Print Page  Close Window

SEC Filings

S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
Entire Document
 
<PAGE>


         Forfeiture  as a Result of  Termination  for  Cause.  If the  Committee
determines, after full consideration of the facts presented on behalf of Key and
an Optionee,  that (a) the  Optionee  has been  engaged in fraud,  embezzlement,
theft, commission of a felony or dishonesty, has made unauthorized disclosure of
trade secrets or other  proprietary  information of Key or any subsidiary in the
course of his or her employment,  or has materially  breached any noncompetition
covenant of the Optionee in favor of Key or a subsidiary;  or (b) the Optionee's
employment or involvement was otherwise terminated for "cause" as defined in any
employment  agreement  with  the  Optionee  or as  determined  by Key,  then the
Optionee's  right to exercise an Option  shall,  except to the extent  otherwise
expressly provided in any Option Agreement or in a written employment  agreement
with the Optionee,  terminate as of the date of such act or such termination and
the  Optionee  shall  forfeit  all  unexercised  Options.  The  decision  of the
Committee as to the cause of an Optionee's  discharge and the damage done to Key
or a  subsidiary  shall be final,  binding  and  conclusive.  No decision of the
Committee,  however, shall affect in any manner the finality of the discharge of
such Optionee by Key or a subsidiary.

         Amendments of the 1995 Plan. The Board may modify,  revise or terminate
the 1995 Plan at any time and from time to time; provided, however, that without
the further  approval  of the holders of at least a majority of the  outstanding
shares of Common Stock,  the Board may not (a) materially  increase the benefits
accruing to Optionees  under the 1995 Plan or make any  "modifications"  as that
term is defined under Section 424(h)(3) of the Code if such increase in benefits
or modifications would adversely affect (i) the availability to the 1995 Plan of
the protections of Rule 16b-3 of the Exchange Act, or (ii) the  qualification of
the 1995 Plan or any  Options  for  "incentive  stock  option"  treatment  under
Section  422 of the Code;  (b) change the  aggregate  number of shares of Common
Stock  available  for  Options  under the 1995 Plan or the  aggregate  number of
shares of Common  Stock for which  options may be issued to any single  employee
over the life of the Plan,  or (c) change  the class of  employees  eligible  to
receive Options.  Notwithstanding the preceding sentence, the Board shall in all
events have the power and  authority  to make such changes as, in the opinion of
counsel for Key, may be necessary or appropriate from time to time to enable any
Option granted pursuant to the 1995 Plan to qualify as an incentive stock option
or such other stock  option as may be defined  under the Code,  so as to receive
preferential  federal income tax treatment.  No amendment shall adversely affect
outstanding  Options,  and no  termination  of the  1995  Plan  shall  terminate
outstanding Options, without the consent of the Optionee.

         Tax Status of the 1995  Plan.  The  federal  income  tax  treatment  of
Options is  governed  by Section 83 (as to NSOs) and Section 422 (as to ISOs) of
the Code.  Special rules apply to the taxation of Options  exercised by delivery
of stock.

         Tax  Treatment  of NSOs.  Under  Section  83 of the Code,  an  Optionee
realizes  no taxable  income  when a NSO is  granted.  Instead,  the  difference
between  the  fair  market  value of the  Common  Stock  subject  to NSO and the
exercise price paid is taxed as ordinary  compensation  income,  on or after the
date on which the NSO is exercised.  The  difference is measured and taxed as of
the date of  exercise  if the stock is  "substantially  vested"  as  defined  in
regulations  under Section 83. The stock will be  "substantially  nonvested" for

                                     -103-