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S-4/A
KEY ENERGY SERVICES INC filed this Form S-4/A on 03/08/1996
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the Person  making it. The Company  shall  further  advise Key of the status and
changes in the material  terms of any such proposal or inquiry (or any amendment
to any of them). During the term of this Agreement,  the Company shall not enter
into any agreement,  oral or written,  and whether or not legally binding,  with
any Person that provides for, or in any way facilitates,  any Other Transaction,
or affects any other obligation of the Company under this Agreement.

         (b) Key shall not, nor shall it permit any Subsidiary,  or any of Key's
or  any  Subsidiary's   Representatives  (including,   without  limitation,  any
investment banker, attorney or accountant retained by it) to, initiate,  solicit
or  facilitate,  directly  or  indirectly,  any  inquiries  or the making of any
proposal with respect to any Other  Transaction,  engage in any  discussions  or
negotiations concerning,  or provide to any other person any information or data
relating to, it or any Subsidiary for the purposes of, or otherwise cooperate in
any way with or assist or  participate  in, or  facilitate  any inquiries or the
making of any proposal which constitutes,  or may reasonably be expected to lead
to, a proposal to seek or effect any Other  Transaction,  or agree to or endorse
any Other Transaction; provided, however, that nothing contained in this Section
shall  prohibit Key or its Board of Directors  from making any disclosure to its
stockholders  that,  in the  reasonable  judgment of its Board of  Directors  in
accordance  with,  and based upon the written  advice of,  outside  counsel,  is
required under  Applicable  Law. Key shall  promptly  advise the Company of, and
communicate  the  material  terms  of,  any  proposal   relating  to  any  Other
Transaction it may receive, or any inquiries it receives which may reasonably be
expected to lead to such a proposal,  and the identity of the Person  making it.
Key shall  further  advise the Company of the status and changes in the material
terms of any such proposal or inquiry (or any amendment to any of them).  During
the term of this  Agreement,  Key shall not enter  into any  agreement,  oral or
written, and whether or not legally binding,  with any Person that provides for,
or in  any  way  facilitates,  any  Other  Transaction,  or  affects  any  other
obligation of Key under this Agreement.

         (c)  "Other  Transaction"  means a  transaction  or series  of  related
transactions  (other than the Merger and the Transactions)  resulting in (a) any
change of control of the Company or Key, (b) any merger or  consolidation of the
Company or Key, or any of either of their  Subsidiaries,  regardless  of whether
the Company or Key (or any such  Subsidiary) is the surviving  corporation,  (c)
any tender offer or exchange offer for, or any  acquisitions  of, any securities
of the  Company  or Key,  (d) any sale or other  disposition  of  assets  of the
Company or Key or any Subsidiary of either of them not otherwise permitted under
Section 3.18 or 4.18 hereof, or (e) so long as this Agreement remains in effect,
any  issue or sale,  or any  agreement  to issue  or sell,  any  capital  stock,
Convertible  Securities or Option Securities by the Company or Key not otherwise
permitted under Section 4.15 hereof.

         SECTION  6.7   Termination  of  Option   Securities   and   Convertible
Securities.  The  Company  will  take all  action  necessary  to  terminate  all
outstanding  Option  Securities  and the  conversion  rights of all  Convertible
Securities  issued by the Company as of the Effective Time and to provide timely
notice to all holders of Option Securities and Convertible  Securities notifying
them of such  termination.  Without the prior written  consent of Key, except as
set forth in  Section  3.15(a)  of the  Company  Disclosure  Schedule,  (a) such
termination  will not  cause an  acceleration  of the  exercise,  conversion  or
vesting schedule of any Option Security or of any Convertible Security,  and (b)
the Company will not  otherwise  accelerate,  or cause an  acceleration  of, the
exercise,  conversion or vesting  schedule of any Option Security or Convertible
Security.  Prior to the Closing,  the Company  shall issue  Certificates  to all
holders  of  properly   exercised  Option  Securities  and  properly   converted
Convertible Securities;  such Certificates shall accurately represent the number
of Company Shares to which such holder is entitled by virtue of such exercise or
conversion and the Company shall amend Section 3.15(b) of the Company Disclosure
Schedule accordingly.


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