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AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of April
1, 2008 (the “Effective Date”), by and between GREY WOLF, INC., a Texas corporation (the
“Company”), and DAVID J. CROWLEY (the “Executive”).

     The Company and the Executive desire to amend and restate the existing Employment Agreement
dated as of July 30, 2007, by and between the Company and the Executive as previously amended on
March 1, 2008 on the terms and conditions of this Agreement.

     Accordingly, the parties agree as follows:

     1. Employment, Duties and Acceptance.

          1.1 Employment by the Company and Duties. The Company hereby agrees to employ the
Executive for a term commencing on the Effective Date and expiring at the end of the day on July
30, 2009 (such date, or later date to which this Agreement is extended in accordance with the terms
hereof, the “Termination Date”), unless earlier terminated as provided in Section 4 or unless
extended as provided herein (the “Term”). The Term shall be automatically extended commencing on
the Termination Date and on each Termination Date thereafter (each such date being a “Renewal
Date”), so as to terminate one (1) year from such Renewal Date, unless and until at least ninety
(90) days prior to a Renewal Date either party hereto gives written notice to the other that the
Term should not be further extended after the next Renewal Date, in which event the Termination
Date shall be the Renewal Date next following such notice. During the Term, the Executive shall
serve in the capacity of Executive Vice President and Chief Operating Officer of the Company, and
shall also serve in those offices and directorships of subsidiary corporations or entities of the
Company to which he may from time to time be appointed or elected. During the Term, the Executive
shall devote all reasonable efforts and all of his business time and services to the Company,
subject to the direction of the Board of Directors of the Company (the “Board”). The Executive
shall not engage in any other business activities except for passive investments as more
particularly described in subsection 3.1.1 below.

          1.2 Acceptance of Employment by the Executive. The Executive hereby accepts such
employment and shall render the services and perform the duties described above.

     2. Compensation and Other Benefits.

          2.1 Annual Salary. The Company shall pay to the Executive an annual salary at a rate
of not less than Three Hundred Ninety-Four Thousand and No/100 ($394,000.00) per year (the “Annual
Salary”), subject to increase at the sole discretion of the Board. The Annual Salary shall be
payable in accordance with the payroll policies of the Company as from time to time in effect, but
in no event less frequently than once each month, less such deductions as shall be required to be
withheld by applicable law and regulations.

 

 

          2.2 Bonuses. The Executive shall receive, at the sole discretion of the Board, an
incentive bonus with respect to the fiscal years ending during the term hereof (the “Incentive
Bonus”). Any such Incentive Bonus shall be paid on or after January 1 and on or before March 15 of
the calendar year following the calendar year in which the bonus relates.

          2.3 Vacation Policy. The Executive shall be entitled to five (5) weeks of paid
vacation during each year of the Term.

          2.4 Participation in Employee Benefit Plans. The Company agrees to permit the
Executive during the Term to participate in any group life, hospitalization or disability insurance
plan, health program, pension plan, similar benefit plan or other so called “fringe benefits” of
the Company (collectively, “Benefits”) which may be available to other executives of the Company on
terms no less favorable to the Executive than the terms offered to such other executives. The
Executive shall cooperate with the Company in applying for such coverage, including submitting to a
physical exam and providing all relevant health and personal data.

          2.5 General Business Expenses. The Company shall pay or reimburse the Executive for
all expenses reasonably and necessarily incurred by the Executive during the Term in the
performance of the Executive’s services under this Agreement. Such payment shall be made upon
presentation of such documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.

          2.6 Company Car and Cellular Telephone. The Company shall provide an automobile, of
the Executive’s choice, to be used by the Executive during the Term hereof or until his employment
hereunder is terminated. The purchase price of the automobile shall not exceed $52,000 (the “Auto
Allowance”); provided, however, the Auto Allowance shall be increased effective January 1, 2009 and
on January 1 of each year thereafter during the Term by a percentage equal to the percentage
increase in the Consumer Price Index (Urban-Houston Metropolitan Area) for the previous calendar
year. If requested by the Executive, the Company will replace the automobile with a new automobile
no less frequently than every three (3) years during the Term hereof provided that the purchase
price of the replacement automobile shall not exceed the Auto Allowance. The Company shall, at its
expense, pay any and all expenses associated with the operation of such company car, including, but
not limited to, collision and liability insurance, maintenance and repair costs, replacement parts,
tires, fuel and oil. The Executive may use the automobile for personal purposes and the value of
any such personal use shall be deemed to be additional compensation. The Company shall also
furnish the Executive with a cellular telephone of his choice and the Company shall pay all charges
in connection with the use thereof, other than charges for calls not related to the Executive’s
duties hereunder. The payment or reimbursement of the expenses described in this Section 2.6 shall
be subject to the provisions of Section 2.8.

          2.7 Certain Additional Payments by the Company.

               2.7.1 Excise Tax; Gross-Up Payment. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or distribution by the
Company to or for benefit of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without regard

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to any additional payments required under this Section 2.7) (a “Payment”) would be subject to
the excise tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall
be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that after
payment by the Executive of all taxes (including any interest or penalties imposed with respect to
such taxes), including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

               2.7.2 Accounting Firm Determinations. Subject to the provisions of Section 2.7.3, all
determinations required to be made under this Section 2.7, including whether and when Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by KPMG, LLP (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and the Executive within fifteen (15)
business days of the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting a Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 2.7, shall be paid by the Company to
the Executive within five (5) days of the receipt of the Accounting Firm’s determination. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the Executive’s
applicable federal income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 2.7.3 and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit
of the Executive. Any Gross-Up payment as determined pursuant to this Section 2.7 shall be paid by
the Company to the Executive within five (5) days after receipt of the accounting firm’s
determination or, if earlier, by the last day of the calendar year following the calendar year in
which the excise tax is paid by the Executive.

               2.7.3 Notification of Claims. The Executive shall notify the Company in writing of
any claims by the Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as practicable but no
later than thirty (30) days after the Executive actually receives notice in writing of such claim
and shall apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the

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expiration of the thirty (30) day period following the date on which he gives such notice to
the Company (or such shorter period ending on the date that any payment of taxes with respect to
such claim is due). If the Company notifies the Executive in writing prior to the expiration of
such period that it desires to contest such claim, the Executive shall:

          (i) give the Company any information reasonably requested by the Company relating to
such claim;

          (ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company;

          (iii) cooperate with the Company in good faith in order to effectively contest such
claim; and

          (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 2.7.3, the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

               2.7.4 Refund. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 2.7.3, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 2.7.3) promptly pay to the Company the amount of such refund

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(together with any interest paid or credited thereon after taxes applicable thereto). If,
after the receipt by the Executive of an amount advanced by the Company pursuant to Section 2.7.3,
a determination is made that the Executive shall not be entitled to any refund with respect to such
claim and the Company does not notify the Executive in writing of its intent to contest such denial
of refund prior to the expiration of thirty (30) days after such determination, then such advance
shall be forgiven and shall not be required to be repaid and the amount of such advance shall
offset, to the extent thereof, the amount of Gross-Up Payment required to be paid.

               2.7.5 Notwithstanding anything to the contrary in the foregoing provisions of this Section
2.7, in no event shall payment of any Gross-Up Payment or any Underpayment be made later than
December 31 of the year next following the year in which the Excise Tax is remitted to the taxing
authority. Reimbursement of any costs or expenses incurred by the Executive due to a tax audit or
litigation described in this Section 2.7 above shall be made by December 31 of the year following
the year in which the taxes that are the subject of the audit or litigation are remitted to the
taxing authority, or where as a result of such audit or litigation no taxes are remitted, by
December 31 of the year following the year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the litigation. The Executive’s right to payment
or reimbursement pursuant to this Section 2.7.5 shall not be subject to liquidation or exchange for
any other benefit.

          2.8 Section 409A-Related Reimbursement Provisions. The amount of expenses to be paid
or reimbursed pursuant to Sections 2.5 and 2.6 shall be made promptly after they are incurred, but
no later than December 31 of the calendar year following the calendar year in which the expenses
are incurred. The amount of such expenses eligible for payment or reimbursement during any
calendar year shall not affect the amount of expenses eligible for payment or reimbursement in any
other calendar year and the Executive’s right to payment or reimbursement of such expenses shall
not be subject to liquidation or exchange for any other benefit.

     3. Non-Competition, Confidentiality and Company Property.

          3.1 Covenants Against Competition. The Executive acknowledges that (i) the Company is
currently engaged in the business of owning, managing and operating onshore drilling and workover
rigs for its own account or for others which are contracted or hired for the purpose of drilling
and/or workover of oil or natural gas wells (the “Company Business”); (ii) his work for the Company
will give him access to trade secrets of and confidential information concerning the Company; and
(iii) the agreements and covenants contained in this Agreement are essential to protect the
business and goodwill of the Company. Accordingly, the Executive covenants and agrees as follows:

               3.1.1 Non-Compete. The Executive agrees that he shall not during the Restricted
Period (as hereinafter defined) within a two hundred (200) mile radius of any office maintained by
the Company within one year prior to the end of the Term, including, without limitation, the office
address specified from time to time pursuant to Section 7.2 hereof and any field offices, directly
or indirectly (except in the Executive’s capacity as an officer of the Company) (i) engage or
participate in the Company Business; or (ii) enter the employ of, or render any other services to,
any person engaged in the Company Business except as permitted

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hereunder. In addition, the Executive agrees that he shall not during the Restrictive Period
(as hereinafter defined) become interested in any such person in any capacity, including, without
limitation, as an individual, partner, shareholder, lender, officer, director, principal, agent or
trustee except as permitted hereunder; provided, however, that the Executive may own, directly or
indirectly, solely as an investment, securities of any person traded on any national securities
exchange or listed on the National Association of Securities Dealers Automated Quotation System if
the Executive is not a controlling person of, or a member of a group which controls, such person
and the Executive does not, directly or indirectly, own five percent (5%) or more of any class of
equity securities, or securities convertible into or exercisable or exchangeable for five percent
(5%) or more of any class of equity securities, of such person. As used herein, the “Restricted
Period” shall mean a period commencing on the date hereof and terminating upon the first to occur
of (a) the date on which the Company terminates or is deemed to terminate the Executive’s
employment without Cause (as hereinafter defined), (b) the date the Executive terminates or is
deemed to terminate his employment pursuant to Section 4.6 hereof, or (c) the date of termination
of this Agreement. Notwithstanding the foregoing, if: (x) the Company shall have terminated the
Executive’s employment for Cause and such Cause in fact exists, the Restricted Period shall end one
(1) year following the termination of the Executive’s employment hereunder or (y) the Executive
shall have terminated his employment with the Company in breach of the terms of this Agreement, the
Restricted Period shall end six (6) months following the termination of Executive’s employment
hereunder unless Executive shall have been promoted to President of the Company, in which event the
Restricted Period shall end one (1) year following the termination of the Executive’s employment
hereunder.

               3.1.2 Confidential Information. The Executive acknowledges that the Company has a
legitimate and continuing proprietary interest in the protection of its confidential information
and that it has invested substantial sums and will continue to invest substantial sums to develop,
maintain and protect confidential information. The Company agrees to provide the Executive access
to confidential information in conjunction with the Executive’s duties, including, without
limitation, information of a technical and business nature regarding the Company’s past, current or
anticipated business that may encompass financial information, financial figures, trade secrets,
customer lists, details of client or consultant contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business acquisition plans,
Company employee information, organizational charts, new personnel acquisition plans, technical
processes, designs and design projects, inventions and research projects, ideas, discoveries,
inventions, improvements, trade secrets, design specifications, writings and other works of
authorship. In exchange, as an independent covenant, the Executive agrees not to make any
unauthorized use, publication, or disclosure, during or subsequent to his employment by the
Company, of any information of a confidential or trade secret nature, generated or acquired by him
during the course of his employment, except to the extent that the disclosure of such confidential
information is necessary to fulfill his responsibilities as an employee of the Company. The
Executive understands that confidential information and trade secrets include information not
generally known by or available to the public about or belonging to the Company, its divisions,
subsidiaries, and related affiliates, or belonging to other companies to whom the Company, its
divisions, subsidiaries, and related affiliates, may have an obligation to maintain information in
confidence, and that authorization for public disclosure may only be obtained through the Company’s
written consent.

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               3.1.3 Property of the Company. All memoranda, notes, lists, records, engineering
drawings, technical specifications and related documents and other documents or papers (and all
copies thereof) relating to the Company, including such items stored in computer memories,
microfiche or by any other means, made or compiled by or on behalf of the Executive after the date
hereof, or made available to the Executive after the date hereof relating to the Company, its
affiliates or any entity which may hereafter become an affiliate thereof, shall be the property of
the Company, and shall be delivered to the Company promptly upon the termination of the Executive’s
employment with the Company or at any other time upon request; provided, however, that the
Executive’s address books, diaries, chronological correspondence files and rolodex files shall be
deemed to be property of the Executive.

               3.1.4 Original Material. The Executive agrees that any inventions, discoveries,
improvements, ideas, concepts or original works of authorship relating directly to the Company
Business, including without limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how, manufacturing processes,
product formulae, design specifications, writings and other works of authorship, computer programs,
financial figures, marketing plans, customer lists and data, business plans or methods and the
like, which relate in any manner to the actual or anticipated business or the actual or anticipated
areas of research and development of the Company and its divisions, subsidiaries, affiliates, or
related entities, whether or not protectable by patent or copyright, that have been originated,
developed or reduced to practice by the Executive alone or jointly with others during the
Executive’s employment with the Company shall be the property of and belong exclusively to the
Company. The Executive shall promptly and fully disclose to the Company the origination or
development by the Executive of any such material and shall provide the Company with any
information that it may reasonably request about such material. Either during or subsequent to the
Executive’s employment, upon the request and at the expense of the Company or its nominee, and for
no remuneration in addition to that due the Executive pursuant to his employment by the Company,
but at no expense to him, the Executive agrees to execute, acknowledge, and deliver to the Company
or its attorneys any and all instruments which, in the judgment of the Company or its attorneys,
may be necessary or desirable to secure or maintain for the benefit of the Company adequate patent,
copyright, and other property rights in the United States and foreign countries with respect to any
such inventions, improvements, ideas, concepts, or original works of authorship embraced within
this Agreement.

               3.1.5 Employees of the Company and its Affiliates. The Executive agrees to refrain
during the Restricted Period from inducing or attempting to influence any employee of the Company,
its divisions, subsidiaries and/or affiliated entities to terminate his employment.

               3.1.6 Customers. The Executive also agrees to refrain during the Restricted Period
from diverting, taking, soliciting and/or accepting on his own behalf or on the behalf of another
person, firm, or company, the business of any past or present customer of the Company, its
divisions, subsidiaries and/or other affiliated entities, or any identified prospective or
potential customer of the Company, its divisions, subsidiaries and/or affiliated entities, whose
identity became known to the Executive through his employment by the Company.

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          3.2 Rights and Remedies Upon Breach. If the Executive breaches, any of the provisions
contained in Section 3.1 of this Agreement (the “Restrictive Covenants”), the Company shall have
the following rights and remedies, each of which rights and remedies shall be independent of the
others and severally enforceable, and each of which is in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity:

               3.2.1 Specific Performance. The right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed that any breach of
the Restrictive Covenants would cause irreparable injury to the Company and that money damages
would not provide an adequate remedy to the Company.

               3.2.2 Accounting. The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments or other benefits
derived or received by the Executive as the result of any action constituting a breach of the
Restrictive Covenants.

          3.3 Severability of Covenants. The Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in duration and geographical scope and in all other
respects. If any court determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected
and shall be given full effect without regard to the invalid portions.

          3.4 Court Review. If any court determines that any of the Restrictive Covenants, or
any part thereof, is unenforceable because of the duration or geographical scope of, or scope of
activities restrained by, such provision, such court shall have the power to reduce the duration or
scope of such provision, as the case may be, and, in its reduced form, such provision shall then be
enforceable.

          3.5 Enforceability in Jurisdictions. The Company and the Executive intend to and
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction
within the geographical scope of such Restrictive Covenants. If the courts of any one or more of
such jurisdictions hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company that such determination not bar or in any
way affect the right of the Company to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive Covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and independent
covenants.

     4. Termination.

          4.1 Termination Upon Death. If the Executive dies during the Term, this Agreement
shall terminate; provided, however, that in any such event, the Company shall pay to the
Executive’s estate (i) any portion of the Annual Salary and any Incentive Bonus that shall have
been earned by the Executive prior to the termination but not yet paid; (ii) any Benefits that have
vested in the Executive at the time of such termination as a result of his participation in any of
the Company’s benefit plans; and (iii) any expenses with respect to which the Executive is

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entitled to reimbursement pursuant to this Agreement. In addition, the Executive’s right to
indemnification, payment or reimbursement pursuant to Section 6 of this Agreement shall not be
affected by such termination and shall continue in full force and effect, both with respect to
proceedings that are threatened, pending or completed at the date of such termination and with
respect to proceedings that are threatened, pending or completed after that date.

          4.2 Termination With Cause. The Company has the right, at any time during the Term,
subject to all of the provisions hereof, exercisable by serving notice, effective on or after the
date of service of such notice as specified therein, to terminate the Executive’s employment under
this Agreement and discharge the Executive with Cause. If such right is exercised, the Company’s
obligation to the Executive shall be limited solely to the lump sum cash payment on the Date of
Termination of unpaid Annual Salary accrued, together with earned but unpaid Incentive Bonus, if
any, and Benefits vested up to the effective date specified in the Company’s notice of termination
payable pursuant to the terms of the applicable benefit plans. As used in this Agreement, the term
“Cause” shall mean and include (i) chronic alcoholism or controlled substance abuse as determined
by a doctor mutually acceptable to the Company and the Executive; (ii) an act of proven fraud or
dishonesty on the part of the Executive with respect to the Company or its subsidiaries; (iii)
knowing and material failure by the Executive to comply with material applicable laws and
regulations relating to the business of the Company or its subsidiaries; (iv) the Executive’s
material and continuing failure to perform (as opposed to unsatisfactory performance) his duties
hereunder or a material breach by the Executive of this Agreement except, in each case, where such
failure or breach is caused by the illness or other similar incapacity or disability of the
Executive; or (v) conviction of a crime involving moral turpitude or a felony. Prior to the
effectiveness of termination for Cause under subclause (i), (ii), (iii) or (iv) above, the
Executive shall be given thirty (30) days prior notice from the Board specifically identifying the
reasons which are alleged to constitute Cause for any termination hereunder and an opportunity to
be heard by the Board in the event the Executive disputes such allegations.

          4.3 Termination Without Cause. The Company has the right, at any time during the
Term, subject to all of the provisions hereof, exercisable by serving notice, effective on or after
the date of service of such notice as specified therein, to terminate the Executive’s employment
under this Agreement and discharge the Executive without Cause. If the Executive is terminated
during the Term without Cause (including any termination which is deemed to be a constructive
termination without Cause under Section 4.6 hereof), the Company’s obligation to the Executive
shall be limited solely to the following:

               4.3.1 Severance Payments. The Company shall pay to the Executive, in a lump sum in
cash within thirty (30) days after the Date of Termination except as otherwise deferred in
accordance with the provisions of Section 4.8, the aggregate of the following amounts:

          (i) the amounts otherwise payable to Executive upon his death under Section 4.1 hereof;
and

          (ii) an amount equal to: 1) in the event such termination occurs within one (1) year
after a Change of Control, an amount equal to three times (3x) the sum of:

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(a) the Annual Salary of Executive in effect on the Date of Termination (or, if the
Company has reduced the Executive’s Annual Salary in breach of this Agreement, the
Executive’s Annual Salary immediately before such reduction) plus (b) a bonus equal to fifty
percent (50%) of such Annual Salary; or 2) in the event such termination occurs at any time
other than within one (1) year after a Change of Control, an amount equal to the sum of: (a)
the Annual Salary of the Executive in effect on the Date of Termination (or, if the Company
has reduced the Executive’s Annual Salary in breach of this Agreement, the Executive’s
Annual Salary immediately before such reduction) plus (b) a bonus equal to fifty percent
(50%) of such Annual Salary; and

               4.3.2 Extension of Medical Benefits. The Executive shall be entitled to an extension
of medical benefits as provided in clauses (i) or (ii) below, as applicable:

          (i) if the Executive has attained age 55 and has completed at least five years of
continuous service with the Company at the date of his termination, the Company will provide
the Executive and, if the Executive is married, the Executive’s spouse and minor dependents
with medical and dental coverage at a level that in all respects is not less than the
medical and dental coverage available to the Executive under the Company’s group health plan
as of the Effective Date for the period commencing on the date such coverage otherwise would
cease due to his termination and ending on the earlier of (a) the Executive’s attainment of
age 65 or (b) the date the Executive first becomes covered after the date of his termination
under another group health plan; provided, however that the Executive is not obligated to
seek employment following his termination or to enroll for coverage under any other group
health plan; or

          (ii) if the Executive has not attained age 55, but has completed at least five years of
continuous service with the Company at the date of his termination, the Company will provide
the Executive and, if the Executive is married, the Executive’s spouse and minor dependents
with medical and dental coverage at a level that in all respects is not less than the
medical and dental coverage available to the Executive under the Company’s group health plan
as of the Effective Date, for the period commencing on the date such coverage otherwise
would cease due to his termination and ending on the earlier of (a) three years following
the date of the Executive’s termination or (b) the date the Executive first becomes covered
after the date of his termination under another group health plan; provided, however that
the Executive is not obligated to seek employment following his termination or to enroll for
coverage under any other group health plan.

The medical and dental benefits provided to the Executive and, if applicable, to the Executive’s
spouse and minor dependents pursuant to this Section 4.3.2 shall be provided by the Company in a
manner such that the Executive will not be taxable on any reimbursements to or on behalf of the
Executive and, if applicable, to or on behalf of the Executive’s spouse. In addition, such medical
and dental benefits shall be provided at no cost to the Executive; provided, however, that if the
Company reasonably determines, based on the advice of its legal counsel, that the Executive must be
taxed on the Company’s actual cost of providing such medical and dental coverage to the Executive
(the “Coverage Cost”) to avoid the Executive being taxed on the reimbursements relating to such
coverage, the Company and the Executive agree that the Company will deliver timely to the Executive
appropriate tax information returns to cause the

10

 

Executive to include the Coverage Cost in the Executive’s income. Reimbursement of such medical
and dental expenses shall be made on or before the last day of the year following the year in which
such expenses were incurred.

          4.4 Termination by the Executive. Any termination of this Agreement by the Executive
during the Term, except such termination as is deemed to be a constructive termination without
Cause by the Company under Section 4.6 of this Agreement, shall be deemed to be a breach of the
terms of this Agreement for the purposes of Section 3.1.1 hereof and shall entitle the Company to
discontinue payment of all Annual Salary, Incentive Bonus and Benefits not earned and payable prior
to the date of such termination.

          4.5 Termination upon Disability. If during the Term the Executive becomes physically
or mentally disabled, whether totally or partially, as evidenced by the written statement of a
competent physician licensed to practice medicine in the United States who is mutually acceptable
to the Company and the Executive or his closest relative if he is not then able to make such a
choice, so that the Executive is unable substantially to perform his services hereunder for (i) a
period of four consecutive months, or (ii) for shorter periods aggregating six months during any
twelve (12) month period, the Company may at any time after the last day of the four consecutive
months of disability or the day on which the shorter periods of disability equal an aggregate of
six months, by written notice to the Executive, terminate the Executive’s employment hereunder and
discontinue payments of the Annual Salary, Incentive Bonus and Benefits accruing from and after the
date of such termination. The Executive shall be entitled to the full compensation payable to him
hereunder for periods of disability shorter than the periods specified in clauses (i) and (ii) of
the previous sentence. In addition, the Executive’s right to indemnification, payment or
reimbursement pursuant to Section 6 of this Agreement shall not be affected by such termination and
shall continue in full force and effect, both with respect to proceedings that are threatened,
pending or completed at the date of such termination and with respect to proceedings that are
threatened, pending or completed after that date.

          4.6 Constructive Termination Without Cause. Notwithstanding any other provision of
this Agreement, the Executive’s employment under this Agreement may be terminated during the Term
by the Executive, which shall be deemed to be constructive termination by the Company without
Cause, if one of the following events shall occur without the consent of the Executive: (i) a
failure to elect or reelect or to appoint or reappoint the Executive to the office of Executive
Vice President and Chief Operating Officer of the Company or other material change by the Company
of the Executive’s functions, duties or responsibilities which change would reduce the ranking or
level, dignity, responsibility, importance or scope of the Executive’s position with the Company
from the position and attributes thereof described in Section 1 above; (ii) the assignment or
reassignment by the Company of the Executive to a location not within fifty (50) miles of the
Company’s current location; (iii) the liquidation, dissolution, consolidation or merger of the
Company, or transfer of all or substantially all of its assets, other than a transaction in which a
successor corporation with a net worth substantially the same as or greater than that of the
Company assumes this Agreement and all obligations and undertakings of the Company hereunder; (iv)
a reduction in the Executive’s annual salary; (v) a Change of Control (subject to amendment as
provided in Section 7.14); (vi) the failure of the Company to continue to provide the Executive
with office space, related facilities and secretarial assistance that are commensurate with the
Executive’s responsibilities to and position with the

11

 

Company; (vii) the notification by the Company of the Company’s intention not to observe or
perform one or more of the obligations of the Company under this Agreement; (viii) the failure by
the Company to indemnify, pay or reimburse the Executive at the time and under the circumstances
required by Section 6 of this Agreement; (ix) the occurrence of any other material breach of this
Agreement by the Company or any of its subsidiaries; or (x) the delivery of notice by the Company
in accordance with Section 1.1 hereof that it desires to terminate this Agreement. Any such
termination shall be made by written notice from the Executive to the Company specifying the event
relied upon for such termination and given within sixty (60) days after such event. Any
constructive termination shall be effective sixty (60) days after the date the Company has been
given such written notice setting forth the grounds for such termination with specificity (the
“Cure Period”); provided, however, that the Executive shall not be entitled to terminate this
Agreement in respect of any of the grounds set forth above if during the Cure Period the action
constituting such ground for termination has been cured and is no longer continuing. A
constructive termination by the Company without Cause shall terminate the Restrictive Period
hereunder.

          4.7 Section 409A Separation from Service. Notwithstanding any provision in this
Agreement to the contrary, no payment or benefit shall be paid pursuant to this Section 4 that
would be considered “deferred compensation” under Section 409A of the Code until the Executive has
incurred a “separation from service” (as such term is defined under Section 409A of the Code),
unless the payment is made by reason of another permitted payment event described in Section
409A(a)(2)(A) of the Code.

          4.8 Section 409A Delayed Payment Provisions. Notwithstanding any other provision
contained in this Agreement to the contrary, no payments that are considered to be “deferred
compensation” under Section 409A of the Code may be made to the Executive as a result of the
Executive’s separation from service to the Company until the date that is six months after the date
of the separation from service (or, if earlier, the death of the Executive) if the Executive is a
“specified employee” as described in Section 409A(a)(2)(B)(i) of the Code at the time of the
Executive’s separation from service or other time deemed applicable by the Company. The provisions
of this Section 4.8 shall only apply to the minimum extent required to avoid the Executive’s
incurrence of taxes imposed under Section 409A of the Code.

     5. Insurance. The Company may, from time to time, apply for and take out, in its own
name and at its own expense, naming itself or one or more of its affiliates as the designated
beneficiary (which it may change from time to time), policies for life, health, accident,
disability or other insurance upon the Executive in any amount or amounts that it may deem
necessary or appropriate to protect its interest. The Executive agrees to aid the Company in
procuring such insurance by submitting to medical examinations and by completing, executing and
delivering such applications and other instruments in writing as may reasonably be required by an
insurance company or companies to which any application or applications for insurance may be made
by or for the Company.

     6. Indemnification.

          6.1 Claims. The Company shall, to the maximum extent not prohibited by law, indemnify
the Executive if he is made, or threatened to be made, a party to any threatened,

12

 

pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Company to procure a judgment in its
favor (collectively, a “Proceeding”), by reason of the fact that the Executive is or was a director
or officer of the Company, or is or was serving in any capacity at the request of the Company for
any other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against judgments, fines, penalties, excise taxes, amounts paid in settlement and
costs, charges and expenses (including attorneys’ fees and disbursements) paid or incurred in
connection with any such Proceeding.

          6.2 Expenses. The Company shall, from time to time, reimburse or advance to the
Executive the funds necessary for payment of expenses, including attorneys’ fees and disbursements,
incurred in connection with any Proceeding in advance of the final disposition of such Proceeding;
provided, however, that, if required by the Texas Business Corporation Act, such expenses incurred
by or on behalf of the Executive may be paid in advance of the final disposition of a Proceeding
only upon receipt by the Company of an undertaking, by or on behalf of the Executive, to repay any
such amount so advanced if it shall ultimately be determined by final judicial decision from which
there is no further right of appeal that the Executive is not entitled to be indemnified for such
expenses.

          6.3 Non-Exclusivity. The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall not be deemed exclusive of any
other rights which the Executive may now or hereafter have under any law, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.

          6.4 Continuation of Rights. The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6 shall continue as to
the Executive after he has ceased to be a director, officer or employee of the Company and shall
inure to the benefit of the heirs, executors and administrators of the Executive’s estate.

          6.5 D&O Insurance. The Company shall purchase and maintain director and officer
liability insurance on such terms and providing such coverage as the Board determines is
appropriate, and the Executive shall be covered by such insurance on the same basis as the other
directors and executive officers of the Company.

          6.6 Enforcement. The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall be enforceable by the Executive
in any court of competent jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the Company. Neither the
failure of the Company (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the circumstances nor an
actual determination by the Company (including its board of directors, independent legal counsel,
or its stockholders) that the Executive is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a presumption that the
Executive is not so entitled. The Executive shall also be indemnified for any expenses incurred in
connection with successfully establishing his right to

13

 

such indemnification or reimbursement or advancement of expenses, in whole or in part, in any
such proceeding.

          6.7 Other Services. If the Executive serves (i) another corporation of which a
majority of the shares entitled to vote in the election of its directors is held by the Company, or
(ii) any employee benefit plan of the Company or any corporation referred to in clause (i), in any
capacity, then he shall be deemed to be doing so at the request of the Company.

          6.8 Applicable Law. The right to indemnification or reimbursement or advancement of
expenses shall be interpreted on the basis of the applicable law in effect at the time of the
occurrence of the event or events giving rise to the applicable Proceeding.

     7. Other Provisions.

          7.1 Certain Definitions. As used in this Agreement, the following words and phrases
have the following meanings unless the context otherwise requires:

               7.1.1 “Affiliate” with respect to the Company means any other person controlled by or under
common control with the Company but shall not include any stockholder or director of the Company,
as such.

               7.1.2 “Change of Control” means, for the purposes of this Agreement (but subject to amendment
pursuant to Section 7.14), the occurrence of any of the following:

          (i) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act, directly or
indirectly, of securities of the Company representing thirty-five percent (35%) or more of
the combined voting power of the Company’s then outstanding securities;

          (ii) there occurs a proxy contest or a consent solicitation, or the Company is a party
to a merger, consolidation, sale of assets, plan of liquidation or other reorganization, as
a consequence of which members of the Board in office immediately prior to such transaction
or event constitute less than a majority of the Board thereafter; or

          (iii) during any period of two consecutive years, other than as a result of an event
described in clause (ii) of this Section 7.1.2, 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 stockholders was approved by a vote of at least a
majority 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.

               7.1.3 “Code” means the Internal Revenue Code of 1986, as amended, and any successor statute.
Reference in this Agreement to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any Treasury regulations promulgated under such section.

14

 

               7.1.4 “Date of Termination” means for purposes of (i) Section 4.1, within thirty (30) days
after the date of Executive’s death; (ii) Sections 4.2, 4.3, and 4.5, the date specified in the
Company’s notice of termination to Executive; and (iii) Section 4.4, the date specified in
Executive’s notice of voluntary resignation or retirement; and (iv) Section 4.6, the first day
following the expiration of the Cure Period during which the Company did not cure the grounds for
termination specified in Executive’s notice to the Company.

               7.1.5 “person” means any individual, corporation, partnership, limited liability company,
firm, joint company, association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.

               7.1.6 “subsidiary” means any person 50% or more of the voting securities of which are owned
directly or indirectly by the Company.

          7.2 Notices. Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, on the date of actual receipt thereof, as follows:

	 	(i)	 	if to the Company, to:
 

Grey Wolf, Inc.

10370 Richmond Avenue, Suite 600

Houston, Texas 77042
	 
	 	(ii)	 	if to the Executive, to:
 

David J. Crowley

4107 Camden Bend Ct.

Katy, Texas 77450

Any party may change its address for notice hereunder by notice to the other party hereto.

          7.3 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements, written or
oral, with respect thereto, including, without limitation, the Employment Agreement dated as of
July 30, 2007 as previously amended on March 1, 2008, by and between the Company and the Executive.

          7.4 Waivers and Amendments. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any waiver on the part of any party of any such right, power or
privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.

15

 

          7.5 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas (without giving effect to the choice of law provisions thereof)
where the employment of the Executive shall be deemed, in part, to be performed and enforcement of
this Agreement or any action taken or held with respect to this Agreement shall be taken in the
courts of appropriate jurisdiction in Houston, Texas.

          7.6 Assignment. This Agreement, and any rights and obligations hereunder, may not be
assigned by the Executive and may be assigned by the Company (subject to Section 4.6 (iii) hereof)
only to a successor by merger or purchasers of substantially all of the assets of the Company.

          7.7 Counterparts. This Agreement may be executed in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of which together shall
constitute one and the same instrument.

          7.8 Headings. The headings in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

          7.9 No Presumption Against Interest. This Agreement has been negotiated, drafted,
edited and reviewed by the respective parties, and therefore, no provision arising directly or
indirectly herefrom shall be construed against any party as being drafted by said party.

          7.10 Validity Contest. The Company shall promptly pay any and all legal fees and
expenses incurred by the Executive from time to time as a direct result of the Company’s contesting
the due execution, authorization, validity or enforceability of this Agreement. Executive shall
have no obligation to mitigate damages suffered as a result of termination of his employment with
the Company. The provisions of this Section 7.10 shall survive termination of this Agreement.
Reimbursement of such expenses shall be made promptly and in no event later than December 31 of the
year following the year in which such expenses were incurred, and the amount of such expenses
eligible for reimbursement in any year shall not affect the amount of such expenses eligible for
reimbursement in any other year.

          7.11 Dispute Resolution. If any dispute arises out of or relates to this Agreement,
or the breach thereof, the Executive and the Company agree to promptly negotiate in good faith to
resolve such dispute. If the dispute cannot be settled by the parties through negotiation, the
Executive and the Company agree to try in good faith to settle the dispute by mediation under the
Commercial Mediation Rules of the American Arbitration Association before resorting to arbitration,
litigation or any other dispute resolution procedure. If the parties are unable to settle the
dispute by mediation as provided in the preceding sentence, any claim, controversy or dispute
arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding
arbitration before a panel of three arbitrators in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration shall be conducted in Houston, Harris
County, Texas, or such other location to which the parties mutually agree. The decision of the
arbitrator(s) shall be final and binding and judgment upon the award rendered may be entered in any
court having jurisdiction thereof. Notwithstanding the foregoing provisions of this Section 7.12,
the Company may exercise its rights as provided in Section 3 at any time and without regard to the
foregoing provisions of this Section 7.12.

16

 

          7.12 Binding Agreement. This Agreement shall inure to the benefit of and be binding
upon the Company and its respective successors and assigns and the Executive and his legal
representatives.

          7.13 Section 409A Compliance. The Parties intend that this Agreement and the benefits
provided hereunder be interpreted and construed to comply with Section 409A of the Code to the
extent applicable thereto.

          7.14 Amendment of Certain Provisions and Proposed Merger. The following amendments to
this Agreement shall become effective (without any further action by the parties) immediately prior
to the effectiveness of the proposed merger, consolidation or other business combination of the
Company and Basic Energy Services, Inc., a Delaware corporation, into each other or a new
corporation, however structured (the “Proposed Merger”):

               7.14.1 Subpart (v) of Section 4.6 shall be deleted.

               7.14.2 Section 7.1.2 shall be deleted in its entirety and replaced by the following:

          “7.1.2 “Change of Control” means, for purposes of this Agreement, the
occurrence of any of the following:

          (i) any “Person” (as such term is used in Sections 13(d) and 14(d) of
the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities;

          (ii) there occurs a proxy contest or a consent solicitation, or the
Company is a party to a merger, consolidation, sale of assets, plan of
liquidation or other reorganization, as a consequence of which members of
the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board thereafter;

          (iii) during any period of two consecutive years, other than as a
result of an event described in clause (ii) of this Section 7.1.2,
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 stockholders was approved by a vote of at
least a majority 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;

          (iv) approval by the shareholders of the Company of a reorganization,
merger, consolidation or similar business combination involving the Company
(a “Merger”), unless immediately following such Merger, substantially all of
the holders of the then outstanding shares of

17

 

common stock of the Company (the “Outstanding Company Voting
Securities”) immediately prior to the Merger beneficially own, directly or
indirectly, more than fifty percent (50%) of the common stock of the
corporation resulting from such Merger (or its parent corporation) in
substantially the same proportions as their ownership of Outstanding Company
Voting Securities immediately prior to such Merger;

          (v) the sale or other disposition of all or substantially all of the
assets of the Company and its subsidiaries (including through sale or other
disposition of the equity of such subsidiaries), unless immediately
following such sale or other disposition, substantially all of the holders
of the Outstanding Company Voting Securities immediately prior to the
consummation of such sale or other disposition beneficially own, directly or
indirectly, more than fifty percent (50%) of the common stock of the
corporation acquiring such assets in substantially the same proportions as
their ownership of Outstanding Company Voting Securities immediately prior
to the consummation of such sale or disposition; or

          (vi) the Proposed Merger.”

If the Proposed Merger is not effective for any reason on or before November 30, 2008, this Section
7.14 shall terminate and be of no further force or effect.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

18

 

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ David J. Crowley
 	 
	 	David J. Crowley 	 
	 	 	 
	 
	 	COMPANY

GREY WOLF, INC.

 	 
	 	By:  	/s/ Thomas P. Richards
 	 
	 	 	Thomas P. Richards 	 
	 	 	Chairman, President and CEO 	 
	 

19exv10w5

 

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this “Agreement”) is entered into as of April
1, 2008 (the “Effective Date”), by and between GREY WOLF, INC., a Texas corporation (the
“Company”), and ROBERT J. PROFFIT (the “Executive”).

     The Company and the Executive desire to amend and restate the existing Employment Agreement
dated as of December 28, 2005, by and between the Company and the Executive as previously amended
on March 1, 2008 on the terms and conditions of this Agreement.

     Accordingly, the parties agree as follows:

     1. Employment, Duties and Acceptance.

          1.1 Employment by the Company and Duties. The Company hereby agrees to employ the
Executive for a term commencing on the Effective Date and expiring at the end of the day on
December 31, 2008 (such date, or later date to which this Agreement is extended in accordance with
the terms hereof, the “Termination Date”), unless earlier terminated as provided in Section 4 or
unless extended as provided herein (the “Term”). The Term shall be automatically extended
commencing on the Termination Date and on each Termination Date thereafter (each such date being a
“Renewal Date”), so as to terminate one (1) year from such Renewal Date, unless and until at least
ninety (90) days prior to a Renewal Date either party hereto gives written notice to the other that
the Term should not be further extended after the next Renewal Date, in which event the Termination
Date shall be the Renewal Date next following such notice. During the Term, the Executive shall
serve in the capacity of Senior Vice President, Human Resources of the Company, and shall also
serve in those offices and directorships of subsidiary corporations or entities of the Company to
which he may from time to time be appointed or elected. During the Term, the Executive shall
devote all reasonable efforts and all of his business time and services to the Company, subject to
the direction of the Board of Directors of the Company (the “Board”). The Executive shall not
engage in any other business activities except for passive investments as more particularly
described in subsection 3.1.1 below.

          1.2 Acceptance of Employment by the Executive. The Executive hereby accepts such
employment and shall render the services and perform the duties described above.

     2. Compensation and Other Benefits.

          2.1 Annual Salary. The Company shall pay to the Executive an annual salary at a rate
of not less than Two Hundred Twenty-Seven Thousand and No/100 Dollars ($227,000.00) per year (the
“Annual Salary”), subject to increase at the sole discretion of the Board. The Annual Salary shall
be payable in accordance with the payroll policies of the Company as from time to time in effect,
but in no event less frequently than once each month, less such deductions as shall be required to
be withheld by applicable law and regulations.

 

 

          2.2 Bonuses. The Executive shall receive, at the sole discretion of the Board, an
incentive bonus with respect to the fiscal years ending during the term hereof (the “Incentive
Bonus”). Any such Incentive Bonus shall be paid on or after January 1 and on or before March 15 of
the calendar year following the calendar year in which the bonus relates.

          2.3 Vacation Policy. The Executive shall be entitled to three (3) weeks of paid
vacation during each year of the Term until Executive has been employed by the Company for ten (10)
years when the Executive shall be entitled to four (4) weeks of paid vacation during each year of
the Term until Executive has been employed by the Company for twenty (20) years when the Executive
shall be entitled to five (5) weeks paid vacation during each year of the Term.

          2.4 Participation in Employee Benefit Plans. The Company agrees to permit the
Executive during the Term to participate in any group life, hospitalization or disability insurance
plan, health program, pension plan, similar benefit plan or other so called “fringe benefits” of
the Company (collectively, “Benefits”) which may be available to other executives of the Company on
terms no less favorable to the Executive than the terms offered to such other executives. The
Executive shall cooperate with the Company in applying for such coverage, including submitting to a
physical exam and providing all relevant health and personal data.

          2.5 General Business Expenses. The Company shall pay or reimburse the Executive for
all expenses reasonably and necessarily incurred by the Executive during the Term in the
performance of the Executive’s services under this Agreement. Such payment shall be made upon
presentation of such documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.

          2.6 Company Car and Cellular Telephone. The Company shall provide an automobile, of
the Executive’s choice, to be used by the Executive during the Term hereof or until his employment
hereunder is terminated. The purchase price of the automobile shall not exceed $51,000 (the “Auto
Allowance”); provided, however, the Auto Allowance shall be increased effective January 1, 2009 and
on January 1 of each year thereafter during the Term by a percentage equal to the percentage
increase in the Consumer Price Index (Urban-Houston Metropolitan Area) for the previous calendar
year. If requested by the Executive, the Company will replace the automobile with a new automobile
no less frequently than every three (3) years during the Term hereof provided that the purchase
price of the replacement automobile shall not exceed the Auto Allowance. The Company shall, at its
expense, pay any and all expenses associated with the operation of such company car, including, but
not limited to, collision and liability insurance, maintenance and repair costs, replacement parts,
tires, fuel and oil. The Executive may use the automobile for personal purposes and the value of
any such personal use shall be deemed to be additional compensation. The Company shall also
furnish the Executive with a cellular telephone of his choice and the Company shall pay all charges
in connection with the use thereof, other than charges for calls not related to the Executive’s
duties hereunder. The payment or reimbursement of the expenses described in this Section 2.6 shall
be subject to the provisions of Section 2.8.

2

 

          2.7 Certain Additional Payments by the Company.

               2.7.1 Excise Tax; Gross-Up Payment. Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or distribution by the
Company to or for benefit of the Executive (whether paid or payable or distributed or distributable
pursuant to the terms of this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 2.7) (a “Payment”) would be subject to the excise
tax imposed by Section 4999 of the Code or any interest or penalties are incurred by the Executive
with respect to such excise tax (such excise tax, together with any such interest and penalties,
are hereinafter collectively referred to as the “Excise Tax”), then the Executive shall be entitled
to receive an additional payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive retains an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.

               2.7.2 Accounting Firm Determinations. Subject to the provisions of Section 2.7.3, all
determinations required to be made under this Section 2.7, including whether and when Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in
arriving at such determination, shall be made by KPMG, LLP (the “Accounting Firm”) which shall
provide detailed supporting calculations both to the Company and the Executive within fifteen (15)
business days of the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting Firm is serving as
accountant or auditor for the individual, entity or group effecting a Change of Control, the
Executive shall appoint another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 2.7, shall be paid by the Company to
the Executive within five (5) days of the receipt of the Accounting Firm’s determination. If the
Accounting Firm determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the Executive’s
applicable federal income tax return would not result in the imposition of a negligence or similar
penalty. Any determination by the Accounting Firm shall be binding upon the Company and the
Executive. As a result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (“Underpayment”),
consistent with the calculations required to be made hereunder. In the event that the Company
exhausts its remedies pursuant to Section 2.7.3 and the Executive thereafter is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that
has occurred and any such Underpayment shall be promptly paid by the Company to or for the benefit
of the Executive.

               2.7.3 Notification of Claims. The Executive shall notify the Company in writing of
any claims by the Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as

3

 

practicable but no later than thirty (30) days after the Executive actually receives notice in
writing of such claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on which he gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes with respect to such
claim is due). If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

          (i) give the Company any information reasonably requested by the Company relating to
such claim;

          (ii) take such action in connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including, without limitation, accepting
legal representation with respect to such claim by an attorney reasonably selected by the
Company;

          (iii) cooperate with the Company in good faith in order to effectively contest such
claim; and

          (iv) permit the Company to participate in any proceedings relating to such claim;

provided, however, that the Company shall bear and pay directly all costs and expenses (including
additional interest and penalties) incurred in connection with such contest and shall indemnify and
hold the Executive harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such representation and payment
of costs and expenses. Without limitation on the foregoing provisions of this Section 2.7.3, the
Company shall control all proceedings taken in connection with such contest and, at its sole
option, may pursue or forego any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the claim in any
permissible manner, and the Executive agrees to prosecute such contest to a determination before
any administrative tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as the Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold the Executive
harmless, on an after-tax basis, from any Excise Tax or income tax (including interest or penalties
with respect thereto) imposed with respect to such advance or with respect to any imputed income
with respect to such advance; and further provided that any extension of the statute of limitations
relating to payment of taxes for the taxable year of the Executive with respect to which such
contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the
Company’s control of the contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle or contest, as the
case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

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               2.7.4 Refund. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 2.7.3, the Executive becomes entitled to receive any refund with
respect to such claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 2.7.3) promptly pay to the Company the amount of such refund (together with
any interest paid or credited thereon after taxes applicable thereto). If, after the receipt by
the Executive of an amount advanced by the Company pursuant to Section 2.7.3, a determination is
made that the Executive shall not be entitled to any refund with respect to such claim and the
Company does not notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance shall offset, to the
extent thereof, the amount of Gross-Up Payment required to be paid.

               2.7.5 Notwithstanding anything to the contrary in the foregoing provisions of this Section
2.7, in no event shall payment of any Gross-Up Payment or any Underpayment be made later than
December 31 of the year next following the year in which the Excise Tax is remitted to the taxing
authority. Reimbursement of any costs or expenses incurred by the Executive due to a tax audit or
litigation described in this Section 2.7 above shall be made by December 31 of the year following
the year in which the taxes that are the subject of the audit or litigation are remitted to the
taxing authority, or where as a result of such audit or litigation no taxes are remitted, by
December 31 of the year following the year in which the audit is completed or there is a final and
nonappealable settlement or other resolution of the litigation. The Executive’s right to payment
or reimbursement pursuant to this Section 2.7.5 shall not be subject to liquidation or exchange for
any other benefit.

          2.8 Section 409A-Related Reimbursement Provisions. The amount of expenses to be paid
or reimbursed pursuant to Sections 2.5 and 2.6 shall be made promptly after they are incurred, but
no later than December 31 of the calendar year following the calendar year in which the expenses
are incurred. The amount of such expenses eligible for payment or reimbursement during any
calendar year shall not affect the amount of expenses eligible for payment or reimbursement in any
other calendar year and the Executive’s right to payment or reimbursement of such expenses shall
not be subject to liquidation or exchange for any other benefit.

     3. Non-Competition, Confidentiality and Company Property.

          3.1 Covenants Against Competition. The Executive acknowledges that (i) the Company is
currently engaged in the business of owning, managing and operating onshore drilling and workover
rigs for its own account or for others which are contracted or hired for the purpose of drilling
and/or workover of oil or natural gas wells (the “Company Business”); (ii) his work for the Company
will give him access to trade secrets of and confidential information concerning the Company; and
(iii) the agreements and covenants contained in this Agreement are essential to protect the
business and goodwill of the Company. Accordingly, the Executive covenants and agrees as follows:

               3.1.1 Non-Compete. The Executive agrees that he shall not during the Restricted
Period (as hereinafter defined) within a two hundred (200) mile radius of any office maintained by
the Company within one year prior to the end of the Term, including, without

5

 

limitation, the office address specified from time to time pursuant to Section 7.2 hereof and
any field offices, directly or indirectly (except in the Executive’s capacity as an officer of the
Company) (i) engage or participate in the Company Business; or (ii) enter the employ of, or render
any other services to, any person engaged in the Company Business except as permitted hereunder.
In addition, the Executive agrees that he shall not during the Restrictive Period (as hereinafter
defined) become interested in any such person in any capacity, including, without limitation, as an
individual, partner, shareholder, lender, officer, director, principal, agent or trustee except as
permitted hereunder; provided, however, that the Executive may own, directly or indirectly, solely
as an investment, securities of any person traded on any national securities exchange or listed on
the National Association of Securities Dealers Automated Quotation System if the Executive is not a
controlling person of, or a member of a group which controls, such person and the Executive does
not, directly or indirectly, own five percent (5%) or more of any class of equity securities, or
securities convertible into or exercisable or exchangeable for five percent (5%) or more of any
class of equity securities, of such person. As used herein, the “Restricted Period” shall mean a
period commencing on the date hereof and terminating upon the first to occur of (a) the date on
which the Company terminates or is deemed to terminate the Executive’s employment without Cause (as
hereinafter defined), (b) the date the Executive terminates or is deemed to terminate his
employment pursuant to Section 4.6 hereof, or (c) the date of termination of this Agreement;
provided, however, that if the Company shall have terminated the Executive’s employment for Cause
and such Cause in fact exists or if the Executive shall have terminated his employment with the
Company in breach of the terms of this Agreement, the Restricted Period shall end one (1) year
following the termination of the Executive’s employment hereunder.

               3.1.2 Confidential Information. The Executive acknowledges that the Company has a
legitimate and continuing proprietary interest in the protection of its confidential information
and that it has invested substantial sums and will continue to invest substantial sums to develop,
maintain and protect confidential information. The Company agrees to provide the Executive access
to confidential information in conjunction with the Executive’s duties, including, without
limitation, information of a technical and business nature regarding the Company’s past, current or
anticipated business that may encompass financial information, financial figures, trade secrets,
customer lists, details of client or consultant contracts, pricing policies, operational methods,
marketing plans or strategies, product development techniques or plans, business acquisition plans,
Company employee information, organizational charts, new personnel acquisition plans, technical
processes, designs and design projects, inventions and research projects, ideas, discoveries,
inventions, improvements, trade secrets, design specifications, writings and other works of
authorship. In exchange, as an independent covenant, the Executive agrees not to make any
unauthorized use, publication, or disclosure, during or subsequent to his employment by the
Company, of any information of a confidential or trade secret nature, generated or acquired by him
during the course of his employment, except to the extent that the disclosure of such confidential
information is necessary to fulfill his responsibilities as an employee of the Company. The
Executive understands that confidential information and trade secrets include information not
generally known by or available to the public about or belonging to the Company, its divisions,
subsidiaries, and related affiliates, or belonging to other companies to whom the Company, its
divisions, subsidiaries, and related affiliates, may have an obligation to maintain information in
confidence, and that authorization for public disclosure may only be obtained through the Company’s
written consent.

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               3.1.3 Property of the Company. All memoranda, notes, lists, records, engineering
drawings, technical specifications and related documents and other documents or papers (and all
copies thereof) relating to the Company, including such items stored in computer memories,
microfiche or by any other means, made or compiled by or on behalf of the Executive after the date
hereof, or made available to the Executive after the date hereof relating to the Company, its
affiliates or any entity which may hereafter become an affiliate thereof, shall be the property of
the Company, and shall be delivered to the Company promptly upon the termination of the Executive’s
employment with the Company or at any other time upon request; provided, however, that the
Executive’s address books, diaries, chronological correspondence files and rolodex files shall be
deemed to be property of the Executive.

               3.1.4 Original Material. The Executive agrees that any inventions, discoveries,
improvements, ideas, concepts or original works of authorship relating directly to the Company
Business, including without limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how, manufacturing processes,
product formulae, design specifications, writings and other works of authorship, computer programs,
financial figures, marketing plans, customer lists and data, business plans or methods and the
like, which relate in any manner to the actual or anticipated business or the actual or anticipated
areas of research and development of the Company and its divisions, subsidiaries, affiliates, or
related entities, whether or not protectable by patent or copyright, that have been originated,
developed or reduced to practice by the Executive alone or jointly with others during the
Executive’s employment with the Company shall be the property of and belong exclusively to the
Company. The Executive shall promptly and fully disclose to the Company the origination or
development by the Executive of any such material and shall provide the Company with any
information that it may reasonably request about such material. Either during or subsequent to the
Executive’s employment, upon the request and at the expense of the Company or its nominee, and for
no remuneration in addition to that due the Executive pursuant to his employment by the Company,
but at no expense to him, the Executive agrees to execute, acknowledge, and deliver to the Company
or its attorneys any and all instruments which, in the judgment of the Company or its attorneys,
may be necessary or desirable to secure or maintain for the benefit of the Company adequate patent,
copyright, and other property rights in the United States and foreign countries with respect to any
such inventions, improvements, ideas, concepts, or original works of authorship embraced within
this Agreement.

               3.1.5 Employees of the Company and its Affiliates. The Executive agrees to refrain
during the Restricted Period from inducing or attempting to influence any employee of the Company,
its divisions, subsidiaries and/or affiliated entities to terminate his employment.

               3.1.6 Customers. The Executive also agrees to refrain during the Restricted Period
from diverting, taking, soliciting and/or accepting on his own behalf or on the behalf of another
person, firm, or company, the business of any past or present customer of the Company, its
divisions, subsidiaries and/or other affiliated entities, or any identified prospective or
potential customer of the Company, its divisions, subsidiaries and/or affiliated entities, whose
identity became known to the Executive through his employment by the Company.

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          3.2 Rights and Remedies Upon Breach. If the Executive breaches, any of the provisions
contained in Section 3.1 of this Agreement (the “Restrictive Covenants”), the Company shall have
the following rights and remedies, each of which rights and remedies shall be independent of the
others and severally enforceable, and each of which is in addition to, and not in lieu of, any
other rights and remedies available to the Company under law or in equity:

               3.2.1 Specific Performance. The right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed that any breach of
the Restrictive Covenants would cause irreparable injury to the Company and that money damages
would not provide an adequate remedy to the Company.

               3.2.2 Accounting. The right and remedy to require the Executive to account for and
pay over to the Company all compensation, profits, monies, accruals, increments or other benefits
derived or received by the Executive as the result of any action constituting a breach of the
Restrictive Covenants.

          3.3 Severability of Covenants. The Executive acknowledges and agrees that the
Restrictive Covenants are reasonable and valid in duration and geographical scope and in all other
respects. If any court determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not thereby be affected
and shall be given full effect without regard to the invalid portions.

          3.4 Court Review. If any court determines that any of the Restrictive Covenants, or
any part thereof, is unenforceable because of the duration or geographical scope of, or scope of
activities restrained by, such provision, such court shall have the power to reduce the duration or
scope of such provision, as the case may be, and, in its reduced form, such provision shall then be
enforceable.

          3.5 Enforceability in Jurisdictions. The Company and the Executive intend to and
hereby confer jurisdiction to enforce the Restrictive Covenants upon the courts of any jurisdiction
within the geographical scope of such Restrictive Covenants. If the courts of any one or more of
such jurisdictions hold the Restrictive Covenants unenforceable by reason of the breadth of such
scope or otherwise, it is the intention of the Company that such determination not bar or in any
way affect the right of the Company to the relief provided above in the courts of any other
jurisdiction within the geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive Covenants as they
relate to each jurisdiction being, for this purpose, severable into diverse and independent
covenants.

     4. Termination.

          4.1 Termination Upon Death. If the Executive dies during the Term, this Agreement
shall terminate; provided, however, that in any such event, the Company shall pay to the
Executive’s estate (i) any portion of the Annual Salary and any Incentive Bonus that shall have
been earned by the Executive prior to the termination but not yet paid; (ii) any Benefits that have
vested in the Executive at the time of such termination as a result of his participation in any of
the Company’s benefit plans; and (iii) any expenses with respect to which the Executive is

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entitled to reimbursement pursuant to this Agreement. In addition, the Executive’s right to
indemnification, payment or reimbursement pursuant to Section 6 of this Agreement shall not be
affected by such termination and shall continue in full force and effect, both with respect to
proceedings that are threatened, pending or completed at the date of such termination and with
respect to proceedings that are threatened, pending or completed after that date.

          4.2 Termination With Cause. The Company has the right, at any time during the Term,
subject to all of the provisions hereof, exercisable by serving notice, effective on or after the
date of service of such notice as specified therein, to terminate the Executive’s employment under
this Agreement and discharge the Executive with Cause. If such right is exercised, the Company’s
obligation to the Executive shall be limited solely to the lump sum cash payment on the Date of
Termination of unpaid Annual Salary accrued, together with earned but unpaid Incentive Bonus, if
any, and Benefits vested up to the effective date specified in the Company’s notice of termination
payable pursuant to the terms of the applicable benefit plans. As used in this Agreement, the term
“Cause” shall mean and include (i) chronic alcoholism or controlled substance abuse as determined
by a doctor mutually acceptable to the Company and the Executive; (ii) an act of proven fraud or
dishonesty on the part of the Executive with respect to the Company or its subsidiaries; (iii)
knowing and material failure by the Executive to comply with material applicable laws and
regulations relating to the business of the Company or its subsidiaries; (iv) the Executive’s
material and continuing failure to perform (as opposed to unsatisfactory performance) his duties
hereunder or a material breach by the Executive of this Agreement except, in each case, where such
failure or breach is caused by the illness or other similar incapacity or disability of the
Executive; or (v) conviction of a crime involving moral turpitude or a felony. Prior to the
effectiveness of termination for Cause under subclause (i), (ii), (iii) or (iv) above, the
Executive shall be given thirty (30) days prior notice from the Board specifically identifying the
reasons which are alleged to constitute Cause for any termination hereunder and an opportunity to
be heard by the Board in the event the Executive disputes such allegations.

          4.3 Termination Without Cause. The Company has the right, at any time during the
Term, subject to all of the provisions hereof, exercisable by serving notice, effective on or after
the date of service of such notice as specified therein, to terminate the Executive’s employment
under this Agreement and discharge the Executive without Cause. If the Executive is terminated
during the Term without Cause (including any termination which is deemed to be a constructive
termination without Cause under Section 4.6 hereof), the Company’s obligation to the Executive
shall be limited solely to the following:

               4.3.1 Severance Payments. The Company shall pay to the Executive, in a lump sum in
cash within thirty (30) days after the Date of Termination except as otherwise deferred in
accordance with the provisions of Section 4.8, the aggregate of the following amounts:

          (i) the amounts otherwise payable to Executive upon his death under Section 4.1 hereof;
and

          (ii) an amount equal to: 1) in the event such termination occurs within one (1) year
after a Change of Control, an amount equal to three times (3x) the sum of:

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(a) the Annual Salary of Executive in effect on the Date of Termination (or, if the
Company has reduced the Executive’s Annual Salary in breach of this Agreement, the
Executive’s Annual Salary immediately before such reduction) plus (b) a bonus equal to fifty
percent (50%) of such Annual Salary; or 2) in the event such termination occurs at any time
other than within one (1) year after a Change of Control, an amount equal to the sum of: (a)
the Annual Salary of the Executive in effect on the Date of Termination (or, if the Company
has reduced the Executive’s Annual Salary in breach of this Agreement, the Executive’s
Annual Salary immediately before such reduction) plus (b) a bonus equal to fifty percent
(50%) of such Annual Salary; and

               4.3.2 Extension of Medical Benefits. The Executive shall be entitled to an extension
of medical benefits as provided in clauses (i) or (ii) below, as applicable:

          (i) if the Executive has attained age 55 and has completed at least five years of
continuous service with the Company at the date of his termination, the Company will provide
the Executive and, if the Executive is married, the Executive’s spouse and minor dependents
with medical and dental coverage at a level that in all respects is not less than the
medical and dental coverage available to the Executive under the Company’s group health plan
as of the Effective Date for the period commencing on the date such coverage otherwise would
cease due to his termination and ending on the earlier of (a) the Executive’s attainment of
age 65 or (b) the date the Executive first becomes covered after the date of his termination
under another group health plan; provided, however that the Executive is not obligated to
seek employment following his termination or to enroll for coverage under any other group
health plan; or

          (ii) if the Executive has not attained age 55, but has completed at least five years of
continuous service with the Company at the date of his termination, the Company will provide
the Executive and, if the Executive is married, the Executive’s spouse and minor dependents
with medical and dental coverage at a level that in all respects is not less than the
medical and dental coverage available to the Executive under the Company’s group health plan
as of the Effective Date, for the period commencing on the date such coverage otherwise
would cease due to his termination and ending on the earlier of (a) three years following
the date of the Executive’s termination or (b) the date the Executive first becomes covered
after the date of his termination under another group health plan; provided, however that
the Executive is not obligated to seek employment following his termination or to enroll for
coverage under any other group health plan.

The medical and dental benefits provided to the Executive and, if applicable, to the Executive’s
spouse and minor dependents pursuant to this Section 4.3.2 shall be provided by the Company in a
manner such that the Executive will not be taxable on any reimbursements to or on behalf of the
Executive and, if applicable, to or on behalf of the Executive’s spouse. In addition, such medical
and dental benefits shall be provided at no cost to the Executive; provided, however, that if the
Company reasonably determines, based on the advice of its legal counsel, that the Executive must be
taxed on the Company’s actual cost of providing such medical and dental coverage to the Executive
(the “Coverage Cost”) to avoid the Executive being taxed on the reimbursements relating to such
coverage, the Company and the Executive agree that the Company will deliver timely to the Executive
appropriate tax information returns to cause the

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Executive to include the Coverage Cost in the Executive’s income. Reimbursement of such medical
and dental expenses shall be made on or before the last day of the year following the year in which
such expenses were incurred.

          4.4 Termination by the Executive. Any termination of this Agreement by the Executive
during the Term, except such termination as is deemed to be a constructive termination without
Cause by the Company under Section 4.6 of this Agreement, shall be deemed to be a breach of the
terms of this Agreement for the purposes of Section 3.1.1 hereof and shall entitle the Company to
discontinue payment of all Annual Salary, Incentive Bonus and Benefits not earned and payable prior
to the date of such termination.

          4.5 Termination upon Disability. If during the Term the Executive becomes physically
or mentally disabled, whether totally or partially, as evidenced by the written statement of a
competent physician licensed to practice medicine in the United States who is mutually acceptable
to the Company and the Executive or his closest relative if he is not then able to make such a
choice, so that the Executive is unable substantially to perform his services hereunder for (i) a
period of four consecutive months, or (ii) for shorter periods aggregating six months during any
twelve (12) month period, the Company may at any time after the last day of the four consecutive
months of disability or the day on which the shorter periods of disability equal an aggregate of
six months, by written notice to the Executive, terminate the Executive’s employment hereunder and
discontinue payments of the Annual Salary, Incentive Bonus and Benefits accruing from and after the
date of such termination. The Executive shall be entitled to the full compensation payable to him
hereunder for periods of disability shorter than the periods specified in clauses (i) and (ii) of
the previous sentence. In addition, the Executive’s right to indemnification, payment or
reimbursement pursuant to Section 6 of this Agreement shall not be affected by such termination and
shall continue in full force and effect, both with respect to proceedings that are threatened,
pending or completed at the date of such termination and with respect to proceedings that are
threatened, pending or completed after that date.

          4.6 Constructive Termination Without Cause. Notwithstanding any other provision of
this Agreement, the Executive’s employment under this Agreement may be terminated during the Term
by the Executive, which shall be deemed to be constructive termination by the Company without
Cause, if one of the following events shall occur without the consent of the Executive: (i) a
failure to elect or reelect or to appoint or reappoint the Executive to the office of Vice
President — Human Resources of the Company or other material change by the Company of the
Executive’s functions, duties or responsibilities which change would reduce the ranking or level,
dignity, responsibility, importance or scope of the Executive’s position with the Company from the
position and attributes thereof described in Section 1 above; (ii) the assignment or reassignment
by the Company of the Executive to a location not within fifty (50) miles of the Company’s current
location; (iii) the liquidation, dissolution, consolidation or merger of the Company, or transfer
of all or substantially all of its assets, other than a transaction in which a successor
corporation with a net worth substantially the same as or greater than that of the Company assumes
this Agreement and all obligations and undertakings of the Company hereunder; (iv) a reduction in
the Executive’s fixed salary; (v) a Change of Control (subject to amendment as provided in Section
7.14); (vi) the failure of the Company to continue to provide the Executive with office space,
related facilities and secretarial assistance that are commensurate with the Executive’s
responsibilities to and position with the Company; (vii) the

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notification by the Company of the Company’s intention not to observe or perform one or more
of the obligations of the Company under this Agreement; (viii) the failure by the Company to
indemnify, pay or reimburse the Executive at the time and under the circumstances required by
Section 6 of this Agreement; (ix) the occurrence of any other material breach of this Agreement by
the Company or any of its subsidiaries; or (x) the delivery of notice by the Company in accordance
with Section 1.1 hereof that it desires to terminate this Agreement. Any such termination shall be
made by written notice from the Executive to the Company specifying the event relied upon for such
termination and given within sixty (60) days after such event. Any constructive termination shall
be effective sixty (60) days after the date the Company has been given such written notice setting
forth the grounds for such termination with specificity (the “Cure Period”); provided, however,
that the Executive shall not be entitled to terminate this Agreement in respect of any of the
grounds set forth above if during the Cure Period the action constituting such ground for
termination has been cured and is no longer continuing. A constructive termination by the Company
without Cause shall terminate the Restrictive Period hereunder.

          4.7 Section 409A Separation from Service. Notwithstanding any provision in this
Agreement to the contrary, no payment or benefit shall be paid pursuant to this Section 4 that
would be considered “deferred compensation” under Section 409A of the Code until the Executive has
incurred a “separation from service” (as such term is defined under Section 409A of the Code),
unless the payment is made by reason of another permitted payment event described in Section
409A(a)(2)(A) of the Code.

          4.8 Section 409A Delayed Payment Provisions. Notwithstanding any other provision
contained in this Agreement to the contrary, no payments that are considered to be “deferred
compensation” under Section 409A of the Code may be made to the Executive as a result of the
Executive’s separation from service to the Company until the date that is six months after the date
of the separation from service (or, if earlier, the death of the Executive) if the Executive is a
“specified employee” as described in Section 409A(a)(2)(B)(i) of the Code at the time of the
Executive’s separation from service or other time deemed applicable by the Company. The provisions
of this Section 4.8 shall only apply to the minimum extent required to avoid the Executive’s
incurrence of taxes imposed under Section 409A of the Code.

     5. Insurance. The Company may, from time to time, apply for and take out, in its own
name and at its own expense, naming itself or one or more of its affiliates as the designated
beneficiary (which it may change from time to time), policies for life, health, accident,
disability or other insurance upon the Executive in any amount or amounts that it may deem
necessary or appropriate to protect its interest. The Executive agrees to aid the Company in
procuring such insurance by submitting to medical examinations and by completing, executing and
delivering such applications and other instruments in writing as may reasonably be required by an
insurance company or companies to which any application or applications for insurance may be made
by or for the Company.

     6. Indemnification.

          6.1 Claims. The Company shall, to the maximum extent not prohibited by law, indemnify
the Executive if he is made, or threatened to be made, a party to any threatened,

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pending or completed action, suit or proceeding, whether civil, criminal, administrative or
investigative, including an action by or in the right of the Company to procure a judgment in its
favor (collectively, a “Proceeding”), by reason of the fact that the Executive is or was a director
or officer of the Company, or is or was serving in any capacity at the request of the Company for
any other corporation, partnership, joint venture, trust, employee benefit plan or other
enterprise, against judgments, fines, penalties, excise taxes, amounts paid in settlement and
costs, charges and expenses (including attorneys’ fees and disbursements) paid or incurred in
connection with any such Proceeding.

          6.2 Expenses. The Company shall, from time to time, reimburse or advance to the
Executive the funds necessary for payment of expenses, including attorneys’ fees and disbursements,
incurred in connection with any Proceeding in advance of the final disposition of such Proceeding;
provided, however, that, if required by the Texas Business Corporation Act, such expenses incurred
by or on behalf of the Executive may be paid in advance of the final disposition of a Proceeding
only upon receipt by the Company of an undertaking, by or on behalf of the Executive, to repay any
such amount so advanced if it shall ultimately be determined by final judicial decision from which
there is no further right of appeal that the Executive is not entitled to be indemnified for such
expenses.

          6.3 Non-Exclusivity. The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall not be deemed exclusive of any
other rights which the Executive may now or hereafter have under any law, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his official capacity
and as to action in another capacity while holding such office.

          6.4 Continuation of Rights. The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6 shall continue as to
the Executive after he has ceased to be a director, officer or employee of the Company and shall
inure to the benefit of the heirs, executors and administrators of the Executive’s estate.

          6.5 D&O Insurance. The Company shall purchase and maintain director and officer
liability insurance on such terms and providing such coverage as the Board determines is
appropriate, and the Executive shall be covered by such insurance on the same basis as the other
directors and executive officers of the Company.

          6.6 Enforcement. The right to indemnification and reimbursement or advancement of
expenses provided by, or granted pursuant to, this Section 6 shall be enforceable by the Executive
in any court of competent jurisdiction. The burden of proving that such indemnification or
reimbursement or advancement of expenses is not appropriate shall be on the Company. Neither the
failure of the Company (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the circumstances nor an
actual determination by the Company (including its board of directors, independent legal counsel,
or its stockholders) that the Executive is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a presumption that the
Executive is not so entitled. The Executive shall also be indemnified for any expenses incurred in
connection with successfully establishing his right to

13

 

such indemnification or reimbursement or advancement of expenses, in whole or in part, in any
such proceeding.

          6.7 Other Services. If the Executive serves (i) another corporation of which a
majority of the shares entitled to vote in the election of its directors is held by the Company, or
(ii) any employee benefit plan of the Company or any corporation referred to in clause (i), in any
capacity, then he shall be deemed to be doing so at the request of the Company.

          6.8 Applicable Law. The right to indemnification or reimbursement or advancement of
expenses shall be interpreted on the basis of the applicable law in effect at the time of the
occurrence of the event or events giving rise to the applicable Proceeding.

     7. Other Provisions.

          7.1 Certain Definitions. As used in this Agreement, the following words and phrases
have the following meanings unless the context otherwise requires:

               7.1.1 “Affiliate” with respect to the Company means any other person controlled by or under
common control with the Company but shall not include any stockholder or director of the Company,
as such.

               7.1.2 “Change of Control” means, for the purposes of this Agreement (but subject to amendment
pursuant to Section 7.14), the occurrence of any of the following:

          (i) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Act) is or
becomes the “beneficial owner” (as defined in Rule 13d-3 under the Act, directly or
indirectly, of securities of the Company representing thirty-five percent (35%) or more of
the combined voting power of the Company’s then outstanding securities;

          (ii) there occurs a proxy contest or a consent solicitation, or the Company is a party
to a merger, consolidation, sale of assets, plan of liquidation or other reorganization, as
a consequence of which members of the Board in office immediately prior to such transaction
or event constitute less than a majority of the Board thereafter; or

          (iii) during any period of two consecutive years, other than as a result of an event
described in clause (ii) of this Section 7.1.2, 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 stockholders was approved by a vote of at least a
majority 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.

               7.1.3 “Code” means the Internal Revenue Code of 1986, as amended, and any successor statute.
Reference in this Agreement to any section of the Code shall be deemed to include any amendments or
successor provisions to such section and any Treasury regulations promulgated under such section.

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               7.1.4 “Date of Termination” means for purposes of (i) Section 4.1, within thirty (30) days
after the date of Executive’s death; (ii) Sections 4.2, 4.3, and 4.5, the date specified in the
Company’s notice of termination to Executive; and (iii) Section 4.4, the date specified in
Executive’s notice of voluntary resignation or retirement; and (iv) Section 4.6, the first day
following the expiration of the Cure Period during which the Company did not cure the grounds for
termination specified in Executive’s notice to the Company.

               7.1.5 “person” means any individual, corporation, partnership, limited liability company,
firm, joint company, association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.

               7.1.6 “subsidiary” means any person 50% or more of the voting securities of which are owned
directly or indirectly by the Company.

          7.2 Notices. Any notice or other communication required or permitted hereunder shall
be in writing and shall be delivered personally, telegraphed, telexed, sent by facsimile
transmission or sent by certified, registered or express mail, postage prepaid. Any such notice
shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, on the date of actual receipt thereof, as follows:

	 	(i)	 	if to the Company, to:
	 
	 	 	 	Grey Wolf, Inc.

10370 Richmond Avenue, Suite 600

Houston, Texas 77042
	 
	 	(ii)	 	if to the Executive, to:
	 
	 	 	 	Robert J. Proffit

7506 Stone Arbor

Sugarland, Texas 77479

Any party may change its address for notice hereunder by notice to the other party hereto.

          7.3 Entire Agreement. This Agreement contains the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements, written or
oral, with respect thereto, including, without limitation, the Employment Agreement dated as of
December 28, 2005 as previously amended on March 1, 2008, by and between the Company and the
Executive.

          7.4 Waivers and Amendments. This Agreement may be amended, superseded, canceled,
renewed or extended, and the terms and conditions hereof may be waived, only by a written
instrument signed by the parties or, in the case of a waiver, by the party waiving compliance. No
delay on the part of any party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any waiver on the part of any party of any such right, power or
privilege hereunder, nor any single or partial exercise of any right, power or privilege hereunder,
preclude any other or further exercise thereof or the exercise of any other right, power or
privilege hereunder.

15

 

          7.5 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Texas (without giving effect to the choice of law provisions thereof)
where the employment of the Executive shall be deemed, in part, to be performed and enforcement of
this Agreement or any action taken or held with respect to this Agreement shall be taken in the
courts of appropriate jurisdiction in Houston, Texas.

          7.6 Assignment. This Agreement, and any rights and obligations hereunder, may not be
assigned by the Executive and may be assigned by the Company (subject to Section 4.6 (iii) hereof)
only to a successor by merger or purchasers of substantially all of the assets of the Company.

          7.7 Counterparts. This Agreement may be executed in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of which together shall
constitute one and the same instrument.

          7.8 Headings. The headings in this Agreement are for reference purposes only and
shall not in any way affect the meaning or interpretation of this Agreement.

          7.9 No Presumption Against Interest. This Agreement has been negotiated, drafted,
edited and reviewed by the respective parties, and therefore, no provision arising directly or
indirectly herefrom shall be construed against any party as being drafted by said party.

          7.10 Validity Contest. The Company shall promptly pay any and all legal fees and
expenses incurred by the Executive from time to time as a direct result of the Company’s contesting
the due execution, authorization, validity or enforceability of this Agreement. Executive shall
have no obligation to mitigate damages suffered as a result of termination of his employment with
the Company. The provisions of this Section 7.10 shall survive termination of this Agreement.
Reimbursement of such expenses shall be made promptly and in no event later than December 31 of the
year following the year in which such expenses were incurred, and the amount of such expenses
eligible for reimbursement in any year shall not affect the amount of such expenses eligible for
reimbursement in any other year.

          7.11 Dispute Resolution. If any dispute arises out of or relates to this Agreement,
or the breach thereof, the Executive and the Company agree to promptly negotiate in good faith to
resolve such dispute. If the dispute cannot be settled by the parties through negotiation, the
Executive and the Company agree to try in good faith to settle the dispute by mediation under the
Commercial Mediation Rules of the American Arbitration Association before resorting to arbitration,
litigation or any other dispute resolution procedure. If the parties are unable to settle the
dispute by mediation as provided in the preceding sentence, any claim, controversy or dispute
arising out of or relating to this Agreement, or the breach thereof, shall be settled by binding
arbitration before a panel of three arbitrators in accordance with the Commercial Arbitration Rules
of the American Arbitration Association. The arbitration shall be conducted in Houston, Harris
County, Texas, or such other location to which the parties mutually agree. The decision of the
arbitrator(s) shall be final and binding and judgment upon the award rendered may be entered in any
court having jurisdiction thereof. Notwithstanding the foregoing provisions of this Section 7.12,
the Company may exercise its rights as provided in Section 3 at any time and without regard to the
foregoing provisions of this Section 7.12.

16

 

          7.12 Binding Agreement. This Agreement shall inure to the benefit of and be binding
upon the Company and its respective successors and assigns and the Executive and his legal
representatives.

          7.13 Section 409A Compliance. The Parties intend that this Agreement and the benefits
provided hereunder be interpreted and construed to comply with Section 409A of the Code to the
extent applicable thereto.

          7.14 Amendment of Certain Provisions and Proposed Merger. The following amendments to
this Agreement shall become effective (without any further action by the parties) immediately prior
to the effectiveness of the proposed merger, consolidation or other business combination of the
Company and Basic Energy Services, Inc., a Delaware corporation, into each other or a new
corporation, however structured (the “Proposed Merger”):

                    7.14.1 Subpart (v) of Section 4.6 shall be deleted.

                    7.14.2 Section 7.1.2 shall be deleted in its entirety and replaced by the following:

          “7.1.2 “Change of Control” means, for purposes of this Agreement, the
occurrence of any of the following:

          (i) any “Person” (as such term is used in Sections 13(d) and 14(d) of
the Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the combined voting power of the
Company’s then outstanding securities;

          (ii) there occurs a proxy contest or a consent solicitation, or the
Company is a party to a merger, consolidation, sale of assets, plan of
liquidation or other reorganization, as a consequence of which members of
the Board in office immediately prior to such transaction or event
constitute less than a majority of the Board thereafter;

          (iii) during any period of two consecutive years, other than as a
result of an event described in clause (ii) of this Section 7.1.2,
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 stockholders was approved by a vote of at
least a majority 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;

          (iv) approval by the shareholders of the Company of a reorganization,
merger, consolidation or similar business combination involving the Company
(a “Merger”), unless immediately following such Merger, substantially all of
the holders of the then outstanding shares of

17

 

common stock of the Company (the “Outstanding Company Voting
Securities”) immediately prior to the Merger beneficially own, directly or
indirectly, more than fifty percent (50%) of the common stock of the
corporation resulting from such Merger (or its parent corporation) in
substantially the same proportions as their ownership of Outstanding Company
Voting Securities immediately prior to such Merger;

          (v) the sale or other disposition of all or substantially all of the
assets of the Company and its subsidiaries (including through sale or other
disposition of the equity of such subsidiaries), unless immediately
following such sale or other disposition, substantially all of the holders
of the Outstanding Company Voting Securities immediately prior to the
consummation of such sale or other disposition beneficially own, directly or
indirectly, more than fifty percent (50%) of the common stock of the
corporation acquiring such assets in substantially the same proportions as
their ownership of Outstanding Company Voting Securities immediately prior
to the consummation of such sale or disposition; or

          (vi) the Proposed Merger.”

If the Proposed Merger is not effective for any reason on or before November 30, 2008, this Section
7.14 shall terminate and be of no further force or effect.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	/s/ Robert J. Proffit
 	 
	 	Robert J. Proffit 	 
	 	 	 
	 
	 	COMPANY

GREY WOLF, INC.

 	 
	 	By:  	/s/ Thomas P. Richards
 	 
	 	 	Thomas P. Richards 	 
	 	 	Chairman, President and CEO 	 
	 

19

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