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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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                                                                   APPENDIX A

                                   DEFINITIONS

         As used in this Agreement,  unless the context otherwise requires,  the
following  terms  (or any  variant  in the  form  thereof)  have  the  following
respective  meanings.  Terms  defined in the  singular  shall have a  comparable
meaning when used in the plural, and vice versa, and the reference to any gender
shall be deemed to include all genders.  Unless otherwise defined or the context
otherwise clearly  requires,  terms for which meanings are provided herein shall
have  such  meanings  when  used in the  Company  Disclosure  Schedule,  the Key
Disclosure  Schedule  and each  Collateral  Document  executed or required to be
executed pursuant hereto or thereto or otherwise  delivered,  from time to time,
pursuant  hereto or thereto.  References to "hereof",  "herein" or similar terms
are intended to refer to the Agreement as a whole and not a particular  section,
and references to "this Section" are intended to refer to the entire section and
not a particular subsection thereof.

         Adverse,  Adversely, when used alone or in conjunction with other terms
(including  without  limitation  "Affect," "Change" and "Effect") shall mean any
Event which is reasonably likely, in the reasonable  business judgment of Key or
the  Company,  as the case may be,  be  expected  to (a)  adversely  affect  the
validity or  enforceability  of this Agreement or the likelihood of consummation
of the Merger,  or (b) adversely  affect the business,  operations,  management,
properties or prospects,  or the  condition,  financial or other,  or results of
operation  of the Company and its  Subsidiaries  taken as a whole or Key and its
Subsidiaries  taken as a whole,  as the case may be, or (c) impair the Company's
or Key's, as the case may be, ability to fulfill its obligations under the terms
of this Agreement,  or (d) adversely affect the aggregate rights and remedies of
Key or the  Company,  as the case may be,  under this  Agreement,  in all cases,
unless  otherwise  specifically set forth, in a material manner or to a material
degree.  Notwithstanding the foregoing,  for purposes of determining whether one
or more  conditions,  including  without  limitation those set forth in Sections
7.1(b), 7.1(c),  7.2(e), 7.2(g) and 7.3(g), shall have been satisfied,  the term
"Adverse" when used alone or in conjunction with other terms (including  without
limitation  "Affect,"  "Change"  and  "Effect")  shall mean any Event which when
considered  with all other Changes  would  reasonably be expected to result in a
"loss" having the effect of so fundamentally adversely affecting the business or
financial prospects of the Company or Key, as the case may be, that the benefits
reasonably expected to be obtained by such party as a result of the Merger would
be  jeopardized  in a material  manner or to a  material  degree  with  relative
certainty;  provided, however, that in no event shall either (a) a change in the
oil and gas industry  generally or in the particular  geographic  areas in which
the Company or Key are  engaged in  business or (b) in the trading  price of the
Key  Stock on the  American  Stock  Exchange  between  the date  hereof  and the
Effective  Date,  in and of  itself,  constitute  an Adverse  Change,  Affect or
Effect.  The term  "loss"  shall mean any and all direct or  indirect  payments,
obligations, assessments, losses, loss of income, liabilities, fines, penalties,
costs  and  expenses  paid or  incurred  or more  likely  than not to be paid or
incurred, or diminutions in value of any kind or character (whether or not known
or unknown,  conditional  or  unconditional,  choate or inchoate,  liquidated or
unliquidated,  secured or unsecured, accrued, absolute, contingent or otherwise)
that are more likely than not to occur,  including without limitation penalties,
interest on any amount payable to a third party as a result of the foregoing and
any legal or other  expenses  reasonably  incurred or more likely than not to be
reasonably  incurred in  connection  with  investigating  or defending any Legal
Actions or other Claims that,  if adversely  determined,  would likely result in
losses,  and all amounts paid in  settlement  of Legal  Actions or other Claims;
provided,  however,  that  losses  shall  be net of (i) any  insurance  proceeds
entitled to be received  from a  nonaffiliated  insurance  company on account of
such losses  (after  taking into account any costs  incurred in  obtaining  such


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