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EXHIBIT 4.2
1996 EMPLOYEE
STOCK OPTION PLAN AMENDMENT
The 1996 Employee Stock Option Plan (the "Plan") of Grey Wolf, Inc. (the
"Company") is hereby amended as follows effective August 26, 1998.
1. Section II is amended to add a new paragraph (d) to read as follows
in its entirety:
(d) Notwithstanding the foregoing, the Optionee may exercise
the Option as to all of the Option Shares (whether previously
exercisable or not) on or before one (1) year after the termination
of Optionee's employment if (i) a Change of Control of the
Corporation shall be deemed to have occurred and (ii) within one
(1) year of the date a Change of Control of the Corporation shall
be deemed to have occurred, Optionee's employment with the
Corporation is terminated for any reason other than (a) voluntary
resignation or retirement, (b) death or permanent and total
disability, or (c) Cause.
For the purposes of this Agreement, a "Change of Control of
the Corporation" shall be deemed to have occurred if after the
effective date of this Agreement (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 Securities
Exchange Act of 1934 [the "Act"]), directly or indirectly, or
securities of the Corporation representing 50% or more of the
combined voting power of the Corporation's then outstanding
securities; (ii) there occurs a proxy contest or a consent
solicitation, or the Corporation 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 of
Directors in office immediately prior to such transaction or event
constitute less than a majority of the Board of Directors
thereafter; or (iii) during any period of two consecutive years,
other than as a result of an event described in clause (ii) of this
paragraph, individuals who at the beginning of such period
constituted the Board of Directors (including for this purpose any
new director whose election or nomination for election by the
Corporation'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 of Directors.
For purposes of 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 Corporation and
the Optionee, (ii) an act of proven fraud or dishonesty on the part
of the Optionee with respect to the Corporation or its
subsidiaries; (iii) knowing and material failure by the Optionee to
comply with material applicable laws and regulations relating to
the business of the Company or its subsidiaries; (iv) the
Optionee's material and continuing failure to perform (as opposed
to unsatisfactory performance) his duties to the Corporation
except, in each case, where such failure or breach is caused by the
illness or other similar incapacity or disability of the Optionee;
or (v) conviction of a misdemeanor involving moral turpitude or a
felony. Prior to the effectiveness of termination for Cause under
subclause (i), (ii), (iii) or (iv) above, the Optionee shall be
given 30 days' prior notice from the Board specifically identifying
the reasons which are alleged to constitute Cause hereunder and an
opportunity to be heard by the Board in the event Optionee disputes
such allegations.
2. The last paragraph of Section 11 is amended to read as follows in
its entirety:
Nothing in (a), (b), (c) or (d) shall extend the time for
exercising the Option granted pursuant to this Agreement beyond the
Expiration Date.
