exv10w5





Exhibit 10.5




[FORM OF] INDEMNIFICATION AGREEMENT




     THIS INDEMNIFICATION AGREEMENT (the “Agreement”) is effective as of
______________, 200__, by and among Grey Wolf, Inc., a Delaware corporation (f/k/a
Horsepower Holdings, Inc.) (the “Company”), and ____________________ (the
“Indemnitee”).



     WHEREAS, it is reasonable, prudent and necessary for the Company contractually to
obligate itself to indemnify certain of its Authorized Representatives (as defined below) of
the Company to the fullest extent permitted by applicable law so that they will serve or
continue to serve as such free from undue concern that they will not be adequately
protected;



     WHEREAS, the Indemnitee is willing to serve and continue to serve as an Authorized
Representative on the condition that he be so indemnified; and



     WHEREAS, to the extent permitted by law, this Agreement is a supplement to and in
furtherance of the provisions of the certificate of incorporation (the
“Certificate”) and bylaws of the Company (the “Bylaws”), in each case as
amended and effect on the date hereof, or resolutions adopted pursuant thereto, and shall
not be deemed a substitute therefor, nor to diminish or abrogate any rights of the
Indemnitee thereunder;



     NOW THEREFORE, in consideration of the premises and the covenants contained herein, the
Company and the Indemnitee do hereby covenant and agree as follows:



          1. Services by the Indemnitee. The Indemnitee agrees to continue to serve at the request of
the Company as an Authorized Representative. Notwithstanding the foregoing, the Indemnitee may at
any time and for any reason resign from any such position.




          2. Indemnification — General. The Company shall indemnify, and advance Expenses (as
hereinafter defined) to, the Indemnitee as provided in this Agreement and to the fullest extent
permitted by applicable law in effect on the date hereof and to such greater extent as applicable
law may thereafter from time to time permit. The rights of the Indemnitee provided under the
preceding sentence shall include, but shall not be limited to, the rights set forth in the other
Sections of this Agreement.




          3. Proceedings Other Than Proceedings by or in the Right of the Company. The Indemnitee shall
be entitled to the rights of indemnification provided in this Section 3 if, by reason of
his Corporate Status (as hereinafter defined), he is, or is threatened to be made, a party to or
participant in any threatened, pending or completed Proceeding (as hereinafter defined), other than
a Proceeding by or in the right of the Company. Pursuant to this Section 3, the Company
shall indemnify the Indemnitee against Expenses, judgments, penalties, fines and amounts paid in
settlement (as and to the extent permitted hereunder) actually and reasonably incurred by him or on
his behalf in connection with such Proceeding or any claim, issue or matter therein, if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal Proceeding, if he also had no reasonable cause to
believe his conduct was unlawful.




 









 







          4. Proceedings by or in the Right of the Company. The Indemnitee shall be entitled to the
rights of indemnification provided in this Section 4 if, by reason of his Corporate Status,
he is, or is threatened to be made, a party to or participant in any threatened, pending or
completed Proceeding brought by or in the right of the Company to procure a judgment in its favor.
Pursuant to this Section 4, the Company shall indemnify the Indemnitee against Expenses
actually and reasonably incurred by him or on his behalf in connection with such Proceeding if he
acted in good faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Company. Notwithstanding the foregoing, no indemnification against such Expenses
shall be made in respect of any claim, issue or matter in such Proceeding as to which the
Indemnitee shall have been adjudged to be liable to the Company or if applicable law prohibits such
indemnification; provided, however, that if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in such event if and to
the extent that the court in which such Proceeding shall have been brought or is pending, shall so
determine.




          5. Indemnification for Expenses of a Party Who is Wholly or Partly
Successful.




          (a) To the extent that the Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, the Company shall indemnify the
Indemnitee against all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith. If the Indemnitee is not wholly successful in defense of any Proceeding but
is successful, on the merits or otherwise, as to one or more but less than all claims, issues or
matters in such Proceeding, the Company shall indemnify the Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each such claim, issue
or matter as to which the Indemnitee is successful, on the merits or otherwise. For purposes of
this Section 5(a), the term “successful, on the merits or otherwise,” shall include, but
shall not be limited to, (i) the termination of any claim, issue or matter in a Proceeding by
withdrawal or dismissal, with or without prejudice, (ii) termination of any claim, issue or matter
in a Proceeding by any other means without any express finding of liability or guilt against the
Indemnitee, with or without prejudice, (iii) the expiration of 120 days after the making of a claim
or threat of a Proceeding without the institution of the same and without any promise or payment
made to induce a settlement or (iv) the settlement of any claim, issue or matter in a Proceeding
pursuant to which the Indemnitee pays less than $100,000. The provisions of this Section
5(a) are subject to Section 5(b) below.




          (b) In no event shall the Indemnitee be entitled to indemnification under Section 5(a)
above with respect to a claim, issue or matter to the extent (i) applicable law prohibits such
indemnification, or (ii) an admission is made by the Indemnitee in writing to the Company or in
such Proceeding or a final, nonappealable determination is made in such Proceeding that the
standard of conduct required for indemnification under this Agreement has not been met with respect
to such claim, issue or matter.




          6. Indemnification for Expenses as a Witness. Notwithstanding any provisions herein to the
contrary, to the extent that the Indemnitee is, by reason of his Corporate Status, a witness in any
Proceeding, the Company shall indemnify the Indemnitee against all Expenses actually and reasonably
incurred by or on behalf of the Indemnitee in connection therewith.




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          7. Advancement of Expenses. The Company shall advance all reasonable Expenses incurred by or
on behalf of the Indemnitee in connection with any Proceeding within 10 days after the receipt by
the Company of a statement or statements from the Indemnitee requesting such advance or advances
from time to time, whether prior to or after the final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by or on behalf of the
Indemnitee. The Indemnitee hereby expressly undertakes to repay such amounts advanced only if, and
to the extent that, it shall ultimately be determined by a final, non-appealable adjudication or
arbitration decision that the Indemnitee is not entitled to be indemnified against such Expenses.
All amounts advanced to the Indemnitee by the Company pursuant to this Section 7 shall be
without interest. The Company shall make all advances pursuant to this Section 7 without
regard to the financial ability of the Indemnitee to make repayment, without bond or other security
and without regard to the prospect of whether the Indemnitee may ultimately be found to be entitled
to indemnification under the provisions of this Agreement. Any required reimbursement of Expenses
by the Indemnitee shall be made by the Indemnitee to the Company within 10 days following the entry
of the final, non-appealable adjudication or arbitration decision pursuant to which it is
determined that the Indemnitee is not entitled to be indemnified against such Expenses.




          8. Procedure for Determination of Entitlement to Indemnification.




          (a) To obtain indemnification under this Agreement, the Indemnitee shall submit to the Company
a written request therefor, along with such documentation and information as is reasonably
available to the Indemnitee and reasonably necessary to determine whether and to what extent the
Indemnitee is entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that the Indemnitee has
requested indemnification.




          (b) Upon written request by the Indemnitee for indemnification pursuant to the first sentence
of Section 8(a) hereof, a determination, if required by applicable law, with respect to the
Indemnitee’s entitlement thereto shall be made in the specific case: (i) by the Board by a majority
vote of a quorum consisting of Disinterested Directors (as hereinafter defined); or (ii) if a
quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable,
such quorum of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined),
as selected pursuant to Section 8(d), in a written opinion to the Board (which opinion may
be a “more likely than not” opinion), a copy of which shall be delivered to the Indemnitee. If it
is so determined that the Indemnitee is entitled to indemnification, the Company shall make payment
to the Indemnitee within 10 days after such determination. The Indemnitee shall cooperate with the
Person or Persons making such determination with respect to the Indemnitee’s entitlement to
indemnification, including providing to such Person or Persons upon reasonable advance request any
documentation or information which is not privileged or otherwise protected from disclosure and
which is reasonably available to the Indemnitee and reasonably necessary to such determination.
Subject to the provisions of Section 10 hereof, any costs or expenses (including reasonable
attorneys’ fees and disbursements) incurred by the Indemnitee in so cooperating with the Person or
Persons making such determination shall be borne by the Company, and the Company hereby agrees to
indemnify and hold the Indemnitee harmless therefrom.




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          (c) Notwithstanding the foregoing, if a Change of Control has occurred, the Indemnitee may
require a determination with respect to the Indemnitee’s entitlement to indemnification to be made
by Independent Counsel, as selected pursuant to Section 8(d), in a written opinion to the
Board (which opinion may be a “more likely than not” opinion), a copy of which shall be delivered
to the Indemnitee.




          (d) In the event the determination of entitlement to indemnification is to be made by
Independent Counsel pursuant to Section 8(b) or (c) hereof, the Independent Counsel
shall be selected as provided in this Section 8(d). If a Change of Control shall not have
occurred, the Independent Counsel shall be selected by the Board (including a vote of a majority of
the Disinterested Directors if obtainable), and the Company shall give written notice to the
Indemnitee advising him of the identity of the Independent Counsel so selected. If a Change of
Control shall have occurred, the Independent Counsel shall be selected by the Indemnitee (unless
the Indemnitee shall request that such selection be made by the Board, in which event the preceding
sentence shall apply), and approved by the Company (which approval shall not be unreasonably
withheld). If (i) an Independent Counsel is to make the determination of entitlement pursuant to
Section 8(b) or (c) hereof, and (ii) within 20 days after submission by the
Indemnitee of a written request for indemnification pursuant to Section 8(a) hereof, no
Independent Counsel shall have been selected, either the Company or the Indemnitee may petition the
appropriate court of the State (as hereafter defined) or other court of competent jurisdiction for
the appointment as Independent Counsel of a Person selected by such court or by such other Person
as such court shall designate. The Company shall pay any and all reasonable fees and expenses of
Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to
Section 8(b) or (c) hereof, and the Company shall pay all reasonable fees and
expenses incident to the procedures of this Section 8(d), regardless of the manner in which
such Independent Counsel was selected or appointed. Upon the due commencement of any judicial
proceeding or arbitration pursuant to Section 10(a)(iv) of this Agreement, Independent
Counsel shall be discharged and relieved of any further responsibility in such capacity (subject to
the applicable standards of professional conduct then prevailing).




          9. Presumptions and Effect of Certain Proceedings; Construction of
Certain Phrases.




          (a) In making a determination with respect to whether the Indemnitee is entitled to
indemnification hereunder, the party making such determination shall presume that the Indemnitee is
entitled to indemnification under this Agreement if the Indemnitee has submitted a request for
indemnification in accordance with Section 8(a) of this Agreement, and anyone seeking to
overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and
convincing evidence.




          (b) Subject to the terms of Section 16 below, the termination of any Proceeding or of
any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of
nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this
Agreement) of itself adversely affect the right of the Indemnitee to indemnification or create a
presumption that the Indemnitee did not act in good faith and in a manner which he reasonably
believed to be in or not opposed to the best interests of the Company or, with respect to any
criminal Proceeding, that the Indemnitee had reasonable cause to believe that his conduct was
unlawful.




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          (c) For purposes of any determination of the Indemnitee’s entitlement to indemnification under
this Agreement or otherwise, the Indemnitee shall be deemed to have acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of the Company, and,
with respect to a criminal Proceeding, to have also had no reasonable cause to believe his conduct
was unlawful, if the Indemnitee’s action is based on the records or books of account of the Company
or another enterprise, including financial statements, or on information supplied to the Indemnitee
by the officers of the Company or another enterprise in the course of their duties, or on the
advice of legal or financial counsel for the Company or the Board (or any committee thereof) or for
another enterprise or its board of directors (or any committee thereof), or on information or
records given or reports made by an independent certified public accountant or by an appraiser or
other expert selected by the Company or the Board (or any committee thereof) or by another
enterprise or its board of directors (or any committee thereof). For purposes of this Section
9(c), the term “another enterprise” means any other corporation, partnership, limited liability
company, joint venture, trust, employee benefit plan or other enterprise of which the Indemnitee is
or was serving at the request of the Company as a director, officer, employee or agent. The
provisions of this Section 9(c) shall not be deemed to be exclusive or to limit in any way
the other circumstances in which the Indemnitee may be deemed or found to have met the applicable
standard of conduct set forth in this Agreement. In addition, the knowledge and/or actions, or
failure to act, of any other director, trustee, partner, managing member, fiduciary, officer, agent
or employee of the Company shall not be imputed to the Indemnitee for purposes of determining the
right to indemnification under this Agreement. Whether or not the foregoing provisions of this
Section 9(c) are satisfied, it shall in any event be presumed that the Indemnitee has acted
in good faith and in a manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to a criminal Proceeding, that he also had no reasonable cause to
believe his conduct was unlawful. Anyone seeking to overcome this presumption shall have the
burden of proof and the burden of persuasion, by clear and convincing evidence.




          (d) For purposes of this Agreement, references to “fines” shall include any excise taxes
assessed on the Indemnitee with respect to an employee benefit plan; references to “serving at the
request of the Company” shall include, but shall not be limited to, any service as a director,
officer, employee or agent of the Company which imposes duties on, or involves services by, the
Indemnitee with respect to an employee benefit plan, its participants or its beneficiaries; and if
the Indemnitee has acted in good faith and in a manner he reasonably believed to be in the interest
of the participants and beneficiaries of an employee benefit plan, he shall be deemed to have acted
in a manner “not opposed to the best interests of the Company” as used in this Agreement. The
provisions of this Section 9(d) shall not be deemed to be exclusive or to limit in any way
the other circumstances in which the Indemnitee may be deemed or found to have met the applicable
standard of conduct set forth in this Agreement.




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          10. Remedies of the Indemnitee.




          (a) In the event that (i) a determination is made pursuant to Section 8 of this
Agreement that the Indemnitee is not entitled to indemnification under this Agreement, (ii)
advancement of Expenses is not timely made pursuant to Section 7 of this Agreement,
(iii) the determination of entitlement to indemnification is to be made by the Board pursuant to
Section 8(b) of this Agreement and such determination shall not have been made and
delivered to the Indemnitee in writing within twenty (20) days after receipt by the Company of the
request for indemnification, (iv) the determination of entitlement to indemnification is to be made
by Independent Counsel pursuant to Section 8(b) or (c) of this Agreement and such
determination shall not have been made in a written opinion to the Board and a copy delivered to
the Indemnitee within forty-five (45) days after receipt by the Company of the request for
indemnification, (v) payment of indemnification is not made pursuant to Section 6 of this
Agreement within 10 days after receipt by the Company of a written request therefor or (vi) payment
of indemnification is not made within 10 days after a determination has been made that the
Indemnitee is entitled to indemnification or such determination is deemed to have been made
pursuant to Section 8 or 9 of this Agreement, the Indemnitee shall be entitled to
an adjudication in an appropriate court of the State of his entitlement to such indemnification or
advancement of Expenses. Alternatively, the Indemnitee, at his sole option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of the American
Arbitration Association. The Indemnitee shall commence such Proceeding seeking an adjudication or
an award in arbitration within 180 days following the date on which the Indemnitee first has the
right to commence such Proceeding pursuant to this Section 10(a); provided,
however, that the foregoing clause shall not apply in respect of a Proceeding brought by
the Indemnitee to enforce his rights under Section 5 of this Agreement.




          (b) In the event that a determination is made pursuant to Section 8 of this Agreement
that the Indemnitee is not entitled to indemnification, any judicial proceeding or arbitration
commenced pursuant to this Section 10 shall be conducted in all respects as a de novo trial
or a de novo arbitration (as applicable) on the merits, and the Indemnitee shall not be prejudiced
by reason of that adverse determination. In any judicial proceeding or arbitration commenced
pursuant to this Section 10, the Company shall have the burden of proving that the
Indemnitee is not entitled to indemnification, and the Company shall be precluded from referring to
or offering into evidence a determination made pursuant to Section 8 of this Agreement that
is adverse to the Indemnitee’s right to indemnification. If the Indemnitee commences a judicial
proceeding or arbitration pursuant to this Section 10, the Indemnitee shall not be required
to reimburse the Company for any advances pursuant to Section 7 until a final determination
is made with respect to the Indemnitee’s entitlement to indemnification (as to which rights of
appeal have been exhausted or lapsed).




          (c) If a determination is made or deemed to have been made pursuant to Section 8 or
9 of this Agreement that the Indemnitee is entitled to indemnification, the Company shall
be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this
Section 10, absent (i) a misstatement by the Indemnitee of a material fact, or an omission
by the Indemnitee of a material fact necessary to make the Indemnitee’s statement not materially
misleading, in connection with the request for indemnification, or (ii) a prohibition of such
indemnification under applicable law.




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          (d) The Company shall be precluded from asserting in any judicial proceeding or arbitration
commenced pursuant to this Section 10 that the procedures and presumptions of this
Agreement are not valid, binding and enforceable and shall stipulate in any such court or
before any such arbitrator that the Company is bound by all of the provisions of this Agreement.




          (e) In the event that the Indemnitee, pursuant to this Section 10, seeks a judicial
adjudication or an award in arbitration to enforce his rights under, or to recover damages for
breach of, this Agreement, the Indemnitee shall be entitled to recover from the Company, and shall
be indemnified by the Company against, any and all Expenses actually and reasonably incurred by him
in such judicial adjudication or arbitration, unless the court or arbitrator determines that each
of the Indemnitee’s claims in such Proceeding were made in bad faith or were frivolous. In the
event that a Proceeding is commenced by or in the right of the Company against the Indemnitee to
enforce or interpret any of the terms of this Agreement, the Indemnitee shall be entitled to
recover from the Company, and shall be indemnified by the Company against, any and all Expenses
actually and reasonably incurred by him in such Proceeding (including with respect to any
counter-claims or cross-claims made by the Indemnitee against the Company in such Proceeding),
unless the court or arbitrator determines that each of the Indemnitee’s material defenses in such
Proceeding were made in bad faith or were frivolous.




          (f) Any judicial adjudication or arbitration determined under this Section 10 shall be
final and binding on the parties.




          11. Defense of Certain Proceedings. In the event the Company shall be obligated under this
Agreement to pay the Expenses of any Proceeding against the Indemnitee in which the Company is a
co-defendant with the Indemnitee, the Company shall be entitled to assume the defense of such
Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably
withheld, upon the delivery to the Indemnitee of written notice of its election to do so. After
delivery of such notice, approval of such counsel by the Indemnitee and the retention of such
counsel by the Company, the Indemnitee shall nevertheless be entitled to employ or continue to
employ his own counsel in such Proceeding. Employment of such counsel by the Indemnitee shall be
at the cost and expense of the Company unless and until the Company shall have demonstrated to the
reasonable satisfaction of the Indemnitee and the Indemnitee’s counsel that there is complete
identity of issues and defenses and no conflict of interest between the Company and the Indemnitee
in such Proceeding, after which time further employment of such counsel by the Indemnitee shall be
at the cost and expense of the Indemnitee. In all events, if the Company shall not, in fact, have
timely employed counsel to assume the defense of such Proceeding, then the fees and Expenses of the
Indemnitee’s counsel shall be at the cost and expense of the Company.




          12. Exception to Right of Indemnification or Advancement of Expenses. Notwithstanding any
other provision of this Agreement, the Indemnitee shall not be entitled to indemnification or
advancement of Expenses under this Agreement with respect to any Proceeding, or any claim therein,
brought or made by the Indemnitee against:




          (a) the Company, except for (i) any claim or Proceeding in respect of this Agreement and/or
the Indemnitee’s rights hereunder, (ii) any claim or Proceeding to establish or enforce a right to
indemnification under any statute or law and (iii) any counter-claim or cross-claim brought or made
by him against the Company in any Proceeding brought by or in the right of the Company against him;
or




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          (b) any other Person, except for Proceedings or claims approved by the Board.




          13. Contribution.




          (a) If, with respect to any Proceeding, the indemnification provided for in this Agreement is
held by a court of competent jurisdiction to be unavailable to the Indemnitee for any reason other
than that the Indemnitee did not act in good faith and in a manner he reasonably believed to be in
or not opposed to the best interests of the Company or, with respect to a criminal Proceeding, that
the Indemnitee had reasonable cause to believe his conduct was unlawful, the Company shall
contribute to the amount of Expenses, judgments, penalties, fines and amounts paid in settlement
actually and reasonably incurred by the Indemnitee or on his behalf in connection with such
Proceeding or any claim, issue or matter therein in such proportion as is appropriate to reflect
the relative benefits received by the Indemnitee and the relative fault of the Indemnitee versus
the other defendants or participants in connection with the action or inaction which resulted in
such Expenses, judgments, penalties, fines and amounts paid in settlement, as well as any other
relevant equitable considerations.




          (b) The Company and the Indemnitee agree that it would not be just and equitable if
contribution pursuant to this Section 13 were determined by pro rata or per capita
allocation or by any other method of allocation which does not take into account the equitable
considerations referred to in Section 13(a) above.




          (c) No Person found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act of 1933) shall be entitled to contribution from any Person who was not
found guilty of such fraudulent misrepresentation.




          14. Officer and Director Liability Insurance.




          (a) The Company shall use all commercially reasonable efforts to obtain and maintain in effect
during the entire period for which the Company is obligated to indemnify the Indemnitee under this
Agreement, one or more policies of insurance with reputable insurance companies to provide the
directors and officers of the Company with coverage for losses from wrongful acts and omissions and
to ensure the Company’s performance of its indemnification obligations under this Agreement. In
all such insurance policies, the Indemnitee shall be named as an insured in such a manner as to
provide the Indemnitee with the same rights and benefits as are accorded to the most favorably
insured of the Company’s directors and officers. Notwithstanding the foregoing, the Company shall
have no obligation to obtain or maintain such insurance if the Company determines in good faith
that the Indemnitee is covered by such insurance maintained by a subsidiary or parent of the
Company.




          (b) To the extent that the Company maintains an insurance policy or policies providing
liability insurance for directors or officers of any other corporation, partnership, limited
liability company, joint venture, trust, employee benefit plan or other enterprise which the
Indemnitee serves at the request of the Company, the Indemnitee shall be named as an insured under
and shall be covered by such policy or policies in accordance with its or their terms to the
maximum extent of the coverage available for the most favorably insured director or officer under
such policy or policies.




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          (c) In the event that the Company is a named insured under any policy or policies of insurance
referenced in either Section 14(a) or (b) above, the Company hereby covenants and
agrees that it will not settle any claims or Proceedings that may be covered by such policy or
policies of insurance and in which the Indemnitee has or may incur Expenses, judgments, penalties,
fines or amounts paid in settlement without the prior written consent of the Indemnitee.




          15. Security. Upon reasonable request by the Indemnitee, the Company shall provide security
to the Indemnitee for the Company’s obligations hereunder through an irrevocable bank letter of
credit, funded trust or other similar collateral. Any such security, once provided to the
Indemnitee, may not be revoked or released without the prior written consent of the Indemnitee,
which consent may be granted or withheld at the Indemnitee’s sole and absolute discretion.




          16. Settlement of Claims. The Company shall not be liable to indemnify the Indemnitee under
this Agreement for any amounts paid in settlement of any Proceeding effected without the Company’s
written consent, which consent shall not be unreasonably withheld.




          17. Duration of Agreement. This Agreement shall be unaffected by the termination of the
Corporate Status of the Indemnitee and shall continue for so long as the Indemnitee may have any
liability or potential liability by virtue of his Corporate Status, including, without limitation,
the final termination of all pending Proceedings in respect of which the Indemnitee is granted
rights of indemnification or advancement of Expenses hereunder and of any Proceeding commenced by
the Indemnitee pursuant to Section 10 of this Agreement relating thereto, whether or not he
is acting or serving in such capacity at the time any liability or Expense is incurred for which
indemnification can be provided under this Agreement. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their respective successors
(including any direct or indirect successor by purchase, merger, consolidation or otherwise to all
or substantially all of the business or assets of the Company), assigns, spouses, heirs, executors
and personal and legal representatives.




          18. Remedies of the Company. The Company hereby covenants and agrees to submit any and all
disputes relating to this Agreement that the parties are unable to resolve between themselves to
binding arbitration pursuant to the rules of the American Arbitration Association and waives all
rights to judicial adjudication of any matter or dispute relating to this Agreement except where
judicial adjudication is requested or required by the Indemnitee.




          19. Covenant Not to Sue, Limitation of Actions and Release of Claims. No legal action shall
be brought and no cause of action shall be asserted by or on behalf of the Company (or any of its
subsidiaries) against the Indemnitee, his spouse, heirs, executors, personal representatives or
administrators after the expiration of two (2) years from the date on which the Corporate Status of
the Indemnitee is terminated (for any reason), and any claim or cause of action of the Company (or
any of its subsidiaries) shall be extinguished and deemed released unless asserted by filing of a
legal action within such two-year period; provided, however, that the foregoing
shall not apply to any action or cause of action brought or asserted by the Company pursuant to or
in respect of this Agreement and shall not constitute a waiver or release of any of the Company’s
rights under this Agreement.




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          20. Limitation of Liability. Notwithstanding any other provision of this Agreement, neither
party shall have any liability to the other for, and neither party shall be entitled to recover
from the other, any consequential, special, punitive, multiple or exemplary damages as a result of
a breach of this Agreement.




          21. Subrogation. In the event of any payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who
shall execute all papers required and take all action necessary to secure such rights, including
execution of such documents as are necessary to enable the Company to bring suit to enforce such
rights.




          22. No Multiple Recovery. The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that the Indemnitee has
otherwise actually received such payment under any insurance policy, contract, agreement or
otherwise.




          23. Definitions. For purposes of this Agreement:




          (a) “Affiliate” means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person. For purposes
hereof, “control” (including, with correlative meaning, the terms “controlling”, “controlled by”
and “under common control with”) means the possession, directly or indirectly, of the power to
direct or cause the direction of management and policies of such Person, by contract or otherwise.




          (b) “Authorized Representative” means (i) a director, officer, employee, agent or
fiduciary of the Company or any Subsidiary and (ii) a person serving at the request of the Company
or any Subsidiary as a director, officer, employee, agent, trustee, fiduciary or other
representative of another corporation, partnership, limited liability company, joint venture,
trust, employee benefit plan or other enterprise.




          (c) “Board” means the Board of Directors of the Company.




          (d) “Change of Control” shall mean a change in control of the Company occurring after
the date of this Agreement of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule
or form) promulgated under the Exchange Act, whether or not the Company is then subject to such
reporting requirement. Without limiting the foregoing, such a Change in Control shall be deemed to
have occurred if, after the date of this Agreement, (i) any “person” (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act) other than a Permitted Holder is or becomes the
“beneficial owner” (as defined in Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of securities of the Company representing 20% or more of the combined voting power of
the Company’s then outstanding securities entitled to vote generally in the election of directors
without the prior approval of at least two-thirds of the members of the Board in office immediately
prior to such person attaining such percentage interest; (ii) the Company is a party to a merger,
consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of
which members of the Board in office




10









 






immediately prior to such transaction or event constitute less than a majority of the Board
thereafter; (iii) during any period of two consecutive years, individuals who at the beginning of
such period constituted the Board (including for this purpose any new director whose election or
nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of such period) cease for
any reason to constitute at least a majority of the Board; or (iv) approval by the shareholders of
the Company of a liquidation or dissolution of the Company.




          (e) “Company” means Grey Wolf, Inc., a Delaware corporation (f/k/a Horsepower
Holdings, Inc.). As used in this definitions of “Authorized Representative” and “Corporate
Status,” the “Company” shall include any predecessors of the Company, including Basic Energy
Services, Inc., a Delaware corporation, and Grey Wolf, Inc., a Texas corporation.




          (f) “Corporate Status” describes the status of an individual who is or was an officer,
director, employee, agent or fiduciary of the Company or any of the Company’s Affiliates, or is or
was serving at the request of the Company or any of its Affiliates as an officer, director,
employee, agent, trustee, fiduciary or other representative of another corporation, partnership,
limited liability company, joint venture, trust, employee benefit plan or other enterprise,
including any Authorized Representative.




          (g) “Disinterested Director” means a director of the Company who is not and was not a
party to, or otherwise involved in, the Proceeding for which indemnification is sought by the
Indemnitee.




          (h) “Exchange Act” means the Securities Exchange Act of 1934, as amended.




          (i) “Expenses” shall include all reasonable attorneys’ fees, retainers, court costs,
transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and
binding costs, telephone charges, postage, delivery service fees and all other disbursements or
expenses of the types customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating or being or preparing to be a witness in a Proceeding.




          (j) “Independent Counsel” means a law firm or a member of a law firm that is
experienced in matters of corporation law and neither presently is, nor in the past five (5) years
has been, retained to represent: (i) the Company or the Indemnitee in any matter material to either
such party or (ii) any other party to the Proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any
Person who, under the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or the Indemnitee in an action to determine
the Indemnitee’s rights under this Agreement




          (k) “Permitted Holder” means Credit Suisse First Boston, Inc., its Affiliates, and DLJ
Merchant Banking Partners III, L.P. and any other partnerships, funds or other entities either
controlled by Credit Suisse First Boston, Inc. or its Affiliates or for which such Persons have
voting or investment control over shares of the Company’s securities without other control,
provided such Permitted Holder is not a “beneficial owner” (as defined in Rule 13d-3 promulgated
under the Exchange Act), directly or indirectly, of securities of the Company




11









 






representing 30% or more of the combined voting power of the Company’s then outstanding
securities entitled to vote generally in the election of directors without the prior approval of at
least two-thirds of the members of the Board in office immediately prior to such person attaining
such percentage interest.




          (l) “Person” means a natural person, firm, partnership, joint venture, association,
corporation, company, limited liability company, trust, business trust, estate or other entity.




          (m) “Proceeding” includes any action, suit, arbitration, alternate dispute resolution
mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal,
administrative or investigative.




          (n) “State” means the State of Texas.




          24. Non-Exclusivity. The Indemnitee’s rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which
the Indemnitee may at any time be entitled under applicable law, the Certificate, the Bylaws, any
agreement, a vote of stockholders, a resolution of directors or otherwise.




          25. Remedies Not Exclusive. Except as set forth in Section 37, no right or remedy
herein conferred upon the Indemnitee is intended to be exclusive of any other right or remedy, and
every other right or remedy shall be cumulative of and in addition to the rights and remedies given
hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy of the Indemnitee hereunder or otherwise shall not be deemed an
election of remedies on the part of the Indemnitee and shall not prevent the concurrent assertion
or employment of any other right or remedy by the Indemnitee.




          26. Changes in Law. In the event that a change in applicable law after the date of this
Agreement, whether by statute, rule or judicial decision, expands or otherwise increases the right
or ability of a Delaware corporation to indemnify a member of its board of directors or an officer,
the Indemnitee shall, by this Agreement, enjoy the greater benefits so afforded by such change. In
the event that a change in applicable law after the date of this Agreement, whether by statute,
rule or judicial decision, narrows or otherwise reduces the right or ability of a Delaware
corporation to indemnify a member of its board of directors or an officer, such change shall have
no effect on this Agreement or any of the Indemnitee’s rights hereunder, except and only to the
extent required by law.




          27. Interpretation of Agreement. The Company and the Indemnitee acknowledge and agree that it
is their intention that this Agreement be interpreted and enforced so as to provide indemnification
to the Indemnitee to the fullest extent now or hereafter permitted by law.




          28. Severability. If any provision or provisions of this Agreement shall be held to be
invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and
enforceability of the remaining provisions of this agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to be invalid, illegal
or unenforceable) shall not in any way be affected or impaired thereby; (b) such provision or
provisions will be deemed reformed to the extent necessary to conform to applicable law and to




12









 






give maximum effect to the intent of the parties hereto; and (c) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, each portion of any
Section of this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to
give effect to the intent manifested by the provision or provisions held invalid, illegal or
unenforceable.




          29. Governing Law; Jurisdiction and Venue; Specific Performance.




          (a) The parties agree that this Agreement shall be governed by, and construed and enforced in
accordance with, the internal laws of the State of Delaware without giving effect to any choice or
conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State of Delaware.




          (b) ANY “ACTION OR PROCEEDING” (AS SUCH TERM IS DEFINED BELOW) ARISING OUT OF OR RELATING TO
THIS AGREEMENT SHALL BE FILED IN AND LITIGATED OR ARBITRATED SOLELY BEFORE THE COURTS LOCATED IN OR
ARBITRATORS SITTING IN HARRIS COUNTY IN THE STATE OF TEXAS, AND EACH PARTY TO THIS AGREEMENT: (i)
GENERALLY AND UNCONDITIONALLY ACCEPTS THE EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
ARBITRATORS AND VENUE THEREIN, AND WAIVES TO THE FULLEST EXTENT PROVIDED BY LAW ANY DEFENSE OR
OBJECTION TO SUCH JURISDICTION AND VENUE BASED UPON THE DOCTRINE OF “FORUM NON CONVENIENS;” AND
(ii) GENERALLY AND UNCONDITIONALLY CONSENTS TO SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING
BY DELIVERY OF CERTIFIED OR REGISTERED MAILING OF THE SUMMONS AND COMPLAINT IN ACCORDANCE WITH THE
NOTICE PROVISIONS OF THIS AGREEMENT. FOR PURPOSES OF THIS SECTION, THE TERM “ACTION OR PROCEEDING”
IS DEFINED AS ANY AND ALL CLAIMS, SUITS, ACTIONS, HEARINGS, ARBITRATIONS OR OTHER SIMILAR
PROCEEDINGS, INCLUDING APPEALS AND PETITIONS THEREFROM, WHETHER FORMAL OR INFORMAL, GOVERNMENTAL OR
NON-GOVERNMENTAL, OR CIVIL OR CRIMINAL. THE FOREGOING CONSENT TO JURISDICTION SHALL NOT CONSTITUTE
GENERAL CONSENT TO SERVICE OF PROCESS IN THE STATE FOR ANY PURPOSE EXCEPT AS PROVIDED ABOVE, AND
SHALL NOT BE DEEMED TO CONFER RIGHTS ON ANY PERSON OTHER THAN THE PARTIES TO THIS AGREEMENT.




          (c) The Company acknowledges that the Indemnitee may, as a result of the Company’s breach of
its covenants and obligations under this Agreement, sustain immediate and long-term substantial and
irreparable injury and damage which cannot be reasonably or adequately compensated by damages at
law. Consequently, the Company agrees that the Indemnitee shall be entitled, in the event of the
Company’s breach or threatened breach of its covenants and obligations hereunder, to obtain
equitable relief from a court of competent jurisdiction, including enforcement of each provision of
this Agreement by specific performance and/or temporary, preliminary and/or permanent injunctions
enforcing any of the Indemnitee’s rights, requiring performance by the Company, or enjoining any
breach by the Company, all without proof of any actual damages that have been or may be caused to
the Indemnitee by such




13









 






breach or threatened breach and without the posting of bond or other security in connection
therewith. The Company waives the claim or defense therein that the Indemnitee has an adequate
remedy at law, and the Company shall not allege or otherwise assert the legal position that any
such remedy at law exists. The Company agrees and acknowledges that: (i) the terms of this
Section 29(c) are fair, reasonable and necessary to protect the legitimate interests of the
Indemnitee; (ii) this waiver is a material inducement to the Indemnitee to enter into the
transactions contemplated hereby; and (iii) the Indemnitee relied upon this waiver in entering into
this Agreement and will continue to rely on this waiver in its future dealings with the Company.
The Company represents and warrants that it has reviewed this provision with its legal counsel, and
that it has knowingly and voluntarily waived its rights referenced in this Section 29
following consultation with such legal counsel.




          30. Nondisclosure of Payments. Except as expressly required by Federal securities laws, the
Company shall not disclose any payments under this Agreement without the prior written consent of
the Indemnitee. Any payments to the Indemnitee that must be disclosed shall, unless otherwise
required by law, be described only in the Company proxy or information statements relating to
special and/or annual meetings of the Company’s shareholders, and the Company shall afford the
Indemnitee a reasonable opportunity to review all such disclosures and, if requested by the
Indemnitee, to explain in such statement any mitigating circumstances regarding the events
reported.




          31. Notice by the Indemnitee. The Indemnitee agrees to promptly notify the Company in writing
upon being served with any summons, citation, subpoena, complaint, indictment, information or other
document relating to any Proceeding or matter which may be subject to indemnification or
advancement of Expenses covered hereunder.




          32. Notices. All notices, requests, demands and other communications hereunder shall be in
writing and shall be deemed to have been duly given if (a) delivered by hand and received for by
the party to whom said notice or other communication shall have been directed, or (b) mailed by
U.S. certified or registered mail with postage prepaid, on the third business day after the date on
which it is so mailed: (i) If to the Company: Grey Wolf, Inc., 10370 Richmond Avenue, Suite 600,
Houston, Texas 77042, Attention: Chief Executive Officer; and (ii) if to any other party hereto,
including the Indemnitee, to the address of such party set forth on the signature page hereof; or
to such other address as may have been furnished by any party to the other(s), in accordance with
this Section 32.




          33. Modification and Waiver. No supplement, modification or amendment of this Agreement or
any provision hereof shall limit or restrict in any way any right of the Indemnitee under this
Agreement with respect to any action taken or omitted by the Indemnitee in his Corporate Status
prior to such supplement, modification or amendment. No supplement, modification or amendment of
this Agreement or any provision hereof shall be binding unless executed in writing by both of the
Company and the Indemnitee. No waiver of any provision of this Agreement shall be deemed or shall
constitute a wavier of any other provision hereof (whether or not similar) nor shall such waiver
constitute a continuing waiver.




14









 







          34. Headings. The headings of the Sections or paragraphs of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction thereof.




          35. Gender. Use of the masculine pronoun in this Agreement shall be deemed to include usage
of the feminine pronoun where appropriate.




          36. Identical Counterparts. This Agreement may be executed in one or more counterparts
(whether by original, photocopy or facsimile signature), each of which shall for all purposes be
deemed to be an original, but all of which together shall constitute one and the same Agreement.
Only one such counterpart executed by the party against whom enforcement is sought must be produced
to evidence the existence of this Agreement.




          37. Supercedure. Indemnitee and the Company agree that, to the extent Indemnitee and any
predecessor of the Company are parties to an Indemnification Agreement as of the date of this
Agreement, such prior Indemnification Agreement shall no longer apply to any matters or actions
occurring or arising on or after the date of this Agreement. With respect to any matters or
actions occurring or arising prior to the date of this Agreement, Indemnitee shall be entitled, but
without duplication, to the rights and remedies set forth in both this Agreement and any prior
Indemnification Agreement to which Indemnitee and any precedessor of the Company is a party.
Except as set forth in the first sentence of this Section 37, this Agreement shall have no
effect on any prior Indemnification Agreement or other obligations of any predecessor of the
Company (including under any articles or certificate of incorporation, or bylaws) in effect on or
prior to the date hereof.




15









 







     IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day
and year first above written.



	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	GREY WOLF, INC.
	 
	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	 	 	Name:	 	 
	 

	 	 
	 	 	 	 	 	 
	Title:

	 	 	 	 	 	Title:	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	INDEMNITEE
	 
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	 	 	[NAME]	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	10370 Richmond Avenue, Suite 600

Houston, Texas 77042







16