Document:

EX-10.1

Exhibit 10.1

	 	 	 
	CREDIT SUISSE SECURITIES (USA) LLC
	 	WACHOVIA CAPITAL MARKETS, LLC
	Eleven Madison Avenue
	 	One Wachovia Center
	New York, NY 10010
	 	301 South College Street
	 
	 	Charlotte, NC 28288
	 	 	 
	CREDIT SUISSE
	 	WACHOVIA BANK, NATIONAL ASSOCIATION
	Eleven Madison Avenue
	 	One Wachovia Center
	New York, NY 10010
	 	301 South College Street
	 
	 	Charlotte, NC 28288

CONFIDENTIAL

November 23, 2008

King Pharmaceuticals, Inc.

501 Fifth Street

Bristol, Tennessee 37620

Attention: Joe Squicciarino

PROJECT ALBERT

$775,000,000 Senior Secured Credit Facilities

Amended and Restated Commitment Letter

Ladies and Gentlemen:

     This Amended and Restated Commitment Letter amends and restates the commitment letter among
the parties hereto dated September 11, 2008 (the “Original Commitment Letter”) with respect to the
subject matter hereof, and supersedes and replaces the Original Commitment Letter in all respects.

     You have advised Credit Suisse (“CS”), Credit Suisse Securities (USA) LLC (“CS Securities”
and, together with CS and their respective affiliates, “Credit Suisse”), Wachovia Bank, National
Association (“Wachovia Bank”) and Wachovia Capital Markets, LLC (“Wachovia Securities” and,
together with Wachovia Bank and their respective affiliates, “Wachovia”, and together with Credit
Suisse, the “Commitment Parties”, “we” or “us”) that you intend to acquire (the “Acquisition”) all
the equity interests of a company previously identified to us as “Albert” (the “Company”), and to
consummate the other Transactions (such term and each other capitalized term used but not defined
herein having the meaning assigned to such term in the Summary of Principal Terms and Conditions
attached hereto as Exhibit A (the “Term Sheet”)).

     You have further advised us that, in connection therewith, the Borrower will obtain the senior
secured credit facilities (the “Senior Facilities”) described in the Term Sheet, in an aggregate
principal amount of up to $775,000,000.

Commitment Letter

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1. Commitments.

     In connection with the foregoing, each of Credit Suisse and Wachovia is pleased to advise you
of its several, but not joint, commitment to each provide 50% of the principal amount of the Senior
Facilities, upon the terms and subject to the conditions set forth in this commitment letter
(including the Term Sheet and other attachments hereto, this “Commitment Letter”) and in Exhibits A
and B hereto.

2. Titles and Roles.

     You hereby appoint (a) each of CS Securities and Wachovia Securities to act, and each of CS
Securities and Wachovia Securities hereby agrees to act, as joint bookrunners and joint arrangers
for the Senior Facilities (collectively, the “Joint Arrangers”), (b) Wachovia Securities to act,
and Wachovia Securities hereby agrees to act, as Syndication Agent and (c) CS to act, and CS hereby
agrees to act, as sole administrative agent and sole collateral agent for the Senior Facilities, in
each case upon the terms and subject to the conditions set forth or referred to in this Commitment
Letter. Each of CS Securities, CS and Wachovia Securities, in such capacities, will perform the
duties and exercise the authority customarily performed and exercised by it in such roles. You
agree that Credit Suisse will have “left” placement in any and all marketing materials or other
documentation used in connection with the Senior Facilities. You further agree that no other
titles will be awarded and no compensation (other than that expressly contemplated by this
Commitment Letter and the Fee Letter referred to below) will be paid in connection with the Senior
Facilities unless you and we shall so agree.

3. Syndication.

     We reserve the right, prior to and/or after the execution of definitive documentation for the
Senior Facilities, to syndicate all or a portion of our commitments with respect to the Senior
Facilities to a group of banks, financial institutions and other institutional lenders (together
with the Commitment Parties, the “Lenders”) identified by us and reasonably acceptable to you, and
you agree to provide us through at least December 12, 2008 to syndicate the Senior Facilities. We
have commenced syndication efforts and you agree to continue to actively assist us in completing a
satisfactory syndication. Such assistance shall include (a) your using commercially reasonable
efforts to ensure that any syndication efforts benefit materially from your existing lending and
investment banking relationships, (b) direct contact between senior management, representatives and
advisors of you and the proposed Lenders, (c) assistance by you in the preparation of a
Confidential Information Memorandum for the Senior Facilities and other marketing materials to be
used in connection with the syndication, (d) your providing or causing to be provided a detailed
business plan or projections of the Borrower and its subsidiaries for the years 2008 through 2014
(if the Closing Date occurs in 2008) or 2015 (if the Closing Date occurs in 2009) and for the eight
quarters beginning with the third quarter of 2008, in each case, to the extent delivered after the
date hereof, in form and substance the same in all material respects as previously delivered and
otherwise reasonably satisfactory to us (we confirm that you have delivered such business plan
prior to the date hereof and such business plan was in form and substance reasonably satisfactory
to us), (e) your using commercially reasonable efforts to obtain, promptly following the execution
hereof, a public corporate credit rating from Standard & Poor’s Ratings Service (“S&P”) and a
public corporate family rating from Moody’s Investors Service, Inc. (“Moody’s”), in each case with
respect to the Borrower and giving effect to the Transactions, and ratings for the Senior
Facilities from each of S&P and Moody’s, and (f) the hosting, with the Joint Arrangers, of one or
more meetings of prospective Lenders. You further agree that, if Merger Sub, you and the Company
enter into an agreement and plan of merger in connection with

Commitment Letter

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the Acquisition (a “Merger Agreement”) prior to the consummation of a Tender Offer or if the
Board of Directors of the Company recommends the Tender Offer to its shareholders (each, a
“Negotiated Transaction”), you will thereafter use your commercially reasonable efforts to cause
the Company, its senior management, representatives and advisors to assist in the foregoing
matters.

     You agree, at the request of the Joint Arrangers, to assist in the preparation of a version of
the Confidential Information Memorandum and other marketing materials and presentations to be used
in connection with the syndication of the Senior Facilities, consisting exclusively of information
and documentation that is either (i) publicly available or (ii) not material with respect to the
Borrower or the Company or their respective subsidiaries or any of their respective securities for
purposes of foreign, United States Federal and state securities laws (all such information and
documentation being “Public Lender Information”). Any information and documentation that is not
Public Lender Information is referred to herein as “Private Lender Information”. You further agree
that each document to be disseminated by the Joint Arrangers to any Lender in connection with the
Senior Facilities will, at the request of any Joint Arranger, be identified by you as either (i)
containing Private Lender Information or (ii) containing solely Public Lender Information. You
acknowledge that the following documents contain solely Public Lender Information (unless you
notify us promptly (after you have had an opportunity to review the same) that any such document
contains Private Lender Information): (a) drafts and final definitive documentation with respect to
the Senior Facilities; (b) administrative materials prepared by the Joint Arrangers for prospective
Lenders (such as a lender meeting invitation, bank allocation, if any, and funding and closing
memoranda); and (c) notification of changes in the terms of the Senior Facilities.

     The Joint Arrangers will manage all aspects of any syndication in consultation with you,
including decisions as to the selection of institutions to be approached and when they will be
approached, when their commitments will be accepted, which institutions will participate, the
allocation of the commitments among the Lenders, any naming rights and the amount and distribution
of fees among the Lenders. To assist the Joint Arrangers in their syndication efforts, you agree
promptly to prepare and provide (and, in the case of a Negotiated Transaction, to use commercially
reasonable efforts to cause the Company to provide) to the Joint Arrangers all information with
respect to the Borrower and the Company and their respective subsidiaries, the Transactions and the
other transactions contemplated hereby, including all financial information and projections (the
“Projections”), as the Joint Arrangers may reasonably request.

4. Information.

     You hereby represent and covenant (and it shall be a condition to our commitments hereunder,
and our agreements to perform the services described herein) that (a) all information other than
the Projections (the “Information”) that has been or will be made available to the Joint Arrangers
by or on behalf of you or any of your representatives is or will be, when furnished and taken as a
whole, complete and correct in all material respects and does not or will not, when furnished and
taken as a whole, contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not materially misleading in light of
the circumstances under which such statements are made and (b) the Projections that have been or
will be made available to the Joint Arrangers by or on behalf of you or any of your representatives
have been or will be prepared in good faith based upon accounting principles consistent with the
historical audited financial statements of the Borrower and the Company and upon assumptions that
are reasonable at the time made and at the time the related Projections are made available to the
Joint Arrangers (it being understood that such Projections

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are not a guaranty of future performance and that actual results during the period covered by
such Projections may materially differ from the projected results therein). You agree that if at
any time prior to the closing of the Senior Facilities any of the representations in the preceding
sentence would be incorrect if the Information and Projections were being furnished, and such
representations were being made, at such time, then you will promptly supplement the Information
and the Projections so that such representations will be correct under those circumstances. In
arranging and syndicating the Senior Facilities, we will be entitled to use and rely primarily on
the Information and the Projections without responsibility for independent verification thereof.

5. Fees.

     As consideration for our commitments hereunder, and our agreements to perform the services
described herein, you agree to pay to us the fees set forth in this Commitment Letter and in the
amended and restated fee letter dated the date hereof and delivered herewith with respect to the
Senior Facilities (the “Fee Letter”).

6. Conditions Precedent.

     Our commitments hereunder, and our agreements to perform the services described herein, are
subject to (a) our not having discovered or otherwise having become aware of any information not
previously disclosed to us (including without limitation by way of any public filings by the
Borrower or the Company with the Securities and Exchange Commission prior to the date hereof) that
is inconsistent in a material and adverse manner with our understanding, based on the information
provided to us prior to the date hereof, of (i) the business, assets, liabilities, operations,
condition (financial or otherwise), operating results, Projections or prospects of the Company and
its subsidiaries or the Borrower and its subsidiaries, in each case, taken as a whole, or (ii) the
Transactions, (b) there not having occurred any event, change or condition since December 31, 2007
(the date of the most recent audited financial statements of the Company delivered to the Joint
Arrangers as of the date hereof) that, individually or in the aggregate, has had, or could
reasonably be expected to have, a material adverse effect on the business, assets, liabilities,
operations, condition (financial or otherwise), operating results, Projections or prospects of the
Company and its subsidiaries, taken as a whole, (c) there not having occurred any event, change or
condition since December 31, 2007 (the date of the most recent audited financial statements of the
Borrower delivered to the Joint Arrangers as of the date hereof) that, individually or in the
aggregate, has had, or could reasonably be expected to have, a material adverse effect on the
business, assets, liabilities, operations, condition (financial or otherwise), operating results,
Projections or prospects of the Borrower and its subsidiaries, taken as a whole, (d) our
satisfaction that, prior to and during the syndication of the Senior Facilities, there shall be no
other issues of debt securities or commercial bank or other credit facilities of the Borrower or
its subsidiaries, or, in the event of a Negotiated Transaction, the Company or its subsidiaries,
being announced, offered, placed or arranged (other than indebtedness secured only by auction rate
securities and that otherwise has terms reasonably satisfactory to the Joint Arrangers (a
“Permitted ARS Borrowing”)), (e) the negotiation, execution and delivery of definitive
documentation with respect to the Senior Facilities on terms and conditions set forth herein and
otherwise in form and substance reasonably satisfactory to us and our counsel, (f) your compliance
with the terms of this Commitment Letter and the Fee Letter, and (g) the other conditions set forth
in Exhibits A and B hereto. The terms of the definitive documentation for the Senior Facilities
shall be in a form such that they do not materially impair the initial funding of the Senior
Facilities on the Closing Date if the conditions set forth in the preceding sentence are satisfied.

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7. Indemnification; Expenses.

     You agree (a) to indemnify and hold harmless each Commitment Party and its officers,
directors, employees, agents, advisors, controlling persons, members and successors and assigns
(each, an “Indemnified Person”) from and against any and all losses, claims, damages, liabilities
and expenses, joint or several, to which any such Indemnified Person may become subject arising out
of or in connection with this Commitment Letter, the Fee Letter, the Transactions, the Senior
Facilities or any related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any such Indemnified Person is a party
thereto (and regardless of whether such matter is initiated by a third party or by the Borrower,
the Company or any of their respective shareholders or affiliates), and to reimburse each such
Indemnified Person upon demand for any reasonable legal or other expenses incurred in connection
with investigating or defending any of the foregoing, provided that the foregoing indemnity will
not, as to any Indemnified Person, apply to losses, claims, damages, liabilities or related
expenses to the extent they are found in a final, non-appealable judgment of a court of competent
jurisdiction to have resulted primarily from the willful misconduct or gross negligence of such
Indemnified Person, and (b) to reimburse each Commitment Party from time to time, upon
presentation of a summary statement, for all reasonable out-of-pocket expenses (including but not
limited to expenses of such Commitment Party’s due diligence investigation, consultants’ fees,
syndication expenses, travel expenses and fees, disbursements and other charges of counsel), in
each case, incurred in connection with the Senior Facilities and the preparation, negotiation and
enforcement of this Commitment Letter, the Fee Letter, the definitive documentation for the Senior
Facilities and any ancillary documents and security arrangements in connection therewith.
Notwithstanding any other provision of this Commitment Letter, no Indemnified Person shall be
liable for any indirect, special, punitive or consequential damages in connection with its
activities related to the Senior Facilities.

8. Sharing Information; Absence of Fiduciary Relationship; Affiliate Activities.

     You acknowledge that each Commitment Party may be providing debt financing, equity capital or
other services (including financial advisory services) to other companies in respect of which you
may have conflicting interests regarding the transactions described herein or otherwise. We will
not furnish confidential information obtained from you by virtue of the transactions contemplated
by this Commitment Letter or our other relationships with you to other companies. You also
acknowledge that we do not have any obligation to use in connection with the transactions
contemplated by this Commitment Letter, or to furnish to you, confidential information obtained by
us from other companies.

     You further acknowledge and agree that (a) no fiduciary, advisory or agency relationship
between you and any Commitment Party is intended to be or has been created in respect of any of the
transactions contemplated by this Commitment Letter, irrespective of whether any Commitment Party
has advised or is advising you on other matters, (b) the Commitment Parties, on the one hand, and
you, on the other hand, have an arms-length business relationship that does not directly or
indirectly give rise to, nor do you rely on, any fiduciary duty on the part of any Commitment
Party, (c) you are capable of evaluating and understanding, and you understand and accept, the
terms, risks and conditions of the transactions contemplated by this Commitment Letter, (d) you
have been advised that each Commitment Party is engaged in a broad range of transactions that may
involve interests that differ from your interests and that no Commitment Party has any obligation
to disclose such interests and transactions to you by virtue of any fiduciary, advisory or agency
relationship, and (e) you waive, to the fullest extent permitted by law, any claims you may have
against any Commitment Party for breach of fiduciary duty or

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alleged breach of fiduciary duty and agree that no Commitment Party shall have any liability
(whether direct or indirect) to you in respect of such a fiduciary duty claim or to any person
asserting a fiduciary duty claim on behalf of or in right of you, including your stockholders,
employees or creditors. Additionally, you acknowledge and agree that the Commitment Parties are
not advising you as to any legal, tax, investment, accounting or regulatory matters in any
jurisdiction. You shall consult with your own advisors concerning such matters and shall be
responsible for making your own independent investigation and appraisal of the transactions
contemplated hereby, and no Commitment Party shall have any responsibility or liability to you with
respect thereto. Any review by any Commitment Party of the Borrower, the Company, the
Transactions, the other transactions contemplated hereby or other matters relating to such
transactions will be performed solely for the benefit of such Commitment Party and shall not be on
behalf of you or any of your affiliates.

     You further acknowledge that each Commitment Party is a full service securities firm engaged
in securities trading and brokerage activities as well as providing investment banking and other
financial services. In the ordinary course of business, each Commitment Party may provide
investment banking and other financial services to, and/or acquire, hold or sell, for its own
accounts and the accounts of customers, equity, debt and other securities and financial instruments
(including bank loans and other obligations) of, you, the Company and other companies with which
you or the Company may have commercial or other relationships. With respect to any securities
and/or financial instruments so held by any Commitment Party or any of its customers, all rights in
respect of such securities and financial instruments, including any voting rights, will be
exercised by the holder of the rights, in its sole discretion.

9. Assignments; Amendments; Governing Law, Etc.

     This Commitment Letter shall not be assignable by you without the prior written consent of the
Joint Arrangers (and any attempted assignment without such consent shall be null and void), is
intended to be solely for the benefit of the parties hereto (and Indemnified Persons), and is not
intended to confer any benefits upon, or create any rights in favor of, any person other than the
parties hereto (and Indemnified Persons). Each Commitment Party may assign its commitment
hereunder to one or more prospective Lenders with the prior written consent of CS Securities (which
consent shall not be unreasonably withheld or delayed), whereupon such Commitment Party shall be
released from the portion of its commitment hereunder so assigned. Any and all obligations of, and
services to be provided by, any Commitment Party hereunder (including, without limitation, such
Commitment Party’s commitment) may be performed and any and all rights of such Commitment Party
hereunder may be exercised by or through any of its respective affiliates or branches. This
Commitment Letter may not be amended or any provision hereof waived or modified except by an
instrument in writing signed by the Joint Arrangers and you. This Commitment Letter may be
executed in any number of counterparts, each of which shall be an original and all of which, when
taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature
page of this Commitment Letter by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof. Section headings used herein are for convenience of
reference only, are not part of this Commitment Letter and are not to affect the construction of,
or to be taken into consideration in interpreting, this Commitment Letter. You acknowledge that
information and documents relating to the Senior Facilities may be transmitted through SyndTrak,
Intralinks, the internet, e-mail, or similar electronic transmission systems, and that the
Commitment Parties shall not be liable for any damages arising from the unauthorized use by others
of information or documents transmitted in such manner. Each Commitment Party may place
advertisements in financial and other newspapers and periodicals or on a home page or similar place
for dissemination of information

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on the Internet or worldwide web as it may choose, and circulate similar promotional
materials, after the closing of the Transactions in the form of a “tombstone” or otherwise
describing the names of you and your affiliates (or any of them), and the amount, type and closing
date of such Transactions, all at such Commitment Party’s expense. This Commitment Letter and the
Fee Letter supersede all prior understandings, whether written or oral, between us with respect to
the Senior Facilities. THIS COMMITMENT LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

10. Jurisdiction.

     Each of the parties hereto hereby irrevocably and unconditionally (a) submits, for itself and
its property, to the exclusive jurisdiction of any New York State court or Federal court of the
United States of America sitting in New York City, and any appellate court from any thereof, in any
action or proceeding arising out of or relating to this Commitment Letter, the Fee Letter or the
transactions contemplated hereby or thereby, and agrees that all claims in respect of any such
action or proceeding may be heard and determined only in such New York State court or, to the
extent permitted by law, in such Federal court, (b) waives, to the fullest extent it may legally
and effectively do so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Commitment Letter, the Fee Letter
or the transactions contemplated hereby or thereby in any New York State court or in any such
Federal court, (c) waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court, and (d) agrees that a
final judgment in any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law. Service of any
process, summons, notice or document by registered mail addressed to you at the address above shall
be effective service of process against you for any suit, action or proceeding brought in any such
court.

11. Waiver of Jury Trial.

     EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY OR ON BEHALF OF ANY PARTY RELATED TO OR ARISING OUT OF
THIS COMMITMENT LETTER, THE FEE LETTER OR THE PERFORMANCE OF SERVICES HEREUNDER OR THEREUNDER.

12. Confidentiality.

     This Commitment Letter is delivered to you on the understanding that neither this Commitment
Letter nor the Fee Letter nor any of their terms or substance, nor the activities of any Commitment
Party pursuant hereto, shall be disclosed, directly or indirectly, to any other person except (a)
to your officers, directors, employees, attorneys, accountants and advisors on a confidential and
need-to-know basis or (b) as required by applicable law or compulsory legal process (in which case
you agree, to the extent legally permitted to do so, to inform us promptly thereof prior to such
disclosure); provided that, after your acceptance of this Commitment Letter and the Fee Letter, you
may disclose this Commitment Letter and the contents hereof (but not the Fee Letter or the contents
thereof) (i) to the Company and its officers, directors, employees, attorneys, accountants and
advisors on a confidential and need-to-know basis, (ii) to rating agencies in connection with the
Transactions, and (iii) in filings with the Securities and Exchange Commission and other applicable
regulatory authorities and stock exchanges, to the extent you

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reasonably determine that such disclosure is required by law; provided further that, following
your acceptance of this Commitment Letter and the Fee Letter, you may disclose the Fee Letter,
redacted in a manner satisfactory to the Joint Arrangers, to the Company and its officers,
directors, employees, attorneys, accountants and advisors on a confidential “need to know” basis;
provided further that, unless otherwise instructed in writing by either Joint Arranger, you may
disclose drafts of this Commitment Letter and the contents hereof (but not the Fee Letter or the
contents thereof) to the Company and its officers, directors, employees, attorneys, accountants and
advisors on a confidential and need-to-know basis.

     Notwithstanding anything herein to the contrary, any party to this Commitment Letter (and any
employee, representative or other agent of such party) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions contemplated by
this Commitment Letter and the Fee Letter and all materials of any kind (including opinions or
other tax analyses) that are provided to it relating to such tax treatment and tax structure,
except that (i) tax treatment and tax structure shall not include the identity of any existing or
future party (or any affiliate of such party) to this Commitment Letter or the Fee Letter, and (ii)
no party shall disclose any information relating to such tax treatment and tax structure to the
extent nondisclosure is reasonably necessary in order to comply with applicable securities laws.
For this purpose, the tax treatment of the transactions contemplated by this Commitment Letter and
the Fee Letter is the purported or claimed U.S. Federal income tax treatment of such transactions
and the tax structure of such transactions is any fact that may be relevant to understanding the
purported or claimed U.S. Federal income tax treatment of such transactions.

13. Surviving Provisions.

     The compensation, reimbursement, indemnification, confidentiality, syndication, jurisdiction,
governing law and waiver of jury trial provisions contained herein and in the Fee Letter shall
remain in full force and effect regardless of whether definitive financing documentation shall be
executed and delivered and (other than in the case of the syndication provisions) notwithstanding
the termination of this Commitment Letter or any Commitment Party’s commitment hereunder and our
agreements to perform the services described herein.

14. PATRIOT Act Notification.

     Each Commitment Party hereby notifies you that, pursuant to the requirements of the USA
PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “PATRIOT Act”),
such Commitment Party and each Lender is required to obtain, verify and record information that
identifies the Borrower, which information includes the name, address, tax identification number
and other information regarding the Borrower that will allow such Commitment Party or such Lender
to identify the Borrower in accordance with the PATRIOT Act. This notice is given in accordance
with the requirements of the PATRIOT Act and is effective as to each Commitment Party and each
Lender. You hereby acknowledge and agree that each Commitment Party shall be permitted to share
any or all such information with the Lenders.

15. Acceptance and Termination.

     If the foregoing correctly sets forth our agreement with you, please indicate your acceptance
of the terms of this Commitment Letter and of the Fee Letter by returning to us executed
counterparts hereof and of the Fee Letter not later than 12:00 (noon), New York City time, on
November 24, 2008. Each Commitment Party’s offer hereunder, and its agreements to

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perform the services described herein, will expire automatically and without further action or
notice and without further obligation to you at such time in the event that the Joint Arrangers
have not received such executed counterparts in accordance with the immediately preceding sentence.
This Commitment Letter will become a binding commitment on each Commitment Party only after it has
been duly executed and delivered by you in accordance with the first sentence of this Section 15.
In the event that the Closing Date does not occur on or before 5:00 p.m., New York City time, on
the earliest to occur of (x) the date of the closing of the Tender Offer, (y) the public
announcement of the abandonment of the Acquisition or acceptance of an alternative proposal or, in
the event a Merger Agreement is entered into, the termination of the Merger Agreement or (z)
February 15, 2009, then this Commitment Letter and each Commitment Party’s commitment hereunder,
and our agreements to perform the services described herein, shall automatically terminate without
further action or notice and without further obligation to you unless the Commitment Parties shall,
in their discretion, agree to an extension.

[Remainder of this page intentionally left blank]

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     We are pleased to have been given the opportunity to assist you in connection with the
financing for the Acquisition.

	 	 	 	 	 
	 	Very truly yours,

CREDIT SUISSE SECURITIES (USA) LLC

 	 
	 	By  	/s/
Jeffrey Cohen	 
	 	 	Name:  	Jeffrey Cohen	 
	 	 	Title:  	Managing  Director	 
	 
	 	CREDIT SUISSE, CAYMAN ISLANDS BRANCH

 	 
	 	By  	/s/
John D. Toronto	 
	 	 	Name:  	John D. Toronto	 
	 	 	Title:  	Director	 
	 
	 	 	 
	 	By  	
/s/ Shaheen Malik	 
	 	 	Name:  	Shaheen Malik	 
	 	 	Title:  	Associate	 
	 
	 	WACHOVIA CAPITAL MARKETS, LLC

 	 
	 	By  	/s/
David Gillespie	 
	 	 	Name:  	David Gillespie	 
	 	 	Title:  	Managing Director	 
	 
	 	WACHOVIA BANK, NATIONAL ASSOCIATION

 	 
	 	By  	/s/
David Gillespie	 
	 	 	Name:  	David Gillespie	 
	 	 	Title:  	Managing Director	 
	 

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	Accepted and agreed to
as of 

the date first above written:	 	 	 	 
	 
	 	 	 	 	 	 
	KING PHARMACEUTICALS, INC.	 	 	 	 
	 
	 	 	 	 	 	 
	By

	 	/s/ Brian A. Markison	 	 
	 	 
	 

	 	 	 	 	 	 
	 

	 	Name: Brian A. Markison	 	 	 	 
	 

	 	Title: Chairman, President and
Chief Executive Officer	 	 	 	 

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CONFIDENTIAL

EXHIBIT A

PROJECT ALBERT

$775,000,000 Senior Secured Credit Facilities

Summary of Principal Terms and Conditions

	 	 	 	 	 
	Borrower:

	 	 	 	King Pharmaceuticals, Inc., a Tennessee
corporation (the “Borrower”).
	 
	 	 	 	 
	Transactions:

	 	 	 	The Borrower intends to acquire (the
“Acquisition”) all the equity interests of a
company previously identified to the Joint
Arrangers (as defined below) as “Albert” (the
“Company”). The Acquisition will be effected
through a two-step transaction pursuant to which
the Borrower or a newly formed, wholly-owned
Delaware subsidiary of the Borrower (“Merger
Sub”) will commence a cash tender offer (the
“Tender Offer”) for all of the issued and
outstanding shares of capital stock of the
Company not owned directly or indirectly by the
Borrower at the time of the commencement of the
Tender Offer, followed as promptly as
practicable after the consummation of the Tender
Offer by a merger (the “Second-Step Merger”) of
Merger Sub with and into the Company, with the
Company surviving as a wholly owned subsidiary
of the Borrower and all shares not tendered in
the Tender Offer, subject to dissenters’ rights,
being cashed out in the Second-Step Merger. In
connection with the Acquisition, (a) equity
holders of the Company shall receive cash
consideration not to exceed an amount to be
agreed among the Joint Arrangers and the
Borrower, (b) the Borrower will obtain the
senior secured credit facilities described below
under the caption “Senior Facilities”, and
(c) fees and expenses incurred in connection
with the foregoing in an aggregate amount not to
exceed an amount to be agreed among the Joint
Arrangers and the Borrower (the “Transaction
Costs”) will be paid. The transactions
described in this paragraph are collectively
referred to herein as the “Transactions”.
	 
	 	 	 	 
	Agent:

	 	 	 	Credit Suisse, acting through one or more of its
branches or affiliates (“CS”), will act as sole
administrative agent and collateral agent
(collectively, in such capacities, the “Agent”)
for a syndicate of banks, financial institutions
and other institutional lenders reasonably
acceptable to you (together with CS, the
“Lenders”), and will perform the duties
customarily associated with such roles.
	 
	 	 	 	 
	Joint Bookrunners and
Joint
Arrangers:

	 	 	 	Credit Suisse Securities (USA) LLC and Wachovia
Capital Markets, LLC will act as joint
bookrunners and joint arrangers for the Senior
Facilities described

Senior Facilities Term Sheet

A-1

 

	 	 	 	 	 
	 

	 	 	 	below (collectively, in
such capacities, the “Joint Arrangers”), and
will perform the duties customarily associated
with such roles. Credit Suisse will have “left”
placement in any and all marketing materials or
other documentation used in connection with the
Senior Facilities.
	 
	 	 	 	 
	Syndication Agent:

	 	 	 	Wachovia Capital Markets, LLC will act as
syndication agent for the Senior Facilities
described below (in such capacity, the
"Syndication Agent”).
	 
	 	 	 	 
	Documentation Agent:

	 	 	 	At the option of the Joint Arrangers, one or
more financial institutions identified by the
Joint Arrangers and acceptable to the Borrower
(in such capacity, the “Documentation Agent”).
	 
	 	 	 	 
	Senior Facilities:

	 	(A)
	 	A senior secured term loan facility in an
aggregate principal amount of up to $125,000,000
(the “Term Loan A Facility”).
	 
	 	 	 	 
	 

	 	(B)
	 	A senior secured term loan facility in an
aggregate principal amount of up to $500,000,000
(the “Term Loan B Facility” and, together with
the Term Loan A Facility, the “Term
Facilities”).
	 
	 	 	 	 
	 

	 	 	 	To the extent the Borrower is able to access its
auction rate securities (“ARS”) (whether through
a Permitted ARS Borrowing, redemption of such
ARS by the issuer thereof, repurchase of such
ARS by the seller thereof, sale of such ARS by
the Borrower or otherwise (each of the foregoing
an “ARS Liquidation”)) on or prior to the
Closing Date, the size of the Term Facilities
shall be reduced in an amount equal to the net
cash proceeds thereof so accessed; provided that
in the event that the Revolving Facility is
reduced to $100,000,000 upon failure to satisfy
the Ratings Condition as provided below, such
reduction of the Term Facilities shall only be
required from and to the extent that the net
cash proceeds of all such ARS Liquidations
exceed $50,000,000 (the allocation of such
reduction between the Term Facilities to be
determined by the Joint Arrangers in
consultation with the Borrower).

Senior Facilities Term Sheet

A-2

 

	 	 	 	 	 
	 

	 	(C)
	 	A senior secured revolving credit facility in an
aggregate principal amount of up to $150,000,000
(the “Revolving Facility” and, together with the
Term Facilities, the “Senior Facilities”), of
which up to an aggregate amount to be agreed
upon will be available through a subfacility in
the form of letters of credit; provided that if
the Ratings Condition (as defined below) is not
satisfied, the amount of the Revolving Facility
shall be reduced to $100,000,000.
	 
	 	 	 	 
	 

	 	 	 	In connection with the Revolving Facility, CS
(in such capacity, the “Swingline Lender”) will
make available to the Borrower a swingline
facility under which the Borrower may make
short-term borrowings of up to an aggregate
amount to be agreed upon. Except for purposes
of calculating the Commitment Fee described in
Annex I hereto, any such swingline borrowings
will reduce availability under the Revolving
Facility on a dollar-for-dollar basis. Each
Lender under the Revolving Facility shall,
promptly upon request by the Swingline Lender,
fund to the Swingline Lender its pro rata share
of any swingline borrowings.
	 
	 	 	 	 
	Purpose:

	 	(A)
	 	The proceeds of the Term Facilities will be used
by the Borrower solely as follows: (a) to pay
part of the share consideration payable upon
consummation of the Tender Offer and the merger
consideration payable upon consummation of the
Second-Step Merger (the share and merger
consideration, the “Acquisition Consideration”),
(b) to refinance certain existing indebtedness
of the Borrower and its subsidiaries and the
Company and its subsidiaries outstanding as of
the Closing Date (the “Existing Debt”) and
(c) to pay the Transaction Costs.
	 
	 	 	 	 
	 

	 	(B)
	 	The proceeds of loans under the Revolving
Facility will be used by the Borrower solely
from time to time for general corporate purposes
(including the payment of Acquisition
Consideration).
	 
	 	 	 	 
	 

	 	(C)
	 	Letters of credit will be used solely to support
payment obligations incurred in the ordinary
course of business by the Borrower and its
subsidiaries.
	 
	 	 	 	 
	Availability:

	 	(A)
	 	The Term Facilities shall be available in not
more than 3 drawings at any time commencing on
the Closing Date and ending on the earlier of
(i) the date that is 120 days after the Closing
Date and (ii) the consummation of the
Second-Step Merger.
	 
	 	 	 	 
	 

	 	 	 	Amounts borrowed under the Term Facilities that
are repaid or prepaid may not be reborrowed.

Senior Facilities Term Sheet

A-3

 

	 	 	 	 	 
	 

	 	(B)
	 	Loans under the Revolving Facility may be made
on the Closing Date to fund any Acquisition
Consideration and to fund up-front fees or
original issue discount as expressly
contemplated by the Fee Letter. Letters of
credit may be issued on the Closing Date in
order to backstop or replace letters of credit
outstanding on the Closing Date under the
facilities no longer available to the Borrower
and its subsidiaries as of the Closing Date or,
in lieu thereof, loans under the Revolving
Facility may be made on the Closing Date up to
an amount to be agreed to cash collateralize
such outstanding letters of credit. After the
Closing Date, loans under the Revolving Facility
will be available at any time prior to the final
maturity of the Revolving Facility, in minimum
principal amounts and upon notice to be agreed
upon. Amounts repaid under the Revolving
Facility may be reborrowed.
	 
	 	 	 	 
	Original Issue Discount:

	 	(A)
	 	Term Loan A Facility
	 
	 	 	 	 
	 

	 	 	 	If, on the Closing Date, the Borrower has
received a public corporate credit rating of BB- or higher by S&P and a public corporate family
rating of Ba3 or higher by Moody’s (the “Ratings
Condition”), the loans under the Term Loan A
Facility will be issued to the Lenders at a
price of 98.0% of their principal amount. 

If, on the Closing Date, the Ratings Condition
is not satisfied, the loans under the Term Loan
A Facility will be issued to the Lenders at a
price of 97.5% of their principal amount.
	 
	 	 	 	 
	 

	 	(B)
	 	Term Loan B Facility
	 
	 	 	 	 
	 

	 	 	 	If, on the Closing Date, the Ratings Condition
is satisfied, the loans under the Term Loan B
Facility will be issued to the Lenders at a
price of 97.5% of their principal amount.
	 
	 	 	 	 
	 

	 	 	 	If, on the Closing Date, the Ratings Condition
is not satisfied, the loans under the Term Loan
B Facility will be issued to the Lenders at a
price of 97.0% of their principal amount.

Senior Facilities Term Sheet

A-4

 

	 	 	 	 	 
	 

	 	(C)
	 	Revolving Facility
	 
	 	 	 	 
	 

	 	 	 	If, on the Closing Date, the Ratings Condition
is satisfied, an upfront fee equal to 2.0% of
the aggregate commitments under the Revolving
Facility will be payable by the Borrower on the
Closing Date to the Lenders under the Revolving
Facility.
	 
	 	 	 	 
	 

	 	 	 	If, on the Closing Date, the Ratings Condition
is not satisfied, an upfront fee equal to 2.5%
of the aggregate commitments under the Revolving
Facility will be payable by the Borrower on the
Closing Date to the Lenders under the Revolving
Facility.
	 
	 	 	 	 
	 

	 	(D)
	 	Generally
	 
	 	 	 	 
	 

	 	 	 	Notwithstanding the above, (a) all calculations
of interest and fees in respect of the Senior
Facilities will be calculated on the basis of
their full stated principal amount and (b) at
the option of the Joint Arrangers, any original
issue discount may instead be effected in the
form of additional upfront fees payable to the
applicable Lenders.
	 
	 	 	 	 
	Interest Rates and
Fees:

	 	 	 	As set forth on Annex I hereto.
	 
	 	 	 	 
	Default Rate:

	 	 	 	The applicable interest rate plus 2.0% per annum.
	 
	 	 	 	 
	Letters of Credit:

	 	 	 	Letters of credit under the Revolving Facility
will be issued by CS or another Lender
acceptable to the Borrower and the Agent (the
"Issuing Bank”). Each letter of credit shall
expire not later than the earlier of (a) 12
months after its date of issuance and (b) the
fifth business day prior to the final maturity
of the Revolving Facility; provided, however,
that any letter of credit may provide for
renewal thereof for additional periods of up to
12 months (which in no event shall extend beyond
the date referred to in clause (b) above).
	 
	 	 	 	 
	 

	 	 	 	Drawings under any letter of credit shall be
reimbursed by the Borrower on the same business
day. To the extent that the Borrower does not
reimburse the Issuing Bank on the same business
day, the Lenders under the Revolving Facility
shall be irrevocably obligated to reimburse the
Issuing Bank pro rata based upon their
respective Revolving Facility commitments.
	 
	 	 	 	 
	 

	 	 	 	The issuance of all letters of credit shall be
subject to the customary procedures of the
Issuing Bank.

 Senior Facilities Term Sheet

A-5

 

	 	 	 	 	 
	Final Maturity
and Amortization:

	 	(A)
	 	Term Loan A Facility

The Term Loan A Facility will mature on the date
that is five years after the Closing Date, and
will amortize in equal quarterly installments in
an aggregate annual amount equal to 7.5% of the
original principal amount of the Term Loan A
Facility during the first year after the Closing
Date, 7.5% of the original principal amount of
the Term Loan A Facility during the second year
after the Closing Date, 10% of the original
principal amount of the Term Loan A Facility
during the third year after the Closing Date,
15% of the original principal amount of the Term
Loan A Facility during the fourth year after the
Closing Date and 60% of the original principal
amount of the Term Loan A Facility during the
fifth year after the Closing Date.
	 
	 	 	 	 
	 

	 	(B)
	 	Term Loan B Facility
	 
	 	 	 	 
	 

	 	 	 	The Term Loan B Facility will mature on the date
that is six years after the Closing Date, and
will amortize in equal quarterly installments in
an aggregate annual amount equal to 1% of the
original principal amount of the Term Loan B
Facility with the balance payable on the
maturity date of the Term Loan B Facility.
	 
	 	 	 	 
	 

	 	(C)
	 	Revolving Facility
	 
	 	 	 	 
	 

	 	 	 	The Revolving Facility will mature and the
commitments thereunder will terminate on the
date that is five years after the Closing Date.
	 
	 	 	 	 
	 

	 	(D)
	 	Generally
	 
	 	 	 	 
	 

	 	 	 	Notwithstanding the foregoing, each of the
Senior Facilities shall mature and be payable in
full on October 1, 2011 unless the Borrower’s
11/4% convertible senior notes due April 1, 2026
(the “Borrower’s Convertible Notes”) shall have
been refinanced on terms reasonably satisfactory
to the Agent on or prior to such date.
	 
	 	 	 	 
	Guarantees:

	 	 	 	All obligations of the Borrower under the Senior
Facilities and under any interest rate
protection or other hedging arrangements entered
into with the Agent, any Joint Arranger, an
entity that is a Lender at the time of such
transaction, or any affiliate of any of the
foregoing (“Hedging Arrangements”) will be
unconditionally guaranteed (the “Guarantees”) by
each existing and subsequently acquired or
organized domestic subsidiary of the Borrower
(the “Subsidiary Guarantors”); provided that the
Company and its subsidiaries shall not be
required to become Guarantors prior to the
consummation of the Second-

 Senior Facilities Term Sheet

A-6

 

	 	 	 	 	 
	 

	 	 	 	
Step Merger.

	 
	Security:

	 	 	 	 The Senior Facilities, the Guarantees and any
Hedging Arrangements will be secured by
substantially all assets of the Borrower and
each Subsidiary Guarantor, whether owned on the
Closing Date or thereafter acquired
(collectively, the “Collateral”), including but
not limited to: (a) a perfected
first-priority 
pledge of all the equity interests held by the
Borrower or any Subsidiary Guarantor (excluding,
prior to the consummation of the Second-Step
Merger, the equity interests of the Company)
(which pledge, in the case of any foreign
subsidiary, (i) shall be limited to 100% of the
non-voting equity interests (if any) and 66% of
the voting equity interests of such foreign
subsidiary to the extent the pledge of any
greater percentage would result in adverse tax
consequences to the Borrower and (ii) shall
exclude any equity interests in immaterial
foreign subsidiaries) and (b) perfected
first-priority security interests in, and
mortgages on, substantially all tangible and
intangible assets of the Borrower and each
Subsidiary Guarantor (including but not limited
to accounts receivable, inventory, equipment,
general intangibles, investment property,
intellectual property, real property, cash,
deposit and securities accounts, commercial tort
claims, letter of credit rights, intercompany
notes and proceeds of the foregoing).
	 
	 	 	 	 
	 

	 	 	 	All the above-described pledges, security
interests and mortgages shall be created on
terms, and pursuant to documentation, reasonably
satisfactory to the Lenders (including, in the
case of real property, by customary items such
as satisfactory title insurance and surveys),
and none of the Collateral shall be subject to
any other liens, subject to customary and
limited exceptions to be agreed upon.
Notwithstanding the foregoing, (i) in
circumstances where the Agent and the Borrower
agree that the cost, burden or consequences of
obtaining or perfecting a security interest in
any asset is excessive in relation to the
practical benefit afforded thereby, such asset
shall be excluded from the Collateral, (ii) (x)
the Borrower and its subsidiaries (excluding the
Company and its subsidiaries) shall only be
required to provide liens on real property,
deposit accounts and letter of credit rights
(the “Specified Collateral”) within a reasonable
period of time (to be agreed) following the
Closing Date; provided that it shall use
commercially reasonable efforts to provide a
lien on such Specified Collateral on or prior to
such date and (y) the

 Senior Facilities Term Sheet

A-7

 

	 	 	 	 	 
	 

	 	 	 	Company and its
subsidiaries shall only be obligated to provide
liens on Specified Collateral within a
reasonable period of time (to be agreed upon)
following the Second-Step Merger; provided that
it shall have used commercially reasonable
efforts to provide a lien on such Specified
Collateral on or prior to such date and (iii)
ARS shall not constitute part of the Collateral
to the extent subject to a Permitted ARS
Borrowing (and shall be automatically released
from the Collateral in the event of any
consummation of a Permitted ARS Borrowing
post-closing).
	 
	 	 	 	 
	Mandatory Prepayments:

	 	 	 	Loans under the Senior Facilities shall be
prepaid with (a) 50% of Excess Cash Flow (to be
defined), subject to a leveraged-based step-down
to be agreed, (b) 100% of the net cash proceeds
of all asset sales or other dispositions of
property by the Borrower and its subsidiaries
(including proceeds from the sale of stock of
any subsidiary of the Borrower and insurance and
condemnation proceeds but excluding certain
sales of margin stock) (subject to exceptions
and reinvestment provisions to be agreed upon),
(c) 100% of the net cash proceeds of issuances,
offerings or placements of debt obligations of
the Borrower and its subsidiaries (subject to
exceptions to be agreed upon), (d) 100% of the
net cash proceeds of any ARS Liquidation
received after the Closing Date; provided that
in the event that Revolving Facility is reduced
to $100,000,000 upon a failure to satisfy the
Ratings Condition as provided above, such
prepayment shall only be required from and to
the extent that the net cash proceeds from all
ARS Liquidations exceed $50,000,000 in the
aggregate, (e) 50% of the net cash proceeds of
issuances of equity securities of the Borrower
and its subsidiaries (subject to exceptions to
be agreed upon), and (f) 100% of any purchase
price adjustment following consummation of the
Acquisition.
	 
	 	 	 	 
	 

	 	 	 	Notwithstanding the foregoing, each Lender under
the Term Facilities shall have the right to
reject its pro rata share of any mandatory
prepayments described above. Any remaining
amounts may be retained by the Borrower.
	 
	 	 	 	 
	 

	 	 	 	The above-described mandatory prepayments shall
be applied pro rata to the remaining
amortization payments under the Term Facilities.
When there are no longer outstanding loans
under the Term Facilities, mandatory prepayments
will be applied first, to prepay outstanding
loans under the Revolving Facility and second,
to cash
collateralize outstanding letters of

Senior Facilities Term Sheet

A-8

 

	 	 	 	 	 
	 

	 	 	 	credit, in each case, with no corresponding
permanent reduction of commitments under the
Revolving Facility.
	 
	 	 	 	 
	Voluntary Prepayments
and Reductions in
Commitments:

	 	 	 	Voluntary reductions of the unutilized portion
of the commitments under the Senior Facilities
and prepayments of borrowings thereunder will be
permitted at any time, in minimum principal
amounts to be agreed upon, without premium or
penalty, subject to reimbursement of the
Lenders’ redeployment costs in the case of a
prepayment of Adjusted LIBOR borrowings other
than on the last day of the relevant interest
period. All voluntary prepayments of the Term
Facilities will be applied pro rata to the
remaining amortization payments under the Term
Facilities.
	 
	 	 	 	 
	Representations and
Warranties:

	 	 	 	To be reasonably specified by the Agent,
including, without limitation, corporate status;
legal, valid and binding documentation; no
consents; accuracy of financial statements,
confidential information memorandum and other
information; no material adverse change; absence
of undisclosed liabilities, litigation and
investigations; no violation of agreements or
instruments; compliance with laws (including
PATRIOT Act, OFAC rules and regulations, ERISA,
margin regulations, environmental laws and laws
applicable to sanctioned persons); payment of
taxes; ownership of properties; inapplicability
of the Investment Company Act; solvency;
effectiveness of governmental approvals; labor
matters; environmental and other regulatory
matters; validity, priority and perfection of
security interests in the Collateral; and
treatment as senior debt under all subordinated
debt (if any) and as sole designated senior debt
thereunder.
	 
	 	 	 	 
	Conditions Precedent to
Initial Borrowing:

	 	 	 	Delivery of satisfactory legal opinions,
corporate documents and officers’ and public
officials’ certifications; first-priority
perfected security interests in the Collateral
(free and clear of all liens, subject to
customary and limited exceptions to be agreed
upon); receipt of customary lien and judgment
searches (except with respect to the Company and
its subsidiaries); execution of the Guarantees,
which shall be in full force and effect;
evidence of authority; payment of fees and
expenses; and obtaining of customary insurance
(together with customary insurance
certificates).
	 
	 	 	 	 
	 

	 	 	 	The initial borrowing under the Senior
Facilities will also be subject to the
conditions precedent set forth in Exhibit B to
the Commitment Letter.

Senior Facilities Term Sheet

A-9

 

	 	 	 	 	 
	Conditions Precedent to
all Borrowings:

	 	 	 	Delivery of notice, accuracy of representations
and warranties and absence of defaults; provided
that the material adverse change representation
made on the Closing Date shall be consistent
with the no material adverse change conditions
precedent set forth in paragraph 6 of the
Commitment Letter; and provided further that any
borrowing under the Term Facilities occurring
after the initial borrowing for the purpose of
consummating the Second-Step Merger shall only
be subject to (i) the delivery of notice, (ii)
the additional conditions set forth below and
(iii) the conditions set forth in paragraph B of
Exhibit B to the Commitment Letter.
	 
	 	 	 	 
	 

	 	 	 	In addition, it shall be a condition to any
borrowing hereunder occurring upon or prior to
the consummation of the Second-Step Merger that,
prior to or simultaneously with such borrowing,
the Borrower shall have paid Acquisition
Consideration from cash and cash equivalents on
hand and not from the proceeds of the Senior
Facilities or other indebtedness in an amount
not less than the greater of (x) $1,000,000,000
(the “Minimum Borrower Cash Consideration”) and
(y) the amount necessary to purchase equity
interests in the Company sufficient to satisfy
the Minimum Acceptance Condition (as defined in
Exhibit B to the Commitment Letter).
	 
	 	 	 	 
	Affirmative Covenants:

	 	 	 	To be reasonably specified by the Agent (to be
applicable to the Borrower and its
subsidiaries), including, without limitation,
maintenance of corporate existence and rights;
performance of obligations; delivery of
consolidated and consolidating financial
statements and other information, including
information required under the PATRIOT Act and
audit and management letters; delivery of
notices of default, litigation, ERISA events and
material adverse change; maintenance of
properties in good working order; maintenance of
satisfactory insurance; use of commercially
reasonable efforts to maintain a public
corporate credit rating from Standard & Poor’s
Ratings Service (“S&P”) and a public corporate
family rating from Moody’s Investors Service,
Inc. (“Moody’s”), in each case with respect to
the Borrower, and a rating of the Senior
Facilities by each of S&P and Moody’s;
compliance with laws (including OFAC rules and
regulations); inspection of books and
properties; hedging arrangements satisfactory to
the Agent; further assurances; payment of taxes;
and, consummation as promptly as practicable
following

 Senior Facilities Term Sheet

A-10

 

	 	 	 	 	 
	 

	 	 	 	the Closing Date, of the Second-Step
Merger.
	 
	 	 	 	 
	Negative Covenants:

	 	 	 	To be reasonably specified by the Agent (to be
applicable to the Borrower and its
subsidiaries), including, without limitation,
limitations on dividends on, and redemptions and
repurchases of, equity interests and other
restricted payments; limitations on prepayments,
redemptions and repurchases of debt (other than
loans under the Senior Facilities); limitations
on liens (other than liens on margin stock to
the extent necessary to comply with margin
regulations) and sale-leaseback transactions;
limitations on loans and investments;
limitations on debt, guarantees and hedging
arrangements (other than Permitted ARS
Borrowings); limitations on mergers,
acquisitions and asset sales (which will permit
sales of margin stock for fair value and for
cash, so long as the proceeds thereof are
invested by the Borrower in cash or cash
equivalents); limitations on transactions with
affiliates; limitations on changes in business
conducted by the Borrower and its subsidiaries;
limitations on restrictions on ability of
subsidiaries to pay dividends or make
distributions; limitations on amendments of debt
and other material agreements; and limitations
on capital expenditures.
	 
	 	 	 	 
	Selected Financial 

Covenants:

	 	 	 	Usual for facilities and transactions of this
type (with financial definitions, levels and
measurement periods to be agreed upon),
including, without limitation: (a) maximum
ratios of Total Debt to EBITDA; and (b) minimum
interest coverage ratios.
	 
	 	 	 	 
	Events of Default:

	 	 	 	To be reasonably specified by the Agent relating
to the Borrower and its subsidiaries (subject,
where appropriate, to thresholds and grace
periods to be agreed upon), including, without
limitation, nonpayment of principal, interest or
other amounts; violation of covenants;
incorrectness of representations and warranties
in any material respect; cross default and cross
acceleration; bankruptcy; material judgments;
ERISA events; actual or asserted invalidity of
guarantees or security documents; and Change of
Control (to be defined). For the avoidance of
doubt, except in the case of a Negotiated
Transaction, any change of control defaults
arising under any indebtedness of the Company or
any subsidiary of the Company as a direct result
of the consummation of the Tender Offer shall
not constitute a default or event of default
under the Senior Facilities until the expiration
of a cure period to be agreed.
	 
	Voting:

	 	 	 	Amendments and waivers of the
definitive credit 

 Senior Facilities Term Sheet

A-11

 

	 	 	 	 	 
	 

	 	 	 	documentation will require the approval of
Lenders holding more than 50% of the aggregate
amount of the loans and commitments under the
Senior Facilities (with certain amendments and
waivers also requiring class votes), except that
the consent of each Lender shall be required
with respect to, among other things,
(a) increases in the commitment of such Lender,
(b) reductions of principal, interest or fees
payable to such Lender, (c) extensions of final
maturity or scheduled amortization of the loans
or commitments of such Lender and (d) releases
of all or substantially all of the value of the
Guarantees, or all or substantially all of the
Collateral.
	 
	 	 	 	 
	Cost and Yield Protection:

	 	 	 	Usual for facilities and transactions of this
type, including customary tax gross-up
provisions.
	 
	 	 	 	 
	Assignments and
Participations:

	 	 	 	The Lenders will be permitted to assign (a)
loans and commitments under the Term Facilities
without the consent of the Borrower; provided
that the Agent shall use its commercially
reasonable efforts to provide notice of any such
assignment to the Borrower and (b) loans and
commitments under the Revolving Facility with
the consent of the Borrower, the Swingline
Lender and the Issuing Bank, in each case not to
be unreasonably withheld or delayed; provided
that such consent of the Borrower shall not be
required (i) if such assignment is made to
another Lender or an affiliate or approved fund
of a Lender, (ii) during the primary syndication
of the loans and commitments under the Senior
Facilities to persons identified by the Agent or
any Joint Arranger to the Borrower on or prior
to the Closing Date or (iii) after the
occurrence and during the continuance of an
event of default. All assignments will also
require the consent of the Agent, not to be
unreasonably withheld or delayed. Each
assignment will be in an amount of an integral
multiple of $1,000,000. Assignments will be by
novation and will not be required to be pro rata
between the Senior Facilities.
	 
	 	 	 	 
	 

	 	 	 	The Lenders will be permitted to sell
participations in loans and commitments without
restriction. Voting rights of participants
shall be limited to matters in respect of (a)
increases in commitments of such participant,
(b) reductions of principal, interest or fees
payable to such participant, (c) extensions of
final maturity or scheduled amortization of the
loans or commitments in which such participant
participates and (d) releases of all or
substantially all of the value of the
Guarantees, or all or substantially all of the
Collateral.

 Senior Facilities Term Sheet

A-12

 

	 	 	 	 	 
	Expenses and Indemnification:

	 	 
	 	The Borrower will indemnify the Joint Arrangers,
the Agent, the Syndication Agent, the
Documentation Agent, the Lenders, the Issuing
Bank, the Swingline Lender, their respective
affiliates, successors and assigns and the
officers, directors, employees, agents,
advisors, controlling persons and members of
each of the foregoing (each, an “Indemnified
Person”) and hold them harmless from and against
all costs, expenses (including reasonable fees,
disbursements and other charges of counsel) and
liabilities of such Indemnified Person arising
out of or relating to any claim or any
litigation or other proceeding (regardless of
whether such Indemnified Person is a party
thereto and regardless of whether such matter is
initiated by a third party or by the Borrower,
the Company or any of their respective
shareholders or affiliates) that relates to the
Transactions, including the financing
contemplated hereby, the Acquisition or any
transactions in connection therewith, provided
that no Indemnified Person will be indemnified
for any cost, expense or liability to the extent
determined in the final, non-appealable judgment
of a court of competent jurisdiction to have
resulted primarily from its gross negligence or
willful misconduct. In addition, all
out-of-pocket expenses (including, without
limitation, fees, disbursements and other
charges of counsel) of the Joint Arrangers, the
Agent, the Syndication Agent, the Documentation
Agent, the Issuing Bank, the Swingline Lender
and the Lenders for enforcement costs and
documentary taxes associated with the Senior
Facilities will be paid by the Borrower.
	 
	 	 	 	 
	Governing Law and Forum:

	 	 	 	New York.
	 
	 	 	 	 
	Counsel to the Agent
and the Lead Arrangers:

	 	 	 	Davis Polk & Wardwell.

Senior Facilities Term Sheet

A-13

 

ANNEX I

	 	 	 
	Interest Rates:

	 	If, on the Closing Date, the Ratings
Condition is satisfied, the interest rates
under the Senior Facilities will be as
follows:
	 
	 	 
	 

	 	Revolving Facility and Term Loan A Facility 
	 
	 	 
	 

	 	At the option of the Borrower, (i) 4.00% plus
the greater of (A) Adjusted LIBOR and (B)
3.00% or (ii) 3.00% plus the greater of (A)
ABR and (B) 4.00%.
	 
	 	 
	 

	 	 Term Loan B Facility 
	 
	 	 
	 

	 	At the option of the Borrower, (i) 4.50% plus
the greater of (A) Adjusted LIBOR and (B)
3.00% or (ii) 3.50% plus the greater of (A)
ABR and (B) 4.00%.
	 
	 	 
	 

	 	If, on the Closing Date, the Ratings
Condition is not satisfied, the interest
rates under the Senior Facilities will be as
follows:
	 
	 	 
	 

	 	 Revolving Facility and Term Loan A Facility 
	 
	 	 
	 

	 	At the option of the Borrower, (i) 4.25% plus
the greater of (A) Adjusted LIBOR and (B)
3.00% or (ii) 3.25% plus the greater of (A)
ABR and (B) 4.00%.
	 
	 	 
	 

	 	Term Loan B Facility 
	 
	 	 
	 

	 	At the option of the Borrower, (i) 4.75% plus
the greater of (A) Adjusted LIBOR and (B)
3.00% or (ii) 3.75% plus the greater of (A)
ABR and (B) 4.00%.
	 
	 	 
	 

	 	The Borrower may elect interest periods of 1,
2, 3, 6 or (if available to all lenders) 9
months for Adjusted LIBOR borrowings.
	 
	 	 
	 

	 	Calculation of interest shall be on the basis
of the actual days elapsed in a year of 360
days (or 365 or 366 days, as the case may be,
in the case of ABR loans based on the Prime
Rate) and interest shall be payable at the
end of each interest period and, in any
event, at least every three months.
	 
	 	 
	 

	 	ABR is the Alternate Base Rate, which is the
higher of CS’s Prime Rate and the Federal
Funds Effective Rate plus 1/2 of 1.0%.
	 
	 	 
	 

	 	Adjusted LIBOR will at all times include
statutory reserves.
	 
	 	 
	Letter of Credit
Fees:

	 	A per annum fee equal to the spread over
Adjusted LIBOR under the Revolving Facility
will accrue on the

Senior Facilities Term Sheet

Annex I-1

 

 

2

	 	 	 
	 

	 	aggregate face amount of
outstanding letters of credit under the
Revolving Facility, payable in arrears at the
end of each quarter and upon the termination
of the Revolving Facility, in each case for
the actual number of days elapsed over a
360-day year. Such fees shall be distributed
to the Lenders participating in the Revolving
Facility pro rata in accordance with the
amount of each such Lender’s Revolving
Facility commitment. In addition, the
Borrower shall pay to the Issuing Bank, for
its own account, (a) a fronting fee equal to
a percentage per annum to be agreed upon of
the aggregate face amount of outstanding
letters of credit, payable in arrears at the
end of each quarter and upon the termination
of the Revolving Facility, calculated based
upon the actual number of days elapsed over a
360-day year, and (b) customary issuance and
administration fees.
	 
	 	 
	Commitment Fees:

	 	0.50% per annum on the undrawn portion of the
commitments in respect of the Revolving
Facility, payable quarterly in arrears after
the Closing Date and upon the termination of
the commitments, calculated based on the
number of days elapsed in a 360-day year.
	 
	 	 
	Delayed Draw
Commitment Fee:

	 	With respect to any Term Facility, a rate per
annum equal to the interest rate margin
applicable to loans made under such Term
Facility, on the undrawn portion of the
commitments under such Term Facility, payable
quarterly in arrears after the Closing Date
and upon termination of the commitments under
the applicable Term Facility, calculated
based on the number of days elapsed in a
360-day year.

Senior Facilities Term Sheet

Annex I-2

 

 

EXHIBIT B

PROJECT ALBERT

$775,000,000 Senior Secured Credit Facilities

Summary of Additional Conditions Precedent1

     A. Conditions to Closing and Initial Borrowing: The initial borrowing under the Senior
Facilities shall be subject to the following additional conditions precedent (the date of such
initial borrowing, the “Closing Date”):

     1. (a) the definitive documents to be filed with the Securities and Exchange Commission with
respect to the commencement of the Tender Offer shall have been provided to the Joint Arrangers
prior to the commencement of the Tender Offer (or, in the case of any amendments, supplements or
other modifications that are subsequently filed, prior to the filing thereof), and the terms and
conditions thereof and documentation relating thereto (the “Tender Offer Documentation”) shall be
in form and substance reasonably satisfactory to the Joint Arrangers (it being understood that the
Tender Offer Documentation dated September 12, 2008, as extended on October 13, 2008, as amended to
reflect the changes thereto set forth in the Final Draft Merger Agreement (defined below), is in
form and substance satisfactory to the Joint Arrangers) and shall be in full force and effect, (b)
the Tender Offer Documentation shall not have been altered, amended or otherwise changed or
supplemented, in each case in any respect that could reasonably be expected to be materially
adverse to the rights or interests of the Agent or the Lenders or the ability of the Joint
Arrangers to syndicate the Senior Facilities, and no condition thereto shall have been waived,
altered, amended or otherwise changed or supplemented, in each case without the prior written
consent of the Joint Arrangers (such consent not to be unreasonably withheld or delayed), (c) all
material aspects of the Tender Offer shall have been consummated in accordance with applicable laws
and the description thereof in the Tender Offer Documentation, (d) the offer price in the Tender
Offer shall not exceed an amount to be mutually agreed upon by the Joint Arrangers and the
Borrower, and (e) Merger Sub shall have accepted for payment, pursuant to the Tender Offer, a
number of shares of common stock of the Company (i) equal to at least a majority of the total
number of shares of common stock of the Company and (ii) representing at least a majority of the
combined voting power of all equity securities of the Company, in each case on a fully diluted
basis (the “Minimum Acceptance Condition”).

     2. All shareholder rights plans, “poison pill” or any similar plans or charter or by-law
provisions and all anti-takeover or similar statutes, including Section 203 of the Delaware General
Corporations Law, are or will be invalid or inapplicable to the acquisition of shares pursuant to
the Acquisition and to the Borrower, the Company, Merger Sub and their affiliates.

     3. All amounts due or outstanding in respect of the Existing Debt shall have been (or
substantially simultaneously with the closing under the Senior Facilities shall be) paid in full,
all commitments (if any) in respect thereof terminated and all guarantees (if any) therefor and
security (if any) thereof discharged and released. After giving effect to the Transactions and the
other transactions contemplated hereby, the Borrower and its subsidiaries shall have outstanding no
indebtedness or preferred stock other than (a) the loans and other extensions of credit under the
Senior Facilities, (b) the Borrower’s Convertible Notes; (c) any Permitted ARS Borrowing, (d) other
than in the case of a Negotiated Transaction, prior to the Second-Step Merger,

 

			
	1	 	All capitalized terms used but not defined herein have
the meanings given to them in the Commitment Letter to which this Exhibit B is
attached, including Exhibit A thereto.

Senior Facilities Term Sheet

B-1

 

indebtedness of the Company and its subsidiaries and (e) other limited indebtedness to be
agreed upon.

     4. The Joint Arrangers shall have received (a) U.S. GAAP audited consolidated balance sheets
and related statements of income, stockholders’ equity and cash flows of the Borrower and the
Company for the 2005, 2006 and 2007 fiscal years (and, to the extent available, the related
unaudited consolidating financial statements) and (b) U.S. GAAP unaudited consolidated and (to the
extent available) consolidating balance sheets and related statements of income, stockholders’
equity and cash flows of (i) the Borrower and, with respect to a Negotiated Transaction or, to the
extent available, the Company, for each subsequent fiscal quarter ended 30 days before the Closing
Date and (ii) the Borrower and, with respect to a Negotiated Transaction, or, to the extent
available, the Company, for each fiscal month after the most recent fiscal quarter for which
financial statements were received by the Joint Arrangers as described above and ended 30 days
before the Closing Date, which financial statements shall not be materially inconsistent with the
financial statements or forecasts previously provided to the Joint Arrangers (it being agreed that
the financial statements provided to the Joint Arrangers prior to the date of the Commitment Letter
are not materially inconsistent with the financial statements or forecasts previously provided to
the Joint Arrangers). There shall not have been any material change to the capital stock of the
Borrower or the Company outstanding as of the date hereof.

     5. The Joint Arrangers shall have received a pro forma consolidated balance sheet and related
pro forma consolidated statements of income and cash flows of the Borrower as of and for the
twelve-month period ending on the last day of the four-fiscal quarter period ended at least 30 days
before the Closing Date, prepared after giving effect to the Transactions as if the Transactions
had occurred as of such date (in the case of such balance sheet) or at the beginning of such period
(in the case of such other financial statements), which financial statements shall not be
materially inconsistent with the forecasts previously provided to the Joint Arrangers (it being
agreed that the pro forma financial statements provided to the Joint Arrangers prior to the date of
the Commitment Letter are not materially inconsistent with the forecasts previously provided to the
Joint Arrangers).

     6. The Joint Arrangers shall be satisfied, in their reasonable judgment, that the Borrower’s
consolidated EBITDA (to be defined to exclude “milestone payments”) for the four-fiscal quarter
period ended at least 30 days prior to the Closing Date (excluding EBITDA of the Company and its
subsidiaries) shall not be less than $500,000,000.

     7. The Agent shall have received a certificate from the chief financial officer of the
Borrower certifying that the Borrower and its subsidiaries, on a consolidated basis after giving
effect to the Transactions and the other transactions contemplated hereby, are solvent.

     8. All requisite governmental authorities and third parties shall have approved or consented
to the Transactions and the other transactions contemplated hereby to the extent required (except
to the extent such approvals or consents are not material to the Transaction or the other
transactions contemplated hereby), all applicable appeal periods shall have expired and there shall
be no litigation, governmental, administrative or judicial action, actual or threatened, that could
reasonably be expected to restrain, prevent or impose materially burdensome conditions on the
Transactions or the other transactions contemplated hereby. Without limiting the foregoing, the
waiting periods under the Hart-Scott-Rodino Antitrust Improvement Act 1976 (as amended, the “HSR
Act”) shall have expired or have been terminated.

Senior Facilities Term Sheet

B-2

 

     9. The Borrower shall have received a public corporate credit rating of B+ or higher by S&P
and a public corporate family rating of B1 or higher by Moody’s, in each case after giving effect
to the Transactions.

     10. The Joint Arrangers shall have received, at least five business days prior to the Closing
Date, all documentation and other information required by regulatory authorities under applicable
“know your customer” and anti-money laundering rules and regulations, including without limitation
the PATRIOT Act.

     B. Conditions to Subsequent Borrowings for Second-Step Merger. The borrowing under the Term
Facilities in connection with the consummation of any Second-Step Merger shall be subject to the
following conditions precedent:

     1. After giving effect to the Second-Step Merger, the Company and its subsidiaries shall have
outstanding no indebtedness or preferred stock other than limited indebtedness to be agreed upon
(including indebtedness contemplated by the next sentence). Except as provided under “Security” in
Exhibit A to the Commitment Letter, (a) the Company and its domestic subsidiaries that are required
to become Guarantors shall have executed and delivered customary new or joinder documentation with
respect to the definitive documentation for the Senior Facilities, including collateral documents
and (b) the Lenders shall have received (x) additional legal opinions, in form and substance
similar to those delivered with respect to the initial borrowing, with respect to such additional
Guarantors and collateral and (y) customary lien and judgment searches with respect to the Company
and its subsidiaries.

     2. All requisite governmental authorities and third parties shall have approved or consented
to the Transactions and the other transactions contemplated hereby to the extent required (except
to the extent such approvals or consents are not material to the Transaction or the other
transactions contemplated hereby), all applicable appeal periods shall have expired and there shall
be no litigation, governmental, administrative or judicial action, actual or threatened, that could
reasonably be expected to restrain, prevent or impose materially burdensome conditions on the
Transactions or the other transactions contemplated hereby. Without limiting the foregoing, the
waiting periods under the HSR Act shall have expired or been terminated.

     3. The terms and conditions of the Merger Agreement (if any), and documentation relating
thereto, shall be in form and substance reasonably satisfactory to the Joint Arrangers (it being
understood that the final draft Merger Agreement and Disclosure Schedule dated November 23 , 2008
delivered to the Joint Lead Arrangers on or prior to the date of the Commitment Letter (the “Final
Draft Merger Agreement”) is in form and substance satisfactory to the Joint Arrangers); and shall
be in full force and effect. The Merger Agreement (if any) shall not have been altered, amended or
otherwise changed or supplemented, in each case in any respect that could reasonably be expected to
be materially adverse to the rights or interests of the Agent or the Lenders or the ability of the
Joint Arrangers to syndicate the Senior Facilities, and no condition thereto shall have been
waived, altered, amended or otherwise changed or supplemented, in each case without the prior
written consent of the Joint Arrangers (such consent not to be unreasonably withheld or delayed).
The Second-Step Merger shall be consummated simultaneously with such borrowing under the Senior
Facilities in accordance with applicable laws and on terms described in the Merger Agreement (if
any).

     4. All accrued fees and expenses of the Agent, the Joint Arrangers and the Lenders shall have
been paid.

Senior Facilities Term Sheet

B-3

 

     5. No uncured payment default or bankruptcy default under any of the definitive documentation
for the Senior Facilities shall exist, and the representation and warranties related to the
Borrower’s and its material subsidiaries’ existence and good standing, noncontravention,
enforceability, compliance with margin stock rules and the Investment Company Act of 1940 shall be
correct.

Senior Facilities Term Sheet

B-4exv10w1

Exhibit 10.1

AMENDED AND RESTATED EMPLOYMENT AGREEMENT

(Charles W. Swift)

     THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT (the “Agreement”), is made and entered into
effective as of November 21, 2008 (the “Effective Date”), by and between BASIC ENERGY SERVICES,
INC., a Delaware corporation (hereafter “Company”), and CHARLES W. SWIFT (hereafter “Executive”),
an individual and resident of Texas. The Company and Executive may sometimes hereafter be referred
to singularly as a “Party” or collectively as the “Parties.”

WITNESSETH:

     WHEREAS, the Company desires to continue to secure the employment services of Executive
subject to the terms and conditions hereafter set forth; and

     WHEREAS, the Company and the Executive are party to an existing Employment Agreement made and
entered into on December 29, 2006 but effective as of December 31, 2006, which shall terminate and
be superseded in all respects by this Agreement;

     WHEREAS, the Executive is willing to enter into this Agreement upon the terms and conditions
hereafter set forth;

     NOW, THEREFORE, in consideration of Executive’s employment with the Company, and the premises
and mutual covenants contained herein, the Parties hereto agree as follows.

     1. Employment. During the Employment Period (as defined in Section 4 hereto), the Company
shall employ Executive, and Executive shall serve as, Senior Vice President, Operations Support of
the Company. Executive’s principal place of employment shall be at the main corporate offices of
the Company in Midland, Texas.

     2. Compensation.

     (a) Salary. The Company shall pay to Executive during the Employment Period a base
salary of $250,000.00 per year, as adjusted pursuant to the subsequent provisions of this
paragraph (the “Base Salary”). The Base Salary shall be payable in accordance with the
Company’s normal payroll schedule and procedures for its executives. The Base Salary shall
be subject to at least annual review and may be increased (but not decreased without
Executive’s express consent) by the Compensation Committee (the “Compensation Committee”) of
the Board of Directors of the Company [(the “Board”)] at any time. Nothing contained herein
shall preclude the payment of any other compensation to Executive at any time.

     (b) Bonus. In addition to the Base Salary in Section 2(a), for each annual period
following the Effective Date until the last day of the Employment Period (as defined in
Section 4) (each such annual period being referred to as a “Bonus Period”),

 

 

Executive shall
be entitled to a bonus equal to a percentage of Executive’s Base Salary paid during each
such one (1) year period (such bonus, including any applicable bonuses under any quarterly
bonus plan or program during such period are referred to herein collectively as the
“Bonus”); provided, however, Executive shall be entitled to the Bonus only if Executive has
met the performance criteria set by the Compensation Committee for the applicable period.
If the Employment Period ends before the end of the Bonus Period, Executive shall be
entitled to a pro rata portion of the Bonus for that year (based on the number of days in
which he was employed during the year divided by 365) as determined based on satisfaction of
the performance criteria for that period on a pro rata basis, unless Executive’s employment
with the Company has been terminated for Cause (as defined in Section 6(d)) or Employee has
terminated his employment as a Voluntary Termination (as defined in Section 6(d)) in which
event he shall not be entitled to any Bonus for that year. Executive acknowledges that the
amount and performance criteria for Executive’s Bonus to be earned for each Bonus Period
shall be set by the Compensation Committee of the Company. Upon completion of the criteria
for the applicable Bonus Period, such criteria shall be communicated to Executive in
writing. If Executive successfully meets the performance criteria established by the
Compensation Committee, Employer shall pay Executive the earned Bonus amount within 30 days
after receipt of the Company’s audited financial reports for the calendar year in which the
Bonus is calculated or, with respect to any payments under a quarterly bonus plan or
program, within the period applicable to such plan or program; provided, in the event of a
termination due to death, Disability (as defined in Section 6(d)) or Retirement (as defined
in Section 6(d)) of Executive, or Good Reason (as defined in Section 6(d)) by Executive, any
pro rata portion shall be paid as soon as reasonably practical to Executive or Executive’s
spouse or legal representative based upon Executive’s and the Company’s performance through
the month immediately preceding such death, Disability, Retirement or Good Reason or
termination. In all matters related to the determination of the earned Bonus (including the
determination of a pro rata amount), the good faith determination of the Compensation
Committee shall be deemed conclusive.

     (c) Stock Options. Executive shall be eligible from time to time to receive grants of
stock options and other long-term equity incentive compensation, as commensurate with his
executive position, under the terms of the Company’s equity compensation plans.

     3. Duties and Responsibilities of Executive. During the Employment Period, Executive shall
devote his services full-time to the business of the Company and perform the duties and
responsibilities assigned to him under the Company’s Bylaws or by the Company to the best of his
ability and with reasonable diligence. In determining Executive’s duties and responsibilities, the
Company shall not assign duties and responsibilities to Executive that are inappropriate for his
position as Senior Vice President, Operations Support. This Section 3 shall not be construed as
preventing Executive from (a) engaging in reasonable volunteer services for charitable, educational
or civic organizations, or (b) investing his assets in such a manner that
will not require a material amount of his time or services in the operations of the businesses
in which such investments are made; provided, however, no such other activity shall conflict with
Executive’s loyalties and duties to the Company. Executive shall at all times use his best efforts

2

 

to in good faith comply with United States laws applicable to Executive’s actions on behalf of the
Company and its Affiliates (as defined in Section 6(d)). Executive understands and agrees that he
may be required to travel from time to time for purposes of the Company’s business.

     4. Term of Employment. Executive’s initial term of employment with the Company under this
Agreement shall be for the period from the Effective Date through December 31, 2009 (the “Initial
Term of Employment”). Thereafter, the employment period hereunder shall be automatically extended
repetitively for an additional one (1) year period on January 1, 2010, and each one-year
anniversary thereafter, unless Notice of Termination (pursuant to Section 7) is given by either the
Company or Executive to the other Party at least 90 days prior to the end of the Initial Term of
Employment, or any one-year extension thereof, as applicable, that the Agreement will not be
renewed for a successive one-year period after the end of the current period. The Company and
Executive shall each have the right to give Notice of Termination at will, with or without cause,
at any time subject, however, to the terms and conditions of this Agreement regarding the rights
and duties of the Parties upon termination of employment. The Initial Term of Employment, and any
one-year extension of employment hereunder, shall each be referred to herein as a “Term of
Employment.” The period from the Effective Date through the date of Executive’s termination of
employment for whatever reason shall be referred to herein as the “Employment Period.”

     5. Benefits. Subject to the terms and conditions of this Agreement, during the Employment
Period, Executive shall be entitled to all of the following:

     (a) Reimbursement of Business Expenses. The Company shall pay or reimburse Executive
for all reasonable travel, entertainment and other expenses paid or incurred by Executive in
the performance of his duties hereunder in accordance with the Company’s policies in effect
from time to time. The Company shall also provide Executive with suitable office space,
including staff support, and paid parking. In addition, subject to prior approval of the
Compensation Committee, the Company shall pay the membership fees and dues for Executive to
be a member of a luncheon club or clubs as appropriate for his position.

     (b) Other Employee Benefits. Executive shall be entitled to participate in, and shall
participate in coverage under, any employee benefits plans or programs of the Company to the
same extent as available to any other employees of the Company under the terms of such plans
or programs.

     (c) Paid Time Off Days and Holidays. Executive shall be entitled to accrue paid time
off (“PTO”) days in each calendar year determined in accordance with the Company’s PTO
policy or plans for employees of the Company as in effect from time to time. Executive
shall also be entitled to all paid holidays and personal days given by the Company to any of
its other employees.

     6. Rights and Payments upon Termination. The Executive’s right to compensation and benefits
for periods after the date on which his employment with the Company

3

 

terminates for whatever reason
(the “Termination Date”), shall be determined in accordance with this Section 6 as follows:

     (a) Minimum Payments. Executive shall be entitled to the following minimum payments
under this Section 6(a), in addition to any other payments or benefits which he is entitled
to receive under the terms of any employee benefit plan or program or Section 6(b) or
Section 8.

     (1) his accrued but unpaid salary through his Termination Date;

     (2) his unused PTO days which have accrued through his Termination Date; and

     (3) reimbursement of his reasonable business expenses that were incurred but
unpaid as of his Termination Date.

     Such salary and accrued PTO days shall be paid to Executive within 15 days following the
Termination Date in a cash lump sum less applicable withholdings. Business expenses shall be
reimbursed in accordance with the Company’s normal procedures.

     (b) Severance Payments. In the event that during the Term of Employment (i)
Executive’s employment is terminated by the Company for any reason except due to a
termination by the Company for Cause (as defined in Section 6(d)), or (ii) Executive
terminates his own employment hereunder for Good Reason or Retirement (as such terms are
defined in Section 6(d)), the following severance benefits shall be provided to Executive
or, in the event of his death before receiving all such benefits, to his Designated
Beneficiary (as defined in Section 6(d)) following his death:

     (1) The Company shall pay to Executive as additional compensation (the
“Additional Payment”), an amount which is equal to “Total Cash” (defined below).
“Total Cash” means 1.50 times the sum of (A) Executive’s annual Base Salary (as in
effect immediately prior to his Termination Date) plus (B) Executive’s current
annual incentive target Bonus (Section 2(b)) for the full year in which the
termination of employment occurred; provided, in the event of a Change in Control
and a termination of Executive by the Company without Cause, by Executive for Good
Reason or for Retirement within the six (6) months preceding or the 12 months
following a Change in Control, “Total Cash” shall be calculated as two (2) times the
sum of (A) Executive’s annual Base Salary (as in effect immediately prior to his
Termination Date) plus (B) the higher of (x) Executive’s current annual incentive
target Bonus (Section 2(b)) for the full year in which the termination of employment
occurred or (y) the highest annual incentive Bonus received by Executive with
respect to any of the last three completed fiscal years. The Company shall make the
Additional Payment to Executive in a cash lump sum not later than 60 calendar days
following the
Termination Date and, if applicable with respect to a Change in Control that
occurs within six (6) months after a Termination Date, the Company shall make a

4

 

payment equal to the positive difference, if any, of the Additional Payment due
under this Section 6(b) applicable to the Change in Control less the Additional
Payment previously made pursuant to this Section 6(b) prior to the Change in
Control.

     (2) Following the Executive’s Termination Date, the Company shall provide
continued group health coverage (including payment of premiums and any applicable
federal and state withholding taxes based on the premiums paid) to the Executive and
his covered spouse and dependents under the Consolidated Omnibus Budget
Reconciliation Act of 1985 (“COBRA”), provided the Executive makes timely election
of such coverage. Company shall continue to provide such COBRA coverage at no cost
to the Executive until the Executive becomes eligible for group health coverage
under another employer’s plan with comparable benefits or for 18 months, whichever
is less. Upon his acceptance of employment with another employer, Executive will be
obligated to notify the Company of such acceptance of employment and to provide to
the Company a copy of the summary plan description of the new employer’s group
health plan and a schedule showing the required employee contributions for
participation in the plan. In the event of any change to the provisions of the
Company’s group health plan following the Executive’s Termination Date, Executive
and his spouse and dependents, as applicable, shall be treated consistently with the
then-current officers of the Company (or its successor) with respect to the terms
and conditions of coverage and other substantive provisions of the plan, subject,
however, to the agreement of the Executive and his spouse to acquire and maintain
any and all coverage that either or both of them are entitled to at any time during
their lives under the Medicare program or any similar program of the United States
or any agency thereof (hereinafter referred to as “Medicare”). The coverage
described in the immediately preceding sentence includes, without limitation, parts
A and B of Medicare and any additional parts of Medicare available to them at any
time. Executive and his spouse further agree to pay any required premiums for
Medicare coverage from their personal funds.

     If (i) Executive voluntarily resigns or otherwise voluntarily terminates his own employment,
except for Good Reason (as defined in Section 6(d)) or Retirement (as defined in Section 6(d)), or
(ii) Executive’s employment is terminated by the Company for Cause (as defined in Section 6(d)),
then in either such event, the Company shall have no obligation to provide the severance benefits
described in paragraphs (1) and (2) (above) of this Section 6(b), except to offer COBRA coverage
(as required by applicable law). Executive shall still be entitled to the minimum benefits
provided under Section 6(a). The severance payments provided under this Agreement shall supersede
and replace any severance payments under any severance pay plan that the Company or any Affiliate
maintains for employees generally.

     (c) Notwithstanding any provision of this Agreement to the contrary, in order to
receive the severance benefits payable under either Section 6(b) or Section 8, as
applicable, the Executive must first execute an appropriate release agreement (on a
form provided by the Company) whereby the Executive agrees to release and waive, in return

5

 

for such severance benefits, any claims that he may have against the Company including,
without limitation, for unlawful discrimination (such as Title VII of the Civil Rights Act);
provided, however, such release agreement shall not release any claim by Executive for any
payment or benefit that is due under either this Agreement or any employee benefit plan
until fully paid.

     (d) Definitions.

     (1) “Affiliate” means any entity in which the Company has a 50% or greater
capital, profits or voting interest.

     (2) “Cause” means any of the following:

     (A) the Executive’s conviction by a court of competent jurisdiction as
to which no further appeal can be taken of a crime involving moral turpitude
or a felony or entering the plea of nolo contendere or settlement agreement
to such crime by the Executive; provided, any conviction, plea or settlement
for a crime other than a crime involving moral turpitude by the Executive
must also reasonably be expected to have a material adverse effect on the
business (including public share price) or reputation of the Company or any
Affiliate;

     (B) the commission by the Executive of a material act of fraud upon the
Company or any Affiliate;

     (C) the material misappropriation of funds or property of the Company
or any Affiliate by the Executive;

     (D) the knowing engagement by the Executive, without the written
approval of the Board or Compensation Committee in any material activity
which directly competes with the business of the Company or any Affiliate,
or which the Compensation Committee determines in good faith would directly
result in a material injury to the business or reputation of the Company or
any Affiliate; or

     (E) (i) the material breach by Executive of any material provision of
this Agreement, or (ii) the willful, material and repeated nonperformance of
Executive’s duties to the Company or any Affiliate (other than by reason of
Executive’s illness or incapacity), but only under clause (E) (i) or (E)
(ii) after written notice from the Compensation Committee of such material
breach or nonperformance (which notice specifically identifies the manner
and sets forth specific facts, circumstances and examples in which the
Compensation Committee believes that Executive has breached the Agreement or
not substantially
performed his duties) and his continued willful failure to cure such
breach or nonperformance within the time period set by the Compensation

6

 

Committee but in no event less than thirty (30) business day after his
receipt of such notice; and, for purposes of this clause (E), no act or
failure to act on Executive’s part shall be deemed “willful” unless it is
done or omitted by Executive without his reasonable belief that such action
or omission was in the best interest of the Company. Assuming disclosure of
the pertinent facts, any action or omission by Executive after consultation
with, and in accordance with the advice of, legal counsel reasonably
acceptable to the Company shall be deemed to have been taken in good faith
and to not be willful under this Agreement.

     (4) “Change in Control” of the Company means the occurrence of any one of the following
events:

     (A) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) (a “Person”)) of beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of 50% or more of
either (i) the then outstanding shares of common stock of the Company (the
“Outstanding Company Stock”) or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in
the election of directors (the “Outstanding Company Voting Securities”);
provided, however, the following acquisitions shall not constitute a Change
in Control; (i) any acquisition directly from the Company or any subsidiary
thereof (a “Subsidiary”), (ii) any acquisition by the Company or any
Subsidiary, or by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any Subsidiary, (iii) any acquisition by any
corporation pursuant to a reorganization, merger, consolidation or similar
business combination involving the Company (a “Merger”) which for purposes
of this definition of Change in Control, shall be subject to paragraph (b)
(below) or (iv) the current ownership or any subsequent acquisitions of
Outstanding Company Stock by Credit Suisse First Boston and any of its
Affiliates, including without limitation any of the “DLJ Parties” (as
defined under the Amended and Restated Stockholders’ Agreement dated as of
October 3, 2003, by and among the Company and the other stockholders of the
Company party thereto) and their Affiliates; or

     (B) Approval by the shareholders of the Company of a Merger, unless
immediately following such Merger, substantially all of the holders of the
Outstanding Company Voting Securities immediately prior to Merger
beneficially own, directly or indirectly, more than 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;
or

7

 

     (C) The sale or other disposition of all or substantially all of the
assets of the Company, 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 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.

     (5) “Code” means the Internal Revenue Code of 1986, as amended, or its
successor. References herein to any Section of the Code shall include any
successor provisions of the Code.

     (6) “Disability” shall mean that Executive is entitled to receive
long-term disability (“LTD”) income benefits under the LTD plan or policy
maintained by the Company that covers Executive. If, for any reason,
Executive is not covered under such LTD plan or policy, then “Disability”
shall mean a “permanent and total disability” as defined in Section 22(e)(3)
of the Code and Treasury regulations thereunder. Evidence of such
Disability shall be certified by a physician acceptable to both the Company
and Executive. In the event that the Parties are not able to agree on the
choice of a physician, each shall select one physician who, in turn, shall
select a third physician to render such certification. All costs relating
to the determination of whether Executive has incurred a Disability shall be
paid by the Company. Executive agrees to submit to any examinations that
are reasonably required by the attending physician or other healthcare
service providers to determine whether he has a Disability.

     (7) “Designated Beneficiary” means the Executive’s surviving spouse, if
any. If there is no such surviving spouse at the time of Executive’s death,
then the Designated Beneficiary hereunder shall be Executive’s estate.

     (8) “Good Reason” means the occurrence of any of the following events,
except in connection with termination of the Executive’s employment for
Cause or Disability, without Executive’s express written consent:

     (A) A reduction in Executive’s Base Salary pursuant to Section
2(a);

     (B) A relocation of more than fifty (50) miles of Executive’s
principal office with the Company or its successor;

8

 

     (C) A substantial and adverse change in the Executive’s duties,
control, authority, status or position, or the assignment to the
Executive of duties or responsibilities which are materially
inconsistent with such status or position, or a material reduction in
the duties and responsibilities previously exercised by the
Executive, or a loss of title, loss of office, loss of significant
authority, power or control, or any removal of Executive from, or any
failure to reappoint or reelect him to, such positions, except in
connection with the termination of his employment by the Company for
Cause (as described in Section 6(d)) (provided, a change in reporting
relationships alone shall not constitute such a change);

     (D) The Company or its successor fails to continue in effect any
pension plan, life insurance plan, health-and-accident plan,
retirement plan, disability plan, stock option plan, deferred
compensation plan or executive incentive compensation plan under
which Executive was receiving material benefits (or plans providing
Executive with substantially similar benefits), or the taking of any
action by the Company or its successor that would materially and
adversely affect Executive’s participation in or materially reduce
his benefits under any such plan, unless any such adverse change to
any such plan applies on the same terms to all of the then-current
senior officers of the Company;

     (E) Any material breach by the Company or its successor of any
other material provision of this Agreement; or

     (F) Any failure by the Company to obtain an assumption of this
Agreement by its successor in interest pursuant to Section 35.

     Notwithstanding the foregoing definition of “Good Reason”, the Executive cannot terminate his
employment hereunder for Good Reason unless he (i) first notifies the Compensation Committee in
writing of the event (or events) which the Executive believes constitutes a Good Reason event under
subparagraphs (A), (B), (C), (D) or (E) (above) within 120 days from the date of such event, and
(ii) provides the Company with at least 30 days to cure, correct or mitigate the Good Reason event
so that it either (1) does not constitute a Good Reason event hereunder or (2) Executive agrees, in
writing, that after any such modification or accommodation made by the Company that such event
shall not constitute a Good Reason event hereunder.

     (9) “Retirement” means the termination of Executive’s employment for normal
retirement at or after attaining age sixty-five (65) provided that, on the date of
his retirement, Executive has accrued at least ten years of active service with the
Company.

9

 

     (10) “Voluntary Termination” means the termination of Executive’s employment by
Executive other than for Good Reason, Retirement, death or Disability.

     7. Notice of Termination. Any termination of employment under this Agreement by the Company
or the Executive shall be communicated by Notice of Termination to the other Party hereto. For
purposes of this Agreement, the term “Notice of Termination” means a written notice which indicates
the specific termination provision of this Agreement relied upon and sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of the Executive’s
employment under the provision so indicated.

     8. Severance Benefits Following Nonrenewal of Agreement. In the event that (i) this Agreement
is not renewed by the Company (pursuant to Section 4) for any reason other than for Cause (as
defined in Section 6(d)) and (ii) Executive has not entered into a new employment agreement with
the Company on or before the expiration of the Term of Employment hereunder due to nonrenewal by
the Company, then Executive shall be entitled to the same severance benefits (hereafter, the
“Nonrenewal Severance Benefits”), in all respects, as the benefits described in Section 6(b),
including the Change in Control benefits if the non-renewal of this Agreement and termination of
employment under this Agreement occurs within the six (6) months preceding or the 12 months
following a Change in Control, provided that he first enters into a release agreement pursuant to
Section 6(c).

     9. No Mitigation. Subject to Section 6(b)(2), Executive shall not be required to mitigate the
amount of any payment provided for under this Agreement by seeking other employment or in any other
manner.

     10. Change in Control: Requirement of Tax Bonus Payment in Certain Circumstances.

     (a) If Executive is deemed to have received an “excess parachute payment” (as defined
in Section 2800(b) of the Code) which is subject to the excise taxes (the “Excise Taxes”)
imposed by Section 4999 of the Code in respect of any payment pursuant to this Agreement, or
any other agreement, plan, instrument or obligation, in whatever form, the Company shall
make the Tax Bonus Payment (defined below) to Executive notwithstanding any contrary
provision in this Agreement, or any other agreement, plan, instrument or obligation.

     (b) The term “Tax Bonus Payment” means a cash payment in an amount equal to the sum of
(i) all Excise Taxes payable by Executive, plus (ii) all additional Excise Taxes and federal
or state income taxes to the extent such taxes are imposed in respect of the Tax Bonus
Payment, such that Executive shall be in the same after-tax
position and shall have received the same benefits that he would have received if the
Excise Taxes had not been imposed. For purposes of calculating any income taxes
attributable to the Tax Bonus Payment, Executive shall be deemed for all purposes to be
paying income taxes at the highest marginal federal income tax rate, taking into account

10

 

any
applicable surtaxes and other generally applicable taxes which have the effect of increasing
the marginal federal income tax rate, if applicable, at the highest marginal state income
tax rate, to which the Tax Bonus Payment and Executive are subject. The following is an
example of the calculation of the Tax Bonus Payment:

Assume that the Excise Tax rate is 20%, the highest federal marginal income tax rate
is 40% and Executive is not subject to state income taxes. Further assume that
Executive has received an excess parachute payment in the amount of $200,000, on
which $40,000 ($200,000) x 20%) in Excise Taxes are due. The amount of the required
Tax Bonus Payment is thus computed to be $100,000, i.e., the Tax Bonus Payment of
$100,000, less additional Excise Taxes on the Tax Bonus Payment of $20,000 (i.e.,
20% x $100,000) and less income taxes on the Tax Bonus Payment of $40,000 (i.e., 40%
x $100,000), yields the net of $40,000, which is the amount of the Excise Taxes owed
by Executive in respect of the original excess parachute payment.

     (c) Executive agrees to reasonably cooperate with the Company to minimize the amount of
the excess parachute payments, including, without limitation, assisting the Company in
establishing that some or all of the payments received by Executive that are “contingent on
a change,” as described in Section 280G(b)(2)(A)(i) of the Code, are reasonable compensation
for personal services actually rendered by Executive before the date of such change or to be
rendered by Executive on or after the date of such change. If the Company is able to
establish that the amount of the excess parachute payment is less than originally
anticipated by Executive, Executive shall refund to the Company any excess Tax Bonus Payment
to the extent Executive is not required to pay Excise Taxes or income taxes (including those
incurred in respect of receipt of the Tax Bonus Payment). Notwithstanding the foregoing,
Executive shall not be required to take any action which his attorney or tax advisor advises
him in writing (i) is improper or (ii) exposes Executive to personal liability. Executive
may require the Company to deliver to Executive an indemnification agreement, in form and
substance reasonably satisfactory to the Company and the Executive, as a condition to taking
any action required by this paragraph.

     (d) The Company shall make any Tax Bonus Payment required to be made under this Section
10 in a cash lump sum after the date on which Executive received or is deemed to have
received any such excess parachute payment. Any Tax Bonus Payment which is not paid by the
Company within 30 days of receipt of Executive’s written demand therefor shall thereafter be
deemed delinquent, and the Company shall pay to Executive immediately upon demand interest
at the rate of 10% per annum from the date such payment becomes delinquent to the date of
payment of such delinquent sum with interest.

     (e) If there is any change to the Code which results in the recodification of Section
280G or Section 4999 of the Code, or if either such section of the Code is amended, replaced
or supplemented by other provisions of the Code of similar import (“Successor Provisions”),
then this Agreement shall be applied and enforced with

11

 

respect to such new Code provisions
in a manner consistent with the intent of the parties as expressed herein, which is to
assure that Employee is in the same after-tax position and has received the same benefits
that he would have been in and received if any taxes imposed by Section 4999 (or any
Successor Provisions) had not been imposed.

     (f) All determinations required to be made under this Section 10 including, without
limitation, whether and when a Tax Bonus Payment is required, and the amount of such Tax
Bonus Payment and the assumptions to be utilized in arriving at such determinations, unless
otherwise expressly set forth in this Agreement, shall be made within 30 days from the
Change in Control Date by the independent tax consultant(s) selected by the Company and
reasonably acceptable to Executive (“Tax Consultant”). The Tax Consultant must be a
qualified tax attorney or certified public accountant. All fees and expenses of the Tax
Consultant shall be paid in full by the Company. Any Excise Taxes as determined pursuant to
this Section 10 shall be paid by the Company to the Internal Revenue Service (or any other
appropriate taxing authority) on Executive’s behalf within five (5) business days after
receipt by the Company and Executive of the Tax Consultant’s final determination.

     (g) If the Tax Consultant determines that there is substantial authority (within the
meaning of Section 6662 of the Code) that no Excise Taxes are payable by Executive, the Tax
Consultant shall furnish Executive with a written opinion that failure to disclose or report
the Excise Taxes on Executive’s federal income tax return will not constitute a substantial
understatement of tax or be reasonably likely to result in the imposition of a negligence or
any other penalty.

     (h) The Company shall indemnify and hold harmless the Executive, on an after-tax basis,
from any costs, expenses, penalties, fines, interest or other liabilities (“Losses”)
incurred by Executive with respect to the exercise by the Company of any of its rights under
this Section 10, including, without limitation, any Losses related to the Company’s decision
to contest a claim of any imputed income to Executive. The Company shall pay all fees and
expenses incurred under this Section 10, and shall promptly reimburse Executive for the
reasonable expenses incurred by Executive in connection with any actions taken by the
Company or required to be taken by Executive hereunder. Any payments owing to Executive and
not made within 30 days of delivery to the Company of evidence of Executive’s entitlement
thereto shall be paid to Executive together with interest computed at the rate of 10% per
annum.

     11. Secret and Confidential Information.

     (a) Access to Secret and Confidential Information. Prior to the date of this Agreement
the Company has given to Executive in his capacity as an officer, and after the Effective
Date and on an ongoing basis the Company will give to Executive, access to
Secret and Confidential Information (including, without limitation, Secret and
Confidential Information of the Company’s Affiliates and subsidiaries) (collectively,
“Secret and Confidential Information”), which the Executive did not have access to or
knowledge before given by, or acquired in connection with work on behalf of, the

12

 

Company.
Secret and Confidential Information includes, without limitation: all of the Company’s
technical and business information, whether patentable or not, which is of a confidential,
trade secret or proprietary character, and which is either developed by the Executive alone,
with others or by others; lists of customers; identity of customers; identity of prospective
customers; contract terms; bidding information and strategies; pricing methods or
information; computer software; computer software methods and documentation; hardware; the
Company or its Affiliates or subsidiaries’ methods of operation; the procedures, forms and
techniques used in servicing accounts; and other information or documents that the Company
requires to be maintained in confidence for the Company’s continued business success.

     (b) Access to Specialized Training. As of the Effective date and on an ongoing basis,
the Company agrees to provide Executive with initial and ongoing Specialized Training, which
the Executive does not have access to or knowledge of before the execution of this
Agreement. “Specialized Training” includes the training the Company provides to its
Executives that is unique to its business and enhances Executive’s ability to perform
Executive’s job duties effectively.

     (c) Agreement Not to Use or Disclose Secret and Confidential Information and
Specialized Training. In exchange for the Company’s promises to provide Executive with
Specialized Training and Secret and Confidential Information, Executive shall not during the
period of Executive’s employment with the Company or at any time thereafter, disclose to
anyone, including, without limitation, any person, firm, corporation, or other entity, or
publish, or use for any purpose, any Specialized Training and Secret and Confidential
Information, except as properly required in the ordinary course of the Company’s business or
as directed and authorized by the Company.

     (d) Agreement to Refrain from Defamatory Statements. Executive shall refrain, both
during the employment relationship and after the employment relationship terminates, from
publishing any oral or written statements about the Company or any of its Affiliates’
directors, officers, employees, agents, investors or representatives that are slanderous,
libelous, or defamatory; or that disclose private or confidential information about the
Company or any of its Affiliates’ business affairs, directors, officers, employees, agents
investors or representatives; or that constitute an intrusion into the seclusion or private
lives of the Company or any of its Affiliates’ directors, officers, employees, agents,
investors or representatives; or that give rise to unreasonable publicity about the private
lives of such directors, officers, employees, agents, investors or representatives; or that
place such directors, officers, employees, agents, investors or representatives in a false
light before the public; or that constitute a misappropriation of the name or likeness of
such directors, officers, employees, agents, investors or representatives. A violation or
threatened violation of this prohibition may be enjoined.

     12. Duty to Return Company Documents and Property. Upon the termination of Executive’s
employment with the Company for any reason, Executive shall immediately return and deliver to the
Company any and all papers, books, records, documents, memoranda and manuals, e-mail, electronic or
magnetic recordings or data, including all copies thereof belonging

13

 

to the Company or relating to
its business, in Executive’s possession, whether prepared by Executive or others. If at any time
after the Employment Period, Executive determines that he has any Secret and Confidential
Information in his possession or control, Executive shall immediately return to the Company all
such Secret and Confidential Information in his possession or control, including all copies and
portions thereof.

     13. Best Efforts and Disclosure. Executive agrees that, while he is employed with the
Company, he shall devote his full business time and attention to the Company’s business and shall
use his best efforts to promote its success. Further, Executive shall promptly disclose to the
Company all ideas, inventions, computer programs, and discoveries, whether or not patentable or
copyrightable, which he may conceive or make, alone or with others, during the Employment Period,
whether or not during working hours, and which directly or indirectly:

     (a) relate to matters within the scope, field, duties or responsibility of Executive’s
employment with the Company; or

     (b) are based on any knowledge of the actual or anticipated business or interest of the
Company; or

     (c) are aided by the use of time, materials, facilities or information of the Company.

     Executive assigns to the Company, without further compensation, any and all rights, titles and
interest in all such ideas, inventions, computer programs and discoveries in all countries of the
world. Executive recognizes that all ideas, inventions, computer programs and discoveries of the
type described above, conceived or made by Executive alone or with others within six (6) months
after termination of employment (voluntary or otherwise), are likely to have been conceived in
significant part either while employed by the Company or as a direct result of knowledge Executive
had of proprietary information. Accordingly, Executive agrees that such ideas, inventions or
discoveries shall be presumed to have been conceived during his employment with the Company, unless
and until the contrary is clearly established by the Executive.

     14. Inventions and Other Works. Any and all writings, computer software, inventions,
improvements, processes, procedures and/or techniques which Executive may make, conceive, discover,
or develop, either solely or jointly with any other person or persons, at any time during the
Employment Period, whether at the request or upon the suggestion of the Company or otherwise, which
relate to or are useful in connection with any business now or hereafter carried on or contemplated
by the Company, including developments or expansions of its present fields of operations, shall be
the sole and exclusive property of the Company. Executive agrees to take any and all actions
necessary or appropriate so that the Company can prepare and present applications for copyright or
Letters Patent therefor, and can secure such
copyright or Letters Patent wherever possible, as well as reissue renewals, and extensions
thereof and can obtain the record title to such copyright or patents. Executive shall not be
entitled to any additional or special compensation or reimbursement regarding any such writings,
computer software, inventions, improvements, processes, procedures and techniques. Executive

14

 

acknowledges that the Company from time to time may have agreements with other persons or entities
which impose obligations or restrictions on the Company regarding inventions made during the course
of work thereunder or regarding the confidential nature of such work. Executive agrees to be bound
by all such obligations and restrictions and to take all action necessary to discourage the
obligations of the Company.

     15. Non-Solicitation Restriction. To protect the Company’s Secret and Confidential
Information, and in the event of Executive’s termination of employment for whatever reason, whether
by Executive or the Company, it is necessary to enter into the following restrictive covenant,
which is ancillary to the enforceable promises between the Company and Executive in Sections 11
through 14 of this Agreement. Executive hereby covenants and agrees that he will not, directly or
indirectly, either individually or as a principal, partner, agent, consultant, contractor,
employee, or as a director or officer of any entity, or in any other manner or capacity whatsoever,
except on behalf of the Company, solicit business, or attempt to solicit business, in products or
services competitive with any products or services sold (or offered for sale) by the Company or any
Affiliate, from the Company’s or Affiliate’s customers or prospective customers, or those
individuals or entities with whom the Company or Affiliate did any business during the two-year
period ending on the Termination Date. Subject to Section 18, the prohibitions set forth in this
Section 15 shall remain in effect (i) for a period of two (2) years following the Termination Date
for Retirement or any other reason other than (A) by the Executive for Good Reason or (B) by the
Company other than for Cause, or (ii) for a period of six (6) months following the Termination Date
for a termination (A) by the Executive for Good Reason or (B) by the Company for a reason other
than Cause unless such termination is within 12 months following a Change of Control (in which case
the foregoing restrictions shall not apply).

     16. Non-Competition Restrictions.

     (a) Executive hereby agrees that in order to protect the Company’s Secret and
Confidential Information, it is necessary to enter into the following restrictive covenant,
which is ancillary to the enforceable promise between the Company and Executive in Sections
11 through 15 of this Agreement. Executive hereby covenants and agrees that for the
Employment Period, and (i) for a period of two (2) years following the Termination Date for
Retirement or any other reason other than (A) by the Executive for Good Reason or (B) by the
Company other than for Cause, or (ii) for a period of six (6) months following the
Termination Date for a termination (A) by the Executive for Good Reason or (B) by the
Company for a reason other than Cause unless such termination is within 12 months following
a Change of Control (in which case the following restrictions shall not apply), Executive
will not, directly or indirectly for Executive or for others (as a principal, agent, owner,
employee, consultant or otherwise), in any county in the United States, or in any province
in Canada, or otherwise within one hundred fifty (150) miles of where the Company or any of
its subsidiaries or affiliates are conducting any business as
of the date of termination of Executive’s employment relationship or have conducted any
business 12 months prior to the date of such termination (the “Territory”), including, but
not limited to, the business of operating oil and gas pulling units or workover rigs, of
completing or servicing, maintaining, or repairing oil and gas wells, removing,

15

 

transporting, or disposing of liquid waste as produced therefrom, or of pressure pumping,
rental and fishing tools or contract drilling:

     (1) engage in any business competitive with the business conducted by the
Company or its affiliates or subsidiaries;

     (2) render advice or services to, or otherwise assist, any other person,
association, or entity who is engaged, directly or indirectly, in any business
competitive with the business conducted by the Company or its affiliates or
subsidiaries;

     (3) solicit business, or attempt to solicit business within the Territory, in
products or services competitive with any products or services sold (or offered for
sale) by the Company or any Affiliate, from the Company’s or Affiliate’s customers
or prospective customers, or those individuals or entities with whom the Company or
Affiliate did any business during the two-year period ending on the Termination
Date; or

     (4) testify as an expert witness in matters related to the Company’s business
for an adverse party to the Company in litigation; provided, that nothing contained
herein shall interfere with Executive’s duty to testify as a witness if required by
law;

provided, however, the foregoing and this Section shall not prohibit or be construed to
prohibit Executive from owning less than 2% of any class of stock or other securities which
are publicly traded on a national securities exchange or in a recognized over-the-counter
market even if such entity or its Affiliates are engaged in competition with the Company or
a subsidiary of the Company.

     (b) Executive understands that the foregoing restrictions may limit Executive’s ability
to engage in certain businesses during the periods provided for above, but acknowledges that
Executive will receive sufficiently high remuneration and other benefits under this
Agreement to justify such restriction. Executive acknowledges that money damages may not be
a sufficient remedy for any breach of this Section 16 by Executive, and the Company shall be
entitled to enforce the provisions of this Section 16 by terminating any payments then owing
to Executive under this Agreement arid/or to seek specific performance and injunctive relief
as remedies for such breach. Such remedies shall not be deemed the exclusive remedies for a
breach of this Section 16, but shall be in addition to all remedies available at law or in
equity to the Company, including, without limitation, the recovery of damages from Executive
and Executive’s agents involved in such breach. Executive further agrees to waive any
requirement for the Company’s securing or posting of any bond in co with such remedies.

     (c) It is expressly understood and agreed that the Company and Executive consider the
restrictions contained in this Section 16 to be reasonable and necessary to protect the
proprietary information of the Company. Nevertheless, if any of the aforesaid

16

 

restrictions
are found by a court having jurisdiction to be unreasonable, or overly broad as to
geographic area or time, or otherwise unenforceable, the parties intend for the restrictions
therein set forth to be modified by such courts so as to be reasonable and enforceable and,
as so modified by the court, to be fully enforced.

     (d) The covenants in this Section 16 are severable and separate, and the
unenforceability of any specific covenant shall not affect the provisions of any other
covenant. Moreover, in the event any court having jurisdiction shall determine that the
scope, time or territorial restrictions set forth are unreasonable, then it is the intention
of the parties that such restrictions be enforced to the fullest extent which the court
deems reasonable, and the Agreement shall thereby be reformed.

     (e) All of the covenants in this Section 16 shall be construed as an agreement
independent of any other provision in this Agreement, and the existence of any claim or
cause of action of Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of such
covenants. It is specifically agreed that the period following termination of Executive’s
employment, during which the agreements and covenants of Executive made herein shall be
effective, shall be computed by excluding from such computation any time during which
Executive is in material violation of any provision of this Section 16.

     17. No-Recruitment Restriction. Executive agrees that during the Employment Period, and for a
period of two (2) years from his Termination Date for whatever reason, Executive will not, either
directly or indirectly, or by acting in concert with others, solicit or influence or seek to
solicit or influence, any employee of the Company or any Affiliate to terminate, reduce or
otherwise adversely affect his or her employment with the Company or any Affiliate.

     18. Tolling. If Executive violates any of the restrictions contained in Sections 11 through
17 of this Agreement, the restrictive period will be suspended and will not run in favor of
Executive from the time of the commencement of any violation until the time when the Executive
cures the violation to the Company’s reasonable satisfaction.

     19. Reformation. If a court or arbitrator concludes that any time period or the geographic
area specified in any restrictive covenant in Sections 11 through 17 of this Agreement is
unenforceable, then the time period will be reduced by the number of months, or the geographic area
will be reduced by the elimination of such unenforceable portion, or both, so that the restrictions
may be enforced in the geographic area and for the time to the full extent permitted by law.

     20. No Previous Restrictive Agreements. Executive represents that, except as disclosed in
writing to the company, he is not bound by the terms of any agreement with any
previous employer or other party to (a) refrain from using or disclosing any trade secret or
confidential or proprietary information in the course of Executive’s employment by the Company or
(b) refrain from competing, directly or indirectly, with the business of such previous employer or
any other party. Executive further represents that his performance of all the terms

17

 

of this
Agreement and his work duties for the Company does not, and will not, breach any agreement to keep
in confidence proprietary information, knowledge or data acquired by Executive in confidence or in
trust prior to Executive’s employment with the Company, and Executive will not disclose to the
Company or induce the Company to use any confidential or proprietary information or material
belonging to any previous employer or others.

     21. Conflicts of Interest. In keeping with his fiduciary duties to Company, Executive hereby
agrees that he shall not become involved in a conflict of interest, or upon discovery thereof allow
such a conflict to continue at any time during the Employment Period. In this respect, Executive
agrees to fully comply with the conflict of interest agreement entered into by Executive in his
capacity as of an officer or director of the Company. In the instance of a material violation of
the conflict of interest agreement to which Executive is a party, it may be necessary for the
Company to terminate Executive’s employment for Cause (as defined in Section 6(d)); provided,
however, Executive cannot be terminated for Cause hereunder unless the Company first provides
Executive with notice and an opportunity to cure such conflict of interest pursuant to the same
procedures as set forth in clause (E) of the definition of “Cause” in Section 6(d)(2).

     22. Remedies. Executive acknowledges that the restrictions contained in Sections 11 through
21 of this Agreement, in view of the nature of the Company’s business, are reasonable and necessary
to protect the Company’s legitimate business interests, and that any violation of this Agreement
would result in irreparable injury to the Company. In the event of a breach or a threatened breach
by Executive of any provision of Sections 11 through 21 of this Agreement, the Company shall be
entitled to a temporary restraining order and injunctive relief restraining Executive from the
commission of any breach, and to recover the Company’s attorneys’ fees, costs and expenses related
to the breach or threatened breach. Nothing contained in this Agreement shall be construed as
prohibiting the Company from pursuing any other remedies available to it for any such breach or
threatened breach, including, without limitation, the recovery of money damages, attorneys’ fees,
and costs. These covenants and disclosures shall each be construed as independent of any other
provisions in this Agreement, and the existence of any claim or cause of action by Executive
against the Company, whether predicated on this Agreement or otherwise, shall not constitute a
defense to the enforcement by the Company of such covenants and agreements.

     23. Withholdings: Right of Offset. The Company may withhold and deduct from any benefits and
payments made or to be made pursuant to this Agreement (a) all federal, state, local and other
taxes may be required pursuant to any law or governmental regulation or ruling, (b) all other
normal employee deductions made with respect to Company’s employees generally, and (c) any advances
made to Executive and owed to Company

     24. Nonalienation. The right to receive payments under this Agreement shall not be subject in
any manner to anticipation, alienation, sale, transfer, assignment, pledge or
encumbrances by Executive, his dependents, or beneficiaries, or to any other person who is or
may become entitled to receive such payments hereunder. The right to receive payments hereunder
shall not be subject to or liable for the debts, contracts, liabilities, engagements or torts of
any person who is or may become entitled to receive such payments, nor may the same be

18

 

subject to
attachment or seizure by any creditor of such person under any circumstances, and any such
attempted attachment or seizure shall be void and of no force and effect.

     25. Incompetent or Minor Payees. Should the Company or the Compensation Committee determine,
in its discretion, that any person to whom any payment is payable under this Agreement has been
determined to be legally incompetent or is a minor, any payment due hereunder, notwithstanding any
other provision of this Agreement to the contrary, may be made in any one or more of the following
ways: (a) directly to such minor or person; (b) to the legal guardian or other duly appointed
personal representative of this person or estate of such minor or person; or (c) to such adult or
adults as have, in the good faith knowledge of the Company or the Compensation Committee, assumed
custody and support of such minor or person; and any payment so made shall constitute full and
complete discharge of any liability under this Agreement in respect to the amount paid.

     26. Indemnification. The Company has entered into, or will enter into, the Indemnification
Agreement with the Executive in substantially the same form as attached hereto as Exhibit
A. To the extent such Indemnification Agreement has already been executed by the Company and
Executive, such agreement shall remain in full force and effect and not be superseded by this
Agreement.

     27. Severability. It is the desire of the parties hereto that this Agreement be enforced to
the maximum extent permitted by law, and should any provision contained herein be held
unenforceable by a court of competent jurisdiction or arbitrator (pursuant to Section 30), the
parties hereby agree and consent that such provision shall be reformed to create a valid and
enforceable provision to the maximum extent permitted by law; provided, however, if such provision
cannot be reformed, it shall be deemed ineffective and deleted herefrom without affecting any other
provision of this Agreement. This Agreement should be construed by limiting and reducing it only
to the minimum extent necessary to be enforceable under then applicable law.

     28. Title and Headings; Construction. Titles and headings to Sections hereof are for the
purpose of reference only and shall in no way limit, define or otherwise affect the provisions
hereof. The words “herein”, “hereof’, “hereunder” and other compounds of the word “here” shall
refer to the entire Agreement and not to any particular provision hereof.

     29. Choice of Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW.

     30. Arbitration.

     (a) Subject to Section 22, any dispute or other controversy (hereafter a “Dispute”)
arising under or in connection with this Agreement, whether in contract, in tort, statutory
or otherwise, shall be finally and solely resolved by binding arbitration in the City of
Midland, Texas, administered by the American Arbitration Association (the “AAA”) in
accordance with the Employment Dispute Resolution Rules of the AAA as

19

 

effective on the
Effective Date, this Section 30 and, to the maximum extent applicable, the Federal
Arbitration Act. Such arbitration shall be conducted by a single arbitrator (the
“Arbitrator”). If the parties cannot agree on the choice of an Arbitrator within 30 days
after the Dispute has been filed with the AAA, then the Arbitrator shall be selected
pursuant to the Employment Dispute Resolution Rules of the AAA. The Arbitrator may proceed
to an award notwithstanding the failure of any party to participate in such proceedings.
The prevailing party in the arbitration proceeding may be entitled to an award of reasonable
attorneys’ fees incurred in connection with the arbitration in such amount, if any, as
determined by the Arbitrator in his discretion. The costs of the arbitration shall be borne
equally by the parties unless otherwise determined by the Arbitrator in the award.

     (b) To the maximum extent practicable, an arbitration proceeding hereunder shall be
concluded within 180 days of the filing of the Dispute with the AAA. The Arbitrator shall
be empowered to impose sanctions and to take such other actions as the Arbitrator deems
necessary to the same extent a judge could impose sanctions or take such other actions
pursuant to the Federal Rules of Civil Procedure and applicable law. Each party agrees to
keep all Disputes and arbitration proceedings strictly confidential except for disclosure of
information required by applicable law which cannot be waived.

     (c) The award of the Arbitrator shall be (i) the sole and exclusive remedy of the
parties, and (ii) final and binding on the parties hereto except for any appeals provided by
the Federal Arbitration Act. Only the district courts of Texas shall have jurisdiction to
enter a judgment upon any award rendered by the Arbitrator, and the parties hereby consent
to the personal jurisdiction of such courts and waive any objection that such forum is
inconvenient. This Section 30 shall not preclude (A) the parties at any time from agreeing
to pursue non binding mediation of the Dispute prior to arbitration hereunder or (B) the
Company from pursuing the remedies available under Section 22 in any court of competent
jurisdiction.

     31. Binding Effect: Third Party Beneficiaries. This Agreement shall be binding upon and inure
to the benefit of the parties hereto, and to their respective heirs, executors, beneficiaries,
personal representatives, successors and permitted assigns hereunder, but otherwise this Agreement
shall not be for the benefit of any third parties.

     32. Entire Agreement; Amendment and Termination. This Agreement contains the entire agreement
of the Parties hereto with respect to the matters covered herein; moreover, this Agreement
supersedes all prior and contemporaneous agreements and understandings, oral or written, between
the Parties concerning the subject matter hereof This Agreement may be amended, waived or
terminated only by a written instrument that is identified as an amendment or termination hereto
and that is executed on behalf of both Parties.

     33. Survival of Certain Provisions. Wherever appropriate to the intention of the Parties, the
respective rights and obligations of the Parties hereunder shall survive any termination or
expiration of this Agreement.

20

 

     34. Waiver of Breach. No waiver of either Party hereto of a breach of any provision of this
Agreement by any other Party, or of compliance with any condition or provision of this Agreement to
be performed by such other Party, will operate or be construed as a waiver of any subsequent breach
by such other Party or any similar or dissimilar provision or condition at the same or any
subsequent time. The failure of either Party hereto to take any action by reason of any breach
will not deprive such Party of the right to take action at any time while such breach continues.

     35. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of
the Company and its Affiliates (and its and their successors), as well as upon any person or
entity, acquiring, whether by merger, consolidation, purchase of assets, dissolution or otherwise,
all or substantially all of the capital stock, business and/or assets of the Company (or its
successor) regardless of whether the Company is the surviving or resulting corporation. The
Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation, dissolution or otherwise) to all or substantially all of the capital stock, business
or assets of the Company to expressly assume and agree to perform this Agreement in the same manner
and to the same extent that the Company would be required to perform it if no such succession had
occurred; provided, however, no such assumption shall relieve the Company of its duties or
obligations hereunder unless otherwise agreed, in writing, by Executive.

     This Agreement shall inure to the benefit of and be enforceable by Executive’s personal or
legal representative, executors, administrators, successors, and heirs. In the event of the death
of Executive while any amount is payable hereunder including, without limitation, pursuant to
Sections 2, 5, 6 and 8, all such amounts shall be paid to the Designated Beneficiary (as defined in
Section 6(d)).

     36. Notices. Any notice provided for in this Agreement shall be in writing and shall be
deemed to have been duly received (a) when delivered in person, (b) on the first business day after
it is sent by air express overnight courier services, or (c) on the third business day following
deposit in the United States mail, registered or certified mail, return receipt requested, postage
prepaid and addressed, to the following address, as applicable:

	 	(1)	 	If to Company, addressed to:

Basic Energy Services, Inc.

Attn: Chief Executive Officer

P.O. Box 10460

Midland, Texas 79702
	 
	 	(2)	 	If to Executive, addressed to the address set forth below his name on the
execution page hereof;

Or to such other address as either party may have furnished to the other party in writing in
accordance with this Section 36.

     37. Executive Acknowledgment. Executive acknowledges that (a) he is knowledgeable and
sophisticated as to business matters, including the subject matter of this Agreement, (b) he has
read this

21

 

Agreement and understands its terms and conditions, (c) he has had ample opportunity to
discuss this Agreement with his legal counsel prior to execution, and (d) no strict rules of
construction shall apply for or against the drafter or any other Party. Executive represents that
he is free to enter into this Agreement including, without limitation, that he is not subject to
any covenant not to compete that would conflict with his duties under this Agreement.

     38. Termination of Prior Employment Agreement/Survivor of Other Agreements. After this
Agreement is effective and enforceable upon execution by the Parties hereto, that certain
Employment Agreement between the same Parties, made and entered into as of December 29, 2006 but
effective as of December 31, 2006, as amended to date, shall terminate and be superseded in all
respects by this Agreement. Subject to Section 32, all other agreements or arrangements between
the Executive and Company as in effect on the Effective Date hereof shall remain in full force and
effect to the extent not in conflict with the terms and provisions of this Agreement.

     39. Counterparts. This Agreement may be executed in any number of counterparts, each of which
when so executed and delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a copy hereof containing
multiple signature pages, each signed by one party hereto, but together signed by both parties.
The facsimile transmission of any signed document, shall be the same as delivery of an original.
At the request of either party, the parties will confirm facsimile transmitted signatures by
signing an original document for delivery between the parties.

(Signature page follows)

22

 

     IN WITNESS WHEREOF, Executive has hereunto set his hand and Company has caused this Agreement
to be executed in its name and on its behalf by its duly authorized officer, to be effective as of
the Effective Date.

	 	 	 	 	 
	 	 	EXECUTIVE:
	 
	 	 	 	 
	 

	 	Signature:
	 	/s/ Charles W. Swift
	 

	 	 	 	 
	 

	 	Name:
	 	Charles W. Swift                           
	 
	 

	 	Date:
	 	November 21, 2008                    
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Address for Notices:
	 

	 	 	 	3702 Stanolind
	 

	 	          
	 	Midland, Texas 79707                               
	 	 	 
	 
	 	 	 	 
	 	 	BASIC ENERGY SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:  
	 	/s/ Kenneth V. Huseman 
 

Kenneth V. Huseman, President and
	 

	 	 	 	Chief Executive Officer
	 
	 	 	 	 
	 

	 	Date:
	 	November 21, 2008                     

23

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