Document:

Exhibit 10.1

 

FOURTH AMENDMENT TO CREDIT
AGREEMENT

 

DATED AS OF NOVEMBER 12, 2007

 

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

PRELIMINARY
STATEMENTS

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

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

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

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

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

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

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

 

 

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

2.             Existing
Letter of Credit.

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

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

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

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

 

2

 

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

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

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

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

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

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

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

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

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

 

3

 

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

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

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

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

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

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

6.             Reference
to and Effect on Credit Agreement.

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

 

4

 

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

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

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

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

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

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

[Signature
pages follow]

 

5

 

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

ADMINISTRATIVE
AGENT AND COLLATERAL AGENT:

 

LEHMAN
COMMERCIAL PAPER INC.

 

 

	
  By: 

  	
  /s/ Maria Maslennikova Lund

  
	
  Name: 

  	
  Maria Maslennikova Lund

  
	
  Title: 

  	
  Vice President

  
				

 

 

 

 

 

 

 

[Signature
Page to Fourth Amendment]

 

 

Wells
Fargo Foothill, Inc.

 (as Lender)

 

 

	
  By: 

  	
  /s/ Kristy S. Loucks

  
	
  Name: 

  	
  Kristy S. Loucks

  
	
  Title: 

  	
  Vice President

  
				

 

 

 

Wells
Fargo Foothill, Inc.

 (as Issuing Lender)

 

 

	
  By: 

  	
  /s/ Kristy S. Loucks

  
	
  Name: 

  	
  Kristy S. Loucks

  
	
  Title: 

  	
  Vice President

  
				

 

 

Capital
One, N.A.

 (as Lender)

 

 

	
  By: 

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

  
	
  Name: 

  	
  David L. Denbina, P.E.

  
	
  Title: 

  	
  Senior Vice President          

  
				

 

 

 

 

 

	
   

  
	
  (as Issuing Lender)

  

 

 

	
  By: 

  	
   

  
	
  Name: 

  	
   

  
	
  Title: 

  	
   

  
				

 

 

BORROWER:

 

KEY
ENERGY SERVICES, INC.

 

 

	
  By: 

  	
  /s/ William M. Austin

  
	
  Name: 

  	
  William M. Austin

  
	
  Title: 

  	
  Senior Vice President and Chief Financial Officer

  
				

 

 

EXECUTION
VERSION

 

GUARANTORS:

 

KEY ENERGY DRILLING, INC.

ODESSA EXPLORATION INCORPORATED

UNITRACK SERVICES HOLDING, INC.

 

 

	
  By: 

  	
  /s/ Newton W. Wilson III

  
	
   

  	
  Name:

  	
  Newton W. Wilson III

  
	
   

  	
  Title:

  	
  President and Secretary

  
					

 

 

 

KEY ENERGY SERVICES, LLC

KEY ENERGY PRESSURE PUMPING
SERVICES, LLC

KEY ENERGY FISHING &
RENTAL SERVICES, LLC

KEY ENERGY SHARED SERVICES,
LLC

MISR KEY ENERGY INVESTMENTS,
LLC*

MISR KEY ENERGY SERVICES,
LLC*

KEY ELECTRIC WIRELINE
SERVICES, LLC

 

 

	
  By: 

  	
  /s/ Newton W. Wilson III

  
	
   

  	
  Name:

  	
  Newton W. Wilson III

  
	
   

  	
  Title:

  	
  Vice President and Secretary

  
					

 

*Executing
in the capacity of PresidentExhibit 10.2

 

$425,000,000

 

Key Energy Services,
Inc.

 

8.375% Senior Notes due
2014

 

PURCHASE
AGREEMENT

 

November 14, 2007

 

LEHMAN
BROTHERS INC.

BANC OF AMERICA SECURITIES LLC

MORGAN STANLEY & CO. INCORPORATED

As Representatives of the several
    Initial Purchasers named in Schedule I
attached hereto,

c/o Lehman Brothers Inc.

745 Seventh Avenue

New York, New York 10019

 

Ladies and
Gentlemen:

 

Key Energy Services, Inc., a Maryland corporation (the
“Company”), proposes, upon the terms and
conditions set forth in this agreement (this “Agreement”),
to issue and sell to you, as the initial purchasers (the “Initial
Purchasers”), $425,000,000 in aggregate principal amount of its
8.375% Senior Notes due 2014 (the “Notes”). The
Notes (i) will have terms and provisions that are summarized in the Offering
Memorandum (as defined below) and (ii) are to be issued pursuant to an
Indenture (the “Indenture”) to be entered into
among the Company, the Guarantors (as defined below) and The Bank of New York
Trust Company, N.A., as trustee (the “Trustee”). The Company’s obligations under the Notes,
including the due and punctual payment of interest on the Notes, will be
unconditionally guaranteed (the “Guarantees”) by
the guarantors listed in Schedule II hereto (collectively, the “Guarantors”). As used herein, the term “Notes” shall include
the Guarantees, unless the context otherwise requires. This constitutes
the agreement concerning the purchase of the Notes from the Company by the
Initial Purchasers.

 

1.                                       Purchase and Resale of the Notes. The Notes and Guarantees
will be offered and sold to the Initial Purchasers without registration under
the Securities Act of 1933, as amended (the “Securities
Act”), in reliance on an exemption pursuant to Section 4(2) under
the Securities Act. The Company and
the Guarantors have prepared (i) a preliminary offering memorandum,
dated November 5, 2007 (the “Preliminary Offering
Memorandum”), (ii) a pricing term sheet substantially in the form
attached hereto as Schedule III (the “Pricing Term Sheet”)
setting forth the terms of the Notes omitted from the Preliminary Offering
Memorandum and (iii) an offering memorandum, dated November 14, 2007 (the “Offering Memorandum”), setting forth information regarding
the Company, the Guarantors, the Notes, the Exchange Notes (as defined below),
the Guarantees and the Exchange Guarantees (as defined below). The Preliminary
Offering Memorandum, as supplemented and amended as of the Applicable Time (as
defined 

 

 

below), together with the Pricing Term Sheet and any
of the documents listed on Schedule IV hereto are collectively referred to as
the “Pricing Disclosure Package.” The
Company and the Guarantors
hereby confirm that they  have
authorized the use of the Pricing Disclosure Package and the Offering
Memorandum in connection with the offering and resale of the Notes by the
Initial Purchasers to Eligible Persons (as defined below). “Applicable Time” means 4:33 p.m. (New York City time) on the
date of this Agreement.

 

Any reference to the Preliminary Offering Memorandum, the Pricing Disclosure Package or the  Offering Memorandum shall be deemed to refer to and include
the Company’s most recent Annual Report
on Form 10-K and all subsequent documents deemed “filed” with the United States
Securities and Exchange Commission (the “Commission”)
pursuant to Section 13(a) or 15(d) of the United States Securities Exchange Act
of 1934, as amended (the “Exchange Act”),
on or prior to the date of the Preliminary Offering Memorandum, the Pricing
Disclosure Package or the Offering Memorandum, as the case may be. Any
reference to the Preliminary Offering Memorandum, Pricing Disclosure Package or
the  Offering Memorandum, as the case may be, as amended or supplemented, as
of any specified date, shall be deemed to include any documents deemed “filed”
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
after the date of the Preliminary Offering Memorandum, Pricing Disclosure
Package or the Offering Memorandum, as the case may be, and prior to such
specified date. All documents filed under the Exchange Act and so deemed to be
included in the Preliminary Offering Memorandum, the Pricing Disclosure Package
or the Offering Memorandum, as the case may be, or any amendment or supplement
thereto are hereinafter called the “Exchange
Act Reports.”  The Exchange
Act Reports, when they were or are filed with the Commission, conformed or will
conform in all material respects to the applicable requirements of the Exchange
Act and the applicable rules and regulations of the Commission thereunder.

 

It is understood and acknowledged that upon original
issuance thereof, and until such time as the same is no longer required under
the applicable requirements of the Securities Act, the Notes (and all
securities issued in exchange therefor or in substitution thereof) shall bear
the legend set forth under “Notice to Investors” in the Offering Memorandum
(along with such other legends as the Initial Purchasers and their counsel deem
necessary).

 

You have advised the Company that you will make offers
(the “Exempt Resales”) of the Notes purchased
by you hereunder on the terms set forth in each of the Pricing Disclosure
Package and the Offering Memorandum, as amended or supplemented, solely (i) to
persons whom you reasonably believe to be “qualified institutional buyers” as
defined in Rule 144A under the Securities Act (“QIBs”)
and (ii) outside the United States to certain persons who are not U.S. Persons
(as defined in Regulation S under the Securities Act (“Regulation S”))
(such persons, “Non-U.S. Persons”) in offshore
transactions in reliance on Regulation S. Those persons specified in clauses
(i) and (ii) are referred to herein as the (“Eligible
Purchasers”). You will offer the Notes to Eligible Purchasers
initially at a price equal to 100.0% of the principal amount thereof. Such
price may be changed at any time without notice.

 

Holders (including subsequent transferees) of the
Notes will have the registration rights set forth in the registration rights
agreement attached hereto as Exhibit A (the “Registration
Rights Agreement”) among the Company, the Guarantors and the Initial
Purchasers to be dated November 29, 2007 (the “Closing Date”),
for so long as such Notes constitute “Transfer 

 

2

 

Restricted Securities”
(as defined in the Registration Rights Agreement). Pursuant to the Registration
Rights Agreement, the Company and the Guarantors will agree to file with the
Commission, under the circumstances set forth therein, a registration statement
under the Securities Act (the “Exchange Offer
Registration Statement”) relating to the Company’s 8.375% Senior
Notes due 2014 (the “Exchange Notes”)
and the Guarantors’ Exchange Guarantees (the “Exchange
Guarantees”) to be offered in exchange for the Notes and the
Guarantees. Such portion of the offering is referred to as the “Exchange Offer.”

 

2.                                       Representations and Warranties of the Company and the Guarantors.
The Company and each of the
Guarantors, jointly and severally, represent and warrant as follows:

 

(a)                                  When
the Notes and Guarantees are issued and delivered pursuant to this Agreement,
such Notes and Guarantees will not be of the same class of securities (within
the meaning of Rule 144A under the Securities Act) as the securities of the
Company or the Guarantors that are listed on a United States national
securities exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated inter-dealer quotation system.

 

(b)                                 Neither
the Company nor any subsidiary is, and after giving effect to the offer and
sale of the Notes and the application of the proceeds therefrom as described
under “Use of Proceeds” in each of the Pricing Disclosure Package and the
Offering Memorandum will be, an “investment company” or a company “controlled”
by an “investment company” within the meaning of the Investment Company Act of
1940, as amended, and the rules and regulations of the Commission thereunder.

 

(c)                                  Assuming
that your representations and warranties in Section 3 are true, the purchase
and resale of the Notes pursuant hereto (including pursuant to the Exempt
Resales) is exempt from the registration requirements of the Securities Act. No
form of general solicitation or general advertising within the meaning of
Regulation D of the Securities Act (including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) was used by the Company, the Guarantors or
any of their respective representatives (other than you and the other Initial
Purchasers, as to whom the Company and the Guarantors make no representation)
in connection with the offer and sale of the Notes.

 

(d)                                 No
form of general solicitation or general advertising was used by the Company,
the Guarantors or any of their respective representatives (other than you and
the other Initial Purchasers, as to whom the Company and the Guarantors make no
representation) with respect to Notes
sold outside the United States to Non-U.S. Persons, by means of any directed
selling efforts within the meaning of Rule 902 under the Securities Act, and
the Company, any affiliate of the Company and any person acting on its or their
behalf (other than you and the other Initial Purchasers, as to whom the Company
and the Guarantors make no representation) has complied with the “offering
restrictions” required by Rules 902, 903 and 904 under the Securities Act.

 

3

 

(e)                                  Each
of the Preliminary Offering Memorandum, the Pricing Disclosure Package and the
Offering Memorandum, each as of its respective date, contains all the
information specified in, and meeting the requirements of, Rule 144A(d)(4)
under the Securities Act in all material respects.

 

(f)                                    The
Preliminary Offering Memorandum, the Pricing Disclosure Package and the
Offering Memorandum have been prepared by the Company and the Guarantors for use by the Initial Purchasers in
connection with the Exempt Resales. No order or decree preventing the use of
the Preliminary Offering Memorandum, the Pricing Disclosure Package or the
Offering Memorandum, or any order asserting that the transactions contemplated
by this Agreement are subject to the registration requirements of the
Securities Act, has been issued by the Commission, and no proceeding for that
purpose has commenced or is pending or, to the knowledge of the Company or any
of the Guarantors, is contemplated.

 

(g)                                 The
Pricing Disclosure Package did not, as of the Applicable Time, and will not, as
of the Closing Date, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Pricing Disclosure Package in
reliance upon and in conformity with written information furnished to the
Company through the Representatives by or on behalf of any Initial Purchaser
specifically for inclusion therein, which information is specified in Section
8(e).

 

(h)                                 The
Offering Memorandum will not, as of its date and as of the Closing Date,
contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading; provided
that no representation or warranty is made as to information contained in or
omitted from the Offering Memorandum in reliance upon and in conformity with
written information furnished to the Company through the Representatives by or
on behalf of any Initial Purchaser specifically for inclusion therein, which
information is specified in Section 8(e).

 

(i)                                     The
Company has not made any offer to sell or solicitation of an offer to buy the
Notes that would constitute a “free writing prospectus” (if the offering of the
Notes was made pursuant to a registered offering under the Securities Act), as
defined in Rule 405 under the Securities Act (a “Free Writing
Offering Document”), without the prior consent of the
Representatives; any such Free Writing Offering Document the use of which has
been previously consented to by the Initial Purchasers is set forth
substantially in form and substance as attached hereto on Schedule IV.

 

(j)                                     The
Exchange Act Reports did not, when filed with the Commission, contain an untrue
statement of material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading.

 

(k)                                  The
statistical and market-related data included under the captions “Summary,” “Management’s
Discussion and Analysis of Financial Condition and Results of 

 

4

 

Operations” and “Business” included in the Pricing
Disclosure Package and the Offering Memorandum are based on or derived from
sources that the Company believes to be reliable and accurate in all material
respects.

 

(l)                                     Each
of the Company, the Guarantors and their respective subsidiaries has been duly
organized and is validly existing and in good standing as a corporation or
other business entity under the laws of its jurisdiction of organization and is
duly qualified to do business and in good standing as a foreign corporation or
other business entity in each jurisdiction in which its ownership or lease of
property or the conduct of its businesses requires such qualification, except
where the failure to be so qualified or in good standing would not, in the
aggregate, reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), results of operations, stockholders’
equity, properties, business or prospects of the Company and its subsidiaries
taken as a whole or a material adverse effect on the performance by the Company
and the Guarantors of the performance of this Agreement, the Indenture or the
Notes or the consummation of any of the transactions contemplated hereby or
thereby (a “Material Adverse Effect”); each of
the Company, the Guarantors and their respective subsidiaries has all power and
authority necessary to own or hold its properties and to conduct the businesses
in which it is engaged in all material respects. The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the subsidiaries listed in the Company’s Annual Report on Form 10-K
for the most recent fiscal year and/or Schedule V hereto. None of the
subsidiaries of the Company (other than Key Energy Services, LLC, a Texas
limited liability company, Key Energy Pressure Pumping Services, LLC, a Texas
limited liability company, and Key Energy Shared Services, LLC, a Delaware
limited liability company (collectively, the “Significant
Subsidiaries”)) is a “significant subsidiary” (as defined in Rule
405 under the Securities Act).

 

(m)                               The
Company has an authorized capitalization as set forth in each of the Pricing
Disclosure Package and the Offering Memorandum, and all of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable; and all of the issued and outstanding shares
of capital stock or other equity interests of each subsidiary of the Company
have been duly authorized and validly issued, are fully paid and non-assessable
and (except for directors’ qualifying shares for foreign subsidiaries, if any,
and except as set forth in each of the Pricing Disclosure Package and the
Offering Memorandum) are owned directly or indirectly by the Company, free and
clear of all liens, encumbrances, equities or claims, except for such liens,
encumbrances, equities or claims as would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.

 

(n)                                 Each
of the Company and the Guarantors has all requisite corporate or limited
liability company power and authority, as applicable, to execute, deliver and
perform its obligations under the Indenture. The Indenture has been duly and
validly authorized by the Company and
the Guarantors, and upon its execution and delivery and, assuming due
authorization, execution and delivery by the Trustee, will constitute the valid
and binding agreement of the Company and
the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors’
rights generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), by public
policy, 

 

5

 

by applicable law relating to indemnification and
contribution and by an implied covenant of good faith and fair dealing; no
qualification of the Indenture under the Trust Indenture Act of 1939, as
amended (the “1939 Act”), is required in
connection with the offer and sale of the Notes contemplated hereby or in
connection with the Exempt Resales. The Indenture will conform in all material
respects to the description thereof in each of the Pricing Disclosure Package
and the Offering Memorandum.

 

(o)                                 The
Company has all requisite corporate power and authority to execute, issue, sell
and perform its obligations under the Notes. The Notes have been duly
authorized by the Company and, when duly executed by the Company in accordance
with the terms of the Indenture, assuming due authentication of the Notes by
the Trustee, upon delivery to the Initial Purchasers against payment therefor
in accordance with the terms hereof, will be validly issued and delivered and
will constitute valid and binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors’ rights generally, by general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law), by public policy, by applicable law relating
to indemnification and contribution and by an implied covenant of good faith
and fair dealing. The Notes will conform in all material respects to the
description thereof in each of the Pricing Disclosure Package and the Offering
Memorandum.

 

(p)                                 The
Company has all requisite corporate power and authority to execute, issue and
perform its obligations under the Exchange Notes. The Exchange Notes have been
duly and validly authorized by the Company and if and when issued and
authenticated in accordance with the terms of the Indenture and delivered in
accordance with the Exchange Offer provided for in the Registration Rights
Agreement, will be validly issued and delivered and will constitute valid and
binding obligations of the Company entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors’
rights generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), by public
policy, by applicable law relating to indemnification and contribution and by
an implied covenant of good faith and fair dealing.

 

(q)                                 Each
Guarantor has all requisite corporate or limited liability company power and
authority, as applicable, to issue and perform its obligations under the
Guarantees. The Guarantees have been duly and validly authorized by the Guarantors
and when the Indenture is duly executed and delivered by the Guarantors in
accordance with its terms and upon the due execution, authentication and
delivery of the Notes in accordance with the Indenture and the issuance of the
Notes in the sale to the Initial Purchasers contemplated by this Agreement,
will constitute valid and binding obligations of the Guarantors, enforceable
against the Guarantors in accordance with their terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other laws relating to or affecting creditors’
rights generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), by public
policy, by applicable law relating to indemnification and contribution and by
an implied covenant of good faith and 

 

6

 

fair dealing. The Guarantees will conform in all
material respects to the description thereof in each of the Pricing Disclosure
Package and the Offering Memorandum.

 

(r)                                    Each
Guarantor has all requisite corporate or limited liability company power and
authority, as applicable, to issue and perform its obligations under the
Exchange Guarantees. The Exchange Guarantees have been duly and validly
authorized by the Guarantors and if and when executed and delivered by the
Guarantors in accordance with the terms of the Indenture and upon the due
execution and authentication of the Exchange Notes in accordance with the
Indenture and the issuance and delivery of the Exchange Notes in the Exchange
Offer contemplated by the Registration Rights Agreement, will be validly issued
and delivered and will constitute valid and binding obligations of the
Guarantors entitled to the benefits of the Indenture, enforceable against the
Guarantors in accordance with their terms, except as such enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors’ rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), by public
policy, by applicable law relating to indemnification and contribution and by
an implied covenant of good faith and fair dealing.

 

(s)                                  Each
of the Company and the Guarantors has all requisite corporate or limited
liability company power and authority, as applicable, to execute, deliver and
perform its obligations under the Registration Rights Agreement. The
Registration Rights Agreement has been duly authorized by the Company and each
Guarantor and, when executed and delivered by the Company and each Guarantor in
accordance with the terms hereof and thereof, will be validly executed and
delivered and (assuming the due authorization, execution and delivery thereof
by you) will be the legally valid and binding obligation of the Company and
each Guarantor in accordance with the terms thereof, enforceable against the Company
and each Guarantor in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditor’s rights generally, by general
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law), by public policy, by applicable law
relating to indemnification and contribution and by an implied covenant of good
faith and fair dealing. The Registration Rights Agreement will conform in all
material respects to the description thereof in each of the Pricing Disclosure
Package and the Offering Memorandum.

 

(t)                                    Each
of the Company and the Guarantors has all requisite corporate or limited
liability company power to execute, deliver and perform its obligations under
this Agreement. This Agreement has been duly and validly authorized, executed
and delivered by the Company and each of the Guarantors.

 

(u)                                 The
issue and sale of the Notes and the Guarantees, the execution, delivery and
performance by the Company and the Guarantors of the Notes, the Guarantees, the
Exchange Notes, the Exchange Guarantees, the Indenture, the Registration Rights
Agreement and this Agreement, the application of the proceeds from the sale of
the Notes as described under “Use of Proceeds” in each of the Pricing
Disclosure Package and the Offering Memorandum and the consummation of the
transactions contemplated hereby and thereby, will not (i) conflict with or
result in a breach or violation of any of the terms or provisions of, impose
any lien, charge or encumbrance upon any property or assets of the Company, the
Guarantors or their respective 

 

7

 

subsidiaries, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement, license, lease or other
agreement or instrument to which the Company, the Guarantors or any of their
respective subsidiaries is a party or by which the Company, the Guarantors or
any of their respective subsidiaries is bound or to which any of the property
or assets of the Company, the Guarantors or any of their respective
subsidiaries is subject, (ii) result in any violation of the provisions of the
charter or by-laws or similar organizational document of the Company, the
Guarantors or any of their respective subsidiaries or (iii) result in any
violation of any statute or any judgment, order, decree, rule or regulation of
any court or governmental agency or body having jurisdiction over the Company,
the Guarantors or any of their respective subsidiaries or any of their
properties or assets, except, with respect to clauses (i) and (iii), conflicts
or violations that would not reasonably be expected to have a Material Adverse
Effect.

 

(v)                                 No
consent, approval, authorization or order of, or filing, registration or
qualification with any court or governmental agency or body having jurisdiction
over the Company, the Guarantors or any of their respective subsidiaries is
required for the issue and sale of the Notes and the Guarantees, the execution,
delivery and performance by the Company and the Guarantors of the Notes, the
Guarantees, the Exchange Notes, the Exchange Guarantees, the Indenture, the
Registration Rights Agreement and this Agreement, the application of the
proceeds from the sale of the Notes as described under “Use of Proceeds” in
each of the Pricing Disclosure Package and the Offering Memorandum and the
consummation of the transactions contemplated hereby and thereby, except for
(i) the filing of a registration statement by the Company with the Commission
pursuant to the Securities Act as required by the Registration Rights
Agreement, (ii) the order of the Commission declaring the Exchange Offer
Registration Statement or Shelf Registration Statement (each as defined in the
Registration Rights Agreement) effective, (iii) such consents, approvals,
authorizations, orders, filings, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Notes by the Initial Purchasers, (iv) those required in
connection with arranging for the Notes to be designated eligible for trading
in The PortalTM
market or for the Notes to be eligible for clearance and settlement through The
Depository Trust Company and (v) such as have already been obtained.

 

(w)                               Except
as set forth in the Pricing Disclosure Package and the Offering Memorandum,
there are no contracts, agreements or understandings between the Company or any
Guarantor and any person granting such person the right to require the Company
or any Guarantor to file a registration statement under the Securities Act with
respect to any securities of the Company or any Guarantor (other than the
Registration Rights Agreement) owned or to be owned by such person or to
require the Company or any Guarantor to include such securities in the
securities registered pursuant to the Registration Rights Agreement or in any
securities being registered pursuant to any other registration statement filed
by the Company or any Guarantor under the Securities Act.

 

(x)                                   Neither
the Company, any Guarantor nor any other person acting on behalf of the Company
or any Guarantor has sold or issued any securities that would be integrated
with the offering of the Notes contemplated by this Agreement pursuant to the
Securities Act, the rules and regulations thereunder or the interpretations
thereof by the Commission.

 

8

 

(y)                                 Except
as set forth in the Pricing Disclosure Package and the Offering Memorandum,
neither the Company, the Guarantors nor any of their respective subsidiaries
has sustained, since the date of the latest audited financial statements
included in the Pricing Disclosure Package, any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, and, since such date, there has not been any change in the capital
stock or limited liability company interests, as applicable, or long-term debt
of the Company, the Guarantors or any of their respective subsidiaries or any
adverse change, or any development involving a prospective adverse change, in
or affecting the condition (financial or otherwise), results of operations,
stockholders’ equity, properties, management, business or prospects of the
Company and its subsidiaries, taken as a whole, in each case except as would
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.

 

(z)                                   The
historical financial statements (including the related notes and supporting
schedules) included in the Pricing Disclosure Package and the Offering
Memorandum present fairly in all material respects the financial condition, results
of operations and cash flows of the entities purported to be shown thereby, at
the dates and for the periods indicated, and, except as disclosed in the
Pricing Disclosure Package and the Offering Memorandum, have been prepared in
conformity with accounting principles generally accepted in the United States
applied on a consistent basis throughout the periods involved (except as
otherwise stated therein). The other financial information and data included in
the Offering Memorandum, in all material respects, fairly present such
financial information and data and are prepared on a basis consistent with such
financial statements and the books and records of the Company.

 

(aa)                            Grant
Thornton LLP, who has certified certain financial statements of the Company,
whose report appears in the Pricing Disclosure Package and who have delivered
the initial letter referred to in Section 7(e) hereof, is an independent
registered public accounting firm as required under Rule 3600T of the Public
Company Accounting Oversight Board’s Interim Independence Standards and its
interpretations and rulings.

 

(bb)                          Each
of the Company, the Guarantors and their respective subsidiaries has good and
indefeasible title in fee simple to all real property and good and indefeasible
title to all personal property owned by them, in each case free and clear of
all liens, encumbrances and defects, except such liens, encumbrances and
defects that, in the aggregate, would not reasonably be expected to have a
Material Adverse Effect or such as are described in the Pricing Disclosure
Package and the Offering Memorandum or such as do not materially affect the
value of such property and do not materially interfere with the use made and
proposed to be made of such property by the Company, the Guarantors or any of
their respective subsidiaries; and all assets held under lease by the Company,
the Guarantors or any of their respective subsidiaries are held by them under
valid, subsisting and enforceable leases, with such exceptions as do not
materially interfere with the use made and proposed to be made of such assets
by the Company, the Guarantors or any of their respective subsidiaries, except
as disclosed in the Pricing Disclosure Package and the Offering Memorandum.

 

(cc)                            Each
of the Company, the Guarantors and their respective subsidiaries carries, or is
covered by, insurance from insurers of recognized financial responsibility in
such amounts and covering such risks as is reasonably adequate for the conduct
of their respective 

 

9

 

businesses and the value of their respective
properties and as is customary for companies of their size engaged in similar
businesses in similar industries. All policies of insurance of the Company, the
Guarantors and their respective subsidiaries are in full force and effect,
except where the failure to be in full force and effect, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect; the
Company, the Guarantors and their respective subsidiaries are in compliance
with the terms of such policies in all material respects; and neither the
Company, the Guarantors nor any of their respective subsidiaries has received
notice from any insurer or agent of such insurer that capital improvements or
other expenditures are required or necessary to be made in order to continue
such insurance; there are no claims by the Company, the Guarantors or any of
their respective subsidiaries under any such policy or instrument as to which
any insurance company is denying liability or defending under a reservation of
rights clause, except where denial or reservation would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; and neither the
Company, the Guarantors nor any such subsidiary has any reason to believe under
existing market conditions that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at
a cost that would not reasonably be expected to have a Material Adverse Effect.

 

(dd)                          The
Company and each of its subsidiaries have such permits, licenses, patents,
franchises, certificates of need and other approvals or authorizations of
governmental or regulatory authorities (“Permits”) as
are necessary under applicable law to own their properties and conduct their
businesses in the manner described in the Pricing Disclosure Package and the
Offering Memorandum, except for any of the foregoing that would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect; each of
the Company and its subsidiaries has fulfilled and performed all of its
obligations in all material respects with respect to the Permits, and no event
has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or result in any other impairment of the
rights of the holder of any such Permits, except for any of the foregoing that
would not reasonably be expected to have a Material Adverse Effect.

 

(ee)                            Except
for ownership or possession that would not have a Material Adverse Effect, the
Company and each of its subsidiaries own or possess adequate rights to use all
material patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service mark registrations, copyrights, licenses,
know-how, software, systems and technology (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures)  necessary for the conduct
of their respective businesses and have no reason to believe that the conduct
of their respective businesses will conflict with, and have not received any
notice of any claim of conflict with, any such rights of others.

 

(ff)                                Except
as described in the Pricing Disclosure Package and the Offering Memorandum,
there are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject that would, in the aggregate,
reasonably be expected to have a Material Adverse Effect or to have a material
adverse effect on the performance by the Company and the Guarantors of the
performance of this Agreement, the Indenture or the Notes or the consummation
of any of the transactions contemplated hereby; and to the Company’s and each 

 

10

 

Guarantors’ knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others.

 

(gg)                          There
are no legal or governmental proceedings or contracts or other documents that
would be required to be described in a registration statement filed under the
Securities Act or, in the case of documents, would be required to be filed as
exhibits to a registration statement of the Company pursuant to Item 601(10) of
Regulation S-K that have not been described in the Pricing Disclosure Package
and the Offering Memorandum. Neither the Company, the Guarantors nor any of
their respective subsidiaries has knowledge that any other party to any such
contract, agreement or arrangement has any intention not to render full
performance as contemplated by the terms thereof; and that statements made in the Pricing Disclosure Package and the
Offering Memorandum under the captions “Management’s Discussion and Analysis of
Financial Condition and Results of Operations” and “Business” insofar as they
purport to constitute summaries of the terms of statutes, rules or regulations,
legal or governmental proceedings or contracts and other documents, constitute
accurate summaries of the terms of such statutes, rules and regulations, legal
and governmental proceedings and contracts and other documents in all material
respects.

 

(hh)                          No
relationship, direct or indirect, that would be required to be described in a
registration statement of the Company pursuant to Item 404 of Regulation S-K,
exists between or among the Company or any Guarantor, on the one hand, and the
directors, executive officers or any person (including any “group” as that term
is defined in Section 13(d)(3) of the Exchange Act) who is the beneficial owner
of more than five percent of any class of voting securities of the Company or
any Guarantor, or any of their respective immediate family members (as defined
in Item 404 of Regulation S-K), on the other hand, that has not been described
in the Pricing Disclosure Package and the Offering Memorandum.

 

(ii)                                  No
labor disturbance by the employees of the Company or any of its subsidiaries
exists or, to the knowledge of the Company or any Guarantor, is imminent that
in any such case would reasonably be expected to have a Material Adverse
Effect.

 

(jj)                                  (i)
Each “employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Security Act of 1974, as amended (“ERISA”))
for which the Company or any member of its “Controlled Group” (defined as any
organization which is a member of a controlled group of corporations within the
meaning of Section 414 of the Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each a “Plan”) has been maintained in compliance with its terms and
with the requirements of all applicable statutes, rules and regulations
including ERISA and the Code; (ii) with respect to each Plan subject to Title
IV of ERISA (a) no “reportable event” (within the meaning of Section 4043(c) of
ERISA) has occurred or is reasonably expected to occur which would reasonably
be expected to have a Material Adverse Effect, (b) no “accumulated funding deficiency”
(within the meaning of Section 302 of ERISA or Section 412 of the Code),
whether or not waived, has occurred or is reasonably expected to occur which
would reasonably be expected to have a Material Adverse Effect, (c) the fair
market value of the assets under each Plan exceeds the present value of all
benefits accrued under such Plan (determined based on those assumptions used to
fund such Plan) sufficiently as to not have a Material Adverse Effect and (d)
neither the Company or any member of its Controlled Group has incurred, or
reasonably expects to incur, any liability under 

 

11

 

Title IV of ERISA (other than contributions to the
Plan or premiums to the Pension Benefit Guaranty Corporation in the ordinary
course and without default) in respect of a Plan (including a “multiemployer
plan”, within the meaning of Section 4001(c)(3) of ERISA) which would
reasonably be expected to have a Material Adverse Effect; and (iii) each Plan
that is intended to be qualified under Section 401(a) of the Code is to the
knowledge of the Company so qualified and to the knowledge of the Company
nothing has occurred, whether by action or by failure to act, which would cause
the loss of such qualification.

 

(kk)                            Except
where failures to do so would not reasonably be expected to have a Material
Adverse Effect, each of the Company and its subsidiaries has filed all federal,
state, local and foreign income and franchise tax returns required to be filed
through the date hereof, subject to permitted extensions, and has paid all
taxes due thereon. No tax deficiency that has been determined adversely to the
Company, the Guarantors or any of their respective subsidiaries remains
outstanding that would reasonably be expected to have a Material Adverse Effect
and neither the Company nor any Guarantor has any knowledge of any tax
deficiencies that would, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(ll)                                  There
are no transfer taxes or other similar fees or charges under Federal law or the
laws of any state, or any political subdivision thereof, required to be paid in
connection with the execution and delivery of this Agreement or the issuance by
the Company or sale by the Company of the Notes.

 

(mm)                      Since
the date as of which information is given in the Pricing Disclosure Package,
neither the Company nor any Guarantor has (i) issued or granted any securities,
(ii) incurred any liability or obligation, direct or contingent, other than
liabilities and obligations that were incurred in the ordinary course of
business, (iii) entered into any material transaction not in the ordinary
course of business or (iv) declared or paid any dividend on its capital stock.

 

(nn)                          Except
as disclosed in the Pricing Disclosure Package and the Offering Memorandum, the
Company (i) makes and keeps in reasonable detail accurate books and records and
(ii) maintains and has maintained effective internal control over financial
reporting as defined in Rule 13a-15(f) under the Exchange Act and a system of
internal accounting controls sufficient to provide reasonable assurance that
(A) transactions are executed in accordance with management’s general or
specific authorization, (B) transactions are recorded as necessary to permit
preparation of its financial statements in conformity with accounting
principles generally accepted in the United States and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management’s general or specific authorization and  (D) the reported accountability for its
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.

 

(oo)                          Neither
the Company nor any of its subsidiaries (i) is in violation of its charter or
by-laws (or similar organizational documents), (ii) is in default, and no event
has occurred that, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant, condition
or other obligation contained in any indenture, mortgage, deed of trust, loan
agreement, license or other agreement or instrument to which it is a party or
by which it is bound or to which any of its properties or assets is subject or
(iii) is in violation of any statute or any order, rule or regulation of any
court or governmental 

12

 

agency or body having jurisdiction over it or its
property or assets or has failed to obtain any license, permit, certificate,
franchise or other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business, except in the case
of clauses (ii) and (iii), to the extent any such conflict, breach, violation
or default would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.

 

(pp)                          Neither
the Company nor any of its subsidiaries, nor, to the knowledge of the Company
and the Guarantors, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company, the Guarantors or any of
their respective subsidiaries, has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating
to political activity; (ii) made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
(iii) violated or is in violation of any provision of the Foreign Corrupt
Practices Act of 1977; or (iv) made any unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.

 

(qq)                          The
Company and each of its subsidiaries (i) are, and at all times prior hereto
were, in compliance in all material respects with all laws, regulations,
ordinances, rules, orders, judgments, decrees, permits or other legal
requirements of any governmental authority, including without limitation any
international, national, state, provincial, regional, or local authority,
relating to the protection of human health or safety, the environment or natural
resources, or to hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”) applicable to
such entity, which compliance includes, without limitation, obtaining,
maintaining and complying with all permits and authorizations and approvals
required by Environmental Laws to conduct their respective businesses, and
(ii) have not received notice of any actual or alleged violation of
Environmental Laws, or of any potential liability for or other obligation
concerning the presence, disposal or release of hazardous or toxic substances
or wastes, pollutants or contaminants, except in the case of clause (i) or
(ii), where such non-compliance, violation, liability, or other obligation
would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect. Except as described in the Pricing Disclosure Package, (A) there are no
proceedings that are pending, or to the knowledge of the Company contemplated,
against the Company or any of its subsidiaries under Environmental Laws in
which a governmental authority is also a party, other than such proceedings
pursuant to which it is reasonably believed no monetary sanctions, exclusive of
interests and costs, of $100,000 or more will be imposed, (B) the Company, the
Guarantors and their respective subsidiaries are not aware of any issues
regarding compliance with Environmental Laws, or liabilities or other
obligations under Environmental Laws or concerning hazardous or toxic
substances or wastes, pollutants or contaminants, that would reasonably be
expected to have a Material Adverse Effect, and (C) none of the Company, the
Guarantors and their respective subsidiaries anticipates capital expenditures
relating to remediation of properties of the Company or its domestic subsidiaries
in excess of $1,000,000 in excess of any amounts reserved therefor relating to
Environmental Laws.

 

(rr)                                None
of the transactions contemplated by this Agreement (including, without
limitation, the use of the proceeds from the sale of the Notes), will violate
or result in a violation of Section 7 of the Exchange Act, or any regulation
promulgated thereunder, including,

 

13

 

without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System.

 

(ss)         The
statements set forth in each of the Pricing Disclosure Package and the Offering
Memorandum under the caption “Description of the Notes,” insofar as they
purport to constitute a summary of the terms of the Indenture, the Notes and
the Guarantees and under the captions “Management’s Discussion and Analysis of
Financial Condition and Results of Operations,” “Business,” “Management,” “Description
of Other Indebtedness,” “Certain U.S. Federal Tax Consequences,” “Certain ERISA
Considerations” and “Plan of Distribution”, insofar as they purport to describe
the provisions of the laws and documents referred to therein, are accurate in
all material respects.

 

(tt)           The
Company and its controlled affiliates have not taken, directly or indirectly,
any action designed to or that has constituted or that reasonably be expected
to cause or result in the stabilization or manipulation of the price of any
security of the Company or the Guarantors in connection with the offering of
the Notes.

 

(uu)         Except
as disclosed in the Pricing Disclosure Package and the Offering Memorandum, (i)
the Company has established and maintains disclosure controls and procedures
(as such term is defined in Rule 13a-15 under the Exchange Act), (ii) such
disclosure controls and procedures are designed to ensure that the information
required to be disclosed by the Company in the reports it files or submits
under the Exchange Act (assuming the Company was required to file or submit
such reports under the Exchange Act) is accumulated and communicated to
management of the Company, including its principal executive officers and
principal financial officers, as appropriate, to allow timely decisions regarding
required disclosure to be made; and (iii) such disclosure controls and
procedures are effective in all material respects to perform the functions for
which they were established.

 

(vv)         Except
as disclosed in the Pricing Disclosure Package and the Offering Memorandum,
since the date of the most recent balance sheet of the Company and its
consolidated subsidiaries reviewed or audited by Grant Thornton LLP and the
audit committee of the board of directors of the Company, (i) the Company has
not been advised of (A) any significant deficiencies in the design or
operation of internal controls that would adversely affect the ability of the
Company to record, process, summarize and report financial data, or any
material weaknesses in internal controls or (B) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the internal controls of the Company, and (ii) since that date, there
have been no significant changes in internal controls or in other factors that
would significantly affect internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.

 

(ww)       No
subsidiary of the Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company any loans or advances
to such subsidiary from the Company or from transferring any of such subsidiary’s
property or assets to the Company or any other subsidiary of the Company,
except as described in the Pricing Disclosure Package and the Offering
Memorandum.

 

14

 

(xx)          There
is and has been no failure on the part of the Company and, to the knowledge of
the Company, any of the Company’s directors or officers, in their capacities as
such, to comply in all material respects with the provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith.

 

(yy)         The
section entitled “Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Critical Accounting Policies” in the Preliminary
Offering Memorandum contained in the Pricing Disclosure Package describes in
all material respects (A) the accounting policies that the Company believes are
the most important in the portrayal of the Company’s financial condition and
results of operations and that require management’s most difficult, subjective
or complex judgments;  (B) the judgments
and uncertainties affecting the application of critical accounting policies;
and (C) the likelihood that materially different amounts would be reported
under different conditions or using different assumptions and an explanation
thereof.

 

(zz)          Except
as disclosed in the Pricing Disclosure Package and the Offering Memorandum,
neither the Company nor any subsidiary is in violation of or has received
notice of any violation with respect to any federal or state law relating to
discrimination in the hiring, promotion or pay of employees, nor any applicable
federal or state wage and hour laws, the violation of any of which would
reasonably be expected to have a Material Adverse Affect.

 

(aaa)       The
operations of the Company and its subsidiaries are and have been conducted in
all material respects in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act
of 1970, as amended, the money laundering statutes of all jurisdictions, the
rules and regulations thereunder and any related or similar rules, regulations
or guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Money Laundering Laws”)
and no action, suit or proceeding by or before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending or, to the
knowledge of the Company, threatened, except, in each case, as would not
reasonably be expected to have a Material Adverse Effect.

 

(bbb)      Neither
the Company nor any of its subsidiaries nor, to the knowledge of the Company,
any director, officer, agent, employee or affiliate of the Company or any of
its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly or indirectly use
the proceeds of the offering, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other person or entity,
for the purpose of financing the activities of any person currently subject to
any U.S. sanctions administered by OFAC.

 

(ccc)       The Company has not taken any action or omitted
to take any action (such as issuing any press release relating to any Notes
without an appropriate legend) which may result in the loss by any of the
Initial Purchasers of the ability to rely on any stabilization safe harbor provided by the Financial Services
Authority under the Financial Services and Markets Act 2000 (the “FSMA”). The Company has been informed of the guidance
relating to 

 

15

 

stabilization
provided by the Financial Services Authority, in particular in Section MAR
2 Annex 2G of the Financial Services Handbook.

 

Any certificate signed by
any officer of the Company or the Guarantor and delivered to the
Representatives or counsel for the Initial Purchasers in connection with the
offering of the Notes shall be deemed a representation and warranty by the
Company or such Guarantor, as to matters covered thereby, to each Initial
Purchaser.

 

3.             Purchase of the Notes by the Initial Purchasers; Agreements to Sell,
Purchase and Resell (a)  The
Company and the Guarantors, jointly
and severally, hereby agree, on the basis of the representations,
warranties and agreements of the Initial Purchasers contained herein and
subject to all the terms and conditions set forth herein, to issue and sell to
the Initial Purchasers and, upon the basis of the representations, warranties
and agreements of the Company and the
Guarantors herein contained and subject to all the terms and conditions
set forth herein, each Initial Purchaser agrees, severally and not jointly, to
purchase from the Company, at a purchase price of (i) 98.125% of the principal
amount thereof, the principal amount of Notes set forth opposite the name of
such Initial Purchaser in Schedule I-A hereto and (ii) 98.5% of the principal
amount thereof, the principal amount of Notes set forth opposite the name of
such Initial Purchaser in Schedule I-B hereto. The Company and the Guarantors  shall not be obligated to deliver any of the securities to
be delivered hereunder except upon payment for all of the securities to be purchased
as provided herein.

 

(b)           Each
of the Initial Purchasers, severally and not jointly, hereby agrees that it
will offer the Notes for sale upon the terms and conditions set forth in this
Agreement and in the Pricing Disclosure Package. Each of the Initial Purchasers
hereby represents and warrants to, and agrees with, the Company, on the basis
of the representations, warranties and agreements of the Company and the
Guarantors, that such Initial Purchaser: (i) is a QIB with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes; (ii) is purchasing
the Notes pursuant to a private sale exempt from registration under the
Securities Act; (iii) in connection with the Exempt Resales, will solicit
offers to buy the Notes only from, and will offer to sell the Notes only to,
the Eligible Purchasers in accordance with this Agreement and on the terms
contemplated by the Pricing Disclosure Package; and (iv) will not offer or sell
the Notes, nor has it offered or sold the Notes by, or otherwise engaged in,
any form of general solicitation or general advertising (within the meaning of
Regulation D of the Securities Act, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising)  and
will not engage in any directed selling efforts within the meaning of Rules
902, 903 or 904 under the Securities Act, in connection with the offering of
the Notes. The Initial Purchasers have advised the Company that they will offer
the Notes to Eligible Purchasers at a price initially equal to 100.0% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance of the Notes. Such price may be changed subsequently by the Initial
Purchasers at any time without notice.

 

(c)           Each
Initial Purchaser, severally and not jointly, represents and warrants to and
agrees with the Company that:

 

16

 

(i)                                     it
has complied and will comply with all applicable provisions of the FSMA with
respect to anything done by it in relation to the Notes in, from or otherwise
involving the United Kingdom, and it has only communicated or caused to be
communicated and it will only communicate or cause to be communicated any
invitation or inducement to engage in investment activity (within the meaning
of section 21 of the FSMA) received by it in connection with the issue or sale
of any Notes, in circumstances in which section 21(1) of the FSMA does not
apply to the Company; and

 

(ii)                                  in
relation to each Member State of the European Economic Area which has
implemented the Prospectus Directive (each, a Relevant Member State), with
effect from and including the date on which the Prospectus Directive is
implemented in that Relevant Member State (the “Relevant
Implementation Date”), it has not made and will not make an offer of
the Notes to the public in that Relevant Member State prior to the publication
of a prospectus in relation to the Notes which has been approved by the
competent authority in that Relevant Member State or, where appropriate,
approved in another Relevant Member State and notified to the competent
authority in that Relevant Member State, all in accordance with the Prospectus
Directive, except that it may, with effect from and including the Relevant
Implementation Date, make an offer of the Notes to the public in that Relevant
Member State at any time:

 

(A)                              to
legal entities which are authorized or regulated to operate in the financial
markets or, if not so authorized or regulated, whose corporate purpose is
solely to invest in securities;

 

(B)                                to
any legal entity which has two or more of (1) an average of at least 250
employees during the last financial year; (2) a total balance sheet of more
than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as
shown in its last annual or consolidated accounts; or

 

(C)                                in
any other circumstances which do not require the publication by the issuer of a
prospectus pursuant to Article 3 of the Prospectus Directive.

 

For the purposes of this representation, the
expression an “offer of Notes to the public” in any Relevant Member State means
the communication in any form and by any means of sufficient information on the
terms of the offer and for the Notes to be offered so as to enable an investor
to decide to purchase or subscribe the Notes, as the same may be varied in that
Relevant Member State by any measure implementing the Prospectus Directive in
that Relevant Member State and the expression “Prospectus Directive” means
Directive 2003/71/EC and includes any relevant implementing measure in each
Relevant Member State.

 

17

 

(d)           Such Initial Purchaser has not nor,
prior to the later to occur of (A) the Closing Date and (B) completion of the
distribution of the Notes, will not, use, authorize use of, refer to or
distribute any material in connection with the offering and sale of the Notes
other than (i) the Preliminary Offering Memorandum, the Pricing Disclosure
Package, the Offering Memorandum, (ii) any written communication that contains
no “issuer information” (as defined in Rule 433(h)(2) under the Act) that was
not included (including through incorporation by reference) in the Preliminary
Offering Memorandum or any Free Writing Offering Document listed on
Schedule IV hereto, (iii) the Free Writing Offering Documents listed on
Schedule IV hereto, (iv) any written communication prepared by such
Initial Purchaser and approved by the Company in writing, or (v) any written
communication relating to or that contains the terms of the Notes and/or other
information that was included (including through incorporation by reference) in
the Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum.

 

Each of the Initial
Purchasers understands that the Company and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Sections 7(c) and 7(d) hereof,
counsel to the Company and counsel to the Initial Purchasers, will rely upon
the accuracy and truth of the foregoing representations, warranties and
agreements, and the Initial Purchasers hereby consent to such reliance.

 

4.             Delivery of the Notes and Payment Therefor. Delivery to the
Initial Purchasers of and payment for the Notes shall be made at the office of
Porter & Hedges, L.L.P., 1000 Main Street, 36th Floor, Houston, Texas
77002, at 10:00 A.M., New York City time, on November 29, 2007 (the “Closing Date”). The place of closing for the Notes and the
Closing Date may be varied by agreement between the Representatives and the
Company.

 

The Notes will be
delivered to the Trustee as custodian for The Depository Trust Company (“DTC”), against payment by or on behalf of the Initial
Purchasers of the purchase price therefor by wire transfer in immediately
available funds, by causing DTC to credit the Notes to the account of the
Initial Purchasers at DTC. The Notes will be evidenced by one or more global
securities in definitive form (the “Global Notes”)
and will be registered in the name of Cede & Co. as nominee of DTC.

 

5.             Agreements of the Company and the Guarantors. The Company and the Guarantors, jointly and
severally, agree with each of the Initial Purchasers as follows:

 

(a)           The
Company and the Guarantors will
furnish to the Initial Purchasers, without charge, within one business day of
the date of the Offering Memorandum, such number of copies of the Offering
Memorandum as it may then be amended or supplemented as they may reasonably
request.

 

(b)           The
Company and the Guarantors will
not make any amendment or supplement to the Pricing Disclosure Package or to
the Offering Memorandum of which the Initial Purchasers shall not previously
have been advised or to which they shall reasonably object after being so
advised.

 

18

 

(c)           Each
of the Company and the Guarantors consents to the use of the Pricing Disclosure
Package and the Offering Memorandum in accordance with the securities or Blue
Sky laws of the jurisdictions in which the Notes are offered by the Initial
Purchasers and by all dealers to whom Notes may be sold, in connection with the
offering and sale of the Notes.

 

(d)           If,
at any time prior to completion of the distribution of the Notes by the Initial
Purchasers to Eligible Purchasers, any event occurs or information becomes
known that, in the judgment of the Company or any of the Guarantors or in the
opinion of counsel for the Initial Purchasers, should be set forth in the
Pricing Disclosure Package or the Offering Memorandum so that the Pricing
Disclosure Package or the Offering Memorandum, as then amended or supplemented,
does not include any untrue statement of material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or if it is
necessary to supplement or amend the Pricing Disclosure Package or the Offering
Memorandum in order to comply with any law, the Company and the Guarantors will forthwith prepare an appropriate
supplement or amendment thereto, and will expeditiously furnish to the Initial
Purchasers a reasonable number of copies thereof.

 

(e)           None
of the Company nor any Guarantor will make any offer to sell or solicitation of
an offer to buy the Notes that would constitute a Free Writing Offering
Document without the prior consent of the Representatives, which consent shall
not be unreasonably withheld or delayed; if at any time following issuance of a
Free Writing Offering Document any event occurred or occurs as a result of
which such Free Writing Offering Document conflicts with the information in the
Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum or, when taken together with the information in the Preliminary
Offering Memorandum, the Pricing Disclosure Package or the Offering Memorandum,
includes an untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances then prevailing, not misleading, as promptly as practicable after
becoming aware thereof, the Company will give notice thereof to the Initial
Purchasers through the Representatives and, if requested by the
Representatives, will prepare and furnish without charge to each Initial
Purchaser a Free Writing Offering Document or other document which will correct
such conflict, statement or omission.

 

(f)            Promptly
from time to time to take such action as the Initial Purchasers may reasonably
request to qualify the Notes for offering and sale under the securities or Blue
Sky laws of such jurisdictions as the Initial Purchasers may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Notes; provided that
in connection therewith the Company shall not be required to (i) qualify as a
foreign corporation in any jurisdiction in which it would not otherwise be
required to so qualify, (ii) file a general consent to service of process in
any such jurisdiction or (iii) subject itself to taxation in any jurisdiction
in which it would not otherwise be subject.

 

(g)           For
a period commencing on the date hereof and ending on the 90th day after the
date of the Offering Memorandum, the Company and the Guarantors agree not to,
directly or indirectly, (1) offer for sale, sell, or otherwise dispose of (or
enter into any transaction or device that is designed to, or would be expected
to, result in the disposition by any person at 

 

19

 

any time in the
future of) any debt securities of the Company substantially similar to the
Notes or securities convertible into or exchangeable for such debt securities
of the Company, or sell or grant options, rights or warrants with respect to
such debt securities of the Company or securities convertible into or
exchangeable for such debt securities of the Company, (2) enter into any swap
or other derivatives transaction that transfers to another, in whole or in
part, any of the economic benefits or risks of ownership of such debt
securities of the Company, whether any such transaction described in clause (1)
or (2) above is to be settled by delivery of debt securities of the Company or
other securities, in cash or otherwise, (3) file or cause to be filed a
registration statement, including any amendments, with respect to the
registration of debt securities of the Company substantially similar to the
Notes or securities convertible, exercisable or exchangeable into debt
securities of the Company or publicly announce an offering of any debt
securities of the Company substantially similar to the Notes or securities
convertible or exchangeable into such debt securities, in each case without the
prior written consent of Lehman Brothers Inc., on behalf of the Initial
Purchasers, except in each case above in exchange for the Exchange Notes and
the Exchange Guarantees in connection with the Exchange Offer.

 

(h)           The
Company will furnish to the holders of the Notes as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders’
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as practicable after
the end of each of the first three quarters of each fiscal year (beginning with
the fiscal quarter ending after the date of the Offering Memorandum), will make
available to its securityholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail; provided that,
so long as the Company files periodic reports pursuant to Section 13 or 15(d)
of the Exchange Act for the foregoing periods, the Company shall be deemed to
comply with this Section 5(h).

 

(i)            So
long as any of the Notes are outstanding, the Company and the Guarantors will furnish to the Initial Purchasers, as
soon as available, a copy of each report of the Company or any Guarantor mailed
to stockholders generally, provided that
so long as the Company files periodic reports pursuant to Section 13 or 15(d)
of the Exchange Act, the Company shall be deemed to comply with this Section
5(i).

 

(j)            The
Company will apply the net proceeds from the sale of the Notes substantially in
accordance with the description set forth in the Offering Memorandum under the
caption “Use of Proceeds.”

 

(k)           The
Company, the Guarantors and their respective affiliates will not take, directly
or indirectly, any action designed to or that has constituted or that
reasonably would be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company or the Guarantors in
connection with the offering of the Notes.

 

(l)            The
Company and the Guarantors will use their commercially reasonable efforts to
permit the Notes to be designated as Private Offerings, Resales and Trading
through Automated Linkages (PORTAL) MarketSM (the “PORTAL MarketSM”)
securities in accordance with the rules and regulations adopted by the
Financial Industry Regulatory Authority, Inc. 

 

20

 

relating to
trading in the PORTAL MarketSM and to permit the Notes to be
eligible for clearance and settlement through DTC.

 

(m)          The
Company and the Guarantors will take reasonable precautions designed to insure
that any offer or sale, direct or indirect, in the United States or to any U.S.
person (as defined in Rule 902 under the Securities Act), of any Notes or any
substantially similar security issued by the Company or any Guarantor, within
six months subsequent to the date on which the distribution of the Notes has
been completed (as notified to the Company by the Initial Purchasers), is made
under restrictions and other circumstances reasonably designed not to affect
the status of the offer and sale of the Notes in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from the
registration provisions of the Securities Act, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act.

 

(n)           The
Company and the Guarantors will not, and will not permit any of their
respective affiliates (as defined in Rule 144 under the Securities Act) to,
resell any of the Notes that constitute “restricted securities” under Rule 144
that have been acquired by any of them, except for Notes purchased by the
Company, the Guarantors or any of their respective affiliates and resold in a
transaction registered under the Securities Act.

 

(o)           The
Company and the Guarantors
agree not to sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) that
would be integrated with the sale of the Notes in a manner that would require
the registration under the Securities Act of the sale to the Initial Purchasers
or the Eligible Purchasers of the Notes.

 

(p)           The
Company and the Guarantors
agree to comply with all the terms and conditions of the Registration Rights Agreement
and all agreements set forth in the representation letters of the Company and the Guarantors to DTC relating to
the approval of the Notes by DTC for “book entry” transfer.

 

(q)           The
Company and the Guarantors will take such steps as shall be necessary to ensure
that neither the Company nor any of the Company’s subsidiaries becomes an “investment
company” within the meaning of such term under the Investment Company Act of
1940, as amended.

 

(r)            Neither
the Company nor any Guarantor will take any action or omit to take any action
(such as issuing any press release relating to the Notes without an appropriate
legend) which may result in the loss by any of the Initial Purchasers of the
ability to rely on any stabilization safe harbor provided by the Financial
Services Authority under the FSMA.

 

(s)           The
Company and the Guarantors will
do and perform all things required or necessary to be done and performed under
this Agreement by them prior to the Closing Date, and to satisfy all conditions
precedent to the Initial Purchasers’ obligations hereunder to purchase the
Notes.

 

6.             Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement becomes effective or is
terminated, the Company and the 

 

21

 

Guarantors, jointly and severally, agree, to pay all costs, expenses,
fees and taxes incident to and in connection with: (i) the preparation,
printing, filing and distribution of the Preliminary Offering Memorandum, the
Pricing Disclosure Package and the Offering Memorandum (including, without
limitation, financial statements and exhibits) and all amendments and
supplements thereto (including the fees, disbursements and out-of-pocket
expenses of the Company’s accountants and counsel, but not, however, legal
fees, disbursements and other out-of-pocket expenses of the Initial Purchasers’
counsel incurred in connection therewith); (ii) the preparation, printing
(including, without limitation, word processing and duplication costs) and
delivery of this Agreement, the Indenture, the Registration Rights Agreement,
all Blue Sky memoranda and all other agreements, memoranda, correspondence and
other documents printed and delivered in connection therewith and with the
Exempt Resales (but not, however, legal fees, disbursements and other
out-of-pocket expenses of the Initial Purchasers’ counsel incurred in
connection with any of the foregoing other than fees of such counsel plus
reasonable disbursements incurred in connection with the preparation, printing
and delivery of such Blue Sky memoranda not to exceed (when added to the amount
to be paid pursuant to clause (iv) below) $5,000); (iii) the issuance and
delivery by the Company of the Notes and by the Guarantors of the Guarantees
and any taxes payable in connection therewith; (iv) the qualification of the
Notes and Exchange Notes for offer and sale under the securities or Blue Sky
laws of the several states (including, without limitation, the reasonable fees
and disbursements of the Initial Purchasers’ counsel relating to such
registration or qualification not to exceed (when added to the amount to be
paid pursuant to clause (ii) above) $5,000); (v) the furnishing of such copies
of the Pricing Disclosure Package and the Offering Memorandum, and all
amendments and supplements thereto, as may be reasonably requested for use in
connection with the Exempt Resales; (vi) the preparation of the Notes
(including, without limitation, printing and engraving thereof); (vii) the
application for quotation of the Notes in the PORTAL MarketSM (including
all disbursements and listing fees); (viii) the approval of the Notes by DTC
for “book-entry” transfer (including fees, disbursements and other
out-of-pocket expenses of counsel); (ix) the rating of the Notes and the
Exchange Notes; (x) the obligations of the Trustee, any agent of the Trustee
and the counsel for the Trustee in connection with the Indenture, the Notes,
the Guarantees, the Exchange Notes and the Exchange Guarantees; (xi) the
performance by the Company and the
Guarantors of their other obligations under this Agreement; and (xii)
all travel expenses (including expenses related to chartered aircraft) of each
Initial Purchaser and the Company’s officers and employees and any other
expenses of each Initial Purchaser and the Company in connection with attending
or hosting meetings with prospective purchasers of the Notes, and expenses
associated with any electronic road show; provided, however, that the Initial Purchasers agree to pay 50% of the
expenses related to chartered aircraft.

 

7.             Conditions to Initial Purchasers’ Obligations. The
respective obligations of the Initial Purchasers hereunder are subject to the
accuracy, when made and on and as of the Closing Date, of the representations
and warranties of the Company and the Guarantors contained herein, to the
performance by the Company and the Guarantors of their respective obligations
hereunder, and to each of the following additional terms and conditions:

 

(a)           The
Initial Purchasers shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Pricing Disclosure Package or the Offering
Memorandum, or any amendment or supplement thereto, contains an untrue
statement of a fact which, in the opinion of Vinson & Elkins L.L.P.,
counsel to the Initial Purchasers, is material or 

 

22

 

omits to state a
fact which, in the opinion of such counsel, is material and is necessary to
make the statements therein not misleading.

 

(b)           All
corporate proceedings and other legal matters incident to the authorization,
form and validity of this Agreement, the Notes, the Guarantees, the Exchange
Notes, the Exchange Guarantees, the Registration Rights Agreement, the
Indenture, the Pricing Disclosure Package and the Offering Memorandum, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects
to counsel for the Initial Purchasers, and the Company and the Guarantors shall
have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.

 

(c)           Newton
W. Wilson, general counsel of the Company, Porter & Hedges, L.L.P., Wilmer
Cutler Pickerng Hale and Dorr LLP and Liskow & Lewis, a Professional Law
Corporation, shall have furnished to the Initial Purchasers their written
opinions, as counsel to the Company and the Guarantors, addressed to the
Initial Purchasers and dated the Closing Date, covering the matters set forth
in Exhibit B hereto.

 

(d)           The
Initial Purchasers shall have received from Vinson & Elkins L.L.P., counsel
for the Initial Purchasers, such opinion or opinions, dated the Closing Date,
with respect to the issuance and sale of the Notes, the Guarantees, the Pricing
Disclosure Package, the Offering Memorandum and other related matters as the
Initial Purchasers may reasonably require, and the Company shall have furnished
to such counsel such documents and information as they reasonably request for
the purpose of enabling them to pass upon such matters.

 

(e)           At
the time of execution of this Agreement, the Initial Purchasers shall have
received from Grant Thornton LLP a letter, in form and substance reasonably
satisfactory to the Initial Purchasers, addressed to the Initial Purchasers and
dated the date hereof (i) confirming that they are independent public
accountants under Rule 3600T of the Public Company Accounting Oversight Board’s
Interim Independence Standards and its interpretations and rulings and (ii)
stating, as of the date hereof (or, with respect to matters involving changes
or developments since the respective dates as of which specified financial
information is given in the Pricing Disclosure Package, as of a date not more
than three days prior to the date hereof), the conclusions and findings of such
firm with respect to the financial information and (iii) covering such other
matters as are ordinarily covered by accountants’ “comfort letters” to
underwriters in connection with registered public offerings.

 

(f)            With
respect to the letter of Grant Thornton LLP referred to in the preceding
paragraph and delivered to the Initial Purchasers concurrently with the
execution of this Agreement (the “initial letter”),
the Company shall have furnished to the Initial Purchasers a letter (the “bring-down letter”) of such accountants, addressed to the
Initial Purchasers and dated the Closing Date (i) confirming that they are
independent public accountants under Rule 3600T of the Public Company
Accounting Oversight Board’s Interim Independence Standards and its
interpretations and rulings, (ii) stating, as of the Closing Date (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in each of the Pricing
Disclosure Package or the Offering Memorandum, as of a date not more than three
days prior to the date of the Closing Date), the conclusions and 

 

23

 

findings of such
firm with respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the conclusions
and findings set forth in the initial letter.

 

(g)           Except
as described in the Pricing Disclosure Package, (i) neither the Company, any
Guarantor nor any of their respective subsidiaries shall have sustained, since
the date of the latest audited financial statements included in the Pricing
Disclosure Package, any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree or (ii)
since such date, there shall not have been any change in the capital stock or long-term
debt of the Company, any Guarantor or any of their respective subsidiaries or
any change, or any development involving a prospective change, in or affecting
the condition (financial or otherwise), results of operations, stockholders’
equity, properties, management, business or prospects of the Company, the
Guarantors and their respective subsidiaries, taken as a whole, the effect of
which, in any such case described in clause (i) or (ii), is, individually or in
the aggregate, in the judgment of the Representatives, so material and adverse
as to make it impracticable or inadvisable to proceed with the offering or the
delivery of the Notes being delivered on the Closing Date on the terms and in
the manner contemplated in the Offering Memorandum.

 

(h)           The
Company and each Guarantor shall have furnished or caused to be furnished to
the Initial Purchasers on the Closing Date certificates of officers of the
Company and each Guarantor satisfactory to the Initial Purchasers as to such
matters as the Representatives may reasonably request, including, without
limitation, a statement that:

 

(i)            The
representations, warranties and agreements of the Company and the Guarantors in
Section 2 are true and correct on and as of the Closing Date, and the
Company has complied with all its agreements contained herein and satisfied all
the conditions on its part to be performed or satisfied hereunder at or prior
to the Closing Date; and

 

(ii)           They
have carefully examined the Pricing Disclosure Package and the Offering Memorandum,
and, in their opinion, (A) the Pricing Disclosure Package, as of the Applicable
Time and as of the Closing Date, and the Offering Memorandum, as of its date
and as of the Closing Date, did not and do not contain any untrue statement of
a material fact and did not and do not omit to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading and (B) since the date of the Pricing Disclosure
Package and the Offering Memorandum, no event has occurred which should have
been set forth in a supplement or amendment to the Pricing Disclosure Package
or the Offering Memorandum.

 

(i)            The
Notes shall have been designated for trading on the PORTAL MarketSM.

 

(j)            The
Company and the Guarantors shall have executed and delivered the Registration
Rights Agreement, and the Initial Purchasers shall have received an original
copy thereof, duly executed by the Company and the Guarantors.

 

24

 

(k)           The
Company, the Guarantors and the Trustee shall have executed and delivered the
Indenture, and the Initial Purchasers shall have received an original copy
thereof, duly executed by the Company, the Guarantors and the Trustee.

 

(l)            Subsequent
to the execution and delivery of this Agreement there shall not have occurred
any of the following:  (i) trading in
securities generally on the New York Stock Exchange or the American Stock
Exchange or in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or materially limited or the settlement of such trading generally
shall have been materially disrupted or minimum prices shall have been
established on any such exchange or such market by the Commission, by such
exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been an escalation in hostilities involving the
United States or there shall have been a declaration of a national emergency or
war by the United States or (iv) there shall have occurred such a material
adverse change in general economic, political or financial conditions,
including, without limitation, as a result of terrorist activities after the
date hereof (or the effect of international conditions on the financial markets
in the United States shall be such), as to make it, in the judgment of the
Representatives, impracticable or inadvisable to proceed with the offering or
delivery of the Notes being delivered on the Closing Date on the terms and in
the manner contemplated in the Offering Memorandum or that, in the judgment of
the Representatives, would materially and adversely affect the financial
markets or the markets for the Notes and other debt securities.

 

All opinions, letters,
evidence and certificates mentioned above or elsewhere in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Initial Purchasers.

 

8.             Indemnification and Contribution.

 

(a)           The
Company and each Guarantor, hereby agree, jointly and severally, to indemnify
and hold harmless each Initial Purchaser, its directors, officers and employees
and each person, if any, who controls any Initial Purchaser within the meaning
of Section 15 of the Securities Act, from and against any loss, claim, damage
or liability, joint or several, or any action in respect thereof (including,
but not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of Notes), to which that Initial Purchaser, director,
officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Free Writing Offering
Document, any Preliminary Offering Memorandum, the Pricing Disclosure Package
or the Offering Memorandum or in any amendment or supplement thereto, (B) in
any Blue Sky application or other document prepared or executed by the Company
or any Guarantor (or based upon any written information furnished by the
Company or any Guarantor) specifically for the purpose of qualifying any or all
of the Notes under the securities laws of any state or other jurisdiction (any
such application, document or information being hereinafter called a “Blue Sky Application”) or (C) in any materials or information provided to investors by, or with
the approval of, the Company in connection with the marketing of the offering
of the Notes 

 

25

 

(“Marketing Materials”),
including any roadshow or investor presentations made to investors by the
Company (whether in person or electronically) or (ii) the omission or
alleged omission to state in any Free Writing Offering Document, any
Preliminary Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum, or in any amendment or supplement thereto, or in any Blue Sky
Application or in any Marketing Materials, any material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading, and shall reimburse each Initial Purchaser and
each such director, officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser, director, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided,
however, that the Company and the
Guarantors shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged omission
made in any Free Writing Offering Document, any Preliminary Offering
Memorandum, the Pricing Disclosure Package or the Offering Memorandum, or in
any such amendment or supplement thereto, or in any Blue Sky Application or in
any Marketing Materials, in reliance upon and in conformity with written
information concerning such Initial Purchaser furnished to the Company through
the Representatives by or on behalf of any Initial Purchaser specifically for
inclusion therein, which information consists solely of the information
specified in Section 8(e). The foregoing indemnity agreement is in addition to
any liability that the Company or the Guarantors may otherwise have to any
Initial Purchaser or to any director, officer, employee or controlling person
of that Initial Purchaser.

 

(b)           Each
Initial Purchaser, severally and not jointly, hereby agrees to indemnify and
hold harmless the Company, each Guarantor, their respective officers and
employees, each of their respective directors, and each person, if any, who
controls the Company or any Guarantor within the meaning of Section 15 of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company, any Guarantor
or any such director, officer, employee or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in any
Free Writing Offering Document, any Preliminary Offering Memorandum, the
Pricing Disclosure Package or the Offering Memorandum or in any amendment or
supplement thereto, (B) in any Blue Sky Application, or (C) in any Marketing
Materials or (ii) the omission or alleged omission to state in any Free Writing
Offering Document, any Preliminary Offering Memorandum, the Pricing Disclosure
Package or the Offering Memorandum, or in any amendment or supplement thereto,
or in any Blue Sky Application or in any Marketing Materials any material fact
necessary to make the statements therein not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information concerning such Initial Purchaser furnished to the Company through
the Representatives by or on behalf of that Initial Purchaser specifically for
inclusion therein, which information is limited to the information set forth in
Section 8(e). The foregoing indemnity agreement is in addition to any liability
that any Initial Purchaser may otherwise have to the Company, any Guarantor or
any such director, officer, employee or controlling person.

 

26

 

(c)           Promptly
after receipt by an indemnified party under this Section 8 of notice of any
claim or the commencement of any action, the indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party under
this Section 8, notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to notify the indemnifying party
shall not relieve it from any liability that it may have under this Section 8
except to the extent it has been materially prejudiced by such failure and; provided, further, that the failure to notify the indemnifying party
shall not relieve it from any liability that it may have to an indemnified
party otherwise than under this Section 8. If any such claim or action shall be
brought against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the Initial Purchasers shall have the right to
employ counsel to represent jointly the Initial Purchasers and their respective
directors, officers, employees and controlling persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Initial Purchasers against the Company or any Guarantor under this
Section 8, if (i) the Company, the Guarantors and the Initial Purchasers shall have
so mutually agreed; (ii) the Company and the Guarantors have failed within a
reasonable time to retain counsel reasonably satisfactory to the Initial
Purchasers; (iii) the Initial Purchasers and their respective directors,
officers, employees and controlling persons shall have reasonably concluded,
based on the advice of counsel, that there may be legal defenses available to
them that are different from or in addition to those available to the Company
and the Guarantors; or (iv) the named parties in any such proceeding (including
any impleaded parties) include both the Initial Purchasers or their respective
directors, officers, employees or controlling persons, on the one hand, and the
Company and the Guarantors, on the other hand, and representation of both sets
of parties by the same counsel would present a conflict due to actual or
potential differing interests between them, and in any such event the fees and
expenses of such separate counsel shall be paid by the Company and the
Guarantors. No indemnifying party shall (A) without the prior written consent
of the indemnified parties (which consent shall not be unreasonably withheld),
settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (B) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if
there be a final judgment or the plaintiff in any such action, the indemnifying
party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment.

 

(d)           If
the indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or 8(b) in

 

27

 

respect of any
loss, claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability, or action in
respect thereof, (i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other, from the offering of the Notes or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Guarantors, on the one hand, and the Initial Purchasers,
on the other, with respect to the statements or omissions that resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchasers, on the
other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Notes purchased
under this Agreement (before deducting expenses) received by the Company and
the Guarantors, on the one hand, and the total discounts received by the
Initial Purchasers with respect to the Notes purchased under this Agreement, on
the other hand, bear to the total gross proceeds from the offering of the Notes
under this Agreement as set forth on the cover page of the Offering Memorandum.
The relative fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Company, the
Guarantors, or the Initial Purchasers, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent
such statement or omission. For purposes of the preceding two sentences, the
net proceeds deemed to be received by the Company shall be deemed to be also
for the benefit of the Guarantors, and information supplied by the Company
shall also be deemed to have been supplied by the Guarantors. The Company, the
Guarantors, and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation that does
not take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss, claim,
damage or liability, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. Notwithstanding
the provisions of this Section 8(d), no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the net proceeds from
the sale to Eligible Purchasers of the Notes initially purchased by it exceeds
the amount of any damages that such Initial Purchaser has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Initial Purchasers’ obligations to contribute as
provided in this Section 8(d) are several in proportion to their respective
obligations and not joint.

 

(e)           The
Initial Purchasers severally confirm and the Company and the Guarantors
acknowledge and agree that the statements with respect to the offering of the
Notes by the Initial Purchasers set forth in the last paragraph on the front
cover of the Offering Memorandum and in the eleventh, twelfth and thirteenth
paragraphs of the section entitled “Plan 

 

28

 

of Distribution”
in the Pricing Disclosure Package and the Offering Memorandum, to the extent
they relate to the Initial Purchasers, are correct and constitute the only
information concerning such Initial Purchasers furnished in writing to the
Company or any Guarantor by or on behalf of the Initial Purchasers specifically
for inclusion in the Preliminary Offering Memorandum, the Pricing Disclosure
Package and the Offering Memorandum or in any amendment or supplement thereto.

 

9.             Defaulting Initial Purchasers. If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the remaining non-defaulting Initial Purchasers shall be obligated
to purchase the Notes that the defaulting Initial Purchaser agreed but failed
to purchase on the Closing Date in the respective proportions that the number
of Notes set opposite the name of each remaining non-defaulting Initial
Purchaser in Schedule I hereto bears to the total number of Notes set opposite
the names of all the remaining non-defaulting Initial Purchasers in Schedule I
hereto; provided, however,
that the remaining non-defaulting Initial Purchasers shall not be obligated to
purchase any of the Notes on the Closing Date if the aggregate principal amount
of Notes that the defaulting Initial Purchaser or Initial Purchasers agreed but
failed to purchase on such date exceeds 9.09% of the aggregate principal amount
of Notes to be purchased on the Closing Date, and any remaining non-defaulting
Initial Purchasers shall not be obligated to purchase more than 110% of the
aggregate principal amount of Notes that it agreed to purchase on the Closing
Date pursuant to the terms of Section 3. If the foregoing maximums are
exceeded, the remaining non-defaulting Initial Purchasers, or those other
Initial Purchasers satisfactory to the Initial Purchasers who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Notes to be purchased on the Closing
Date. If the remaining Initial Purchasers or other Initial Purchasers
satisfactory to the Initial Purchasers do not elect to purchase the Notes that
the defaulting Initial Purchaser or Initial Purchasers agreed but failed to
purchase on the Closing Date, this Agreement shall terminate without liability
on the part of any non-defaulting Initial Purchaser or the Company or the
Guarantors, except that the Company and the Guarantors will continue to be
liable for the payment of expenses to the extent set forth in Sections 6 and 11.
As used in this Agreement, the term “Initial Purchaser” includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule I hereto that, pursuant to this Section 10, purchases Notes
that a defaulting Initial Purchaser agreed but failed to purchase.

 

Nothing contained herein
shall relieve a defaulting Initial Purchaser of any liability it may have to
the Company or any Guarantor for damages caused by its default. If other
Initial Purchasers are obligated or agree to purchase the Notes of a defaulting
or withdrawing Initial Purchaser, either the remaining Initial Purchasers or
the Company may postpone the Closing Date for up to seven full business days in
order to effect any changes that in the opinion of counsel for the Company or
counsel for the Initial Purchasers may be necessary in the Pricing Disclosure
Package, the Offering Memorandum or in any other document or arrangement.

 

10.           Termination. The obligations of the Initial Purchasers
hereunder may be terminated by the Initial Purchasers by notice given to and
received by the Company prior to delivery of and payment for the Notes if,
prior to that time, any of the events described in 

 

29

 

Sections 7(g) or
(l) shall have occurred or if the Initial Purchasers shall decline to purchase
the Notes for any reason permitted under this Agreement.

 

11.           Reimbursement of Initial
Purchasers’ Expenses. If (a) the Company fails to tender the Notes
for delivery to the Initial Purchasers by reason of any failure, refusal or
inability on the part of the Company or any Guarantor to perform any agreement
on their part to be performed, or because any other condition of the obligations
hereunder required to be fulfilled by the Company or any Guarantor is not
fulfilled or (b) the Initial Purchasers shall decline to purchase the Notes for
any reason permitted under this Agreement, the Company and the Guarantors shall
reimburse the Initial Purchasers for all reasonable out-of-pocket expenses
(including fees and disbursements of counsel) incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase of the
Notes, and upon demand the Company and the Guarantors shall pay the full amount
thereof to the Initial Purchasers; provided that,
in the event that the Initial Purchasers decline to purchase the Notes pursuant
to Section 7(d) or Section 7(l) of this Agreement, the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand,
each agree to pay 50% of the fees and expenses associated with the roadshow
related to the offering of the Notes and will otherwise be responsible for the
other fees and expenses (including fees and disbursements of counsel) they
incur in connection with the offering of the Notes. If this Agreement is
terminated pursuant to Section 10 by reason of the default of one or more
Initial Purchasers, the Company and the Guarantors shall not be obligated to reimburse
any defaulting Initial Purchaser on account of those expenses.

 

12.           Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:

 

(a)           if
to the Initial Purchasers, shall be delivered or sent by hand delivery, mail,
telex, overnight courier or facsimile transmission to Lehman Brothers Inc., 745
Seventh Avenue, New York, New York 10019, Attention:  Syndicate Registration (Fax:  646-834-8133) with a copy to Vinson &
Elkins L.L.P., First City Tower, 1001 Fannin Street, Suite 2500, Houston, Texas
77002, Attention:  Alan Beck (Fax:  713-615-5620), and with a copy, in the case
of any notice pursuant to Section 8(c), to the Director of Litigation, Office
of the General Counsel, Lehman Brothers Inc., 399 Park Avenue, 10th Floor, New
York, New York  10022 (Fax:  212-520-0421);

 

(b)           if
to the Company or any Guarantor, shall be delivered or sent by mail, telex,
overnight courier or facsimile transmission to Key Energy Services, Inc., 1301
McKinney, Suite 1800, Houston, Texas 77010, Attention:  Newton W. Wilson III (Fax:  713-651-4551), with a copy to Porter &
Hedges, L.L.P., 1000 Main Street, 36th Floor, Houston, Texas 77002, Attention:  William W. Wiggins (Fax:  713-226-6227);

 

provided,
however, that any notice to an Initial
Purchaser pursuant to Section 8(c) shall be delivered or sent by hand delivery,
mail, telex or facsimile transmission to such Initial Purchaser at its address
set forth in its acceptance telex to Lehman Brothers Inc., which address will
be supplied to any other party hereto by Lehman Brothers Inc. upon request. Any
such statements, requests, notices or agreements shall take effect at the time
of receipt thereof. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the Initial
Purchasers by Lehman Brothers Inc.

 

30

 

13.           Persons Entitled to Benefit of Agreement. This Agreement
shall inure to the benefit of and be binding upon the Initial Purchasers, the
Company, the Guarantors and their respective successors. This Agreement and the
terms and provisions hereof are for the sole benefit of only those persons,
except that the representations, warranties, indemnities and agreements of the
Company and the Guarantors contained in this Agreement shall also be deemed to
be for the benefit of directors, officers and employees of the Initial
Purchasers and each person or persons, if any, controlling any Initial
Purchaser within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 13, any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision contained
herein.

 

14.           Survival. The respective indemnities, representations,
warranties and agreements of the Company, the Guarantors and the Initial
Purchasers contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Notes and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.

 

15.           Definition of the Terms “Business Day,” “Affiliate” and “Subsidiary.”  For purposes of this Agreement, (a) “business
day” means any day on which the New York Stock Exchange, Inc. is open for
trading and (b) “affiliate” and “subsidiary” have the meanings set forth in
Rule 405 under the Securities Act.

 

16.           Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of New York.

 

17.           No Fiduciary Duty. The Company and the
Guarantors acknowledge and agree that in connection with this offering, or any
other services the Initial Purchasers may be deemed to be providing hereunder,
notwithstanding any preexisting relationship, advisory or otherwise, between
the parties or any oral representations or assurances previously or
subsequently made by the Initial Purchasers: (i) no fiduciary or agency
relationship between the Company, any Guarantor and any other person, on the
one hand, and the Initial Purchasers, on the other, exists; (ii) the Initial
Purchasers are not acting as advisors, expert or otherwise, to the Company or
the Guarantors, including, without limitation, with respect to the
determination of the purchase price of the Notes, and such relationship between
the Company and the Guarantors, on the one hand, and the Initial Purchasers, on
the other, is entirely and solely commercial, based on arms-length
negotiations; (iii) any duties and obligations that the Initial Purchasers may
have to the Company and the Guarantors shall be limited to those duties and
obligations specifically stated herein; and (iv) the Initial Purchasers and
their respective affiliates may have interests that differ from those of the
Company and the Guarantors. The Company and the Guarantors hereby waive any
claims that the Company and the Guarantors may have against the Initial
Purchasers with respect to any breach of fiduciary duty in connection with the
Notes.

 

18.           Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.

 

31

 

19.           Headings. The headings herein are inserted for convenience
of reference only and are not intended to be part of, or to affect the meaning
or interpretation of, this Agreement.

 

[Signature page follows.]

 

32

 

If the foregoing
correctly sets forth the agreement among the Company, the Guarantors, and the
Initial Purchasers, please indicate your acceptance in the space provided for
that purpose below.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Key Energy Services,
  Inc.

  
	
   

  	
   

  
	
   

  	
  By 

  	
  /s/ Newton W. Wilson
  III

  	
   

  
	
   

  	
   

  	
  Name: Newton W. Wilson
  III

  	
   

  
	
   

  	
   

  	
  Title: Senior Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Guarantors:

  
	
   

  	
   

  
	
   

  	
  Key Energy Services
  Mexico, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Newton W. Wilson
  III

  	
   

  
	
   

  	
   

  	
  Newton W. Wilson III

  	
   

  
	
   

  	
   

  	
  Vice
  President and Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Petroleum Well Service,
  Inc.

  
	
   

  	
  Moncla Well Service,
  Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: 

  	
  /s/ Newton W. Wilson
  III

  	
   

  
	
   

  	
   

  	
  Newton W. Wilson III

  	
   

  
	
   

  	
   

  	
  President
  and Secretary

  	
   

  
	
   

  	
   

  	
   

  	
   

  
					

 

Signature Page to Purchase
Agreement

 

 

	
   

  	
  Key Energy Services,
  LLC

  	
   

  
	
   

  	
  Key Energy Pressure
  Pumping Services, LLC

  	
   

  
	
   

  	
  Key Energy Fishing
  & Rental Services, LLC

  	
   

  
	
   

  	
  Key Energy Shared
  Services, LLC

  	
   

  
	
   

  	
  Misr Key Energy Investments,
  LLC*

  	
   

  
	
   

  	
  Misr Key Energy
  Services, LLC*

  	
   

  
	
   

  	
  Key Electric Wireline
  Services, LLC

  	
   

  
	
   

  	
  Key Energy Services
  (Mexico), LLC

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	 
	
   

  	
  By 

  	
  /s/ Newton W. Wilson
  III

  	
   

  
	 
	
   

  	
   

  	
  Newton W. Wilson III

  	
   

  
	 
	
   

  	
   

  	
  Vice
  President and Secretary

  	
   

  
						

 

	 
	
   

  	
   

  	
  *Executing in the
  capacity of President

  	
   

  
	 
	
   

  	
   

  	
   

  	
   

  
	 
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Brothers Oilfield
  Services & Supply, L.L.C.

  
	
   

  	
  4M Equipment &
  Leasing, L.L.C.

  
	
   

  	
  LCM Industries, L.L.C.

  
	
   

  	
  Moncla Marine, L.L.C.

  
	
   

  	
  Moncla Drilling, L.L.C.

  
	
   

  	
  Moncla Marine Crew
  Boats, L.L.C.

  
	
   

  	
  Moncla Marine
  Operations, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 1, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 2, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 3, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 4, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 5, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 6, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 8, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 9, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 10, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 11, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 12, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 14, L.L.C.

  
	
   

  	
  Moncla Marine Vessel
  No. 15, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	 
	
   

  	
  By 

  	
  /s/ Newton W. Wilson
  III

  	
   

  
	 
	
   

  	
   

  	
  Newton W. Wilson III

  	
   

  
	 
	
   

  	
   

  	
  Manager

  	
   

  
	
   

  	
   

  
					

 

Signature Page to Purchase
Agreement

 

 

	
  Accepted:

  	
   

  
	
   

  	
   

  
	
  Lehman Brothers Inc.

  	
   

  
	
  Morgan Stanley &
  Co. Incorporated

  	
   

  
	
  Banc of America
  Securities LLC

  	
   

  
	
  As Representatives of
  the several Initial Purchasers

  	
   

  
	
    named in
  Schedule I attached hereto

  	
   

  
	
   

  	
   

  
	
  By LEHMAN BROTHERS INC., as Authorized Representative

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Timothy N. Hartzell

  	
   

  	
   

  
	
  Name:
  Timothy N. Hartzell

  	
   

  
	
  Title:Manager

  	
   

  
				

 

Signature
Page to Purchase Agreement

 

 

Schedule V

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00132-of-00352.parquet"}]]