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SEC Filings

S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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      ITEM 5: ADOPTION AND APPROVAL OF OUTSIDE DIRECTORS STOCK OPTION PLAN

         Eligibility.  Individuals  who are "Outside  Directors" are eligible to
participate  in the  Outside  Directors  Stock  Option  Plan  (hereinafter,  the
"Directors  Plan").  "Outside Director" means a member of the Board of Directors
who is not an employee of Key or any of its  subsidiaries.  Under the  Directors
Plan, Outside Directors are divided into three groups:

         "Group A Outside  Directors"  are Outside  Directors  who as of July 1,
1995 were members of the  Executive  Committee of the Board of Directors and are
Outside Directors as of the date of stockholder  approval of the Directors Plan;
"Group B Outside  Directors"  are any Outside  Directors  who as of July 1, 1995
were neither Group A nor Group C Outside  Directors and are Outside Directors as
of the date of the  shareholder  approval of the  Directors  Plan;  and "Group C
Outside  Directors"  means  any  Outside  Directors  who  first  become  Outside
Directors  subsequent to July 1, 1995 but prior to July 1, 1996, and are, or are
designated to become,  Outside Directors as of the date of stockholder  approval
of the Directors Plan.

         Options.  Only NSOs may be granted  under the  Directors  Plan.  An NSO
granted under the  Directors  Plan shall expire 10 years after the date of grant
("Option Period"). An NSO may not be granted under the Directors Plan after July
1,  1998,  but  NSOs  granted  prior  to that  date  shall  continue  to  become
exercisable and may be exercised according to the terms of the Directors Plan.

         Shares  Available.  The Directors  Plan provides for the issuance of an
aggregate  of  300,000  shares of Common  Stock,  which  may be  authorized  but
unissued shares,  treasury shares,  or shares purchased on the open market.  The
number of shares of Common Stock  reserved for awards under the Directors  Plan,
the exercise price and the securities  issuable under any outstanding NSOs shall
be subject to  appropriate  adjustment  by the  Committee  to reflect  any stock
split, stock dividend, recapitalization, merger, consolidation,  reorganization,
combination,  or exchange of shares or other similar event.  All  determinations
made by the Committee with respect to adjustment shall be conclusive and binding
for all purposes of the Directors Plan.

         Grants of Options.  Effective as of July 6, 1995, each individual Group
A Outside Director shall automatically receive an NSO to purchase 50,000 shares,
and each individual Group B Outside Director shall automatically  receive an NSO
to purchase 25,000 shares. Effective as of July 1, 1996, each individual Group A
Outside Director shall  automatically  receive an NSO to purchase 25,000 shares,
each individual  Group B Outside Director shall  automatically  receive a NSO to
purchase  25,000  shares,  and each  individual  Group C Outside  Director shall
automatically receive an NSO to purchase 50,000 shares. If on the effective date
of such grants,  the Board  determines,  in its sole discretion,  that Key is in
possession of material, undisclosed information about Key, then the annual grant
of NSO's to  Outside  Directors  shall be  suspended  until the second day after
public  dissemination of such information.  If Common Stock is not traded on the
American  Stock Exchange on any date a grant would  otherwise be made,  then the
grant shall be made as of the next day  thereafter  on which  Common Stock is so
traded.

                                     -107-