KEY ENERGY SERVICES INC (Form: 8-K, Received: 10/31/2019 17:11:51)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 29, 2019

KEY ENERGY SERVICES, INC.

(Exact name of registrant as specified in its charter)


Delaware	001-08038	04-2648081
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1301 McKinney Street, Suite 1800

Houston, Texas 77010

(Address of principal executive offices and Zip Code)

713-651-4300

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange

on which registered

Common Stock, $0.01 par value

KEG

New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Item 1.01 Entry into a Material Definitive Agreement.

Key Energy Services, Inc. (“Key” or the “Company”) has engaged Moelis & Company LLC as its financial advisor and Sullivan & Cromwell LLP as its legal advisor to assist the Company in analyzing various strategic alternatives to address its capital structure and to position the Company for future success.

In connection with this strategic review, the Company elected not to make a scheduled interest payment due October 18, 2019 under the Term Loan and Security Agreement, dated as of December 15, 2016 (the “Term Loan Agreement”), by and among Key, Cortland Products Corp., as agent, and the lenders party thereto (the “Term Loan Lenders”) relating to the Company’s senior secured term loan. The Company’s failure to make such interest payment resulted in a default under the Term Loan Agreement and a “cross default” under the Loan and Security Agreement, dated as of April 5, 2019 (as further amended, restated, supplemented or otherwise modified from time to time, the “ABL Credit Agreement”) by and among Key, as borrower, the Lenders party thereto (the “ABL Lenders” and, collectively with the Term Loan Lenders, the “Lenders”) and Bank of America, N.A. as Administrative Agent and Sole Collateral Agent (such defaults, the “Specified Defaults”).

On October 29, 2019, the Company entered into forbearance agreements with Term Loan Lenders collectively holding over 99.5% of the principal amount of the outstanding term loans (the “Term Loan Forbearance Agreement”) and all of the ABL Lenders (the “ABL Forbearance Agreement” and, collectively, the “Forbearance Agreements”). Pursuant to the Forbearance Agreements, the Lenders party thereto have agreed that, until the earlier of December 6, 2019 or the occurrence of certain specified early termination events, such Lenders will forbear from exercising any default-related rights and remedies with respect to the Specified Defaults. The Forbearance Agreements contain certain representations and warranties of the Company and covenants with which the Company must comply during the forbearance period, including a requirement to maintain aggregate bank and book cash balances of at least $10,000,000 as measured on a weekly basis. The failure to comply with such covenants, among other things, would result in the early termination of the forbearance period.

The foregoing description of the Forbearance Agreements is qualified in its entirety by reference to the complete text of (i) the Term Loan Forbearance Agreement, attached as Exhibit 10.1 hereto and (ii) the ABL Forbearance Agreement, attached as Exhibit 10.2 hereto, each incorporated herein by reference.

Item 8.01 Other Events.

On October 31, 2019, Key issued a press release relating to the events described in Item 1.01 above. A copy of the press release is filed as Exhibit 99.1 to this report. The information set forth under Item 1.01 above is hereby incorporated by reference into this Item 8.01.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.



10.1		Forbearance Agreement dated October 29, 2019, by and among Key Energy Services, Inc., as borrower, the Lenders party thereto, and Cortland Products Corp., as agent. †

10.2		Forbearance Agreement dated October 29, 2019, by and among Key Energy Services, Inc., Key Energy Services, LLC, the Lenders party thereto, and Bank of America, N.A., as administrative agent. †

99.1		Press release dated October 31, 2019.

†	Certain portions of this exhibit (indicated by “[***]”) have been omitted pursuant to Item 601(b)(10) of Regulation S-K.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	KEY ENERGY SERVICES, INC.

Date: October 31, 2019	By:	/s/ Katherine I. Hargis
		Katherine I. Hargis
		Senior Vice President, General Counsel & Corporate Secretary

Exhibit 10.1

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY

[***], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE

COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

EXECUTION VERSION

FORBEARANCE AGREEMENT

This FORBEARANCE AGREEMENT (this “Agreement”), dated as of October 29, 2019, to that certain Term Loan and Security Agreement, dated as of December 15, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “Term Loan Agreement”), by and among Key Energy Services, Inc., as borrower (“Borrower”), the Lenders party thereto from time to time (collectively, the “Lenders”), and Cortland Products Corp., as Agent (in such capacity, the “Agent”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Term Loan Agreement.

RECITALS

WHEREAS, Borrower, the Lenders and the Agent are parties to the Term Loan Agreement;

WHEREAS, Borrower did not make the interest payment due on October 18, 2019 in a timely manner in accordance with the Term Loan Agreement;

WHEREAS, the failure to make such payment has given rise to Events of Default pursuant to Sections 12.1(a) and 12.1(f) of the Term Loan Agreement (collectively, the “Specified Defaults”);

WHEREAS, Borrower has requested that during the Forbearance Period (as hereinafter defined), the Agent and the Lenders party hereto (sometimes referred to herein individually as a “Lender Party,” and collectively as the “Lender Parties”) agree to forbear from exercising any of their Default or Event of Default related rights and remedies against Borrower and the other Loan Parties solely with respect to the Specified Defaults in accordance herewith that would otherwise be exercisable by the Lender Parties but for this Agreement; and

WHEREAS, subject to the terms and conditions set forth herein, the Lender Parties are willing to agree to such a forbearance but only on the terms and conditions contained in this Agreement.

NOW, THEREFORE, in consideration of the foregoing, the terms, covenants and conditions contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

SECTION 1. Confirmation by Borrower of Specified Defaults. Borrower and each other Obligor each acknowledges and agrees that (i) the Specified Defaults constituted Defaults on October 18, 2019 and Events of Default under Sections 12.1(a) and 12.1(f) of the Term Loan Agreement, and (ii) no Events of Default or Defaults (other than the Specified Defaults) have occurred and are continuing as of the date hereof.

SECTION 2. Amounts Owing. Each Obligor acknowledges and agrees that, as of the date hereof, the aggregate principal amount of Loans outstanding under the Term Loan Agreement is $243,125,000.00, plus accrued and unpaid interest and fees thereon. Such Obligations, together with all other outstanding Obligations owing pursuant to the terms of the Loan Documents, including interest, fees, expenses and other charges, are validly owing and are not subject to any right of offset, deduction, claim, or counterclaim in favor of any Obligor.

SECTION 3. Forbearance; Forbearance Default Rights and Remedies.

(a) Effective as of the date hereof, in reliance upon the representations, warranties and covenants of the Obligors contained in this Agreement, and solely upon the terms and subject to the conditions of this Agreement, each of the Lender Parties agrees that until the termination or expiration of the Forbearance Period, such Lender Party will forbear from exercising any of their Default or Event of Default related rights and remedies (whether under the Term Loan Agreement, any other Loan Document, or at law or in equity) against Borrower, any other Obligor or any of their subsidiaries or affiliates solely with respect to the Specified Defaults. As used herein, the term “Forbearance Period” shall mean the period beginning on the date hereof and ending on the earlier of (i) a Forbearance Termination Event (as defined below) and (ii) December 6, 2019; provided that, notwithstanding anything to the contrary herein, the Forbearance Period shall terminate automatically and without notice of termination immediately upon (A) the occurrence of an Event of Default of the type set forth in Section 12.1(h) of the Term Loan Agreement, or (B) the termination or expiration of any other forbearance granted by another creditor pursuant to the ABL Forbearance Agreement (as defined below).

(b) The occurrence of any of the following events or circumstances shall immediately and automatically constitute a termination event with respect to the Forbearance Period (each, a “Forbearance Termination Event”) unless waived by the Agent at the request of Lender Parties representing a majority of the principal amount of Loans held by all of the Lender Parties and outstanding under the Term Loan Agreement within one (1) business day of receipt of notice of such Forbearance Termination Event:

the occurrence of any Default or Event of Default under the Term Loan Agreement or any other Loan Document that is not a Specified Default;

ii.

the occurrence of any breach by the Borrower or any Obligor of any covenant, term or other provision of this Agreement;

iii.

any representation or warranty made by the Borrower or any Obligor herein or which is contained in any certificate, document or financial or other statement furnished by the Borrower at any time under or in connection with this Agreement or otherwise shall prove to have been inaccurate in any material respect on or as of the date made;

iv.

the commencement of any action, suit, litigation or other proceeding against the Agent or any Lender Party (i) by any Obligor; or (ii) by any Person asserting claims relating in any way to any of the Borrower, any Obligor, the Term Loan Agreement, the Loan Documents, or the Collateral;

any payment, or setting aside of funds, by the Borrower, any Obligor, or any of their respective Subsidiaries for the purpose of making any payments, or otherwise transfer any economic value (excluding the payment of any reasonable and documented fees and expenses of one legal counsel to funds affiliated with Platinum Equity Advisors, LLC of up to $150,000 (or such other amount as agreed by the Lender Parties)) to any direct or indirect equity holder of the Borrower in its capacity as such;

vi.

any payment, or setting aside of funds, by the Borrower, any Obligor, or any of their respective Subsidiaries, including with respect to interest, principal, fees, expenses, indemnification or otherwise, on account of or in connection with any Debt for Borrowed Money (other than with respect to the Term Loan Agreement, the ABL Credit Agreement and Capital Leases existing as of the date hereof) or make any payment with respect to interest or principal on account of any such Debt;

vii.

the failure by the Borrower, on the close of business of each Monday during the Forbearance Period, to maintain aggregate bank and book cash balances of at least $10,000,000;

viii.

the Borrower or any Obligor shall make, enter into or implement any amendment, waiver, supplement or other modification to any employment agreement or employee compensation plan, in each case, solely to the extent such agreement or compensation plan relates to an Executive Officer (as defined below), or pay or cause to be paid any amount contemplated by such agreements or plans before the date on which such amount becomes due and payable pursuant to the terms of the such agreements or plans, as applicable, or pay or cause to be paid any bonus, incentive, retention, severance, change of control or termination payments pursuant to the terms of such agreements or plans (other than in accordance with the terms of such agreements or plans as in effect immediately prior to the effectiveness of this Agreement), as applicable, including, without limitation, any transaction or other bonus previously awarded but unpaid (it being understood by the parties hereto that “Executive Officer” means the Borrower’s Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, General Counsel, or Principal Accounting Officer);

ix.

the commencement of any action, suit, litigation or other proceeding by any Lender other than a Lender Party under the Term Loan Agreement or any agent, trustee or representative on behalf of any such Lender against the Borrower or any Obligor or set off against any of their respective property, in each case, with respect to the exercise of remedies or enforcement of the Term Loan Agreement or the obligations thereunder;

the commencement of any action, suit, litigation or other proceeding by any lender under the ABL Credit Agreement or any agent, trustee or representative on behalf of any such lender against the Borrower or any Obligor or set off against any of their respective property, in each case, with respect to the exercise of remedies or enforcement of the ABL Credit Agreement or the obligations thereunder; and

xi.

the failure to comply with Section 12(b) by the time periods set forth therein.

(c) Upon the expiration or termination of the Forbearance Period, the agreement of the Lender Parties hereunder to forbear from exercising their respective Default or Event of Default related rights and remedies with respect to the Specified Defaults shall immediately terminate without the requirement of any demand, presentment, protest, or notice of any kind, all of which Borrower and the other Obligors each waives. Borrower and the other Obligors each agree that any or all of the Lender Parties may at any time thereafter proceed to exercise any and all of their respective rights and remedies under any or all of the Term Loan Agreement, any other Loan Document and/or applicable law, including, without limitation, their respective rights and remedies with respect to the Specified Defaults.

(d) Each of the Lender Parties hereby authorizes and requests that the Agent enter into this Agreement.

(e) This Agreement is limited in nature and nothing contained herein is intended, or shall be deemed or construed, to (i) constitute a waiver of any Specified Default or any existing or future Defaults or Events of Default (including any Event of Default arising from the Specified Defaults) or compliance with any term or provision of the Loan Documents or at law or in equity, (ii) establish a custom or course of dealing between the Obligors, on the one hand, and the Agent and/or any Lender Party, on the other hand, or (iii) waive, alter or impair the obligations or any of the rights or remedies of the Agent or the Lender Parties under the Loan Documents, at law or in equity.

(f) For the avoidance of doubt and notwithstanding anything to the contrary in this Agreement or in any Loan Document, to the extent that the Term Loan Agreement or any other Loan Document prohibits, restricts or limits the use of or reliance on any “basket” by any of the Obligors or any of their respective Subsidiaries upon the occurrence and during the continuance of a Default or Event of Default, then, notwithstanding the forbearance provided herein with respect to the Specified Defaults, such prohibition, restriction or limitation shall continue to apply during the Forbearance Period and thereafter so long as the Specified Defaults or any other Default or Event of Default exists, and nothing herein shall be construed as permitting the Obligors or any of their Subsidiaries to take any action that is not permitted to be taken, or have any right not allowed, upon the occurrence and during the continuance of a Default or Event of Default pursuant to the terms of the Loan Documents.

SECTION 4. Effect of Forbearance. For the avoidance of doubt, the Borrower and each other Obligor hereby acknowledges and agrees that this Agreement is a Loan Document. Except as expressly stated herein, the provisions of the Term Loan Agreement and the other Loan Documents have not been modified, are and shall remain in full force and effect in accordance with their terms, and shall constitute and remain as the legal, valid, binding, and enforceable obligations of the Borrower and the other Obligors, all of which are ratified and affirmed in all respects and shall continue in full force and effect. The parties hereto agree that the running of all statutes of limitation and the doctrine of laches applicable to all claims or causes of action that the Agent and/or any Lender may be entitled to take or bring in order to enforce its rights and remedies against the Borrower and/or any Obligor are, to the fullest extent permitted by law, tolled and suspended during the Forbearance Period.

SECTION 5. Representations and Warranties. To induce the Lenders and the Agent to execute and deliver this Agreement, on behalf of itself and the other Obligors, Borrower hereby represents and warrants to the Lenders and the Agent that:

(a) as of the date hereof, and after giving effect to this Agreement, the representations and warranties set forth in Section 9 of the Term Loan Agreement (other than Sections 9.1.4(b) and 9.1.8, in each case, solely as they relate to the Specified Defaults or the event of default arising under Section 12.1(f) of the ABL Credit Agreement as a result of the Specified Defaults) and in the other Loan Documents shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the date hereof with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such earlier date;

(b) immediately before and after giving effect to this Agreement, no Default or Event of Default (other than any Specified Default) has occurred and is continuing;

(c) each of Borrower and each other Obligor has taken all necessary action to authorize the execution, delivery and performance of this Agreement, this Agreement has been duly executed and delivered by each of Borrower and each other Obligor and this Agreement is the legal, valid and binding obligation of each of Borrower and each other Obligor, enforceable against it 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 principles of law; and

(d) other than the Third Party Forbearance Agreement (as defined below) with respect to the ABL Credit Agreement (the “ABL Forbearance Agreement”), as of the date hereof, no Third Party Forbearance Agreements exist.

SECTION 6. Effectiveness. This Agreement shall become effective at the time (the “Agreement Effective Date”) that all of the following conditions precedent have been met:

(a) Agreement. The Agent shall have received duly executed signature pages for this Agreement signed by the Agent, the Lender Parties, Borrower and other Obligors;

(b) Representations and Warranties. The representations and warranties contained in Section 5 shall be true and correct;

(c) ABL Forbearance Agreement. The ABL Forbearance Agreement shall be effective and on terms acceptable to the Lender Parties;

(d) Expenses: (i) The Borrower shall have paid in full to the extent invoiced at least two (2) business days prior to the satisfaction of the condition set forth in Section 6(a) all of the reasonable and documented fees and expenses of (A) Davis Polk as counsel to the Lenders and (B) to the extent then due and payable pursuant to the terms of its fee letter, Perella Weinberg Partners, as financial advisor to the Lender Parties (the “Advisor”); and (ii) each Obligor hereby reconfirms its joint and several obligations pursuant to Section 11.10 of the Term Loan Agreement to pay and reimburse the Agent and the Lender Parties for all reasonable costs and expenses (including, without limitation, the fees of Davis Polk and the Advisor referred to in

clause (i)(y) above) incurred in connection with the negotiation preparation, execution and delivery of this Agreement and all other documents and instruments delivered in connection herewith; and

(e) The Advisor and the Lender Parties shall have received a preliminary cash flow forecast of the Borrower and its Subsidiaries covering the 13-week period ending January 17, 2020, in Excel format (the “13-Week Forecast”), which 13-Week Forecast and any amendments thereto shall reflect, for the periods covered thereby, projected weekly disbursements (in line item detail), cash receipts (in line item detail), and ending cash for each week covered by the 13-Week Forecast.

SECTION 7. Reaffirmation of Guarantee and Security. Each Obligor, by its signature below, hereby agrees that:

(a) (i) after giving effect to this Agreement, the Security Documents shall continue to be in full force and effect and (ii) affirms and confirms all of its obligations and liabilities under the Term Loan Agreement and each other Loan Document, in each case after giving effect to this Agreement, including its guarantee of the Guaranteed Obligations and the pledge of and/or grant of a security interest in its assets as Collateral pursuant to the Security Documents to secure such Secured Obligations, all as provided in the Security Documents as originally executed, and acknowledges and agrees that such obligations, liabilities, guarantee, pledge and grant continue in full force and effect in respect of, and to secure, the Guaranteed Obligations under the Term Loan Agreement and the other Loan Documents, in each case after giving effect to this Agreement; and

(b) after giving effect to this Agreement, each Lien granted by it to the Agent for the benefit of the Secured Parties under each of the Loan Documents to which it is a party shall (i) continue in full force and effect during the term of the Term Loan Agreement and (ii) continue to secure the Guaranteed Obligations, in each case on and subject to the terms and conditions set forth in the Term Loan Agreement and the other Loan Documents.

SECTION 8. Release.

(a) In consideration of this Agreement and agreements of the Agent and Lender Parties contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower and the other Obligors (collectively, the “Releasing Parties”), each on behalf of itself and its successors, assigns, and other legal representatives hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges Agent, the Lender Parties, solely in their capacities as Lenders, and their respective present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives, in each case solely in their capacities relative to the Lender Parties and not in any other capacity such party may have relative to the Releasing Parties (Agent, each Lender Party, and all such other Persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Borrower, the Obligors or any of their respective successors, assigns or other legal

representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Agreement, for or on account of, or in relation to, or in any way in connection with the Term Loan Agreement or any of the other Loan Documents or transactions thereunder (any of the foregoing, a “Claim” and collectively, the “Claims”). Each Releasing Party expressly acknowledges and agrees, with respect to the Claims, that it waives, to the fullest extent permitted by applicable law, any and all provisions, rights, and benefits conferred by any applicable U.S. federal or state law, or any principle of U.S. common law, that would otherwise limit a release or discharge of any unknown Claims pursuant to this Section 8. Furthermore, each of the Releasing Parties hereby absolutely, unconditionally and irrevocably covenants and agrees with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released and/or discharged by the Releasing Parties pursuant to this Section 8. The foregoing release, covenant and waivers of this Section 8 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment or prepayment of any of the Loans, or the termination of the Term Loan Agreement, this Agreement, any other Loan Document or any provision hereof or thereof.

(b) Each Releasing Party understands, acknowledges and agrees that its release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

(c) Each Releasing Party agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.

SECTION 9. Incorporation by Reference. Section 15 (Miscellaneous) of the Term Loan Agreement is hereby incorporated by reference as if set forth herein in its entirety.

SECTION 10. More Favorable Terms. To the extent that any other forbearance, standstill or other similar agreement entered into by the Borrower or any Obligor (any such agreement, a “Third Party Forbearance Agreement”), or any amendment to any Third Party Forbearance Agreement, in each case, entered into or agreed after the date of this Agreement and during the Forbearance Period, provides any benefit or right (including, without limitation, the benefit of a forbearance period of shorter duration than the Forbearance Period) to any creditor party thereto that is more favorable than the benefits and rights provided to the Agent and the Lenders under this Agreement, taking into account the terms and conditions of the underlying debt financing documents in effect with such creditor party, this Agreement shall be deemed to be amended so as to cause any such benefit or right to be incorporated into this Agreement concurrently with making any such benefit or right available, and on comparable terms as it is made available, to any such other creditor.

SECTION 11. Interest Rate. For so long as the Specified Defaults shall be continuing under the Term Loan Agreement, all Obligations shall continue to accrue at the Default Rate in the manner set forth in Section 3.1.1(b) and Section 13.10.2 of the Term Loan Agreement.

SECTION 12. Diligence Cooperation; Variance Report.

(a) During the Forbearance Period, the Borrower shall cooperate reasonably with the Advisor and provide the Advisor with reasonable access to the Borrower’s facilities, books and records, officers and consultants and any information reasonably requested by the Advisor to perform the services within the scope of its engagement.

(b) During the Forbearance Period, the Borrower shall deliver to the Lender Parties and the Advisor on or prior to 5:00 p.m. (Eastern time) on Wednesday of every calendar week, beginning with the calendar week ending on November 2, 2019, a report for the weekly period ended on the most recent Friday that provides (x) a narrative description of any material variances from, or changes to, the 13-Week Forecast, (y) the aggregate amount of payments made during such period and (z) the aggregate book cash balance of the Borrower and Subsidiaries as of the close of such period.

(c) The Borrower and each Obligor hereby confirms, acknowledges and agrees that, unless waived in writing by the Agent (at the direction of the Lender Parties), the failure of Borrower to deliver any report or notice required by Section 12(b) hereof shall constitute a Forbearance Termination Event.

SECTION 13. Notice of Default. Each Obligor shall provide notice to the Agent and to counsel to the Lender Parties within one (1) business day of its obtaining knowledge of the occurrence of any Forbearance Termination Event, which notice shall state that such event has occurred and set forth, in reasonable detail, the facts and circumstances that gave rise to such event. Such notice shall be delivered to:

The Agent:

Cortland Products Corp.

225 W. Washington Street, 9^th Floor

Suite 2100

Chicago , Illinois 60606

Attn: Legal Department

Telecopy: 312-376-0751

Legal advisor to the Agent and the Lender Parties:

Davis Polk & Wardwell LLP

450 Lexington Avenue

New York, NY 10017

Attn: Derek Dostal (Derek.Dostal@davispolk.com)

Damian Schaible (Damian.Schaible@davispolk.com)

All notices given in accordance with the provisions of this Section 13 shall be (x) deemed to have been given on the date of receipt and (y) in the case of such notices given to the Agent, promptly delivered by the Agent to the legal advisor to the Lender Parties.

[Signature pages to follow]

IN WITNESS WHEREOF, this Forbearance Agreement has been executed by the parties hereto as of the date first written above.


BORROWER:

KEY ENERGY SERVICES, INC.

By:	/s/ J. Marshall Dodson
	Name:	J. Marshall Dodson
	Title:	Senior Vice President, Chief Financial Officer & Treasurer

[Signature page to Forbearance Agreement]


GUARANTOR:

KEY ENERGY SERVICES, LLC

By:	/s/ J. Marshall Dodson
	Name:	J. Marshall Dodson
	Title:	Senior Vice President, Chief Financial Officer & Treasurer

[Signature page to Forbearance Agreement]


AGENT AND LENDERS:

CORTLAND PRODUCTS CORP., AS AGENT

By:	/s/ Matthew Trybula
	Name:	Matthew Trybula
	Title:	Associate Counsel

[Signature page to Forbearance Agreement]


SPECIAL SITUATIONS INVESTING GROUP, INC., as a Lender

By:	/s/ Lee D. Becker
	Name:	Lee D. Becker
	Title:	Managing Director


Principal amount of Loans:				[***]

[Signature page to Forbearance Agreement]


BlueMountain Foinaven Master Fund L.P, as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal
amount of
Loans:		[***]


Blue Mountain Credit Alternatives Master Fund L.P, as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal
amount of
Loans:		[***]


BlueMountain Guadalupe Peak Fund L.P, as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]


BlueMountain Logan Opportunities Fund L.P, as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal
amount of
Loans:		[***]


BlueMountain Montenvers Master Fund SCA SICAV-SIF, as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal
amount of
Loans:		[***]


BlueMountain Summit Trading L.P., as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]


BlueMountain Timberline Ltd., as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal amount of Loans:				[***]


BlueMountain Kicking Horse Fund L.P., as a Lender

By:	/s/ David O’Mara
	Name:	David O’Mara
	Title:	Deputy General Counsel



Principal amount of Loans:		[***]

[Signature page to Forbearance Agreement]


TENNENBAUM ENERGY OPPORTUNITIES CO, LLC
TCP WATERMAN CLO, LLC
TENNENBAUM SNEIOR LOAN FUNDING III, LLC
TENNENBAUM SENIOR LOAN FUND V, LLC

as Lenders

On behalf of each of the above entities:
By:	TENNENBAUM CAPITAL PARTNERS LLC
Its:	Investment Manager
By:	/s/ Mark Kronfeld
	Name:	Mark Kronfeld
	Title:	Managing Director


TCP ENHANCED YIELD FUNDING I, LLC

as Lender

By:	Tennenbaum Enhanced Yield Operating I, LLC
Its:	Sole Member
By:	Tennenbaum Capital Partners, LLC
Its:	Investment Manager
By:	/s/ Mark Kronfeld
	Name:	Mark Kronfeld
	Title:	Managing Director



Principal amount of Loans:		[***]

[Signature page to Forbearance Agreement]


SOTER CAPITAL LLC, as a Lender

By:	/s/ Mary Ann Sigler
	Name:	Mary Ann Sigler
	Title:	President and Treasurer



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]


WHITEBOX ASYMMETRIC PARTNERS, L.P., as a Lender
By:	Whitebox Advisors LLC its investment manager

By:	/s/ Luke Harris
	Name:	Luke Harris
	Title:	General Counsel – Corporate, Transactions & Litigation



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]


WHITEBOX CAJA BLANCA FUND, LP, as a Lender
By:	Whitebox Caja Blanca GP LLC its general partner
By:	Whitebox Advisors LLC its investment manager
By:	/s/ Luke Harris
	Name:	Luke Harris
	Title:	General Counsel – Corporate, Transactions & Litigation



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]


WHITEBOX RELATIVE VALUE PARTNERS, L.P., as a Lender
By:	Whitebox Advisors LLC its investment manager

By:	/s/ Luke Harris
	Name:	Luke Harris
	Title:	General Counsel – Corporate, Transactions & Litigation



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]


WHITEBOX CREDIT PARTNERS, L.P., as a Lender
By:	Whitebox Advisors LLC its investment manager

By:	/s/ Luke Harris
	Name:	Luke Harris
	Title:	General Counsel – Corporate, Transactions & Litigation



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]


WHITEBOX MULTI-STRATEGY PARTNERS, L.P., as a Lender
By:	Whitebox Advisors LLC its investment manager

By:	/s/ Luke Harris
	Name:	Luke Harris
	Title:	General Counsel – Corporate, Transactions & Litigation



Principal
amount of
Loans:		[***]

[Signature page to Forbearance Agreement]

Exhibit 10.2

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***], HAS BEEN OMITTED BECAUSE IT IS NOT MATERIAL AND WOULD LIKELY CAUSE COMPETITIVE HARM TO THE COMPANY IF PUBLICLY DISCLOSED.

FORBEARANCE AGREEMENT

This FORBEARANCE AGREEMENT (this “Agreement”), dated as of October 29, 2019, to that certain Loan and Security Agreement, dated as of December 15, 2016 (as amended, restated, supplemented or otherwise modified from time to time, the “Loan Agreement”), by and among Key Energy Services, Inc., a Delaware corporation (the “Company”), Key Energy Services, LLC, a Texas limited liability company (“Key Energy LLC”, and together with the Company, collectively, “Borrowers” or “Borrower”), the Lenders party thereto from time to time (collectively, the “Lenders”), and Bank of America, N.A., a national banking association, as administrative agent for the Lenders (in such capacity, the “Administrative Agent”). Capitalized terms used but not otherwise defined herein shall have the respective meanings ascribed to such terms in the Loan Agreement.

RECITALS

WHEREAS, Borrowers, the Lenders and the Administrative Agent are parties to the Loan Agreement;

WHEREAS, the Company has not made the interest payment due on October 18, 2019 in a timely manner in accordance with the Term Loan Credit Agreement;

WHEREAS, the failure to make such payment gave rise to an immediate Event of Default pursuant to Section 12.1(f) of the Loan Agreement (collectively, the “Specified Defaults”);

WHEREAS, Borrowers have requested that during the Forbearance Period (as hereinafter defined), the Administrative Agent and the Lenders party hereto (sometimes referred to herein individually as a “Lender Party,” and collectively as the “Lender Parties”) agree to forbear from exercising any of their Default or Event of Default related rights and remedies against Borrowers and the other Loan Parties solely with respect to the Specified Defaults in accordance herewith that would otherwise be exercisable by the Lender Parties but for this Agreement; and

WHEREAS, subject to the terms and conditions set forth herein, the Lender Parties are willing to agree to such a forbearance but only on the terms and conditions contained in this Agreement.

SECTION 1. Confirmation by Borrowers of Specified Defaults. Each Borrower acknowledges and agrees that (i) the Specified Defaults constitute an Event Default on October 18, 2019 and (ii) no Events of Default or Defaults (other than the Specified Defaults) have occurred and are continuing as of the date hereof.

SECTION 2. Amounts Owing. Each Obligor acknowledges and agrees that, as of the date hereof, the aggregate amount of LC Obligations under the Loan Agreement is $34,569,949, plus accrued and unpaid interest and fees related thereto. Such Obligations, together with all other outstanding Obligations owing pursuant to the terms of the Loan Documents, including interest, fees, expenses and other charges, are validly owing and are not subject to any right of offset, deduction, claim, or counterclaim in favor of any Obligor.

SECTION 3. Forbearance; Forbearance Default Rights and Remedies.

(a) Effective as of the date hereof, in reliance upon the representations, warranties and covenants of the Obligors contained in this Agreement, and solely upon the terms and subject to the conditions of this Agreement, each of the Lender Parties agrees that until the termination or expiration of the Forbearance Period, such Lender Party will forbear from exercising any of their Default or Event of Default related rights and remedies (whether under the Loan Agreement, any other Loan Document, or at law or in equity) against any Borrower, any other Obligor or any of their subsidiaries or affiliates solely with respect to the Specified Defaults. As used herein, the term “Forbearance Period” shall mean the period beginning on the date hereof and ending on the earlier of (i) a Forbearance Termination Event (as defined below) and (ii) December 6, 2019; provided that, notwithstanding anything to the contrary herein, the Forbearance Period shall terminate automatically and without notice of termination immediately upon (A) the occurrence of an Event of Default of the type set forth in Section 12.1(h) of the Loan Agreement, or (B) the termination or expiration of any other forbearance granted by another creditor pursuant to the Term Loan Forbearance Agreement (as defined below).

(b) The occurrence of any of the following events or circumstances shall immediately and automatically constitute a termination event with respect to the Forbearance Period (each, a “Forbearance Termination Event”), unless waived by the Administrative Agent at the request of Required Lenders within one (1) Business Day of receipt of notice of such Forbearance Termination Event:

the occurrence of any Default or Event of Default under the Loan Agreement or any other Loan Document that is not a Specified Default;

ii.

the occurrence of any breach by any Borrower or any Obligor of any covenant, term or other provision of this Agreement;

iii.

any representation or warranty made by any Borrower or any Obligor herein or which is contained in any certificate, document or financial or other statement furnished by a Borrower at any time under or in connection with this Agreement or otherwise shall prove to have been inaccurate in any material respect on or as of the date made;

iv.

the commencement of any action, suit, litigation or other proceeding against the Administrative Agent or any Lender Party (i) by any Obligor; or (ii) by any Person asserting claims relating in any way to any of any Borrower, any Obligor, the Term Loan Credit Agreement, the Loan Documents, or the Collateral;

any payment, or setting aside of funds, by any Borrower, any Obligor, or any of their respective Subsidiaries for the purpose of making any payments, or otherwise transfer any economic value (excluding the payment of any reasonable and documented fees and expenses of one legal counsel to funds affiliated with Platinum Equity Advisors, LLC of up to $150,000 (or such other amount as agreed by the Lender Parties)) to any direct or indirect equity holder of any Borrower in its capacity as such;

vi.

any payment, or setting aside of funds, by any Borrower, any Obligor, or any of their respective Subsidiaries, including with respect to interest, principal, fees, expenses, indemnification or otherwise, on account of or in connection with any Debt for Borrowed Money (other than with respect to the Loan Agreement, the Term Loan Credit Agreement and Capital Leases existing as of the date hereof) or make any payment with respect to interest or principal on account of any such Debt;

vii.

the failure by the Borrower, on the close of business of each Monday during the Forbearance Period, to maintain aggregate bank and book cash balances of at least $10,000,000;

viii.

any Borrower or any Obligor shall make, enter into or implement any amendment, waiver, supplement or other modification to any employment agreement or employee compensation plan, in each case, solely to the extent such agreement or compensation plan relates to an Executive Officer (as defined below), or pay or cause to be paid any amount contemplated by such agreements or plans before the date on which such amount becomes due and payable pursuant to the terms of such agreements or plans, as applicable, or pay or cause to be paid any bonus, incentive, retention, severance, change of control or termination payments pursuant to the terms of such agreements or plans (other than in accordance with the terms of such agreements or plans as in effect immediately prior to the effectiveness of this Agreement), as applicable, including, without limitation, any transaction or other bonus previously awarded but unpaid (it being understood by the parties hereto that “Executive Officer” means the Company’s Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer, General Counsel, or Principal Accounting Officer);

ix.

the commencement of any action, suit, litigation or other proceeding by any Lender other than a Lender Party under the Loan Agreement or any agent, trustee or representative on behalf of any such Lender against any Borrower or set off against any of their respective property, in each case, with respect to the exercise of remedies or enforcement of the Loan Agreement or the obligations thereunder;

the commencement of any action, suit, litigation or other proceeding by any lender under the Term Loan Credit Agreement or any agent, trustee or representative on behalf of any such lender against any Borrower or any Obligor or set off against any of their respective property, in each case, with respect to the exercise of remedies or enforcement of the Term Loan Credit Agreement or the obligations thereunder;

xi.

at any time Availability is less than $12,500,000 (provided, that, notwithstanding anything to the contrary in this Agreement or in any Loan Document, for the purposes of calculating Borrowing Base in determining Availability pursuant to this clause, any Segregated Account Cash Balance, cash or Cash Equivalents shall be excluded); and

xii.

the failure to comply with Section 12(b), Section 12(c) or Section 12(d) by the time periods set forth therein.

(c) Upon the expiration or termination of the Forbearance Period, the Specified Defaults shall automatically and without any further action constitute a “Default” or “Event of Default” for purposes of the Loan Agreement and the agreement of the Lender Parties hereunder to forbear from exercising their respective Default or Event of Default related rights and remedies with respect to the Specified Defaults shall immediately terminate without the requirement of any demand, presentment, protest, or notice of any kind, all of which Borrowers and the other Obligors each waives. Borrowers and the other Obligors each agree that any or all of the Lender Parties may at any time thereafter proceed to exercise any and all of their respective rights and remedies under any or all of the Loan Agreement, any other Loan Document and/or applicable law, including, without limitation, their respective rights and remedies with respect to the Specified Defaults.

(d) Each of the Lender Parties hereby authorizes and requests that the Administrative Agent enter into this Agreement.

(e) This Agreement is limited in nature and nothing contained herein is intended, or shall be deemed or construed, to (i) constitute a waiver of any Specified Default or any existing or future Defaults or Events of Default (including any Event of Default arising from the Specified Defaults) or compliance with any term or provision of the Loan Documents or at law or in equity, (ii) establish a custom or course of dealing between the Obligors, on the one hand, and the Administrative Agent and/or any Lender Party, on the other hand, or (iii) waive, alter or impair the obligations or any of the rights or remedies of the Administrative Agent or the Lender Parties under the Loan Documents, at law or in equity.

(f) For the avoidance of doubt and notwithstanding anything to the contrary in this Agreement or in any Loan Document, to the extent that the Loan Agreement or any other Loan Document prohibits, restricts or limits the use of or reliance on any “basket” by any of the Obligors or any of their respective Subsidiaries or conditions any credit extension (including, without limitation, the funding of any Loans or arranging for issuance of any Letters of Credit to or for the benefit of Borrowers) upon the occurrence and during the continuance of a Default or Event of Default, then, notwithstanding the forbearance provided herein with respect to the Specified Defaults, such prohibition, restriction, limitation or conditions shall continue to apply during the Forbearance Period and thereafter so long as the Specified Defaults or any other Default or Event of Default exists, and nothing herein shall be construed (i) as permitting the Obligors or any of their Subsidiaries to take any action that is not permitted to be taken, or have any right not allowed, upon the occurrence and during the continuance of a Default or Event of Default pursuant to the terms of the Loan Documents or (b) as requiring the Administrative Agent, Issuing Bank or any Lender (it being understood and agreed that the Administrative Agent, Issuing Bank and Lenders shall not be required) to fund any Loans or arrange for issuance of any Letters of Credit to or for the benefit of Borrowers upon the occurrence and during the continuance of a Default or Event of Default pursuant to the terms of the Loan Documents.

SECTION 4. Effect of Forbearance. For the avoidance of doubt, the Borrowers and each other Obligor hereby acknowledges and agrees that this Agreement is a Loan Document. Except as expressly stated herein, the provisions of the Loan Agreement and the other Loan Documents have not been modified, are and shall remain in full force and effect in accordance with their terms, and shall constitute and remain as the legal, valid, binding, and enforceable obligations of the Borrowers and the other Obligors, all of which are ratified and affirmed in all respects and shall continue in full force and effect. The parties hereto agree that the running of all statutes of limitation and the doctrine of laches applicable to all claims or causes of action that the Administrative Agent and/or any Lender may be entitled to take or bring in order to enforce its rights and remedies against the Borrowers and/or any Obligor are, to the fullest extent permitted by law, tolled and suspended during the Forbearance Period.

SECTION 5. Representations and Warranties. To induce the Lenders and the Administrative Agent to execute and deliver this Agreement, on behalf of itself and the other Obligors, each Borrower hereby represents and warrants to the Lenders and the Administrative Agent that:

(a) as of the date hereof, and after giving effect to this Agreement, the representations and warranties set forth in Section 9 of the Loan Agreement (other than Section 9.1.9(c) solely as it relates to the Specified Defaults) and in the other Loan Documents shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the date hereof with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects (without duplication of any materiality qualifier contained therein) as of such earlier date;

(b) immediately before and after giving effect to this Agreement, no Default or Event of Default (other than any Specified Default) has occurred and is continuing;

(c) each Borrower and each other Obligor has taken all necessary action to authorize the execution, delivery and performance of this Agreement, this Agreement has been duly executed and delivered by each Borrower and each other Obligor and this Agreement is the legal, valid and binding obligation of each Borrower and each other Obligor, enforceable against it 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 principles of law;

(d) other than the Third Party Forbearance Agreement (as defined below) with respect to the Term Loan Credit Agreement (the “Term Loan Forbearance Agreement”), as of the date hereof, no Third Party Forbearance Agreements exist; and

(e) Borrowers have engaged Moelis & Company as their financial advisor (the “Company Advisor”).

SECTION 6. Effectiveness. This Agreement shall become effective at the time (the “Agreement Effective Date”) that all of the following conditions precedent have been met:

(a) Agreement. The Administrative Agent shall have received duly executed signature pages for this Agreement signed by the Administrative Agent, the Required Lenders, and the Borrowers;

(b) Representations and Warranties. The representations and warranties contained in Section 5 shall be true and correct;

(c) Term Loan Forbearance Agreement. The Term Loan Forbearance Agreement shall be effective and on terms acceptable to the Lender Parties; and

(d) Expenses: (i) The Borrowers shall have paid in full to the extent invoiced all of the reasonable and documented fees and expenses of Latham & Watkins LLP as counsel to the Administrative Agent; and (ii) each Obligor hereby reconfirms its joint and several obligations pursuant to Section 3.4 of the Loan Agreement to pay and reimburse the Administrative Agent for all reasonable costs and expenses (including, without limitation, the fees of Latham & Watkins LLP referred to in clause (i) above) incurred in connection with the negotiation preparation, execution and delivery of this Agreement and all other documents and instruments delivered in connection herewith;

(e) Forecast. The Lender Parties shall have received a preliminary cash flow forecast of the Company and its Subsidiaries covering the 13-week period ending January 17, 2020, in Excel format (the “13-Week Forecast”), which 13-Week Forecast and any amendments thereto shall reflect, for the periods covered thereby, projected weekly disbursements (in line item detail), cash receipts (in line item detail), and ending cash for each week covered by the 13-Week Forecast; and

(f) Fees. The Administrative Agent shall have received for the benefit of each Lender that executes and delivers a counterpart of this Agreement (each such Lender, a “Consenting Lender”), a fee in an amount equal to (i) [***] payable to Bank of America, N.A., (ii) [***] payable to Wells Fargo Bank, National Association and (iii) [***] payable to Siemens Financial Services, Inc.

SECTION 7. Reaffirmation of Guarantee and Security. Each Obligor, by its signature below, hereby agrees that:

(a) (i) after giving effect to this Agreement, the Security Documents shall continue to be in full force and effect and (ii) affirms and confirms all of its obligations and liabilities under the Loan Agreement and each other Loan Document, in each case after giving effect to this Agreement, including its guarantee of the Guaranteed Obligations and the pledge of and/or grant of a security interest in its assets as Collateral pursuant to the Security Documents to secure such Secured Obligations, all as provided in the Security Documents as originally executed, and acknowledges and agrees that such obligations, liabilities, guarantee, pledge and grant continue in full force and effect in respect of, and to secure, the Guaranteed Obligations under the Loan Agreement and the other Loan Documents, in each case after giving effect to this Agreement; and

(b) after giving effect to this Agreement, each Lien granted by it to the Administrative Agent for the benefit of the Secured Parties under each of the Loan Documents to which it is a party shall (i) continue in full force and effect during the term of the Loan Agreement and (ii) continue to secure the Guaranteed Obligations, in each case on and subject to the terms and conditions set forth in the Loan Agreement and the other Loan Documents.

SECTION 8. Release.

(a) In consideration of this Agreement and agreements of the Administrative Agent and Lenders contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrowers and the other Obligors (collectively, the “Releasing Parties”), each on behalf of itself and its successors, assigns, and other legal representatives hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges the Administrative Agent, the Lenders and their respective present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Administrative Agent, each Lender, and all such other Persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights of set-off, demands and liabilities whatsoever of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Borrowers, the Obligors or any of their respective successors, assigns or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Agreement, for or on account of, or in relation to, or in any way in connection with the Loan Agreement or any of the other Loan Documents or transactions thereunder (any of the foregoing, a “Claim” and collectively, the “Claims”). Each Releasing Party expressly acknowledges and agrees, with respect to the Claims, that it waives, to the fullest extent permitted by applicable law, any and all provisions, rights, and benefits conferred by any applicable U.S. federal or state law, or any principle of U.S. common law, that would otherwise limit a release or discharge of any unknown Claims pursuant to this Section 8. Furthermore, each of the Releasing Parties hereby absolutely, unconditionally and irrevocably covenants and agrees with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released and/or discharged by the Releasing Parties pursuant to this Section 8. The foregoing release, covenant and waivers of this Section 8 shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment or prepayment of any of the Loans, or the termination of the Loan Agreement, this Agreement, any other Loan Document or any provision hereof or thereof.

SECTION 9. Incorporation by Reference. Section 15 (Miscellaneous) of the Loan Agreement is hereby incorporated by reference as if set forth herein in its entirety.

SECTION 10. More Favorable Terms. To the extent that any other forbearance, standstill or other similar agreement entered into by the Borrowers or any Obligor (any such agreement, a “Third Party Forbearance Agreement”), or any amendment to any Third Party Forbearance Agreement, in each case, entered into or agreed after the date of this Agreement and during the Forbearance Period, provides any benefit or right (including, without limitation, the benefit of a forbearance period of shorter duration than the Forbearance Period) to any creditor party thereto that is more favorable than the benefits and rights provided to the Administrative Agent and the Lenders under this Agreement, taking into account the terms and conditions of the underlying debt financing documents in effect with such creditor party, this Agreement shall be deemed to be amended so as to cause any such benefit or right to be incorporated into this Agreement concurrently with making any such benefit or right available, and on comparable terms as it is made available, to any such other creditor.

SECTION 11. Interest Rate. Notwithstanding anything to the contrary in this Agreement or in any Loan Document, for so long as the Specified Defaults or any other Event of Default shall be continuing under the Loan Agreement, all Obligations shall continue to accrue at the Default Rate in the manner set forth in Section 3.1.1(b) and (c) and Section 3.2.2 of the Loan Agreement.

SECTION 12. Diligence Cooperation; Variance Report.

(a) During the Forbearance Period, Borrowers shall cooperate reasonably with the Lender Parties to provide Lender Parties with a continuous access to the Company Advisor.

(b) During the Forbearance Period, (i) the Borrowers shall deliver to the Lender Parties on or prior to 5:00 p.m. (Eastern time) on Wednesday of every calendar week, beginning with the calendar week ending on November 2, 2019, a report for the weekly period ended on the most recent Friday that provides (x) a narrative description of any material variances from, or changes to, the 13-Week Forecast, (y) the aggregate amount of payments made during such period and (z) the aggregate book cash balance of the Company and Subsidiaries as of the close of such period and (ii) at time to be mutually agreed on Wednesday of every calendar week hold a telephone conference call with Company Advisor and Lender Parties.

(c) If Moelis & Company ceases to be the financial advisor to Borrowers during the Forbearance Period, Borrowers shall deliver a notice thereof to the Administrative Agent no later than immediately succeeding Business Day.

(d) During the Forbearance Period, Borrowers shall deliver to the Administrative Agent (and the Administrative Agent shall promptly deliver same to Lenders) a Borrowing Base Report by each Wednesday of each week for the weekly period ended as of the close of business on Monday occurring prior to such Wednesday (commencing with first such Borrowing Base Report due by Wednesday, November 6, 2019, for the weekly period ended as of the close of business on Monday, November 4, 2019). All information (including calculation of Availability) in a Borrowing Base Report shall be certified by Borrower Agent.

(e) Each Borrower hereby confirms, acknowledges and agrees that, unless waived in writing by the Administrative Agent (at the direction of the Lender Parties), the failure of any Borrower (i) to deliver any report or notice or hold weekly conference calls required by Section 12(b) hereof, (ii) deliver notice as required by Section 12(c) or (iii) deliver a Borrowing Base Report as required by Section 12(d), shall each constitute a Forbearance Termination Event.

SECTION 13. Notice of Default. Each Obligor shall provide notice to the Administrative Agent and to counsel to the Lender Parties within one (1) Business Day of its obtaining knowledge of the occurrence of any Forbearance Termination Event, which notice shall state that such event has occurred and set forth, in reasonable detail, the facts and circumstances that gave rise to such event. Such notice shall be delivered in accordance with Section 15.3.1 of the Loan Agreement.

[Signature pages to follow]

IN WITNESS WHEREOF, this Forbearance Agreement has been executed by the parties hereto as of the date first written above.


BORROWERS: KEY ENERGY SERVICES, INC.

By:		/s/ J. Marshall Dodson
		Name: J. Marshall Dodson
		Title: Senior Vice President, Chief Financial Officer & Treasurer


KEY ENERGY SERVICES, LLC

By:		/s/ J. Marshall Dodson
		Name: J. Marshall Dodson
		Title: Senior Vice President, Chief Financial Officer & Treasurer

[Signature page to Forbearance Agreement]


ADMINISTRATIVE AGENT AND LENDERS: BANK OF AMERICA, N.A., as Administrative Agent and a Lender

By:		/s/ Ajay Jagsi
		Name: Ajay Jagsi
		Title: Vice President

[Signature page to Forbearance Agreement]


WELLS FARGO BANK, NATIONAL ASSOCIATION, as a Lender

By:		/s/ William M. Plough
		Name: William M. Plough
		Title: Vice President

[Signature page to Forbearance Agreement]


SIEMENS FINANCIAL SERVICES, INC., as a Lender

By:		/s/ Maria Levy
		Name: Maria Levy
		Title: Vice President

By:		/s/ John Finore
		Name: John Finore
		Title: Vice President

[Signature page to Forbearance Agreement]

Exhibit 99.1

LOGO

Key Energy Services, Inc.

1301 McKinney Street

Suite 1800

Houston, TX 77010

October 31, 2019

Contact:

Marshall Dodson

713-651-4403

FOR IMMEDIATE RELEASE

Key Energy Services Announces Strategic Review of Capital Structure; Enters Into Forbearance Agreements with Term Loan and ABL Lenders

HOUSTON, October 31, 2019 – Key Energy Services, Inc. (“Key” or the “Company”) (NYSE: KEG) announced today that it has engaged Moelis & Company LLC as its financial advisor and Sullivan & Cromwell LLP as its legal advisor to assist the Company in analyzing various strategic alternatives to address its capital structure and to position the Company for future success.

In connection with this strategic review, the Company elected not to make a scheduled interest payment due October 18, 2019 under the Term Loan and Security Agreement, dated as of December 15, 2016 (the “Term Loan Agreement”), by and among Key, Cortland Products Corp., as agent, and the lenders party thereto (the “Term Loan Lenders”) relating to the Company’s senior secured term loan. The Company’s failure to make the October interest payment resulted in a default under the Term Loan Agreement and a cross default under the Loan and Security Agreement, dated as of April 5, 2019 (as further amended, restated, supplemented or otherwise modified from time to time, the “ABL Credit Agreement”) by and among Key, as borrower, the Lenders party thereto (the “ABL Lenders” and, collectively with the Term Loan Lenders, the “Lenders”) and Bank of America, N.A. as Administrative Agent and Sole Collateral Agent (such defaults, the “Specified Defaults”).

The Company is in active discussions with the Lenders regarding the Company’s capital structure and the potential to reduce its debt level in light of challenging market conditions.

As part of its strategic review, the Company has determined to focus its operations on the Company’s core areas of operations and exit certain low margin markets. The Company believes that this will allow reductions in its cost structure and improvements in its operating cash flow, in addition to generating future capital expenditure savings. The Company otherwise intends to continue to operate in the ordinary course of business in respect of its core markets while

Key Energy Services, Inc.

1301 McKinney Street

Suite 1800

Houston, TX 77010

discussions with its Lenders take place, providing the same high level of quality service and responsiveness that its customers, vendors and business partners have come to expect. The Company expects that the conclusion of its negotiations with the Lenders will not result in an impairment of amounts owed to its trade vendors or a change of its ordinary course operations in its core markets, including with its employees in those markets.

Rob Saltiel, President and Chief Executive Officer, stated, “Addressing our capital structure is a top priority for Key, and our management and Board are working constructively with our Lenders to reach a good outcome for our Company. As we explore various strategic alternatives, we remain focused on providing our customers with the same high level of safety and service quality to which they are accustomed. While the outlook for North American oilfield services remains challenging, we believe that the conclusion of this process will position Key for future success.”

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not historical in nature or that relate to future events and conditions are, or may be deemed to be, forward-looking statements, including statements relating to Key’s review of its capital structure. These forward-looking statements are based on Key’s current expectations, estimates and projections and its management’s beliefs and assumptions concerning future events and financial trends affecting its financial condition and results of operations. In some cases, you can identify these statements by terminology such as “may,” “will,” “should,” “predicts,” “expects,” “believes,” “anticipates,” “projects,” “potential” or “continue” or the negative of such terms and other comparable terminology. These statements are only predictions and are subject to substantial risks and uncertainties and are not guarantees of performance. Future actions, events and conditions and future results of operations may differ materially from those expressed in these statements. In evaluating those statements, you should carefully consider the information above as well as the risks outlined in “Item 1A. Risk Factors,” in Key’s Annual Report on Form 10-K for the year ended December 31, 2018 and in other reports Key files with the Securities and Exchange Commission.

Key undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this press release except as required by law. All of Key’s written and oral forward-looking statements are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements.

Important factors that may affect Key’s expectations, estimates or projections include, but are not limited to, the following: the structure and timing of any financial, transactional, or other strategic alternative and whether any such financial, transactional, or other strategic alternative will be completed; Key’s ability to adjust its debt levels; Key’s ability to achieve the benefits of the cost efficiency and cash flow growth initiatives; conditions in the oil and natural gas industry, especially oil and natural gas prices and capital expenditures by oil and natural gas companies; volatility in oil and natural gas prices; Key’s ability to implement price increases or maintain pricing on its core services; risks that Key may not be able to reduce, and could even experience increases in, the costs of labor, fuel, equipment and supplies employed in its businesses; industry capacity; asset impairments or other charges; the periodic low demand for Key’s services and resulting operating losses and negative cash flows; Key’s highly competitive industry as well as operating risks, which are primarily self-insured, and the possibility that its insurance may not be adequate to cover all of its losses or liabilities; significant costs and potential liabilities resulting from compliance with applicable laws, including those resulting from environmental, health and safety laws and regulations, specifically those relating to hydraulic fracturing, as well as climate change legislation or initiatives; Key’s historically high employee turnover rate and its ability to replace or add workers, including executive officers and skilled workers; Key’s ability to incur debt or long-term lease obligations; Key’s ability to implement technological developments and enhancements; severe

Key Energy Services, Inc.

1301 McKinney Street

Suite 1800

Houston, TX 77010

weather impacts on Key’s business, including hurricane activity; Key’s ability to successfully identify, make and integrate acquisitions and its ability to finance future growth of its operations or future acquisitions; Key’s ability to achieve the benefits expected from disposition transactions; the loss of one or more of Key’s larger customers; Key’s ability to generate sufficient cash flow to meet debt service obligations; the amount of Key’s debt and the limitations imposed by the covenants in the agreements governing its debt, including its ability to comply with covenants under its current debt agreements; an increase in Key’s debt service obligations due to variable rate indebtedness; Key’s inability to achieve its financial, capital expenditure and operational projections, including quarterly and annual projections of revenue and/or operating income and its inaccurate assessment of future activity levels, customer demand, and pricing stability which may not materialize (whether for Key as a whole or for geographic regions and/or business segments individually); Key’s ability to respond to changing or declining market conditions, including Key’s ability to reduce the costs of labor, fuel, equipment and supplies employed and used in its businesses; Key’s ability to maintain sufficient liquidity; the adverse impact of litigation; and other factors affecting Key’s business described in “Item 1A. Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2018, and other reports Key files with the Securities and Exchange Commission.

About Key Energy Services

Key Energy Services is the largest onshore, rig-based well servicing contractor based on the number of rigs owned. Key provides a complete range of well intervention services and has operations in all major onshore oil and gas producing regions of the continental United States.