S-1

Use these links to rapidly review the document
TABLE OF CONTENTS
INDEX TO FINANCIAL STATEMENTS

As filed with the Securities and Exchange Commission on August 12, 2005

Registration No. 333-          

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

Basic Energy Services, Inc.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 1389
(Primary Standard Industrial
Classification Code Number) 54-2091194
(I.R.S. Employer
Identification No.)

400 W. Illinois, Suite 800
Midland, Texas 79701
(432) 620-5500
(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Kenneth V. Huseman
President
400 W. Illinois, Suite 800
Midland, Texas 79701
(432) 620-5500
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
Andrews Kurth LLP 600 Travis, Suite 4200 Houston, Texas 77002 (713) 220-4200 Attn: David C. Buck	Vinson & Elkins L.L.P. 2300 First City Tower, 1001 Fannin Houston, Texas 77002 (713) 758-2222 Attn: Thomas P. Mason

        Approximate date of commencement of proposed sale to the public:    As soon as practicable after this Registration Statement becomes effective.

        If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. o

        If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

        If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, par value $0.01	$258,750,000	$30,455

(1)

Includes common stock issuable upon the exercise of the underwriters' over-allotment option.

(2)

Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act 1933.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

Subject to Completion dated August 12, 2005

                    Shares

Basic Energy Services, Inc.

Common Stock

        This is an initial public offering of shares of common stock of Basic Energy Services. We are selling                    shares of common stock, and the selling stockholders are selling                    shares of common stock. We will not receive any of the proceeds from the shares of common stock sold by the selling stockholders. One of the selling stockholders owns a majority of the shares of our outstanding common stock and is also an affiliate of Credit Suisse First Boston, one of the underwriters of this offering.

        Prior to this offering, there has been no public market for our common stock. The initial public offering price of our common stock is currently expected to be between $                     per share and $                    per share. We have applied to list our common stock on The New York Stock Exchange under the symbol "BAS."

See "Risk Factors" beginning on page 11 to read about factors you should consider before buying our common stock.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed on the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	Price to Public	Underwriting Discounts and Commissions	Proceeds to Basic Energy Services	Proceeds to Selling Stockholders
Per Share	$	$	$	$
Total	$	$	$	$

        To the extent that the underwriters sell more than                    shares, the underwriters have the option to purchase up to an additional                    shares from the selling stockholders at the initial public offering price less the underwriting discount.

        The underwriters expect to deliver the shares of common stock against payment in New York, New York on or about                          , 2005.

Joint Book-Running Managers

Goldman, Sachs & Co. Credit Suisse First Boston

Lehman Brothers

UBS Investment Bank

Deutsche Bank Securities

Raymond James

RBC Capital Markets

Prospectus dated                          , 2005

1.

Well Servicing Rig Preparing to Begin Work

2.

Fluid Services Transport Truck

3.

24 Hour Workover Rig

4.

Well Site Construction Equipment

5.

Saltwater Disposal Facility

6.

Frac Tank Utilized for Storage of Fluids

7.

Trailer-Mounted Pressure Pumping Equipment

8.

Coiled Tubing Unit Used in Pressure Pumping

9.

Inland Barge Workover Rig

10.

Trailer-Mounted Foam Circulating Unit Used in Underbalanced Workover Operations

TABLE OF CONTENTS

You should rely only on the information contained in this prospectus or to which we have referred you. We have not authorized anyone to provide you with information that is different from what we have provided to you. This document may only be used where it is legal to sell these securities. The information in this document may only be accurate on the date of this document.

        In this prospectus, we use the terms "Basic Energy Services," "we," "us" and "our" to refer to Basic Energy Services, Inc. together with its subsidiaries unless the context otherwise requires. Unless the context otherwise requires, these terms also refer to our predecessor entity and its subsidiaries prior to our holding company restructuring in January 2003, which is described in "The Company."

        Cautionary Note Regarding Industry and Market Data.    This prospectus includes market share, industry data and forecasts that we obtained from internal company surveys (including estimates based on our knowledge and experience in the industry in which we operate), market research, consultant surveys, publicly available information, industry publications and surveys. These sources include Oil & Gas Journal magazine, World Oil magazine, Baker Hughes Incorporated, the Association of Energy Service Companies, and the Energy Information Administration of the U.S. Department of Energy. Industry surveys, publications, consultant surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but there can be no assurance as to the accuracy and completeness of such information due to the voluntary nature of information gathering in industry surveys, limits on the availability and reliability of raw data, and other limitations and uncertainties. We have not independently verified any of the data from third-party sources nor have we ascertained the underlying economic assumptions relied upon therein. For example, the number of onshore well servicing rigs in the U.S. could be lower than our estimate to the extent our two larger competitors have continued to report as stacked rigs equipment that is not actually complete or subject to refurbishment. Similarly, our management's industry estimates, which we believe to be reliable based upon management's knowledge of the industry, have not been verified by any independent sources. In addition, we do not know what assumptions regarding general economic growth were used in preparing the forecasts we cite. Statements as to our position relative to our competitors or as to market share refer to the most recent available data.

Dealer Prospectus Delivery Obligation

Until              , 2005 (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

-i-

Prospectus Summary

This summary highlights information contained elsewhere in this prospectus. You should read the entire prospectus carefully, including the risks discussed in the "Risk Factors" section, the historical consolidated financial statements and notes to those financial statements. This summary may not contain all of the information that investors should consider before investing in our common stock. Unless otherwise indicated, all numbers of shares and per share amounts give effect to a 5-for-1 stock split that will be effected as a stock dividend prior to the closing of this offering. Unless we specifically state otherwise, the information in this prospectus also does not take into account the sale of up to                  shares of common stock, which the underwriters have the option to purchase from the selling stockholders to cover over-allotments. If you are not familiar with some of the oil and gas industry terms used in this prospectus, please read our Glossary of Terms included as Appendix A to this prospectus.

Our Company

        We provide a wide range of well site services to oil and gas drilling and producing companies, including well servicing, fluid services, drilling and completion services and well site construction services. These services are fundamental to establishing and maintaining the flow of oil and gas throughout the productive life of a well. Our broad range of services enables us to meet multiple needs of our customers at the well site. Our operations are managed regionally and are concentrated in the major United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Louisiana and in the Rocky Mountain states. We provide our services to a diverse group of over 1,000 oil and gas companies. We operate the third largest fleet of well servicing rigs (also commonly referred to as workover rigs) in the United States, representing over 10% of the overall available U.S. fleet, according to the Association of Energy Service Companies. We maintain a strong market share position based on the number of available well servicing rigs in several of our operating areas, including 21% in West Texas, 19% in the Ark-La-Tex region and 15% in the Texas Gulf Coast region as of March 2005. Since the beginning of 2001, we have expanded our asset base from $53.0 million of total assets as of December 31, 2000 to $367.6 million of total assets as of December 31, 2004 and increased our revenues from $56.5 million in 2000 to $311.5 million in 2004.

        We derive a majority of our revenues from services supporting production from existing oil and gas operations. Demand for these production-related services, including well servicing and fluid services, tends to remain relatively stable, even in moderate oil and gas price environments, as ongoing maintenance spending is required to sustain production. As oil and gas prices reach higher levels, demand for our production-related services generally increases as our customers engage in more well servicing activities relating to existing wells to maintain or increase oil and gas production from those wells. The utilization rate for our fleet of well servicing rigs increased from approximately 60% in 2002 to 78% in 2004 and 84% in the first quarter of 2005. Because our services are required to support increased drilling and workover activities, we also benefit from increased capital spending by our customers as oil and gas prices increase.

        We currently conduct our operations through the following four business segments:

•

Well Servicing. Our well servicing segment (46% of our 2004 revenues) currently operates our fleet of over 300 well servicing rigs and related equipment. This business segment encompasses a full range of services performed with a mobile well servicing rig, including the installation and removal of downhole equipment and elimination of obstructions in the well bore to facilitate the flow of oil and gas. These services are performed to establish, maintain and improve production throughout the productive life of an oil and gas well and to

-1-

plug and abandon a well at the end of its productive life. Our well servicing equipment and capabilities are essential to facilitate most other services performed on a well.

•

Fluid Services. Our fluid services segment (32% of our 2004 revenues) currently utilizes our fleet of over 400 fluid services trucks and related assets, including specialized tank trucks, storage tanks, water wells, disposal facilities and related equipment. These assets provide, transport, store and dispose of a variety of fluids. These services are required in most workover, drilling and completion projects and are routinely used in daily producing well operations.



•

Drilling and Completion Services. Our drilling and completion services segment (9% of our 2004 revenues) currently operates our fleet of over 30 pressure pumping units, 22 air compressor packages specially configured for underbalanced drilling operations and ten cased-hole wireline units. These services are designed to initiate or stimulate oil and gas production. The largest portion of this business consists of pressure pumping services focused on cementing, acidizing and fracturing services in niche markets.



•

Well Site Construction Services. Our well site construction services segment (13% of our 2004 revenues) currently utilizes our fleet of over 200 operated power units, which include dozers, trenchers, motor graders, backhoes and other heavy equipment. We utilize these assets primarily to provide services for the construction and maintenance of oil and gas production infrastructure, such as preparing and maintaining access roads and well locations, installation of small diameter gathering lines and pipelines and construction of temporary foundations to support drilling rigs.

        Our industry historically has consisted of a large number of small companies, several regional contractors and a few large national companies. Over the last decade, our industry has consolidated, including the consolidation of the well servicing segment of our industry, from nine large competitors (with 50 or more well servicing rigs) to four. However, the industry still remains fragmented with many smaller competitors owning approximately 1,000 well servicing rigs. We have led recent consolidation of this industry by acquiring regional businesses and assets in 33 separate acquisitions from the beginning of 2001 through March 31, 2005. We plan to continue participating in the consolidation of our industry after the completion of this offering by selectively acquiring additional businesses and assets that complement and expand our existing service offerings and geographic footprint.

Industry

        Demand for services offered by our industry is a function of our customers' willingness to make expenditures to explore for, develop and produce hydrocarbons in the United States, which in turn is affected by current and expected levels of oil and gas prices. As oil and gas prices have rebounded beginning in early 1999, total expenditures for all U.S. exploration and production activities (including offshore activities that we do not serve) have increased to an estimated $56 billion in 2003 and $62 billion in 2004 and are expected to reach $66 billion in 2005 according to Oil & Gas Journal.

        Increased expenditures for exploration and production activities generally involve the deployment of more drilling and well servicing rigs. The number of active rigs, also known as the rig count, serves as an indicator of demand for our services. According to Baker Hughes, the U.S. land-based drilling rig count and U.S. land-based workover rig count increased approximately 36% and 13%, respectively, from year-end 2002 to year-end 2003, and 11% and 10%, respectively, from year-end 2003 to year-end 2004.

-2-

        Our business is influenced substantially by both operating and capital expenditures by oil and gas companies. Because existing oil and gas wells require ongoing spending to maintain production, expenditures by oil and gas companies for the maintenance of existing wells are relatively stable and predictable compared to exploration and drilling expenditures. In contrast, capital expenditures by oil and gas companies for drilling are more directly influenced by current and expected oil and gas prices and generally reflect the volatility of commodity prices.

        We expect more spending growth in the well servicing and fluid services markets to come from independent exploration and production companies, which represent over 90% of our revenue. This trend is primarily driven by the increased acquisitions of proved oil and gas properties by independent producers. When these types of properties are acquired, purchasers typically intensify drilling, workover and well maintenance activities to accelerate production from the newly acquired reserves.

Our Competitive Strengths

        We believe that the following competitive strengths currently position us well within our industry:

        Market Leadership Position.    We maintain a significant market share for our well servicing operations in our core operating areas throughout Texas and a growing market share in the other markets that we serve. Our fleet of over 300 well servicing rigs represents the third largest fleet in the United States, and our goal is to be one of the top two providers of well site services in each of our core operating areas. Our market position allows us to expand the range of services performed on a well throughout its life, such as completion, maintenance, workover and plugging and abandonment services.

        Modern and Active Fleet.    We believe that our well servicing rig fleet is among the most modern in the industry. We believe over 95% of the active U.S. well servicing rig fleet was built prior to 1985. Approximately 56 of our rigs are either 2000 model year or newer, or have undergone major refurbishments during the last four years. As of June 30, 2005, we have taken delivery of 19 newbuild well servicing rigs since October 2004 as part of a 54-rig newbuild commitment. The remainder of these newbuilds will be delivered prior to the end of May 2006. In addition to our regular maintenance program, we have an established program to routinely monitor and evaluate the condition of our fleet. We selectively refurbish rigs and other assets to maintain the quality of our service and to provide a safe work environment for our personnel and have made major refurbishments on 44 of our rigs since the beginning of 2001. We have an active fleet, with approximately 96% of our fleet active or available for work and the remainder awaiting refurbishment at March 31, 2005. We believe only approximately 62% of the well servicing rig fleet of our two major competitors are active and available for work. During 2003 and 2004, we obtained independent reviews and evaluations of substantially all of our assets, which confirmed the location and condition of these assets.

        Extensive Domestic Footprint in the Most Prolific Basins.    Our operations are concentrated in the major United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Louisiana and the Rocky Mountain states. We operate in states that accounted for approximately 60% of the more than 900,000 existing onshore oil and gas wells in the 48 contiguous states and approximately 70% of onshore oil and gas production in 2004. We believe that our operations are located in the most attractive U.S. well services markets, as we currently focus our operations on onshore domestic oil and gas production areas that include both the highest concentration of existing oil and gas production activities and the largest prospective acreage for new drilling activity. This extensive footprint allows us to offer our suite of services to more than 1,000 customers who are active in those areas and allows us to redeploy equipment between markets as activity shifts.

-3-

        Diversified Service Offering for Further Revenue Growth.    We believe our range of well site services provides us a competitive advantage over smaller companies that typically offer fewer services. Our experience, equipment and network of 65 service locations position us to market our full range of well site services to our existing customers. By utilizing a wider range of our services, our customers can use fewer service providers, which enables them to reduce their administrative costs and simplify their logistics. Furthermore, offering a broader range of services allows us to capitalize on our existing customer base and management structure to grow within existing markets, generate more business from existing customers, and increase our operating profits as we spread our overhead costs over a larger revenue base.

        Decentralized Management with Strong Corporate Infrastructure.    Our corporate group is responsible for maintaining a unified infrastructure to support our diversified operations through standardized financial and accounting, safety, environmental and maintenance processes and controls. Below our corporate level, we operate a decentralized operational organization in which field level managers are largely responsible for all aspects of their area's performance. Our eight regional managers are responsible for their regional operations, including asset management, cost control, policy compliance and training and other aspects of quality control. With an average of 28 years of industry experience, each regional manager has extensive knowledge of the customer base, job requirements and working conditions in each local market. Our 65 area managers are directly responsible for customer relationships, personnel management, accident prevention and equipment maintenance, the key drivers of our operating profitability. This management structure allows us to monitor operating performance on a daily basis, maintain financial, accounting and asset management controls, integrate acquisitions, prepare timely financial reports and manage contractual risk.

Our Business Strategy

        We intend to increase our shareholder value by pursuing the following strategies:

        Establish and Maintain Leadership Position in Core Operating Areas.    We strive to establish and maintain market leadership positions within our core operating areas. To achieve this goal, we maintain close customer relationships, seek to expand the breadth of our services and offer high quality services and equipment that meet the scope of customer specifications and requirements. In addition, our leadership position in our core operating areas facilitates employee retention and attraction, a key factor for success in our business. Our leadership positions in our core operating areas also provide us with brand recognition that we intend to utilize in creating leading positions in new operating areas.

        Expand Within Our Regional Markets.    We intend to continue strengthening our presence within our existing geographic footprint through internal growth and acquisitions of businesses with strong customer relationships, well-maintained equipment and experienced and skilled personnel. Our larger competitors have not actively pursued acquisitions of small- to mid-size regional businesses or assets in recent years due to the small relative scale and financial impact of these potential acquisitions. In contrast, we have successfully pursued these types of acquisitions, which remain attractive to us and make a meaningful impact on our overall operations. We typically enter into new markets through the acquisition of businesses with strong management teams that will allow us to expand within these markets. Management of acquired companies often remain with us and retain key positions within our organization, which enhances our attractiveness as an acquisition partner. We have a record of successfully implementing this strategy, as demonstrated by our 2003 acquisitions of FESCO Holdings, Inc., PWI Inc. and New Force Energy Services, Inc., which expanded our exposure to the active drilling environment of the Rocky Mountain states, the active well services and drilling markets along the Gulf Coast and the pressure pumping business,

-4-

respectively. Additionally, in December 2004 we expanded our presence along the Gulf Coast with the acquisition of three inland barges, two of which have been refurbished and were available for service in the second quarter of 2005.

        Develop Additional Service Offerings Within the Well Servicing Market.    We intend to continue broadening the portfolio of services we provide to our clients by leveraging our well servicing infrastructure. A customer typically begins a new maintenance or workover project by securing access to a well servicing rig, which generally stays on site for the duration of the project. As a result, our rigs are often the first equipment to arrive at the well site and typically the last to leave, providing us the opportunity to offer our customers other complementary services. We believe the fragmented nature of the well servicing market creates an opportunity to sell more services to our core customers and to expand our total service offering within each of our markets. We have expanded our suite of services available to our customers and increased our opportunities to cross-sell new services to our core well servicing customers through recent acquisitions and internal growth. We expect to continue to develop or selectively acquire capabilities to provide additional services to expand and further strengthen our customer relationships.

        Pursue Growth Through Selective Capital Deployment.    We intend to continue growing our business through selective acquisitions, continuing a newbuild program and/or upgrading our existing assets. Our capital investment decisions are determined by an analysis of the projected return on capital employed of each of those alternatives. Acquisitions are evaluated for "fit" with our area and regional operations management and thoroughly reviewed by corporate level financial, equipment, safety and environmental specialists to ensure consideration is given to identified risks. We also evaluate the cost to acquire existing assets from a third party, the capital required to build new equipment and the point in the oil and gas commodity price cycle. Based on these factors, we make capital investment decisions that we believe will support our long-term growth strategy, which decisions may involve a combination of asset acquisitions and the purchase of new equipment. During 2005, we have completed six separate acquisitions for an aggregate purchase price of $11.1 million, including future potential payments, and have taken delivery of 14 new well servicing rigs as of June 30, 2005.

How You Can Contact Us

        Our principal executive offices are located at 400 W. Illinois, Suite 800, Midland, Texas 79701, and our telephone number is (432) 620-5500.

-5-

The Offering

Common stock offered:
	By us	shares.
	By the selling stockholders	shares (               shares if the underwriters' over-allotment option is fully exercised).
	Total	shares (               shares if the underwriters' over-allotment option is fully exercised).
Common stock to be outstanding after the offering		shares.
Common stock owned by the selling stockholders after the offering		shares (               shares if the underwriters' over-allotment is fully exercised).
Use of proceeds		We estimate that our net proceeds from the sale of the shares offered by us, after deducting estimated expenses and underwriting discounts and commissions, will be approximately $93.2 million. We plan to use $70.0 million of our net proceeds from this offering to repay a portion of the term loan under our credit facility and the remainder for general corporate purposes, which may include cash payments made in connection with acquisitions. Affiliates of some of the underwriters of this offering are lenders under our credit facility and therefore will receive a portion of the proceeds from this offering that we use to repay indebtedness.
		We will not receive any of the proceeds from the sale of shares of our common stock by the selling stockholders. One of the selling stockholders owns a majority of the shares of our outstanding common stock and is also an affiliate of Credit Suisse First Boston, one of the underwriters of this offering. See "Use of Proceeds" and "Underwriting."
Reserved NYSE symbol		"BAS"
Risk Factors		See "Risk Factors" beginning on page 11 of this prospectus for a discussion of factors that you should carefully consider before deciding to invest in shares of our common stock.

The number of shares of common stock that will be outstanding after the offering includes an aggregate of 837,500 shares of restricted common stock issued to officers and key employees under our Second Amended and Restated 2003 Incentive Plan (our "2003 Incentive Plan") that are subject to vesting.

        The number of shares of common stock that will be outstanding after the offering excludes:

•

up to 4,350,000 shares that may be issued upon the exercise of warrants held by affiliates of DLJ Merchant Banking Partners III, L.P. and its affiliated funds, or DLJ Merchant Banking;



•

2,430,800 shares issuable upon the exercise of options outstanding as of March 31, 2005 under our 2003 Incentive Plan; and



•

an aggregate of 1,731,700 shares of common stock reserved and available for future issuance as of March 31, 2005 under our 2003 Incentive Plan.

-6-

Summary Historical Financial Information

        The following table sets forth our summary historical financial and operating data for the periods shown. The following information should be read in conjunction with "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements included elsewhere in this prospectus. The amounts for each historical annual period presented below were derived from our audited financial statements.

			Year Ended December 31,									Three Months Ended March 31,
			2002			2003			2004			2004			2005
												(unaudited)
			(dollars in thousands, except per share data)
Statement of Operations Data:
Revenues:
	Well servicing		$	73,848		$	104,097		$	142,551		$	31,822		$	44,798
	Fluid services			34,170			52,810			98,683			22,140			29,303
	Drilling and completion services			733			14,808			29,341			4,865			10,764
	Well site construction services			—			9,184			40,927			8,776			8,948
		Total revenues		108,751			180,899			311,502			67,603			93,813
Expenses:
	Well servicing			55,643			73,244			98,058			21,789			28,191
	Fluid services			22,705			34,420			65,167			14,513			19,238
	Drilling and completion services			512			9,363			17,481			3,139			5,860
	Well site construction services			—			6,586			31,454			6,614			7,108
	General and administrative(1)			13,124			21,933			37,186			7,923			13,091
	Depreciation and amortization			13,414			18,213			28,676			6,318			8,047
		Total expenses		105,398			163,759			278,022			60,296			81,535
Operating income				3,353			17,140			33,480			7,307			12,278
Net interest expense				(4,750	)		(5,174	)		(9,550	)		(2,029	)		(2,960	)
Loss on disposal of assets				(351	)		(391	)		(2,616	)		(1,045	)		(102	)
Loss on early extinguishment of debt				—			(5,197	)		—			—			—
Other (income) expense				31			146			(398	)		25			75
Income (loss) from continuing operations before income taxes				(1,717	)		6,524			20,916			4,258			9,291
Income tax (expense) benefit				419			(3,048	)		(7,984	)		(1,625	)		(3,490	)
Income (loss) from continuing operations				(1,298	)		3,476			12,932			2,633			5,801
Discontinued operations, net of tax				—			22			(71	)		52			—
Cumulative effect of accounting change, net of tax				—			(151	)		—			—			—
Net income (loss)				(1,298	)		3,347			12,861			2,685			5,801
Preferred stock dividend				(1,075	)		(1,525	)		—			—			—
Accretion of preferred stock discount				(374	)		(540	)		—			—			—
Net income (loss) available to common stockholders			$	(2,747	)	$	1,282		$	12,861		$	2,685		$	5,801
Net income (loss) per common share:
	Basic		$	(0.13	)	$	0.05		$	0.46		$	0.10		$	0.20
	Diluted		$	(0.13	)	$	0.05		$	0.42		$	0.09		$	0.18
Other Financial Data:
Adjusted EBITDA(2)			$	16,872		$	35,558		$	63,743		$	13,789		$	20,916
Cash flows from operating activities				17,012			29,815			46,539			1,767			16,734
Cash flows from investing activities				(45,303	)		(84,903	)		(73,587	)		(10,075	)		(19,946	)
Cash flows from financing activities				21,572			79,859			21,498			501			(2,817	)
Capital expenditures:
	Acquisitions, net of cash acquired			31,075			61,885			19,284			—			3,909
	Property and equipment			14,674			23,501			55,674			10,350			16,083

-7-

	As of December 31,						As of March 31, 2005
	2002		2003		2004		Actual		As Adjusted(3)
							(unaudited)
	(dollars in thousands)
Balance Sheet Data:
Cash and cash equivalents	$	926	$	25,697	$	20,147	$	14,118	$	37,318
Net property and equipment		108,487		188,243		233,451		245,158		245,158
Total assets		156,502		299,011		367,601		377,782		400,982
Total long-term debt		39,706		142,116		170,915		168,007		98,007
Mandatorily redeemable preferred stock		12,093		—		—		—		—
Total stockholders' equity		72,834		107,295		121,786		128,492		221,692

(1)

Includes approximately $105,000, $205,000 and $1,587,000 of non-cash stock-based compensation expense for the years ended December 31, 2002, 2003 and 2004, and $165,000 and $591,000 for the three months ended March 31, 2004 and 2005, respectively.

(2)

Adjusted EBITDA means earnings before interest, taxes, depreciation and amortization, cumulative effect of accounting change, discontinued operations, other income, loss on early extinguishment of debt, loss (gain) on disposal of assets and stock-based compensation. Adjusted EBITDA is used as a supplemental financial measure by our management, directors and by external users of our financial statements, such as investors, to assess:

•

the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

•

the ability of our assets to generate cash sufficient to pay interest on our indebtedness; and

•

our operating performance and return on invested capital as compared to those of other companies in the well services industry, without regard to financing methods and capital structure.

Adjusted EBITDA has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). Adjusted EBITDA excludes some, but not all, items that affect net income and operating income, and these measures may vary among other companies. Limitations to using Adjusted EBITDA as an analytical tool include:

•

Adjusted EBITDA does not reflect our current or future requirements for capital expenditures or capital commitments;



•

Adjusted EBITDA does not reflect changes in, or cash requirements necessary to service interest or principal payments on, our debt;



•

Adjusted EBITDA does not reflect income taxes;



•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;



•

stock-based compensation, a non-cash compensation expense, may have a dilutive effect on our earnings per share; and



•

other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

(3)

Gives effect to this offering and the application of our estimated net proceeds from this offering as set forth under "Use of Proceeds" as if each had occurred on March 31, 2005.

-8-

        The following table presents a reconciliation of Adjusted EBITDA to net income (loss), which is the most directly comparable GAAP financial performance measure, and to cash flows from operating activities, which is the most directly comparable GAAP liquidity measure, for each of the periods indicated:

		Year Ended December 31,									Three Months Ended March 31,
		2002			2003			2004			2004			2005
											(unaudited)
		(dollars in thousands)
Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income (loss)		$	(1,298	)	$	3,347		$	12,861		$	2,685		$	5,801
Cumulative effect of accounting change			—			151			—			—			—
Discontinued operations			—			(22	)		71			(52	)		—
	Income taxes		(419	)		3,048			7,984			1,625			3,490
Other income			(31	)		(146	)		398			(25	)		(75	)
	Loss on early extinguishment of debt		—			5,197			—			—			—
	Loss (gain) on disposal of assets		351			391			2,616			1,045			102
	Net interest expense		4,750			5,174			9,550			2,029			2,960
	Depreciation and amortization		13,414			18,213			28,676			6,318			8,047
	Stock-based compensation		105			205			1,587			165			591
Adjusted EBITDA		$	16,872		$	35,558		$	63,743		$	13,790		$	20,916
Reconciliation of Adjusted EBITDA to cash flows from operating activities:
Cash flows from operating activities		$	17,012		$	29,815		$	46,539		$	1,767		$	16,734
	Cash loss of early extinguishment of debt		—			1,675			—			—			—
	Bad debt expense		(200	)		(1,279	)		(1,150	)		(306	)		(450	)
	Interest expense, net of amortization of debt costs		4,066			4,540			8,744			1,871			2,798
	Income taxes		(1,918	)		(68	)		—			(27	)		—
	Increase (decrease) in operating assets and liabilities		(1,593	)		1,199			9,338			10,620			2,019
	Other, net		(495	)		(324	)		272			(135	)		(185	)
Adjusted EBITDA		$	16,872		$	35,558		$	63,743		$	13,790		$	20,916

-9-

Operating Data

        The following table sets forth operating data for our well servicing, fluid services, drilling and completion services and well site construction services segments for the periods shown. The data presented below reflects the following:

•

we charge our well servicing customers on an hourly basis — rig hours reflect actual billed hours;



•

our rig utilization rate is calculated using a 55-hour work week per rig;



•

our fluid services segment includes an array of services billed on an hourly, daily and per barrel basis; accordingly, we believe revenue per truck is the more meaningful information for this measure; and



•

in our drilling and completion services segment, we charge different rates for our pressure pumping trucks based on the type of services performed and varying horsepower requirements, and in our well site construction services segment, we similarly charge different rates for different equipment, in each case making operating margin the most meaningful measure of performance.

	Year Ended December 31,									Three Months Ended March 31,
	2002			2003			2004			2004			2005
Well Servicing
Weighted average number of rigs		225			257			279			272			291
Rig hours (000's)		383.2			523.9			618.8			145.9			175.3
Rig utilization rate		59.7	%		71.4	%		77.8	%		75.0	%		84.3	%
Revenue per rig hour	$	193		$	199		$	230		$	218		$	255
Operating margin per rig hour	$	48		$	59		$	72		$	69		$	94
Operating margin		24.7	%		29.6	%		31.2	%		31.5	%		37.1	%
Fluid Services
Weighted average number of fluid service trucks		196			249			386			371			414
Revenue per fluid service truck (000's)	$	174		$	212		$	256		$	61		$	71
Operating margin per fluid service truck (000's)	$	58		$	74		$	87		$	21		$	24
Operating margin		33.6	%		34.8	%		34.0	%		34.4	%		34.3	%
Drilling and Completion Services
Operating margin		30.2	%		36.8	%		40.4	%		35.5	%		45.6	%
Well Site Construction Services
Operating margin		—			28.2	%		23.1	%		24.6	%		20.6	%

        Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations — Well Servicing," "— Fluid Services," "— Drilling and Completion Services" and "— Well Site Construction Services" for an analysis of our well servicing, fluid services, drilling and completion and well site construction services.

-10-

RISK FACTORS

You should carefully consider the risks described below, as well as the other information included in this prospectus, before making an investment decision. The risks described below summarize the material risks involved in investing in our common stock, but are not the only ones we face. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Our business, results of operations or financial condition could be materially and adversely affected by any of these risks, and the value of your investment may decrease due to any of these risks.

Risks Related to Our Business

A decline in or substantial volatility of oil and gas prices could adversely affect the demand for our services.

        The demand for our services is primarily determined by current and anticipated oil and gas prices and the related general production spending and level of drilling activity in the areas in which we have operations. Volatility or weakness in oil and gas prices (or the perception that oil and gas prices will decrease) affects the spending patterns of our customers and may result in the drilling of fewer new wells or lower production spending on existing wells. This, in turn, could result in lower demand for our services and may cause lower rates and lower utilization of our well service equipment. A decline in oil and gas prices or a reduction in drilling activities could materially and adversely affect the demand for our services and our results of operations.

        Prices for oil and gas historically have been extremely volatile and are expected to continue to be volatile. For example, although oil and natural gas prices have recently exceeded $60 per barrel and $9.00 per mcf, respectively, oil and natural gas prices fell below $11 per barrel and $2 per mcf, respectively, in early 1999. The Cushing WTI Spot Oil Price averaged $31.08 and $41.51 per barrel in 2003 and 2004, respectively, and the average wellhead price for natural gas, as recorded by the Energy Information Agency, was $4.98 and $5.49 per mcf for 2003 and 2004, respectively. While commodity prices have increased significantly in recent years, there can be no assurance that such prices will remain at current levels.

Our business depends on domestic spending by the oil and gas industry, and this spending and our business may be adversely affected by industry conditions that are beyond our control.

        We depend on our customers' willingness to make operating and capital expenditures to explore, develop and produce oil and gas in the United States. Customers' expectations for lower market prices for oil and gas may curtail spending thereby reducing demand for our services and equipment. We cannot predict the future level of demand for our services, future oil and gas commodity prices or future conditions of the well services industry.

        Industry conditions are influenced by numerous factors over which we have no control, such as the supply of and demand for oil and gas, domestic and worldwide economic conditions, political instability in oil and gas producing countries and merger and divestiture activity among oil and gas producers. The volatility of the oil and gas industry and the consequent impact on exploration and production activity could adversely impact the level of drilling and workover activity by some of our customers. This reduction may cause a decline in the demand for our services or adversely affect the price of our services. In addition, reduced discovery rates of new oil and gas reserves in our market areas also may have a negative long-term impact on our business, even in an environment of stronger oil and gas prices, to the extent existing production is not replaced and the number of producing wells for us to service declines.

-11-

We may not be able to grow successfully through future acquisitions or successfully manage future growth, and we may not be able to effectively integrate the businesses we do acquire.

        Our business strategy includes growth through the acquisitions of other businesses. We may not be able to continue to identify attractive acquisition opportunities or successfully acquire identified targets. In addition, we may not be successful in integrating our current or future acquisitions into our existing operations, which may result in unforeseen operational difficulties or diminished financial performance or require a disproportionate amount of our management's attention. Even if we are successful in integrating our current or future acquisitions into our existing operations, we may not derive the benefits, such as operational or administrative synergies, that we expected from such acquisitions, which may result in the commitment of our capital resources without the expected returns on such capital. Furthermore, competition for acquisition opportunities may escalate, increasing our cost of making further acquisitions or causing us to refrain from making additional acquisitions. We also must meet certain financial covenants in order to borrow money under our existing credit agreement to fund future acquisitions.

Our auditors have previously identified material weaknesses in our internal controls, and if we fail to develop or maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud. As a result, investors could lose confidence in our financial reporting, which would harm our business and the trading price of our common stock.

        Effective internal controls, including internal control over financial reporting and disclosure controls and procedures, are necessary for us to provide reliable financial reports and effectively prevent fraud and to operate successfully as a public company. If we cannot provide reliable financial reports or prevent fraud, our reputation and operating results could be materially harmed. We have in the past discovered, and may in the future discover, areas of our internal controls that need improvement.

        We entered into a number of transactions in 2003, including our acquisitions of FESCO Holdings, Inc., PWI Inc. and New Force Energy Services, Inc., which significantly increased our accounting and financial reporting obligations. The integration of accounting systems and procedures of each of the companies we acquired in 2003 required a significant portion of our accounting staff's time and resources. In July 2004, our independent auditors advised our board of directors that they had identified material weaknesses in our internal controls in connection with the audit of our 2003 consolidated financial statements. Our auditors also noted certain other items specific to our operations that they did not consider to be material weaknesses.

        To improve our financial accounting organization and processes, we have established an internal audit department and have added five new personnel and positions, including directors of financial reporting and treasury. We also implemented a new accounting software system throughout our operations during the third quarter of 2004 and adopted additional policies and procedures to address the items noted by our auditors and generally to strengthen our financial reporting system. However, the process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial reporting system that is adequate to satisfy our reporting obligations.

        Upon completion of this offering, we will have had only limited operating experience with the improvements we have made to date. We may not be able to implement and maintain adequate controls over our financial processes and reporting in the future, which may require us to restate our financial statements in the future. In addition, we may discover additional past, ongoing or future weaknesses or significant deficiencies in our financial reporting system in the future. Any

-12-

failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations or result in material misstatements in our financial statements. Any such failure also could adversely affect the results of the periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our "internal control over financial reporting" that will be required when the SEC's rules under Section 404 of the Sarbanes-Oxley Act of 2002 become applicable to us beginning with our Annual Report on Form 10-K for the year ending December 31, 2006 to be filed in the first quarter of 2007. Inferior internal controls could also cause investors to lose confidence in our reported financial information, which could result in a lower trading price of our common stock.

We may require additional capital in the future, which may not be available to us.

        Our business is capital intensive, requiring specialized equipment to provide our services. We may need to raise additional funds through public or private debt or equity financings. Adequate funds may not be available when needed or may not be available on favorable terms. If we raise additional funds by issuing equity securities, dilution to existing stockholders may result. If funding is insufficient at any time in the future, we may be unable to fund maintenance requirements, acquisitions, take advantage of business opportunities or respond to competitive pressures, any of which could harm our business.

Competition within the well services industry may adversely affect our ability to market our services.

        The well services industry is highly competitive and fragmented and includes numerous small companies capable of competing effectively in our markets on a local basis as well as several large companies that possess substantially greater financial and other resources than we do. Our larger competitors' greater resources could allow those competitors to compete more effectively than we can. The amount of equipment available may exceed demand, which could result in active price competition. Many contracts are awarded on a bid basis, which may further increase competition based primarily on price. In addition, recent market conditions have stimulated the reactivation of well servicing rigs and construction of new equipment, which could result in excess equipment and lower utilization rates in future periods.

We depend on several significant customers, and a loss of one or more significant customers could adversely affect our results of operations.

        Our customers consist primarily of major and independent oil and gas companies. During 2004 and the first quarter of 2005, our top five customers accounted for 20% and 17%, respectively, of our revenues. The loss of any one of our largest customers or a sustained decrease in demand by any of such customers could result in a substantial loss of revenues and could have a material adverse effect on our results of operations.

Our industry has experienced a high rate of employee turnover. Any difficulty we experience replacing or adding personnel could adversely affect our business.

        We may not be able to find enough skilled labor to meet our needs, which could limit our growth. Our business activity historically decreases or increases with the price of oil and gas. Although we have been able to hire workers to meet our current needs, we may have problems finding enough skilled and unskilled laborers in the future if the demand for our services increases. We have raised wage rates to attract workers from other fields and to retain or expand our current work force during the past year. If we are not able to increase our service rates sufficiently to compensate for wage rate increases, our operating results may be adversely affected.

-13-

        Other factors may also inhibit our ability to find enough workers to meet our employment needs. Our services require skilled workers who can perform physically demanding work. As a result of our industry volatility and the demanding nature of the work, workers may choose to pursue employment in fields that offer a more desirable work environment at wage rates that are competitive with ours. We believe that our success is dependent upon our ability to continue to employ and retain skilled technical personnel. Our inability to employ or retain skilled technical personnel generally could have a material adverse effect on our operations.

Our success depends on key members of our management, the loss of any of whom could disrupt our business operations.

        We depend to a large extent on the services of some of our executive officers. The loss of the services of Kenneth V. Huseman, our President and Chief Executive Officer, or other key personnel could disrupt our operations. We have entered into employment agreements with Mr. Huseman, James J. Carter, Alan Krenek, Dub W. Harrison and Charlie W. Swift that, among other provisions, contain non-compete agreements. We also have similar employment agreements with all our corporate vice presidents and senior division level management. Notwithstanding these agreements, we may not be able to retain our executive officers and may not be able to enforce the non-compete provisions in the employment agreements. Although we maintain key person life insurance on the life of Mr. Huseman, the death or disability of Mr. Huseman still may adversely affect our operations, and the proceeds from the insurance policy may not be sufficient to cover our losses.

Our operations are subject to inherent risks, some of which are beyond our control. These risks may not be fully covered under our insurance policies.

        Our operations are subject to hazards inherent in the oil and gas industry, such as, but not limited to, accidents, blowouts, explosions, craterings, fires and oil spills. These conditions can cause:

•

personal injury or loss of life;



•

damage to or destruction of property, equipment and the environment; and



•

suspension of operations.

        The occurrence of a significant event or adverse claim in excess of the insurance coverage that we maintain or that is not covered by insurance could have a material adverse effect on our financial condition and results of operations. In addition, claims for loss of oil and gas production and damage to formations can occur in the well services industry. Litigation arising from a catastrophic occurrence at a location where our equipment and services are being used may result in us being named as a defendant in lawsuits asserting large claims.

-14-

        We maintain insurance coverage that we believe to be customary in the industry against these hazards. However, we do not have insurance against all foreseeable risks, either because insurance is not available or because of the high premium costs. The occurrence of an event not fully insured against, or the failure of an insurer to meet its insurance obligations, could result in substantial losses. In addition, we may not be able to maintain adequate insurance in the future at rates we consider reasonable. There can be no assurance that insurance will be available to cover any or all of these risks, or, even if available, that it will be adequate, or that insurance premiums or other costs will not rise significantly in the future so as to make such insurance prohibitive. It is likely that, in our insurance renewals, our premiums and deductibles will be higher, and certain insurance coverage either will be unavailable or considerably more expensive than it has been in the recent past. In addition, our insurance is subject to coverage limits and some policies exclude coverage for damages resulting from environmental contamination.

We are subject to federal, state and local regulation regarding issues of health, safety and protection of the environment. Under these regulations, we may become liable for penalties, damages or costs of remediation. Any changes in laws and government regulations could increase our costs of doing business.

        Our operations are subject to federal, state and local laws and regulations relating to protection of natural resources and the environment, health and safety, waste management, and transportation of waste and other materials. Our fluid services segment includes disposal operations into injection wells that pose some risks of environmental liability. Although we monitor the injection well process, leakage from the wells to surface or subsurface soils, surface water or groundwater could occur. Liability under these laws and regulations could result in cancellation of well operations, fines and penalties, expenditures for remediation, and liability for property damage and personal injuries. Sanctions for noncompliance with applicable environmental laws and regulations also may include assessment of administrative, civil and criminal penalties, revocation of permits and issuance of corrective action orders.

        Laws protecting the environment generally have become more stringent over time and are expected to continue to do so, which could lead to material increases in costs for future environmental compliance and remediation. The modification or interpretation of existing laws or regulations, or the adoption of new laws or regulations, could curtail exploratory or developmental drilling for oil and gas and could limit well servicing opportunities. Some environmental laws and regulations may impose strict liability, which means that in some situations we could be exposed to liability as a result of our conduct that was lawful at the time it occurred or conduct of, or conditions caused by, prior operators or other third parties. Clean-up costs and other damages arising as a result of environmental laws, and costs associated with changes in environmental laws and regulations could be substantial and could have a material adverse effect on our financial condition. Please read "Business — Environmental Regulation" for more information on the environmental laws and government regulations that are applicable to us.

Our indebtedness could restrict our operations and make us more vulnerable to adverse economic conditions.

        We now have, and after this offering will continue to have, a significant amount of indebtedness. As of March 31, 2005, our total debt, the majority of which bears interest at variable rates, was $180.7 million, including the aggregate principal amount due under the term loan portion of our senior credit facility of $164.7 million and capital lease obligations in the aggregate amount of $16.0 million. As of March 31, 2005, on an as adjusted basis (as if we had completed this offering and used the net proceeds as described in "Use of Proceeds" on that date), our total debt would have been $110.7 million. For the year ended December 31, 2004, we made cash principal

-15-

and interest payments totaling $8.8 million. Holding all other variables constant, if interest rates increased by 1%, our annual interest expense (excluding effects of our interest rate hedges) would have increased by approximately $1.7 million during 2004. Our market risks at March 31, 2005 are similar to those disclosed for the year ended December 31, 2004.

        Our current and future indebtedness could have important consequences to you. For example, it could:

•

impair our ability to make investments and obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes;



•

limit our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to make principal and interest payments on our indebtedness;



•

make us more vulnerable to a downturn in our business, our industry or the economy in general as a substantial portion of our operating cash flow will be required to make principal and interest payments on our indebtedness, making it more difficult to react to changes in our business and in industry and market conditions;



•

limit our ability to obtain additional financing that may be necessary to operate or expand our business;



•

put us at a competitive disadvantage to competitors that have less debt; and



•

increase our vulnerability to interest rate increases to the extent that we incur variable rate indebtedness.

        Our total debt could increase, as we have a total borrowing capacity of $50.0 million under the revolving portion of our senior credit facility, of which $41.7 million was available as of March 31, 2005, net of $8.3 million of outstanding letters of credit. To the extent that we incur additional indebtedness, whether under the revolving portion of our senior credit facility or otherwise, the potential consequences described above could be exacerbated.

        If we are unable to generate sufficient cash flow or are otherwise unable to obtain the funds required to make principal and interest payments on our indebtedness, or if we otherwise fail to comply with the various covenants in our senior credit facility or other instruments governing any future indebtedness, we could be in default under the terms of our senior credit facility or such instruments. In the event of a default, the holders of our indebtedness could elect to declare all the funds borrowed under those instruments to be due and payable together with accrued and unpaid interest, the lenders under our credit facilities could elect to terminate their commitments thereunder and we or one or more of our subsidiaries could be forced into bankruptcy or liquidation. Any of the foregoing consequences could restrict our ability to grow our business and cause the value of our common stock to decline.

Our existing credit facility imposes restrictions on us that may affect our ability to successfully operate our business.

        Our senior credit facility limits our ability to take various actions, such as:

•

limitations on the incurrence of additional indebtedness;



•

restrictions on mergers, sales or transfer of assets without the lenders' consent; and



•

limitation on dividends and distributions.

        In addition, our senior credit facility requires us to maintain certain financial ratios and to satisfy certain financial conditions, several of which become more restrictive over time and may require us

-16-

to reduce our debt or take some other action in order to comply with them. Our current financial covenants include as of June 30, 2005:

•

a maximum leverage ratio of 3.25 to 1.00 reducing to 3.00 to 1.00;



•

a minimum fixed charge coverage ratio of 1.15 to 1.00; and



•

a minimum interest coverage ratio of 3.00 to 1.00.

        These restrictions could also limit our ability to obtain future financings, make needed capital expenditures, withstand a downturn in our business or the economy in general, or otherwise conduct necessary corporate activities. We also may be prevented from taking advantage of business opportunities that arise because of the limitations imposed on us by the restrictive covenants under our senior credit facility. Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — 2004 Credit Facility" for a discussion of our senior credit facility.

Risks Related to our Relationship with DLJ Merchant Banking

DLJ Merchant Banking effectively controls the outcome of stockholder voting and may exercise this voting power in a manner adverse to our other stockholders.

        After giving effect to this offering, DLJ Merchant Banking effectively will own approximately    % of our outstanding common stock, or    % if the underwriters exercise their over-allotment option in full. Accordingly, DLJ Merchant Banking is in a position to effectively control the outcome of matters requiring a stockholder vote, including the election of directors, adoption of amendments to our certificate of incorporation or bylaws or approval of transactions involving a change of control. The interests of DLJ Merchant Banking may differ from those of our other stockholders, and DLJ Merchant Banking may vote its common stock in a manner that may adversely affect our other stockholders. Please read "Security Ownership of Certain Beneficial Owners and Management" for a discussion of DLJ Merchant Banking's ownership interests in us and "Certain Relationships and Related Party Transactions — Transactions with DLJ Merchant Banking" for a description of DLJ Merchant Banking.

Risks Related to this Offering

Certain stockholders' shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly.

        After this offering, we will have outstanding             shares of common stock. Of these shares, the             shares we and the selling stockholders are selling in this offering, or             shares if the underwriters exercise their over-allotment option in full, will be freely tradable without restriction under the Securities Act except for any shares purchased by one of our "affiliates" as defined in Rule 144 under the Securities Act. A total of             shares, or             shares if the underwriters exercise their over-allotment option in full, will be "restricted securities" (within the meaning of Rule 144 under the Securities Act) or subject to lock-up arrangements. In connection with this offering, we, our officers and directors and substantially all of our existing stockholders (including the selling stockholders) have entered into lock-up agreements under which we and they have agreed not to offer or sell any shares of common stock or securities convertible into or exchangeable or exercisable for shares of common stock for an initial period of 180 days from the date of this prospectus, which may be extended for up to 34 days in certain circumstances, without the prior written consent of Goldman, Sachs & Co. and Credit Suisse First Boston LLC on behalf of the underwriters. Goldman, Sachs & Co. and Credit Suisse First Boston LLC may, at any time and without notice, waive any of the terms of these lock-up agreements. See "Underwriting" for a

-17-

description of these lock-up agreements. An aggregate of    of these shares will become available for resale in the public market as shown in the chart below.

Number of shares	Date of eligibility for resale into public market
	No less than 180 days after the date of this prospectus (in accordance with lock-up agreements with Goldman, Sachs & Co. and Credit Suisse First Boston LLC)
	Between 181 and 365 days after the date of this prospectus due to the requirements of the federal securities laws.

        After this offering, the holders of             shares of our common stock will have rights, subject to some limited conditions, to demand that we include their shares in registration statements that we file on their behalf, on our behalf or on behalf of other stockholders. By exercising their registration rights and selling a large number of shares, these holders could cause the price of our common stock to decline. Furthermore, if we file a registration statement to offer additional shares of our common stock and have to include shares held by those holders, it could impair our ability to raise needed capital by depressing the price at which we could sell our common stock.

        As soon as practicable after this offering, we intend to file one or more registration statements with the SEC on Form S-8 providing for the registration of 5,000,000 shares of our common stock issued or reserved for issuance under our stock option plans. Subject to the exercise of unexercised options or the expiration or waiver of vesting conditions for restricted stock and the expiration of lock-ups we and certain of our stockholders have entered into, shares registered under these registration statements on Form S-8 will be available for resale immediately in the public market without restriction.

Purchasers of common stock will experience immediate and substantial dilution.

        Based on an assumed initial public offering price of $    per share, purchasers of our common stock in this offering will experience an immediate and substantial dilution of $    per share in the net tangible book value per share of common stock from the initial public offering price, and our pro forma net tangible book value as of March 31, 2005 after giving effect to this offering would be $    per share. Please read "Dilution" for a complete description of the calculation of net tangible book value.

Our certificate of incorporation and bylaws, as well as Delaware law, contain provisions that could discourage acquisition bids or merger proposals, which may adversely affect the market price of our common stock.

        Our certificate of incorporation authorizes our board of directors to issue preferred stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us, even if the change of control would be beneficial to our stockholders, including:

•

a classified board of directors, so that only approximately one-third of our directors are elected each year;



•

limitations on the removal of directors;



•

the prohibition of stockholder action by written consent; and

-18-

•

limitations on the ability of our stockholders to call special meetings and establish advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders.

        Delaware law prohibits us from engaging in any business combination with any "interested stockholder," meaning generally that a stockholder who beneficially owns more than 15% of our stock cannot acquire us for a period of three years from the date this person became an interested stockholder, unless various conditions are met, such as approval of the transaction by our board of directors.

Because we have no plans to pay dividends on our common stock, investors must look solely to stock appreciation for a return on their investment in us.

        We do not anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings to fund the development and growth of our business. Any payment of future dividends will be at the discretion of our board of directors and will depend on, among other things, our earnings, financial condition, capital requirements, level of indebtedness, statutory and contractual restrictions applying to the payment of dividends and other considerations that the board of directors deems relevant. The terms of our existing senior credit facility restrict the payment of dividends without the prior written consent of the lenders. Investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize a return on their investment. Investors seeking cash dividends should not purchase our common stock.

There has been no active trading market for our common stock, and an active trading market may not develop.

        Prior to this offering, there has been no public market for our common stock. We have applied to list our common stock on the New York Stock Exchange. We do not know if an active trading market will develop for our common stock or how the common stock will trade in the future, which may make it more difficult for you to sell your shares. Negotiations between the underwriters, the selling stockholders and us will determine the initial public offering price. You may not be able to resell your shares at or above the initial public offering price.

If our stock price declines after the initial offering, you could lose a significant part of your investment.

        The market price of our common stock could be subject to wide fluctuations in response to a number of factors, most of which we cannot control, including:

•

changes in securities analysts' recommendations and their estimates of our financial performance;



•

the public's reaction to our press releases, announcements and our filings with the Securities and Exchange Commission;



•

fluctuations in broader stock market prices and volumes, particularly among securities of oil and gas service companies;



•

changes in market valuations of similar companies;



•

additions or departures of key personnel;



•

commencement of or involvement in litigation;

-19-

•

announcements by us or our competitors of strategic alliances, significant contracts, new technologies, acquisitions, commercial relationships, joint ventures or capital commitments;



•

variations in our quarterly results of operations or cash flows or those of other oil and gas service companies;



•

changes in our pricing policies or pricing policies of our competitors;



•

future issuances and sales of our common stock; and



•

changes in general conditions in the U.S. economy, financial markets or the oil and gas industry.

        In recent years, the stock market has experienced extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to the operating performance of these companies. These market fluctuations may also result in a lower price of our common stock.

-20-

FORWARD-LOOKING STATEMENTS

        This prospectus contains forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting the financial condition of our business. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including, among other things, the risk factors discussed in this prospectus and other factors, most of which are beyond our control.

        The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "plan," "expect" and similar expressions are intended to identify forward-looking statements. All statements other than statements of current or historical fact contained in this prospectus are forward-looking statements.

        Although we believe that the forward-looking statements contained in this prospectus are based upon reasonable assumptions, the forward-looking events and circumstances discussed in this prospectus may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements.

        Important factors that may affect our expectations, estimates or projections include:

•

a decline in or substantial volatility of oil and gas prices, and any related changes in expenditures by our customers;



•

the effects of future acquisitions on our business;



•

changes in customer requirements in markets or industries we serve;



•

competition within our industry;



•

general economic and market conditions;



•

our access to current or future financing arrangements;



•

our ability to replace or add workers at economic rates; and



•

environmental and other governmental regulations.

        Our forward-looking statements speak only as of the date of this prospectus. Unless otherwise required by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

-21-

THE COMPANY

        We commenced business in 1992 through our predecessor company. In December 2000, we completed a private recapitalization by DLJ Merchant Banking, which gained majority control of us. DLJ Merchant Banking has contributed approximately $81 million through several equity investments and has been instrumental in providing and arranging capital to drive our growth. Since our formation, we have grown largely through acquisitions of businesses and assets, including 33 acquisitions from January 2001 through March 31, 2005. Primarily through these transactions, our revenues have grown from $56.5 million in 2000 to $311.5 million in 2004.

        In January 2003, we completed a holding company reorganization to provide greater operational, administrative and financial flexibility. All of the then-outstanding shares of common stock and preferred stock of our predecessor were exchanged for shares of a new holding company then known as BES Holding Co. in a tax-free exchange, and our precedessor was converted into a limited partnership now known as Basic Energy Services, L.P., which currently remains our indirect, wholly owned subsidiary. In April 2004, we changed our name from BES Holding Co. to Basic Energy Services, Inc.

-22-

USE OF PROCEEDS

        We expect to receive net proceeds from this offering of approximately $93.2 million, assuming an initial public offering price of $    per share and after deducting underwriting discounts and commissions and estimated offering expenses. We will not receive any of the net proceeds from the sale of shares of common stock by the selling stockholders. One of the selling stockholders owns a majority of the shares of our outstanding common stock and is also an affiliate of Credit Suisse First Boston, one of the underwriters of this offering. See "Principal and Selling Stockholders" and "Underwriting."

        We plan to use $70.0 million of our net proceeds from this offering to repay a portion of the term loan under our credit facility and the remainder for general corporate purposes, which may include cash payments made in connection with acquisitions. We do not currently have any pending letters of intent or agreements for any significant acquisitions. Our current senior credit facility consists of a $50 million revolving credit facility and a term loan facility of $170 million. As of March 31, 2005, we had $165.1 million of indebtedness outstanding under the term loan portion of our senior credit facility, including approximately $384,000 of accrued interest. The term loan bears interest at either a base rate plus 2.0%, or the London Interbank Offered Rate ("LIBOR") plus 3.0%, and becomes due and payable in October 2009. As of March 31, 2005, we had no indebtedness outstanding under our revolving credit facility, other than $8.3 million of stand-by letters of credit. Our borrowings under the term loan and revolving credit facility were used to refinance existing debt and to provide for ongoing working capital and general corporate purposes. Affiliates of some of the underwriters of this offering are lenders under our credit facility and therefore will receive a portion of the proceeds from this offering that we use to repay indebtedness. See "Underwriting."

        Please read "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources — Credit Facilities — 2004 Credit Facility" for a description of our outstanding indebtedness and our senior credit facility following this offering.

DIVIDEND POLICY

        We have not declared or paid any cash dividends on our common stock, and we do not currently anticipate paying any cash dividends on our common stock in the foreseeable future. We currently intend to retain all future earnings to fund the development and growth of our business. Any future determination relating to our dividend policy will be at the discretion of our board of directors and will depend on our results of operations, financial condition, capital requirements and other factors deemed relevant by our board. We are also currently restricted in our ability to pay dividends under our senior credit facility.

-23-

CAPITALIZATION

        The following table sets forth our capitalization at March 31, 2005:

•

on an actual basis; and



•

on an as adjusted basis to give effect to this offering and the application of our estimated net proceeds from this offering as set forth under "Use of Proceeds" as if each had occurred on March 31, 2005.

        The information was derived from and is qualified by reference to our financial statements included elsewhere in this prospectus. You should read this information in conjunction with these consolidated financial statements, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Use of Proceeds."

				March 31, 2005
				Actual			As Adjusted
				(in thousands)
Cash and cash equivalents				$	14,118		$	37,318
Total long-term debt, including current portion:
	Notes payable:
		Term loan under senior credit facility		$	164,750		$	94,750
		Other debt and obligations under capital leases			15,949			15,949
			Total		180,699			110,699
Stockholders' equity:
	Common stock, $.01 par value, 80,000,000 shares authorized; 28,931,935 shares issued and outstanding;              shares issued and outstanding, as adjusted				58
	Additional paid-in capital				144,466
	Deferred compensation				(9,861	)		(9,861	)
	Accumulated deficit				(6,528	)		(6,528	)
	Accumulated other comprehensive income				357			357
			Total stockholders' equity		128,492			221,692
			Total capitalization	$	309,191		$	332,391

-24-

DILUTION

        Purchasers of the common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of the common stock for accounting purposes. Net tangible book value per share represents the amount of the total tangible assets less our total liabilities, divided by the number of shares of common stock that will be outstanding after giving effect to a 5-for-1 stock split to be completed prior to the closing of this offering. At March 31, 2005, we had a net tangible book value of $81.4 million, or $2.81 per share of outstanding common stock after giving effect to a 5-for-1 stock split to be completed prior to the closing of this offering. After giving effect to the sale of             shares of common stock in this offering at an assumed initial public offering price of $             per share and after the deduction of underwriting discounts and commissions and estimated offering expenses, the as adjusted net tangible book value at March 31, 2005 would have been $             million or $                    per share. This represents an immediate increase in such net tangible book value of $                    per share to existing stockholders and an immediate and substantial dilution of $                    per share to new investors purchasing common stock in this offering. The following table illustrates this per share dilution:

Assumed initial public offering price per share				$
	Net tangible book value per share as of March 31, 2005	$	2.81
	Increase attributable to new public investors	$
As adjusted net tangible book value per share after this offering				$
Dilution in as adjusted net tangible book value per share to new investors				$

        The following table summarizes, on an as adjusted basis set forth above as of March 31, 2005, the total number of shares of common stock owned by existing stockholders and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing stockholders and to be paid by new investors in this offering at $                    , the mid-point of the range of the initial public offering prices set forth on the cover page of this prospectus, calculated before deduction of estimated underwriting discounts and commissions.

		Shares Purchased(1)			Total Consideration
									Average Price Per Share
		Number	Percent		Amount		Percent
Existing Stockholders(2)		28,931,935		%	$	126,544,313	55.9	%	$	4.37
New Public Investors						100,000,000	44.1	%
	Total		100.0	%	$	226,544,313	100.0	%

(1)

The number of shares disclosed for the existing stockholders includes             shares being sold by the selling stockholders in this offering. The number of shares disclosed for the new investors does not include the             shares being purchased by the new investors from the selling stockholders in this offering.

(2)

With respect to our executive officers, directors and greater-than-10% stockholders, and assuming the exercise of all outstanding warrants and stock options, the number of shares of

-25-

common stock purchased from us, the total consideration paid to us, and the average price per share paid by all of those affiliated persons, are as follows:

	Shares Purchased			Total Consideration
								Average Price Per Share
	Number	Percent		Amount		Percent
Affiliated persons	34,395,930		%	$	148,349,848		%	$	4.31

        As of March 31, 2005, there were 28,931,935 shares of our common stock outstanding, after giving effect to the 5-for-1 stock split, held by 36 stockholders of record. Sales by the selling stockholders in this offering will reduce the number of shares of common stock held by existing stockholders to             or approximately             % of the total number of shares of common stock outstanding after this offering and will increase the number of shares of common stock held by new investors to                      or approximately             % of the total number of shares of common stock outstanding after this offering.

-26-

SELECTED HISTORICAL FINANCIAL DATA

        The following table sets forth our selected historical financial information for the periods shown. The following information should be read in conjunction with "Capitalization," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our financial statements included elsewhere in this prospectus. The amounts for each historical annual period presented below were derived from our audited financial statements.

			Year Ended December 31,															Three Months Ended March 31,
			2000			2001			2002			2003			2004			2004			2005
																		(unaudited)
			(dollars in thousands, except per share data)
Statement of Operations Data:
Revenues:
	Well servicing		$	37,784		$	62,943		$	73,848		$	104,097		$	142,551		$	31,822		$	44,798
	Fluid services			18,682			36,766			34,170			52,810			98,683			22,140			29,303
	Drilling and completion services			—			—			733			14,808			29,341			4,865			10,764
	Well site construction services			—			—			—			9,184			40,927			8,776			8,948
		Total revenues		56,466			99,709			108,751			180,899			311,502			67,603			93,813
Expenses:
	Well servicing			27,475			40,906			55,643			73,244			98,058			21,789			28,191
	Fluid services			12,639			21,363			22,705			34,420			65,167			14,513			19,238
	Drilling and completion services			—			—			512			9,363			17,481			3,139			5,860
	Well site construction services			—			—			—			6,586			31,454			6,614			7,108
	General and administrative(1)			6,683			11,497			13,124			21,933			37,186			7,923			13,091
	Depreciation and amortization			6,795			9,599			13,414			18,213			28,676			6,318			8,047
	Unsuccessful offering and acquisition costs			2,073			—			—			—			—			—			—
		Total expenses		55,665			83,365			105,398			163,759			278,022			60,296			81,535
Operating income				801			16,344			3,353			17,140			33,480			7,307			12,278
Net interest expense				(6,837	)		(3,303	)		(4,750	)		(5,174	)		(9,550	)		(2,029	)		(2,960	)
Gain (loss) on disposal of assets				91			10			(351	)		(391	)		(2,616	)		(1,045	)		(102	)
Gain (loss) on early extinguishment of debt				17,681			(1,462	)		—			(5,197	)		—			—			—
Other (income) expense				76			16			31			146			(398	)		25			75
Income (loss) from continuing operations before income taxes				11,812			11,605			(1,717	)		6,524			20,916			4,258			9,291
Income tax (expense) benefit				2,320			(4,449	)		419			(3,048	)		(7,984	)		(1,625	)		(3,490	)
Income (loss) from continuing operations				14,132			7,156			(1,298	)		3,476			12,932			2,633			5,801
Discontinued operations, net of tax				—			—			—			22			(71	)		52			—
Cumulative effect of accounting change, net of tax				—			—			—			(151	)		—			—			—
Net income (loss)				14,132			7,156			(1,298	)		3,347			12,861			2,685			5,801
Preferred stock dividend				(645	)		—			(1,075	)		(1,525	)		—			—			—
Accretion of preferred stock discount discount				—			—			(374	)		(540	)		—			—			—
Net income (loss) available to common stockholders			$	13,487		$	7,156		$	(2,747	)	$	1,282		$	12,861		$	2,685		$	5,801
Basic earnings (loss) per share of common stock:
	Continuing operations less preferred stock dividend and accretion		$	5.46		$	0.46		$	(0.13	)	$	0.06		$	0.46		$	0.10		$	0.20
	Discontinued operations			—			—			—			—			—			—			—
	Cumulative effect of accounting change			—			—			—			(0.01	)		—			—			—
Net income (loss) available to common stockholders			$	5.46		$	0.46		$	(0.13	)	$	0.05		$	0.46		$	0.10		$	0.20
Diluted earnings (loss) per share of common stock:
	Continuing operations less preferred stock dividend and accretion		$	5.46		$	0.46		$	(0.13	)	$	0.06		$	0.42		$	0.09		$	0.18
	Discontinued operations			—			—			—			—			—			—			—
	Cumulative effect of accounting change			—			—			—			(0.01	)		—			—			—
Net income (loss) available to common stockholders			$	5.46		$	0.46		$	(0.13	)	$	0.05		$	0.42		$	0.09		$	0.18

-27-

Other Financial Data:
Adjusted EBITDA(2)		$	9,669		$	26,628		$	16,872		$	35,558		$	63,743		$	13,789		$	20,916
Cash flows from operating activities			7,318			14,060			17,012			29,815			46,539			1,767			16,734
Cash flows from investing activities			(3,782	)		(60,305	)		(45,303	)		(84,903	)		(73,587	)		(10,075	)		(19,946	)
Cash flows from financing activities			(1,480	)		(50,770	)		21,572			79,859			21,498			501			(2,817	)
Capital expenditures:
	Acquisitions, net of cash acquired		80			44,928			31,075			61,885			19,284			—			3,909
	Property and equipment		4,255			15,208			14,674			23,501			55,674			10,350			16,083
Balance Sheet Data:
Cash and cash equivalent		$	3,118		$	7,645		$	926		$	25,697		$	20,147		$	17,890		$	14,118
Property and equipment, net			32,780			78,602			108,487			188,243			233,451			193,089			245,158
Total assets			53,018			126,207			156,502			302,653			367,601			299,720			378,468
Long-term debt			15,390			45,258			39,706			142,116			170,915			141,329			168,007
Mandatorily redeemable cumulative preferred stock			—			—			12,093			—			—			—			—
Stockholders' equity (deficit)			21,537			59,177			72,834			107,295			121,786			110,078			128,492

(1)

Includes approximately $684,000, $105,000, $205,000 and $1,587,000 of non-cash stock compensation expense for the years ended December 31, 2001, 2002, 2003 and 2004, and $165,000 and $591,000 for the three months ended March 31, 2004 and 2005, respectively.

(2)

Adjusted EBITDA means earnings before interest, taxes, depreciation and amortization, cumulative effect of accounting change, discontinued operations, other income, loss on early extinguishment of debt, loss (gain) on disposal of assets and stock-based compensation. Adjusted EBITDA is used as a supplemental financial measure by our management, directors and by external users of our financial statements, such as investors, to assess:

•

the financial performance of our assets without regard to financing methods, capital structure or historical cost basis;

•

the ability of our assets to generate cash sufficient to pay interest on our indebtedness; and

•

our operating performance and return on invested capital as compared to those of other companies in the well services industry, without regard to financing methods and capital structure.

Adjusted EBITDA has limitations as an analytical tool and should not be considered an alternative to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity presented in accordance with generally accepted accounting principles (GAAP). Adjusted EBITDA excludes some, but not all, items that affect net income and operating income, and these measures may vary among other companies. Limitations to using Adjusted EBITDA as an analytical tool include:

•

Adjusted EBITDA does not reflect our current or future requirements for capital expenditures or capital commitments;



•

Adjusted EBITDA does not reflect changes in, or cash requirements necessary to service interest or principal payments on, our debt;



•

Adjusted EBITDA does not reflect income taxes;



•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;



•

stock-based compensation, a non-cash compensation expense, may have a dilutive effect on our earnings per share; and



•

other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

-28-

        The following table presents a reconciliation of the non-GAAP financial measures of Adjusted EBITDA to the most directly comparable GAAP financial measures on a historical basis for each of the periods indicated.

		December 31,															March 31,
		2000			2001			2002			2003			2004			2004			2005
																	(unaudited)
		(dollars in thousands)
Reconciliation of Adjusted EBITDA to Net Income (Loss):
Net income (loss)		$	14,132		$	7,156		$	(1,298	)	$	3,347		$	12,861		$	2,685		$	5,801
	Cumulative effect of accounting change		—			—			—			151			—			—			—
	Discontinued operations, net of tax		—			—			—			(22	)		71			(52	)		—
	Income tax (expense) benefit		(2,320	)		4,449			(419	)		3,048			7,984			1,625			3,490
	Other income (expenses)		(76	)		(16	)		(31	)		(146	)		398			(25	)		(75	)
	Gain (loss) on early extinguishment of debt		(17,681	)		1,463			—			5,197			—			—			—
	Gain (loss) on disposal of assets		(91	)		(10	)		351			391			2,616			1,045			102
	Net interest expense		6,837			3,303			4,750			5,174			9,550			2,029			2,960
	Unsuccessful offering and acquisition costs		2,073			—			—			—			—			—			—
	Depreciation and amortization		6,795			9,599			13,414			18,213			28,676			6,318			8,047
	Non-cash compensation		—			684			105			205			1,587			165			591
Adjusted EBITDA		$	9,669		$	26,628		$	16,872		$	35,558		$	63,743		$	13,790		$	20,916
Reconciliation of Adjusted EBITDA to Cash Flows from Operations:
Net cash provided by operating activities		$	7,318		$	14,060		$	17,012		$	29,815		$	46,539		$	1,767		$	16,734
	Cash loss on early extinguishment of debt		4,434			695			—			1,675			—			—			—
	Bad debt expense		(113	)		(6	)		(200	)		(1,279	)		(1,150	)		(306	)		(450	)
	Interest expense, net of amortization of debt costs		273			2,842			4,066			4,540			8,744			1,871			2,798
	Income taxes		(4,434	)		1,868			(1,918	)		(68	)		—			(27	)		—
	Increase (decrease) in operating assets and liabilities		2,360			7,307			(1,593	)		1,199			9,338			10,620			2,019
	Other, net		(169	)		(138	)		(495	)		(324	)		272			(135	)		(185	)
Adjusted EBITDA		$	9,669		$	26,628		$	16,872		$	35,558		$	63,743		$	13,790		$	20,916

-29-

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management's Overview

        We provide a wide range of well site services to oil and gas drilling and producing companies, including well servicing, fluid services, drilling and completion services and well site construction services. Our results of operations since the beginning of 2002 reflect the impact of our acquisition strategy as a leading consolidator in the domestic land-based well services industry during this period. Our acquisitions have increased our breadth of service offerings at the well site and expanded our market presence. In implementing this strategy, we have purchased businesses and assets in 33 separate acquisitions from January 1, 2001 to March 31, 2005. Our weighted average number of well servicing rigs has increased from 126 in 2001 to 291 in the first quarter of 2005, and our weighted average number of fluid service trucks has increased from 156 to 414 in the same period. In 2003, primarily through acquisitions, we significantly increased our drilling and completion (principally pressure pumping) services and entered the well site construction services segment. These acquisitions make changes in revenues, expenses and income not directly comparable.

        Our operating revenues from each of our segments, and their relative percentages of our total revenues, consisted of the following (dollars in millions):

		Year Ended December 31,												Three Months Ended March 31,
		2002				2003				2004				2004				2005
Revenues:
Well servicing		$	73.8	68	%	$	104.1	58	%	$	142.6	46	%	$	31.8	47	%	$	44.8	48	%
Fluid services			34.2	31	%		52.8	29	%		98.7	32	%		22.1	33	%		29.3	31	%
Drilling and completion services			0.7	1	%		14.8	8	%		29.3	9	%		4.9	7	%		10.8	11	%
Well site construction services			—	0	%		9.2	5	%		40.9	13	%		8.8	13	%		8.9	10	%
	Total revenues	$	108.7	100	%	$	180.9	100	%	$	311.5	100	%	$	67.6	100	%	$	93.8	100	%

        Our core businesses depend on our customers' willingness to make expenditures to produce, develop and explore for oil and gas in the United States. Industry conditions are influenced by numerous factors, such as the supply of and demand for oil and gas, domestic and worldwide economic conditions, political instability in oil producing countries and merger and divestiture activity among oil and gas producers. The volatility of the oil and gas industry, and the consequent impact on exploration and production activity, could adversely impact the level of drilling and workover activity by some of our customers. This volatility affects the demand for our services and the price of our services. In addition, the discovery rate of new oil and gas reserves in our market areas also may have an impact on our business, even in an environment of stronger oil and gas prices. For a more comprehensive discussion of our industry trends, see "Business — General Industry Overview."

        We derive a majority of our revenues from services supporting production from existing oil and gas operations. Demand for these production-related services, including well servicing and fluid services, tends to remain relatively stable, even in moderate oil and gas price environments, as ongoing maintenance spending is required to sustain production. As oil and gas prices reach higher levels, demand for our production-related services generally increases as our customers engage in more well servicing activities relating to existing wells to maintain or increase oil and gas production from those wells. The utilization rate for our fleet of well servicing rigs increased from approximately 60% in 2002 to 78% in 2004 and 85% in the first quarter of 2005. Because our services are required to support increased drilling and workover activities, we also benefit from increased capital spending by our customers as oil and gas prices increase.

-30-

        We expect our business strategy will continue to include growth through selective acquisitions. Our continued rate of growth will depend on our ability to identify attractive acquisition opportunities and to acquire identified targets at commercially reasonable prices. We will also continue integrating current or future acquisitions into our existing operations. While we believe our costs of integration for prior acquisitions have been reflected in our historical results of operations, integration of acquisitions may result in unforeseen operational difficulties or require a disproportionate amount of our management's attention. As discussed below in "— Liquidity and Capital Resources," we also must meet certain financial covenants in order to borrow money under our existing credit agreement to fund future acquisitions.

Recent Strategic Acquisitions and Expansions

        During the period 2002 through 2004, we grew significantly through acquisitions and capital expenditures. During 2002 and 2003, this growth was focused more on acquisitions of new lines of related business and of regional platforms for our existing businesses. During 2004, we directed our focus more at the integration and expansion of these businesses, including capital expenditures of selected assets to expand our existing businesses.

        We discuss the aggregate purchase prices and related financing issues below in "— Liquidity and Capital Resources" and present the historical financial statements of certain significant acquisitions in the historical financial statements included with this prospectus.

Selected 2003 Acquisitions

        The following is a summary of our four largest acquisitions during 2003. These acquisitions are indicative of our strategic expansion into new lines of business.

New Force Energy Services, Inc.

        On January 27, 2003, we completed the acquisition of the business and assets of New Force Energy Services, Inc., a pressure pumping services company in north central Texas. This acquisition added 31 pressure pumping units and associated support equipment and three new locations in north central Texas and increased the services offered in our Permian Basin, North Texas and Ark-La-Tex divisions. This transaction was structured as an asset purchase for a total purchase price of approximately $7.7 million in cash and up to an additional $2.7 million in future contingent earnest payments, of which $916,000 had been earned as of December 31, 2004.

FESCO Holdings, Inc./First Energy Services Company

        On October 3, 2003, we completed the acquisition of FESCO Holdings, Inc., which we refer to as FESCO, a fluid and well site construction services provider that operates through its subsidiary First Energy Services Company. FESCO's operations are concentrated in Wyoming, Montana, North Dakota and Colorado and historically have been largely dependent on drilling activity in the Rocky Mountain states. This transaction extended our operating presence in the Rocky Mountain states, a region that we expect will experience increased levels of demand for well site and fluid services due to increased drilling activity. We have supplemented FESCO's fluid services capabilities with our well servicing capabilities and equipment to provide additional service offerings in the Rocky Mountain states. The transaction was structured as a stock-for-stock merger for a total purchase price of approximately $37.9 million, including $19.1 million of assumed FESCO debt.

PWI Inc.

        On October 3, 2003, we completed the acquisition of substantially all the operating assets of PWI Inc. and certain other affiliated entities, which we refer to as PWI, a provider of onshore oilfield fluid, equipment rental, and well site construction services. These services include fluid

-31-

transportation and sales, disposal services, oilfield equipment rental, well site construction and lease maintenance work. Through eight locations, PWI operated primarily in southeast Texas and southwest Louisiana. The PWI acquisition substantially enhanced our existing onshore Gulf Coast well servicing operations by adding fluid services and well site construction services to this market. This acquisition provided us established operations in an active region and enables us to cross-sell additional services in the area. We acquired the assets of PWI for $25.1 million in cash and up to an additional $2.5 million in future contingent earnout payments, of which none had been earned as of December 31, 2004.

Pennant Services Company

        On October 3, 2003, we completed the acquisition of substantially all of the operating assets of Pennant Services Company, a well servicing company with operations in Wyoming and Utah. This acquisition added 13 well servicing rigs and associated workover equipment to our fleet, which have been integrated with FESCO's operations to expand the range of services and equipment that we offer to customers in the Rocky Mountain states. We acquired these assets for $7.4 million in cash.

Selected 2004 Acquisitions

        During 2004, we made a number of smaller acquisitions and capital expenditures that we anticipate will serve as a platform for future growth. These include:

Energy Air Drilling

        On August 30, 2004, we completed the acquisition of Energy Air Drilling Service Company, an underbalanced drilling services company, with operations in Farmington, New Mexico, and Grand Junction, Colorado. This acquisition added 18 air drilling packages, four trailer-mounted foam units, and additional compressors and boosters. This acquisition provided a platform to expand into the Southern Rockies market area, while expanding our service offerings. The transaction was structured as a securities purchase for a total purchase price of approximately $6.5 million in cash.

AWS Wireline Services

        On November 1, 2004, we completed the acquisition of substantially all of the operating assets of AWS Wireline Services, a cased-hole wireline company based in Albany, Texas. This acquisition of six wireline units was our initial entry into the wireline business. This service is complementary to our existing pressure pumping service organization infrastructure in this same market area. This transaction was structured as an asset purchase for a total purchase price of approximately $4.3 million in cash.

Segment Overview

Well Servicing

        During 2004, our well servicing segment represented 46% of our revenue. Revenue in our well servicing segment is derived from maintenance, workover, completion and plugging and abandonment services. We provide maintenance-related services as part of the normal, periodic upkeep of producing oil and gas wells. Maintenance-related services represent a relatively consistent component of our business. Workover and completion services generate more revenue per hour than maintenance work due to the use of auxiliary equipment, but demand for workover and completion services fluctuates more with the overall activity level in the industry.

        We typically charge our customers for services on an hourly basis at rates that are determined by the type of service and equipment required, market conditions in the region in which the rig

-32-

operates, the ancillary equipment provided on the rig and the necessary personnel. Depending on the type of job, we may also charge by the project or by the day. We measure our activity levels by the total number of hours worked by all of the rigs in our fleet. We monitor our fleet utilization levels, with full utilization deemed to be 55 hours per week per rig. Through acquisitions and individual equipment purchases, our fleet has more than tripled since the beginning of 2001.

        The following is an analysis of our well servicing operations for each of the quarters and years in the years ended December 31, 2002, 2003 and 2004, and the quarter ended March 31, 2005:

	Weighted Average Number of Rigs	Rig Hours	Rig Utilization Rate		Revenue Per Rig Hour		Operating Cost Per Rig Hour		Operating Margin Per Rig Hour		Operating Margin %
2002:
First Quarter	193	77,400	56.1	%	$	201	$	153	$	47	23.7	%
Second Quarter	203	88,800	61.2	%	$	197	$	141	$	56	28.4	%
Third Quarter	250	106,700	59.7	%	$	188	$	139	$	49	26.1	%
Fourth Quarter	252	110,300	61.2	%	$	188	$	148	$	40	21.4	%
Full Year	225	383,200	59.7	%	$	193	$	145	$	48	24.7	%
2003:
First Quarter	252	128,200	71.2	%	$	188	$	136	$	52	27.8	%
Second Quarter	252	131,000	72.7	%	$	195	$	133	$	62	31.9	%
Third Quarter	252	133,200	73.9	%	$	200	$	138	$	62	30.9	%
Fourth Quarter	270	131,500	68.1	%	$	211	$	152	$	59	27.8	%
Full Year	257	523,900	71.4	%	$	199	$	140	$	59	29.6	%
2004:
First Quarter	272	145,900	75.0	%	$	218	$	149	$	69	31.5	%
Second Quarter	276	154,600	78.4	%	$	222	$	153	$	69	31.1	%
Third Quarter	282	162,400	80.5	%	$	234	$	162	$	72	30.6	%
Fourth Quarter	284	155,900	76.8	%	$	246	$	168	$	78	31.7	%
Full Year	279	618,800	77.8	%	$	230	$	158	$	72	31.2	%
2005:
First Quarter	291	175,300	84.3	%	$	255	$	161	$	94	37.1	%

        Our utilization declined to a low of 56% in the first quarter of 2002. This decline in utilization during 2002 contributed to our net loss for this period. Since this low point, our utilization has improved to 84% in the first quarter of 2005.

        In 2002, well servicing rates declined marginally due to the lower activity levels. In addition, our rates were adversely affected by the mix of acquisitions that were made in 2002, as a majority of our rig acquisitions in mid-2002 were in areas with lower market rates than our average rate. This affected our average rates during the third quarter of 2002. However, since the beginning of 2003, we have been able to increase our rates, which has contributed to our improved operating margins.

Fluid Services

        Revenues in our fluid services segment are earned from the sale, transportation, storage and disposal of fluids used in the drilling, production and maintenance of oil and gas wells. The fluid services segment has a base level of business consisting of transporting and disposing of salt water produced as a by-product of the production of oil and gas. These services are necessary for our customers and generally have a stable demand but typically produce lower relative operating margins than other parts of our fluid services segment. Fluid services for completion and workover projects typically require fresh or brine water for making drilling mud, circulating fluids or frac fluids used during a job, and all of these fluids require storage tanks and hauling and disposal. Because we can provide a full complement of fluid sales, trucking, storage and disposal required on most

-33-

drilling and workover projects, the add-on services associated with drilling and workover activity enable us to generate higher margin contributions. The higher margins are due to the relatively small incremental labor costs associated with providing these services in addition to our base fluid services segment. We typically price fluid services by the job, by the hour or by the quantities sold, disposed of or hauled.

        The following is an analysis of our fluid services operations for each of the quarters and years in the years ended December 31, 2002, 2003 and 2004, and the quarter ended March 31, 2005 (dollars in thousands):

	Weighted Average Number of Fluid Service Trucks	Revenue Per Fluid Service Truck		Operating Cost Per Fluid Service Truck		Operating Margin Per Fluid Service Truck		Operating Margin %
2002:
First Quarter	183	$	44	$	28	$	16	36.1	%
Second Quarter	183	$	43	$	31	$	12	28.2	%
Third Quarter	208	$	45	$	28	$	17	37.0	%
Fourth Quarter	209	$	43	$	29	$	14	32.5	%
Full Year	196	$	174	$	116	$	58	33.6	%
2003:
First Quarter	202	$	51	$	35	$	16	31.5	%
Second Quarter	209	$	53	$	35	$	18	35.0	%
Third Quarter	223	$	50	$	32	$	18	35.4	%
Fourth Quarter	363	$	56	$	35	$	21	36.1	%
Full Year	249	$	212	$	138	$	74	34.8	%
2004:
First Quarter	371	$	61	$	40	$	21	34.4	%
Second Quarter	376	$	63	$	41	$	21	33.6	%
Third Quarter	386	$	64	$	42	$	22	34.1	%
Fourth Quarter	411	$	68	$	45	$	23	34.2	%
Full Year	386	$	256	$	169	$	87	34.0	%
2005:
First Quarter	414	$	71	$	47	$	24	34.3	%

        We gauge activity levels in our fluid services segment based on revenues and operating margin per fluid service truck. Reduced capital spending by oil and gas companies during 2002 affected our fluid services segment more significantly than our well servicing segment. In 2002, our revenues per fluid services truck and operating margin were approximately $174,000 and 33.6%, respectively, compared to $239,000 and 41.9%, respectively, during 2001. This decline in profitability resulted from a decline in drilling-related revenues and lower overall levels of business activity in base fluid services. Increased oilfield activity since the third quarter of 2002 has led to a recovery in our fluid services segment, including the implementation of price increases.

        In 2003, our revenues per truck increased by approximately $38,000, or 22%, over 2002 to approximately $212,000, and our operating margin per truck increased by approximately $16,000, or 28%. These increases were due to improved market conditions, additional frac tanks, and improved pricing.

-34-

        In 2004, our revenues per truck increased by approximately $44,000, or 21%, over 2003 to approximately $256,000 and our operating margin per truck increased by approximately $13,000, or 18%. The revenue increase was due to a combination of higher utilization, a positive change in our service mix, and minor improvements in pricing. Our operating margin improved due to the factors mentioned above, plus the continued addition of frac tanks.

Drilling and Completion Services

        During 2004, our drilling and completion services segment represented 9% of our revenue. Revenue from our drilling and completion services segment are generally derived from a variety of services designed to stimulate oil and gas production or place cement slurry within the wellbores. Our drilling and completion services segment includes pressure pumping, cased-hole wireline services and underbalanced drilling.

        Our pressure pumping operations concentrate on providing single-truck, lower horsepower cementing, acidizing and fracturing services in selected markets. We entered the market for pressure pumping in East Texas during late 2002, and we expanded our presence with the acquisition of New Force in January 2003. We entered this market in the Rocky Mountain states with the acquisition of FESCO, which had a small cementing business based in Gillette, Wyoming. In December 2003, we acquired the assets of Graham Acidizing and integrated these assets into our New Force and Ark-La-Tex operations.

        We entered the wireline business in 2004 as part of our acquisition of AWS Wireline, a regional firm based in North Texas. We entered the underbalanced drilling services business in 2004 through our acquisition of Energy Air Drilling Services, a business operating in northwest New Mexico and the western slope of Colorado markets. For a description of our wireline and underbalanced drilling services, please read "Business — Overview of Our Segments and Services — Drilling and Completion Services Segment."

        In this segment, we generally derive our revenues on a project-by-project basis in a competitive bidding process. Our bids are generally based on the amount and type of equipment and personnel required, with the materials consumed billed separately. During periods of decreased spending by oil and gas companies, we may be required to discount our rates to remain competitive, which would cause lower operating margins.

        We gauge the performance of our drilling and completion services segment based on the segment's operating revenue and operating margins. A lower operating margin could be the result of lower rates being charged, lower utilization of related equipment, or a combination of both.

        The following is an analysis of our drilling and completion services for the quarter ended December 31, 2002 (when we first entered this segment), each of the quarters and years in the

-35-

years ended December 31, 2003 and 2004, and the quarter ended March 31, 2005 (dollars in thousands):

	Revenue		Operating Margin %
2002:
Fourth Quarter	$	733	30.2	%
2003:
First Quarter	$	2,642	45.6	%
Second Quarter	$	3,454	31.5	%
Third Quarter	$	4,180	37.9	%
Fourth Quarter	$	4,532	32.3	%
Full Year	$	14,808	36.8	%
2004:
First Quarter	$	4,865	35.5	%
Second Quarter	$	7,251	46.0	%
Third Quarter	$	8,463	41.0	%
Fourth Quarter	$	8,762	38.1	%
Full Year	$	29,341	40.4	%
2005:
First Quarter	$	10,765	45.6	%

Well Site Construction Services

        During 2004, our well site construction services segment represented 13% of our revenue. Revenue from our well site construction services segment is derived primarily from preparing and maintaining access roads and well locations, installing small diameter gathering lines and pipelines, constructing foundations to support drilling rigs and providing maintenance services for oil and gas facilities. These services are independent of our other services and, while offered to some customers utilizing other services, are not offered on a bundled basis. We entered the well site construction services segment during the forth quarter of 2003 in the Gulf Coast through the acquisition of PWI and in the Rocky Mountain states through our acquisition of FESCO.

        Within this segment, we generally charge established hourly rates or competitive bid for projects depending on customer specifications and equipment and personnel requirements. This segment allows us to perform services to customers outside the oil and gas industry, since substantially all of our power units are general purpose construction equipment. However, the majority of our current business in this segment is with customers in the oil and gas industry. If our customer base has the demand for certain types of power units that we do not currently own, we generally purchase or lease them without significant delay.

        We gauge the performance of our well site construction services segment based on the segment's operating revenues and operating margins. While we monitor our levels of idle equipment, we do not focus on revenues per piece of equipment. To the extent we believe we have excess idle power units, we may be able to divest ourselves of certain types of power units.

-36-

        The following is an analysis of our well site construction services for the quarter ended December 31, 2003 (when we first entered this segment), each of the quarters and year in the year ended December 31, 2004, and the quarter ended March 31, 2005 (dollars in thousands):

	Revenue		Operating Margin %
2003:
Fourth Quarter	$	9,184	28.2	%
2004:
First Quarter	$	8,776	24.6	%
Second Quarter	$	9,868	21.3	%
Third Quarter	$	11,298	24.3	%
Fourth Quarter	$	10,985	22.4	%
Full Year	$	40,927	23.1	%
2005:
First Quarter	$	8,952	20.6	%

        In the fourth quarter of 2003, this segment had revenues of $9.2 million with an operating margin of $2.6 million, or 28.2%, while in 2004, this segment had revenues of $40.9 million with an operating margin of $9.5 million and 23.1%. The decrease in revenues from the third quarter to the fourth quarter is primarily due to the seasonality of demand for these assets in our Rocky Mountain division in the winter months.

Operating Cost Overview

        Our operating costs are comprised primarily of labor, including workers' compensation and health insurance, repair and maintenance, fuel and insurance. A majority of our employees are paid on an hourly basis. With a reduced pool of workers in the industry, it is possible that we will have to raise wage rates to attract workers from other fields and retain or expand our current work force. We believe we will be able to increase service rates to our customers to compensate for wage rate increases. We also incur costs to employ personnel to sell and supervise our services and perform maintenance on our fleet. These costs are not directly tied to our level of business activity. Compensation for our administrative personnel in local operating yards and in our corporate office is accounted for as general and administrative expenses. Repair and maintenance is performed by our crews, company maintenance personnel and outside service providers. Insurance is generally a fixed cost regardless of utilization and relates to the number of rigs, trucks and other equipment in our fleet, employee payroll and safety record.

Critical Accounting Policies and Estimates

        Our consolidated financial statements are impacted by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete summary of these policies is included in note 2 of the notes to our historical consolidated financial statements. The following is a discussion of our critical accounting policies and estimates.

Critical Accounting Policies

        We have identified below accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows and which require the application of significant judgment by management.

-37-

        Property and Equipment.    Property and equipment are stated at cost, or at estimated fair value at acquisition date if acquired in a business combination. Expenditures for repairs and maintenance are charged to expense as incurred. We also review the capitalization of refurbishment of workover rigs as described in note 2 of the notes to our historical consolidated financial statements.

        Impairments.    We review our assets for impairment at a minimum annually, or whenever, in management's judgment, events or changes in circumstances indicate that the carrying amount of a long-lived asset may not be recovered over its remaining service life. Provisions for asset impairment are charged to income when the sum of the estimated future cash flows, on an undiscounted basis, is less than the assets' carrying amount. When an impairment is indicated, an impairment charge is recorded based on an estimate of future cash flows on a discounted basis.

        Self-Insured Risk Accruals.    We are self-insured up to retention limits with regard to workers' compensation and medical and dental coverage of our employees. We generally maintain no physical property damage coverage on our workover rig fleet, with the exception of certain of our 24-hour workover rigs and newly manufactured rigs. We have deductibles per occurrence for workers' compensation and medical and dental coverage of $150,000 and $100,000, respectively. We have lower deductibles per occurrence for automobile liability and general liability. We maintain accruals in our consolidated balance sheets related to self-insurance retentions by using third-party data and historical claims history.

        Revenue Recognition.    We recognize revenue when the services are performed, collection of the relevant receivables is probable, persuasive evidence of the arrangement exists and the price is fixed and determinable.

        Income Taxes.    We account for income taxes based upon Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the statutory enactment date. A valuation allowance for deferred tax assets is recognized when it is more likely than not that the benefit of deferred tax assets will not be realized.

Critical Accounting Estimates

        The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the balance sheet date and the amounts of revenues and expenses recognized during the reporting period. We analyze our estimates based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. However, actual results could differ from such estimates. The following is a discussion of our critical accounting estimates.

        Depreciation and Amortization.    In order to depreciate and amortize our property and equipment and our intangible assets with finite lives, we estimate the useful lives and salvage values of these items. Our estimates may be affected by such factors as changing market conditions, technological advances in industry or changes in regulations governing the industry.

-38-

        Impairment of Property and Equipment.    Our impairment of property and equipment requires us to estimate undiscounted future cash flows. Actual impairment charges are recorded using an estimate of discounted future cash flows. The determination of future cash flows requires us to estimate rates and utilization in future periods and such estimates can change based on market conditions, technological advances in industry or changes in regulations governing the industry.

        Allowance for Doubtful Accounts.    We estimate our allowance for doubtful accounts based on an analysis of historical collection activity and specific identification of overdue accounts. Factors that may affect this estimate include (1) changes in the financial positions of significant customers and (2) a decline in commodity prices that could affect the entire customer base.

        Litigation and Self-Insured Risk Reserves.    We estimate our reserves related to litigation and self-insure risk based on the facts and circumstances specific to the litigation and self-insured risk claims and our past experience with similar claims. The actual outcome of litigated and insured claims could differ significantly from estimated amounts. As discussed in "— Self-Insured Risk Accruals" above with respect to our critical accounting policies, we maintain accruals on our balance sheet to cover self-insured retentions. These accruals are based on certain assumptions developed using third-party data and historical data to project future losses. Loss estimates in the calculation of these accruals are adjusted based upon actual claim settlements and reported claims.

        Fair Value of Assets Acquired and Liabilities Assumed.    We estimate the fair value of assets acquired and liabilities assumed in business combinations, which involves the use of various assumptions. These estimates may be affected by such factors as changing market conditions, technological advances in industry or changes in regulations governing the industry. The most significant assumptions, and the ones requiring the most judgment, involve the estimated fair value of property and equipment, intangible assets and the resulting amount of goodwill, if any. Our adoption of SFAS No. 142 on January 1, 2002 requires us to test annually for impairment the goodwill and intangible assets with indefinite useful lives recorded in business combinations. This requires us to estimate the fair values of our own assets and liabilities at the reporting unit level. Therefore, considerable judgment, similar to that described above in connection with our estimation of the fair value of acquired company, is required to assess goodwill and certain intangible assets for impairment.

        Cash Flow Estimates.    Our estimates of future cash flows are based on the most recent available market and operating data for the applicable asset or reporting unit at the time the estimate is made. Our cash flow estimates are used for asset impairment analyses.

        Stock-Based Compensation.    We account for stock-based compensation using the intrinsic value method presented by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." However, in accordance with SFAS No. 148, "Accounting for Stock-Based Compensation," an amendment to SFAS No. 123, we must estimate the fair value of our outstanding stock-based compensation awards for disclosure purposes. In so doing, we use an option-pricing model (Black-Scholes), which requires various assumptions as to interest rates, volatility, dividend yields and expected lives of stock-based awards.

        The fair value of common stock for options granted from July 1, 2004 through March 31, 2005 was estimated by management using an internal valuation methodology. We did not obtain contemporaneous valuations by an unrelated valuation specialist because we were focused on internal growth and acquisitions and because we had consistently used our internal valuation methodology for previous stock awards.

        We used a market approach to estimate our enterprise value at the dates on which options were granted. Our market approach uses estimates of EBITDA and cash flows multiplied by

-39-

relevant market multiples. We used market multiples of publicly traded energy service companies that were supplied by investment bankers in order to estimate our enterprise value. The assumptions underlying the estimates are consistent with our business plan. The risks associated with achieving our forecasts were assessed in the multiples we utilized. Had different multiples been utilized, the valuations would have been different.

        As disclosed in Note 2 to our March 31, 2005 financial statements, we granted stock options as follows for the nine months ended March 31, 2005.

Grants Made	Number of Options Granted	Weighted Average Exercise Price		Weighted Average Fair Value Per Share		Weighted Average Intrinsic Value Per Share
January 2005	100,000	$	5.16	$	9.63	$	4.47
March 2005	865,000	$	6.98	$	12.78	$	5.80

        The reasons for the differences between the fair value per share at the option grant date and the estimated IPO price of $             to $             are as follows:

•

During the three months ended March 31, 2005, we closed five acquisitions which added two well servicing rigs, 12 fluid hauling trucks/trailers, two salt water disposal wells and other equipment. Industry conditions also improved in the first quarter. As a result of this, our revenues exceeded the first quarter projected revenues by 12%.



•

In addition, we placed an order for six new well servicing rigs which will be delivered throughout the remainder of 2005.



•

During the three months ended June 30, 2005, we closed two acquisitions which added six well servicing rigs and additional pressure pumping equipment. Demand for our equipment and services continued to strengthen during this quarter. Our well servicing rig revenue per hour increased by 10% from the first quarter of 2005. Based on the market outlook, we placed an order for an additional 24 new well servicing rigs, of which five of them will be put into service later in 2005.



•

We increased our projected EBITDA and cash flows for 2005 and 2006 due to the acquisitions and improved operating results.



•

Market prices of publicly traded energy service companies have shown significant increases from January 1, 2005 due to increases in demand caused by increasing commodity prices.

        Based on an estimated IPO price of $             to $             , the intrinsic value of the options granted in the last nine months was $              million, of which $              million related to vested options and $              million related to unvested options. We have recorded deferred compensation related to these options of $5.5 million, which is being recorded to compensation expense over the service period.

        Income Taxes.    The amount and availability of our loss carryforwards (and certain other tax attributes) are subject to a variety of interpretations and restrictive tests. The utilization of such carryforwards could be limited or lost upon certain changes in ownership and the passage of time. Accordingly, although we believe substantial loss carryforwards are available to us, no assurance can be given concerning the realization of such loss carryforwards, or whether or not such loss carryforwards will be available in the future.

        Asset Retirement Obligations.    SFAS No. 143 requires Basic to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets and to capitalize an equal amount as a cost of the asset, depreciating it over the life of the asset. Subsequent to the initial measurement of the asset

-40-

retirement obligation, the obligation is adjusted as the end of each quarter to reflect the passage of time, changes in the estimated future cash flows underlying the obligation, acquisition or construction of assets, and settlement of obligations.

Results of Operations

        The results of operations between periods will not be comparable, primarily due to the significant number of acquisitions made and their relative timing in the year acquired. See note 3 of the notes to our historical consolidated financial statements for more detail.

Three Months Ended March 31, 2005 Compared to Three Months Ended March 31, 2004

        Revenues.    Revenues increased 38% to $93.8 million in the first three months of 2005 from $67.6 million during the same period in 2004. This increase was due primarily to increased oilfield service activity resulting from continued strong oil and gas prices, higher utilization rates derived in part from the redeployment of our equipment to take advantage of increasing activity in some of our markets and acquisitions that we made during the last three quarters of 2004.

        Well servicing revenues increased 41% to $44.8 million in the first quarter of 2005 compared to $31.8 million in the first quarter of 2004. The increase was due primarily to higher rig utilization, which was due to the general increase in well maintenance activity caused by continued higher oil and gas prices and more aggressive marketing of our fleet in areas of increasing activity. The increased revenue per rig hour reflects minor price increases implemented by us after the first quarter of 2004 combined with an improving mix of well servicing activity.

        Fluid services revenues increased 32% to $29.3 million during the first quarter of 2005 as compared to $22.1 million during the same period of 2004. The increase in revenue was due primarily to increased activities and our internal growth of, and increase in trucks and frac tanks used by, this segment. We monitor fluid services revenues by the average revenue per fluid service truck. During the first quarter of 2005, our average revenue per fluid service truck totaled approximately $71,000 as compared to average revenue of approximately $61,000 per truck during the same period in 2004. Our weighted average number of fluid service trucks also increased approximately 12% from 371 to 414.

        Drilling and completion services revenue increased 121% to $10.8 million during the first quarter of 2005 as compared to $4.9 million during the same period of 2004. The increase in revenue between these periods was primarily due to increased utilization and rates, as well as the result of acquisitions, including our acquisition of wireline and underbalanced drilling businesses during 2004.

        Well site construction services revenue increased 2% to $8.9 million during the first quarter of 2005 as compared to $8.8 million during the same period of 2004.

        Operating Expenses.    Operating expenses, which primarily consist of labor, including workers compensation and health insurance, and maintenance and repair costs and fuel costs, increased 31% to $60.4 million in the first three months of 2005 from $46.0 million in the first quarter of 2004 as a result of additional rigs and trucks, as well as higher utilization of our equipment. Operating expenses decreased to 64% of revenue for the period from 68% in the same period during 2004, as fixed operating costs such as field supervision, insurance and vehicle expenses were spread over a higher revenue base. We also benefited from a favorable mix of businesses that we acquired and from higher utilization and increases pricing of our services.

        Operating expenses for the well servicing segment increased 29% to $28.2 million in the first three months of 2005 as compared to $21.8 million in the same period during 2004 due primarily to increased activity. Operating margins increased to 37% of revenues in the first three months of 2005

-41-

compared to 32% during the same period in 2004, as higher activity levels contributed to lower unit costs per rig hour.

        Operating expenses for the fluid services segment increased 33% to $19.2 million in the first three months of 2005 as compared to $14.5 million in the same period during 2004 due primarily to increased activity. Operating margins for the fluid services segment remained at 34% in the first three months of 2005 and the same period during 2004.

        Operating expenses for the drilling and completion services segment increased 87% to $5.9 million in the first three months of 2005 as compared to $3.1 million for the same period during 2004 due primarily to acquisitions. Our operating margin increased to 46% in the first three months of 2005 from 35% in the same period during 2004.

        Operating expenses for the well site construction services segment increased 7% to $7.1 million in 2005 as compared to $6.6 million in the same period during 2004. Operating margins for this segment decreased to 20% during the first three months of 2005 as compared to 25% for the same period in 2004. The decrease in operating margin was due primarily to additional expenses incurred from a redeployment of equipment during 2005.

        General and Administrative Expenses.    General and administrative expenses increased 65% to $13.1 million in the first three months of 2005 from $7.9 million in the first three months of 2004. The increase primarily reflects higher salary and office expenses related to the expansion of our business, as well as $1.3 million accrued for a litigation judgment.

        Depreciation and Amortization Expenses.    Depreciation and amortization expenses were $8.0 million for the first three months of 2005 and $6.3 million for the first three months of 2004, reflecting the increase in the size and investment in our asset base.

        Interest Expense.    Interest expense increased 47% to $3.1 million in the first three months of 2005 from $2.1 million in the same period during 2004. The increase was due to an approximately $29 million increase in long-term debt, which was used primarily in connection with our acquisitions and expenditures for property and equipment.

        Income Tax Expense (Benefit).    Income tax expense was $3.5 million in the first three months of 2005 as compared to $1.6 million in the first three months of 2004. Our effective tax rate in both periods was approximately 38%.

        Discontinued Operations.    We acquired, as part of the FESCO acquisition in October 2003, certain well servicing assets in Alaska that we made the decision to sell. Accordingly, these assets and related liabilities were held for sale and reflected in our first quarter 2004 financial results for the assets as discontinued operations, but the assets were sold in the third quarter of 2004 at their carrying value and the remaining liability for a property lease charged to discontinued operations.

        Net Income (Loss).    Our net income increased to $5.8 million in the first three months of 2005 from $2.7 million in the same period during 2004. This improvement was due primarily to the factors described above, including our increased asset base and related revenues, higher utilization rates and increased revenues per rig and fluid service truck, and higher operating margins on our drilling and completion services equipment.

-42-

Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

        Revenues.    Revenues increased 72% to $311.5 million in 2004 from $180.9 million in 2003. This increase was primarily due to major acquisitions that we made in the fourth quarter of 2003, increased oilfield service activity resulting from continued strong oil and gas prices, the purchase of additional revenue generating equipment and the higher utilization derived from the redeployment of equipment to take advantage of increasing activity in some of our markets. We operated a weighted average of 279 rigs in 2004 compared to 257 in 2003, and 386 fluid service trucks in 2004 compared to 249 in 2003, which also contributed to the increase.

        Well servicing revenues increased 37% to $142.6 million in 2004 compared to $104.1 million in 2003. Our full-fleet utilization rate was 77.8% and revenue per rig hour was $230 in 2004 compared to 71.4% and $199, respectively, for 2003. The higher rig utilization was due to the general increase in activity caused by continued higher oil and gas prices and more aggressive deployment of our fleet in areas of increasing activity. The increasing rate per hour reflects price increases implemented by us combined with a changing geographic mix of activity.

        Fluid services revenues increased 85% to $98.7 million in 2004 from $52.8 million in 2003. During 2004, our average revenues per fluid service truck totaled $256,000, versus average revenues of $212,000 per truck during the same period in 2003.

        Drilling and completion service revenues were $29.3 million during 2004 as compared to $14.8 million during 2003. Our significant entry into this segment occurred in late January 2003 with the acquisition of New Force and other acquisitions occurring during the fourth quarter of 2003. The increase in revenues between periods is primarily the result of the addition of equipment and an increase in rates due to higher utilization.

        Well site construction service revenues were $40.9 million in 2004, as compared to $9.2 million in 2003. We entered this segment in the fourth quarter of 2003 with our acquisition of FESCO and PWI. This service line has benefited from the increase in drilling activity, primarily in the Rocky Mountains.

        Operating Expenses.    Operating expenses, which primarily consist of labor and repair and maintenance, increased 71.0% to $212.2 million in 2004 from $123.6 million in 2003 as a result of operating additional rigs and trucks, as well as higher utilization of our equipment. Operating expenses as a percentage of revenue for 2004 remained virtually unchanged from the 68.0% in 2003, as fixed operating costs such as field supervision, insurance and vehicle expenses were spread over a higher revenue base, and this was offset by unit increases in fuel and steel. The addition of our construction services line also contributed to the static margin as this service line generates a lower margin than our other service lines.

        Operating expenses for the well servicing segment increased 34.0% to $98.1 million in 2004 as compared to $73.2 million in 2003 due to increased activity. Operating margins increased to 31.2% of revenues in 2004 compared to 29.6% during 2003, as higher activity levels and rate increases were able to offset cost increases for fuel and supplies.

        Operating expenses for the fluid services segment increased 89.6% to $65.2 million in 2004 from $34.4 million in 2003. Operating margins for the fluid services segment decreased to 34.0% in 2004 from 34.8% in 2003. This was the result of higher fuel and disposal costs, which were partially offset by an increase in drilling related activity.

        Operating expenses for the drilling and completion services segment were $17.5 million in 2004 as compared to $9.4 million in 2003, and the operating margin for this segment was 40.7% for 2004. Our significant entry into this segment occurred in late January 2003 with the acquisition of New Force and other acquisitions occurring throughout the remainder of 2003.

-43-

        Operating expenses for our well site construction services segment in 2004 were $31.5 million, and the operating margin for this segment was 23.1% for this period as compared to $6.6 million in operating expenses and operating margins of 28.2% for the same period in 2003. We entered this segment in October 2003, as previously discussed.

        General and Administrative Expenses.    General and administrative expenses increased 69.5% to $37.2 million in 2004 from $21.9 million in 2003, which included $1.6 million and $205,000 of stock-based compensation expense in 2004 and 2003, respectively. The increase primarily reflects higher salary and office expenses related to the expansion of our business into the Rocky Mountains and the Gulf Coast region in the fourth quarter of 2003, the addition of our North Texas pressure pumping business (in our drilling and completion segment), and additional administrative personnel to support new service locations and growth of the company.

        Depreciation and Amortization Expenses.    Depreciation and amortization expenses were $28.7 million for 2004 and $18.2 for 2003, reflecting the increase in the size and investment in our asset base. We invested $19.3 million for acquisitions in 2004 and an additional $55.7 million for capital expenditures in 2004 (excluding capital leases).

        Interest Expense.    Interest expense increased 85.6% to $9.7 million in 2004 from $5.2 million in 2003. The increase was due to approximately $100 million increase in long-term debt which was primarily used in connection with our acquisitions, most of which was added in the fourth quarter of 2003, and capital expenditures for property and equipment. In addition, both prime and LIBOR interest rates increased in 2004, and our term loan interest rate is tied directly to these rates. Our 2003 interest expense was favorably impacted by the reduced interest rate we received in our January 2003 refinancing, as well as an additional reduction in interest rates in our October 2003 refinancing. As part of the refinancings in January 2003 and October 2003, we recognized a loss of $5.2 million from the early extinguishment of debt. As part of our 2004 refinancing, we further reduced our base interest rate by 50 basis points. See "— Liquidity and Capital Resources."

        Income Tax Expense (Benefit).    Income taxes increased to an $8.0 million expense in 2004 from a $3.0 million expense in 2003. The change was due to improved profitability offset in part by a decrease in the effective tax rate in 2004. The effective tax rate in 2004 was approximately 38.2% as compared to 46.7% in 2003. The decrease in the effective tax rate in 2004 was due primarily to an adjustment of the federal tax rate from 34% in previous years to 35% in 2003, and the associated effects on our deferred tax liability.

        Discontinued Operations.    As part of the FESCO acquisition in October 2003, we acquired certain fluid services assets in Alaska that, prior to completing the acquisition, we decided to sell. Accordingly, these assets were treated as held for sale and therefore the financial results for the assets are reflected as discontinued operations. These assets were sold in the third quarter of 2004 at their carrying value. At the time of sale, we charged the remaining liability for a property lease to discontinued operations.

        Cumulative Effect of Accounting Change.    As of January 1, 2003, we adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligation" ("SFAS No. 143"). SFAS No. 143 requires us to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets and capitalize on equal amount as a cost of the asset depreciating it over the life of the asset. As a result of this adoption we recorded an expense, net of tax of approximately $151,000 in 2003.

-44-

        Net Income (Loss).    Our net income increased to $12.9 million in 2004 from a net income of $3.3 million in 2003. This improvement was due primarily to the increase in revenue and margins in 2004 compared to 2003 detailed above.

Year Ended December 31, 2003 Compared to Year Ended December 31, 2002

        Revenues.    Revenues increased 67% to $180.9 million in 2003 from $108.8 million in 2002. This increase was primarily due to major acquisitions that we made in the first and fourth quarters of 2003, increased oilfield service activity resulting from continued strong oil and gas prices, and the higher utilization derived from the redeployment of equipment to take advantage of increasing activity in some of our markets. We operated a weighted average of 257 rigs in 2003 compared to 225 in 2002, and 249 fluid service trucks in 2003 compared to 196 in 2002, which also contributed to the increase.

        Well servicing revenues increased 41.0% to $104.1 million in 2003 compared to $73.8 million in 2002. Our full-fleet utilization rate was 71.4% and revenue per rig hour was $199 in 2003 compared to 59.7% and $193, respectively, for 2002. The higher rig utilization was due to the general increase in oil well maintenance activity caused by continued higher oil and gas prices and more aggressive marketing of our fleet in areas of increasing activity. The increasing rate per hour reflects minor price increases implemented by us combined with a changing mix of activity.

        Fluid services revenues increased 54.0% to $52.8 million in 2003 from $34.2 million in 2002. We monitor fluid services revenues by our average revenues per truck. During 2003, our average revenues per fluid service truck totaled $212,000, versus average revenues of $174,000 per truck during the same period in 2002.

        Drilling and completion service revenues were $14.8 million during 2003 as compared to $0.7 million during 2002. Our significant entry into this segment occurred in late January 2003 with the acquisition of New Force and other acquisitions occurring during the fourth quarter of 2003. The increase in revenues between periods is primarily the result of the acquisitions.

        Well site construction service revenues were $9.2 million in 2003 as we entered this segment in the fourth quarter of 2003 with our acquisition of FESCO and PWI.

        Operating Expenses.    Operating expenses, which primarily consist of labor, maintenance and fuel, increased 57.4% to $123.6 million in 2003 from $78.9 million in 2002 as a result of operating additional rigs and trucks, as well as higher utilization of our equipment. Operating expenses decreased to 68.4% of revenue for 2003 from 72.5% in 2002, as fixed operating costs such as field supervision, insurance and vehicle expenses were spread over a higher revenue base. We also benefited from a favorable mix of businesses that we acquired, as the majority of the assets acquired in 2003 were fluid services and well site construction services assets. The fluid services line typically produces a higher operating margin than the well servicing segment.

        Operating expenses for the well servicing segment increased 31.7% to $73.2 million in 2003 as compared to $55.6 million in 2002 due to increased activity. Operating margins increased to 29.6% of revenues in 2003 compared to 24.7% during 2002, as higher activity levels contributed to lower unit costs per rig hour.

        Operating expenses for the fluid services segment increased 56.4% to $34.4 million in 2003 from $22.7 million in 2002. Operating margins for the fluid services segment increased to 34.8% in 2003 from 33.6% in 2002. This was the result of more drilling-related activity, which generally is higher margin activity, as well as overall higher utilization of our equipment, offset partially by higher fuel costs and rental costs.

-45-

        Operating expenses for the drilling and completion services segment were $9.4 million in 2003 as compared to $0.5 million in 2002, and the operating margin for this segment was 36.5% for 2003. Our significant entry into this segment occurred in late January 2003 with the acquisition of New Force, and other equipment additions and acquisitions occurring throughout the remainder of 2003.

        Operating expenses for our well site construction services segment in 2003 were $6.6 million, and the operating margin for this segment was 28.2% for this period. We entered this segment in October 2003, as previously discussed.

        General and Administrative Expenses.    General and administrative expenses increased 67.2% to $21.9 million in 2003 from $13.1 million in 2002, which included $205,000 and $105,000 of stock-based compensation expense in 2003 and 2002, respectively. The increase primarily reflects higher salary and office expenses related to the expansion of our business into the Rocky Mountains and the Gulf Coast region in the fourth quarter of 2003, the addition of our North Texas pressure pumping business (in our drilling and completion segment), and additional management and administrative personnel to support and manage new service locations.

        Depreciation and Amortization Expenses.    Depreciation and amortization expenses were $18.2 million for 2003 and $13.4 for 2002, reflecting the increase in the size and investment in our asset base. We invested $80.7 million for acquisitions in 2003 and an additional $23.5 million for capital expenditures in 2003 (excluding capital leases).

        Interest Expense.    Interest expense increased 8.3% to $5.2 million in 2003 from $4.8 million in 2002. The increase was due to approximately $100 million increase in long-term debt which was primarily used in connection with our acquisitions, most of which was added in the fourth quarter of 2003, and capital expenditures for property and equipment. Our 2003 interest expense was favorably impacted by the reduced interest rate we received in our January 2003 refinancing, as well as an additional reduction in interest rates in our October 2003 refinancing. As part of the refinancings in January 2003 and October 2003, we recognized a loss of $5.2 million from the early extinguishment of debt. See "— Liquidity and Capital Resources."

        Income Tax Expense (Benefit).    Income taxes changed to a $3.0 million expense in 2003 from a $419,000 benefit in 2002. The change was due to improved profitability in 2003. The effective tax rate in 2003 was approximately 46.7% as compared to 24.4% in 2002. The increase in the effective tax rate was due primarily to an adjustment of the tax rate in 2003 to a 35% tax rate and associated effects on our deferred tax liability.

        Discontinued Operations.    As part of the FESCO acquisition in October 2003, we acquired certain fluid services assets in Alaska that, prior to completing the acquisition, we decided to sell. Accordingly, these assets were treated as held for sale during 2003 and therefore the financial results for the assets were reflected as discontinued operations.

        Cumulative Effect of Accounting Change.    As of January 1, 2003, we adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligation" ("SFAS No. 143"). SFAS No. 143 requires us to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets and capitalize on equal amount as a cost of the asset depreciating it over the life of the asset. As a result of this adoption we recorded an expense, net of tax of approximately $151,000.

        Net Income (Loss).    Our net income increased to $3.3 million in 2003 from a net loss of $1.3 million in 2002. This improvement was due primarily to our substantial increase in revenue and margins in 2003 compared to 2002, partially offset by the write-off of approximately $5.2 million loss

-46-

on the early extinguishment of debt due to the two refinancings of our indebtedness in 2003. As part of our October 2003 refinancing, all of our outstanding mandatorily redeemable preferred stock was converted to common stock. Before this conversion, we incurred accrued dividends and accretion of preferred stock discount of $1.4 million in 2002 and $2.1 million in 2003. These amounts reduced our net income available to common stockholders to a net loss of $2.7 million in 2002 and net income of $1.3 million in 2003.

Liquidity and Capital Resources

        Currently, our primary capital resources are net cash flows from our operations, utilization of capital leases as allowed under our credit facility (up to a maximum of $30 million, approximately $16 million of which were outstanding at March 31, 2005), and availability under our credit facility, of which approximately $41.7 million was available at March 31, 2005. We have utilized, and expect to utilize in the future, bank and capital lease financing and sales of equity to obtain capital resources. When appropriate, we will consider public or private debt and equity offerings and non-recourse transactions to meet our liquidity needs.

Net Cash Provided by Operating Activities

        Cash flow from operating activities was $16.7 million during the first quarter of 2005 as compared to $1.8 million during the same period in 2004, and was $46.5 million in 2004 as compared to $29.8 million in 2003 and $17.0 million in 2002. The increase in operating cash flows during the first quarter of 2005 over the same period in 2004 was primarily due to improvements in the operating margins and utilization of our equipment. The increase in operating cash flows in 2004 over 2003 was primarily due to (1) improvements in the operating margins and utilization of our equipment and (2) our acquisitions in 2003. The 2003 operating cash flows, as compared to 2002, increased as a result of our acquisitions, and an increase in our operating margins and utilization. For 2004 and 2005, these favorable trends were negatively impacted by an increase in cash required to satisfy our working capital requirements, particularly the increase in accounts receivable.

Capital Expenditures

        Capital expenditures are the main component of our investing activities. Cash capital expenditures for the first quarter of 2005 were $20.0 million as compared to $10.1 million for the same period in 2004, and were $73.6 million in 2004 as compared to $84.9 million in 2003 and $45.3 million in 2002. During the first quarter of 2005, the majority of our capital expenditures were for the expansion of our fleet. In 2004, the majority of the capital expenditures were for the expansion of our fleet, whereas in 2003 the majority were for acquisitions. In 2003, we issued 3,650,000 shares of common stock as part of the FESCO acquisition which added a non-cash cost to acquisitions of $18.8 million and is in addition to the $84.9 million spent in 2003. In 2003, we experienced a significant increase in our acquisition activity as compared to the previous periods which allowed us to expand our services and regions where we operate. We also added assets through our capital lease program of approximately $1.0 million during the first quarter of 2005, and $12.8 million, $10.8 million and $2.4 million in 2004, 2003 and 2002, respectively.

        For 2005, we currently have budgeted approximately $57 million in capital expenditures, none of which is planned for acquisitions. We do not budget acquisitions in the normal course of business, but we believe that we may spend a significant amount for acquisitions in 2005. The $57 million of capital expenditures planned for property and equipment is primarily for (1) purchase of additional equipment to expand our services in certain regions, (2) continued refurbishment of our well servicing rigs and (3) replacement of existing equipment. During the first quarter of 2005, we spent an aggregate of $16.1 million on these capital expenditures, including $3.9 million for

-47-

acquisitions. As of March 31, 2005, we had executed letters of intent for acquisitions providing for an aggregate cash purchase price, including potential future payments, of approximately $7.5 million, all of which were completed during April and May of 2005.

        We regularly engage in discussions related to potential acquisitions related to the well services industry. At present, we have not entered into any agreement, commitment or understanding with respect to any significant acquisition.

Capital Resources and Financing

        Our current primary capital resources are cash flow from our operations, the ability to enter into capital leases of up to an additional $14 million at March 31, 2005, the availability under our credit facility of $41.7 million at March 31, 2005 and a cash balance of $14.1 million at March 31, 2005. In 2004, we financed activities in excess of cash flow from operations primarily through the use of bank debt and capital loans. During 2003 and 2002, we utilized bank debt and the issuance of equity for cash as consideration for acquisitions.

        We have significant contractual obligations in the future that will require capital resources. Our primary contractual obligations are (1) our long-term debt, (2) our capital leases, (3) our operating leases, (4) our rig purchase obligations, (5) our asset retirement obligations and (6) our other long-term liabilities. The following table outlines our contractual obligations as of December 31, 2004 (in thousands):

		Obligations Due in Periods Ended December 31,
Contractual Obligations
		Total		2005		2006-2007		2008-2009		Thereafter
Long-term debt (excluding capital leases)		$	166,500	$	7,000	$	21,000	$	138,500	$	—
Capital leases			15,976		4,561		8,159		3,256		—
Operating leases			3,191		818		1,017		641		715
Rig purchase obligations			13,000		13,000		—		—		—
Asset retirement obligations			473		—		—		—		473
Other long-term liabilities			522		379		135		8		—
	Total	$	199,662	$	25,758	$	30,311	$	142,405	$	1,188

        Our long-term debt, excluding capital leases, consists primarily of term loan indebtedness outstanding under our senior credit facility. Our capital leases relate primarily to light-duty and heavy-duty vehicles and trailers. Our operating leases relate primarily to real estate. Our rig purchase obligations relate to our commitments to purchase new well servicing rigs.

        The table above does not reflect any additional payments that we may be required to make pursuant to contingent earn-out agreements that are associated with certain acquisitions. At December 31, 2004, we had a maximum potential obligation of $5.7 million related to the contingent earn-out agreements. See note 3 of the notes to our historical consolidated financial statements for additional detail.

        The table above also does not reflect $8.3 million of outstanding standby letters of credit issued under our revolving line of credit that expire during 2005. At March 31, 2005, of the $50.0 million in financial commitments under the revolving line of credit under our senior credit facility, there was only $41.7 million of available capacity due to the $8.3 million of outstanding standby letters of credit. In the normal course of business, we have performance obligations which are supported by surety bonds and letters of credit. These obligations primarily cover various

-48-

reclamation and plugging obligations related to our operations, and collateral for future workers compensation and liability retained losses.

        Our ability to access additional sources of financing will be dependent on our operating cash flows and demand for our services, which could be negatively impacted due to the extreme volatility of commodity prices.

Credit Facilities

2004 Credit Facility

        On December 21, 2004, we amended and restated our credit facility with a syndicate of lenders ("2004 Credit Facility") which increased aggregate commitments to us from $170 million to $220 million. The 2004 Credit Facility provides for a $170 million Term B Loan ("2004 Term B Loan") and a $50 million revolving line of credit ("Revolver"). The commitment under the Revolver allows for (1) the borrowing of funds, (2) the issuance of up to $20 million of letters of credit and (3) $2.5 million of swing-line loans. The amounts outstanding under the 2004 Term B Loan require quarterly amortization at various amounts during each quarter with all amounts outstanding being due and payable in full on October 3, 2009. All the outstanding amounts under the Revolver are due and payable on October 3, 2008. The 2004 Credit Facility is secured by substantially all of our tangible and intangible assets. We incurred approximately $0.8 million in debt issuance costs in obtaining the 2004 Credit Facility.

        At our option, borrowings under the 2004 Term B Loan bear interest at either (1) the "Alternative Base Rate" (i.e., the higher of the bank's prime rate or the federal funds rate plus .50% per year) plus 2.0% or (2) the LIBOR rate plus 3.0%. At March 31, 2005, our weighted average interest rate on the 2004 Term B Loan was 5.55%. At March 31, 2005, $165.1 million was outstanding under the 2004 Term B Loan, including approximately $384,000 of accrued interest.

        At our option, borrowings under the Revolver bear interest at either (1) the Alternative Base Rate plus a margin ranging from 1.50% to 2.00% or (2) the LIBOR rate plus a margin ranging from 2.50% to 3.00%. The margins vary depending on our leverage ratio. At March 31, 2005, our margin on Alternative Base Rates and LIBOR tranches was 2.00% and 3.00%, respectively. Fees on the letters of credit are due quarterly on the outstanding amount of the letters of credit at a rate ranging from 2.50% to 3.00% for participation fees and .125% for fronting fees. A commitment fee is due quarterly on the available borrowings under the Revolver at rates ranging from .375% to .50%.

        At March 31, 2005, we had outstanding $8.3 million of letters of credit under the Revolver and no amounts outstanding in swing-line loans under the Revolver. At March 31, 2005, we had availability under the Revolver of $41.7 million and no principal balance outstanding.

        Pursuant to the 2004 Credit Facility, we must apply proceeds from certain specified events to reduce principal outstanding under the Revolver, including:

•

assets sales greater than $1.0 million individually or $5.0 million in the aggregate on an annual basis; and



•

50% of the proceeds from any equity offering.

        The 2004 Credit Facility required us to enter into an interest rate hedge, acceptable to the lenders, for at least two years on at least $65 million of our then-outstanding indebtedness. See the notes to our historical consolidated financial statements discussing the interest rate hedge. Repayments on the Term B Loan may not be reborrowed.

-49-

        The 2004 Credit Facility contains various restrictive covenants and compliance requirements, including the following:

•

limitations on the incurrence of additional indebtedness;



•

restrictions on mergers, sales or transfer of assets without the lenders' consent;



•

limitation on dividends and distributions; and



•

various financial covenants, including as of June 30, 2005:



•

a maximum leverage ratio of 3.25 to 1.00 reducing to 3.00 to 1.00,



•

a minimum fixed charge coverage ratio of 1.15 to 1.00, and



•

a minimum interest coverage ratio of 3.00 to 1.00.

        At March 31, 2005, we were in compliance with all covenants.

2003 Credit Facility

        In October 2003, we refinanced our 2003 Refinancing Facility by entering into a $170 million credit facility with a syndicate of lenders (the "2003 Credit Facility"). The interest rates and other terms were similar to our current 2004 Credit Facility, but it provided for a $140 million Term B loan and $30.0 million revolving line of credit, including $10.0 million of letters of credit. At the date the 2003 Credit Facility was refinanced by the 2004 Credit Facility, the outstanding principal balance was approximately $139 million. We incurred approximately $5.1 million in debt issuance costs in obtaining the 2003 Credit Facility.

2003 Refinancing Facility

        In January 2003, we refinanced our then-existing credit facilities by entering into a $62 million credit facility with a capital markets group for a combination of term and revolving loans, and a $22 million revolving line of credit with a bank (collectively, the "2003 Refinancing Facility"). The interest rates on the loans under the 2003 Refinancing Facility were tied to a variable index plus a margin. At the date the 2003 Refinancing Facility was terminated and refinanced by the 2003 Credit Facility, the outstanding principal balance was approximately $54 million. We incurred approximately $2.5 million in debt issuance costs in obtaining the 2003 Refinancing Facility.

Other Debt

        We have a variety of other capital leases and notes payable outstanding that are generally customary in our business. None of these debt instruments are individually significant.

Losses on Extinguishment of Debt

        In 2003, we recognized a loss on the early extinguishment of debt. We paid termination fees of approximately $1.7 million and wrote off unamortized debt issuance costs of approximately $3.5 million, which resulted in a loss of approximately $5.2 million. The 2003 Refinancing Facility was done (1) to provide for a facility which would better accommodate acquisitions and (2) to realize better interest rate margins and fees. The 2003 Credit Facility was primarily done to enable us to fund the significant acquisitions in the fourth quarter in 2003, which could not be economically negotiated under the facility related to the 2003 Refinancing Facility.

        In 2003, we adopted Statement of Financial Accounting Standards No. 145 "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS No. 145"). The provisions of SFAS No. 145, which are currently applicable to

-50-

us, rescind Statement No. 4, which required all gains and losses from extinguishment of debt to be aggregated and classified as an extraordinary item, and instead require that such gains and losses be reported in income from operations. We now record gains and losses from the extinguishment of debt in income from operations and have reclassified such gains and losses in the consolidated financial statements for 2002 to conform to the presentation in 2003.

Credit Rating Agencies

        We have received credit ratings of B1 from Moody's and B from Standard & Poor's for our long-term debt under the 2004 Credit Facility. None of our debt or other instruments is dependent upon our credit ratings. However, the credit ratings may affect our ability to obtain financing in the future.

Preferred Stock

        In October 2003, we converted our then-outstanding mandatorily redeemable preferred stock into shares of our common stock as part of our debt refinancing process.

Other Matters

Net Operating Losses

        We used all of our then-available net operating losses for federal income tax purposes when we completed a recapitalization in December 2000, which included a significant amount of debt forgiveness. In 2002, our profitability suffered and, when combined with a significant level of capital expenditures, we ended 2002 with a net operating loss, or NOL, of $12.2 million. In 2003, we returned to profitability, but we again made significant investments in existing equipment, additional equipment and acquisitions. Due to these events, we again reported a tax loss in 2003 and ended the year with a $27.1 million NOL, including $7.0 million that was included in the purchase of FESCO. As of December 31, 2004, we had approximately $55.9 million of NOL carryforward. Approximately $7.0 million of the NOL relates to the pre-acquisition period of FESCO, which is subject to an annual limitation of approximately $900,000. The carryforwards begin to expire in 2017. Accordingly, we have significant NOLs to shelter future taxable income, but our ability to utilize our NOLs may be limited by the alternative minimum tax, and the use of the NOL attributable to FESCO prior to its acquisition by us will be limited by the change of control that occurred at that time.

Recent Accounting Pronouncements

        In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 123R, "Share-Based Payment" ("SFAS No. 123R"). We will adopt the provisions of SFAS No. 123R on January 1, 2006 using the modified prospective application. Accordingly, we will recognize compensation expense for all newly granted awards and awards modified, repurchased, or canceled after January 1, 2006.

        Compensation cost for the unvested portion of awards that are outstanding as of January 1, 2006 will be recognized ratably over the remaining vesting period. The compensation cost for the unvested portion of awards will be based on the fair value at date of grant as calculated for our pro forma disclosure under SFAS No. 123. However, we will continue to account for any portion of awards outstanding on January 1, 2006 that were initially measured using the minimum value method under the intrinsic value method under APB No. 25. We will recognize compensation expense for awards under our Amended and Restated 2003 Incentive Plan (the "Incentive Plan") beginning on January 1, 2006.

-51-

        We estimate that the effect on net income and earnings per share in the periods following adoption of SFAS No. 123R will be consistent with our pro forma disclosure under SFAS No. 123, except that estimated forfeitures will be considered in the calculation of compensation expense under SFAS No. 123R. However, the actual effect on net income and earnings per share will vary depending upon the number of options granted in future years compared to prior years and the number of shares purchased under the Incentive Plan. Further, we have not yet determined the actual model we will use to calculate fair value.

Impact of Inflation on Operations

        Management is of the opinion that inflation has not had a significant impact on our business.

Quantitative and Qualitative Disclosures about Market Risk

        We are exposed to changes in interest rates as a result of our credit facility. We had a total of $166.5 million of indebtedness outstanding under our credit facility at December 31, 2004. The impact of a 1% increase in interest rates on this amount of debt would result in increased interest expense (excluding effects of our interest rate hedges) of approximately $1.7 million annually, or a decrease in net income of approximately $1.0 million. Our market risks at March 31, 2005 are similar to those disclosed for the year ended December 31, 2004.

        We do not hold or issue derivative instruments for trading purposes. We do, however, have an interest rate derivate instrument that has been formally designated as a cash flow hedge instrument. This instrument effectively converts the variable interest payments on $65 million of our 2004 Term B Loan into fixed interest payments.

        The table below provides scheduled principle payments and fair value information about our market-risk sensitive instruments as of December 31, 2004 (dollars in thousands):

	Expected Year of Maturity
	2005		2006		2007		2008		2009		Total		Fair Value
Debt
Variable rate	$	7,000	$	10,500	$	10,500	$	14,000	$	124,500	$	166,500	$	166,500
Average interest rate(1)

	Average Notional Amounts Outstanding(2)
	2005			2006			2007	2008	2009	Total			Fair Value
Interest Rate Derivatives
Variable to Fixed	$	65,000		$	26,356		$—	$—	$—	$	91,356		$	29
Average pay rate		3.03	%		3.03	%	—	—	—		3.03	%		N/A
Average received rate		3.25	%		4.00	%	—	—	—		3.63	%		N/A

(1)

At our option, borrowings under the Revolver bear interest at either the (a) the "Alternative Base Rate" (i.e. the higher of the bank's prime rate or the federal funds rate plus .5% per annum) plus a margin ranging from 1.5% to 2.0% or (b) the LIBOR rate plus a margin ranging from 2.5% to 3.0%. The margins vary depending on our leverage ratio. At December 31, 2004, our margin on Alternative Base Rates and LIBOR tranches was 2.0% and 3.0%, respectively.

(2)

The notional amounts of interest rate instruments do not represent amounts exchanged by the parties and, thus, are not a measure of our exposure to credit loss. The amounts exchanged are determined by reference to the notional amount and the other terms of the contract. The variable component of the interest rate derivative is based on the LIBOR rate using the forward yield curve as of June 21, 2005.

-52-

BUSINESS

General

        We provide a wide range of well site services to oil and gas drilling and producing companies, including well servicing, fluid services, drilling and completion services and well site construction services. These services are fundamental to establishing and maintaining the flow of oil and gas throughout the productive life of a well. Our broad range of services enables us to meet multiple needs of our customers at the well site. Our operations are managed regionally and are concentrated in the major United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Louisiana and in the Rocky Mountain states. We provide our services to a diverse group of over 1,000 oil and gas companies. We operate the third largest fleet of well servicing rigs (also commonly referred to as workover rigs) in the United States, representing over 10% of the overall available U.S. fleet, according to the Association of Energy Services Companies.

        We currently conduct our operations through the following four business segments:

•

Well Servicing.  Our well servicing segment (46% of our 2004 revenues) currently operates our fleet of over 300 well servicing rigs and related equipment. This business segment encompasses a full range of services performed with a mobile well servicing rig, including the installation and removal of downhole equipment and elimination of obstructions in the well bore to facilitate the flow of oil and gas. These services are performed to establish, maintain and improve production throughout the productive life of an oil and gas well and to plug and abandon a well at the end of its productive life. Our well servicing equipment and capabilities are essential to facilitate most other services performed on a well.



•

Fluid Services.  Our fluid services segment (32% of our 2004 revenues) currently utilizes our fleet of over 400 fluid services trucks and related assets, including specialized tank trucks, storage tanks, water wells, disposal facilities and related equipment. These assets provide, transport, store and dispose of a variety of fluids. These services are required in most workover, drilling and completion projects and are routinely used in daily producing well operations.



•

Drilling and Completion Services.  Our drilling and completion services segment (9% of our 2004 revenues) currently operates our fleet of over 30 pressure pumping units, 22 air compressor packages specially configured for underbalanced drilling operations and ten cased-hole wireline units. These services are designed to initiate or stimulate oil and gas production. The largest portion of this business consists of pressure pumping services focused on cementing, acidizing and fracturing services in niche markets.



•

Well Site Construction Services.  Our well site construction services segment (13% of our 2004 revenues) currently utilizes our fleet of over 200 operated power units, which include dozers, trenchers, motor graders, backhoes and other heavy equipment. We utilize these assets primarily to provide services for the construction and maintenance of oil and gas production infrastructure, such as preparing and maintaining access roads and well locations, installation of small diameter gathering lines and pipelines and construction of temporary foundations to support drilling rigs.

Our Competitive Strengths

        We believe that the following competitive strengths currently position us well within our industry:

        Market Leadership Position.    We maintain a significant market share for our well servicing operations in our core operating areas throughout Texas and a growing market share in the other

-53-

markets that we serve. Our fleet of over 300 well servicing rigs represents the third largest fleet in the United States, and our goal is to be one of the top two providers of well site services in each of our core operating areas. Our market position allows us to expand the range of services performed on a well throughout its life, such as completion, maintenance, workover and plugging and abandonment services.

        Modern and Active Fleet.    We believe that our well servicing rig fleet is among the most modern in the industry. We believe over 95% of the active U.S. well servicing rig fleet was built prior to 1985. Approximately 56 of our rigs are either 2000 model year or newer, or have undergone major refurbishments during the last four years. As of June 30, 2005, we have taken delivery of 19 newbuild well servicing rigs since October 2004 as part of a 54-rig newbuild commitment. The remainder of these newbuilds will be delivered prior to the end of May 2006. In addition to our regular maintenance program, we have an established program to routinely monitor and evaluate the condition of our fleet. We selectively refurbish rigs and other assets to maintain the quality of our service and to provide a safe work environment for our personnel and have made major refurbishments on 44 of our rigs since the beginning of 2001. We have an active fleet, with approximately 96% of our fleet active or available for work and the remainder awaiting refurbishment at March 31, 2005. We believe only approximately 62% of the well servicing rig fleet of our two major competitors are active and available for work. During 2003 and 2004, we obtained independent reviews and evaluations of substantially all of our assets, which confirmed the location and condition of these assets.

        Extensive Domestic Footprint in the Most Prolific Basins.    Our operations are concentrated in the major United States onshore oil and gas producing regions in Texas, New Mexico, Oklahoma, Louisiana and the Rocky Mountain states. We operate in states that accounted for approximately 60% of the more than 900,000 existing onshore oil and gas wells in the 48 contiguous states and approximately 70% of onshore oil and gas production in 2004. We believe that our operations are located in the most attractive U.S. well services markets, as we currently focus our operations on onshore domestic oil and gas production areas that include both the highest concentration of existing oil and gas production activities and the largest prospective acreage for new drilling activity. This extensive footprint allows us to offer our suite of services to more than 1,000 customers who are active in those areas and allows us to redeploy equipment between markets as activity shifts.

        Diversified Service Offering for Further Revenue Growth.    We believe our range of well site services provides us a competitive advantage over smaller companies that typically offer fewer services. Our experience, equipment and network of 65 service locations position us to market our full range of well site services to our existing customers. By utilizing a wider range of our services, our customers can use fewer service providers, which enables them to reduce their administrative costs and simplify their logistics. Furthermore, offering a broader range of services allows us to capitalize on our existing customer base and management structure to grow within existing markets, generate more business from existing customers, and increase our operating profits as we spread our overhead costs over a larger revenue base.

        Decentralized Management with Strong Corporate Infrastructure.    Our corporate group is responsible for maintaining a unified infrastructure to support our diversified operations through standardized financial and accounting, safety, environmental and maintenance processes and controls. Below our corporate level, we operate a decentralized operational organization in which field level managers are largely responsible for all aspects of their area's performance. Our eight regional managers are responsible for their regional operations, including asset management, cost control, policy compliance and training and other aspects of quality control. With an average of 28 years of industry experience, each regional manager has extensive knowledge of the customer base, job requirements and working conditions in each local market. Our 65 area managers are

-54-

directly responsible for customer relationships, personnel management, accident prevention and equipment maintenance, the key drivers of our operating profitability. This management structure allows us to monitor operating performance on a daily basis, maintain financial, accounting and asset management controls, integrate acquisitions, prepare timely financial reports and manage contractual risk.

Our Business Strategy

        We intend to increase our shareholder value by pursuing the following strategies:

        Establish and Maintain Leadership Position in Core Operating Areas.    We strive to establish and maintain market leadership positions within our core operating areas. To achieve this goal, we maintain close customer relationships, seek to expand the breadth of our services and offer high quality services and equipment that meet the scope of customer specifications and requirements. In addition, our leadership position in our core operating areas facilitates employee retention and attraction, a key factor for success in our business. Our leadership positions in our core operating areas also provide us with brand recognition that we intend to utilize in creating leading positions in new operating areas.

        Expand Within Our Regional Markets.    We intend to continue strengthening our presence within our existing geographic footprint through internal growth and acquisitions of businesses with strong customer relationships, well-maintained equipment and experienced and skilled personnel. Our larger competitors have not actively pursued acquisitions of small- to mid-size regional businesses or assets in recent years due to the small relative scale and financial impact of these potential acquisitions. In contrast, we have successfully pursued these types of acquisitions, which remain attractive to us and make a meaningful impact on our overall operations. We typically enter into new markets through the acquisition of businesses with strong management teams that will allow us to expand within these markets. Management of acquired companies often remain with us and retain key positions within our organization, which enhances our attractiveness as an acquisition partner. We have a record of successfully implementing this strategy, as demonstrated by our 2003 acquisitions of FESCO Holdings, Inc., PWI Inc. and New Force Energy Services, Inc., which expanded our exposure to the active drilling environment of the Rocky Mountain states, the active well services and drilling markets along the Gulf Coast and the pressure pumping business, respectively. Additionally, in December 2004 we expanded our presence along the Gulf Coast with the acquisition of three inland barges, two of which have been refurbished and were available for service in the second quarter of 2005.

        Develop Additional Service Offerings Within the Well Servicing Market.    We intend to continue broadening the portfolio of services we provide to our clients by leveraging our well servicing infrastructure. A customer typically begins a new maintenance or workover project by securing access to a well servicing rig, which generally stays on site for the duration of the project. As a result, our rigs are often the first equipment to arrive at the well site and typically the last to leave, providing us the opportunity to offer our customers other complementary services. We believe the fragmented nature of the well servicing market creates an opportunity to sell more services to our core customers and to expand our total service offering within each of our markets. We have expanded our suite of services available to our customers and increased our opportunities to cross-sell new services to our core well servicing customers through recent acquisitions and internal growth. We expect to continue to develop or selectively acquire capabilities to provide additional services to expand and further strengthen our customer relationships.

        Pursue Growth Through Selective Capital Deployment.    We intend to continue growing our business through selective acquisitions, continuing a newbuild program and/or upgrading our existing assets. Our capital investment decisions are determined by an analysis of the projected

-55-

return on capital employed of each of those alternatives. Acquisitions are evaluated for "fit" with our area and regional operations management and thoroughly reviewed by corporate level financial, equipment, safety and environmental specialists to ensure consideration is given to identified risks. We also evaluate the cost to acquire existing assets from a third party, the capital required to build new equipment and the point in the oil and gas commodity price cycle. Based on these factors, we make capital investment decisions that we believe will support our long-term growth strategy, which decisions may involve a combination of asset acquisitions and the purchase of new equipment. During 2005, we have completed six separate acquisitions for an aggregate purchase price of $11.1 million, including future potential payments, and have taken delivery of 14 new well servicing rigs as of June 30, 2005.

General Industry Overview

        Demand for services offered by our industry is a function of our customers' willingness to make capital expenditures to explore for, develop and produce hydrocarbons in the U.S., which in turn is affected by current and expected levels of oil and gas prices. The following industry statistics illustrate the growing spending dynamic in the U.S. oil and gas sector:

•

As oil and gas prices have rebounded beginning in early 1999, total expenditures for all U.S. exploration and production activities (including offshore activities that we do not serve) have increased to an estimated $56 billion in 2003 and $62 billion in 2004 and are expected to reach $66 billion in 2005, according to Oil & Gas Journal in April 2005.



•

A survey of 16 U.S. major integrated and 102 independent oil and gas companies by World Oil Magazine projects the U.S. drilling activity in 2005 to be skewed more towards independent players, as the number of wells drilled by the major producers in 2005 is expected to increase 19.4%, whereas independent companies, which represent over 90% of our revenue, are expected to drill almost 50% more wells in 2005 than in 2004. This trend is primarily driven by the increased acquisitions of proved oil and gas properties by independent producers. When these types of properties are acquired, purchasers typically intensify drilling, workover and well maintenance activities to accelerate production from the newly acquired reserves.

        Increased spending by oil and gas operators is generally driven by oil and gas prices that have rebounded since 1999. The table below sets forth average daily closing prices for the Cushing WTI Spot Oil Price and the Energy Information Agency average wellhead price for natural gas since 1999:

Period	Cushing WTI Spot Oil Price ($/bbl)		Average Wellhead Price Natural Gas ($/mcf)
1/1/99 - 12/31/99	$	19.34	$	2.19
1/1/00 - 12/31/00		30.38		3.69
1/1/01 - 12/31/01		25.97		4.01
1/1/02 - 12/31/02		26.18		2.95
1/1/03 - 12/31/03		31.08		4.98
1/1/04 - 12/31/04		41.51		5.49
1/1/05 - 6/30/05		51.54		5.95

Source: U.S. Department of Energy.

        Increased expenditures for exploration and production activities generally involve the deployment of more drilling and well servicing rigs, which often serves as an indicator of demand for our services. Rising oil and gas prices since early 1999 and the corresponding increase in

-56-

onshore oil exploration and production spending have led to expanded drilling and well service activity, as the U.S. land-based drilling rig count and U.S. land-based workover rig count increased approximately 36% and 13%, respectively, from year-end 2002 to year-end 2003, and 11% and 10%, respectively, from year-end 2003 to year-end 2004, according to Baker Hughes.

        Exploration and production spending is generally categorized as either an operating expenditure or a capital expenditure. Activities designed to add hydrocarbon reserves are classified as capital expenditures, while those associated with maintaining or accelerating production are categorized as operating expenditures.

        Capital expenditure spending tends to be relatively sensitive to volatility in oil or gas prices because project decisions are tied to a return on investment spanning a number of years. As such, capital expenditure economics often require the use of commodity price forecasts which may prove inaccurate in the short amount of time required to plan and execute a capital expenditure project (such as the drilling of a deep well). When commodity prices are depressed for even a short period of time, capital expenditure projects are routinely deferred until prices return to an acceptable level.

        In contrast, both mandatory and discretionary operating expenditures are substantially more stable than exploration and drilling expenditures. Mandatory operating expenditure projects involve activities that cannot be avoided in the short term, such as regulatory compliance, safety, contractual obligations and projects to maintain the well and related infrastructure in operating condition (for example, repairs to a central tank battery, downhole pump, saltwater disposal system or gathering system). Discretionary operating expenditure projects may not be critical to the short-term viability of a lease or field but these projects are relatively insensitive to commodity price volatility. Discretionary operating expenditure work is evaluated according to a simple short-term payout criterion which is far less dependent on commodity price forecasts.

        Our business is influenced substantially by both operating and capital expenditures by oil and gas companies. Because existing oil and gas wells require ongoing spending to maintain production, expenditures by oil and gas companies for the maintenance of existing wells are relatively stable and predictable compared to exploration and drilling expenditures. In contrast, capital expenditures by oil and gas companies for drilling are more directly influenced by current and expected oil and gas prices and generally reflect the volatility of commodity prices.

Overview of Our Segments and Services

Well Servicing Segment

        Our well servicing segment encompasses a full range of services performed with a mobile well servicing rig, also commonly referred to as a workover rig, and ancillary equipment. Our rigs and personnel provide the means for hoisting equipment and tools into and out of the well bore, and our well servicing equipment and capabilities are essential to facilitate most other services performed on a well. Our well servicing segment services, which are performed to maintain and improve production throughout the productive life of an oil and gas well, include:

•

maintenance work involving removal, repair and replacement of down-hole equipment and returning the well to production after these operations are completed;



•

hoisting tools and equipment required by the operation into and out of the well, or removing equipment from the well bore, to facilitate specialized production enhancement and well repair operations performed by other oilfield service companies; and



•

plugging and abandonment services when a well has reached the end of its productive life.

        Regardless of the type of work being performed on the well, our personnel and rigs are often the first to arrive at the well site and the last to leave. We generally charge our customers an hourly rate for these services, which rate varies based on a number of considerations including market conditions in each region, the type of rig and ancillary equipment required, and the necessary personnel.

-57-

        Our fleet includes 298 well service rigs as of March 31, 2005, including 11 newbuilds since October 2004 and 42 rebuilds since the beginning of 2001. We operate from 65 facilities in Texas, Wyoming, Oklahoma, North Dakota, New Mexico, Louisiana, Colorado and Montana, most of which are used jointly for our business segments. Our rigs are mobile units that generally operate within a radius of approximately 75 to 100 miles from their respective bases. Prior to December 2004, our well servicing segment consisted entirely of land-based equipment. During December 2004, we acquired three inland barges, two of which are equipped with rigs, have been refurbished and are expected to be available for service in the second quarter of 2005. Inland barges are used to service wells in shallow water marine environments, such as coastal marshes and bays.

        The following table sets forth the location, characteristics and number of the well servicing rigs that we operated at March 31, 2005. We categorize our rig fleet by the rated capacity of the mast, which indicates the maximum weight that the rig is capable of lifting. This capability is the limiting factor in our ability to provide services. These figures do not include 43 new well servicing rigs that we have contracted for delivery during April 2005 through May 2006 as part of a 54-rig commitment:

			Operating Division
Rig Type		Rated Capacity	Permian Basin	North Texas	South Texas	Ark-La- Tex	Mid- Continent	Northern Rockies	Southern Rockies	Stacked	Houma Lou.	Total
Swab		N/A	2	1	1	8	2	0	0	0	0	14
Light Duty		£90 tons	7	25	2	0	1	1	0	2	0	38
Medium Duty		>90; <125 tons	88	18	30	13	17	9	6	5	0	186
Heavy Duty		³125 tons	27	0	4	6	5	4	3	4	0	53
24-Hour		³125 tons	1	0	3	0	0	0	1	0	0	5
Inland Barge		³125 tons	0	0	0	0	0	0	0	0	2	2
	Total		125	44	40	27	25	14	10	11	2	298

        Management currently estimates that there are approximately 3,500 onshore well servicing rigs currently in the U.S., owned by an estimated 125 contractors, and that the actual number that are actively marketed and operable without major capital expenditures may be as much as 20% lower than this estimate. Based on information from U.S. contractors reporting their utilization to Weatherford-AESC, there were 2,477 well servicing rigs working in June 2005. This figure represents a projected utilization rate of 90% for the available fleet that are operable without major capital expenditures.

        According to the Guiberson Well Service Rig Count, by 1982 substantial new rig construction increased the total well servicing rig fleet to a total of 8,063 well servicing rigs operating in the United States owned by a large number of small companies, several multi-regional contractors and a few large national contractors. The largest well servicing contractor at that time had less than 500 rigs, or less than 6% of the total number of operating rigs. Due to increased competition and lower day rates, the domestic well servicing fleet has declined substantially over the last 20 years and has experienced considerable consolidation that has affected companies of all sizes, including the consolidation of several larger regional companies. Specifically, the well servicing segment of our industry has consolidated from nine large competitors (with 50 or more well servicing rigs) ten years ago to four today. The excess capacity of rigs that has existed in the industry since the early 1980's has also been reduced due to the lack of new rig construction, retirements due to mechanical problems, casualties, exports to foreign markets and, to some extent, cannibalization efforts by rig operators, wherein parts are stripped from idle rigs to outfit refurbishments on an active rig fleet.

        Based on the most recent publicly available information, our two largest competitors own a combined 2,234 rigs of which 1,349 are operated and 885 are stacked. These two competitors' total rigs represent approximately 64% of the industry's total fleet. We have the third largest fleet with

-58-

over 300 rigs, or over 10% of the overall available U.S. industry's fleet. Due to the fragmented nature of the market, we believe only one company other than us and our two larger competitors owns more than 50 rigs (with a total of only 124 rigs) and a total of an estimated 120 companies own the approximately 900 estimated remaining well servicing rigs, or approximately 26% of the industry's total fleet.

        Maintenance.    Regular maintenance is generally required throughout the life of a well to sustain optimal levels of oil and gas production. We believe regular maintenance comprises the largest portion of our work in this business segment. We provide well service rigs, equipment and crews for these maintenance services. Maintenance services are often performed on a series of wells in proximity to each other. These services consist of routine mechanical repairs necessary to maintain production, such as repairing inoperable pumping equipment in an oil well or replacing defective tubing in a gas well, and removing debris such as sand and paraffin from the well. Other services include pulling the rods, tubing, pumps and other downhole equipment out of the well bore to identify and repair a production problem. These downhole equipment failures are typically caused by the repetitive pumping action of an oil well. Corrosion, water cut, grade of oil, sand production and other factors can also result in frequent failures of downhole equipment.

        The need for maintenance activity does not directly depend on the level of drilling activity, although it is somewhat impacted by short-term fluctuations in oil and gas prices. Demand for our maintenance services is affected by changes in the total number of producing oil and gas wells in our geographic service areas. Accordingly, maintenance services generally experience relatively stable demand.

        Our regular well maintenance services involve relatively low cost, short duration jobs which are part of normal well operating costs. Demand for well maintenance is driven primarily by the production requirements of the local oil or gas fields and, to a lesser degree, the actual prices received for oil and gas. Well operators cannot delay all maintenance work without a significant impact on production. Operators may, however, choose to temporarily shut in producing wells when oil or gas prices are too low to justify additional expenditures, including maintenance.

        Workover.    In addition to periodic maintenance, producing oil and gas wells occasionally require major repairs or modifications called workovers, which are typically more complex and more time consuming than maintenance operations. Workover services include extensions of existing wells to drain new formations either through perforating the well casing to expose additional productive zones not previously produced, deepening well bores to new zones or the drilling of lateral well bores to improve reservoir drainage patterns. Our workover rigs are also used to convert former producing wells to injection wells through which water or carbon dioxide is then pumped into the formation for enhanced oil recovery operations. Workovers also include major subsurface repairs such as repair or replacement of well casing, recovery or replacement of tubing and removal of foreign objects from the well bore. These extensive workover operations are normally performed by a workover rig with additional specialized auxiliary equipment, which may include rotary drilling equipment, mud pumps, mud tanks and fishing tools, depending upon the particular type of workover operation. Most of our well servicing rigs are designed to perform complex workover operations. A workover may require a few days to several weeks and generally requires additional auxiliary equipment. The demand for workover services is sensitive to oil and gas producers' intermediate and long-term expectations for oil and gas prices. As oil and gas prices increase, the level of workover activity tends to increase as oil and gas producers seek to increase output by enhancing the efficiency of their wells.

        New Well Completion.    New well completion services involve the preparation of newly drilled wells for production. The completion process may involve selectively perforating the well casing in the productive zones to allow oil or gas to flow into the well bore, stimulating and testing these

-59-

zones and installing the production string and other downhole equipment. We provide well service rigs to assist in this completion process. Newly drilled wells are frequently completed by well servicing rigs to minimize the use of higher cost drilling rigs in the completion process. The completion process typically requires a few days to several weeks, depending on the nature and type of the completion, and generally requires additional auxiliary equipment. Accordingly, completion services require less well-to-well mobilization of equipment and generally provide higher operating margins than regular maintenance work. The demand for completion services is directly related to drilling activity levels, which are sensitive to expectations relating to and changes in oil and gas prices.

        Plugging and Abandonment.    Well servicing rigs are also used in the process of permanently closing oil and gas wells no longer capable of producing in economic quantities. Plugging and abandonment work can be performed with a well servicing rig along with wireline and cementing equipment; however, this service is typically provided by companies that specialize in plugging and abandonment work. Many well operators bid this work on a "turnkey" basis, requiring the service company to perform the entire job, including the sale or disposal of equipment salvaged from the well as part of the compensation received, and complying with state regulatory requirements. Plugging and abandonment work can provide favorable operating margins and is less sensitive to oil and gas pricing than drilling and workover activity since well operators must plug a well in accordance with state regulations when it is no longer productive. We perform plugging and abandonment work throughout our core areas of operation in conjunction with equipment provided by other service companies.

Fluid Services Segment

        Our fluid services segment provides oilfield fluid supply, transportation and storage services. These services are required in most workover, drilling and completion projects and are routinely used in daily producing well operations. These services include:

•

transportation of fluids used in drilling and workover operations and of salt water produced as a by-product of oil and gas production;



•

sale and transportation of fresh and brine water used in drilling and workover activities;



•

rental of portable frac tanks and test tanks used to store fluids on well sites; and



•

operation of company-owned fresh water and brine source wells and of non-hazardous wastewater disposal wells.

        This segment utilizes our fleet of fluid services trucks and related assets, including specialized tank trucks, portable storage tanks, water wells, disposal facilities and related equipment. The following table sets forth the type, number and location of the fluid services equipment that we operated at March 31, 2005:

	Operating Division
	Northern Rockies	Permian Basin	Ark-La- Tex	Gulf Coast	South Texas	North Texas	Mid- Continent	Southern Rockies	Total
Fluid Services Trucks	75	117	70	61	69	15	16	—	423
Salt Water Disposal Wells	—	8	7	2	4	2	3	—	26
Fresh/Brine Water Stations	—	28	—	—	2	—	—	—	30
Fluid Storage Tanks	210	255	267	184	144	20	52	—	1,132

        Requirements for minor or incidental fluid services are usually purchased on a "call out" basis and charged according to a published schedule of rates. Larger projects, such as servicing the requirements of a multi-well drilling program or frac program, generally involve a bidding process. We compete for services both on a call out basis and for multi-well contract projects.

-60-

        We provide a full array of fluid sales, transportation, storage and disposal services required on most workover, drilling and completion projects. Our breadth of capabilities in this business segment provides us with a competitive advantage as a one-stop source for our customers. Many of our smaller competitors in this segment can provide some, but not all, of the equipment and services required by customers, requiring them to use several companies to meet their requirements and increasing their administrative burden.

        As in our well servicing segment, our fluid services segment has a base level of business volume related to the regular maintenance of oil and gas wells. Most oil and gas fields produce residual salt water in conjunction with oil or gas. Fluid service trucks pick up this fluid from tank batteries at the well site and transport it to a salt water disposal well for injection. This regular maintenance work must be performed if a well is to remain active. Transportation and disposal of produced water is considered a low value service by most operators, and it is difficult for us to command a premium over rates charged by our competition. Our ability to out perform competitors in this segment depends on our ability to achieve significant economies relating to logistics — specifically, proximity between areas where salt water is produced and our company owned disposal wells. Ownership of disposal wells eliminates the need to pay third parties a fee for disposal. We operate salt water disposal wells in most of our markets.

        Workover, drilling and completion activities also provide the opportunity for higher operating margins from tank rentals and fluid sales. Drilling and workover jobs typically require fresh or brine water for drilling mud or circulating fluid used during the job. Completion and workover procedures often also require large volumes of water for fracturing operations, a process of stimulating a well hydraulically to increase production. Spent mud and flowback fluids are required to be transported from the well site to a disposal well.

        Competitors in the fluid services industry are mostly small, regionally focused companies. There are currently no companies that have a dominant position on a nationwide basis. The level of activity in the fluid services industry is comprised of a relatively stable demand for services related to the maintenance of producing wells and a highly variable demand for services used in the drilling and completion of new wells. As a result, the level of onshore drilling activity significantly affects the level of activity in the fluid services industry. While there are no industry-wide statistics, the Baker Hughes Land Drilling Rig Count is an indirect indication of demand for fluid services because it directly reflects the level of onshore drilling activity.

        Fluid Services and Support Trucks.    We currently own and operate over 400 fluid service tank trucks equipped with a fluid hauling capacity of up to 150 barrels. Each fluid service truck is equipped to pump fluids from or into wells, pits, tanks and other storage facilities. The majority of our fluid service trucks are also used to transport water to fill frac tanks on well locations, including frac tanks provided by us and others, to transport produced salt water to disposal wells, including injection wells owned and operated by us, and to transport drilling and completion fluids to and from well locations. In conjunction with the rental of our frac tanks, we generally use our fluid service trucks to transport water for use in fracturing operations. Following completion of fracturing operations, our fluid service trucks are used to transport the flowback produced as a result of the fracturing operations from the well site to disposal wells. Fluid services trucks are generally provided to oilfield operators within a 50-mile radius of our nearest yard. Our "hot oil" trucks are used to remove paraffin, a by-product of oil production in many fields, from the well bore. If paraffin is left untreated, it can inhibit a well's production. Our support trucks are used to move our fluid storage tanks and other equipment to and from the job sites of our customers.

        Salt Water Disposal Well Services.    We own disposal wells that are permitted to dispose of salt water and incidental non-hazardous oil and gas wastes. Our transport trucks frequently transport fluids that are disposed of in these salt water disposal wells. The disposal wells have injection

-61-

capacities ranging up to 3,500 barrels per day. Our salt water disposal wells are strategically located in close proximity to our customers' producing wells. Most oil and gas wells produce varying amounts of salt water throughout their productive lives. In the states in which we generate oil and gas wastes and salt water produced from oil and gas wells are required by law to be disposed of in authorized facilities, including permitted salt water disposal wells. Injection wells are licensed by state authorities and are completed in permeable formations below the fresh water table. We maintain separators at most of our disposal wells permitting us to salvage residual crude oil, which is later sold for our account.

        Fresh and Brine Water Stations.    Our network of fresh and brine water stations, particularly, in the Permian Basin, where surface water is generally not available, are used to supply water necessary for the drilling and completion of oil and gas wells. Our strategic locations, in combination with our other fluid handling services, give us a competitive advantage over other service providers in those areas in which these other companies cannot provide these services. These locations also allows us to expand our customer base.

        Fluid Storage Tanks.    Our fluid storage tanks can store up to 500 barrels of fluid and are used by oilfield operators to store various fluids at the well site, including water, brine, drilling mud and acid for frac jobs, flowback, temporary production and mud storage. We transport the tanks on our trucks to well locations that are usually within a 50-mile radius of our nearest yard. Frac tanks are used during all phases of the life of a producing well. We generally rent fluid services tanks at daily rates for a minimum of three days. A typical fracturing operation can be completed within four days using 10 to 40 frac tanks.

Drilling and Completion Services Segment

        Our drilling and completion services segment provides oil and gas operators with a package of services that include the following:

•

niche pressure pumping, such as cementing, acidizing, fracturing, coiled tubing and pressure testing;



•

cased-hole wireline services; and



•

underbalanced drilling in low pressure and fluid sensitive reservoirs.

        This segment currently operates 31 pressure pumping units to conduct a variety of services designed to stimulate oil and gas production or to enable cement slurry to be placed in or circulated within a well. As of March 31, 2005, we also operate 22 air compressor packages, including foam circulation units, for underbalanced drilling and seven wireline units for cased-hole measurement and pipe recovery services.

        Just as a well servicing rig is required to perform various operations over the life cycle of a well, there is a similar need for equipment capable of pumping fluids into the well under varying degrees of pressure. During the drilling and completion phase, the well bore is lined with large diameter steel pipe called casing. Casing is cemented into place by circulating slurry into the annulus created between the pipe and the rock wall of the well bore. The cement slurry is forced into the well by pressure pumping equipment located on the surface. Cementing services are also utilized over the life of a well to repair leaks in the casing, to close perforations that are no longer productive and ultimately to "plug" the well at the end of its productive life.

        A hydrocarbon reservoir is essentially an interval of rock that is saturated with oil and/or gas, usually in combination with water. Three primary factors determine the productivity of a well that intersects a hydrocarbon reservoir: porosity — the percentage of the reservoir volume represented by pore space in which the hydrocarbons reside, permeability — the natural propensity for the flow

-62-

of hydrocarbons toward the well bore, and "skin" — the degree to which the portion of the reservoir in close proximity to the well bore has experienced reduced permeability as a result of exposure to drilling fluids or other contaminants. Well productivity can be increased by artificially improving either permeability or skin through stimulation methods.

        Permeability can be increased through the use of fracturing methods. The reservoir is subjected to fluids pumped into it under high pressure. This pressure creates stress in the reservoir and causes the rock to fracture thereby creating additional channels through which hydrocarbons can flow. In most cases, sand or another form of proppant is pumped with the fluid as a means of holding open the newly created fractures.

        The most common means of reducing near-well bore damage, or skin, is the injection of a highly reactive solvent (such as hydrochloric acid) solution into the area where the hydrocarbons enter the well. This solution has the effect of dissolving contaminants which have accumulated and are restricting flow. This process is generically known as acidizing.

        As a well is drilled, long intervals of rock are left exposed and unprotected. In order to prevent the exposed rock from caving and to prevent fluids from entering or leaving the exposed sections, steel casing is lowered into the hole and cemented in place. Pressure pumping equipment is utilized to force a cement slurry into the area between the rock face and the casing, thereby securing it. After a well is drilled and completed, the casing may develop leaks as a result of abrasion from production tubing, exposure to corrosive elements or inadequate support from the original attempt to cement it in place. When a leak develops, it is necessary to place specialized equipment into the well and to pump cement in such a way as to seal the leak. Repairing leaks in this manner is known as "squeeze" cementing — a method that utilizes pressure pumping equipment.

        Our pressure pumping business focuses on single-truck, lower horsepower cementing, acidizing and fracturing services in niche markets. Major pressure pumping companies have deemphasized new well cementing and stimulation work in the shallow well markets and do not aggressively pursue the remedial work available in many of the deeper well markets.

        The following table sets forth the type, number and location of the drilling and completion services equipment that we operated at March 31, 2005:

	Operating Division
	Ark-La- Tex	Gulf Coast	Mid- Continent	North Texas	Permian Basin	Northern Rockies	Southern Rockies	South Texas	Total
Pressure Pumping Units	7	—	—	20	—	4	—		31
Support Trucks	4	—	—	58	—	8	—		70
Coiled Tubing Units	—	—	—	3	—	—	—	—	3
Underbalanced Drilling Units	—	—	—	—	—	—	22	—	22

        Currently, there are only three pressure pumping companies that provide their services on a national basis. These three companies also control a majority of the activities in the U.S. market. For the most part, these companies have concentrated their assets in markets characterized by complex work with the potential for high profit margins. This has created an opportunity in the markets for pressure pumping services in mature areas with less complex requirements. We, along with a number of smaller, regional companies, have concentrated our efforts on these markets. One of our major well servicing competitors also participates in the pressure pumping business, but primarily outside our core areas of operations for pumping services.

        Like our fluid services business, the level of activity of our pressure pumping business is tied to drilling and workover activity. The bulk of pressure pumping work is associated with cementing casing in place as the well is drilled or pumping fluid that stimulates production from the well

-63-

during the completion phase. Pressure pumping work is awarded based on a combination of price and expertise. More complex work is less sensitive to price and routine work is often awarded on the basis of price alone.

        Cased-hole wireline services typically utilize a single truck equipped with a spool of wireline that is used to lower and raise a variety of specialized tools in and out of a cased wellbore. These tools can be used to measure pressures and temperatures as well as the condition of the casing and the cement that holds the casing in place. Other applications for wireline tools include placing equipment in or retrieving equipment from the wellbore, or perforating the casing and cutting off pipe that is stuck in the well so that the free section can be recovered. Electric wireline contains a conduit that allows signals to be transmitted to or from tools located in the well. A simpler form of wireline, slickline, lacks an electrical conduit and is used only to perform mechanical tasks such as setting or retrieving various tools. Wireline trucks are often used in place of a well servicing rig when there is no requirement to remove tubulars from the well in order to make repairs. Wireline trucks, like well servicing rigs, are utilized throughout the life of a well.

        Underbalanced drilling services, unlike pressure pumping and wireline services, are not utilized universally throughout oil and gas operations. Underbalanced drilling services are utilized in areas where conventional drilling fluids or stimulation techniques will severely damage the producing formation or in areas where drilling performance can be substantially improved with a lightened drilling fluid. In these cases, the drilling fluid is lightened to make the natural pressure of the formation greater than the hydrostatic pressure of the drilling fluid, thereby creating a situation where pressure is forcing fluid out of the formation (i.e., underbalanced) as opposed to into the formation (i.e., over balanced). The most common method of lightening drilling fluid is to mix it with air as the fluid is pumped into the well. By varying the volume of air pumped with the fluid, the net hydrostatic pressure can be adjusted to the desired level. In extreme cases, air alone can be used to circulate rock cuttings from the well.

        Since reservoir pressure depletes over time as a well is produced, it may be desirable to use underbalanced fluids in workover operations associated with an existing well. Our air compressors, pressure boosters, trailer-mounted foam units and associated equipment are used in a variety of drilling and workover applications involving lightened fluids. Due to its limited application, there is only one service company providing these services on a national basis. The rest of the market is serviced by small regional firms or rig contractors who supply the equipment as part of the rig package.

Well Site Construction Services Segment

        Our well site construction services segment employs an array of equipment and assets to provide services for the construction and maintenance of oil and gas production infrastructure. These services are primarily related to new drilling activities, although the same equipment is utilized to maintain oil and gas field infrastructure. Our well site construction services segment includes dirt work for the following services:

•

preparation and maintenance of access roads;



•

building of drilling locations;



•

installation of small gathering lines and pipelines; and



•

maintenance of production facilities.

        This segment utilizes a fleet of power units, including dozers, trenchers, motor graders, backhoes and other heavy equipment used in road construction. In addition, we own rock pits in some markets in our Rocky Mountain division to ensure a reliable source of rock to support our

-64-

construction activities. We also own a substantial quantity of wooden mats in our Gulf Coast operations to support the well site construction requirements in that marshy environment. This range of services, coupled with our fluid service capabilities in the same markets, differentiates us from our more specialized competitors.

        Companies engaged in oilfield construction and maintenance services are typically privately owned and highly localized. There are currently no companies that provide these services on a nationwide basis. We believe that our well site construction services in the Gulf Coast and the Rocky Mountain states are among the largest in these markets. We believe that our existing infrastructure will allow us to expand these operations.

        Contracts for well site construction services are normally awarded by our customers on the basis of competitive bidding and may range in scope from several days to several months in duration.

Properties

        Our principal executive offices are currently located at 400 W. Illinois, Suite 800, Midland, Texas 79701. We have also recently purchased and are renovating a facility in Midland, Texas to consolidate our corporate office and to expand our refurbishment capacities. We currently conduct our business from 65 area offices, 28 of which we own and 37 of which we lease. Each office typically includes a yard, administrative office and maintenance facility. Of our 65 area offices, 43 are located in Texas, five are in Wyoming, five are in Oklahoma, three are in New Mexico, three are in Louisiana, three are in Colorado, two are in Montana and one is in North Dakota.

Customers

        We serve numerous major and independent oil and gas companies that are active in our core areas of operations. During 2004, we provided services to more than 1,000 customers, with our top five customers comprising only 20% of our revenues. The majority of our business is with independent oil and gas companies. While we believe we could redeploy equipment in the current market environment if we lost a single material customer, or a few of them, such loss could have an adverse effect on our business until the equipment is redeployed.

Operating Risks and Insurance

        Our operations are subject to hazards inherent in the oil and gas industry, such as accidents, blowouts, explosions, craterings, fires and oil spills, that can cause:

•

personal injury or loss of life;



•

damage or destruction of property, equipment and the environment; and



•

suspension of operations.

        In addition, claims for loss of oil and gas production and damage to formations can occur in the well services industry. If a serious accident were to occur at a location where our equipment and services are being used, it could result in our being named as a defendant in lawsuits asserting large claims.

        Because our business involves the transportation of heavy equipment and materials, we may also experience traffic accidents which may result in spills, property damage and personal injury.

        Despite our efforts to maintain high safety standards, we from time to time have suffered accidents in the past and anticipate that we could experience accidents in the future. In addition to the property and personal losses from these accidents, the frequency and severity of these

-65-

incidents affect our operating costs and insurability and our relationships with customers, employees and regulatory agencies. Any significant increase in the frequency or severity of these incidents, or the general level of compensation awards, could adversely affect the cost of, or our ability to obtain, workers' compensation and other forms of insurance, and could have other material adverse effects on our financial condition and results of operations.

        Although we maintain insurance coverage of types and amounts that we believe to be customary in the industry, we are not fully insured against all risks, either because insurance is not available or because of the high premium costs. We do maintain employer's liability, pollution, cargo, umbrella, comprehensive commercial general liability, workers' compensation and limited physical damage insurance. There can be no assurance, however, that any insurance obtained by us will be adequate to cover any losses or liabilities, or that this insurance will continue to be available or available on terms which are acceptable to us. Liabilities for which we are not insured, or which exceed the policy limits of our applicable insurance, could have a material adverse effect on us.

Competition

        Our competition includes small regional contractors as well as larger companies with international operations. Our two largest competitors, Key Energy Services, Inc. and Nabors Well Services Co., combined own approximately 64% of the well service market share based on well servicing rig ownership. Both of these competitors are public companies or subsidiaries of public companies that operate in most of the large oil and gas producing regions in the U.S. These competitors have centralized management teams that direct their operations and decision-making primarily from corporate and regional headquarters. In addition, because of their size, these companies market a large portion of their work to the major oil and gas companies.

        We differentiate ourselves from our major competition by our operating philosophy. We operate a decentralized organization, where local management teams are largely responsible for sales and marketing to develop stronger relationships with our customers at the field level. We target areas that are attractive to independent oil and gas operators who in our opinion tend to be more aggressive in spending, less focused on price and more likely to award work based on performance. With the major oil and gas companies divesting mature U.S. properties, we expect our target customers' well population to grow over time through acquisition of properties formerly operated by major oil and gas companies. We concentrate on providing services to a diverse group of large and small independent oil and gas companies. These independents typically are relationship driven, make decisions at the local level and are willing to pay higher rates for services. We have been successful using this business model and believe it will enable us to continue to grow our business and maintain or expand our operating margins.

Safety Program

        In recent years, many of our larger customers have placed an emphasis not only on pricing, but also on safety records and the quality management systems of contractors. We believe that these factors will gain further importance in the future. We have directed substantial resources toward employee safety and quality management training programs as well as our employee review process. While our efforts in these areas are not unique, we believe many competitors, and particularly smaller contractors, have not undertaken similar training programs for their employees.

        We believe our approach to safety management is consistent with our decentralized management structure. Company-mandated policies and procedures provide the overall framework to ensure our operations minimize the hazards inherent in our work and are intended to meet

-66-

regulatory requirements, while allowing our operations to satisfy customer-mandated policies and local needs and practices.

Environmental Regulation

        Our well site servicing operations are subject to stringent federal, state and local laws regulating the discharge of materials into the environment or otherwise relating to health and safety or the protection of the environment. Numerous governmental agencies, such as the U.S. Environmental Protection Agency, commonly referred to as the "EPA", issue regulations to implement and enforce these laws, which often require difficult and costly compliance measures. Failure to comply with these laws and regulations may result in the assessment of substantial administrative, civil and criminal penalties, as well as the issuance of injunctions limiting or prohibiting our activities. In addition, some laws and regulations relating to protection of the environment may, in certain circumstances, impose strict liability for environmental contamination, rendering a person liable for environmental damages and cleanup costs without regard to negligence or fault on the part of that person. Strict adherence with these regulatory requirements increases our cost of doing business and consequently affects our profitability. We believe that we are in substantial compliance with current applicable environmental laws and regulations and that continued compliance with existing requirements will not have a material adverse impact on our operations. However, environmental laws and regulations have been subject to frequent changes over the years, and the imposition of more stringent requirements could have a materially adverse effect upon our capital expenditures, earnings or our competitive position.

        The Comprehensive Environmental Response, Compensation and Liability Act, referred to as "CERCLA" or the Superfund law, and comparable state laws impose liability, without regard to fault on certain classes of persons that are considered to be responsible for the release of a hazardous substance into the environment. These persons include the current or former owner or operator of the disposal site or sites where the release occurred and companies that disposed or arranged for the disposal of hazardous substances that have been released at the site. Under CERCLA, these persons may be subject to joint and several liability for the costs of investigating and cleaning up hazardous substances that have been released into the environment, for damages to natural resources and for the costs of some health studies. In addition, companies that incur liability frequently confront additional claims because it is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by hazardous substances or other pollutants released into the environment.

        The federal Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, referred to as "RCRA", generally does not regulate most wastes generated by the exploration and production of oil and natural gas because that act specifically excludes drilling fluids, produced waters and other wastes associated with the exploration, development or production of oil and gas from regulation as hazardous wastes. However, these wastes may be regulated by the EPA or state agencies as non-hazardous wastes as long as these wastes are not commingled with regulated hazardous wastes. Moreover, in the ordinary course of our operations, industrial wastes such as paint wastes and waste solvents as well as wastes generated in the course of us providing well services may be regulated as hazardous waste under RCRA or hazardous substances under CERCLA.

        We currently own or lease, and have in the past owned or leased, a number of properties that have been used for many years as service yards in support of oil and natural gas exploration and production activities. Although we have utilized operating and disposal practices that were standard in the industry at the time, there is the possibility that repair and maintenance activities on rigs and equipment stored in these service yards, as well as well bore fluids stored at these yards, may have resulted in the disposal or release of hydrocarbons or other wastes on or under these yards or

-67-

other locations where these wastes have been taken for disposal. In addition, we own or lease properties that in the past were operated by third parties whose operations were not under our control. These properties and the hydrocarbons or wastes disposed thereon may be subject to CERCLA, RCRA and analogous state laws. Under these laws, we could be required to remove or remediate previously disposed wastes or property contamination. We believe that we are in substantial compliance with the requirements of CERCLA and RCRA.

        Our operations are also subject to the federal Clean Water Act and analogous state laws. Under the Clean Water Act, the Environmental Protection Agency has adopted regulations concerning discharges of storm water runoff. This program requires covered facilities to obtain individual permits, or seek coverage under a general permit. Some of our properties may require permits for discharges of storm water runoff and, as part of our overall evaluation of our current operations, we are applying for stormwater discharge permit coverage and updating stormwater discharge management practices at some of our facilities. We believe that we will be able to obtain, or be included under, these permits, where necessary, and make minor modifications to existing facilities and operations that would not have a material effect on us.

        The federal Clean Water Act and the federal Oil Pollution Act of 1990, which contains numerous requirements relating to the prevention of and response to oil spills into waters of the United States, require some owners or operators of facilities that store or otherwise handle oil to prepare and implement spill prevention, control and countermeasure plans, also referred to as "SPCC plans", relating to the possible discharge of oil into surface waters. In the course of our ongoing operations, we are in the process of updating SPCC plans for several of our facilities and currently expect to complete and implement these plans by the end of 2005. We believe we are in substantial compliance with these regulations.

        Our underground injection operations are subject to the federal Safe Drinking Water Act, as well as analogous state and local laws and regulations. Under Part C of the Safe Drinking Water Act, the EPA established the Underground Injection Control program, which established the minimum program requirements for state and local programs regulating underground injection activities. The Underground Injection Control program includes requirements for permitting, testing, monitoring, record keeping and reporting of injection well activities, as well as a prohibition against the migration of fluid containing any contaminant into underground sources of drinking water. The substantial majority of our saltwater disposal wells are located in the State of Texas and regulated by the Texas Railroad Commission, also known as the "RRC". We also operate salt water disposal wells in Oklahoma and Wyoming and are subject to similar regulatory controls in those states. Regulations in these states require us to obtain a permit from the applicable regulatory agencies to operate each of our underground injection wells. We believe that we have obtained the necessary permits from these agencies for each of our underground injection wells and that we are in substantial compliance with permit conditions and commission rules. Nevertheless, these regulatory agencies have the general authority to suspend or modify one or more of these permits if continued operation of one of our underground injection wells is likely to result in pollution of freshwater, substantial violation of permit conditions or applicable rules, or leaks to the environment. Although we monitor the injection process of our wells, any leakage from the subsurface portions of the injection wells could cause degradation of fresh groundwater resources, potentially resulting in cancellation of operations of a well, issuance of fines and penalties from governmental agencies, incurrence of expenditures for remediation of the affected resource and imposition of liability by third parties for property damages and personal injuries. In addition, our sales of residual crude oil collected as part of the saltwater injection process could impose liability on us in the event that the entity to which the oil was transferred fails to manage the residual crude oil in accordance with applicable environmental health and safety laws.

-68-

        We maintain insurance against some risks associated with underground contamination that may occur as a result of well service activities. However, this insurance is limited to activities at the wellsite and there can be no assurance that this insurance will continue to be commercially available or that this insurance will be available at premium levels that justify its purchase by us. The occurrence of a significant event that is not fully insured or indemnified against could have a materially adverse effect on our financial condition and operations.

        We are also subject to the requirements of the federal Occupational Safety and Health Act (OSHA) and comparable state statutes that regulate the protection of the health and safety of workers. In addition, the OSHA hazard communication standard requires that information be maintained about hazardous materials used or produced in operations and that this information be provided to employees, state and local government authorities and the public. We believe that our operations are in substantial compliance with the OSHA requirements, including general industry standards, record keeping requirements, and monitoring of occupational exposure to regulated substances.

Employees

        As of March 31, 2005, we employed approximately 2,800 people, with approximately 85% employed on an hourly basis. Our future success will depend partially on our ability to attract, retain and motivate qualified personnel. We are not a party to any collective bargaining agreements, and we consider our relations with our employees to be satisfactory.

Legal Proceedings

        On September 3, 2004, David Hudson, Jr. et al commenced a civil action against us in the District Court of Panola County, Texas, 123^rd Judicial District, David Hudson, Jr., et al v. Basic Energy Services Company, Cause No. 2004-A-137. The complaint alleges that our operation of a saltwater disposal well has contaminated both the groundwater and the soil in the surrounding area. The relief requested in the complaint is monetary damages, injunctive relief, environmental remediation and a court order requiring us to provide drinking water to the community. In response to the complaint, we have retained counsel and filed a general denial. We are in the beginning stages of discovery and trial has been tentatively scheduled for January or February 2006. We intend to defend ourselves vigorously in this action.

        On December 6, 2004, Karon Smith, et al commenced a civil action against us in the District Court of Hidalgo County, Texas, 206th Judicial District, Karon Smith, et al v. Basic Energy Services GP L.L.C., Cause No. C-42767-04-D. The complaint alleged that (i) one of our fluid services truck drivers disposed of oil-based waste at the plaintiff's waste disposal facility, which was not equipped to accept oil-based waste, and (ii) the disposal of such oil-based waste resulted in plaintiff's facility losing contracts to accept waste. On July 25, 2005, the jury in this case returned a verdict in favor of the plaintiff and awarded damages in the amount of $1.2 million. Our insurance company has denied coverage of liability in this lawsuit. We have accrued a loss of $1.3 million, including interest, for this contingency as of March 31, 2005. We plan to appeal this verdict and may pursue coverage claims with our insurer.

        We are subject to other claims in the ordinary course of business. However, we believe that the ultimate dispositions of the above mentioned and other current legal proceedings will not have a material adverse effect on our financial condition or results of operations.

-69-

MANAGEMENT

Directors, Executive Officers and Other Key Employees

        Our directors, executive officers and other key employees and their respective ages and positions are as follows:

Name	Age	Position
Steven A. Webster	53	Chairman of the Board
Kenneth V. Huseman	53	President, Chief Executive Officer and Director
James J. Carter	60	Executive Vice President and Secretary
Alan Krenek	50	Vice President, Chief Financial Officer and Treasurer
Dub W. Harrison	47	Vice President — Equipment & Safety
Mark D. Rankin	51	Vice President — Business Development
James E. Tyner	55	Vice President — Human Resources
Charles W. Swift	56	Vice President — Permian Basin
James S. D'Agostino, Jr.	58	Director
William E. Chiles	56	Director
Robert F. Fulton	54	Director
Sylvester P. Johnson, IV	49	Director
H. H. Wommack, III	49	Director

        Set forth below is the description of the backgrounds of our directors, executive officers and other key employees.

Steven A. Webster (Chairman of the Board) has been the Chairman of our Board of Directors and a director since January 2001. Mr. Webster is Co-Managing Partner of Avista Capital Holdings, L.P., a private equity firm focused on investments in the energy, media and healthcare sectors. Prior to his position with Avista, Mr. Webster served as Chairman of Global Energy Partners, a specialty group within Credit Suisse First Boston's Alternative Capital Division that made investments in energy companies, from 1999 until June 30, 2005. Mr. Webster has been engaged by Credit Suisse First Boston's Alternative Capital Division as a consultant. As a consultant to Credit Suisse First Boston, Mr. Webster continues to serve on the boards of, and monitor the operations of, various existing portfolio companies of Credit Suisse First Boston's Alternative Capital Division, including Basic Energy Services. From 1998 to 1999, Mr. Webster served as Chief Executive Officer and President of R&B Falcon Corporation, and from 1988 to 1998, Mr. Webster served as Chairman and Chief Executive Officer of Falcon Drilling Corporation, both offshore drilling contractors. Mr. Webster serves as a director of Grey Wolf, Inc., Hercules Offshore, Inc., Brigham Exploration Company, Goodrich Petroleum Corporation, Camden Property Trust, Geokinetics, Inc., and various privately-held companies. In addition, Mr. Webster serves as Chairman of Carrizo Oil & Gas, Inc., Crown Resources Corporation, and Pinnacle Gas Resources, Inc. Mr. Webster was the founder and an original shareholder of Falcon Drilling Company, a predecessor to Transocean, Inc., and was a co-founder and original shareholder of Carrizo Oil & Gas, Inc. Mr. Webster holds a B.S.I.M. from Purdue University and an M.B.A. from Harvard Business School.

Kenneth V. Huseman (President — Chief Executive Officer and Director) has 26 years of well servicing experience. He has been our President, Chief Executive Officer and Director since 1999. Prior to joining us, he was Chief Operating Officer at Key Energy Services from 1996 to 1999. At Key Energy Services, Mr. Huseman expanded the number of rigs from less than 200 to 1,400, the shallow drilling business from 4 to 78 rigs and executed over 50 acquisitions. He was a Divisional Vice President at WellTech, Inc., from 1993 to 1996 where he closed two acquisitions for a total of 42 rigs, moved WellTech from the second largest to the largest player in the market and started a turnaround of operations in Argentina. He was a Vice President of Operations at Pool

-70-

Energy Services Co. from 1982 to 1993, where he managed operations throughout the United States, including drilling operations in Alaska. Mr. Huseman graduated with a B.B.A. degree in Accounting from Texas Tech University.

James J. Carter (Executive Vice President and Secretary) has spent 24 years in the well services industry. He has been our Executive Vice President since January 2005. Served as our Chief Financial Officer from December 2000 until January 2005. From 1999 to 2000, Mr. Carter worked in a consulting and brokerage capacity, with a well services industry specialization. He worked at another well servicing company in financial management from 1996 to 1999, where he managed the financial turnaround of its Argentina operations, negotiated and closed acquisitions in various domestic markets and negotiated insurance coverages and vehicle leases. He worked in financial management positions at Pool Energy Services Co. from 1978 to 1993, where he managed operations analysis and financial support at the corporate level and managed financial operations in California and south Texas. Mr. Carter graduated with a B.S. degree in Accounting from Indiana University and an M.B.A. from Memphis University.

Alan Krenek (Vice President, Chief Financial Officer and Treasurer) has 17 years of related industry experience. He has been our Vice President, Chief Financial Officer and Treasurer since January 2005. From October 2002 to January 2005, he served as Vice President and Controller of Fleetwood Retail Corp., a subsidiary in the manufactured housing division of Fleetwood Enterprises, Inc. From March 2002 to August 2002, he was a consultant involved in management, assessment of operational and financial internal controls, cost recovery and cash flow management. From December 1999 to November 2001, he acted as the Vice President of Finance and later the Chief Financial Officer of Digital Commerce Corporation, a business-to-government internet-based marketplace solutions company that filed for Chapter 11 bankruptcy protection in June 2001. From January 1997 to December 1999, Mr. Krenek was the Vice President, Finance of Global TeleSystems, Inc. From September 1995 to December 1996, he served as Corporate Controller of Landmark Graphics Corporation where he was responsible for SEC reporting, general accounting, financial policies and procedures and purchasing functions. He worked in various financial management positions at Pool Energy Services Co. from 1980 to 1993 and at Noble Corporation from 1993 to 1995. Mr. Krenek graduated with a B.B.A. degree in Accounting from Texas A&M University in 1977 and is a certified public accountant.

Dub W. Harrison (Vice President — Equipment & Safety) has spent 29 years in the well services industry. He has been a Vice President since 1995, during which time he established operations in east Texas, negotiated an acquisition to enter the south Texas market and implemented a consistent maintenance program. From 1987 to 1995, he worked in operations and maintenance management at Pool Energy Services Co.

Mark D. Rankin (Vice President — Business Development) has 28 years of related industry experience. He has been a Vice President since 2004. From 1997 to 2004, he was a consultant to oil and gas companies and was involved in operations research and work process redesign. From 1985 to 1995, he acted as Director of International Marketing and Marketing for U.S. Operations and a District Manager at Pool Energy Services. He was an International Sales Manager and Director of Planning and Market Research at Zapata Off-Shore Company from 1979 to 1985. From 1977 to 1989, he was a Contract Manager at Western Oceanic, Inc. He graduated with a B.A. in Political Science from Texas A&M University.

James E. Tyner (Vice President — Human Resources) has been a Vice President since January 2004. From 1999 to December 2003, he was the General Manager of Human Resources at CMS Panhandle Companies, where he directed delivery of HR Services. Mr. Tyner was the Director of Human Resources Administration and Payroll Services at Duke Energy's Gas Transmission Group from 1998 to 1999. From 1981 to 1998, Mr. Tyner held various positions at Panhandle

-71-

Eastern Corporation. At Panhandle, he managed all Human Resources functions and developed corporate policies and as a Certified Safety Professional, he designed and implemented programs to control workplace hazards. Mr. Tyner received a B.S. and M.S. from Mississippi State University.

Charles W. Swift (Vice President — Permian) has 33 years of related industry experience including 25 years specifically in the domestic well service business. He has been a Vice President since 1997 and was involved in integrating several acquisitions during our expansion phase in late 1997. He was a co-owner of S&N Well Service from 1986 to 1997 and expanded the business to 17 rigs at the time of sale of the company to us. From 1980 to 1986, he worked at Pool Energy Services Co. where he managed the well service and fluid services businesses. Mr. Swift graduated with a B.B.A. degree in International Trade from Texas Tech University.

James S. D'Agostino, Jr. (Director) has served as a director since February 2004. Mr. D'Agostino has served as Chairman of the Board, President and Chief Executive Officer of Encore Bank since November 1999, during which time he initiated turnaround efforts and raised over $30 million of new equity to create a unique private banking organization. From 1998 to 1999, Mr. D'Agostino served as Vice Chairman and Group Executive and from 1997 until 1998, he served as President, Member of the Office of Chairman and Director of American General Corporation. Mr. D'Agostino graduated with an economics degree from Villanova University and a J.D. from Seton Hall University School of Law.

William E. Chiles (Director) has served as a director since August 2003. Mr. Chiles is currently the Chief Executive Officer, President and a Director of Offshore Logistics, Inc., a provider of helicopter transportation services to the worldwide offshore oil and gas industry. Mr. Chiles served as Executive Vice President and Chief Operating Officer of Grey Wolf, Inc. from March 2003 until June 2004. Mr. Chiles served as Vice President of Business Development at ENSCO International Incorporated from August 2002 until March 2003. From August 1997 until its merger into an ENSCO International affiliate in August 2002, Mr. Chiles served as President and Chief Executive Officer of Chiles Offshore, Inc. From May 1996 until March 1997, Mr. Chiles served as Senior Vice President — Drilling Operations of Cliffs Drilling Company. From 1992 to May 1996, Mr. Chiles served as President and Chief Executive Officer of Southwestern Offshore Corporation, a company that he founded in 1992. Mr. Chiles co-founded Chiles Offshore Corporation in 1987 and its predecessor company, Chiles Drilling Company, in 1977, each of which was an offshore contract drilling company. Mr. Chiles has a B.B.A. in Petroleum Land Management from The University of Texas and an M.B.A. in Finance and Accounting with honors from Southern Methodist University, Dallas.

Robert F. Fulton (Director) has served as a director since 2001. Mr. Fulton has served as President and Chief Executive Officer of Frontier Drilling ASA since 2002. He has served as Executive Vice President and Chief Financial Officer of Merlin Offshore Holdings, Inc. from August 1999 until November 2001. From 1998 to June 1999, Mr. Fulton served as Executive Vice President of Finance for R&B Falcon Corporation, during which time he closed the merger of Falcon Drilling Company with Reading & Bates Corporation to create R&B Falcon Corporation and then the merger of R&B Falcon Corporation and Cliffs Drilling Company. He graduated with a B.S. degree in Accountancy from the University of Illinois and an M.B.A. in finance from Northwestern University.

Sylvester P. Johnson, IV (Director) has served as a director since 2001. Mr. Johnson has served as President, Chief Executive Officer and a director of Carrizo Oil & Gas, Inc. since December 1993. Prior to that, he worked for Shell Oil Company for 15 years. His managerial positions included Operations Superintendent, Manager of Planning and Finance and Manager of Development Engineering. Mr. Johnson is a Registered Petroleum Engineer and has a B.S. in Mechanical Engineering from the University of Colorado.

-72-

H. H. Wommack, III (Director) has served as a director since 1992. Mr. Wommack was our founder and our Chairman of the Board from 1992 until January 2001. Mr. Wommack is currently a principal of and Chief Executive Officer of Saber Resources, LLC, a privately held oil and gas company. Mr. Wommack is currently Chairman of the Board of Midland Red Oak Realty, a commercial real estate company involved in investments in the Southwest. Mr. Wommack is also currently the President of Fortress Holdings, LLC and Anchor Resources, LLC. Mr. Wommack served as Chairman of the Board, President, Chief Executive Officer and a Director of Southwest Royalties Holdings, Inc. from its formation in July 1997 until May 2004 and of Southwest Royalties, Inc. from its formation in 1983, until its sale in May 2004. Prior to the formation of Southwest Royalties, Mr. Wommack was a self-employed independent oil and gas producer. He graduated with a B.A. from the University of North Carolina and a J.D. from the University of Texas School of Law.

Board of Directors

        Our board of directors currently consists of seven members, including three independent members — Messrs. D'Agostino, Chiles and Johnson. The listing requirements of the New York Stock Exchange require that our board of directors be composed of a majority of independent directors within one year of the listing of our common stock on the NYSE. Accordingly, we intend to appoint additional independent directors to our board of directors following the completion of this offering.

        Our board of directors will be divided into three classes. The directors will serve staggered three-year terms. The initial terms of the directors of each class will expire at the annual meetings of stockholders to be held in 2006 (Class I), 2007 (Class II) and 2008 (Class III). At each annual meeting of stockholders, one class of directors will be elected for a full term of three years to succeed that class of directors whose terms are expiring. The classification of directors will be as follows:

•

Class I — Messrs. Johnson, Webster and Wommack;



•

Class II — Messrs. Chiles and Fulton; and



•

Class III — Messrs. D'Agostino and Huseman.

Committees

        In compliance with the requirements of the Sarbanes-Oxley Act of 2002, the NYSE listing standards and SEC rules and regulations, a majority of the directors on our corporate governance and nominating and compensation committees will be independent within 90 days of listing on the NYSE and, within one year, these committees will be fully independent and a majority of our board will be independent. A majority of the directors on our audit committee will be independent within 90 days of the effectiveness of the registration statement and, within one year of effectiveness, the committee will be fully independent.

Audit Committee

        Our audit committee is currently comprised of Messrs. D'Agostino, Chiles and Fulton. Our board has determined that Messrs. D'Agostino and Chiles are independent directors as defined under and required by the Securities Exchange Act of 1934, or the Exchange Act, and the listing requirements of the New York Stock Exchange, or NYSE. Rule 10A-3 under the Exchange Act and the listing requirements of the NYSE require that our audit committee be composed of a majority of independent directors within 90 days of the effectiveness of the registration statement of which this prospectus is a part and that it be composed solely of independent directors within one year of such date. Accordingly, we intend to appoint an additional independent director to our audit

-73-

committee to replace Mr. Fulton following the consummation of the offering. Following this offering, one member of the audit committee will be designated as the audit committee financial expert, as defined by Item 401(h) of Regulation S-K of the Exchange Act. The principal duties of the audit committee will be as follows:

•

to review our external financial reporting;



•

to engage our independent auditors; and



•

to review our procedures for internal auditing and the adequacy of our internal accounting controls.

        Our board of directors has adopted a written charter for the audit committee that will be available on our website after the closing of this offering.

Nominating and Corporate Governance Committee

        Our nominating and corporate governance committee currently consists of Messrs. Johnson, Webster and Fulton. Our board has determined that Mr. Johnson is independent as required by the listing requirements of the NYSE. The listing requirements of the NYSE require that our nominating and corporate governance committee be composed of a majority of independent directors within 90 days of the listing of our common stock on the NYSE and that it be composed solely of independent directors and have at least three members within one year of such date. Accordingly, we intend to appoint additional independent directors to our nominating and corporate governance committee to replace Messrs. Webster and Fulton following the consummation of the offering. The principal duties of the nominating and corporate governance committee will be as follows:

•

to recommend to the board of directors proposed nominees for election to the board of directors by the stockholders at annual meetings, including an annual review as to the renominations of incumbents and proposed nominees for election by the board of directors to fill vacancies that occur between stockholder meetings; and



•

to make recommendations to the board of directors regarding corporate governance matters and practices.

        Our board of directors has adopted a written charter for the corporate governance and nominating committee that will be available on our website after the closing of this offering.

Compensation Committee

        Our compensation committee currently consists of Messrs. Chiles, D'Agostino and Wommack. Our board has determined that Messrs. Chiles and D'Agostino are independent as required by the listing requirements of the NYSE. The listing requirements of the NYSE require that our compensation committee be composed of a majority of independent directors within 90 days of the listing of our common stock on the NYSE and that it be composed solely of independent directors within one year of such date. Accordingly, we intend to appoint an additional independent director to our compensation committee to replace Mr. Wommack following the consummation of the offering. The principal duties of the compensation committee will be as follows:

•

to administer our stock plans and incentive compensation plans, including our 2003 Incentive Plan, and in this capacity, make all option grants or awards to our directors and employees under such plans;



•

to make recommendations to the board of directors with respect to the compensation of our chief executive officer and our other executive officers; and



•

to establish compensation and employee benefit policies.

-74-

        Our board of directors has adopted a written charter for the compensation committee that will be available on our website after the closing of this offering.

Web Access

        We will provide access through our website at www.basicenergyservices.com to current information relating to governance, including a copy of each board committee charter, our Code of Conduct, our corporate governance guidelines and other matters impacting our governance principles. You may also contact our chief financial officer for paper copies of these documents free of charge.

Compensation Committee Interlocks and Insider Participation

        None of our executive officers serve as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our board of directors or compensation committee.

Compensation of Executive Officers

        The following table summarizes all compensation earned by our Chief Executive Officer and our four other most highly compensated executive officers during the year ended December 31, 2004, to whom we refer in this prospectus as our named executive officers. The following table does not include Alan Krenek, our Chief Financial Officer who joined us in January 2005.

Summary Compensation Table

		Annual Compensation(1)				Long-Term Compensation(1)
	Year	Salary		Bonus		Restricted Stock Awards($)(2)		Securities Underlying Options (#)	All Other Compensation(3)
Kenneth V. Huseman	2004	$	327,884	$	500,000	$	3,141,000	—	$	2,308
James J. Carter	2004	$	168,846	$	200,000	$	698,000	—	$	—
Charles W. Swift	2004	$	151,924	$	69,894	$	349,000	—	$	9,600
Dub W. Harrison	2004	$	141,539	$	60,250	$	349,000	—	$	9,600
James E. Tyner	2004	$	101,538	$	11,197	$	—	—	$	26,519
Darin G. Holderness(4)	2004	$	103,261	$	5,250	$	—	—	$	—

(1)

Under the terms of their employment agreements, Messrs. Huseman, Carter, Swift, Harrison and Tyner are entitled to the compensation described under "— Employment Agreements" below.

(2)

Shares of restricted stock were granted to the named executive officers during 2004 as follows: Huseman — 450,000 shares; Carter — 100,000 shares; Swift — 50,000 shares; and Harrison — 50,000 shares. The fair market value as of the date of grant of the shares of restricted stock during February 2004, as determined by our board of directors, was $6.98. These shares are subject to vesting in one-fourth increments on each of February 24, 2005, 2006, 2007 and 2008 for each person other than Mr. Carter, whose shares vest one-half on February 24, 2005 and one-half on February 24, 2006. Cash dividends, if any are paid, would be payable on these shares of restricted stock, but the Company will retain any stock dividends applicable to these shares until the vesting period is satisfied on the shares on which the stock dividend is issued. For information concerning grants of and the aggregate holdings of restricted stock by the named executive officers, see "— Employment Agreements."

-75-

(3)

Includes: for Mr. Huseman, a vehicle allowance of $2,308; for each of Mr. Swift and Harrison, a vehicle allowance of $9,600; and for Mr. Tyner, moving-related allowances of $26,519.

(4)

Mr. Holderness served as our Vice President — Finance and Treasurer from March to November 2004.

Aggregated Option Exercises in 2004 and Fiscal Year-End Option Values

        The following table sets forth information concerning options exercised during the last fiscal year and held as of December 31, 2004 by each of the named executive officers. None of the named executive officers exercised options during the year ended December 31, 2004. Because there was no public market for our common stock as of December 31, 2004, amounts described in the following table under the heading "Value of Unexercised In-the-Money Options at December 31, 2004" are determined by multiplying the number of shares issued or issuable upon the exercise of the option by the difference between the assumed initial public offering price of $    per share and the per share option exercise price.

	Number of Shares Underlying Unexercised Options at December 31, 2004		Value of Unexercised In-the-Money Options at December 31, 2004
	Exercisable	Unexercisable	Exercisable	Unexercisable
Kenneth V. Huseman	333,105	233,300	$	$
James J. Carter	108,720	70,000
Dub W. Harrison	72,895	58,330
Charles W. Swift	72,895	68,330
James E. Tyner	—	35,000

Compensation of Directors

        Directors who are our employees do not receive a retainer or fees for service on the board or any committees. We pay non-employee members of the board for their service as directors. Directors who are not employees receive, effective May 1, 2005, an annual fee of $30,000. In addition, the chairman of each committee receives the following annual fees: audit committee — $10,000; compensation committee — $6,000; and nominating and corporate governance committee — $6,000. Directors who are not employees currently receive a fee of $2,000 for each board meeting attended in person, and a fee of $1,000 for attendance at a board meeting held telephonically. For committee meetings, directors who are not employees currently receive a fee of $3,000 for each committee meeting attended in person, and a fee of $1,500 for attendance at a committee meeting held telephonically. In addition, each non-employee director has received, upon election to the board, a stock option to purchase 37,500 shares of our common stock at the market price on the date of grant that vests ratably over three years. Directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the board or committees and for other reasonable expenses related to the performance of their duties as directors.

Second Amended and Restated 2003 Incentive Plan

        Our 2003 Incentive Plan, which was adopted by our Board of Directors and has been approved by our stockholders as amended, covers stock awards issued under our original 2003 Incentive Plan and precedessor equity plan. This incentive plan permits the granting of any or all of the following types of awards:

•

stock options;

-76-

•

restricted stock;



•

performance awards;



•

phantom shares;



•

other stock-based awards;



•

bonus shares; and



•

cash awards.

        All non-employee directors and employees of, and any consultants to, us or any of our affiliates are eligible for participation under the incentive plan.

        The number of shares with respect to which awards may be granted under the 2003 Incentive Plan may not exceed 5,000,000 shares, of which awards for 3,268,300 shares have been issued as of March 31, 2005. The incentive plan will be administered by the compensation committee of our board of directors. The compensation committee will select the participants who will receive awards, determine the type and terms of the awards to be granted and interpret and administer the incentive plan. No awards may be granted under the incentive plan after April 12, 2014.

        The options granted pursuant to the 2003 Incentive Plan may be either incentive options qualifying for beneficial tax treatment for the recipient as "incentive stock options" under Section 422 of the Code or non-qualified options. No person may be issued incentive stock options that first become exercisable in any calendar year with respect to shares having an aggregate fair market value, at the date of grant, in excess of $100,000. No incentive stock option may be granted to a person if at the time such option is granted the person owns stock possessing more than 10% of the total combined voting power of all classes of our stock or any of our subsidiaries as defined in Section 424 of the Code, unless at the time incentive stock options are granted the purchase price for the option shares is at least 110% of the fair market value of the option shares on the date of grant and the incentive stock options are not exercisable five years after the date of grant.

        The 2003 Incentive Plan permits the payment of qualified performance-based compensation within the meaning of Section 162(m) of the Code, which generally limits the deduction that we may take for compensation paid in excess of $1,000,000 to certain of our "covered officers" in any one calendar year unless the compensation is "qualified performance-based compensation" within the meaning of Section 162(m) of the Code. The 2003 Incentive Plan was approved by our stockholders prior to this initial public offering. This prior stockholder approval (assuming no further material modifications of the plan) will satisfy the stockholder approval requirements of Section 162(m) following this initial public offering for a transition period ending not later than our annual meeting of stockholders in 2009.

Tax Treatment for our 2003 Incentive Plan

        The following is a brief summary of certain of the United States federal income tax consequences relating to our 2003 Incentive Plan based on federal income tax laws currently in effect. This summary applies to the plan as normally operated and is not intended to provide or supplement tax advice. Individual circumstances may vary these results, and we recommend that each participant consult his or her own tax counsel for advice regarding tax treatment under the plan. The summary contains general statements based on current United States federal income tax statutes, regulations and currently available interpretations thereof. This summary is not intended to be exhaustive and does not describe state, local or foreign tax consequences or the effect, if any, of gift, estate and inheritance taxes.

        Non-qualified Stock Options.    An optionee will not recognize any taxable income upon the grant of a non-qualified stock option. We will not be entitled to a federal income tax deduction with

-77-

respect to the grant of a non-qualified stock option. Upon exercise of a non-qualified stock option, the excess of the fair market value of the common stock transferred to the optionee over the option exercise price will be taxable as compensation income to the optionee and will be subject to applicable withholding taxes. Such fair market value generally will be determined on the date the shares of common stock are transferred pursuant to the exercise. We generally will be entitled to a federal income tax deduction at such time in the amount of such compensation income. The optionee's federal income tax basis for the common stock received pursuant to the exercise of a non-qualified stock option will equal the sum of the compensation income recognized and the exercise price. In the event of a sale of common stock received upon the exercise of a non-qualified stock option, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss.

        Incentive Stock Options.    An optionee will not recognize any taxable income at the time of grant or timely exercise of an incentive stock option (but in some circumstances may be subject to an alternative minimum tax as a result of exercise), and we will not be entitled to a federal income tax deduction with respect to such grant or exercise. A sale or exchange by an optionee of shares acquired upon the exercise of an incentive stock option more than one year after the transfer of the shares to such optionee and more than two years after the date of grant of the incentive stock option will result in the difference between the amount realized and the exercise price, if any, being treated as long-term capital gain (or loss) to the optionee. If such sale or exchange takes place within two years after the date of grant of the incentive stock option or within one year from the date of transfer of the shares to the optionee, such sale or exchange generally will constitute a "disqualifying disposition" of such shares that will have the following result: any excess of (a) the lesser of (1) the fair market value of the shares at the time of exercise of the incentive stock option and (2) the amount realized on such disqualifying disposition of the shares over (b) the option exercise price of such shares, will be ordinary income to the optionee, and we generally will be entitled to a federal income tax deduction in the amount of such income. The balance, if any, of the optionee's gain upon a disqualifying disposition will qualify as capital gain and will not result in any deduction by us.

        Restricted Stock.    A grantee generally will not recognize taxable income upon the grant of restricted stock, and the recognition of any income will be postponed until such shares are no longer subject to restrictions on transfer or the risk of forfeiture. When either the transfer restrictions or the risk of forfeiture lapses, the grantee will recognize ordinary income equal to the fair market value of the restricted stock at the time of such lapse and, subject to satisfying applicable income reporting requirements and any deduction limitation under Section 162(m) of the Code, we will be entitled to a federal income tax deduction in the same amount and at the same time as the grantee recognized ordinary income. A grantee may elect to be taxed at the time of the grant of restricted stock and, if this election is made, the grantee will recognize ordinary income equal to the excess of the fair market value of the restricted stock at the time of grant (determined without regard to any of the restrictions thereon) over the amount paid, if any, by the grantee for such shares. We generally will be entitled to a federal income tax deduction in the same amount and at the same time as the grantee recognizes ordinary income.

        Performance Awards, Phantom Shares and Other Stock-Based Awards.    Generally, a grantee will not recognize any taxable income and we will not be entitled to a deduction upon the award of performance awards, phantom shares and other stock-based awards. Upon vesting, the participant would include in ordinary income the value of any shares received and an amount equal to any cash received. Subject to satisfying applicable income reporting requirements and any deduction limitation under Section 162(m) of the Code, we will be entitled to a federal income tax deduction equal to the amount of ordinary income recognized by the grantee.

-78-

        Bonus Shares and Cash Awards.    Upon the receipt of bonus shares and cash awards, the grantee would include in ordinary income the value of any shares received and an amount equal to any cash received. Subject to satisfying applicable income reporting requirements and any deduction limitation under Section 162(m) of the Code, we will be entitled to a federal income tax deduction equal to the amount of ordinary income recognized by the grantee.

        Deferred Compensation and Parachute Taxes.    Section 409A of the Code provides for an additional 20% tax, among other things, on awards that, if subject to Section 409A, do not comply with the requirements of this section. We intend for awards to comply with Section 409A. In addition, if, upon a change of control of us, the vesting or payment of awards to certain "disqualified individuals" exceeds certain amounts, that individual will be subject to a 20% excise tax on such payments and those amounts will not be deductible by us.

Employment Agreements

        Under our prior employment agreement with Mr. Huseman through April 30, 2004, Mr. Huseman had a minimum annual salary of $250,000 and an annual bonus ranging from $50,000 to $250,000 based on the level of performance objectives achieved by us. Under this employment agreement, Mr. Huseman received a grant of 45,530 shares of stock in 1999. Under this agreement, as amended, Mr. Huseman received additional grants during 2000 of an additional 19,510 shares that were subject to forfeiture and forfeited and 65,040 shares of restricted stock that vest on anniversaries of his employment commencement date or earlier upon certain qualified terminations of his employment, 19,510 shares of which were subject to forfeiture and forfeited.

        Under the current employment agreement with Mr. Huseman effective March 1, 2004 through February 2007, Mr. Huseman is entitled to an annual salary of $325,000 and an annual bonus ranging from $50,000 to $325,000 based on Mr. Huseman's performance. Under this employment agreement, Mr. Huseman is eligible from time to time to receive grants of stock options and other long-term equity incentive compensation under our Amended and Restated 2003 Incentive Plan. In addition, upon a qualified termination of employment Mr. Huseman would be entitled to three times his base salary plus his current annual incentive target bonus for the full year in which the termination of employment occurred. Similarly, following a change of control of our company, Mr. Huseman would be entitled to a lump sum payment of two times his base salary plus his current annual incentive target bonus for the full year in which the change of control occurred.

        We have also entered into employment agreements with Dub W. Harrison, Charles W. Swift, James J. Carter and James E. Tyner through April 2006. Mr. Harrison is entitled to an annual salary of $120,000, Messrs. Swift and Carter are each entitled to an annual salary of $130,000 and Mr. Tyner is entitled to an annual salary of $110,000. Under these agreements, if the officer's employment is terminated for certain reasons, he would be entitled to a lump sum severance payment equal to six months' salary, or 18 months' salary (or 36 months' salary in the case of Mr. Carter or 12 months' salary in the case of Mr. Tyner) if termination is on or following a change of control of our company.

        Under an employment agreement with Alan Krenek effective January 26, 2005 through January 2008, Mr. Krenek is entitled to an annual salary of $185,000 and an annual bonus, based on Mr. Krenek's performance, ranging from $25,000 to $138,750. Mr. Krenek is also eligible to participate in our 2003 Incentive Plan. Under this employment agreement, Mr. Krenek has already received a one-time cash bonus of $37,500 and an initial grant of options to purchase 100,000 shares of stock. Under this agreement, if Mr. Krenek's employment is terminated for certain reasons, he would be entitled to a lump sum severance payment equal to 12 months' salary, or 18 months' salary if termination is on or following a change of control of our company.

-79-

Indemnification Agreements

        We have also entered into indemnification agreements with all of our directors and some of our executive officers. These indemnification agreements are intended to permit indemnification to the fullest extent now or hereafter permitted by the General Corporation Law of the State of Delaware. It is possible that the applicable law could change the degree to which indemnification is expressly permitted.

        The indemnification agreements cover expenses (including attorneys' fees), judgments, fines and amounts paid in settlement incurred as a result of the fact that such person, in his or her capacity as a director or officer, is made or threatened to be made a party to any suit or proceeding. The indemnification agreements generally cover claims relating to the fact that the indemnified party is or was an officer, director, employee or agent of us or any of our affiliates, or is or was serving at our request in such a position for another entity. The indemnification agreements also obligate us to promptly advance all reasonable expenses incurred in connection with any claim. The indemnitee is, in turn, obligated to reimburse us for all amounts so advanced if it is later determined that the indemnitee is not entitled to indemnification. The indemnification provided under the indemnification agreements is not exclusive of any other indemnity rights; however, double payment to the indemnitee is prohibited.

        We are not obligated to indemnify the indemnitee with respect to claims brought by the indemnitee against:

•

us, except for:



•

claims regarding the indemnitee's rights under the indemnification agreement;



•

claims to enforce a right to indemnification under any statute or law; and



•

counter-claims against us in a proceeding brought by us against the indemnitee; or



•

any other person, except for claims approved by our board of directors.

        We have also agreed to obtain and maintain director and officer liability insurance for the benefit of each of the above indemnitees. These policies will include coverage for losses for wrongful acts and omissions and to ensure our performance under the indemnification agreements. Each of the indemnitees will be named as an insured under such policies and provided with the same rights and benefits as are accorded to the most favorably insured of our directors and officers.

-80-

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Transactions with Officers and Directors

        We performed well servicing and fluid services for Southwest Royalties Holdings, Inc., which owned the shares currently owned by Fortress Holdings, LLC until April 2005 and owned the general partner of Southwest Partners II, L.P. and Southwest Partners III, L.P. until May 2004, based on prices we believe to be comparable to prices charged in the region. Fees paid to us by Southwest Royalties for these services were $800,000, $1.3 million and $140,000 for the years ended 2002, 2003 and 2004, respectively. Mr. Wommack, one of our directors, was President of Southwest Royalties from 1983 until May 2004.

Transactions with DLJ Merchant Banking

        In December 2000, we completed a private recapitalization by DLJ Merchant Banking, which gained majority control of us. The funds comprising DLJ Merchant Banking are part of DLJ Merchant Banking Partners, which is a private equity investor with a 20-year history of investing in leveraged buyouts and related transactions across a broad range of industries. DLJ Merchant Banking Partners is part of Credit Suisse First Boston's Alternative Capital Division, Credit Suisse First Boston's dedicated alternative asset platform.

        DLJ Merchant Banking has contributed approximately $81 million through several equity investments and has been instrumental in providing and arranging capital to drive our growth. DLJ Merchant Banking currently beneficially owns approximately 73.1% of our outstanding common stock (or 76.6% on a diluted basis giving effect to the exercise of warrants held by these funds). DLJ Merchant Banking and its affiliated funds are selling shares of our common stock in this offering. See "Principal and Selling Stockholders." Following the consummation of this offering, DLJ Merchant Banking will beneficially own approximately             % of our outstanding common stock (or             % if the underwriters' over-allotment option is exercised in full).

        Pursuant to the terms of our stockholders' agreement among us, DLJ Merchant Banking and our other stockholders, DLJ Merchant Banking had the right to designate a majority of the members of our Board of Directors. After the completion of this offering, representatives originally designated by DLJ Merchant Banking will continue to compose a majority of our Board of Directors, but DLJ Merchant Banking will no longer have the right to designate members of our Board of Directors.

        Subject to certain restrictions, the stockholders' agreement also provides DLJ Merchant Banking rights to require us to register shares of our common stock. These stockholders may require us to register shares of common stock on up to three occasions after the completion of this offering, provided that the proposed offering proceeds for the offering equal or exceed $10 million (or $5 million if we are able to register on Form S-3). We have agreed to pay most offering fees and expenses associated with the registration and offering of these shares, other than underwriting fees, discounts or commissions. We have also agreed to indemnify these stockholders and their officers, directors, partners, legal counsel and other listed representatives against certain losses, claims, damages or liabilities in connection with the registered offering of their shares.

Relationships with Certain Directors

        Steven A. Webster, the Chairman of our Board of Directors, is the Co-Managing Partner of Avista Capital Holdings, L.P. ("Avista"), a private equity firm that makes investments in the energy sector. This relationship may create a conflict of interest because of his responsibilities to Avista and its owners. His duties as a partner in or director or officer of Avista or its affiliates may conflict with his duties as a director of our company regarding corporate opportunities and other matters. The resolution of this conflict of interest may not always be in our stockholders' best interest.

-81-

PRINCIPAL AND SELLING STOCKHOLDERS

        The following table sets forth information with respect to the beneficial ownership of our common stock as of June 30, 2005 by:

•

each person who is known by us to own beneficially 5% or more of our outstanding common stock;



•

each of our named executive officers;



•

each of our directors; and



•

all of our executive officers and directors as a group (13 persons).

        Except as otherwise indicated, the person or entities listed below have sole voting and investment power with respect to all shares of our common stock beneficially owned by them, except to the extent this power may be shared with a spouse. Unless otherwise indicated, the address of each stockholder listed below is 400 W. Illinois, Suite 800, Midland, TX 79701.

	Shares Beneficially Owned Prior to this Offering				Shares Beneficially Owned After this Offering
Name of Beneficial Owner				Number of Shares Offered
	Number	Percent			Number	Percent
DLJ Merchant Banking Partners III, L.P. and affiliated funds(1)	25,486,280	76.6	%				%
First Reserve Fund VIII, L.P.(2)	3,371,175	11.7	%
Fortress Holdings, LLC(3)(4)(12)	941,590	3.3	%				%
Anchor Resources, LLC(3)(4)(12)	2,024,340	7.0	%				%
Kenneth V. Huseman(5)	1,123,950	3.8	%	—	1,123,950		%
James J. Carter(6)	248,430	*		—	248,430	*
Dub W. Harrison(7)	160,590	*		—	160,590	*
Charles W. Swift(8)	154,325	*		—	154,325	*
James E. Tyner(9)	8,335	*		—	8,335	*
Steven A. Webster(10)	52,500	*		—	52,500	*
James S. D'Agostino, Jr.(11)	15,835	*		—	15,835	*
William E. Chiles(12)	17,500	*		—	17,500	*
Robert F. Fulton(10)	52,500	*		—	52,500	*
Sylvester P. Johnson, IV(10)	52,500	*		—	52,500	*
H.H. Wommack, III(3)(4)(13)	3,018,430	10.4	%				%
Directors and Executive Officers as a Group (13 persons)(14)	4,904,895	16.4	%				%

*

Less than one percent.

(1)

Includes 21,136,280 shares of common stock and 4,350,000 shares of common stock issuable upon exercise of warrants owned by DLJ Merchant Banking and its affiliates as follows: DLJ

-82-

Merchant Banking Partners III, L.P.; DLJ ESC II, L.P.; MBP III Plan Investors, L.P.; DLJ Offshore Partners III, C.V.; DLJ Offshore Partners III-1, C.V.; DLJ Offshore Partners III-2, C.V.; DLJ MB Funding III, Inc.; DLJMB Partners III GmbH & Co. KG; and Millennium Partners II, L.P.

Credit Suisse, a Swiss bank (the "Bank"), owns the majority of the voting stock of Credit Suisse First Boston, Inc., a Delaware corporation which in turn owns all of the voting stock of Credit Suisse First Boston (USA) Inc., a Delaware corporation ("CSFB-USA"). The entities discussed in the above paragraph are merchant banking funds managed by indirect subsidiaries of CSFB-USA and form part of Credit Suisse First Boston's Alternative Capital Division. The ultimate parent company of the Bank is Credit Suisse Group ("CSG"). CSG disclaims beneficial ownership of the reported Common Stock that is beneficially owned by its direct and indirect subsidiaries. Steven A. Webster served as the Chairman of Global Energy Partners, a specialty group within Credit Suisse First Boston's Alternative Capital Division, from 1999 until June 30, 2005 and remains a consultant to Credit Suisse First Boston's Alternative Capital Division.

All of the DLJ Merchant Banking entities can be contacted at Eleven Madison Avenue, New York, New York 10010-3629 except for the three "Offshore Partners" entities, which can be contacted at John B. Gosiraweg, 14, Willemstad, Curacao, Netherlands Antilles.

Number and percentage of shares beneficially owned after this offering assumes that the over-allotment option is exercised in full with respect to shares of common stock owned by DLJ Merchant Banking.

(2)

Includes 842,795 shares currently held in escrow as security for certain of its indemnification obligations pursuant to its Escrow Agreement with us and Amegy, N.A., as the escrow agent. As the record owner of these securities, First Reserve Fund VIII, L.P. is entitled to exercise all voting rights with respect to these shares.

(3)

Fortress Holdings, LLC, successor in interest to Southwest Royalties Holdings, Inc., directly owns 941,590 shares, or 3.3% of total shares outstanding before the offering. Mr. Wommack, our director, is also a director and President of Fortress Capital, LLC. The members of Fortress Capital, LLC who beneficially own 5% or more of the outstanding units of Fortress Holdings, LLC are H. H. Wommack, III, Galloway Bend, Ltd., Sagebrush Oil Company and H. Allen Corey, who own approximately 33%, 32%, 5% and 5% of its outstanding units, respectively. Does not include shares in which Fortress Holdings, LLC has an indirect interest as a member of Anchor Resources, LLC as described in footnote 4 below. Does not include shares owned directly by Anchor Resources, LLC in which Fortress Holdings, LLC has an indirect pecuniary interest.

(4)

Includes 673,680 shares owned directly by Southwest Partners II, L.P. and 1,350,660 shares owned directly by Southwest Partners III, L.P. Anchor Resources, LLC, controls the vote of all shares owned by Southwest Partners II, L.P. and Southwest Partners III, L.P. as managing general partner of each of the two partnerships. The number of beneficially owned shares and percentage of class listed above reflect this control. Anchor Resources, LLC owns a 15% managing general partner interest and a 1.7% limited partner interest in Southwest Partners II. No other person owns 5% or more of the partnership interests in Southwest Partners II. Anchor Resources, LLC owns a 15% managing general partner interest and a 0.2% limited partner interest in Southwest Partners III. No other person owns 5% or more of the partnership interests in Southwest Partners III. Mr. Wommack, our director, is also a director and President of Anchor Resources, LLC. The members of Anchor Resources, LLC who beneficially own 5% or more of the units of Anchor Resources, LLC are Bosworth & Co., Fortress Holdings, LLC, Harvard & Co., Bear Stearns Securities Corp., and Cudd & Co., who own approximately 25%, 23%, 13%, 11% and 10% of its units, respectively.

-83-

(5)

Includes 450,000 shares of restricted stock, of which 337,500 remain subject to vesting in one-third increments on February 24, 2006, 2007 and 2008, and 399,755 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 166,650 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan. Shares beneficially owned after this offering does not give effect to the potential sale of up to              shares that may be sold pursuant to the exercise of the underwriters' over-allotment option.

(6)

Includes 100,000 shares of restricted stock, of which 50,000 are subject to vesting on February 24, 2006, and 128,720 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 50,000 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

(7)

Includes 50,000 shares of restricted stock, of which 37,500 remain subject to vesting in one-third increments on February 24, 2006, 2007 and 2008, and 89,560 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 41,665 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

(8)

Includes 50,000 shares of restricted stock, of which 37,500 remain subject to vesting in one-third increments on February 24, 2006, 2007 and 2008, and 89,560 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 51,665 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

(9)

Includes 8,335 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 26,665 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

(10)

Includes 52,500 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 40,000 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

(11)

Includes 15,835 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 56,665 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

(12)

Includes 17,500 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 60,000 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

(13)

Includes 52,500 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 40,000 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan. Also reflects the beneficial ownership of an aggregate of 2,965,930 shares beneficially owned by Fortress Holdings, LLC and Anchor Resources, LLC. H. H. Wommack, III is a significant unitholder of Fortress Capital, LLC and a director, manager and the President of each of Fortress Holdings, LLC and Anchor Resources, LLC with the intercompany relationships discussed in footnotes 3 and 4 above. Mr. Wommack disclaims beneficial ownership of the shares beneficially owned directly by Fortress Holdings, LLC and indirectly by Anchor Resources, LLC other than to the extent of his pecuniary interest in such shares.

(14)

Includes an aggregate of 837,500 restricted shares, of which 603,125 remain subject to vesting, and an aggregate of 959,265 shares issuable within 60 days upon the exercise of options granted under our 2003 Incentive Plan. Does not include 613,310 shares underlying options that are not exercisable within 60 days granted under our 2003 Incentive Plan.

-84-

DESCRIPTION OF CAPITAL STOCK

        Upon the completion of this offering, our authorized capital stock will consist of:

•

80,000,000 shares of common stock, $0.01 par value; and



•

5,000,000 shares of preferred stock, $0.01 par value, none of which are currently designated.

        Upon the completion of this offering             shares of common stock and no shares of preferred stock will be outstanding.

        The following summarizes the material provisions of our capital stock and important provisions of our certificate of incorporation and bylaws. This summary is qualified by our certificate of incorporation and bylaws, copies of which have been filed as exhibits to the registration statement of which this prospectus is a part and by the provisions of applicable law.

Common Stock

        Holders of common stock are entitled to one vote per share on all matters to be voted upon by the stockholders. Because holders of common stock do not have cumulative voting rights, the holders of a majority of the shares of common stock can elect all of the members of the board of directors standing for election. The holders of common stock are entitled to receive dividends as may be declared by the board of directors. Upon our liquidation, dissolution or winding up, and subject to any prior rights of outstanding preferred stock, the holders of our common stock will be entitled to share pro rata in the distribution of all of our assets available for distribution to our stockholders after satisfaction of all of our liabilities and the payment of the liquidation preference of any preferred stock that may be outstanding. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and non-assessable. The holders of our common stock will have no preemptive or other subscription rights to purchase our common stock.

Escrow Agreement

        In September 2003, we acquired all the outstanding shares of FESCO Holdings Inc. in exchange for 3,650,000 shares of our common stock. In connection with this transaction, we entered into an escrow agreement pursuant to which 365,000 shares of the total consideration remain in escrow with the escrow agent to secure certain indemnification obligations of the sellers under the stock purchase agreement for this transaction. If we incur or suffer any losses for which the sellers are required to indemnify us, then we will be entitled to the number of shares in escrow equaling the dollar value of the loss. The sellers are the record owners of the shares in escrow and are entitled to exercise all voting rights with respect to such shares. Each seller's remaining shares in escrow will be released to such seller within twenty-five days after December 31, 2005.

Preferred Stock

        Subject to the provisions of the certificate of incorporation and limitations prescribed by law, the board of directors will have the authority to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, dividend rates, conversion rates, voting rights, terms of redemption, redemption prices, liquidation preferences and the number of shares constituting any series or the designation of the series, which may be superior to those of the common stock, without further vote or action by the stockholders. We have no present plans to issue any shares of preferred stock.

        One of the effects of undesignated preferred stock may be to enable the board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer,

-85-

proxy contest, merger or otherwise, and, as a result, protect the continuity of our management. The issuance of shares of the preferred stock under the board of directors' authority described above may adversely affect the rights of the holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock or may otherwise adversely affect the market price of the common stock.

Warrants

        There are currently outstanding warrants held by DLJ Merchant Banking to purchase up to 4,350,000 shares of our common stock. These warrants are exercisable at a purchase price of $4.00 per share. Warrants to purchase 600,000 shares expire on February 13, 2007 and warrants to purchase 3,750,000 shares expire on June 30, 2007. These warrants were issued by us in 2002 in connection with the issuance and sale by us of our common stock and preferred stock.

Provisions of Our Certificate of Incorporation and Bylaws

Written Consent of Stockholders

        Our certificate of incorporation and bylaws provide that any action required or permitted to be taken by our stockholders must be taken at a duly called meeting of stockholders and not by written consent.

Amendment of the Bylaws

        Under Delaware law, the power to adopt, amend or repeal bylaws is conferred upon the stockholders. A corporation may, however, in its certificate of incorporation also confer upon the board of directors the power to adopt, amend or repeal its bylaws. Our charter and bylaws grant our board the power to adopt, amend and repeal our bylaws on the affirmative vote of a majority of the directors then in office. Our stockholders may adopt, amend or repeal our bylaws but only at any regular or special meeting of stockholders by the holders of not less than 66²/3% of the voting power of all outstanding voting stock.

Special Meetings of Stockholders

        Our bylaws preclude the ability of our stockholders to call special meetings of stockholders.

Other Limitations on Stockholder Actions

        Advance notice is required for stockholders to nominate directors or to submit proposals for consideration at meetings of stockholders. In addition, the ability of our stockholders to remove directors without cause is precluded.

Classified Board

        Only one of three classes of directors is elected each year. See "Management — Board of Directors."

-86-

Limitation of Liability of Officers and Directors

        Our certificate of incorporation provides that no director shall be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except for liability as follows:

•

for any breach of the director's duty of loyalty to us or our stockholders;



•

for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of laws;



•

for unlawful payment of a dividend or unlawful stock purchase or stock redemption; and



•

for any transaction from which the director derived an improper personal benefit.

        The effect of these provisions is to eliminate our rights and our stockholders' rights, through stockholders' derivative suits on our behalf, to recover monetary damages against a director for a breach of fiduciary duty as a director, including breaches resulting from grossly negligent behavior, except in the situations described above.

Business Combination Under Delaware Law

        We are subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a "business combination" with an "interested stockholder" for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner.

        Section 203 defines a "business combination" as a merger, asset sale or other transaction resulting in a financial benefit to the interested stockholders. Section 203 defines an "interested stockholder" as a person who, together with affiliates and associates, owns, or, in some cases, within three years prior, did own, 15% or more of the corporation's voting stock. Under Section 203, a business combination between us and an interested stockholder is prohibited unless:

•

our board of directors approved either the business combination or the transaction that resulted in the stockholders becoming an interested stockholder prior to the date the person attained the status;



•

upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of our voting stock outstanding at the time the transaction commenced, excluding, for purposes of determining the number of shares outstanding, shares owned by persons who are directors and also officers and issued employee stock plans, under which employee participants do not have the right to determine confidentially whether shares held under the plan will be tendered in a tender or exchange offer; or



•

the business combination is approved by our board of directors on or subsequent to the date the person became an interested stockholder and authorized at an annual or special meeting of the stockholders by the affirmative vote of the holders of at least 66²/3% of the outstanding voting stock that is not owned by the interested stockholder.

        This provision has an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging takeover attempts that might result in a premium over the market price for the shares of our common stock. With approval of our stockholders, we could amend our certificate of incorporation in the future to elect not to be governed by the anti-takeover law. This election would be effective 12 months after the adoption of the amendment

-87-

and would not apply to any business combination between us and any person who became an interested stockholder on or before the adoption of the amendment.

Registration Rights

        Under the terms of our Second Amended and Restated Stockholders' Agreement dated as of April 2, 2004, DLJ Merchant Banking has demand rights to require us to register shares of our common stock. These stockholders may require us to register shares of common stock on up to three occasions after the completion of an initial public offering, provided that the proposed offering proceeds for the offering equal or exceed $10 million (or $5 million if we are able to register on Form S-3). Under this agreement, Southwest Royalties Holdings, Inc., Southwest Partners II, L.P. and Southwest Partners III, L.P., which we call the "Southwest Parties," and First Reserve Fund VIII, LP, Randy D. Spaur, Peter O. Kane, Michael D. Schmid, Jay R. Anderson, William L. Hubbell, Donald C. Busha Revocable Trust, and Jay D. Hacklin, which we call the "FESCO Parties," also have demand rights to require us to register shares of our common stock. The Southwest Parties and the FESCO Parties may each make one request to us to register shares of our common stock after the completion of an initial public offering, provided that the proceeds from the sale of such shares pursuant to such registration are expected to be at least $10 million (or $5 million if we are able to register such shares on Form S-3) and, at the time of such demand, DLJ Merchant Banking beneficially owns less than 25% of their percentage ownership of our common stock immediately following the closing of the Securities Purchase Agreement dated as of December 21, 2000, by and among DLJ Merchant Banking and us. In addition, all current stockholders under the stockholders' agreement may generally require us to include shares of common stock in a registration statement filed by us other than on Forms S-4 or S-8 or any successor forms. The rights granted under this agreement will terminate whenever the shares covered by this agreement may be sold under Rule 144(k) or when these shares have been disposed of in connection with a registration statement or under Rule 144.

Transfer Agent and Registrar

        The transfer agent and registrar for the common stock is American Stock Transfer & Trust Company.

Listing

        We have applied to include our shares of common stock for listing on the NYSE under the symbol "BAS."

-88-

SHARES ELIGIBLE FOR FUTURE SALE

        Prior to this offering, there has been no public market for our common stock. The market price of our common stock could drop due to sales of a large number of shares of our common stock or the perception that these sales could occur. These factors also could make it more difficult to raise funds through future offerings of common stock.

        After this offering,             shares of common stock will be outstanding, or             shares if the underwriters exercise their over-allotment option in full. Of these shares, the             shares sold in this offering, or             shares if the underwriters exercise their over-allotment option in full, will be freely tradable without restriction under the Securities Act except for any shares purchased by one of our "affiliates" as defined in Rule 144 under the Securities Act. A total of             shares will be "restricted securities" within the meaning of Rule 144 under the Securities Act or subject to lock-up arrangements. An aggregate of             of these shares will become available for resale in the public market as shown in the chart below:

Number of shares	Date of eligibility for resale into public market
	No less than 180 days after the date of this prospectus (in accordance with lock-up agreements with Goldman, Sachs & Co. and Credit Suisse First Boston LLC).
	Between 181 and 365 days after the date of this prospectus due to the requirements of the federal securities laws.

        The restricted securities generally may not be sold unless they are registered under the Securities Act or are sold under an exemption from registration, such as the exemption provided by Rule 144 under the Securities Act. After this offering, the holders of             shares of our common stock will have rights, subject to some limited conditions, to demand that we include their shares in registration statements that we file on their behalf, on our behalf or on behalf of other stockholders. By exercising their registration rights and selling a large number of shares, these holders could cause the price of our common stock to decline. Furthermore, if we file a registration statement to offer additional shares of our common stock and have to include shares held by those holders, it could impair our ability to raise needed capital by depressing the price at which we could sell our common stock.

        Our officers and directors and all of our stockholders will enter into lock-up agreements described in "Underwriting."

        As restrictions on resale end, the market price of our common stock could drop significantly if the holders of these restricted shares sell them, or are perceived by the market as intending to sell them.

        As soon as practicable after this offering, we intend to file one or more registration statements with the SEC on Form S-8 providing for the registration of 5,000,000 shares of our common stock issued or reserved for issuance under our stock option plans. Subject to the exercise of unexercised options or the expiration or waiver of vesting conditions for restricted stock and the expiration of lock-ups we and our stockholders have entered into, shares registered under these registration statements on Form S-8 will be available for resale immediately in the public market without restriction.

Rule 144

        In general, under Rule 144 as currently in effect, any person (or persons whose shares are aggregated), including an affiliate, who has beneficially owned shares for a period of at least one

-89-

year is entitled to sell, within any three-month period, a number of shares that does not exceed the greater of:

•

1% of the then outstanding shares of common stock; and



•

the average weekly trading volume in the common stock on the NYSE during the four calendar weeks immediately preceding the date on which the notice of the sale on Form 144 is filed with the Securities Exchange Commission.

        Sales under Rule 144 are also subject to other provisions relating to notice and manner of sale and the availability of current public information about us.

Rule 144(k)

        Under Rule 144(k), a person who is not deemed to have been one of our affiliates at any time during the 90 days preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, including the holding period of any prior owner other than an "affiliate," is entitled to sell the shares without complying with the manner of sale, public information, volume limitation or notice provision of Rule 144.

-90-

CERTAIN UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS

        The following is a general discussion of the principal United States federal income and estate tax consequences of the ownership and disposition of our common stock that may be relevant to you if you are a non-U.S. holder. As used in this discussion, the term "non-U.S. holder" means a beneficial owner of our common stock that is not, for U.S. federal income tax purposes:

•

an individual who is a citizen or resident of the United States;



•

a corporation or partnership (including any entity treated as a corporation or partnership for U.S. federal income tax purposes) created or organized in or under the laws of the United States, or of any political subdivision of the United States;



•

an estate whose income is subject to U.S. federal income taxation regardless of its source; or



•

a trust, in general, if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust, or if it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a United States person.

        An individual may be treated as a resident of the United States in any calendar year for U.S. federal income tax purposes, instead of a nonresident, by, among other ways, being present in the United States for at least 31 days in that calendar year and for an aggregate of at least 183 days during a three-year period ending in the current calendar year. For purposes of this calculation, you would count all of the days present in the current year, one-third of the days present in the immediately preceding year and one-sixth of the days present in the second preceding year. Residents are taxed for U.S. federal income tax purposes as if they were U.S. citizens.

        This discussion does not consider:

•

U.S. state or local or non-U.S. tax consequences;



•

all aspects of U.S. federal income and estate taxes or specific facts and circumstances that may be relevant to a particular non-U.S. holder's tax position, including the fact that in the case of a non-U.S. holder that is an entity treated as a partnership for U.S. federal income tax purposes, the U.S. tax consequences of holding and disposing of our common stock may be affected by certain determinations made at the partner level;



•

the tax consequences for the stockholders, partners or beneficiaries of a non-U.S. holder;



•

special tax rules that may apply to particular non-U.S. holders, such as financial institutions, insurance companies, tax-exempt organizations, U.S. expatriates, broker-dealers, and traders in securities; or



•

special tax rules that may apply to a non-U.S. holder that holds our common stock as part of a "straddle," "hedge," "conversion transaction," "synthetic security" or other integrated investment.

        The following discussion is based on provisions of the U.S. Internal Revenue Code of 1986, as amended, existing and proposed Treasury regulations and administrative and judicial interpretations, all as of the date of this prospectus, and all of which are subject to change, retroactively or prospectively. The following summary assumes that a non-U.S. holder holds our common stock as a capital asset. Each non-U.S. holder is urged to consult a tax advisor regarding the U.S. Federal, state, local and non-U.S. income and other tax consequences of acquiring, holding and disposing of shares of our common stock.

-91-

Distributions on Common Stock

        In the event that we make cash distributions on our common stock, these distributions generally will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Dividends paid to non-U.S. holders of our common stock that are not effectively connected with the non-U.S. holder's conduct of a U.S. trade or business will be subject to U.S. withholding tax at a 30% rate, or if a tax treaty applies, a lower rate specified by the treaty. Non-U.S. holders are urged to consult their tax advisors regarding their entitlement to benefits under a relevant income tax treaty.

        Dividends that are effectively connected with a non-U.S. holder's conduct of a trade or business in the United States and, if an income tax treaty applies, are attributable to a permanent establishment in the United States, are taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons. In that case, we will not have to withhold U.S. federal withholding tax if the non-U.S. holder complies with applicable certification and disclosure requirements. In addition, a "branch profits tax" may be imposed at a 30% rate, or a lower rate under an applicable income tax treaty, on dividends received by a foreign corporation that are effectively connected with the conduct of a trade or business in the United States.

        A non-U.S. holder that claims the benefit of an applicable income tax treaty generally will be required to satisfy applicable certification and other requirements. However,

•

in the case of common stock held by a foreign partnership, the certification requirement will generally be applied to the partners of the partnership and the partnership will be required to provide certain information;



•

in the case of common stock held by a foreign trust, the certification requirement will generally be applied to the trust or the beneficial owners of the trust depending on whether the trust is a "foreign complex trust," "foreign simple trust" or "foreign grantor trust" as defined in the U.S. Treasury regulations; and



•

look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.

        A non-U.S. holder that is a foreign partnership or a foreign trust is urged to consult its own tax advisor regarding its status under these U.S. Treasury regulations and the certification requirements applicable to it.

        A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the U.S. Internal Revenue Service.

Gain on Disposition of Common Stock

        A non-U.S. holder generally will not be subject to U.S. federal income tax on gain recognized on a disposition of our common stock unless:

•

the gain is effectively connected with the non-U.S. holder's conduct of a trade or business in the United States and, if an income tax treaty applies, is attributable to a permanent establishment maintained by the non-U.S. holder in the United States; in these cases, the gain will be taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons and, if the non-U.S. holder is a foreign corporation, the "branch profits tax" described above may also apply;

-92-

•

the non-U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the disposition and meets other requirements; or



•

we are or have been a "United States real property holding corporation" for U.S. federal income tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held our common stock.

        Generally, a corporation is a "United States real property holding corporation" if the fair market value of its "United States real property interests" equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests plus its other assets used or held for use in a trade or business. The tax relating to stock in a "United States real property holding corporation" generally will not apply to a non-U.S. holder whose holdings, direct and indirect, at all times during the applicable period, constituted 5% or less of our common stock, provided that our common stock was regularly traded on an established securities market. We believe that we are not currently, and we do not anticipate becoming in the future, a "United States real property holding corporation" for U.S. federal income tax purposes.

U.S. Federal Estate Tax

        Common stock owned or treated as owned by an individual who is a non-U.S. holder for U.S. federal tax purposes at the time of death will be included in the individual's gross estate for U.S. federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise and, therefore, may be subject to U.S. federal estate tax.

Information Reporting and Backup Withholding Tax

        Dividends paid to you may be subject to information reporting and U.S. backup withholding. If you are a non-U.S. holder you will be exempt from this backup withholding tax if you properly provide a Form W-8BEN certifying that you are a non-U.S. holder or you otherwise meet documentary evidence requirements for establishing that you are a non-U.S. holder or otherwise establish an exemption.

        The gross proceeds from the disposition of our common stock may be subject to information reporting and backup withholding. If you sell your common stock outside the United States through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to you outside the United States, then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. However, U.S. information reporting, but not backup withholding, will generally apply to a payment of sales proceeds, even if that payment is made outside the United States, if you sell your common stock through a non-U.S. office of a broker that:

•

is a United States person;



•

derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the United States;



•

is a "controlled foreign corporation" for U.S. tax purposes; or



•

is a foreign partnership, if at any time during its tax year:

•

one or more of its partners are United States persons who in the aggregate hold more than 50% of the income or capital interests in the partnership; or

•

the foreign partnership is engaged in a U.S. trade or business,

unless the broker has documentary evidence in its files that you are a non-U.S. person and certain other conditions are met or you otherwise establish an exemption.

-93-

        If you receive payments of the proceeds of a sale of our common stock to or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless you properly provide a Form W-8BEN certifying that you are a non-U.S. person or you otherwise establish an exemption.

        You generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed your U.S. federal income tax liability by timely filing a properly completed refund claim with the U.S. Internal Revenue Service.

-94-

UNDERWRITING

        We, the selling stockholders and the underwriters named below have entered into an underwriting agreement with respect to the shares being offered. Subject to certain conditions, each underwriter has severally agreed to purchase the number of shares indicated in the following table. Goldman, Sachs & Co. and Credit Suisse First Boston LLC are the representatives of the underwriters.

Underwriters		Number of Shares
Goldman, Sachs & Co.
Credit Suisse First Boston LLC
Lehman Brothers Inc.
UBS Securities LLC
Deutsche Bank Securities Inc.
Raymond James & Associates, Inc.
RBC Capital Markets Corporation
	Total

        The underwriters are committed to take and pay for all of the shares being offered, if any are taken, other than the shares covered by the option described below unless and until this option is exercised.

        If the underwriters sell more shares than the total number set forth in the table above, the underwriters have an option to buy up to an additional             shares from the selling stockholders to cover such sales. They may exercise that option for 30 days. If any shares are purchased pursuant to this option, the underwriters will severally purchase shares in approximately the same proportion as set forth in the table above.

        The following tables show the per share and total underwriting discounts and commissions to be paid to the underwriters by us and the selling stockholders. Such amounts are shown assuming both no exercise and full exercise of the underwriters' option to purchase             additional shares.

Paid by Us	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

Paid by the Selling Stockholders	No Exercise	Full Exercise
Per Share	$	$
Total	$	$

        Shares sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover of this prospectus. Any shares sold by the underwriters to securities dealers may be sold at a discount of up to $             per share from the initial public offering price. Any such securities dealers may resell any shares purchased from the underwriters to certain other brokers or dealers at a discount of up to $             per share from the initial public offering price. If all the shares are not sold at the initial public offering price, the representatives may change the offering price and the other selling terms.

        We and our executive officers, directors, and holders of all of our outstanding shares of common stock, including the selling stockholders, have agreed with the underwriters, other than in this offering and subject to certain exceptions, not to dispose of or hedge any shares of our common stock or securities convertible into or exchangeable for shares of common stock during

-95-

the period from the date of this prospectus continuing through the date 180 days after the date of this prospectus, except with the prior written consent of the representatives. This agreement does not apply to the issuance by us of any securities in accordance with any of our existing employee benefit plans. See "Shares Available for Future Sale" for a discussion of certain transfer restrictions.

        The 180-day restricted period described in the preceding paragraph will be automatically extended if: (1) during the last 17 days of the 180-day restricted period we issue an earnings release or announce material news or a material event; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 15-day period following the last day of the 180-day period, in which case the restrictions described in the preceding paragraph will continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release of the announcement of the material news or material event.

        Prior to the offering, there has been no public market for the shares. The initial public offering price will be negotiated among us, the selling stockholders and the representatives. Among the factors to be considered in determining the initial public offering price of the shares, in addition to prevailing market conditions, will be our historical performance, estimates of our business potential and earnings prospects, an assessment of our management and the consideration of the above factors in relation to market valuation of companies in related businesses.

        An application has been made to list the common stock on the New York Stock Exchange under the symbol "BAS." In order to meet one of the requirements for listing the common stock on the NYSE, the underwriters have undertaken to sell lots of 100 or more shares to a minimum of 2,000 beneficial holders.

        In connection with the offering, the underwriters may purchase and sell shares of common stock in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Shorts sales involve the sale by the underwriters of a greater number of shares than they are required to purchase in the offering. "Covered" short sales are sales made in an amount not greater than the underwriters' option to purchase additional shares from the selling stockholders in the offering. The underwriters may close out any covered short position by either exercising their option to purchase additional shares or purchasing shares in the open market. In determining the source of shares to close out the covered short position, the underwriters will consider, among other things, the price of shares available for purchase in the open market as compared to the price at which they may purchase additional shares pursuant to the option granted to them. "Naked" short sales are any sales in excess of such option. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase in the offering. Stabilizing transactions consist of various bids for or purchases of common stock made by the underwriters in the open market prior to the completion of the offering.

        The underwriters may also impose a penalty bid. This occurs when a particular underwriter repays to the underwriters a portion of the underwriting discount received by it because the representatives have repurchased shares sold by or for the account of such underwriter in stabilizing or short covering transactions.

        Purchases to cover a short position and stabilizing transactions may have the effect of preventing or retarding a decline in the market price of our common stock, and together with the imposition of the penalty bid, may stabilize, maintain or otherwise affect the market price of the common stock. As a result, the price of the common stock may be higher than the price that otherwise might exist in the open market. If these activities are commenced, they may be

-96-

discontinued at any time. These transactions may be effected on the New York Stock Exchange, in the over-the-counter market or otherwise.

        Each of the underwriters has represented and agreed that:

•

it has not made and will not make an offer of shares to the public in the United Kingdom within the meaning of section 102B of the Financial Services and Markets Act 2000 (as amended) ("FSMA") except to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities or otherwise in circumstances which do not require the publication by us of a prospectus pursuant to the Prospectus Rules of the Financial Services Authority ("FSA");



•

it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of section 21 of FSMA) to persons who have professional experience in matters relating to investments falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 or in circumstances in which section 21 of FSMA does not apply to us; and



•

it has complied with and will comply with all applicable provisions of FSMA with respect to anything done by it in relation to the shares in, from or otherwise involving the United Kingdom.

        In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a "Relevant Member State"), each underwriter has represented and agreed that with effect from and including the date on which the Prospectus Directive is implemented in that Relevant Member State (the "Relevant Implementation Date") it has not made and will not make an offer of shares to the public in that Relevant Member State prior to the publication of a prospectus in relation to the shares which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that it may, with effect from and including the Relevant Implementation Date, make an offer of shares to the public in that Relevant Member State at any time:

•

to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities;



•

to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; or



•

in any other circumstances which do not require the publication by us of a prospectus pursuant to Article 3 of the Prospectus Directive.

        For purposes of this provision, the expression an "offer of shares to the public" in relation to any shares in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and the shares to be offered so as to enable an investor to decide to purchase or subscribe for the Shares, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, and the expression "Prospectus Directive" means Directive 2003/71/EC and includes any relevant implementing measure in each Relevant Member State.

-97-

        The shares may not be offered or sold by means of any document other than to persons whose ordinary business is to buy or sell shares or debentures, whether as principal or agent, or in circumstances which do not constitute an offer to the public within the meaning of the Companies Ordinance (Cap. 32) of Hong Kong, and no advertisement, invitation or document relating to the shares may be issued, whether in Hong Kong or elsewhere, which is directed at, or the contents of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong) other than with respect to shares which are or are intended to be disposed of only to persons outside Hong Kong or only to "professional investors" within the meaning of the Securities and Futures Ordinance (Cap. 571) of Hong Kong and any rules made thereunder.

        This prospectus has not been registered as a prospectus with the Monetary Authority of Singapore. Accordingly, this prospectus and any other document or material in connection with the offer or sale, or invitation or subscription or purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in Singapore other than under circumstances in which such offer, sale or invitation does not constitute an offer or sale, or invitation for subscription or purchase, of the securities to the public in Singapore.

        The securities have not been and will not be registered under the Securities and Exchange Law of Japan (the "Securities and Exchange Law"), and each underwriter has agreed that it will not offer or sell any securities, directly or indirectly, in Japan or to, or for the benefit of, any resident of Japan (which term as used herein means any person resident in Japan, including any corporation or other entity organized under the laws of Japan), or to others for re-offering or resale, directly or indirectly, in Japan or to a resident of Japan, except pursuant to an exemption from the registration requirements of, and otherwise in compliance with, the Securities and Exchange Law and any other applicable laws, regulations and ministerial guidelines of Japan.

        If you purchase shares of common stock offered in this prospectus, you may be required to pay stamp taxes and other charges under the laws and practices of the country of purchase, in addition to the offering price listed on the cover page of this prospectus.

        Credit Suisse First Boston LLC, one of the underwriters, is considered to be our affiliate due to the significant ownership of our outstanding common stock by DLJ Merchant Banking which is comprised of funds that are affiliates of Credit Suisse First Boston LLC. DLJ Merchant Banking is a selling stockholder in this offering. Please read "Principal and Selling Stockholders." Because Credit Suisse First Boston LLC is our affiliate, the underwriters may be deemed to have a "conflict of interest" under Rule 2710(c)(8) of the Conduct Rules of the National Association of Securities Dealers, Inc. Accordingly, this offering will be made in compliance with the applicable provisions of Rule 2720 of the Conduct Rules. Rule 2720 requires that the initial public offering price can be no higher than that recommended by a "qualified independent underwriter," as defined by the NASD. Accordingly, Goldman, Sachs & Co., another underwriter of this offering, is assuming the responsibilities of acting as the qualified independent underwriter in pricing this offering, conducting due diligence and reviewing and participating in the preparation of this prospectus and the registration statement of which this prospectus forms a part. The initial public offering price of the shares of common stock will be no higher than the price recommended by Goldman, Sachs & Co. We will pay Goldman, Sachs & Co. a fee of $10,000 for acting as the qualified independent underwriter.

        At our request, the underwriters have reserved for sale at the initial public offering price up to                          shares of the common stock for employees, directors and other persons associated with us who have expressed an interest in purchasing common stock in the offering. The number of shares available for sale to the general public offering will be reduced to the extent these persons

-98-

purchase the reserved shares. Any reserved shares not so purchased will be offered by the underwriters to the general public on the same terms as the other shares. We have agreed to indemnify the underwriters against certain liabilities and expenses, including liabilities under the Securities Act, in connection with the reserved share program.

        The underwriters have informed us that they will not confirm sales to accounts over which they exercise discretionary authority without the prior written approval of the customer.

        We will pay all of the expenses of the offering, including those of the selling stockholders (other than underwriting discounts and commissions relating to the shares sold by the selling stockholders). We estimate that the total expenses of the offering will be approximately $1.7 million.

        We and the selling stockholders have agreed to indemnify the several underwriters, and Goldman, Sachs & Co. in its capacity as qualified independent underwriter, against certain liabilities, including liabilities under the Securities Act.

        Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory, commercial banking and investment banking services for us, for which they received or will receive customary fees and expenses.

        We completed a private recapitalization in December 2000 by DLJ Merchant Banking, which gained majority control of us. DLJ Merchant Banking has invested approximately $81 million through staged equity injections and has been instrumental in providing capital to support our recent growth. DLJ Merchant Banking currently owns approximately 73.1% of our shares of common stock. DLJ Merchant Banking is selling shares of our common stock in this offering. See "Principal and Selling Stockholders." Following the consummation of this offering, DLJ Merchant Banking, which is comprised of funds that are affiliates of Credit Suisse First Boston LLC, will own    % of our common stock (    % if the underwriters' over-allotment option is exercised in full).

        Pursuant to the terms of our stockholders' agreement among us, DLJ Merchant Banking and our other stockholders, DLJ Merchant Banking had the right to designate a majority of the members of our Board of Directors. After the completion of this offering, DLJ Merchant Banking will continue to have representatives that compose a majority of our Board of Directors but will no longer have the right to designate members of our Board of Directors.

        Subject to certain restrictions, the stockholders' agreement also provides DLJ Merchant Banking rights to require us to register shares of our common stock. These stockholders may require us to register shares of common stock on up to three occasions after the completion of this offering, provided that the proposed offering proceeds for the offering equal or exceed $10 million (or $5 million if we are able to register on Form S-3). We have agreed to pay most offering fees and expenses associated with the registration and offering of these shares, other than underwriting fees, discounts or commissions. We have also agreed to indemnify these stockholders and their officers, directors, partners, legal counsel and other listed representatives against certain losses, claims, damages or liabilities in connection with the registered offering of their shares. See "Certain Relationships and Related Transactions."

        Affiliates of UBS Securities LLC are arrangers, agents and lenders under our 2004 Credit Facility and receive fees customary for performing these services and interest on such indebtedness. See "Management's Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources." We intend to use the net proceeds from this offering to repay a portion of the term loan under our senior credit facility. An affiliate of RBC Capital Markets Corporation that is a lender under this facility will receive its proportionate share of approximately 8.0% of these repayments. Affiliates of Credit Suisse First Boston Corporation, Deutsche Bank Securities Inc. and UBS Securities LLC are lenders under the revolving loans under our credit facility.

-99-

        Following the completion of this offering, Credit Suisse First Boston LLC will be considered to be our affiliate due to the ownership by its affiliates of a significant percentage of the outstanding shares of our common stock. Because of this affiliate status, the rules of the New York Stock Exchange will prohibit Credit Suisse First Boston LLC from soliciting, or making recommendations regarding, the purchase or sale of our common stock following the completion of this offering, until such time as Credit Suisse First Boston LLC ceases to be our affiliate. These rules may effectively preclude Credit Suisse First Boston LLC from preparing and disseminating analysts' research reports and earnings estimates related to us until it ceases to be our affiliate.

LEGAL MATTERS

        The validity of the shares of common stock offered by this prospectus will be passed upon for us by Andrews Kurth LLP, Houston, Texas and passed upon for the underwriters by Vinson & Elkins L.L.P., Houston, Texas.

EXPERTS

        The consolidated financial statements of Basic Energy Services, Inc. and subsidiaries as of December 31, 2003 and 2004, and for each of the years in the three-year period ended December 31, 2004, have been included in this prospectus and in the registration statement in reliance upon the report of KPMG LLP, independent registered public accountants, appearing elsewhere in this prospectus, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the December 31, 2004 consolidated financial statements refers to a change in the method of accounting for asset retirement obligations as of January 1, 2003, and a change in the method of accounting for goodwill and other intangible assets as of January 1, 2002.

        The audited consolidated financial statements of FESCO Holdings, Inc. and its subsidiaries as of December 31, 2002 and the year then ended included in this prospectus and registration statement have been so included in reliance on the report of Pricewaterhouse Coopers LLP, independent accountants, given on the authority of said firm as experts in accounting and auditing.

        The combined financial statements of the business acquired from PWI Inc. for the nine months ended September 30, 2003 have been included in this prospectus and registration statement upon the report of KPMG LLP, independent registered public accountants, appearing elsewhere in this prospectus, and upon the authority of said firm as experts in accounting and auditing. The audit report covering the September 30, 2003 financial statements refers to a change in the method of accounting for asset retirement obligations as of January 1, 2003.

-100-

WHERE YOU CAN FIND MORE INFORMATION

        We have filed with the SEC a registration statement on Form S-1 regarding the common stock offered by this prospectus. This prospectus does not contain all of the information found in the registration statement. For further information regarding us and the common stock offered in this prospectus, you may desire to review the full registration statement, including its exhibits. The registration statement, including the exhibits, may be inspected and copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington D.C. 20549. Copies of this material can also be obtained upon written request from the Public Reference Section of the SEC at prescribed rates, or accessed at the SEC's website on the Internet at http://www.sec.gov. Please call the SEC at 1-800-SEC-0330 for further information on its public reference room. In addition, our future public filings can also be inspected and copied at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005.

        You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where an offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date.

        Following the completion of this offering, we will file with or furnish to the SEC periodic reports and other information. These reports and other information may be inspected and copied at the public reference facilities maintained by the SEC or obtained from the SEC's website as provided above. Our website on the Internet is located at http://www.basicnenergyservices.com, and we expect to make our periodic reports and other information filed with or furnished to the SEC available, free of charge, through our website, as soon as reasonably practicable after those reports and other information are electronically filed with or furnished to the SEC. Information on our website or any other website is not incorporated by reference into this prospectus and does not constitute a part of this prospectus. You may also request a copy of these filings at no cost, by writing or telephoning us at the following address: Basic Energy Services, Inc., Attention: Chief Financial Officer, 400 W. Illinois, Suite 800, Midland, Texas 79701, (432) 620-5500.

        We intend to furnish or make available to our stockholders annual reports containing our audited financial statements prepared in accordance with GAAP. We also intend to furnish or make available to our stockholders quarterly reports containing our unaudited interim financial information, including the information required by Form 10-Q, for the first three fiscal quarters of each fiscal year.

-101-

INDEX TO FINANCIAL STATEMENTS

Basic Energy Services, Inc.
Audited Consolidated Financial Statements
	Report of Independent Registered Public Accounting Firm
	Consolidated Balance Sheets at December 31, 2004 and 2003
	Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2004, 2003 and 2002
	Consolidated Statements of Stockholders' Equity for the years ended December 31, 2004, 2003 and 2002
	Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002
	Notes to Consolidated Financial Statements
Unaudited Consolidated Financial Statements
	Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004
	Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2005 and 2004
	Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2005
	Consolidated Statements of Cash Flows for the three months ended March 31, 2005 and 2004
	Notes to Consolidated Financial Statements
FESCO Holdings, Inc. and Subsidiaries
Audited Consolidated Financial Statements
	Report of Independent Auditors
	Consolidated Balance Sheet as of December 31, 2002
	Consolidated Statements of Operations for the year ended December 31, 2002
	Consolidated Statements of Stockholders' Equity for the year ended December 31, 2002
	Consolidated Statements of Cash Flows for the year ended December 31, 2002
	Notes to Consolidated Financial Statements
Unaudited Consolidated Financial Statements
	Consolidated Balance Sheet at September 30, 2003
	Consolidated Statements of Operations for the nine months ended September 30, 2003
	Consolidated Statements of Stockholders' Equity for the nine months ended September 30, 2003
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2003
	Notes to Consolidated Financial Statements
PWI Inc.
Audited Combined Financial Statements
	Report of Independent Registered Public Accounting Firm
	Statements of Combined Operations for the nine months ended September 30, 2003
	Statements of Combined Equity for the nine months ended September 30, 2003
	Statements of Combined Cash Flows for the nine months ended September 30, 2003
	Notes to Combined Financial Statements

F-1

The following report is in the format that will be signed upon the approval of the stock split to occur prior to completion of the Company's anticipated initial public offering as described in Note 19 to the consolidated financial statements.

/s/ KPMG LLP

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders
Basic Energy Services, Inc.:

        We have audited the accompanying consolidated balance sheets of Basic Energy Services, Inc. and subsidiaries (the "Company") as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, and cash flows for each of the years in the three-year period ended December 31, 2004. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

        We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

        In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Basic Energy Services, Inc. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004 in conformity with U.S. generally accepted accounting principles.

        As discussed in Note 2 to the consolidated financial statements, the Company changed its method of accounting for asset retirement obligations as of January 1, 2003 and the Company changed its method of accounting for goodwill and other intangible assets as of January 1, 2002.

KPMG LLP
Dallas, TX
June 13, 2005, except
as to Note 19b, which is
as of July 25, 2005
and Note 19c, which
is as of                          , 2005

F1-1

Basic Energy Services, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

			December 31,
			2004			2003
Assets
Current assets:
	Cash and cash equivalents		$	20,147		$	25,697
	Trade accounts receivable, net of allowance of $3,108 and $1,958, respectively			56,651			42,600
	Accounts receivable — related parties			103			151
	Income tax refund receivable			355			366
	Inventories			1,176			1,529
	Prepaid expenses			1,798			2,280
	Other current assets			2,099			1,264
	Deferred tax assets			4,899			3,642
		Total current assets		87,228			77,529
Property and equipment, net				233,451			188,243
Deferred debt costs, net of amortization				4,709			4,913
Goodwill				39,853			30,284
Other assets				2,360			1,684
			$	367,601		$	302,653
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	11,388		$	7,798
	Accrued expenses			20,486			19,750
	Current portion of long-term debt			11,561			6,393
	Other current liabilities			545			—
		Total current liabilities		43,980			33,941
Long-term debt				170,915			142,116
Deferred income				44			381
Deferred tax liabilities				30,247			18,267
Other long-term liabilities				629			653
Commitments and contingencies
Stockholders' equity:
	Common stock; $.01 par value; 80,000,000 shares authorized; 28,931,935 and 28,094,435 issued and outstanding at December 31, 2004 and December 31, 2003, respectively			58			56
	Additional paid-in capital			139,004			132,726
	Deferred compensation			(4,990	)		(297	)
	Accumulated deficit			(12,329	)		(25,190	)
	Accumulated other comprehensive income			43			—
		Total stockholders' equity		121,786			107,295
			$	367,601		$	302,653

See accompanying notes to consolidated financial statements.

F1-2

Basic Energy Services, Inc.

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Dollars in thousands, except per share amounts)

			Years Ended December 31,
			2004			2003			2002
Revenues:
	Well servicing		$	142,551		$	104,097		$	73,848
	Fluid services			98,683			52,810			34,170
	Well site construction services			40,927			9,184			—
	Drilling and completion services			29,341			14,808			733
		Total revenues		311,502			180,899			108,751
Expenses:
	Well servicing			98,058			73,244			55,643
	Fluid services			65,167			34,420			22,705
	Well site construction services			31,454			6,586			—
	Drilling and completion services			17,481			9,363			512
	General and administrative, including stock-based compensation of $1,587, $205 and $105 in 2004, 2003 and 2002, respectively			37,186			21,933			13,124
	Depreciation and amortization			28,676			18,213			13,414
		Total expenses		278,022			163,759			105,398
		Operating income		33,480			17,140			3,353
Other income (expense):
	Interest expense			(9,714	)		(5,234	)		(4,832	)
	Interest income			164			60			82
	Gain (loss) on disposal of assets			(2,616	)		(391	)		(351	)
	Loss on early extinguishment of debt			—			(5,197	)		—
	Other income (expense)			(398	)		146			31
Income (loss) from continuing operations before income taxes				20,916			6,524			(1,717	)
Income tax (expense) benefit				(7,984	)		(3,048	)		419
Income (loss) from continuing operations				12,932			3,476			(1,298	)
Discontinued operations, net of tax				(71	)		22			—
Cumulative effect of accounting change, net of tax				—			(151	)		—
Net income (loss)				12,861			3,347			(1,298	)
Preferred stock dividend				—			(1,525	)		(1,075	)
Accretion of preferred stock discount				—			(540	)		(374	)
Net income (loss) available to common stockholders			$	12,861		$	1,282		$	(2,747	)
Basic earnings per share of common stock:
	Continuing operations less preferred stock dividend and accretion		$	0.46		$	0.06		$	(0.13	)
	Discontinued operations			—			—			—
	Cumulative effect of accounting change			—			(0.01	)		—
	Net income (loss) available to common stockholders		$	0.46		$	0.05		$	(0.13	)
Diluted earnings per share of common stock:
	Continuing operations less preferred stock dividend and accretion		$	0.42		$	0.06		$	(0.13	)
	Discontinued operations			—			—			—
	Cumulative effect of accounting change			—			(0.01	)		—
	Net income (loss) available to common stockholders		$	0.42		$	0.05		$	(0.13	)
Comprehensive income (loss):
Net income (loss)			$	12,861		$	3,347		$	(1,298	)
Unrealized gains on hedging activities				43			—			—
Comprehensive income (loss):			$	12,904		$	3,347		$	(1,298	)

See accompanying notes to consolidated financial statements.

F1-3

Basic Energy Services, Inc.

Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

	Common Stock												Accumulated Other Comprehensive Income
				Additional Paid-In Capital			Deferred Compensation			Accumulated Deficit					Total Stockholders' Equity
	Shares	Amount
Balance — December 31, 2001	17,368,610	$	35	$	83,680		$	—		$	(24,538	)	$	—	$	59,177
Common stock issued	3,000,000		6		11,994			—			—			—		12,000
EBITDA contingent warrants	—		—		412			—			(307	)		—		105
Preferred stock dividends	—		—		—			—			(1,075	)		—		(1,075	)
Preferred stock discount	—		—		4,299			—			—			—		4,299
Accretion of preferred stock discount	—		—		(374	)		—			—			—		(374	)
Net loss	—		—		—			—			(1,298	)		—		(1,298	)
Balance — December 31, 2002	20,368,610		41		100,011			—			(27,218	)		—		72,834
Exercise of EBITDA contingent warrants	771,740		2		—			—			—			—		2
EBITDA contingent warrants	—		—		480			—			(358	)		—		122
FESCO Holdings, Inc. acquisition	3,650,000		7		18,820			—			—			—		18,827
Stock-based compensation awards	—		—		380			(380	)		—			—		—
Amortization of deferred compensation	—		—		—			83			—			—		83
Preferred stock conversion to common stock	3,304,085		6		13,575			—			564			—		14,145
Accretion of preferred stock discount	—		—		(540	)		—			—			—		(540	)
Preferred stock dividends	—		—		—			—			(1,525	)		—		(1,525	)
Net income	—		—		—			—			3,347			—		3,347
Balance — December 31, 2003	28,094,435		56		132,726			(297	)		(25,190	)		—		107,295
Issuance of restricted stock and stock options	837,500		2		6,278			(6,280	)		—			—		—
Amortization of deferred compensation	—		—		—			1,587			—			—		1,587
Unrealized gain on interest rate swap agreement	—		—		—			—			—			43		43
Net income	—		—		—			—			12,861			—		12,861
Balance — December 31, 2004	28,931,935	$	58	$	139,004		$	(4,990	)	$	(12,329	)	$	43	$	121,786

See accompanying notes to consolidated financial statements.

F1-4

Basic Energy Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

				Years Ended December 31,
				2004			2003			2002
Cash flows from operating activities:
	Net income (loss)			$	12,861		$	3,347		$	(1,298	)
	Adjustments to reconcile net income (loss) to net cash provided by operating activities:
		Depreciation and amortization			28,676			18,213			13,414
		Accretion on asset retirement obligation			33			28			—
		Change in allowance for doubtful accounts			1,150			1,279			200
		Non-cash interest expense			970			694			766
		Non-cash compensation			1,587			205			105
		Loss on early extinguishment of debt			—			3,588			—
		Loss on disposal of assets			2,616			391			351
		Deferred income taxes			7,984			3,116			1,499
		Other non-cash items			—			(11	)		382
		Non-cash effect of discontinued operations			—			13			—
		Cumulative effect of accounting change			—			151			—
	Changes in operating assets and liabilities, net of acquisitions:
		Accounts receivable			(13,841	)		(12,120	)		(2,776	)
		Inventories			394			125			62
		Income tax receivable			11			1,093			1,012
		Prepaid expenses and other current assets			435			(2,336	)		611
		Other assets			(569	)		1,261			—
		Accounts payable			3,416			2,863			1,289
		Income taxes payable			—			—			(181	)
		Deferred income and other liabilities			127			(11	)		(195	)
		Accrued expenses			689			7,926			1,771
			Net cash provided by operating activities		46,539			29,815			17,012
Cash flows from investing activities:
	Purchase of property and equipment				(55,674	)		(23,501	)		(14,674	)
	Proceeds from sale of assets				2,484			660			446
	Payments for other long-term assets				(1,113	)		(177	)		—
	Payments for businesses, net of cash acquired				(19,284	)		(61,885	)		(31,075	)
			Net cash used in investing activities		(73,587	)		(84,903	)		(45,303	)
Cash flows from financing activities:
	Proceeds from debt				43,500			203,012			1,900
	Payments of debt				(21,236	)		(115,603	)		(6,846	)
	Collections of notes receivable				—			9			32
	Proceeds from issuance of common stock				—			—			12,000
	Proceeds from issuance of preferred stock				—			—			14,942
	Proceeds from exercise of EBITDA contingent warrants				—			2			—
	Deferred loan costs and other financing activities				(766	)		(7,561	)		(456	)
			Net cash provided by financing activities		21,498			79,859			21,572
			Net increase (decrease) in cash and equivalents		(5,550	)		24,771			(6,719	)
Cash and cash equivalents — beginning of year					25,697			926			7,645
Cash and cash equivalents — end of year				$	20,147		$	25,697		$	926

See accompanying notes to consolidated financial statements.

F1-5

Basic Energy Services, Inc.

Notes To Consolidated Financial Statements

December 31, 2004, 2003 and 2002

1.    Nature of Operations and Basis of Presentation

Organization and Restructuring

        Effective January 24, 2003, Basic Energy Services, Inc. (predecessor entity), a Delaware corporation ("Historical Basic") changed its corporate structure to a holding company format. The purpose of this corporate restructuring was to provide greater operational, administrative and financial flexibility to Historical Basic, as well as improved economics. In connection with this restructuring, Historical Basic merged with a newly formed subsidiary of BES Holding Co. (the "New Basic"), a Delaware corporation incorporated on January 7, 2003 as a wholly-owned subsidiary of the Holding Company. The merger was structured as a tax-free reorganization to Historical Basic stockholders, and all of the then-outstanding shares of common stock and preferred stock of Historical Basic were exchanged for shares of New Basic as a result of the merger. Historical Basic survived the merger and was subsequently converted to a Delaware limited partnership now known as Basic Energy Services, L.P., which is currently an indirect wholly-owned subsidiary of New Basic. On April 2, 2004, BES Holding Co. changed its name to Basic Energy Services, Inc. Historical Basic prior to January 24, 2003 and New Basic thereafter are referred to in these Notes to Consolidated Financial Statements as "Basic."

Basis of Presentation

        The historical consolidated financial statements presented herein of Basic prior to its formation are the historical results of Historical Basic since the ownership of Basic and Historical Basic at the merger date were identical. The financial results of the New Basic and Historical Basic are combined to present the consolidated financial statements of Basic.

Nature of Operations

        Basic provides a range of well site services to oil and gas drilling and producing companies, including well servicing, fluid services, well site construction services and drilling and completion services. These services are primarily provided by Basic's fleet of equipment. Basic's operations are concentrated in the major United States onshore oil and gas producing regions of the states of Texas, New Mexico, Oklahoma and Louisiana, and the Rocky Mountain region.

2.    Summary of Significant Accounting Policies

Principles of Consolidation

        The accompanying consolidated financial statements include the accounts of Basic and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated.

Estimates and Uncertainties

        Preparation of the accompanying consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results

F1-6

could differ from those estimates. Areas where critical accounting estimates are made by management include:

•

Depreciation and amortization of property and equipment and intangible assets



•

Impairment of property and equipment and goodwill



•

Allowance for doubtful accounts



•

Litigation and self-insured risk reserves



•

Fair value of assets acquired and liabilities assumed



•

Stock-based compensation



•

Income taxes



•

Asset retirement obligations

Revenue Recognition

Well Servicing — Well servicing consists primarily of maintenance services, workover services, completion services and plugging and abandonment services. Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable. Basic prices well servicing by the hour of service performed.

Fluid Services — Fluid services consists primarily of the sale, transportation, storage and disposal of fluids used in drilling, production and maintenance of oil and natural gas wells. Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable. Basic prices fluid services by the job, by the hour or by the quantities sold, disposed of or hauled.

Well Site Construction Services — Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable. Basic prices well site construction services by the hour, day, or project depending on the type of service performed.

Drilling and Completion Services — Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable. Basic prices drilling and completion services by the hour, day, or project depending on the type of service performed. When the Company provides multiple services to a customer, revenue is allocated to the services performed based on the fair values of the services.

Cash and Cash Equivalents

        Basic considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. Basic maintains its excess cash in various financial institutions, where deposits may exceed federally insured amounts at times.

F1-7

Fair Value of Financial Instruments

        The carrying value amount of cash, accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short maturity of these instruments. The carrying amount of long-term debt approximates fair value because Basic's current borrowing rate is based on a variable market rate of interest.

Inventories

        Inventories, consisting mainly of rig components, repair parts, drilling and completion materials and gravel, are held for use in the operations of the Company and are stated at the lower of cost or market, with cost being determined on the first-in, first-out ("FIFO") method.

Property and Equipment

        Property and equipment are stated at cost, or at estimated fair value at acquisition date if acquired in a business combination. Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of the assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation and amortization are removed from the related accounts and any gain or loss is reflected in operations. All property and equipment are depreciated or amortized (to the extent of estimated salvage values) on the straight-line method and the estimated useful lives of the assets are as follows:

Building and improvements	20 - 30 years
Well servicing rigs and equipment	3 - 15 years
Fluid services equipment	5 - 10 years
Brine/fresh water stations	15 years
Frac/test tanks	10 years
Pressure pumping equipment	5 - 10 years
Construction equipment	3 - 10 years
Disposal facilities	10 - 15 years
Vehicles	3 - 7 years
Rental equipment	3 - 15 years
Aircraft	20 years

        The components of a well servicing rig generally require replacement or refurbishment during the well servicing rig's life and are depreciated over their estimated useful lives, which ranges from 3 to 15 years. The costs of the original components of a purchased or acquired well servicing rig are not maintained separately from the base rig.

Impairments

        On January 1, 2002, Basic adopted Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"). SFAS No. 144 provides a single accounting model for long-lived assets to be disposed of. SFAS No. 144 also

F1-8

changes the criteria for classifying an asset as held for sale; broadens the scope of businesses to be disposed of that qualify for reporting as discontinued operations; and changes the timing of recognizing losses on such operations. The adoption of SFAS No. 144 did not materially affect Basic's financial statements.

        In accordance with SFAS No. 144, long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment at a minimum annually, or whenever, in management's judgment events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of such assets to estimated undiscounted future cash flows expected to be generated by the assets. Expected future cash flows and carrying values are aggregated at their lowest identifiable level. If the carrying amount of such assets exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of such assets exceeds the fair value of the assets. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities, if material, of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet.

        Goodwill and intangible assets not subject to amortization are tested annually for impairment, and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value.

        Prior to the adoption of SFAS No. 144, Basic accounted for long-lived assets in accordance with SFAS No. 121, Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. Basic had no impairment expense in 2004, 2003 or 2002.

Deferred Debt Costs

        Basic capitalizes certain costs in connection with obtaining its borrowings, such as lender's fees and related attorney's fees. These costs are being amortized to interest expense using the effective interest method over the terms of the related debt.

        Deferred debt costs of approximately $5.8 million and $5.2 million at December 31, 2004 and 2003, respectively, represent debt issuance costs and are recorded net of accumulated amortization of $1.1 million, and $238,000 at December 31, 2004 and 2003, respectively. Amortization of deferred debt costs totaled approximately $907,000, $694,000, and $766,000 for the years ended December 31, 2004, 2003 and 2002, respectively. See note 5 regarding the losses on extinguishment of debt.

Goodwill

        Basic adopted Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142") on January 1, 2002. SFAS No. 142 eliminates the amortization for goodwill and other intangible assets with indefinite lives. Intangible assets with lives restricted by contractual, legal, or other means will continue to be amortized over their useful lives. Goodwill and

F1-9

other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. SFAS No. 142 requires a two-step process for testing impairment. First, the fair value of each reporting unit is compared to its carrying value to determine whether an indication of impairment exists. If impairment is indicated, then the fair value of the reporting unit's goodwill is determined by allocating the unit's fair value to its assets and liabilities (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The amount of impairment for goodwill is measured as the excess of its carrying value over its fair value. Basic completed its assessment of goodwill impairment as of the date of adoption and completed subsequent annual impairment assessments as of December 31, 2004 and 2003. The assessments did not result in any indications of goodwill impairment.

        Intangible assets subject to amortization under SFAS No. 142 consist of non-compete agreements. Amortization expense for the non-compete agreements is calculated using the straight-line method over the period of the agreement, ranging from three to five years. The weighted average amortization period for non-compete agreements acquired during 2004 and 2003 is 60 months and 59 months, respectively.

        The gross carrying amount of non-compete agreements subject to amortization totaled approximately $3.7 million and $3.1 million at December 31, 2004 and 2003, respectively. Accumulated amortization related to these intangible assets totaled approximately $2.4 million and $1.9 million at December 31, 2004 and 2003, respectively. Amortization expense for the years ended December 31, 2004, 2003 and 2002 was approximately $457,000, $364,000, and $272,000, respectively. Amortization expense for the next five succeeding years is estimated to be approximately $483,000, $402,000, $265,000, $164,000, and $61,000, respectively.

        Basic has identified its reporting units to be well servicing, fluid services, well site construction services and drilling and completion services. The goodwill allocated to such reporting units as of December 31, 2004 is $8.8 million, $18.6 million, $3.8 million and $8.7 million, respectively. The change in the carrying amount of goodwill for the year ended December 31, 2004 of $9.6 million relates to goodwill from acquisitions and payments pursuant to contingent earn-out agreements, with approximately $900,000, $1 million, $400,000 and $7.3 million of goodwill additions relating to the well servicing, fluid services, well site construction services and the drilling and completion services units, respectively.

Stock-Based Compensation

        Basic accounts for stock-based compensation using the intrinsic value method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25"). Accordingly, Basic has adopted the disclosure provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123").

        SFAS No. 123 sets forth alternative accounting and disclosure requirements for stock-based compensation arrangements. Companies may continue to follow the provisions of APB No. 25 to measure and recognize employee stock-based compensation; however, SFAS No. 123 requires disclosure of pro forma net income and earnings per share that would have been reported under

F1-10

the fair value based recognition provisions of SFAS No. 123. The following table illustrates the effect on net income if Basic had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

		Year ended December 31,
		2004			2003			2002
		(in thousands, except per share data)
Net income (loss) available to common stockholders — as reported		$	12,861		$	1,282		$	(2,747	)
Add: Stock-based employee compensation expense included in statement of operations, net of tax			986			109			79
Deduct: Stock-based employee compensation expense determined under fair-value based method for all awards, net of tax			(1,283	)		(365	)		(478	)
Net income (loss) available to common stockholders — pro forma basis		$	12,564		$	1,026		$	(3,146	)
Basic earnings per share of common stock:
	Historical	$	0.46		$	0.06		$	(0.13	)
	Pro forma	$	0.45		$	0.05		$	(0.15	)
Diluted earnings per share of common stock:
	Historical	$	0.42		$	0.05		$	(0.13	)
	Pro forma	$	0.41		$	0.04		$	(0.15	)

        Under SFAS No. 123, the fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants during the years ended December 31, 2004, 2003 and 2002:

	2004		2003		2002
Risk-free interest rate	4.4	%	2.9	%	4.3	%
Expected life	10		10		10
Expected volatility	0	%	0	%	0	%
Expected dividend yield	—		—		—

Income Taxes

        Basic accounts for income taxes based upon Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the statutory enactment date. A valuation allowance for

F1-11

deferred tax assets is recognized when it is more likely than not that the benefit of deferred tax assets will not be realized.

Concentrations of Credit Risk

        Financial instruments, which potentially subject Basic to concentration of credit risk, consist primarily of temporary cash investments and trade receivables. Basic restricts investment of temporary cash investments to financial institutions with high credit standing. Basic's customer base consists primarily of multi-national and independent oil and natural gas producers. It performs ongoing credit evaluations of its customers but generally does not require collateral on its trade receivables. Credit risk is considered by management to be limited due to the large number of customers comprising its customer base. Basic maintains an allowance for potential credit losses on its trade receivables, and such losses have been within management's expectations.

        Basic did not have any one customer which represented 10% or more of consolidated revenues for 2004, 2003 or 2002.

Derivative Instruments and Hedging Activities

        In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133"), which establishes standards for derivative instruments, including certain derivative instruments embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities on the balance sheet and measure those instruments at fair value. It establishes conditions under which a derivative may be designated as a hedge, and establishes standards for reporting changes in the fair value of a derivative. Basic adopted SFAS No. 133, as amended by SFAS No. 138, on January 1, 2001. Basic adopted the additional amendments pursuant to SFAS No. 149 for contracts entered or modified after June 30, 2003, if any. At inception, the Company formally documents the relationship between the hedging instrument and the underlying hedged item as well as risk management objective and strategy. The Company assesses, both at inception and on an ongoing basis, whether the derivative used in a hedging transition is highly effective in offsetting changes in the fair value or cash flows of the respective hedged item.

        Basic had no derivative contracts in 2003 and 2002. In May 2004 the Company implemented a cash flow hedge to protect itself from fluctuation in cash flows associated with its credit facility. Changes in fair value of the hedging derivative are initially recorded in other comprehensive income, then recognized in income in the same period(s) in which the hedged transaction affects income.

Asset Retirement Obligations

        As of January 1, 2003, Basic adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligation" ("SFAS No. 143"). SFAS No. 143 requires Basic to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets and capitalize on equal

F1-12

amount as a cost of the asset depreciating it over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each quarter to reflect the passage of time, changes in the estimated future cash flows underlying the obligation, acquisition or construction of assets, and settlements of obligations. On January 1, 2003, Basic recorded additional costs, net of accumulated depreciation of approximately $102,000, an asset retirement obligation of approximately $340,000 and an after-tax charge of approximately $151,000 for the cumulative effect on prior year's depreciation of the additional costs and the accretion expense on the liability related to the expected abandonment costs.

        Basic owns and operates salt water disposal sites, brine water wells, gravel pits and land farm sites, each of which is subject to rules and regulations regarding usage and eventual closure. The following table reflects the changes in the liability during the fiscal years ended December 31, 2004 and 2003 (in thousands):

Balance, January 1, 2003	$	—
Initial recognition of asset retirement obligation		340
Additional asset retirement obligations recognized through acquisitions		47
Accretion expense		28
Settlements		—
Balance, December 31, 2003		415
Additional asset retirement obligations recognized through acquisitions		36
Accretion expense		33
Settlements		(11	)
Balance December 31, 2004	$	473

        If SFAS No. 143 had been applied during 2002, the pro forma fair value of the asset retirement obligation included in the balance sheet would have been approximately $340,000, as of December 31, 2002. The pro forma net income (loss) and related per share amounts assuming SFAS No. 143 had been applied in each year are as follows (in thousands, except per share data):

		2003		2002
Pro forma net income (loss) available to common shareholders(a)		$	1,433	$	(2,785	)
Pro forma earnings per share of common stock
	Basic	$	0.06	$	(0.14	)
	Diluted	$	0.06	$	(0.14	)

(a)

The net income available to common stockholders in 2003 has been adjusted to remove the $151,000 cumulative effect of accounting change attributable to SFAS No. 143. The net income available to common stockholders in 2002 has been adjusted by $38,000 to reflect the pro-forma effect of SFAS No. 143.

F1-13

Environmental

        Basic is subject to extensive federal, state and local environmental laws and regulations. These laws, which are constantly changing, regulate the discharge of materials into the environment and may require Basic to remove or mitigate the adverse environmental effects of disposal or release of petroleum, chemical and other substances at various sites. Environmental expenditures are expensed or capitalized depending on the future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated.

Litigation and Self-Insured Risk Reserves

        Basic estimates its reserves related to litigation and self-insured risks based on the facts and circumstances specific to the litigation and self-insured claims and our past experience with similar claims. Basic maintains accruals in the consolidated balance sheets to cover self-insurance retentions (See note 7).

Comprehensive Income

        Basic follows the provisions of Statement of Financial Accounting Standards No. 130, "Reporting of Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 establishes standards for reporting and presentation of comprehensive income and its components. SFAS No. 130 requires all items that are required to be recognized under accounting standards as components of comprehensive income to be reported in a financial statement that is displayed with the same prominence as other financial statements. In accordance with the provisions of SFAS No. 130, gains and losses on cash flow hedging derivatives, to the extent effective, are included in other comprehensive income (loss).

Reclassifications

        Certain reclassifications of prior year financial statement amounts have been made to conform to current year presentations.

Recent Accounting Pronouncements

        In December 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 123R, "Share-Based Payment" ("SFAS No. 123R"). We will adopt the provisions of SFAS No. 123R on January 1, 2006 using the modified prospective application. Accordingly, we will recognize compensation expense for all newly granted awards and awards modified, repurchased, or cancelled after January 1, 2006.

        Compensation cost for the unvested portion of awards that are outstanding as of January 1, 2006 will be recognized ratably over the remaining vesting period. The compensation cost for the unvested portion of awards will be based on the fair value at date of grant as calculated for our pro forma disclosure under SFAS No. 123. However, we will continue to account for any portion of awards outstanding on January 1, 2006 that were initially measured using the minimum value

F1-14

method under the intrinsic value method under APB No. 25. We will recognize compensation expense for awards under our Amended and Restated 2003 Incentive Plan (the "Incentive Plan") beginning in January 1, 2006.

        We estimate that the effect on net income and earnings per share in the periods following adoption of SFAS No. 123R will be consistent with our pro forma disclosure under SFAS No. 123, except that estimated forfeitures will be considered in the calculation of compensation expense under SFAS No. 123R. However, the actual effect on net income and earnings per share will vary depending upon the number of options granted in future years compared to prior years and the number of shares purchased under the Incentive Plan. Further, we have not yet determined the actual model we will use to calculate fair value.

F1-15

3.    Acquisitions

        In 2004, 2003, and 2002, Basic acquired either substantially all of the assets or all of the outstanding capital stock of each of the following businesses, each of which were accounted for using the purchase method of accounting (in thousands):

	Closing Date	Total Cash Paid (net of cash acquired)
Mas-Tech	January 28, 2002	$	5,408
CJS Pinnacle Services	February 14, 2002		3,904
Tommy's Well Services	February 14, 2002		4,416
Wester Services, Inc.	June 25, 2002		3,931
B&F Services, Inc.	July 15, 2002		13,036
Advantage Services, Inc.	October 9, 2002		380
Total 2002		$	31,075
New Force Energy Services	January 27, 2003	$	7,665
S & S Bulk Cement	April 17, 2003		195
Briscoe Oil Tools	June 13, 2003		260
FESCO Holdings, Inc.(a)	October 3, 2003		19,093
PWI, Inc.	October 3, 2003		25,104
Pennant Service Company	October 3, 2003		7,387
Graham Acidizing	December 1, 2003		2,181
Total 2003		$	61,885
Action Trucking — Curtis Smith, Inc.	April 27, 2004	$	821
Rolling Plains	May 30, 2004		3,022
Perry's Pump Service	May 30, 2004		1,379
Lone Tree Construction	June 23, 2004		211
Hayes Services	July 1, 2004		1,595
Western Oil Well	July 30, 2004		854
Summit Energy	August 19, 2004		647
Energy Air Drilling	August 30, 2004		6,500
AWS Wireline	November 1, 2004		4,255
Total 2004		$	19,284

(a)

This acquisition was funded through the issuance of Basic's common stock. The total cash paid represents the retirement of debt at closing and transaction costs incurred net of the cash acquired.

        The operations of each of the acquisitions listed above are included in Basic's statement of operations as of each respective closing date. The acquisitions of (a) New Force Energy Services ("New Force"), FESCO Holdings, Inc. ("FESCO") and PWI, Inc. and certain other affiliated entities ("PWI") in 2003, and (b) Mas-Tech ("Mas-Tech"), Tommy's Well Services ("Tommy's") and B&F Services, Inc. ("B&F") in 2002 are deemed significant and discussed below in further detail.

F1-16

New Force Energy Services

        On January 27, 2003, Basic acquired substantially all the assets of New Force for $7.7 million plus a $2.7 million contingent earn-out payment. The contingent earn-out payment will be paid upon the New Force assets meeting certain financial objectives in the future. The preliminary cash cost of the New Force acquisition was $7.7 million (including other direct acquisition costs) which was allocated $6.3 million to property and equipment, $1.3 million to goodwill, $105,000 to inventory and $10,000 to non-compete agreements.

FESCO Holdings, Inc.

        On October 3, 2003, Basic acquired all the capital stock of FESCO. As consideration for the acquisition of FESCO, Basic issued 3,650,000 shares of its common stock, based on an estimated fair value of the stock of $5.16 per share (a total fair value of approximately $18.8 million), and paid approximately $19.1 million in net cash at the closing, representing the retirement of debt of FESCO at closing and the payment of transaction costs incurred, net of the cash held by FESCO. In addition to assuming the working capital of FESCO, Basic incurred other direct acquisition costs and assumed certain other liabilities of FESCO, resulting in Basic recording an aggregate purchase price of approximately $37.9 million. The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Current assets, excluding cash		$	12,855
Property and equipment			32,344
Other assets			38
	Total assets acquired		45,237
Current liabilities			5,592
Deferred tax liability			1,725
	Total liabilities assumed		7,317
Net assets acquired		$	37,920

PWI, Inc.

        On October 3, 2003, Basic acquired substantially all the assets of PWI for $25.1 million plus a $2.5 million contingent earn-out payment. The contingent earn-out payment will be paid upon the PWI assets meeting certain financial objectives in the future. The cash cost of the PWI acquisition was $25.1 million (including other direct acquisition costs) which was allocated $16.4 million to property and equipment, $8.6 million to goodwill, $250,000 to non-compete agreements and $200,000 to liabilities assumed.

Mas-Tech

        On January 28, 2002, Basic acquired substantially all the assets of Mas-Tech for $5.4 million. The cash cost of the Mas-Tech acquisition was $5.4 million (including other direct acquisition costs)

F1-17

which was allocated $3.9 million to property and equipment, $1.5 million to goodwill, $20,000 to non-compete agreements and $4,000 to liabilities assumed.

Tommy's Well Services

        On February 14, 2002, Basic acquired substantially all the assets of Tommy's for $4.4 million and $200,000 of future well servicing services. The cash cost of the Tommy's acquisition was $4.4 million (including other direct acquisition costs) which was allocated $4.6 million to property and equipment, $25,000 to non-compete agreements and $200,000 of deferred income.

B&F Services, Inc.

        On July 15, 2002, Basic acquired substantially all the assets of B&F for $13.0 million. The cash cost of the B&F acquisition was $13.0 million (including other direct acquisition costs) which was allocated $10.9 million to property and equipment, $2.1 million to goodwill, $640,000 to inventory, $157,000 to accounts receivable $150,000 to non-compete agreements, $842,000 of assumed notes payable and $64,000 of liabilities assumed.

Contingent Earn-out Arrangements and Final Purchase Price Allocations

        Contingent earn-out arrangements are generally arrangements entered in certain acquisitions to encourage the owner/manager to continue operating and building the business after the purchase transaction. The contingent earn-out arrangements of the related acquisitions are generally linked to certain financial measures and performance of the assets acquired in the various acquisitions and accrued when the payment is probable. All amounts paid or accrued for related to the contingent earn-out payments are reflected as increases to the goodwill associated with the acquisition.

        The following presents a summary of acquisitions that have a contingent earn-out arrangement (in thousands):

Acquisition	Termination date of contingent earn-out arrangement	Maximum exposure of contingent earn-out arrangement		Amount paid or accrued through December 31, 2004
Advantage Services, Inc.	October 9, 2005	$	250	$	166
New Force Energy Services	January 27, 2008		2,700		916
S & S Bulk Cement	April 20, 2008		115		60
Briscoe Oil Tools	June 12, 2008		125		59
PWI, Inc.	August 14, 2008		2,500		—
Rolling Plains	April 30, 2009		*		—
		$	5,690	$	1,201

*

Basic will pay to the sellers an amount for each of the five consecutive 12 month periods beginning on May 1, 2004 equal to 50% of the amount by which annual EBITDA exceeds an

F1-18

annual targeted EBITDA. There is no guarantee or assurance that the targeted EBITDA will be reached.

        The following unaudited pro forma results of operations have been prepared as though the Mas-Tech, Tommy's, B&F, New Force, FESCO and PWI acquisitions had been completed on January 1, 2002. Pro forma amounts are based on the final purchase price allocations of the significant acquisitions and are not necessarily indicative of the results that may be reported in the future (in thousands, except per share data).

	Year ended December 31,
	2003		2002
	(Unaudited)		(Unaudited)
Revenues	$	228,059	$	193,236
Income (loss) from continuing operations less preferred stock dividends and accretion	$	2,215	$	(5,659	)
Earnings per common share — basic	$	0.09	$	(0.23	)
Earnings per common share — diluted	$	0.08	$	(0.23	)

        Basic does not believe the pro-forma effect of the other acquisitions completed in 2002, 2003, or 2004 is material to the pro-forma results of operations.

4.    Property and Equipment

        Property and equipment consists of the following (in thousands):

	December 31,
	2004		2003
Land	$	1,573	$	1,286
Buildings and improvements		6,615		5,486
Well servicing rigs and equipment		138,957		116,150
Fluid services equipment		53,111		42,427
Brine and fresh water stations		7,722		8,623
Frac/test tanks		19,707		9,954
Pressure pumping equipment		14,971		6,864
Construction equipment		21,964		19,967
Disposal facilities		14,079		11,060
Vehicles		18,881		18,890
Rental equipment		4,885		2,916
Aircraft		3,335		—
Other		7,780		5,242
		313,580		248,865
Less accumulated depreciation and amortization		80,129		60,622
Property and equipment, net	$	233,451	$	188,243

F1-19

        Basic is obligated under various capital leases for certain vehicles and equipment that expire at various dates during the next five years. The gross amount of property and equipment and related accumulated amortization recorded under capital leases and included above consists of the following (in thousands):

	December 31,
	2004		2003
Light vehicles	$	12,993	$	8,615
Fluid services equipment		10,558		5,600
Construction equipment		840		840
Other		—		521
		24,391		15,576
Less accumulated amortization		7,201		6,099
	$	17,190	$	9,477

        Amortization of assets held under capital leases of approximately $1.8 million, $2.5 million and $1.9 million for the years ended December 31, 2004, 2003 and 2002, respectively, is included in depreciation and amortization expense in the consolidated statements of operations.

5.    Long-Term Debt

        Long-term debt consists of the following (in thousands):

		December 31,
		2004		2003
Credit Facilities:
	Term B Loan	$	166,500	$	139,000
	Revolver		—		—
	Swing-line		—		—
Capital leases and other notes			15,976		9,509
			182,476		148,509
Less current portion			11,561		6,393
		$	170,915	$	142,116

2004 Credit Facility

        On December 21, 2004, Basic entered into a $220 million Second Amended and Restated Credit Agreement with a syndicate of lenders ("2004 Credit Facility") which refinanced all of its then existing credit facilities. The 2004 Credit Facility provides for a $170 million Term B Loan ("2004 Term B Loan") and a $50 million revolving line of credit ("Revolver"). The commitment under the Revolver allows for (a) the borrowing of funds (b) issuance of up to $20 million of letters of credits and (c) $2.5 million of swing-line loans (next day borrowing). The amounts outstanding under the

F1-20

2004 Term B Loan require quarterly amortization at various amounts during each quarter with all amounts outstanding on October 3, 2009 being due and payable in full. All the outstanding amounts under the Revolver are due and payable on October 3, 2008. The 2004 Credit Facility is secured by substantially all of Basic's tangible and intangible assets. Basic incurred approximately $766,000 in debt issuance costs in obtaining the 2004 Credit Facility.

        At Basic's option, borrowings under the 2004 Term B Loan bear interest at either (a) the "Alternative Base Rate" (i.e. the higher of the bank's prime rate or the federal funds rate plus .5% per annum) plus 2% or (b) the LIBOR rate plus 3%. At December 31, 2004, Basic's weighted average interest rate on its 2004 Term B Loan was 5.5%.

        At Basic's option, borrowings under the Revolver bear interest at either the (a) the "Alternative Base Rate" (i.e. the higher of the bank's prime rate or the federal funds rate plus .5% per annum) plus a margin ranging from 1.5% to 2.0% or (b) the LIBOR rate plus a margin ranging from 2.5% to 3.0%. The margins vary depending on Basic's leverage ratio. At December 31, 2004, Basic's margin on Alternative Base Rates and LIBOR tranches was 2.0% and 3.0%, respectively. Fees on the letters of credit are due quarterly on the outstanding amount of the letters of credit at a rate ranging from 2.5% to 3.0% for participation fees and .125% for fronting fees. A commitment fee is due quarterly on the available borrowings under the Revolver at rates ranging from .375% to .5%.

        At December 31, 2004, Basic, under its Revolver, had $8.3 million of outstanding letters of credit and no amounts outstanding in swing-line loans. At December 31, 2004, Basic had availability under its Revolver of $41.7 million.

        Pursuant to the 2004 Credit Facility Basic must apply proceeds to reduce principal outstanding under the 2004 Term B Revolver from (a) individual assets sales greater than $1 million or $5 million in aggregate on an annual basis, and (b) 50% of the proceeds from any equity offering. The 2004 Credit Facility required Basic to enter into a interest rate hedge, acceptable to the lenders, for at least two years on at least $65 million of Basic's then outstanding indebtedness. Paydowns on the 2004 Term B Loan may not be reborrowed.

        The 2004 Credit Facility contains various restrictive covenants and compliance requirements, which include (a) limiting of the incurrence of additional indebtedness, (b) restrictions on merger, sales or transfer of assets without the lenders' consent, (c) limitation on dividends and distributions and (d) various financial covenants, including (1) a maximum leverage ratio of 3.6 to 1.0 reducing over time to 3.0 to 1.0, (2) a minimum fixed coverage ratio of 1.15 to 1.0 and (3) a minimum interest coverage ratio of 3.0 to 1.0. At December 31, 2004, Basic was in compliance with its covenants.

2003 Credit Facility

        On October 3, 2003, Basic entered into a $170 million credit facility with a syndicate of lenders ("2003 Credit Facility") which refinanced all of its then existing credit facilities. The 2003 Credit Facility provided for a $140 million Term B Loan ("2003 Term B Loan") and a $30 million revolving line of credit ("Revolver"). The commitment under the Revolver allowed for (a) the borrowing of funds (b) issuance of up to $10 million of letters of credits and (c) $2.5 million of swing-line loans (next day borrowing). The amounts outstanding under the 2003 Term B Loan required quarterly

F1-21

amortization at various amounts during each quarter with all amounts outstanding on October 3, 2009 being due and payable in full. All the outstanding amounts under the Revolver were due and payable on October 3, 2008. The 2003 Credit Facility was secured by substantially all of Basic's tangible and intangible assets. Basic incurred approximately $5.1 million in debt issuance costs in obtaining the 2003 Credit Facility.

        At Basic's option, borrowings under the 2003 Term B Loan bore interest at either (a) the "Alternative Base Rate" (i.e. the higher of the bank's prime rate or the federal funds rate plus .50% per annum) plus 2.5% or (b) the LIBOR rate plus 3.5%. At December 31, 2003, Basic's weighted average interest rate on its 2003 Term B Loan was 4.67%.

        At Basic's option, borrowings under the Revolver bore interest at either the (a) the "Alternative Base Rate" (i.e. the higher of the bank's prime rate or the federal funds rate plus .5% per annum) plus a margin ranging from 1.5% to 2.0% or (b) the LIBOR rate plus a margin ranging from 2.5% to 3.0%. The margins varied depending on Basic's leverage ratio. At December 31, 2003, Basic's margin on Alternative Base Rates and LIBOR tranches was 2.0% and 3.0%, respectively. Fees on the letters of credit were due quarterly on the outstanding amount of the letters of credit at a rate ranging from 2.5% to 3.0% for participation fees and .125% for fronting fees. A commitment fee was due quarterly on the available borrowings under the Revolver at rates ranging from .5% to .375%.

        At December 31, 2003, Basic, under its Revolver, had $5.3 million of outstanding letters of credit and no amounts outstanding in swing-line loans. At December 31, 2003, Basic had availability under its Revolver of $24.7 million.

Other Debt

        Basic has a variety of other capital leases and notes payable outstanding that are generally customary in its business. None of these debt instruments are individually significant.

        As of December 31, 2004, the aggregate maturities of debt, including capital leases, for the next five years and thereafter are as follows (in thousands):

	Debt		Capital Leases
2005	$	7,000	$	4,561
2006		10,500		4,419
2007		10,500		3,740
2008		14,000		2,654
2009		124,500		602
Thereafter		—		—
	$	166,500	$	15,976

F1-22

        Basic's interest expense consisted of the following (in thousands):

	Year ended December 31,
	2004		2003		2002
Cash payments for interest	$	8,159	$	3,934	$	4,066
Commitment and other fees paid		25		109		—
Amortization of debt issuance costs		970		694		766
Other		560		497		—
	$	9,714	$	5,234	$	4,832

Losses on Extinguishment of Debt

        In 2003, Basic recognized a loss on the early extinguishment of debt. Basic paid termination fees of approximately $1.7 million and wrote-off unamortized debt issuance costs of approximately $3.5 million which resulted in a loss of approximately $5.2 million.

        In 2003, Basic adopted Statement of Financial Accounting Standards No. 145 "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS No. 145"). The provisions of SFAS No. 145, which are currently applicable to Basic, rescind Statement No. 4, which required all gains and losses from extinguishment of debt to be aggregated and classified as an extraordinary item, and instead require that such gains and losses be reported as ordinary income or loss. Basic now records gains and losses from the extinguishment of debt as ordinary income or loss and has reclassified such gains and losses in the consolidated financial statements for 2002 to conform to the presentation in future years.

F1-23

6.    Income Taxes

        Income tax provision (benefit) was allocated as follows (in thousands):

	Years ended December 31,
	2004			2003			2002
Income (loss) from continuing operations	$	7,984		$	3,048		$	(419	)
Discontinued operations		(38	)		13			—
Cumulative effect of accounting change		—			(88	)		—
	$	7,946		$	2,973		$	(419	)

        Income tax expense (benefit) attributable to income (loss) from continuing operations consists of the following (in thousands):

	Years ended December 31,
	2004		2003			2002
Current	$	—	$	(68	)	$	(1,918	)
Deferred		7,984		3,116			1,499
	$	7,984	$	3,048		$	(419	)

        No federal income taxes were paid or received in 2004. In 2003 and 2002, Basic received an income tax refund, net, of approximately $1.5 million and $2.8 million respectively.

        Reconciliation between the amount determined by applying the federal statutory rate (35% in 2004 and 2003; 34% in 2002) to the income (loss) from continuing operations with the provision (benefit) for income taxes is as follows (in thousands):

	Years ended December 31,
	2004			2003			2002
Statutory federal income tax	$	7,321		$	2,283		$	(584	)
Amortization of non-deductible goodwill and property		—			—			8
Meals and entertainment		265			166			112
State taxes, net of federal benefit		421			138			(43	)
Change in tax rates		—			542			—
Changes in estimates and other		(23	)		(81	)		88
	$	7,984		$	3,048		$	(419	)

F1-24

        The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in thousands):

			December 31,
			2004			2003
Current deferred taxes:
	Receivables allowance		$	1,148		$	723
	EBITDA contingent warrants			337			337
	Accrued liabilities			3,414			2,582
		Net current deferred tax asset	$	4,899		$	3,642
Noncurrent deferred taxes:
	Operating loss and tax credit carryforwards		$	20,782		$	18,673
	Property and equipment			(51,194	)		(37,201	)
	Goodwill and intangibles			(602	)		72
	Deferred Compensation			617			—
	Asset retirement obligation			175			153
	Other			(25	)		36
		Net noncurrent deferred tax liability	$	(30,247	)	$	(18,267	)

        Basic provides a valuation allowance when it is more likely than not that some portion of the deferred tax assets will not be realized. There was no valuation allowance necessary as of December 31, 2004 or 2003.

        As of December 31, 2004, Basic had approximately $55.9 million of net operating loss carryforwards ("NOL") for U.S. federal income tax purposes. Approximately $7.0 million of the NOL relates to the preacquisition period of FESCO, which are subject to an annual limitation of approximately $900,000. The carryforwards begin to expire in 2017.

7.    Commitments and Contingencies

Environmental

        Basic is subject to various federal, state and local environmental laws and regulations that establish standards and requirements for protection of the environment. Basic cannot predict the future impact of such standards and requirements which are subject to change and can have retroactive effectiveness. Basic continues to monitor the status of these laws and regulations. Management does not believe that the disposition of any of these items will result in a material adverse impact to Basic's financial position, liquidity, capital resources or future results of operations.

        Currently, Basic has not been fined, cited or notified of any environmental violations that would have a material adverse effect upon its financial position, liquidity or capital resources. However, management does recognize that by the very nature of its business, material costs could be incurred in the near term to bring Basic into total compliance. The amount of such future

F1-25

expenditures is not determinable due to several factors including the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions which may be required, the determination of Basic's liability in proportion to other responsible parties and the extent to which such expenditures are recoverable from insurance or indemnification.

Litigation

        From time to time, Basic is a party to litigation or other legal proceedings that Basic considers to be a part of the ordinary course of business. Basic is not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity.

Operating Leases

        Basic leases certain property and equipment under non-cancelable operating leases. The term of the operating leases generally range from 12 to 60 months with varying payment dates throughout each month.

        As of December 31, 2004, the future minimum lease payments under non-cancelable operating leases are as follows (in thousands):

Year ended December 31,
2005	$	818
2006		601
2007		416
2008		384
2009		257
Thereafter		715

        Rent expense approximated $5.6 million, $3.0 million, and $1.6 million for 2004, 2003, and 2002, respectively.

        Basic leases rights for the use of various brine and fresh water wells and disposal wells ranging in terms from month-to-month up to 99 years. The above table reflects the future minimum lease payments if the lease contains a periodic rental. However, the majority of these leases require payments based on a royalty percentage or a volume usage.

Employment Agreements

        Under the employment agreement with Mr. Huseman, chief executive officer and president of Basic, effective March 1, 2004 through February 2007, Mr. Huseman will be entitled to an annual salary of $325,000 and an annual bonus ranging from $50,000 to $325,000 based on the level of performance objectives achieved by Basic. Under this employment agreement, Mr. Huseman is eligible from time to time to receive grants of stock options and other long-term equity incentive compensation under our Amended and Restated 2003 Incentive Plan. In addition, upon a qualified termination of employment, Mr. Huseman would be entitled to three times his base salary plus his

F1-26

current annual incentive target bonus for the full year in which the termination of employment occurred. Similarly, following a change of control of Basic, Mr. Huseman would be entitled to a lump sum payment of two times his base salary plus his current annual incentive target bonus for the full year in which the change of control occurred.

        Basic has entered into employment agreements with various other executive officers of Basic that range in term up through 2007. Under these agreements, if the officer's employment is terminated for certain reasons, he would be entitled to a lump sum severance payment equal to six months' annual salary, or 12 to 36 months' annual salary if termination is on or following a change of control of Basic.

Self-Insured Risk Accruals

        Basic is self-insured up to retention limits as it relates to workers' compensation and medical and dental coverage of its employees. Basic, generally, maintains no physical property damage coverage on its workover rig fleet, with the exception of certain of its 24-hour workover rigs and newly manufactured rigs. Basic has deductibles per occurrence for workers' compensation and medical and dental coverage of $150,000 and $100,000, respectively. Basic has lower deductibles per occurrence for automobile liability and general liability. Basic maintains accruals in the accompanying consolidated balance sheets related to self-insurance retentions by using third-party data and historical claims history.

        At December 31, 2004 and 2003, self-insured risk accruals, net of related recoveries/receivables totaled approximately $6.6 million and $4.3 million, respectively.

8.    Mandatorily Redeemable Preferred Stock and Stockholders' Equity

Common Stock

        In February 2002, a group of related investors purchased a total of 3,000,000 shares of Basic's common stock at a purchase price of $4 per share, for a total purchase price of $12 million. As part of the purchase, 600,000 common stock warrants were issued in connection with this transaction, the fair value of which was approximately $1.2 million (calculated using an option valuation model). The warrants allow the holder to purchase 600,000 shares of Basic's common stock at $4 per share. The warrants are exercisable in whole or in part after June 30, 2002 and prior to February 13, 2007.

        In May 2003, the holders of the exercisable EBITDA Contingent Warrants purchased 771,740 shares of Basic's common stock at a price of $.01 per share. See note 11. In October, 2003 Basic issued 3,650,000 shares of its common stock to acquire all the capital stock of FESCO. See note 3.

        In February 2004, the Company granted certain officers and directors 837,500 restricted shares of common stock. The shares vest four years from the award date and are subject to other vesting and forfeiture provisions. The estimated fair value of the restricted shares was $5.8 million at the date of the grant and was recorded as deferred compensation, a component of stockholders' equity. This amount is being charged to expense over the respective vesting period and totaled $1.3 million for the year ended December 31, 2004.

F1-27

Preferred Stock

        In June 2002, Basic issued 150,000 shares of mandatorily redeemable Series A 10% Cumulative Preferred Stock ("Series A Preferred Stock") to a group of investors for $15 million or $100 per share. After deducting fees, this resulted in net proceeds to Basic totaling approximately $14.9 million.

        Dividends on each share of Series A Preferred Stock accrued on a daily basis at the rate of 10% per annum of the sum of the Liquidation Value ($100) thereof plus all accrued and unpaid dividends thereon from and including the date of issuance of such share. All dividends which had accrued on the Series A Preferred Stock were payable on March 31, June 30, September 30 and December 31 of each year, beginning September 30, 2002. All dividends which had accrued on Series A shares outstanding remained as accumulated dividends until paid to the holders thereof.

        Basic could redeem all or any portion of the Series A Preferred Stock by paying a price per share equal to the Liquidation Value ($100) plus all accrued and unpaid dividends plus a premium equal to 1% of the sum of the Liquidation Value plus all accrued and unpaid dividends on or prior to March 31, 2008. Basic was required to redeem all Series A Preferred Stock on March 31, 2008 (including accrued and unpaid dividends).

        The difference between the $15 million face value of the Series A Preferred Stock and ultimate redemption value of approximately $26,975,000 (assuming Basic paid no dividends in cash prior to redemption) was being accreted to the face value of the Series A Preferred Stock from the date of issuance to the mandatory redemption date of March 31, 2008 utilizing the effective interest method.

        In connection with the Series A Preferred Stock financing transaction, Basic granted 3,750,000 common stock warrants to acquire a total of 3,750,000 shares of common stock at a price of $4 per share, exercisable in whole or in part from June 30, 2002 through June 30, 2007 to the holders of Series A Preferred Stock, the relative fair value of which (the initial fair value was approximately $5.9 million, calculated using an option valuation model, and the relative fair value was approximately $4.4 million) was recorded as a discount on the Series A Preferred and included in additional paid-in capital. The Series A Preferred Stock discount, consisting of the warrant fair value of $4.3 million and $58,000 of offering expenses, was being accreted to the Series A Preferred Stock face value from the date of issuance to the mandatory redemption date of March 31, 2008 utilizing the effective interest method.

        In January 2003, Basic issued an additional 45,100 shares of Series A Preferred Stock in lieu of cash of approximately $902,000 for accrued dividends on the Series A Preferred Stock.

        On October 3, 2003, all the Series A Preferred Stock, plus accrued dividends, was converted into 3,304,085 shares of Basic's common stock, at which time the estimated fair value of Basic's common stock was $5.16 per share, pursuant to a share exchange agreement dated September 22, 2003. This conversion did not include the 3,750,000 common stock warrants which remain outstanding at December 31, 2004.

F1-28

9.    Stockholders' Agreement

        Basic has a Stockholders' Agreement, as amended on April 2, 2004 ("Stockholders' Agreement"), which provides for rights relating to the shares of our stockholders and certain corporate governance matters. These rights include the right to cause the board to nominate, and the other stockholders to vote on, the election of directors. The funds affiliated with DLJ Merchant Banking have the right to designate four directors or if there are more than six directors, such number of directors as most closely approximates ²/3 of the aggregate number of directors. Southwest Royalties Holdings, Inc. and its affiliates have the right to designate one director. The chief executive officer of the company is entitled to designate himself as a director so long as he is party to an employment agreement with Basic that requires him to receive a position on the board. These rights with respect to the election or designation of directors will terminate upon an initial public offering of Basic's common stock.

        The Stockholders' Agreement also provides for preemptive rights on our issuance of additional shares, other than pursuant to any public offering of common stock, as consideration in connection with an acquisition, as awards to employees, directors, consultants or advisors that are approved by the board of directors, or equity securities (including convertible debt or warrants) issued as or in connection with a loan or debt financing. These preemptive rights will terminate upon an initial public offering of Basic's common stock.

        The Stockholders' Agreement imposes transfer restrictions on the stockholders prior to December 21, 2007 (or earlier upon either (i) DLJ Merchant Banking and its affiliates ceasing to own at least 25% of its percentage based on their initial equity positions, or (ii) the end of a contractual lock-up period imposed by underwriters after an initial public offering). During this period, stockholders are generally prohibited from transferring shares to persons other than permitted assignees. The Stockholders' Agreement provides for participation rights of the other stockholders to require affiliates of DLJ Merchant Banking to offer to include a specified percentage of their shares whenever affiliates of DLJ Merchant Banking sell their shares for value, other than a public offering or a sale in which all of the parties to the Stockholders' Agreement agree to participate. The Stockholders' Agreement also contains "drag-along" rights. The "drag-along" rights entitle the affiliates of DLJ Merchant Banking to require the other stockholders who are a party to this agreement to sell a portion of their shares of common stock and common stock equivalents in the sale in any proposed to sale of shares of common stock and common stock equivalents representing more than 50% of such equity interest held by the affiliates of DLJ Merchant Banking to a person or persons who are not an affiliate of them.

        Additional special restrictions apply to officers or directors who own shares of common stock or common stock equivalents. Shares owned by these persons are subject to purchase by Basic, at Basic's option, in the event the company terminates the officer or director for Cause (as defined in the agreement), or the holder terminates his employment without Good Reason (as defined in the agreement). The purchase price for this repurchase is the lesser of their fair market value or their book value, computed in accordance with generally accepted accounting principles, as of the end of the most recent completed fiscal quarter. In the event Basic terminates an officer as an employee other than for Cause, an officer terminates his employment for Good Reason, an officer's employment terminates as a result of a permanent disability, retirement or death, or a non-employee director ceases to be a member of the board of directors, then such person is

F1-29

required to sell, and Basic is required to purchase, shares of common stock or common stock equivalents at their fair market value. In the event of a divorce of an officer or director from his/her spouse, if shares of common stock or common stock equivalents previously owned by such officer or director are allocated to such spouse, the officer or director and Basic shall have the option to purchase such shares at their fair market value, unless the spouse is a registered stockholder of Basic prior to the divorce. If the spouse of an officer or director dies and it is determined that shares of common stock or common stock equivalents held of record by the deceased spouse would not vest in the officer or director, then such officer or director and Basic have the option to purchase the non-vested shares at their fair market value. In the event of a bankruptcy of an officer or director, shares of Basic common stock or common stock equivalents owned by such person are subject to purchase by Basic, at Basic's option, at their fair market value. These special restrictions will terminate upon an initial public offering of Basic's common stock.

        The Stockholders' Agreement also provides for demand registration rights after an initial public offering, and piggyback registration rights both in and after an initial public offering of Basic's common stock.

10.    Incentive Plan

        In May 2003, Basic's board of directors and stockholders approved the Basic 2003 Incentive Plan (the "Plan") (as amended effective April 22, 2005) which provides for granting of incentive awards in the form of stock options, restricted stock, performance awards, bonus shares, phantom shares, cash awards and other stock-based awards to officers, employees, directors and consultants of Basic. The Plan assumed awards of the plans of Basic's successors that were awarded and remain outstanding prior to adoption of the Plan. The Plan provides for the issuance of 5,000,000 shares. The Plan is administered by the Plan committee, and in the absence of a Plan committee, by the Board of Directors, which determines the awards and the associated terms of the awards, interprets its provisions and adopts policies for implementing the Plan. The number of shares authorized under the Plan and the number of shares subject to an award under the Plan will be adjusted for stock splits, stock dividends, recapitalizations, mergers and other changes affecting the capital stock of Basic.

        Options granted under the Plan expire 10 years from the date they are granted, and generally vest over a three to five year service period.

F1-30

        The following table reflects the summary of the stock options outstanding for the years ended December 31, 2004, 2003 and 2002 and the changes during the years then ended:

			2004					2003					2002
			Number of options			Weighted average price		Number of options			Weighted average price		Number of options			Weighted average price
Non-statutory stock options:
	Outstanding, beginning of year			1,290,800		$	4.03		700,800		$	4.00		882,500		$	4.00
		Options granted		197,500		$	5.16		642,500		$	4.06		—		$	—
		Options forfeited		(25,000	)	$	5.16		(52,500	)	$	4.00		(181,700	)	$	4.00
		Options exercised		—		$	—		—		$	—		—		$	—
Outstanding, end of year				1,463,300		$	4.17		1,290,800		$	4.03		700,800		$	4.00
Exercisable, end of year				872,440					421,675					254,125
Weighted average fair value of options granted during the year			$	3.14				$	1.61				$	—

        The following table summarizes information about Basic's stock options outstanding and options exercisable at December 31, 2004:

	Options Outstanding				Options Exercisable
Range of Exercise Prices	Number of Options Outstanding at December 31, 2004	Weighted Average Remaining Contractual Life	Weighted Average Exercise Price		Number of Options Outstanding at December 31, 2004	Weighted Average Exercise Price
$4.00	1,253,300	7.43 years	$	4.00	872,440	$	4.00
$5.16	210,000	9.23 years	$	5.16	—	$	—
	1,463,300				872,440

11.    EBITDA Contingent Warrants

        On December 21, 2000, Basic issued EBITDA Contingent Warrants to purchase up to an aggregate of (a) 1,149,705 shares, at $.01 per share, of its common stock as a dividend to stockholders of record on December 18, 2000 and (b) 287,425 shares, at $0.01 per share, as part of an authorized issuance to certain members of management of Basic. The determination of the ultimate number of EBITDA Contingent Warrants that may be exercised was dependent on Basic achieving certain levels of financial performance in 2001 and 2002. The warrants became exercisable no later than March 31, 2003 based on the actual financial performance for 2001 and 2002 and expired on May 1, 2003.

F1-31

        On August 23, 2001, Basic issued additional EBITDA Contingent Warrants to purchase up to an aggregate of 106,310 shares, at $0.01 per share, of Basic's common stock as part of an authorized issuance to certain members of its management. The determination of the ultimate number of EBITDA Contingent Warrants that may be exercised was dependent on Basic's achieving certain levels of financial performance in 2001 and 2002. The warrants became exercisable, and were not subject to forfeiture for termination, no later than March 31, 2003 based on actual financial performance for 2001 and 2002 and expired on May 1, 2003.

        In 2001, Basic determined that it was probable that 50% of the maximum number of EBITDA Contingent Warrants would be awarded. As a result, Basic recognized the compensation expense related to a portion of the warrants issued to management and recorded the value of the warrants issued to stockholders as a common stock dividend. The compensation expense and common stock dividend associated with the EBITDA Contingent Warrants was accounted for utilizing "variable accounting." Compensation expense related to the EBITDA Contingent Warrants of $123,000, $105,000 and $684,000 was recognized in 2003, 2002 and 2001, respectively.

        In 2003, it was determined that Basic did not ultimately meet all the financial performance objectives as set forth in the EBITDA Contingent Warrant grants. However, the board of directors evaluated other subjective matters regarding these grants and authorized the award of 574,860 warrants to the stockholders and 196,880 warrants to certain members of management (50% of the maximum). In 2003, all holders of the warrants exercised all of their rights and acquired common stock of Basic.

12.    Related Party Transactions

        Basic provided services and products for workover, maintenance and plugging of existing oil and gas wells to a related party for approximately $140,000, $1.3 million, and $800,000, in 2004, 2003 and 2002, respectively. Basic had receivables from this related party of approximately $0, and $85,000 as of December 31, 2004 and 2003, respectively, which are included in accounts receivable — related parties in the consolidated balance sheets.

13.    Profit Sharing Plan

        Basic has a 401(k) profit sharing plan that covers substantially all employees with more than 90 days of service. Employees may contribute up to their base salary not to exceed the annual Federal maximum allowed for such plans. The Company makes a matching contribution proportional to each employee's contribution. Employee contributions are fully vested at all times. Employer matching contributions vest incrementally, with full vesting occurring after five years of service. Employer contributions to the 401(k) plan approximated $363,000, $180,000, and $122,000 in 2004, 2003, and 2002, respectively.

14.    Earnings Per Share

        Basic presents earnings per share information in accordance with the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128"). Under SFAS No. 128, basic earnings per common share are determined by dividing net earnings applicable to

F1-32

common stock by the weighted average number of common shares actually outstanding during the year. Diluted earnings per common share is based on the increased number of shares that would be outstanding assuming conversion of dilutive outstanding securities using the "as if converted" method. The following table sets forth the computation of basic and diluted earnings per share. (in thousands, except share data):

		Years ended December 31,
		2004			2003			2002
Numerator (both basic and diluted):
	Income (loss) from continuing operations less preferred stock dividends and accretion	$	12,932		$	1,411		$	(2,747	)
	Discontinued operations, net of tax		(71	)		22			—
	Cumulative effect of accounting change		—			(151	)		—
	Net income (loss) available to common stockholders	$	12,861		$	1,282		$	(2,747	)
Denominator:
	Weighted average common stock outstanding		28,094,435			22,575,940			20,006,965
	EBITDA contingent warrants		—			163,775			485,925
	Denominator for basic earnings per share		28,094,435			22,739,715			20,492,890
	Stock options		389,975			99,475			—
	Restricted stock		711,645			—			—
	Common stock warrants		1,333,310			486,800			—
	Denominator for diluted earnings per share		30,529,365			23,325,990			20,492,890
Basic earnings per common share:
	Income (loss) from continuing operations less preferred stock dividends and accretion	$	0.46		$	0.06		$	(0.13	)
	Discontinued operations, net of tax		—			—			—
	Cumulative effect of accounting change		—			(0.01	)		—
	Net income (loss) available to common stockholders	$	0.46		$	0.05		$	(0.13	)
Diluted earnings per common share:
	Income (loss) from continuing operations less preferred stock dividends and accretion	$	0.42		$	0.06		$	(0.13	)
	Discontinued operations, net of tax		—			—			—
	Cumulative effect of accounting change		—			(0.01	)		—
	Net income (loss) available to common stockholders	$	0.42		$	0.05		$	(0.13	)

        The diluted earnings per share calculation for 2003 excludes the effect of the potential exercise of stock options for 37,500 shares due to the stock option and common stock warrant exercise price exceeding the estimated fair value price of the stock in that period.

        The diluted earnings per share calculation for 2002 exclude the effects of all stock options and common stock warrants as the effects would be anti-dilutive as a result of the net loss.

F1-33

15.    Assets Held for Sale and Discontinued Operations

        In August, 2003 Basic's management and board of directors made the decision to dispose of its fluid services operations in Alaska it acquired in the FESCO acquisition prior to closing of the acquisition. After this disposal Basic no longer had any operations in Alaska.

        The following are the results of operations, since their acquisition in October 2003, from the discontinued operations (in thousands):

		Year ended December 31,
		2004			2003
Revenues		$	1,705		$	550
Operating costs			(1,814	)		(515	)
Income taxes — deferred			38			(13	)
	Income (loss) from discontinued operations, net of tax	$	(71	)	$	22

16.    Business Segment Information

        Basic's reportable business segments are well servicing, fluid services, drilling and completion services and well site construction services. The following is a description of the segments:

        Well Servicing:    This business segment encompasses a full range of services performed with a mobile well servicing rig, including the installation and removal of downhole equipment and elimination of obstructions in the well bore to facilitate the flow of oil and gas. These services are performed to establish, maintain and improve production throughout the productive life of an oil and gas well and to plug and abandon a well at the end of its productive life. Our well servicing equipment and capabilities are essential to facilitate most other services performed on a well.

        Fluid Services:    This segment utilizes a fleet of trucks and related assets, including specialized tank trucks, storage tanks, water wells, disposal facilities and related equipment. We employ these assets to provide, transport, store and dispose of a variety of fluids. These services are required in most workover, drilling and completion projects as well as part of daily producing well operations.

        Drilling and completion Services:    This segment focuses on a variety of services designed to stimulate oil and gas production or to enable cement slurry to be placed in or circulated within a well. These services are carried out in niche markets for jobs requiring a single truck and lower horsepower.

        Well Site Construction Services:    This segment utilizes a fleet of power units, dozers, trenchers, motor graders, backhoes and other heavy equipment. We employ these assets to provide services for the construction and maintenance of oil and gas production infrastructure, such as preparing and maintaining access roads and well locations, installation of small diameter gathering lines and pipelines and construction of temporary foundations to support drilling rigs.

        Basic's management evaluates the performance of its operating segments based on operating revenues and segment profits. Corporate expenses include general corporate expenses associated

F1-34

with managing all reportable operating segments. Corporate assets consist principally of working capital and debt financing costs. The following table sets forth certain financial information with respect to our reportable segments (in thousands):

	Well Servicing			Fluid Services			Well Site Construction Services			Drilling and Completion Services			Corporate and Other		Total
Year ended December 31, 2004:
Operating revenues	$	142,551		$	98,683		$	40,927		$	29,341		$	—	$	311,502
Direct operating costs		(98,058	)		(65,167	)		(31,454	)		(17,481	)		—		(212,160	)
Segment profits	$	44,493		$	33,516		$	9,473		$	11,860		$	—	$	99,342
Capital expenditures (excluding acquisitions)	$	27,918		$	16,436		$	4,748		$	3,670		$	3,021	$	55,793
Identifiable assets	$	126,208		$	87,349		$	24,064		$	24,246		$	105,993	$	367,860
Year ended December 31, 2003:
Operating revenues	$	104,097		$	52,810		$	9,184		$	14,808		$	—	$	180,899
Direct operating costs		(73,244	)		(34,420	)		(6,586	)		(9,363	)		—		(123,613	)
Segment profits	$	30,853		$	18,390		$	2,598		$	5,445		$	—	$	57,286
Capital expenditures (excluding acquisitions)	$	13,217		$	6,298		$	2,412		$	676		$	898	$	23,501
Identifiable assets	$	102,948		$	73,841		$	31,322		$	10,387		$	84,155	$	302,653
Year ended December 31, 2002:
Operating revenues	$	73,848		$	34,170		$	—		$	733		$	—	$	108,751
Direct operating costs		(55,643	)		(22,705	)		—			(512	)		—		(78,860	)
Segment profits	$	18,205		$	11,465		$	—		$	221		$	—	$	29,891
Capital expenditures (excluding acquisitions)	$	8,817		$	4,734		$	—		$	—		$	1,123	$	14,674
Identifiable assets	$	82,855		$	45,262		$	—		$	44		$	28,341	$	156,502

        The following table reconciles the segment profits reported above to the operating income as reported in the consolidated statements of operations (in thousands):

	Year ended December 31,
	2004			2003			2002
Segment profits	$	99,342		$	57,286		$	29,891
General and administrative expenses		(37,186	)		(21,933	)		(13,124	)
Depreciation and amortization		(28,676	)		(18,213	)		(13,414	)
Operating income	$	33,480		$	17,140		$	3,353

F1-35

17.    Accrued Expenses

        The accrued expenses are as follows (in thousands):

	December 31,
	2004		2003
Compensation related	$	6,764	$	6,804
Workers' compensation self-insured risk reserve		5,469		2,328
Health self-insured risk reserve		1,490		2,348
Accrual for receipts		903		599
Authority for expenditure accrual		879		—
Ad valorem taxes		845		1,117
Sales tax		692		389
Insurance obligations		586		3,613
Purchase order accrual		409		—
Professional fee accrual		392		183
Diesel tax accrual		336		273
Acquired contingent earnout obligation		273		849
Retainers		250		51
Fuel accrual		317		172
Accrued interest		232		792
Other		649		232
	$	20,486	$	19,750

18.    Supplemental Schedule of Non-Cash Investing and Financing Activities

	Year ended December 31,
	2004		2003		2002
	(in thousands)
Capital leases issued for equipment	$	10,472	$	10,782	$	2,445
Preferred stock dividend		—		1,525		1,075
Preferred stock discount		—		—		4,299
Preferred stock issued to pay accrued dividends		—		902		—
Accretion of preferred stock discount		—		540		374
EBITDA contingent warrant dividends		—		358		307
Common stock issued for FESCO acquisition		—		18,827		—
Common stock issued for preferred stock		—		14,145		—
Vehicle rebate accrual		709		—		—

F1-36

19.    Subsequent Events

(a)   Acquisitions

        On January 5, 2005, Basic acquired all of the capital stock of R & R Hot Oil Service, Inc. and related real estate for $1.4 million, subject to adjustments. This acquisition will operate in Basic's fluid services line of business in the Rocky Mountain division.

        On January 28, 2005, Basic purchased the operating assets of Premier Vacuum Service, Inc. ("Premier") for $1 million, subject to adjustments. One of the selling shareholders is a related party. This acquisition will operate in Basic's fluid services line of business in the South Texas division.

        On February 9, 2005, Basic purchased the operating assets of Spencer's Coating Specialist Company, Inc. for $615,000 subject to adjustments. This acquisition will operate in Basic's well services line of business in the Permian division.

        On February 25, 2005, Basic purchased the assets of Mark's Well Service, Inc. for $575,000, subject to adjustments. This acquisition will operate in Basic's well services line of business in the North Texas division.

        On April 28, 2005, Basic purchased substantially all the assets of Max-Line, Inc. for $1.5 million, subject to adjustments. This acquisition will operate in Basic's drilling and completion line of business in the North Texas division.

        On May 17, 2005, Basic purchased substantially all the assets of MD Well Service, Inc/D&L Enterprises Corp. for $6.0 million, subject to adjustments. This acquisition will operate in Basic's well services line of business in the Rocky Mountain division.

(b)   Litigation

        On July 25, 2005, a jury returned a verdict in favor of a salt water disposal operator who had filed suit against Basic. The jury awarded the plaintiff $1.2 million in damages. Basic's insurance company has denied coverage of liability. Basic plans to appeal this verdict.

(c)   Stock Split

        On August 3, 2005 the board of directors of Basic approved a resolution to effect a 5-for-1 stock split of the Company's common stock in the form of a stock dividend resulting in 28,931,935 shares of common stock outstanding and to amend the Company's certificate of incorporation to increase the authorized common stock to 80,000,000 shares. The earnings per share information and all common stock information have been retroactively restated for all years presented to reflect this stock split. The record date and distribution date to effect the stock dividend were set by the pricing committee of the board of directors on                  , 2005 and                  , 2005, respectively.

F1-37

Basic Energy Services, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

			March 31, 2005			December 31, 2004
			(Unaudited)
Assets
Current assets:
	Cash and cash equivalents		$	14,118		$	20,147
	Trade accounts receivable, net of allowance of $3,558 and $3,108, respectively			59,105			56,651
	Accounts receivable — related parties			99			103
	Income tax refund receivable			355			355
	Inventories			1,347			1,176
	Prepaid expenses			2,318			1,798
	Other current assets			2,553			2,099
	Deferred tax assets			5,585			4,899
		Total current assets		85,480			87,228
Property and equipment, net				245,158			233,451
Deferred debt costs, net of amortization				4,454			4,709
Goodwill				41,017			39,853
Other assets				2,359			2,360
			$	378,468		$	367,601
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	10,047		$	11,388
	Accrued expenses			23,239			20,486
	Current portion of long-term debt			12,692			11,561
	Other current liabilities			374			545
		Total current liabilities		46,352			43,980
Long-term debt				168,007			170,915
Deferred income				23			44
Deferred tax liabilities				34,886			30,247
Other long-term liabilities				708			629
Commitments and contingencies
Stockholders' equity:
	Common stock; $.01 par value; 80,000,000 shares authorized; 28,931,935 issued and outstanding at March 31, 2005 and December 31, 2004, respectively			58			58
	Additional paid-in capital			144,466			139,004
	Deferred compensation			(9,861	)		(4,990	)
	Accumulated deficit			(6,528	)		(12,329	)
	Accumulated other comprehensive income			357			43
		Total stockholders' equity		128,492			121,786
			$	378,468		$	367,601

See accompanying notes to consolidated financial statements.

F1-38

Basic Energy Services, Inc.

Consolidated Statements of Operations and Comprehensive Income

(Dollars in thousands, except per share amounts)

			Three Months Ended March 31,
			2005			2004
			(Unaudited)
Revenues:
	Well servicing		$	44,798		$	31,822
	Fluid services			29,303			22,140
	Drilling and completion services			10,764			4,865
	Well site construction services			8,948			8,776
		Total revenues		93,813			67,603
Expenses:
	Well servicing			28,191			21,789
	Fluid services			19,238			14,513
	Drilling and completion services			5,860			3,139
	Well site construction services			7,108			6,614
	General and administrative, including stock-based compensation of $591 and $165 in 2005 and 2004, respectively			13,091			7,923
	Depreciation and amortization			8,047			6,318
		Total expenses		81,535			60,296
		Operating income		12,278			7,307
Other income (expense):
	Interest expense			(3,061	)		(2,079	)
	Interest income			101			50
	Gain (loss) on disposal of assets			(102	)		(1,045	)
	Other income			75			25
Income from continuing operations before income taxes				9,291			4,258
Income tax expense				(3,490	)		(1,625	)
Income from continuing operations				5,801			2,633
Discontinued operations, net of tax				—			52
Net income			$	5,801		$	2,685
Basic earnings per share of common stock:
	Continuing operations		$	0.20		$	0.10
	Discontinued operations			—			—
	Net income available to common stockholders		$	0.20		$	0.10
Diluted earnings per share of common stock:
	Continuing operations		$	0.18		$	0.09
	Discontinued operations			—			—
	Net income available to common stockholders		$	0.18		$	0.09
Comprehensive income:
Net income			$	5,801		$	2,685
Unrealized gains on hedging activities				314			—
Comprehensive income:			$	6,115		$	2,685

See accompanying notes to consolidated financial statements.

F1-39

Basic Energy Services, Inc.

Consolidated Statements of Stockholders' Equity

(in thousands, except share data)

	Common Stock											Accumulated Other Comprehensive Income
				Additional Paid-In Capital		Deferred Compensation			Accumulated Deficit					Total Stockholders' Equity
	Shares	Amount
Balance — December 31, 2004	28,931,935	$	58	$	139,004	$	(4,990	)	$	(12,329	)	$	43	$	121,786
Stock-based compensation awards	—		—		5,462		(5,462	)		—			—		—
Amortization of deferred compensation	—		—		—		591			—			—		591
Unrealized gain on interest rate swap agreement	—		—		—		—			—			314		314
Net income	—		—		—		—			5,801			—		5,801
Balance — March 31, 2005 (Unaudited)	28,931,935	$	58	$	144,466	$	(9,861	)	$	(6,528	)	$	357	$	128,492

See accompanying notes to consolidated financial statements.

F1-40

Basic Energy Services, Inc.

Consolidated Statements of Cash Flows

(in thousands)

					Three Months Ended March 31,
					2005			2004
					(Unaudited)
Cash flows from operating activities:
	Net income				$	5,801		$	2,685
		Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization			8,047			6,318
			Accretion on asset retirement obligation			9			8
			Change in allowance for doubtful accounts			450			306
			Non-cash interest expense			263			208
			Non-cash compensation			591			165
			Loss on disposal of assets			102			1,045
			Deferred income taxes			3,490			1,652
		Changes in operating assets and liabilities, net of acquisitions:
			Accounts receivable			(2,763	)		(3,521	)
			Inventories			(171	)		103
			Income tax receivable			—			83
			Prepaid expenses and other current assets			(317	)		(581	)
			Other assets			(53	)		(214	)
			Accounts payable			(1,344	)		(998	)
			Deferred income and other liabilities			(122	)		(125	)
			Accrued expenses			2,751			(5,367	)
				Net cash provided by operating activities		16,734			1,767
	Cash flows from investing activities:
		Purchase of property and equipment				(16,083	)		(10,350	)
		Proceeds from sale of assets				95			421
		Payments for other long-term assets				(49	)		(146	)
		Payments for businesses, net of cash acquired				(3,909	)		—
				Net cash used in investing activities		(19,946	)		(10,075	)
	Cash flows from financing activities:
		Proceeds from debt				129			1,414
		Payments of debt				(2,938	)		(913	)
		Deferred loan costs and other financing activities				(8	)		—
				Net cash provided by (used in) financing activities		(2,817	)		501
				Net increase (decrease) in cash and equivalents		(6,029	)		(7,807	)
	Cash and cash equivalents — beginning of period					20,147			25,697
	Cash and cash equivalents — end of period				$	14,118		$	17,890

See accompanying notes to consolidated financial statements.

F1-41

Basic Energy Services, Inc.

Notes To Consolidated Financial Statements

March 31, 2005

1.    Nature of Operations and Basis of Presentation

Organization and Restructuring

        Effective January 24, 2003, Basic Energy Service, Inc. (predecessor entity), a Delaware corporation ("Historical Basic") changed its corporate structure to a holding company format. The purpose of this corporate restructuring was to provide greater operational, administrative and financial flexibility to Historical Basic, as well as improved economics. In connection with this restructuring, Historical Basic merged with a newly formed subsidiary of BES Holding Co. (the "New Basic"), a Delaware corporation incorporated on January 7, 2003 as a wholly-owned subsidiary of the Holding Company. The merger was structured as a tax-free reorganization to Historical Basic stockholders, and all of the then-outstanding shares of common stock and preferred stock of Historical Basic were exchanged for shares of New Basic as a result of the merger. Historical Basic survived the merger and was subsequently converted to a Delaware limited partnership now known as Basic Energy Services, L.P., which is currently an indirect wholly-owned subsidiary of New Basic. On April 2, 2004, BES Holding Co. changed its name to Basic Energy Services, Inc. Historical Basic prior to January 24, 2003 and New Basic thereafter are referred to in these Notes to Consolidated Financial Statements as "Basic."

Basis of Presentation

        The historical consolidated financial statements presented herein of Basic prior to its formation are the historical results of Historical Basic since the ownership of Basic and Historical Basic at the merger date were identical. The financial results of the New Basic and Historical Basic are combined to present the consolidated financial statements of Basic.

        The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been made in the accompanying unaudited financial statements.

Nature of Operations

        Basic provides a range of well site services to oil and gas drilling and producing companies, including well servicing, fluid services, drilling and completion services and well site construction services. These services are primarily provided by Basic's fleet of equipment. Basic's operations are concentrated in the major United States onshore oil and gas producing regions of the states of Texas, New Mexico, Oklahoma and Louisiana, and the Rocky Mountain states.

2.    Summary of Significant Accounting Policies

Principles of Consolidation

        The accompanying consolidated financial statements include the accounts of Basic and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated.

Revenue Recognition

Well Servicing — Well servicing consists primarily of maintenance services, workover services, completion services and plugging and abandonment services. Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an

F1-42

arrangement exists and the price is fixed or determinable. Basic prices well servicing by the hour of service performed.

Fluid Services — Fluid services consists primarily of the sale, transportation, storage and disposal of fluids used in drilling, production and maintenance of oil and natural gas wells. Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable. Basic prices fluid services by the job, by the hour or by the quantities sold, disposed of or hauled.

Well Site Construction Services — Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable. Basic prices well site construction services by the hour, day, or project depending on the type of service performed.

Drilling and Completion Services — Basic recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixed or determinable. Basic prices drilling and completion services by the hour, day, or project depending on the type of service performed.

Impairments

        In accordance with Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS No. 144"), long-lived assets, such as property, plant, and equipment, and purchased intangibles subject to amortization, are reviewed for impairment at a minimum annually, or whenever, in management's judgment events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of such assets to estimated undiscounted future cash flows expected to be generated by the assets. Expected future cash flows and carrying values are aggregated at their lowest identifiable level. If the carrying amount of such assets exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of such assets exceeds the fair value of the assets. Assets to be disposed of would be separately presented in the consolidated balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities, if material, of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the consolidated balance sheet.

        Goodwill and intangible assets not subject to amortization are tested annually for impairment, and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset's fair value.

        Basic had no impairment expense in 2005 or 2004.

Deferred Debt Costs

        Basic capitalizes certain costs in connection with obtaining its borrowings, such as lender's fees and related attorney's fees. These costs are being amortized to interest expense using the effective interest method over the terms of the related debt.

F1-43

        Deferred debt costs of approximately $5.8 million at March 31, 2005 and December 31, 2004, respectively, represent debt issuance costs and are recorded net of accumulated amortization of $1.4 million, and $1.1 million at March 31, 2005 and December 31, 2004, respectively. Amortization of deferred debt costs totaled approximately $263,000 and $223,000 for the three months ended March 31, 2005, and 2004, respectively.

Goodwill

        Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142") eliminates the amortization for goodwill and other intangible assets with indefinite lives. Intangible assets with lives restricted by contractual, legal, or other means will continue to be amortized over their useful lives. Goodwill and other intangible assets not subject to amortization are tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. SFAS No. 142 requires a two-step process for testing impairment. First, the fair value of each reporting unit is compared to its carrying value to determine whether an indication of impairment exists. If impairment is indicated, then the fair value of the reporting unit's goodwill is determined by allocating the unit's fair value to its assets and liabilities (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination. The amount of impairment for goodwill is measured as the excess of its carrying value over its fair value. Basic completed its assessment of goodwill impairment as of the date of adoption and completed subsequent its annual impairment assessment as of December 31, 2004. The assessments did not result in any indications of goodwill impairment.

        Basic has identified its reporting units to be well servicing, fluid services, drilling and completion services and well site construction services. The goodwill allocated to such reporting units as of March 31, 2005 is $9.2 million, $19.1 million, $8.9 million and $3.8 million, respectively. The change in the carrying amount of goodwill for the three months ended March 31, 2005 of $1.2 million relates to goodwill from acquisitions and payments pursuant to contingent earn-out agreements, with approximately $481,000, $671,000 and $13,000 of goodwill additions relating to the well servicing, fluid services and drilling and completion units, respectively.

Stock-Based Compensation

        Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123") sets forth alternative accounting and disclosure requirements for stock-based compensation arrangements. Companies may continue to follow the provisions of APB No. 25 to measure and recognize employee stock-based compensation; however, SFAS No. 123 requires disclosure of pro forma net income and earnings per share that would have been reported under the fair value based recognition provisions of SFAS No. 123. The following table illustrates

F1-44

the effect on net income if Basic had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation.

		Three months ended March 31,
		2005			2004
		(Unaudited)
Net income available to common stockholders — as reported		$	5,801		$	2,685
Add: Stock-based employee compensation expense included in statement of operations, net of tax			369			99
Deduct: Stock-based employee compensation expense determined under fair-value based method for all awards, net of tax			(556	)		(365	)
Net income available to common stockholders — pro forma basis		$	5,614		$	2,419
Basic earnings per share of common stock:
	As reported	$	0.20		$	0.10
	Pro forma	$	0.20		$	0.09
Diluted earnings per share of common stock:
	As reported	$	0.18		$	0.09
	Pro forma	$	0.17		$	0.08

        Under SFAS No. 123, the fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants during the three months ended March 31, 2005 and 2004:

	2005		2004
Risk-free interest rate	4.5	%	4.0	%
Expected life	10		10
Expected volatility	0	%	0	%
Expected dividend yield	—		—

        During the three months ended March 31, 2005, the Company granted stock options with exercise prices as follows:

Grants Made	Number of Options Granted	Weighted Average Exercise Price		Weighted Average Fair Value Per Share		Weighted Average Intrinsic Value Per Share
January 26, 2005	100,000	$	5.16	$	9.63	$	4.47
March 2, 2005	865,000	$	6.98	$	12.78	$	5.80

        The intrinsic value per share is being recognized as compensation expense over the applicable service period.

F1-45

Asset Retirement Obligations

        Basic owns and operates salt water disposal sites, brine water wells, gravel pits and land farm sites, each of which is subject to rules and regulations regarding usage and eventual closure. The following table reflects the changes in the liability during the three month period ended March 31, 2005 (in thousands):

Balance, December 31, 2004	$	473
Additional asset retirement obligations recognized through acquisitions		44
Accretion expense		9
Balance, March 31, 2005 (Unaudited)	$	526

Environmental

        Basic is subject to extensive federal, state and local environmental laws and regulations. These laws, which are constantly changing, regulate the discharge of materials into the environment and may require Basic to remove or mitigate the adverse environmental effects of disposal or release of petroleum, chemical and other substances at various sites. Environmental expenditures are expensed or capitalized depending on the future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated.

Litigation and Self-Insured Risk Reserves

        Basic estimates its reserves related to litigation and self-insured risks based on the facts and circumstances specific to the litigation and self-insured claims and our past experience with similar claims. Basic maintains accruals in the consolidated balance sheets to cover self-insurance retentions.

Reclassifications

        Certain reclassifications of prior year financial statement amounts have been made to conform to current year presentations.

Recent Accounting Pronouncements

        In March 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standard No. 123R, "Share-Based Payment" ("SFAS No. 123R"). We will adopt the provisions of SFAS No. 123R on January 1, 2006 using the modified prospective application. Accordingly, we will recognize compensation expense for all newly granted awards and awards modified, repurchased, or cancelled after January 1, 2006.

        Compensation cost for the unvested portion of awards that are outstanding as of January 1, 2006 will be recognized ratably over the remaining vesting period. The compensation cost for the unvested portion of awards will be based on the fair value at date of grant as calculated for our pro forma disclosure under SFAS No. 123. However, we will continue to account for any portion of awards outstanding on January 1, 2006 that were initially measured using the minimum value method under the intrinsic value method under APB No. 25. We will recognize compensation

F1-46

expense for awards under our Amended and Restated 2003 Incentive Plan (the "Incentive Plan") beginning in January 1, 2006.

        We estimate that the effect on net income and earnings per share in the periods following adoption of SFAS No. 123R will be consistent with our pro forma disclosure under SFAS No. 123, except that estimated forfeitures will be considered in the calculation of compensation expense under SFAS No. 123R. However, the actual effect on net income and earnings per share will vary depending upon the number of options granted in future years compared to prior years and the number of shares purchased under the Incentive Plan. Further, we have not yet determined the actual model we will use to calculate fair value.

3.    Acquisitions

        In 2005 and 2004 Basic acquired either substantially all of the assets or all of the outstanding capital stock of each of the following businesses, each of which were accounted for using the purchase method of accounting (in thousands):

	Closing Date	Total Cash Paid (net of cash acquired)
Action Trucking — Curtis Smith, Inc.	April 27, 2004	$	821
Rolling Plains	May 30, 2004		3,022
Perry's Pump Service	May 30, 2004		1,379
Lone Tree Construction	June 23, 2004		211
Hayes Services	July 1, 2004		1,595
Western Oil Well	July 30, 2004		854
Summit Energy	August 19, 2004		647
Energy Air Drilling	August 30, 2004		6,500
AWS Wireline	November 1, 2004		4,255
Total 2004		$	19,284
R & R Hot Oil Service	January 5, 2005		1,702
Premier Vacuum Service, Inc.	January 28, 2005		1,009
Spencer's Coating Specialist	February 9, 2005		619
Mark's Well Service	February 25, 2005		579
Total 2005 (Unaudited)		$	3,909

        The operations of each of the acquisitions listed above are included in Basic's statement of operations as of each respective closing date.

Contingent Earn-out Arrangements and Final Purchase Price Allocations

        Contingent earn-out arrangements are generally arrangements entered in certain acquisitions to encourage the owner/manager to continue operating and building the business after the purchase transaction. The contingent earn-out arrangements of the related acquisitions are generally linked to certain financial measures and performance of the assets acquired in the various acquisitions. All amounts paid or reasonably accrued for related to the contingent earn-out payments are reflected as increases to the goodwill associated with the acquisition.

F1-47

        Basic does not believe the pro-forma effect of the acquisitions completed in 2004 or 2005 is material to the pro-forma results of operations.

4.    Property and Equipment

        Property and equipment consists of the following (in thousands):

	March 31, 2005		December 31, 2004
	(Unaudited)
Land	$	1,879	$	1,573
Buildings and improvements		7,334		6,615
Well service units and equipment		153,237		138,957
Fluid services equipment		53,886		53,111
Brine and fresh water stations		7,605		7,722
Frac/test tanks		20,652		19,707
Pressure pumping equipment		16,398		14,971
Construction equipment		21,441		21,964
Disposal facilities		14,859		14,079
Vehicles		19,399		18,881
Rental equipment		5,026		4,885
Aircraft		3,236		3,335
Other		8,169		7,780
		333,121		313,580
Less accumulated depreciation and amortization		87,963		80,129
Property and equipment, net	$	245,158	$	233,451

        Basic is obligated under various capital leases for certain vehicles and equipment that expire at various dates during the next five years. The gross amount of property and equipment and related accumulated amortization recorded under capital leases and included above consists of the following (in thousands):

	March 31, 2005		December 31, 2004
	(Unaudited)
Light vehicles	$	13,950	$	12,993
Fluid services equipment		10,663		10,558
Construction equipment		840		840
		25,423		24,391
Less accumulated amortization		7,454		7,201
	$	17,969	$	17,190

        Amortization of assets held under capital leases of approximately $253,000 and $282,000 for the three months ended March 31, 2005 and 2004, respectively, is included in depreciation and amortization expense in the consolidated statements of operations.

F1-48

Basic Energy Services, Inc.

Notes To Consolidated Financial Statements

March 31, 2005

5.    Long-Term Debt

        Long-term debt consists of the following (in thousands):

		March 31, 2005		December 31, 2004
		(Unaudited)
Credit Facilities:
	Term B Loan	$	164,750	$	166,500
Capital leases and other notes			15,949		15,976
			180,699		182,476
Less current portion			12,692		11,561
		$	168,007	$	170,915

2004 Credit Facility

        On December 21, 2004, Basic entered into a $220 million Second Amended and Restated Credit Agreement with a syndicate of lenders ("2004 Credit Facility") which refinanced all of its then existing credit facilities. The 2004 Credit Facility provides for a $170 million Term B Loan ("2004 Term B Loan") and a $50 million revolving line of credit ("Revolver"). The commitment under the Revolver allows for (a) the borrowing of funds (b) issuance of up to $20 million of letters of credits and (c) $2.5 million of swing-line loans (next day borrowing). The amounts outstanding under the 2004 Term B Loan require quarterly amortization at various amounts during each quarter with all amounts outstanding on October 3, 2009 being due and payable in full. All the outstanding amounts under the Revolver are due and payable on October 3, 2008. The 2004 Credit Facility is secured by substantially all of Basic's tangible and intangible assets. Basic incurred approximately $766,000 in debt issuance costs in obtaining the 2004 Credit Facility.

        At Basic's option, borrowings under the 2004 Term B Loan bear interest at either (a) the "Alternative Base Rate" (i.e. the higher of the bank's prime rate or the federal funds rate plus .5% per annum) plus 2% or (b) LIBOR plus 3%. At March 31, 2005 and December 31, 2004, Basic's weighted average interest rate on its 2004 Term B Loan was 5.55% and 5.5%, respectively.

        At Basic's option, borrowings under the Revolver bear interest at either the (a) the "Alternative Base Rate" (i.e. the higher of the bank's prime rate or the federal funds rate plus .5% per annum) plus a margin ranging from 1.5% to 2.0% or (b) the LIBOR rate plus a margin ranging from 2.5% to 3.0%. The margins vary depending on Basic's leverage ratio. At December 31, 2004, Basic's margin on Alternative Base Rates and LIBOR tranches was 2.0% and 3.0%, respectively. Fees on the letters of credit are due quarterly on the outstanding amount of the letters of credit at a rate ranging from 2.5% to 3.0% for participation fees and .125% for fronting fees. A commitment fee is due quarterly on the available borrowings under the Revolver at rates ranging from .375% to .5%.

        At March 31, 2005 and December 31, 2004, Basic, under its Revolver, had outstanding $8.3 million of letters of credit and no amounts outstanding in swing-line loans. At March 31, 2005 and December 31, 2004, Basic had availability under its Revolver of $41.7 million.

F1-49

        Pursuant to the 2004 Credit Facility Basic must apply proceeds to reduce principal outstanding under the 2004 Term B Revolver from (a) individual assets sales greater than $1 million or $5 million in aggregate on an annual basis, and (b) 50% of the proceeds from any equity offering. The 2004 Credit Facility required Basic to enter into a interest rate hedge, acceptable to the lenders, for at least two years on at least $65 million of Basic's then outstanding indebtedness. Paydowns on the 2004 Term B Loan may not be reborrowed.

        The 2004 Credit Facility contains various restrictive covenants and compliance requirements, which include (a) limiting of the incurrence of additional indebtedness, (b) restrictions on merger, sales or transfer of assets without the lenders' consent, (c) limitation on dividends and distributions and (d) various financial covenants, including (1) a maximum leverage ratio of 3.6 to 1.0 reducing over time to 3.0 to 1.0, (2) a minimum fixed coverage ratio of 1.15 to 1.0 and (3) a minimum interest coverage ratio of 3.0 to 1.0. At March 31, 2005 and December 31, 2004, Basic was in compliance with its covenants.

Other Debt

        Basic has a variety of other capital leases and notes payable outstanding that is generally customary in its business. None of these debt instruments are individually significant.

        Basic's interest expense consisted of the following (in thousands):

	Three Months Ended March 31,
	2005		2004
	(Unaudited)
Cash payments for interest	$	2,723	$	1,871
Amortization of debt issuance costs		263		208
Other		75		—
	$	3,061	$	2,079

6.    Commitments and Contingencies

Environmental

        Basic is subject to various federal, state and local environmental laws and regulations that establish standards and requirements for protection of the environment. Basic cannot predict the future impact of such standards and requirements which are subject to change and can have retroactive effectiveness. Basic continues to monitor the status of these laws and regulations. Management does not believe that the disposition of any of these items will result in a material adverse impact to Basic's financial position, liquidity, capital resources or future results of operations.

        Currently, Basic has not been fined, cited or notified of any environmental violations that would have a material adverse effect upon its financial position, liquidity or capital resources. However,

F1-50

management does recognize that by the very nature of its business, material costs could be incurred in the near term to bring Basic into total compliance. The amount of such future expenditures is not determinable due to several factors including the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions which may be required, the determination of Basic's liability in proportion to other responsible parties and the extent to which such expenditures are recoverable from insurance or indemnification.

Litigation

        From time to time, Basic is a party to litigation or other legal proceedings that Basic considers to be a part of the ordinary course of business. Other than the matter discussed below, Basic is not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity.

        On July 25, 2005, a jury returned a verdict in favor of a salt water disposal operator who had filed suit against Basic. The jury awarded the plaintiff $1.2 million in damages. Basic's insurance company has denied coverage of liability. Basic plans to appeal this verdict. As of March 31, 2005, the Company has accrued a $1.3 million loss, including interest, for this contingency.

Self-Insured Risk Accruals

        Basic is self-insured up to retention limits as it relates to workers' compensation and medical and dental coverage of its employees. Basic, generally, maintains no physical property damage coverage on its workover rig fleet, with the exception of certain of its 24-hour workover rigs and newly manufactured rigs. Basic has deductibles per occurrence for workers' compensation and medical and dental coverage of $150,000 and $100,000, respectively. Basic has lower deductibles per occurrence for automobile liability and general liability. Basic maintains accruals in the accompanying consolidated balance sheets related to self-insurance retentions by using third-party data and historical claims history.

        At March 31, 2005 and December 31, 2004, self-insured risk accruals, net of related recoveries/receivables totaled approximately $7.9 million and $6.6 million, respectively.

7.    Stockholders' Equity

Common Stock

        In February 2002, a group of related investors purchased a total of 3,000,000 shares of Basic's common stock at a purchase price of $4 per share, for a total purchase price of $12 million. As part of the purchase, 600,000 common stock warrants were issued in connection with this transaction, the fair value of which was approximately $1.2 million (calculated using an option valuation model). The warrants allow the holder to purchase 600,000 shares of Basic's common stock at $4 per share. The warrants are exercisable in whole or in part after June 30, 2002 and prior to February 13, 2007.

        In February 2004, the Company granted certain officers and directors 837,500 restricted shares of common stock. The shares vest four years from the award date and are subject to other vesting

F1-51

and forfeiture provisions. The estimated fair value of the restricted shares was $5.8 million at the date of the grant and was recorded as deferred compensation, a component of stockholders' equity. This amount is being charged to expense over the respective vesting period and totaled approximately $409,000 and $122,000 for the three month periods ended March 31, 2005 and 2004, respectively.

8.    Incentive Plan

        In May 2003, Basic board of directors and stockholders approved the Basic 2003 Incentive Plan (the "Plan") (as amended by the stockholders on April 22, 2005) which provides for granting of incentive awards in the form of stock options, restricted stock, performance awards, bonus shares, phantom shares, cash awards and other stock-based awards to officers, employees, directors and consultants of Basic. The Plan assumed awards of the plans of Basic's successors that were awarded and remain outstanding prior to formation of the Plan. The Plan provides for the issuance of 5,000,000 shares. The Plan is administered by the Plan committee, and in the absence of a Plan committee, by the Board of Directors, whom determines the awards, the associated terms of the awards and interprets its provisions and adopts policies for implementing the Plan. The number of shares authorized under the Plan and the number of shares subject to an award under the Plan will be adjusted for stock splits, stock dividends, recapitalizations, mergers and other changes affecting the capital stock of Basic.

9.    Related Party Transactions

        Basic provided services and products for workover, maintenance and plugging of existing oil and gas wells to a related party for approximately $84,000 for the three months ended March 31, 2004. Basic had no receivables from this related party as of March 31, 2005 or December 31, 2004.

10.    Earnings Per Share

        Basic presents earnings per share information in accordance with the provisions of Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS No. 128"). Under SFAS No. 128, basic earnings per common share are determined by dividing net earnings applicable to common stock by the weighted average number of common shares actually outstanding during the year. Diluted earnings per common share is based on the increased number of shares that would be outstanding assuming conversion of dilutive outstanding securities using the "as if converted"

F1-52

method. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except share data):

		Three months ended March 31,
		2005		2004
		(Unaudited)
Numerator (both basic and diluted):
	Income from continuing operations	$	5,801	$	2,633
	Discontinued operations, net of tax		—		52
	Net income available to common stockholders	$	5,801	$	2,685
Denominator:
	Weighted average common stock outstanding		28,094,435		28,094,435
	Vested restricted stock		253,905		19,530
	Denominator for basic earnings per share		28,348,340		28,113,965
	Stock options		571,144		292,766
	Unvested restricted stock		583,595		311,788
	Common stock warrants		2,796,706		1,682,925
	Denominator for diluted earnings per share		32,299,785		30,401,444
Basic earnings per common share:
	Income from continuing operations less preferred stock dividends and accretion	$	0.20	$	0.10
	Discontinued operations, net of tax		—		—
	Net income (loss) available to common stockholders	$	0.20	$	0.10
Diluted earnings per common share:
	Income from continuing operations less preferred stock dividends and accretion	$	0.18	$	0.09
	Discontinued operations, net of tax		—		—
	Net income (loss) available to common stockholders	$	0.18	$	0.09

11.    Discontinued Operations

        In August, 2003 Basic's management and board of directors made the decision to dispose of its fluid services operations in Alaska it acquired in the FESCO acquisition prior to closing of the acquisition. After this disposal Basic no longer had any operations in Alaska.

F1-53

        The following are the results of operations, since their acquisition in October 2003, from the discontinued operations (in thousands):

	Three months ended March 31, 2004
Revenues	$	606
Operating costs		(523	)
Income taxes — deferred		(31	)
Income from discontinued operations, net of tax	$	52

12.    Business Segment Information

        Basic's reportable business segments are well servicing, fluid services, drilling and completion services and well site construction services. The following is a description of the segments:

        Well Servicing:    This business segment encompasses a full range of services performed with a mobile well servicing rig, including the installation and removal of downhole equipment and elimination of obstructions in the well bore to facilitate the flow of oil and gas. These services are performed to establish, maintain and improve production throughout the productive life of an oil and gas well and to plug and abandon a well at the end of its productive life. Our well servicing equipment and capabilities are essential to facilitate most other services performed on a well.

        Fluid Services:    This segment utilizes a fleet of trucks and related assets, including specialized tank trucks, storage tanks, water wells, disposal facilities and related equipment. We employ these assets to provide, transport, store and dispose of a variety of fluids. These services are required in most workover, drilling and completion projects as well as part of daily producing well operations.

        Drilling and completion Services:    This segment focuses on a variety of services designed to stimulate oil and gas production or to enable cement slurry to be placed in or circulated within a well. These services are carried out in niche markets for jobs requiring a single truck and lower horsepower.

        Well Site Construction Services:    This segment utilizes a fleet of power units, dozers, trenchers, motor graders, backhoes and other heavy equipment. We employ these assets to provide services for the construction and maintenance of oil and gas production infrastructure, such as preparing and maintaining access roads and well locations, installation of small diameter gathering lines and pipelines and construction of temporary foundations to support drilling rigs.

        Basic's management evaluates the performance of its operating segments based on operating revenues and segment profits. Corporate expenses include general corporate expenses associated with managing all reportable operating segments. Corporate assets consist principally of working

F1-54

capital and debt financing costs. The following table sets forth certain financial information with respect to our reportable segments (in thousands):

	Well Servicing			Fluid Services			Drilling and Completion Services			Well Site Construction Services			Corporate and Other		Total
Three months ended March 31, 2005 (Unaudited)
Operating revenues	$	44,798		$	29,303		$	10,764		$	8,948		$	—	$	93,813
Direct operating costs		(28,191	)		(19,238	)		(5,860	)		(7,108	)		—		(60,397	)
Segment profits	$	16,607		$	10,065		$	4,904		$	1,840		$	—	$	33,416
Capital expenditures (excluding acquisitions)	$	8,182		$	4,660		$	1,061		$	1,306		$	874	$	16,083
Identifiable assets	$	134,569		$	90,003		$	25,400		$	24,213		$	104,283	$	378,468
Three months ended March 31, 2004 (Unaudited)
Operating revenues	$	31,822		$	22,140		$	4,865		$	8,776		$	—	$	67,603
Direct operating costs		(21,789	)		(14,513	)		(3,139	)		(6,614	)		—		(46,055	)
Segment profits	$	10,033		$	7,627		$	1,726		$	2,162		$	—	$	21,548
Capital expenditures (excluding acquisitions)	$	5,274		$	3,088		$	482		$	1,443		$	63	$	10,350
Identifiable assets	$	107,553		$	75,188		$	10,624		$	30,384		$	75,971	$	299,720

        The following table reconciles the segment profits reported above to the operating income as reported in the consolidated statements of operations (in thousands):

	Three Months Ended March 31,
	2005			2004
Segment profits	$	33,416		$	21,548
General and administrative expenses		(13,091	)		(7,923	)
Depreciation and amortization		(8,047	)		(6,318	)
Operating income	$	12,278		$	7,307

13.    Supplemental Schedule of Non-Cash Investing and Financing Activities

	Three months ended March 31,
	2005		2004
	(in thousands)
Capital leases issued for equipment	$	1,032	$	2,203
Interest rate swap	$	497	$	—

F1-55

14.    Subsequent Events

Acquisitions

        On April 28, 2005, Basic purchased substantially all the assets of Max-Line, Inc. for $1.5 million, subject to adjustments. This acquisition will operate in the Company's drilling and completion line of business in the North Texas division.

        On May 17, 2005, Basic purchased substantially all the assets of MD Well Service, Inc/D&L Enterprises Corp. for $6.0 million, subject to adjustments. This acquisition will operate in the Company's well services line of business in the Company's Rocky Mountain divisions.

Stock Split

        On August 3, 2005, the board of directors of Basic approved a resolution to effect a 5-for-1 stock split of the Company's common stock in the form of a stock dividend resulting in 28,931,935 shares of common stock outstanding and to amend the Company's certificate of incorporation to increase the authorized common stock to 80,000,000 shares. The earnings per share information and all common stock information have been retroactively restated for all periods presented to reflect this stock split. The record date and distribution date to effect the stock dividend were set by the pricing committee of the board of directors on                      , 2005 and                      , 2005, respectively.

F1-56

Report of Independent Auditors

To the Board of Directors and Stockholders of
FESCO Holdings, Inc. and Subsidiaries:

        In our opinion, the accompanying consolidated balance sheet as of December 31, 2002 and the related consolidated statements of operations, stockholders' equity and cash flows present fairly, in all material respects, the financial position of FESCO Holdings, Inc. and Subsidiaries at December 31, 2002 and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

March 7, 2003, except with respect to the matter discussed in Note 11, for which the date is August 28, 2003.

/s/ PricewaterhouseCoopers LLP

F2-1

FESCO Holdings, Inc. and Subsidiaries

Consolidated Balance Sheet

as of December 31, 2002

Assets
Current Assets
	Cash and cash equivalents		$	4,651,460
	Trade accounts receivable, net of allowance for doubtful accounts of $122,392			9,341,988
	Other receivables			37,209
	Income taxes receivable			1,320,508
	Inventories			736,658
	Prepaid expenses and other current assets			389,995
		Total current assets		16,477,818
Property, plant and equipment, net				40,778,656
Intangible assets, net				4,616,056
Goodwill, net				9,299,013
Other assets				1,063,510
		Total assets	$	72,235,053
Liabilities and Stockholders' Equity
Current Liabilities
	Accounts payable		$	1,638,559
	Accrued payroll			782,392
	Other accrued liabilities			1,566,078
	Current portion of accrued earn out payment			897,177
	Current portion of long-term debt			3,245,900
	Current portion of capital lease obligations			1,264,688
		Total current liabilities		9,394,794
Long-term debt, net of current portion				13,573,671
Capital lease obligations, net of current portion				2,634,765
Accrued earn out payment, net of current portion				358,333
Other long-term liabilities				40,000
Deferred income taxes				7,779,010
		Total liabilities		33,780,573
Commitments and contingencies (Note 9)
Stockholders' Equity
	Preferred stock, $.01 par value; 500,000 authorized shares; no shares issued and outstanding as of December 31, 2002
	Common stock, $0.001 par value; 500,000 authorized shares; 406,607 issued and outstanding shares as of December 31, 2002			406
	Additional paid-in capital			40,660,294
	Retained deficit			(2,206,220	)
		Total stockholders' equity		38,454,480
		Total liabilities and stockholders' equity	$	72,235,053

The accompanying notes are an integral part of these consolidated financial statements.

F2-2

FESCO Holdings, Inc. and Subsidiaries

Consolidated Statement of Operations

Year Ended December 31, 2002

		Year Ended December 31, 2002
Sales		$	51,292,683
Cost of Sales			46,385,810
Rents paid to related parties			49,920
Gross Profit			4,856,953
Operating Expenses
	Selling, general and administrative		6,497,859
	Amortization of intangibles		974,398
	Loss on sale of assets		1,544,570
	Bad debt expense		121,110
Operating Loss			(4,280,984	)
	Interest expense		(1,610,479	)
	Interest income		78,113
	Other expenses		18,377
Loss before provision for income taxes			(5,831,727	)
	Benefit for income taxes		1,990,593
Net loss		$	(3,841,134	)

The accompanying notes are an integral part of these consolidated financial statements.

F2-3

FESCO Holdings, Inc. and Subsidiaries

Consolidated Statement of Stockholders' Equity

For the Year Ending December 31, 2002

	Common Stock
				Additional Paid-in Capital		Retained Earnings (Deficit)
	Shares	Amount							Total
Balances at December 31, 2001	273,295	$	273	$	27,329,227	$	1,634,914		$	28,964,414
Issuance of common stock to Fund VIII for cash Investment, March 20, 2002	130,000		130		12,999,870		—			13,000,000
Issuance of common stock to former Schmid Shareholders for the settlement of deferred purchase price payments, November 6, 2002	3,312		3		331,197		—			331,200
Net loss	—		—		—		(3,841,134	)		(3,841,134	)
Balances at December 31, 2002	406,607	$	406	$	40,660,294	$	(2,206,220	)	$	38,454,480

The accompanying notes are an integral part of these consolidated financial statements.

F2-4

FESCO Holdings, Inc. and Subsidiaries

Consolidated Statement of Cash Flows

				Year Ended December 31, 2002
Cash flows from Operating Activities
	Net loss			$	(3,841,134	)
	Adjustments to reconcile net loss to net cash provided by operating activities
		Depreciation and amortization			8,276,808
		Loss on sale of assets			1,544,570
		Deferred income taxes			(896,390	)
		Amortization of deferred loan fees			230,872
		Changes in other non-current assets			59,379
	Changes in current assets and liabilities
		Receivables			987,357
		Inventories			(126,027	)
		Other current assets			45,387
		Accounts payable and accrued liabilities			(1,405,963	)
		Income taxes receivable			(471,677	)
			Net cash provided by operating activities		4,403,182
Cash flows from Investing Activities
	Purchases of property, plant and equipment				(3,607,843	)
	Proceeds from sale of property, plant and equipment				1,205,709
	Schmid acquisition earn-out payment				(1,376,008	)
			Net cash used in investing activities		(3,778,142	)
Cash flows from Financing Activities
	Proceeds from note payable to Fund VIII				13,000,000
	Proceeds from issuance of equipment notes payable				1,200,913
	Repayment of long-term debt				(11,085,380	)
	Repayment of capital lease obligations				(1,765,399	)
	Repayment of lines of credit				(290,681	)
			Net cash provided by financing activities		1,059,453
Net increase in cash and cash equivalents					1,684,493
Cash and cash equivalents, beginning of period					2,966,967
Cash and cash equivalents, end of period				$	4,651,460
Supplemental Cash Flow Information
	Cash paid during the year for:
		Interest		$	1,686,528
		Taxes		$	—
Supplemental Disclosure of Non-Cash Investing and Financing Activities
		Common stock issued for the earn-out of Schmid		$	331,200
		Note payable to Fund VIII converted to common stock		$	13,000,000
		Property acquired through the buy-out of operating leases		$	211,560
		Equipment notes and capital lease obligations refinanced		$	5,462,855
		Accrued Schmid earn-out payment		$	1,255,510

The accompanying notes are an integral part of these consoliated financial statements.

F2-5

FESCO Holdings, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

December 31, 2002

1.    Organization and Business Activity

        First Energy Services Company ("FESCO" or the "Company") was incorporated under the laws of the State of Delaware on April 19, 2000 ("Inception") to acquire and manage oil and gas well site service providers. The Company commenced substantial operations on June 16, 2000 upon the acquisition of Schmid Oilfield Services, Inc. ("Schmid"), and subsequently completed several other acquisitions. The Company's operations are conducted entirely in the United States.

        As noted above, on June 16, 2000, the Company acquired 100% of the outstanding common shares of Schmid. Schmid is a provider of oil field construction and maintenance support services in the mineral, chemical, utility and petroleum industries of the Green River and Powder River Basins of Wyoming.

        On July 1, 2000, the Company acquired 100% of the outstanding common shares of Gane Production Services, Inc. ("Gane"). Gane is a provider of oil and gas maintenance and construction services in the Powder River Basin of Wyoming. The acquisition was accounted for under the purchase method of accounting and, accordingly, the assets, liabilities and operating results of Gane have been included in the accompanying consolidated financial statements from July 1, 2000.

        On July 1, 2000, the Company acquired 100% of the outstanding common shares of Busha Enterprises, Inc. ("Busha"). Busha is a provider of fluid hauling services to the oil and gas industry in the DJ and Piceance Basins of Colorado. The acquisition was accounted for under the purchase method of accounting and, accordingly, the assets, liabilities and operating results of Busha have been included in the accompanying consolidated financial statements from July 1, 2000.

        Effective July 1, 2000, the Company acquired certain assets and liabilities of Sun Cementing of Wyoming, Inc. ("Sun"). The assets acquired are used in the operation of the cementing business in Gillette, Wyoming. This transaction was accounted for under the purchase method of accounting.

        On August 30, 2002, the Company restructured the organization to better-align the above acquisitions into geographic regions. All wholly owned subsidiaries, except HB&R (Note 3), were merged with and into the Company. Operations were divided into specific geographic regions and began operating under the First Energy name. In connection with the restructuring, a new holding company, FESCO Holdings, Inc. ("Holdings"), was incorporated in the state of Delaware to acquire all of the outstanding shares of FESCO.

2.    Significant Accounting Policies

Principles of Consolidation

        The consolidated financial statements include the accounts of Holdings and its wholly-owned subsidiaries for the period, subsequent to acquisition. All significant intercompany accounts, profits and transactions have been eliminated in consolidation.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at

F2-6

the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash and Cash Equivalents

        Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. The Company places its temporary cash investments in financial institutions that management believes to be of high credit quality. As such, the Company believes no significant concentration of credit risk exists with respect to these investments.

Accounts receivable

        Accounts receivable are recorded at cost, net of allowance for doubtful accounts. The Company evaluates the collectibility of its accounts receivable based on the specific identification of problem accounts. In circumstances where the Company is aware of a specific customer's inability to meet its financial obligations, it records a specific reserve to reduce receivables to what it believes will be collected. The allowance for doubtful accounts is reconciled as follows for the year ended December 31, 2002:

Allowance for doubtful accounts — Beginning Balance	$	10,590
Provision for bad debt expense		121,110
Write-offs		(9,308	)
Allowance for doubtful account — ending balance	$	122,392

Inventories

        Inventories consist of gravel, fuel, spare parts and supplies used to operate and maintain the Company's vehicles and equipment. Inventories are carried at the lower of cost or market utilizing the first-in, first-out method. The Company's inventory was comprised of the following at December 31, 2002:

Gravel	$	452,325
Spare parts and supplies		284,333
	$	736,658

Fair Value of Financial Instruments

        The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments. The carrying amounts reported in the accompanying consolidated balance sheets for the line of credit, long-term debt and capital lease obligations approximate fair value since the applicable interest rates are either variable or representative of rates obtainable by the Company on December 31, 2002.

F2-7

Property, Plant and Equipment

        Property and equipment are stated at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets as noted below.

Asset	Estimated Useful Lives
Land	Not depreciated
Buildings and improvements	15 to 40 years
Vehicles and equipment	5 to 8 years
Furniture and fixtures	3 to 5 years
Leased equipment	Term of corresponding lease

        Maintenance and repairs are expensed as incurred. Betterments, major capital improvements and rebuilds that extend the useful life of the property, plant and equipment are capitalized.

Intangibles Assets

        The Company classifies intangible assets as definite-lived intangible assets or goodwill. Definite-lived intangibles include primarily employment agreements, non-compete agreements and customer relationships. The Company periodically reviews the appropriateness of the amortization periods related to its definite-lived assets. These assets are stated at cost. Intangible assets are being amortized on a straight-line basis over the estimated useful lives of the assets as noted below. Amounts paid out under earn out arrangements from acquisitions are capitalized when the amounts can be determined with certainty.

Intangible Asset	Estimated Useful Lives
Employment agreements	1 to 3 years
Non-compete agreements	3 years
Customer lists	10 years

Goodwill

        Goodwill represents the excess of cost over the fair value of tangible assets and identified intangible assets acquired in the acquisitions described in Note 1. Prior to the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142") on January 1, 2002, the Company amortized goodwill over an estimated useful life of 10 years. Beginning in fiscal 2002, in connection with the adoption of SFAS 142, the Company no longer amortizes goodwill. Goodwill is evaluated at least annually for impairment in accordance with the provisions of SFAS 142.

Impairment of Assets

        Long-lived assets and intangible assets are reviewed for impairment in accordance with the provisions of Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), whenever changes in events or circumstances indicate the carrying amount of these assets may not be recoverable. If this review indicates that

F2-8

the carrying value of these assets will not be recoverable, based on future undiscounted net cash flows from the use or disposition of the assets, the carrying value is reduced to estimated fair value.

Income Taxes

        The current provision for income taxes represents estimated amounts due on tax returns filed or to be filed. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the consolidated balance sheets. The overall change in deferred tax assets and liabilities for the period, exclusive of deferred tax assets and liabilities recorded in purchase accounting for businesses acquired, measures the deferred tax expense or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to tax expense in the period of enactment.

Concentration of Credit Risk

        The Company's trade accounts receivable are concentrated with certain customers in the oil and gas industry. Although diversified among many companies, collectibility is dependent upon general economic conditions of the oil and gas industry in the regions in which the Company operates. During the year ended December 31, 2002, virtually all of the Company's revenue came from oil and gas industry customers, with two significant customers contributing 33% of the Company's revenue.

Revenue and Cost Recognition

        Revenues from time-and-material contracts are recognized currently as the work is performed. Costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs.

New Accounting Pronouncements

        During June 2001, the FASB issued Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligations" ("SFAS 143"). SFAS 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. SFAS 143 requires an entity to recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate can be made. The Company is required to adopt SFAS 143 on January 1, 2003. The adoption of SFAS 143 is not expected to have a significant impact on the Company.

        In April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("FAS 145"). This Statement rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This statement amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease

F2-9

modifications that have economic effects that are similar to the sale-leaseback transactions. FAS 145 is effective for the Company for fiscal year 2002. The adoption of FAS 145 did not have a significant effect on the Company's results of operations or its financial position.

        In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("FAS 146"). This statement requires costs associated with exit or disposal activities, such as lease termination or employee severance costs, to be recognized when they are incurred rather than at the date of a commitment to an exit or disposal plan. FAS 146 replaces Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)," which previously provided guidance on this topic. FAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. Management believes that the adoption of FAS 146 will not have a significant effect on the Company's results of operations or its financial position.

        In November 2002, the FASB issued FASB Interpretation no. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others." FIN 45 requires that a liability be recorded in the guarantor's balance sheet upon issuance of a guarantee. In addition, FIN 45 requires disclosures about the guarantees that an entity has issued. As FESCO has not entered into such guarantee agreements, the adoption of FIN 45 is not expected to have a significant effect on the Company's results of operations or its financial statements.

        In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure — An Amendment to FASB Statement No. 123 ("FAS 148"). This statement amends FAS 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, FAS 148 amends the disclosure requirements of FAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The adoption of FAS 148 is not expected to have a significant effect on the Company's results of operations or its financial position.

        In January 2003, the FASB issued FASB Interpretation no. 46 ("FIN 46"), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51." FIN 46 requires certain variable interest entities ("VIEs") to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new VIEs created or acquired after January 31, 2003. For VIEs created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of this standard is not expected to have a significant effect on FESCO's financial statements.

F2-10

3.    Acquisition Earn-Out payments

        In accordance with the original terms of the Schmid acquisition agreement, additional cash consideration in the form of an earn-out payment was required to be paid to the former shareholders of Schmid in 2002. The earn-out payment was to be based upon the amount of EBITDA, as defined, earned by Schmid for the two-year period ending March 31, 2002, plus accrued interest from March 31, 2001 to March 31, 2002 at a rate equal to the prime interest rate plus 1.0%.

        In November 2001, a portion of the earn-out payment was paid through the issuance of 9,307 shares of the Company's common stock, valued at $930,700.

        In November 2002, the Company and the former shareholders of Schmid agreed upon the amount and terms of the remaining unpaid earn-out payment in a negotiated settlement agreement. In settlement of the earn-out payment, the Company agreed to pay the former Schmid shareholders a total of $2,575,000, plus accrued interest from March 31, 2001 to the final payment date, at a rate of 6.5% per annum. The Company paid $1,200,000 in cash and $300,000 in stock, plus accrued interest of $124,900 and $31,200 in cash and stock, respectively, on November 6, 2002. In addition, the Company has accrued $1,075,000 in additional earn-out payments plus $180,500 in accrued interest as of December 31, 2002. The remaining accrued earn-out payment will be paid in equal installments of $358,333 on January 1, 2003, October 1, 2003 and October 1, 2004.

        The total earn-out payment of $2,575,000, interest of $336,700 and legal costs of $51,000 associated with the Schmid earn-out payment was recorded as additional goodwill in the Schmid acquisition during 2002.

4.    Property, Plant and Equipment

	December 31, 2002
Land	$	389,056
Buildings and improvements		2,672,052
Vehicles and equipment		49,823,452
Furniture and fixtures		608,431
		53,492,991
Less: Accumulated depreciation		(13,049,650	)
Construction in progress		335,315
	$	40,778,656

        Depreciation expense amounted to $7,302,412 for the year ended December 31, 2002. As of December 31, 2002, the Company capitalized leases of vehicles and equipment with historical costs of $7,124,588 and accumulated amortization of $1,598,295.

F2-11

5.    Intangible Assets and Goodwill

		December 31, 2002
Intangible assets
	Employment agreements (net of accumulated amortization of $190,954)	$	59,046
	Non-compete agreements (net of accumulated amortization of $607,190)		232,810
	Customer lists (net of accumulated amortization of $4,324,201)		4,324,200
		$	4,616,056

        The Company recognized $974,396 in amortization expense during the year ended December 31, 2002. Estimated future amortization expense related to purchased intangible assets at December 31, 2002 is as follows:

Twelve Months Ending December 31,
	2003	$	778,290
	2004		569,767
	2005		528,100
	2006		528,100
	2007		528,100
	Thereafter		1,683,699
		$	4,616,056

        The following schedule shows development of goodwill balance during fiscal year 2002:

Balance, January 1, 2002		$	6,999,781
Additions
	Schmid earn-out payment (including interest and other costs)		2,962,718
Balance, December 31, 2002			9,962,499
Less: Accumulated amortization			(663,486	)
Goodwill, net		$	9,299,013

F2-12

6.    Long-Term Debt and Capital Lease Obligations

Long-Term Debt

        A summary of the Company's notes payable as of December 31, 2002 is as follows:

GE Capital Term Loan	$	11,812,500
Equipment notes payable		5,007,071
		16,819,571
Less: Current portion		(3,245,900	)
	$	13,573,671

        On August 30, 2001, the Company and certain of its subsidiaries entered into a credit agreement (the "Agreement") with General Electric Capital Corporation ("GE Capital") to refinance certain equipment notes payable assumed through the acquisition of the Company's subsidiaries and the funds borrowed from the Company's majority shareholder, First Reserve Fund VIII L.P. ("Fund VIII"). The Agreement allows for borrowings up to an aggregate sum of $30,000,000, consisting of a Revolving Credit Facility, a Term Loan, an Acquisition Term Loan, a Swing Line Facility and Letters of Credit. All borrowings under the Agreement bear interest at variable interest rates as explained below. The Agreement calls for mandatory prepayments equal to the proceeds from the sale of fixed assets, the proceeds in excess of $250,000 from the sale of Company common stock, and Excess Cash Flow, as defined, beginning in the year ending December 31, 2002. The Agreement is guaranteed by the Company and is secured by all of the Company's personal and real property not already collateralized by other notes and leases. Loan origination fees of $1,073,392 were incurred in connection with the Agreement. These fees are included in other assets in the accompanying consolidated balance sheets and are being amortized to interest expense over the terms of the related loans. A commitment fee of 0.5% of the average remaining available borrowings is due monthly.

        Borrowings under the Revolving Credit Facility may be repaid at any time without penalty but must be repaid in full by August 30, 2006; may not exceed $7,500,000; bear interest at either a) the Index Rate, as defined, plus 1.75% (6.0% as of December 31, 2002), or b) the Company may commit a portion of the outstanding borrowings under the Revolving Credit Facility to one, two or three month terms bearing interest at the LIBOR Rate, as defined, plus 3.25% (5.01%% as of December 31, 2002). The Company is required to pay a monthly commitment fee equal to 0.50% of the remaining funds available under the Revolving Credit Facility. There were no amounts outstanding and $7,500,000 available for borrowing on the Revolving Credit Facility as of December 31, 2002.

        The Term Loan bears interest at the Company's option of either a) the Index Rate, as defined, plus 2.00% (6.25% as of December 31, 2002) or b) the LIBOR Rate plus 3.50% (5.26% as of December 31, 2002). Commencing December 31, 2001, accrued interest computed on the outstanding Term Loan balance is due monthly and principal repayments of $437,500 are due quarterly with the remaining principal balance due at August 30, 2006. The Term Loan may be prepaid at any time in the minimum amount of $500,000. There was $11,812,500 outstanding and $2,187,500 avaiable for borrowing on the Term Loan as of December 31, 2002.

F2-13

        The Acquisition Term Loan bears interest at either a) the Index Rate, as defined, plus 2.00 (6.25% as of December 31, 2002) or b) the Company may commit a portion of the outstanding borrowings under the Acquisition Term Loan to one, two or three month terms bearing interest at the LIBOR Rate, as defined, plus 3.50% (5.26% as of December 31, 2002). Commencing December 31, 2001, accrued interest computed on the outstanding Acquisition Term Loan balance is due monthly and principal repayments of $266,625 are due quarterly with the remaining principal balance due at August 30, 2006. The Acquisition Term Loan was paid off on March 19, 2002. There were no amounts outstanding and $8,500,000 available for borrowing on the Acquisition Term Loan as of December 31, 2002.

        To the extent that the Company's Borrowing Base, as defined, exceeds that used to determine the initial $30,000,000 credit limit under the Agreement, additional funds will be available to the Company by utilizing the Swing Line Facility. As of December 31, 2002, the Company had no available borrowings under the Swing Line Facility. The Borrowing Base as of December 31, 2002 was $7,199,683.The Company may request Letters of Credit from time to time from GE Capital in an amount not to exceed the lesser of $1,000,000 or the funds remaining under the Revolving Credit Facility. Outstanding Letters of Credit bear a fee equal to 3.25% of the outstanding amount. The Company had no Letters of Credit outstanding as of or during the year ended December 31, 2002.

        Aggregate indebtedness to GE Capital under the Revolving Credit Facility, Term Loan and Acquisition Term Loan as of December 31, 2002 was $11,812,500, of which substantially the balance bears interest at the LIBOR Rate plus 3.5%. The weighted average interest rate for the period these borrowings were outstanding in 2002 was 5.38%. For the year ended December 31, 2002, total interest expense related to these borrowings was $932,468.

        On August 30, 2002, the Company amended the Agreement ("Amendment") in conjunction with the reorganization discussed in Note 1. The Amendment established the Company as the primary borrower under the Agreement, and removed the Company's subsidiaries as borrowers under the Agreement. No other material changes were made.

        The Agreement is subject to various financial and non-financial covenants. GE Capital has the option to call the debt in the event of noncompliance with these covenants.

        On March 9, 2002, the Company entered into a Note Payable with Fund VIII and received proceeds of $13,000,000. The Note Payable was subsequently converted to equity of the Company through the issuance of 130,000 shares of the Company's common stock.

        The Company has entered into various notes for the purchase of equipment and vehicles bearing interest at rates ranging from 0.0% to 8.75% per annum which mature at various dates from May 2003 to January 2007. These notes are collateralized by the related equipment and vehicles which have a net book value of $5,647,953 at December 31, 2002.

F2-14

        At December 31, 2002, aggregate scheduled maturities of long-term debt are as follows:

		GE Capital		Equipment Notes		Total
Year ending December 31:
	2003	$	1,750,000	$	1,495,900	$	3,245,900
	2004		1,750,000		1,447,199		3,197,199
	2005		1,750,000		1,304,952		3,054,952
	2006		6,562,500		755,891		7,318,391
	2007		—		3,129		3,129
	Total	$	11,812,500	$	5,007,071	$	16,819,571

Capital Lease Obligations

        The Company has entered into a capital lease obligation for equipment and vehicles. The obligation bears interest at 5.75% per annum and matures January 2006. The lease obligation is collateralized by the related equipment and vehicles which have a net book value of approximately $5,526,293 at December 31, 2002.

        At December 31, 2002, future minimum payments required under capital lease obligation follows:

Year ending December 31:
	2003	$	1,455,573
	2004		1,382,851
	2005		1,310,131
	2006		105,894
			4,254,449
	Less: Interest		(354,996	)
Future minimum principal payments			3,899,453
Less: Current portion			(1,264,688	)
Long-term portion of capital lease obligations		$	2,634,765

7.    Stockholders' Equity

Common and Preferred Stock

        The Company is authorized to issue 500,000 shares of $0.001 par value common stock and 500,000 shares of $.01 par value preferred stock. The rights, terms and conditions of the preferred shares will be determined by the board of directors prior to issuance of any series of preferred stock.

F2-15

Restricted Shares

        The Company's stock may not be transferred without the consent of the Company. Upon consent by the Company of any share transfers, Fund VIII has a right of first refusal to purchase such shares from the selling shareholder based upon the then fair value of the shares. Furthermore, if greater than 50% of the Company's fully diluted common stock is transferred, any remaining shareholders will be required to transfer their shares to the acquirer.

Stock Options

        The Company's 2000 Stock Option Plan (the "2000 Plan"), provides for the grant of options to purchase up to an aggregate of 21,053 shares of common stock of FESCO by employees and nonemployees; of which 8,990 shares are available for grant as of December 31, 2002. The exercise price of nonqualified options granted is determined by the Board of Directors based on the estimated fair market value of FESCO common stock at the date of grant. The 2000 Plan allows for option awards to be granted for ten years from the effective date of the plan, which was June 16, 2000, and options granted have a term of ten years. Options vest as determined by the Board. Since inception, the Board has issued time and performance awards. Time awards vest over four years, with one-fourth vesting at the end of each year. Performance awards vest based on a formula which will not be computed until the date of a Liquidity Event, as defined. Since the number of shares which will be exercisable is not fixed, the performance awards are accounted for under variable accounting and stock-based compensation expense may be recorded in the future when it is probable the shares under grant will become exercisable. The amount of compensation per share will be the difference between the fair value per share of common stock minus the exercise price. If employment is terminated for any reason, vested options must be exercised within 90 days of termination or they are automatically canceled.

        In 2002, the Company cancelled 7,100 options and granted 2,600 options to employees with an exercise price of $100 per share and weighted average fair value of $17.08 per option. As of December 31, 2002, there are 8,990 options outstanding, of which 1,017 are exercisable. These options have an estimated remaining contractual life of 9.1 years. No options have been granted to non-employees.

Fair Value Disclosures

        The Company calculated the minimum fair value of each option grant on the date of grant using the minimum value method utilizing Black-Scholes option pricing model as prescribed by SFAS No. 123 using the following assumptions during the year ended December 31, 2002.

Weighted average risk-free interest rate	4.16	%
Expected lives, in years	4.5
Dividend yield	N/A

        The pro forma compensation cost associated with the Company's stock-based compensation plans, determined using the minimum value method prescribed by SFAS No. 123, results in a pro

F2-16

forma charge of approximately $23,600 to the reported net income during the year ended December 31, 2002.

8.    Income Taxes

        The benefit for income taxes consists of the following:

			Year Ended December 31, 2002
Current
	Federal		$	(1,094,203	)
	State			—
Current benefit				(1,094,203	)
Deferred
	Federal			(789,471	)
	State			(106,919	)
Deferred benefit				(896,390	)
		Total	$	(1,990,593	)

        The following is a reconciliation of the difference between the actual benefit for income taxes and the benefit computed by applying the federal statutory rate of 34% to income before income taxes for the year ended December 31, 2002:

Benefit at statutory rate	$	(1,982,787	)
Non-deductible items		20,393
Alternative minimum tax credit		(79,860	)
State taxes and other		(162,605	)
Other adjustments		214,266
	$	(1,990,593	)

        Net deferred tax liabilities are recognized for the future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax bases using enacted tax rates in effect for the year in which the differences are expected to reverse. The net deferred tax liability consists of differences in amortization rates between book and tax depreciation and amortization of intangible assets and property, plant and equipment.

F2-17

        The net deferred tax liability is comprised of the tax effect of the difference between the book and tax assets of the following at December 31, 2002:

Deferred tax assets:
	Accounts receivable		$	30,892
	Accrued liabilities			254,672
	Net operating loss carryforwards			630,089
	AMT credits			35,523
	Other			49,221
		Total deferred tax assets		1,000,397
Deferred tax liabilities:
	Property, plant and equipment			(7,201,292	)
	Intangible assets			(1,436,251	)
	Other			(141,864	)
		Total deferred tax liabilities		(8,779,407	)
Net deferred tax liabilities			$	(7,779,010	)

        At December 31, 2002, the Company had federal net operating loss carryforwards of approximately $1,570,290, which begin to expire in 2022, and are available to offset future taxable income. Realization of the deferred tax assets is dependent upon generating sufficient taxable income prior to expiration of any net operating loss carryforwards. Although realization is not assured, management believes that a valuation allowance is not required for its domestic deferred tax assets as it is more likely that not the Company will be able to realize the benefit of the net operating loss carryforward through the reversal of existing taxable temporary differences.

        Prior to the acquisition of Gane, this subsidiary filed with the Internal Revenue Service as a subchapter S Corporation. Although the Company is a subchapter C Corporation, the ownership of this subsidiary could expose the Company to liabilities from this subsidiary's previous tax activity if their subchapter S Corporation status were denied by the Internal Revenue Service for any period prior to the Company's acquisition of this subsidiary.

F2-18

9.    Commitments and Contingencies

Operating Lease Commitments

        The Company has entered into noncancelable operating leases for equipment and real property with lease terms through 2007. Future minimum lease payments at December 31, 2002 are as follows:

Year ending December 31,
	2003		$	303,174
	2004			211,085
	2005			372,088
	2006			8,400
	2007			3,500
		Total minimum payments	$	898,247

        Rental expense for the year ended December 31, 2002 for operating leases was $635,225.

Employee Retirement Plans

        The Company provides voluntary 401(k) employee savings plans covering all eligible employees of its Schmid, Sun and HB&R subsidiaries (the "401(k) Plans"). Participants in the 401(k) Plans may contribute up to 20% of their eligible compensation. Qualified and non-qualified, discretionary employer contributions may be made by the Company which are allocated to eligible employees based upon their representative share of total compensation paid to eligible employees during the year. Participant and qualified employer contributions vest immediately, whereas non-qualified employer contributions vest ratably until the participant reaches their sixth year of service. During the year ended December 31, 2002, the Company contributed $157,917 to the 401(k) Plans.

10.    Related Parties

        As discussed in Note 3, the Company accrued $1,255,500 for its earn-out obligation and accrued interest to the former Schmid shareholders.

        The Company leases various land and buildings from entities owned by the former owners of Busha and Gane under the operating leases described above. Total rental payments to the entities owned by the former owners of Busha and Gane related to these leases were $49,920, and the monthly rental payments to these entities were $4,160 for the year ended December 31, 2002.

        Both the former Schmid and Busha shareholders are shareholders of FESCO.

11.    Subsequent Event

        On August 28, 2003, the Company executed a waiver and amendment to the Agreement with GE Capital (as described in Note 7) to cure certain defaults at December 31, 2002, and to loosen certain financial covenant requirements for fiscal 2003 that would have otherwise resulted in a default status.

F2-19

FESCO Holdings, Inc.

and Subsidiaries

Consolidated Balance Sheet

			September 30, 2003
			(Unaudited)
Assets
Current assets:
	Cash and cash equivalents		$	1,895,738
	Trade accounts receivable, net of allowance for doubtful accounts of $70,201			11,648,413
	Other receivables			72,636
	Inventories			781,049
	Prepaid expenses and other current assets			595,792
		Total current assets		14,993,628
Property, plant, and equipment, net				32,343,500
Other assets				852,877
		Total assets	$	48,190,005
Liabilities and Stockholders' Equity
Current liabilities:
	Accounts payable		$	1,209,157
	Accrued liabilities			3,004,354
	Line of credit			140,915
	Current portion of long-term debt			3,746,980
	Current portion of capital lease obligations			1,390,560
		Total current liabilities		9,491,966
Long-term debt, net of current portion				13,244,240
Capital lease obligations, net of current portion				1,791,640
Other long-term liabilities				40,000
		Total liabilities		24,567,846
Commitments and contingencies (note 8)
Stockholders' equity:
	Preferred stock, $0.01 par value. 500,000 shares authorized; no shares issued and outstanding			—
	Common stock, $0.001 par value. 500,000 shares authorized; 406,607 shares issued and outstanding			406
	Additional paid-in capital			40,660,294
	Accumulated deficit			(17,038,541	)
		Total stockholders' equity		23,622,159
		Total liabilities and stockholders' equity	$	48,190,005

See accompanying notes to consolidated financial statements.

F2-20

FESCO Holdings, Inc.

and Subsidiaries

Consolidated Statements of Operations

			Nine Months Ended September 30,
			2003			2002
			(Unaudited)
Sales:
	Fluid services		$	13,132,175		$	14,713,515
	Pressure pumping			1,344,189			1,933,077
	Construction			21,788,751			20,337,285
				36,265,115			36,983,877
Cost of sales:
	Fluid services			10,232,784			11,062,775
	Pressure pumping			1,229,642			1,362,754
	Construction			16,806,682			15,659,539
	Selling, general, and administrative			4,433,619			4,917,368
	Depreciation and amortization			6,370,847			6,188,353
	Impairment loss			18,362,450			—
	Loss (gain) on sale of assets			446,450			1,261,671
				57,882,474			40,452,460
		Operating loss		(21,617,359	)		(3,468,583	)
Interest expense				993,972			1,168,766
		Net loss before income taxes		(22,611,331	)		(4,637,349	)
Income tax benefit				7,779,010			1,583,052
		Net loss to common shareholders	$	(14,832,321	)	$	(3,054,297	)

See accompanying notes to consolidated financial statements.

F2-21

FESCO Holdings, Inc.

and Subsidiaries

Consolidated Statement of Stockholders' Equity

	Common stock
				Additional paid-in capital		Accumulated deficit
	Shares	Amount							Total
Balance at December 31, 2002	406,607	$	406	$	40,660,294	$	(2,206,220	)	$	38,454,480
Net loss	—		—		—		(14,832,321	)		(14,832,321	)
Balance at September 30, 2003 (Unaudited)	406,607	$	406	$	40,660,294	$	(17,038,541	)	$	23,622,159

See accompanying notes to consolidated financial statements.

F2-22

FESCO Holdings, Inc.

and Subsidiaries

Consolidated Statements of Cash Flows

					Nine Months Ended September 30,
					2003			2002
					(Unaudited)
Cash flows from operating activities:
	Net loss				$	(14,832,321	)	$	(3,054,297	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation and amortization				6,370,847			6,188,353
		Impairment loss				18,362,450			—
		Loss on sale of assets				446,450			1,261,671
		Deferred income taxes				(7,779,010	)		(1,583,052	)
		Amortization of deferred loan fees				210,636			107,340
		Changes in current assets and liabilities:
			Receivables			(1,021,344	)		1,443,908
			Inventories			(44,391	)		(180,689	)
			Other current assets			(205,800	)		50,664
			Other noncurrent assets			—			278,543
			Accounts payable and accrued liabilities			(496,299	)		(1,552,097	)
				Net cash provided by operating activities		1,011,218			2,960,344
Cash flows from investing activities:
	Purchases of property, plant, and equipment					(927,464	)		(1,847,635	)
	Proceeds from sale of property, plant, and equipment					332,337			1,159,209
	Schmid acquisition earn-out payment					(406,857	)		—
				Net cash used in investing activities		(1,001,984	)		(688,426	)
Cash flows from financing activities:
	Proceeds from sale of common stock					—			13,000,000
	Repayment of long-term debt and capital lease obligations					(2,905,871	)		(11,764,225	)
	Advance from (repayment of) line of credit					140,915			(266,596	)
				Net cash provided by (used in) financing activities		(2,764,956	)		969,179
				Net increase (decrease) in cash and cash equivalents		(2,755,722	)		3,241,097
Cash and cash equivalents, beginning of period						4,651,460			2,966,967
Cash and cash equivalents, end of period					$	1,895,738		$	6,208,064
Supplemental cash flow information:
	Cash paid during the period for:
		Interest			$	776,443		$	1,310,400
Noncash investing and financing activities:
	Assets obtained by capital lease				$	2,234,474		$	477,628

See accompanying notes to consolidated financial statements.

F2-23

FESCO HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2003

(1) Organization and Business Activity

        First Energy Services Company ("FESCO" or the "Company") was incorporated under the laws of the State of Delaware on April 19, 2000 (Inception) to acquire and manage oil and gas well site service providers. The Company commenced substantial operations on June 16, 2000 upon the acquisition of Schmid Oilfield Services, Inc. (Schmid), and subsequently completed several other acquisitions. The Company's operations are conducted entirely in the United States.

        On August 30, 2002, the Company restructured the organization to better-align its acquisitions into geographic regions. All wholly owned subsidiaries, except HB&R (note 3), were merged with and into the Company. Operations were divided into specific geographic regions and began operating under the First Energy name. In connection with the restructuring, a new holding company, FESCO Holdings, Inc. ("Holdings"), was incorporated in the state of Delaware to acquire all of the outstanding shares of FESCO.

(2) Significant Accounting Policies

(a) Principles of Consolidation

        The consolidated financial statements include the accounts of Holdings and its wholly owned subsidiaries for the period, subsequent to acquisition. All significant intercompany accounts, profits and transactions have been eliminated in consolidation.

(b) Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

        In the opinion of management, the Company's unaudited consolidated financial statements as of September 30, 2003 and for the interim periods ended September 30, 2003 and 2002 include all adjustments which are necessary for a fair presentation in accordance with accounting principles generally accepted in the United States.

        Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted herein pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's 2002 financial statements.

(c) Cash and Cash Equivalents

        Cash and cash equivalents consist of highly liquid investments with original maturities of three months or less. Holdings places its temporary cash investments in financial institutions that management believes to be of high credit quality. As such, Holdings believes no significant concentration of credit risk exists with respect to these investments.

F2-24

(d) Inventories

        Inventories consist of raw materials, fuel, spare parts and supplies used to operate and maintain Holdings' vehicles and equipment. Inventories are carried at the lower of cost or market utilizing the first-in, first-out method.

(e) Fair Value of Financial Instruments

        The carrying amounts reported in the accompanying consolidated balance sheets for cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximate fair value due to the short-term maturities of these instruments. The carrying amounts reported in the accompanying consolidated balance sheet for the line of credit, long-term debt and capital lease obligations approximate fair value since the applicable interest rates are either variable or representative of rates obtainable by Holdings on September 30, 2003.

(f) Property, Plant, and Equipment

        Property and equipment are stated at cost and are depreciated on a straight-line basis over the estimated useful lives of the assets as noted below.

Asset	Estimated useful lives
Land	Not depreciated
Buildings and improvements	15 to 40 years
Vehicles and equipment	5 to 8 years
Furniture and fixtures	3 to 5 years
Leased equipment	Term of corresponding lease

        Maintenance and repairs are expensed as incurred. Betterments, major capital improvements and rebuilds that extend the useful life of the property, plant, and equipment are capitalized.

(g) Intangible Assets

        Holdings recorded intangible assets, including employment agreements, noncompete agreements and customer lists in connection with acquisitions that are being amortized on a straight-line basis over the estimated useful lives of the assets as noted below. Amounts paid out under earn-out arrangements from acquisitions are capitalized when the amounts can be determined with certainty.

Intangible asset	Estimated useful lives
Employment agreements	1 to 3 years
Noncompete agreements	3 years
Customer lists	10 years

        In September 2003, the Company recognized an impairment loss related to intangible assets totaling $4,003,125. The loss was based on a comparison of the fair value of the underlying

F2-25

intangible asset to its carrying value. There is significant judgment used in determining the fair value of the underlying asset. (See Note 11).

(h) Goodwill

        Holdings recorded goodwill in connection with the acquisitions described in note 1. Prior to the adoption of Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets ("SFAS 142") on January 1, 2002, Holdings amortized goodwill over an estimated useful life of 10 years. Beginning in fiscal 2002, in connection with the adoption of SFAS 142, Holdings no longer amortizes goodwill. Goodwill is evaluated at least annually for impairment in accordance with the provisions of SFAS 142.

        In September 2003, the Company recognized impairment loss related to goodwill totaling $9,299,013. Impairment analysis requires management to make a series of critical assumptions to: (1) evaluate whether any impairment exists; and (2) measure the amount of impairment. (See Note 11).

(i) Impairment of Assets

Long-Lived Assets Held and Used

        The Company tests long-lived assets or asset groups for recoverability when events or changes in circumstances indicate that their carrying amount may not be recoverable. Circumstances which could trigger a review, include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business climate or legal factors; current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset. Recoverability is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value (See Note 11).

Long-Lived Assets Held for Sale

        Long-lived assets are classified as held for sale when certain criteria are met, which include: management commitment to a plan to sell the assets; the availability of the assets for immediate sale in their present condition; whether an active program to locate buyers and other actions to sell the assets has been initiated; whether the sale of the assets is probable and their transfer is expected to qualify for recognition as a completed sale within one year; whether the assets are being marketed at reasonable prices in relation to their fair value; and how unlikely it is that significant changes will be made to plan to sell the assets. The Company measures long-lived assets to be disposed of by sale at the lower of carrying amount and fair value less cost to sell. Fair value is determined using quoted market prices or the anticipated cash flows discounted at a rate commensurate with the risk involved (See Note 11).

F2-26

Recent Accounting Pronouncements

        Long-lived assets and intangible assets are reviewed for impairment in accordance with the provisions of Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets ("SFAS 144"), whenever changes in events or circumstances indicate the carrying amount of these assets may not be recoverable. If this review indicates that the carrying value of these assets will not be recoverable, based on future undiscounted net cash flows from the use or disposition of the assets, the carrying value is reduced to estimated fair value. During the third quarter of 2003, the Company recorded impairment loss of $5,060,312, under SFAS No. 144 (see Note 11).

(j) Income Taxes

        The current provision for income taxes represents estimated amounts due on tax returns filed or to be filed. Deferred tax assets and liabilities are recorded for the estimated future tax effects of temporary differences between the tax basis of assets and liabilities and amounts reported in the consolidated balance sheets. The overall change in deferred tax assets and liabilities for the period, exclusive of deferred tax assets and liabilities recorded in purchase accounting for businesses acquired, measures the deferred tax expense or benefit for the period. Effects of changes in enacted tax laws on deferred tax assets and liabilities are reflected as adjustments to tax expense in the period of enactment.

(k) Concentration of Credit Risk

        Holdings' trade accounts receivable are concentrated with certain customers in the oil and gas industry. Although diversified among many companies, collectibility is dependent upon general economic conditions of the oil and gas industry in the regions in which Holdings operates. During the nine-month period ended September 30, 2003, virtually all of Holdings revenue came from oil and gas industry customers, with two significant customers contributing 45.3% of Holdings' revenue. Sales to Customer A were approximately $10,099,000, or 27.8%, and sales to Customer B were approximately $6,332,000 or 17.5% of total revenues. During the nine month period ended September 30, 2002, virtually all of Holdings revenue came from oil and gas industry customers, with two significant customers contributing 29.8% of Holdings' revenue. Sales to Customer A were approximately $7,057,000 or 19.08%, and sales to Customer B were approximately $3,976,000 or 10.7% of total revenues.

(l) Revenue and Cost Recognition

        Revenues from time-and-material contracts are recognized currently as the work is performed. Costs include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools, repairs, and depreciation costs.

(m) New Accounting Pronouncements

        During June 2001, the FASB issued Statement of Financial Accounting Standards No. 143, Accounting for Asset Retirement Obligations ("SFAS 143"). SFAS 143 establishes accounting standards for recognition and measurement of a liability for an asset retirement obligation and the

F2-27

associated asset retirement cost. SFAS 143 requires an entity to recognize the fair value of a liability for an asset retirement obligation in the period in which it is incurred if a reasonable estimate can be made. Holdings adopted SFAS 143 on January 1, 2003. The adoption of SFAS 143 had no significant impact on Holdings.

        In April 2002, the FASB issued Statement of Financial Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("FAS 145"). This Statement rescinds FASB Statement No. 4, Reporting Gains and Losses from Extinguishment of Debt, and an amendment of that statement, FASB Statement No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This statement amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to the sale-leaseback transactions. FAS 145 was effective for the Company for fiscal year 2002. The adoption of FAS 145 did not have a significant effect on the Company's results of operations or its financial position.

        In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities ("FAS 146"). This statement requires costs associated with exit or disposal activities, such as lease termination or employee severance costs, to be recognized when they are incurred rather than at the date of a commitment to an exit or disposal plan. FAS 146 replaces Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring), which previously provided guidance on this topic. FAS 146 is to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The adoption of FAS 146 did not have a significant effect on the Holdings results of operations or its financial position.

        In November 2002, the FASB issued FASB Interpretation No. 45 ("FIN 45"), Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45 requires that a liability be recorded in the guarantor's balance sheet upon issuance of a guarantee. In addition, FIN 45 requires disclosures about the guarantees that an entity has issued. As FESCO has not entered into such guarantee agreements, the adoption of FIN 45 had no effect on Holdings financial statements as of September 30, 2003.

        In December 2002, the FASB issued Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation — Transition and Disclosure — An Amendment to FASB Statement No. 123 (FAS 148). This statement amends FAS 123, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, FAS 148 amends the disclosure requirements of FAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. The adoption of FAS 148 did not have a significant effect on Holdings results of operations or its financial position.

        In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"), Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. FIN 46 requires certain variable interest entities (VIEs) to be consolidated by the primary beneficiary of the entity if the equity investors in

F2-28

the entity do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. FIN 46 is effective for all new VIEs created or acquired after January 31, 2003. For VIEs created or acquired prior to February 1, 2003, the provisions of FIN 46 must be applied for the first interim or annual period beginning after June 15, 2003. The adoption of this standard had no effect on FESCO's financial statements.

(3) Acquisition Earn-out Payments

        In accordance with the original terms of the Schmid acquisition agreement, additional cash consideration in the form of an earn-out payment was required to be paid to the former shareholders of Schmid in 2002. The earn-out payment was to be based upon the amount of EBITDA, as defined, earned by Schmid for the two-year period ending March 31, 2002, plus accrued interest from March 31, 2001 to March 31, 2002 at a rate equal to the prime interest rate plus 1.0%.

        In November 2001, a portion of the earn-out payment was paid through the issuance of 9,307 shares of Holdings common stock, valued at $930,700. This consideration paid in partial satisfaction of the earn-out payment was recorded as additional goodwill in the accompanying consolidated financial statements.

        In November 2002, Holdings and the former shareholders of Schmid agreed upon the amount and terms of the remaining unpaid earn-out payment in a negotiated settlement agreement. In settlement of the earn-out payment, Holdings agreed to pay the former Schmid shareholders a total of $2,575,000, plus accrued interest from March 31, 2001 to the final payment date, at a rate of 6.5% per annum. The Company paid $1,200,000 in cash and $300,000 in stock, plus accrued interest of $124,900 and $31,200 in cash and stock, respectively, on November 6, 2002. In addition, the Company paid $358,333 plus accrued interest of $48,524 on January 1, 2003. The remaining accrued earn-out payment was paid in December 2004.

        The total earn-out payment of $2,575,000, interest of $336,700 and costs of $51,000 associated with the Schmid earn-out payment was recorded as additional goodwill related to the Schmid acquisition.

F2-29

(4) Property, Plant, and Equipment

	September 30, 2003
Land	$	373,520
Buildings and improvements		2,568,297
Vehicles and equipment		46,890,666
Furniture and fixtures		553,527
		50,386,010
Less accumulated depreciation		(18,334,531	)
Construction in progress		292,021
	$	32,343,500

        Depreciation expense amounted to $5,757,909 for the nine months ended September 30, 2003. As of September 30, 2003, the Company had capitalized leases of vehicles and equipment with historical costs of $7,124,588 and accumulated amortization of $2,292,105.

        Depreciation expense amounted to $6,192,102 for the nine months ended September 30, 2002. As of December 31, 2002, the Company had capitalized leases of vehicles and equipment with historical costs of $7,124,588 and accumulated amortization of $1,598,295.

        In September 2003, the Company recognized impairment loss in the amount of $5,060,312 related to property, plant, and equipment (See Note 11).

(5) Intangible Assets and Goodwill

        In September 2003, the Company recognized an impairment loss of $13,302,138 related to intangible assets and goodwill. (See Note 11).

(6) Long Term Debt and Capital Lease Obligations

(a) Long-Term Debt

        A summary of Holdings notes payable is as follows:

		September 30, 2003
GE Capital Revolving Credit Facility		$	140,915
GE Capital Term Loan			10,937,500
Equipment notes payable			6,053,720
			17,132,135
Less:
	Current portion of long-term debt		(3,746,980	)
	Current portion of line of credit		(140,915	)
		$	13,244,240

F2-30

        On August 30, 2001, the Company and certain of its subsidiaries entered into a credit agreement ("the Agreement") with General Electric Capital Corporation ("GE Capital") to refinance certain equipment notes payable assumed through the acquisition of the Company's subsidiaries and the funds borrowed from the Company's majority shareholder, First Reserve Fund VIII L.P. (Fund VIII). The Agreement allows for borrowings up to an aggregate sum of $30,000,000, consisting of a Revolving Credit Facility, a Term Loan, an Acquisition Term Loan, a Swing Line Facility and Letters of Credit. All borrowings under the Agreement bear interest at variable interest rates as explained below. The Agreement calls for mandatory prepayments equal to the proceeds from the sale of fixed assets, the proceeds in excess of $250,000 from the sale of Company common stock, and Excess Cash Flow, as defined, beginning in the year ended December 31, 2002. The Agreement is guaranteed by the Company and is secured by all of the Company's personal and real property. Loan origination fees of $1,325,169 were incurred in connection with the Agreement and subsegment refinancing in August of 2002. These fees are included in other assets in the accompanying consolidated balance sheets and are being amortized to interest expense over the terms of the related loans. A commitment fee of 0.5% of the average remaining available borrowings is due monthly.

        Borrowings under the Revolving Credit Facility may be repaid at any time without penalty but must be repaid in full by August 30, 2006; may not exceed $7,500,000; bear interest at either a) the Index Rate, as defined, plus 1.75%, or b) the Company may commit a portion of the outstanding borrowings under the Revolving Credit Facility to one, two or three month terms bearing interest at the LIBOR Rate, as defined, plus 3.25%. The Company is required to pay a monthly commitment fee equal to 0.50% of the remaining funds available under the Revolving Credit Facility.

        Total principal borrowed on August 30, 2001 under the Term Loan was $14,000,000. The Term Loan bears interest at the Company's option of either (a) the Index Rate, as defined, plus 2.00% (6% and 6.25% as of September 30, 2003 and December 31, 2002, respectively) or (b) the LIBOR Rate plus 3.50% (4.61% and 5.26% as of September 30, 2003 and 2002, respectively). Commencing December 31, 2001, accrued interest computed on the outstanding Term Loan balance is due monthly and principal repayments of $437,500 are due quarterly with the remaining principal balance due at August 30, 2006. The Term Loan may be prepaid at any time in the minimum amount of $500,000.

        To the extent that the Company's Borrowing Base, as defined, exceeds that used to determine the initial $30,000,000 credit limit under the Agreement, additional funds will be available to the Company by utilizing the Swing Line Facility. As of September 30, 2003 the Company had no available borrowings under the Swing Line Facility. The Borrowing Base as of September 30, 2003 was $8,126,724.

        The Company may request Letters of Credit from time to time from GE Capital in an amount not to exceed the lesser of $1,000,000 or the funds remaining under the Revolving Credit Facility. Outstanding Letters of Credit bear a fee equal to 3.25% of the outstanding amount. The Company had no Letters of Credit outstanding as of or during the nine months ended September 30, 2003.

        Aggregate indebtedness to GE Capital under the Revolving Credit Facility, Term Loan and Acquisition Term Loan as of September 30, 2003 was $11,078,415, of which substantially all of the balance bears interest at the LIBOR Rate plus 3.5%. The weighted average interest rate for the

F2-31

period these borrowings were outstanding in 2003 and 2002 was 4.79% and 5.42%, respectively. For the nine months ended September 30, 2003 and 2002, total interest expense related to these borrowings was $457,481 and $738,067, respectively.

        On August 30, 2002, the Company amended the Agreement ("Amendment") in conjunction with the reorganization discussed in note 1. The Amendment established the Company as the primary borrower under the Agreement, and removed the Company's subsidiaries as borrowers under the Agreement. No other material changes were made.

        In August 2003, the Company executed a waiver and amendment to the Agreement with GE Capital to cure certain defaults at December 31, 2002, and to loosen certain financial covenant requirements for fiscal 2003 that would have otherwise resulted in a default status.

        The Agreement is subject to various financial and nonfinancial covenants. GE Capital has the option to call the debt in the event of noncompliance with these covenants.

        The Company has entered into various notes for the purchase of equipment and vehicles bearing interest at rates ranging from 0.0% to 8.75% per annum, which mature at various dates from December 2003 to June 2007. These notes are collateralized by related equipment and vehicles.

        At September 30, 2003, aggregate scheduled maturities of long-term debt are as follows:

			GE Capital		Equipment notes	Total
Year ended September 30:
	2004		$	1,750,000	1,996,980	3,746,980
	2005			1,750,000	1,981,207	3,731,207
	2006			7,437,500	1,502,168	8,939,668
	2007			—	573,365	573,365
		Total	$	10,937,500	6,053,720	16,991,220

(b) Capital Lease Obligations

        Holdings has entered into a capital lease obligation for equipment and vehicles. The obligation bears interest at 5.75% per annum and matures January 2006. The lease obligation is collateralized by the related equipment and vehicles which have a net book value of approximately $4,832,483 and $5,526,293 at September 30, 2003 and December 31, 2002, respectively.

F2-32

        At September 30, 2003, future minimum payments required under the capital lease obligation follows:

Year ended September 30:
	2004		$	1,413,157
	2005			1,340,438
	2006			537,557
				3,291,152
Less interest				(234,824	)
		Future minimum principal payments		3,056,328
Less current portion				(1,264,688	)
		Long-term portion of capital lease obligations	$	1,791,640

(7) Stockholders' Equity

(a) Common and Preferred Stock

        Holdings is authorized to issue 500,000 shares of $0.001 par value common stock and 500,000 shares of $0.01 par value preferred stock. The rights, terms and conditions of the preferred shares will be determined by the board of directors prior to issuance of any series of preferred stock.

(b) Restricted Shares

        The Company's stock may not be transferred without the consent of the Company. Upon consent by the Company of any share transfers, Fund VIII has a right of first refusal to purchase such shares from the selling shareholder based upon the then fair value of the shares. Furthermore, if greater than 50% of the Company's fully diluted common stock is transferred, any remaining shareholders will be required to transfer their shares to the acquirer.

(c) Stock Options

        The Company's 2000 Stock Option Plan (the "2000 Plan"), provides for the grant of options to purchase up to an aggregate of 21,053 shares of common stock of FESCO by employees and nonemployees; of which 8,990 shares are available for grant as of September 30, 2003. The exercise price of nonqualified options granted is determined by the board of directors based on the estimated fair market value of FESCO common stock at the date of grant. The 2000 Plan allows for option awards to be granted for ten years from the effective date of the plan, which was June 16, 2000, and options granted have a term of ten years. Options vest as determined by the Board.

        FESCO accounts for its stock option plan using the intrinsic value method prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees. If the Company had elected to

F2-33

recognize compensation based upon the calculated fair value of the options, earnings would have been as follows:

		Nine Months Ended September 30,
		2003		2002
As reported:
	Stock-based compensation	$	—	—
	Net loss		14,832,321	3,054,297
Pro forma results:
	Stock-based compensation	$	17,684	17,684
	Net loss		14,850,005	3,071,981

(8) Commitments and Contingencies

(a) Operating Lease Commitments

        The Company has entered into noncancelable operating leases for equipment and real property with lease terms through 2007. Future minimum lease payments at September 30, 2003 are as follows:

September 30:
	2004		$	379,256
	2005			362,844
	2006			292,844
	2007			114,359
		Total minimum payments	$	1,149,303

        Rental expense for the nine months ended September 30, 2003 and 2002 for operating leases was $934,200 and $468,555, respectively.

(b) Employee Retirement Plans

        The Company provides voluntary 401(k) employee savings plans covering all eligible employees (the "401(k) Plan"). Participants in the 401(k) Plan may contribute up to 20% of their eligible compensation. Qualified and nonqualified, discretionary employer contributions may be made by the Company which are allocated to eligible employees based upon their representative share of total compensation paid to eligible employees during the year. Participant and qualified employer contributions vest immediately, whereas nonqualified employer contributions vest ratably until the participant reaches their sixth year of service. During the nine months ended September 30, 2003 and 2002, the Company contributed $112,820 and $126,335, respectively, to the 401(k) Plan.

F2-34

(9) Related Parties

        As discussed in note 3, as of September 30, 2003, $848,652 remained accrued for the earn-out obligation and accrued interest to the former Schmid shareholders.

        The Company leases land and buildings from an entity owned by the former owners of Busha. Total rental payments to the entity owned by the former owners of Busha related to this lease was $38,925 in 2003 and $38,100 in 2002 and the monthly rental payments to these entities were $4,160 for first five months of 2002 and $4,325 thereafter.

        Both the former Schmid and Busha shareholders are shareholders of FESCO.

(10) Subsequent Event

Merger

        On October 3, 2003, Basic Energy Services ("Basic") acquired all the capital stock of FESCO. As consideration for the acquisition of FESCO, Basic issued 730,000 shares of its common stock, based on an estimated fair value of the stock of $25.79 per share (a total fair value of approximately $18.8 million), and paid approximately $19.1 million in net cash at the closing to retire debt of FESCO and to pay acquisition costs less the cash held by FESCO. In addition to assuming the working capital of FESCO, Basic incurred other direct acquisition costs and assumed certain other liabilities of FESCO, resulting in Basic recording an aggregate purchase price of approximately $37.9 million. The following table summarizes the preliminary estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):

Current assets, excluding cash		$	12,855
Property and equipment			32,344
Other assets			38
	Total assets acquired		45,237
Current liabilities			5,592
Deferred tax liability			1,725
	Total liabilities assumed		7,317
Net assets acquired		$	37,920

(11) Impairment of Long-Lived Assets

Assets Held and Used

        In September 2003, the Company recorded $5,060,312 of impairment loss in the carrying value of its property, plant, and equipment assets in accordance with Statement of Financial Accounting Standards No. 144 ("SFAS No. 144"). The Company noted indicators during the third quarter of 2003 that the carrying value of its property, plant, and equipment assets may not be recoverable. The impairment analysis was performed in accordance with SFAS No. 144 because of projected declines in current period cash flows combined with a forecast of continuing losses associated with use of the assets and eventual disposal of the assets. The Company evaluated the recoverability of

F2-35

its property, plant and equipment assets and recorded impairment losses based on the amounts by which the carrying amount of these assets exceeded their fair values.

        The Company also recorded $13,302,138 of impairment loss in the carrying value of its goodwill and other intangible assets in accordance with Statement of Financial Accounting Standards No 142 ("SFAS 142"). The impairment analysis was performed in accordance with SFAS No. 142 because of projected declines in current period cash flows combined with a forecast of continuing losses associated with use of the assets and eventual disposal of the assets that generated the goodwill. The Company evaluated the recoverability of goodwill and other intangible assets and recorded impairment losses based on the amounts by which the carrying amount of these assets exceeded their fair values. The following table summarizes the components of the impairment loss of long-lived assets:

	September 30, 2003
Property, Plant, and Equipment	$	5,060,312
Intangible assets, net	$	4,003,125
Goodwill		9,299,013
	$	13,302,138

F2-36

Report of Independent Registered Public Accounting Firm

The Board of Directors
Basic Energy Services, Inc.:

        We have audited the accompanying combined statement of operations, equity and cash flows of PWI, Inc., PWI Management, LLC, Parker Windham, Ltd., PWI Rentals, L.P., PWI Express Services, L.P., and PWI Disposal, L.P. (collectively referred to herein as "PWI") for the nine months ended September 30, 2003. These combined financial statements are the responsibility of PWI's management. Our responsibility is to express an opinion on these combined financial statements based on our audit.

        We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of PWI's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

        In our opinion, the combined financial statements referred to above present fairly, in all material respects, the combined results of PWI's operations and their cash flows for the nine months ended September 30, 2003, in conformity with accounting principles generally accepted in the United States of America.

        As discussed in Note 2 to the combined financial statements, PWI changed its method of accounting for asset retirement obligations as of January 1, 2003.

/s/ KPMG LLP

Dallas, Texas
August 3, 2005

F3-1

PWI

Combined Statement of Operations

For the Nine Months Ended September 30, 2003

Revenues			$	16,050,084
	Total revenues			16,050,084
Expenses
	Cost of goods sold			9,936,889
	Depreciation, depletion and amortization			2,905,120
	Accretion expense			3,220
	General and administrative expenses			3,320,479
		Total expenses		16,165,708
		Operating loss		(115,624	)
Other income (expense)
	Loss on disposal of assets			(144,666	)
	Other expense			(20,499	)
		Total other income (expense)		(165,165	)
	Loss from continuing operations			(280,789	)
	Cumulative effect of accounting change			(22,871	)
		Net loss	$	(303,660	)

The accompanying notes are an integral part of these financial statements

F3-2

PWI

Combined Statement of Equity

For the Nine Months Ended September 30, 2003

	Equity
Balance at December 31, 2002	$	2,525,619
Distributions		(117,222	)
Net loss		(303,660	)
Balance at September 31, 2003	$	2,104,737

The accompanying notes are an integral part of these financial statements

F3-3

PWI

Combined Statement of Cash Flows

For the Nine Months Ended September 30, 2003

				2003
Cash Flows From Operating Activities
	Net loss			$	(303,660	)
	Adjustments to reconcile net loss to net cash provided by operating activities:
		Depreciation, depletion and amortization			2,905,120
		Accretion expense			3,220
		Loss on sale of assets			144,666
		Cumulative effect of accounting change			22,871
		(Increase) in accounts receivable			(18,458	)
		(Increase) in prepaid assets			(244,827	)
		(Increase) in other assets			(3,869	)
		(Decrease) in accounts payable			(187,234	)
		Increase in other accrued liabilities			489,559
			Net cash provided by operating activities		2,807,388
Cash flows from investing activities
	Additions to property, plant and equipment				(1,390,769	)
	Sales of fixed assets				29,600
			Net cash (used in) investing activities		(1,361,169	)
Cash flows from financing activities
	Proceeds from long-term borrowings				2,333,788
	Principal payments of debt				(3,034,192	)
	Principal payments of capital leases				(628,593	)
	Distributions				(117,222	)
			Net cash (used in) financing activities		(1,446,219	)
			Net increase in cash and cash equivalents		—
			Cash and cash equivalents — beginning of period		—
			Cash and cash equivalents — end of period	$	—
Supplemental disclosure of cash flow information
	Cash paid for interest			$	680,835
	Adoption of SFAS No. 143			$	53,662

The accompanying notes are an integral part of these financial statements

F3-4

PWI

Notes to Combined Financial Statements

September 30, 2003

1.    Nature of Operations and Basis of Presentation

Organization

        The combined financial statements included herein are comprised of the individual financial statements of PWI, Inc., PWI Management, LLC (a limited liability corporation), Parker Windham, Ltd. (a Texas Limited partnership), PWI Rentals, L.P. (a partnership), PWI Express Services, L.P. (a partnership) and PWI Disposal L.P. (a partnership), collectively referred to herein as "PWI." As discussed in Note 8, on October 3, 2003, Basic Energy Services, Inc. acquired substantially all of the assets of PWI. Prior to the acquisition, the PWI entities were under common control.

Nature of Operations

        PWI provides a range of well site services to oil and gas drilling and producing companies, including fluid services, rental services, well site construction services and disposal services. These services are primarily provided by PWI's fleet of equipment. PWI's operations are concentrated in the major United States onshore oil and gas producing regions of the states of Texas and Louisiana.

2.    Summary of Significant Accounting Policies

Principles of Combination

        The accompanying combined financial statements include the accounts of the above named partnerships. All material inter-company transactions and balances have been eliminated in the combination.

Estimates and Uncertainties

        Preparation of the accompanying combined financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent assets and liabilities at the date of the combined financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Areas where critical accounting estimates are made by management include:

•

Depreciation and amortization of property and equipment and intangible assets



•

Impairment of property and equipment and goodwill



•

Allowance for doubtful accounts



•

Litigation



•

Fair value of assets acquired and liabilities assumed



•

Income taxes



•

Asset retirement obligations

F3-5

Revenue Recognition

        Fluid Services —    Fluid services consist primarily of trucking/transporting and disposal of oil-based and water-based liquids and solids; salt water and brine water used in drilling, production and maintenance of oil and natural gas wells. Parker Windham, Ltd. recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixable and determinable. Parker Windham, Ltd. prices fluid services by the job, by the hour, or by the quantities sold, disposed of or hauled.

        Construction Services —    Construction services consist primarily of site construction (both matted and rocked), lease maintenance, pit closures and roustabout services. PWI Express Services, L.P. recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixable and determinable. PWI Express Services, L.P. prices well site construction services by the hour, day, or project depending on the type of service performed. Long-term well site construction services revenue is recognized based on the percentage of completion method.

        Rental Services —    Rental services consist primarily of rental of equipment to customers for workover, drilling and completion projects including items such as generators, pumps, light towers, open top tanks, frac tanks, cuttings tanks, forklifts, backhoes, Turbo Tanks and hoppers. PWI Rentals, L.P. recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixable and determinable.

        Disposal Services —    Disposal services consist primarily of two land farms and two salt water disposal wells permitted by the Texas Railroad Commission. These land farms and salt water disposal wells are used to dispose of customers' product from customers' locations. PWI Disposal, L.P. recognizes revenue when services are performed, collection of the relevant receivables is probable, persuasive evidence of an arrangement exists and the price is fixable and determinable.

Cash and Cash Equivalents

        PWI considers all highly liquid instruments purchased with a maturity of three months or less to be cash equivalents. PWI maintains its excess cash in various financial institutions, where deposits may exceed federally insured amounts at times.

Depreciation, Amortization and Repairs and Maintenance Expense

        Expenditures for repairs and maintenance are charged to expense as incurred and additions and improvements that significantly extend the lives of the assets are capitalized. Upon sale or other retirement of depreciable property, the cost and accumulated depreciation and amortization are removed from the related accounts and any gain or loss is reflected in operations. All property and equipment are depreciated or amortized (to the extent of estimated salvage values) on the straight-line method over the estimated useful lives of the assets.

F3-6

Income Taxes

        Parker Windham, Ltd., the only taxable entity in the combined group, accounts for income taxes based upon Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109"). Under SFAS No. 109, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using statutory tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rate is recognized in the period that includes the statutory enactment date. A valuation allowance for deferred tax assets is recognized when it is more likely than not that the benefit of deferred tax assets will not be realized.

        No provision for income taxes has been included in these financial statements for any entity other than Parker Windham, Ltd., since the remaining entities are not taxable and the tax effects of their income or loss is passed through to their individual partners.

Concentrations of Credit Risk

        Financial instruments, which potentially subject PWI to concentration of credit risk, consist primarily of temporary cash investments and trade receivables. PWI restricts investment of temporary cash investments to financial institutions with high credit standing. PWI's customer base consists primarily of multi-national and independent oil and natural gas producers. It performs ongoing credit evaluations of its customers, but generally does not require collateral on its trade receivables. Credit risk is considered by management to be limited due to the large number of customers comprising its customer base. PWI maintains an allowance for potential credit losses on its trade receivables, and such losses have been within management's expectations.

        PWI did not have any one customer which represented 10% or more of combined revenues for the period ended September 30, 2003.

Asset Retirement Obligations

        As of January 1, 2003, PWI adopted Statement of Financial Accounting Standards No. 143, "Accounting for Asset Retirement Obligation" ("SFAS No. 143"). SFAS No. 143 requires PWI to record the fair value of an asset retirement obligation as a liability in the period in which it incurs a legal obligation associated with the retirement of tangible long-lived assets and capitalize an equal amount as a cost of the asset depreciating it over the life of the asset.

        Subsequent to the initial measurement of the asset retirement obligation, the obligation is adjusted at the end of each quarter to reflect the passage of time, changes in the estimated future cash flows underlying the obligation, acquisition or construction of assets, and settlements of obligations. Effective January 1, 2003, PWI recorded additional costs, net of accumulated depreciation of approximately $30,790, an asset retirement obligation of approximately $53,660 and an after-tax charge of approximately $22,871, for the cumulative effect on prior year's depreciation of the additional costs and the accretion expense on the liability related to the expected abandonment costs.

F3-7

        PWI owns and operates salt water disposal sites, brine water wells, gravel pits and land farm sites, each of which is subject to rules and regulations regarding usage and eventual closure. The following table reflects the changes in the liability during the nine months ended September 30, 2003:

Balance, January 1, 2003	$	—
Initial recognition of asset retirement obligation		53,662
Accretion expense		3,220
Balance, September 30, 2003	$	56,882

Environmental

        PWI is subject to extensive federal, state, and local environmental laws and regulations. These laws, which are constantly changing, regulate the discharge of materials into the environment and may require PWI to remove or mitigate the adverse environmental effects of disposal or release of petroleum, chemical and other substances at various sites. Environmental expenditures are expensed or capitalized depending on the future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated.

3.    Income Taxes

        No federal income taxes were paid or received in the period ended September 30, 2003.

        The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pre-tax income (loss) due to the following:

	Nine Months Ended September 30, 2003
Income tax expense (benefit) at statutory rate	$	(103,244	)
Income of non-taxable partnerships at statutory rate		(190,009	)
Non-deductible expenses and other		14,448
Valuation allowance		278,805
Income tax expense	$	—

        A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. Based on expectations for the future and the availability of certain tax planning strategies that would generate taxable income to realize the net tax benefits, if implemented, management has determined that it is more likely than not that a portion of the deferred tax assets will not be realized. Based on recurring operating losses of Parker Windam, Ltd., management has determined a valuation allowance is required to reduce net deferred tax assets to zero at December 31, 2002 and September 30, 2003.

F3-8

4.    Commitments and Contingencies

Environmental

        PWI is subject to various federal, state and local environmental laws and regulations that establish standards and requirements for protection of the environment. PWI cannot predict the future impact of such standards and requirements which are subject to change and can have retroactive effectiveness. PWI continues to monitor the status of these laws and regulations. Management does not believe that the disposition of any of these items will result in a material adverse impact to PWI's financial position, liquidity, capital resources or future results of operations.

        Currently, PWI has not been fined, cited or notified of any environmental violations that would have a material adverse effect upon its financial position, liquidity or capital resources. However, management does recognize that by the very nature of its business, material costs could be incurred in the near term to bring PWI into total compliance. The amount of such future expenditures is not determinable due to several factors including the unknown magnitude of possible contamination, the unknown timing and extent of the corrective actions which may be required, the determination of PWI's liability in proportion to other responsible parties and the extent to which such expenditures are recoverable from insurance or indemnification.

Litigation

        From time to time, PWI is a party to litigation or other legal proceedings that PWI considers to be a part of the ordinary course of business. PWI is not currently involved in any legal proceedings that could reasonably be expected to have a material adverse effect on its financial condition, results of operations or liquidity.

Operating Leases

        PWI leases certain property and equipment under non-cancelable operating leases. The term of the operating leases generally range from 12 to 60 months with varying payment dates throughout each month. As of September 30, 2003, the future minimum lease payments under non-cancelable operating leases are as follows:

Twelve Months Ended September 30,
2004	$	224,208
2005	$	61,090

        Rent expense for the nine months ended September 30, 2003 approximated $49,095, which includes certain related party transactions (see footnote 5).

Employment Agreements

        PWI has entered into employment agreements with various employees that range in terms up through October, 2004. Under these agreements, if the employee is terminated for certain reasons, he would be entitled to his regular pay and all benefits through the date of his termination of employment. If the employee is terminated without cause, then he would be entitled to the continued receipt of his base salary and benefits until the end of the term of the agreement.

F3-9

5.    Related Party Transactions

        PWI leased certain yards owned by a related party for approximately $3,000 for the nine months ended September 30, 2003. PWI also leased a certain office building owned by a related party for approximately $19,995 for the nine months ended September 30, 2003. PWI had notes payable to these related parties for approximately $514,000 at September 30, 2003.

6.    Profit Sharing Plan

        PWI has a 401(k) profit sharing plan that covers substantially all employees with more than 90 days of service. Employees may contribute up to their base salary not to exceed the annual federal maximum allowed for such plans. PWI makes a matching contribution proportional to each employee's contribution. Employee contributions are fully vested at all times. Employer matching contributions vest incrementally, with full vesting occurring after five years of service. Employer contributions to the 401(k) plan approximated $32,304 in 2003.

7.    Business Segment Information

        PWI's reportable business segments are: fluid services, rental services, well site construction services and disposal services. The following is a description of the segments:

        Fluid Services:    This segment utilizes a fleet of trucks and related assets, including specialized tank trucks, storage tanks, water wells, disposal facilities and related equipment. These assets provide, transport, store and dispose of a variety of fluids. These services are required in most workover, drilling and completion projects as well as part of daily producing well operations.

        Rental Services:    This segment is involved in the rental of equipment for their locations. Rental equipment includes items such as generators, pumps, light towers, open top tanks, frac tanks, cuttings tanks, forklifts, backhoes, TurboTanks, and hoppers.

        Well Site Construction Services:    This segment utilizes a fleet of power units, dozers, trenchers, motor graders, backhoes and other heavy equipment. These assets provide services for the construction and maintenance of oil and gas production infrastructure, such as preparing and maintaining access roads and well locations, installation of small diameter gathering lines and pipelines and construction of temporary foundations to support drilling rigs.

        Disposal Services:    This segment includes two land farms and two salt water disposal sites permitted by the Texas Railroad Commission which are used for the actual disposal of product(s) from workover, drilling and completion sites as well as the separation, storage and sale of skim oil from the disposal facility.

        PWI's management evaluates the performance of its operating segments based on operating revenues and segment profits. Corporate expenses include general corporate expenses associated with managing all reportable operating segments. Corporate assets consist principally of working

F3-10

capital and debt financing costs. The following table sets forth certain financial information with respect to our reportable segments:

	Fluid Services			Rental Services			Well Site Construction Services			Disposal Services			Corporate and Other		Total
Operating Revenues	$	10,397,549		$	2,810,912		$	2,616,140		$	225,483		$	—	$	16,050,084
Direct Operating Costs		(7,379,618	)		(874,733	)		(1,666,955	)		(15,583	)	$	—		9,936,889
Segment Profits	$	3,017,931		$	1,936,179		$	949,185		$	209,900		$	—	$	6,113,195
Capital Expenditures (Excluding Acquisitions)	$	1,114,560		$	23,336		$	14,141		$	10,116		$	228,617	$	1,390,770
Identifiable Assets	$	5,358,651		$	3,135,170		$	2,459,181		$	251,146		$	568,502	$	11,772,650

        The following table reconciles the segment profits reported above to the operating income as reported in the consolidated statements of operations:

	Nine months ended September 30, 2003
Segment profits	$	6,113,195
General and administrative expenses		(3,320,479	)
Depreciation and amortization		(2,908,340	)
Operating loss	$	(115,624	)

8.    Subsequent Events

        On October 3, 2003, Basic Energy Services, Inc. acquired substantially all the assets of PWI for $25.1 million plus a $2.5 million contingent earn-out payment. The contingent earn-out payment will be paid upon the PWI assets meeting certain financial objectives in the future. The cash cost of this acquisition was $25.1 million (including other direct acquisition costs) which was allocated $16.4 million to property and equipment, $8.6 million to goodwill, $250,000 to non-compete agreements and $200,000 to liabilities assumed.

F3-11

Appendix A

Glossary of Terms

        Acidizing:    The process of pumping solvent into the well as a means of dissolving unwanted material.

        Brine water:    Water that is heavily saturated with salt used in various well completion and workover activities.

        Cased-hole:    A wellbore lined with a string of casing or liner (generally metal casing placed and cemented) to protect the open hole from fluids, pressures, wellbore stability problems or a combination of these. Although the term can apply to any hole section, it is often used to describe techniques and practices applied after a casing or liner has been set across the reservoir zone, such as cased-hole logging or cased-hole testing.

        Casing:    Steel pipe placed in an oil or gas well as drilling progresses to prevent the wall of the hole from caving in, to prevent seepage of fluids, and to provide a means of extracting petroleum if the well is productive.

        Drilling mud:    The fluid pumped down the drilling string and up the well bore to bring debris from the drilling and workover operators to the surface. Drilling muds also cool and lubricate the bit, protect against blowouts by holding back underground pressures and, in new well drilling, deposit a mud cake on the wall of the borehole to minimize loss of fluid to the formation.

        Electric wireline.    Wireline that contains an electrical conduit, thereby enabling the use of downhole electrical sensors to measure pressures and temperatures.

        Frac job or fracturing operations:    A procedure to stimulate production of oil or gas from a well by pumping fluids from the surface under high pressure into the wellbore to induce fractures in the formation.

        Frac tank:    A steel tank used to store fluids at the well location to facilitate completion and workover operations. The largest demand is related to the storage of fluid used in fracturing operations.

        Hot oil truck:    A truck mounted pump, tank and heating element used to melt paraffin accumulated in the well bore by pumping heated oil or water through the well.

        Newbuild:    A newly built rig, as compared to a refurbished rig that may contain substantially all new components or new derrick but utilizes an older frame.

        Plugging and abandonment activities:    Activities to remove production equipment and seal off a well at the end of a well's economic life.

        Slickline.    A form of wireline that lacks an electrical conduit and is used only to perform mechanical tasks such as setting or retrieving various tools.

        Stimulation:    The general process of improving well productivity through fracturing or acidizing operations.

        Swab rig:    Truck mounted equipment consisting of a hoist and mast used to remove, or "swab," wellbore fluids by alternatively lowering and raising tools in a well's tubing or casing.

        Underbalanced drilling:    A drilling method that utilizes air or foam to create a vacuum or pressure.

A-1

        Water cut:    The volume of water produced by a well as a percentage of all fluids produced.

        Wellbore:    The drilled hole of a well, which may include open hole or uncased portions, and which may also refer to the rock face that bounds the inside diameter of the wall of the drilled hole.

        Well completion:    The activities and procedures necessary to prepare a well for the production of oil and gas after the well has been drilled to its targeted depth. Well completions establish a flow path for hydrocarbons between the reservoir and the surface.

        Well servicing:    The maintenance work performed on an oil or gas well to improve or maintain the production from a formation already producing. It usually involves repairs to the downhole pump, rods, tubing, and so forth or removal of sand, paraffin or other debris which is preventing or restricting production of oil or gas.

        Well workover:    Refers to a broad category of procedures preformed on an existing well to correct a major downhole problem, such as collapsed casing, or to establish production from a formation not previously produced, including deepening the well from its originally completed depth.

        Wireline:    A general term used to describe well-intervention operations conducted using single-strand or multistrand wire or cable for intervention in oil or gas wells. Although applied inconsistently, the term is used commonly in association with electric logging and cables incorporating electrical conductors See "slickline" and "electric wireline" for specific types of wireline services.

A-2

        Until             , 2005 (25 days after the commencement of the offering), all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the shares of common stock offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

                  Shares

Basic Energy Services, Inc.

Common Stock

PROSPECTUS

               , 2005

Joint Book-Running Managers

Goldman, Sachs & Co.

Credit Suisse First Boston

Lehman Brothers
UBS Investment Bank
Deutsche Bank Securities
Raymond James
RBC Capital Markets

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. Other Expenses of Issuance and Distribution

        Set forth below are the expenses (other than underwriting discounts and commissions) expected to be incurred in connection with the issuance and distribution of the securities registered hereby. With the exception of the Securities and Exchange Commission registration fee and the NASD filing fee, the amounts set forth below are estimates:

Securities and Exchange Commission registration fee		$	30,455
NASD filing fee			26,375
NYSE listing fee			170,000
Printing and engraving expenses			400,000
Legal fees and expenses			250,000
Accounting fees and expenses			350,000
Transfer agent and registrar fees			4,500
Miscellaneous			468,670
	TOTAL	$	1,700,000

ITEM 14. Indemnification of Directors and Officers

        Section 145 of the Delaware General Corporation Law ("DGCL") provides that a corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Section 145 further provides that a corporation similarly may indemnify any such person serving in any such capacity who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation and except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Delaware Court of Chancery or such other court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which the Delaware Court of Chancery or such other court shall deem proper. Basic Energy Services' certificate of incorporation and bylaws provide that indemnification shall be to the fullest extent permitted by the DGCL for all current or former directors or officers of Basic Energy Services. As permitted by the DGCL, the certificate of incorporation provides that directors of Basic

II-1

Energy Services shall have no personal liability to Basic Energy Services or its stockholders for monetary damages for breach of fiduciary duty as a director, except (1) for any breach of the director's duty of loyalty to Basic Energy Services or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or knowing violation of II-1 law, (3) under Section 174 of the DGCL or (4) for any transaction from which a director derived an improper personal benefit.

        We have also entered into indemnification agreements with all of our directors and some of our executive officers (including each of our named executive officers). These indemnification agreements are intended to permit indemnification to the fullest extent now or hereafter permitted by the General Corporation Law of the State of Delaware. It is possible that the applicable law could change the degree to which indemnification is expressly permitted.

        The indemnification agreements cover expenses (including attorneys' fees), judgments, fines and amounts paid in settlement incurred as a result of the fact that such person, in his or her capacity as a director or officer, is made or threatened to be made a party to any suit or proceeding. The indemnification agreements generally cover claims relating to the fact that the indemnified party is or was an officer, director, employee or agent of us or any of our affiliates, or is or was serving at our request in such a position for another entity. The indemnification agreements also obligate us to promptly advance all reasonable expenses incurred in connection with any claim. The indemnitee is, in turn, obligated to reimburse us for all amounts so advanced if it is later determined that the indemnitee is not entitled to indemnification. The indemnification provided under the indemnification agreements is not exclusive of any other indemnity rights; however, double payment to the indemnitee is prohibited.

        We are not obligated to indemnify the indemnitee with respect to claims brought by the indemnitee against:

•

us, except for:



•

claims regarding the indemnitee's rights under the indemnification agreement;



•

claims to enforce a right to indemnification under any statute or law; and



•

counter-claims against us in a proceeding brought by us against the indemnitee; or



•

any other person, except for claims approved by our board of directors.

        We have also agreed to obtain and maintain director and officer liability insurance for the benefit of each of the above indemnitees. These policies will include coverage for losses for wrongful acts and omissions and to ensure our performance under the indemnification agreements. Each of the indemnitees will be named as an insured under such policies and provided with the same rights and benefits as are accorded to the most favorably insured of our directors and officers.

ITEM 15. Recent Sales of Unregistered Securities

        During the past three years, we have issued unregistered securities to a limited number of persons, as described below. None of these transactions involved any underwriters or public offerings, and we believe that each of these transactions was exempt from registration requirements pursuant to Section 3(a)(9) or Section 4(2) of the Securities Act of 1933, as amended, Regulation D promulgated thereunder or Rule 701 of the Securities Act of 1933. The recipients of these securities represented their intention to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were affixed to the share certificates and instruments issued in these transactions. No remuneration or commission was paid

II-2

or given directly or indirectly. The following information gives effect to a 5-for-1 stock split to be effected prior to the completion of the offering contemplated by this registration statement:

        In February 2002, our predecessor, Basic Energy Services, Inc., issued 3,000,000 shares of our common stock, together with warrants exercisable for an aggregate of 600,000 shares of our common stock, to existing stockholders and their affiliates for aggregate cash consideration of $12,000,000.

        On June 25, 2002, our predecessor, Basic Energy Services, Inc., issued 187,500 shares of our Series A 10% Cumulative Preferred Stock, together with warrants exercisable for an aggregate of 3,750,000 shares of our common stock, to existing stockholders and their affiliates for aggregate cash consideration of $15,000,000. Offering expenses related to this transaction totaled $58,000.

        On January 24, 2003, we issued one share of our common stock in exchange for each share of then-outstanding common stock of our predecessor, Basic Energy Services, Inc., and shares of our Series A 10% Cumulative Preferred Stock in exchange for all of the then-outstanding shares of its Series A 10% Cumulative Preferred Stock, and assumed all of the outstanding warrants and options then outstanding by this predecessor.

        On May 5, 2003, we issued an aggregate of 771,740 shares of common stock upon the exercise of all of our EBITDA Contingent Warrants, which were issued during December 2000 to our prior stockholders and certain members of management as part of the initial investment by DLJ Merchant Banking and our recapitalization, for aggregate consideration of $1,543.48.

        On May 5, 2003, we granted options to purchase an aggregate of 605,000 shares of common stock under our Amended and Restated 2003 Incentive Plan to employees and directors at an exercise price of $4.00 per share. We received no payments from the optionees upon issuance of the options.

        On October 1, 2003, we granted options to purchase an aggregate of 37,500 shares of common stock under our 2003 Incentive Plan to a new director at an exercise price of $5.1584 per share. We received no payments from the optionee upon issuance of the options.

        On October 3, 2003, we issued an aggregate of 3,650,000 shares of common stock, including 912,500 shares of common stock issued into escrow, to former stockholders of FESCO Holdings, Inc. as consideration for all of the outstanding shares of FESCO Holdings, Inc. The implied value per share in connection with the share exchange was $5.1584 per share.

        On October 3, 2003, we issued an aggregate of 3,304,085 shares of common stock in exchange for all of the outstanding shares of our Series A 10% Cumulative Preferred Stock and accrued dividends. The implied value per share in connection with the share exchange was $5.1584 per share.

        On February 23, 2004, our board of directors approved the issuance of 837,500 shares of restricted stock to our officers under our 2003 Incentive Plan. These shares, as issued effective April 22, 2004 after stockholder approval of our Amended and Restated 2003 Incentive Plan, are subject to vesting in one-fourth increments for all officers other than Mr. Carter on February 24, 2005, 2006, 2007 and 2008, and with respect to shares owned by Mr. Carter, vesting one-half on February 24, 2005 and 2006. All of these shares are also subject to repurchase at the lower of their book value or their fair market value in accordance with our Second Amended and Restated Stockholders Agreement. We received no payments from the recipients upon the issuance of these shares.

        On March 1, 2004, we granted options to purchase an aggregate of 37,500 shares of common stock under our 2003 Incentive Plan to a new director at an exercise price of $5.1584 per share. We received no payments from the optionee upon issuance of the options.

II-3

        On March 23, 2004, we granted options to purchase an aggregate of 50,000 shares of common stock under our Amended and Restated 2003 Incentive Plan to employees at an exercise price of $5.1584. We received no payments from optionees upon issuance of the options.

        On January 26, 2005, we granted options to purchase an aggregate of 100,000 shares of common stock under our Amended and Restated 2003 Incentive Plan to a new executive officer at an exercise price of $5.1584. We received no payment from the optionee upon the issuance of the options.

        On March 2, 2005, we granted options to purchase an aggregate of 865,000 shares of common stock under our Amended and Restated 2003 Incentive Plan to employees at an exercise price of $6.98.

ITEM 16. Exhibits and Financial Statement Schedules

a.

Exhibits:

1.1	—	Form of Underwriting Agreement
3.1	—	Form of Amended and Restated Certificate of Incorporation
3.2	—	Form of Amended and Restated Bylaws
4.1	—	Specimen Stock Certificate representing common stock
5.1	—	Opinion of Andrews Kurth LLP
10.1	—	Form of Indemnification Agreement
10.2*	—	Employment Agreement dated as of March 1, 2004 with Kenneth V. Huseman
10.3*	—	Employment Agreement dated as of May 1, 2003 with Dub W. Harrison
10.4*	—	Employment Agreement dated as of May 1, 2003 with Charles W. Swift
10.5*	—	Employment Agreement dated as of May 1, 2003 with James J. Carter
10.6*	—	Employment Agreement dated as of January 26, 2005 with Alan Krenek
10.7*	—	Second Amended and Restated Stockholders' Agreement dated as of April 2, 2004 by and among Basic Energy Services, Inc. and the stockholders listed therein
10.8*	—	Stock Purchase Agreement dated as of September 18, 2003, as amended on October 1, 2003, with FESCO Holdings, Inc. and the sellers named therein
10.9*	—	Asset Purchase Agreement dated as of August 14, 2003 with PWI
10.10*	—	Second Amended and Restated Credit Agreement, dated as of October 3, 2003, restated as of December 21, 2004, by and among Basic Energy Services, L.P. and the other Borrowers named therein, Basic Energy Services, Inc. and the other Guarantors named therein, the Lenders party thereto, UBS Securities LLC as Arranger, Hibernia National Bank, as Documentation Agent, and UBS AG, Stanford Branch, as Issuing Bank, Administrative Agent and Collateral Agent
10.11*	—	Second Amended and Restated 2003 Incentive Plan
10.12	—	Form of Non-Qualified Option Grant Agreement (Executive Officer — Pre-March 1, 2005)
10.13	—	Form of Non-Qualified Option Grant Agreement (Executive Officer — Post-March 1, 2005)

II-4

10.14	—	Form of Non-Qualified Option Grant Agreement (Non-Employee Director — Pre-March 1, 2005)
10.15	—	Form of Non-Qualified Option Grant Agreement (Non-Employee Director — Post-March 1, 2005)
10.16	—	Form of Restricted Stock Grant Agreement
10.17	—	Workover Unit Package Contract and Acceptance Agreement, dated as of May 17, 2005, by and between Basic Energy Services, Inc. and Taylor Rigs, LLC
21.1	—	Subsidiaries of Basic Energy Services
23.1*	—	Consent of KPMG LLP
23.2*	—	Consent of PricewaterhouseCoopers LLP
23.3	—	Consent of Andrews Kurth LLP (Contained in Exhibit 5.1)
24.1	—	Power of Attorney (included on signature page)

*

Filed herewith

II-5

b.

Financial Statement Schedules

        None.

ITEM 17. Undertakings

        The undersigned Registrant hereby undertakes:

        (a)   Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described in Item 14, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

        (b)   To provide to the underwriter(s) at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter(s) to permit prompt delivery to each purchaser.

        (c)   For purpose of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in the form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective.

        (d)   For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6

SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Houston, in the State of Texas, on August 12, 2005.

BASIC ENERGY SERVICES, INC.
By:	/s/  KENNETH V. HUSEMAN
Name:	Kenneth V. Huseman
Title:	President, Chief Executive Officer and Director

        KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Kenneth V. Huseman and Alan Krenek, and each of them severally, his true and lawful attorney or attorneys-in-fact and agents, with full power to act with or without the others and with full power of substitution and resubstitution, to execute in his name, place and stead, in any and all capacities, any or all amendments (including pre-effective and post-effective amendments) to this Registration Statement and any registration statement for the same offering filed pursuant to Rule 462 under the Securities Act of 1933, as amended, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and each of them, full power and authority to do and perform in the name of on behalf of the undersigned, in any and all capacities, each and every act and thing necessary or desirable to be done in and about the premises, to all intents and purposes and as fully as they might or could do in person, hereby ratifying, approving and confirming all that said attorneys-in-fact and agents or their substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed below by the following persons in the capacities and on the dates indicated below.

Signature		Date
/s/  KENNETH V. HUSEMAN Kenneth V. Huseman	President, Chief Executive Officer and Director (Principal Executive Officer)	August 12, 2005
/s/  ALAN KRENEK Alan Krenek	Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)	August 12, 2005
/s/  STEVEN A. WEBSTER Steven A. Webster	Chairman of the Board	August 12, 2005
/s/  JAMES S. D'AGOSTINO, JR. James S. D'Agostino, Jr.	Director	August 12, 2005
/s/  WILLIAM E. CHILES William E. Chiles	Director	August 12, 2005
/s/  ROBERT F. FULTON Robert F. Fulton	Director	August 12, 2005
/s/  SYLVESTER P. JOHNSON, IV Sylvester P. Johnson, IV	Director	August 12, 2005
/s/  H.H. WOMMACK, III H.H. Wommack, III	Director	August 12, 2005

II-7

EXHIBIT INDEX

1.1	—	Form of Underwriting Agreement
3.1	—	Form of Amended and Restated Certificate of Incorporation
3.2	—	Form of Amended and Restated Bylaws
4.1	—	Specimen Stock Certificate representing common stock
5.1	—	Opinion of Andrews Kurth LLP
10.1	—	Form of Indemnification Agreement
10.2*	—	Employment Agreement dated as of March 1, 2004 with Kenneth V. Huseman
10.3*	—	Employment Agreement dated as of May 1, 2003 with Dub W. Harrison
10.4*	—	Employment Agreement dated as of May 1, 2003 with Charles W. Swift
10.5*	—	Employment Agreement dated as of May 1, 2003 with James J. Carter
10.6*	—	Employment Agreement dated as of January 26, 2005 with Alan Krenek
10.7*	—	Second Amended and Restated Stockholders' Agreement dated as of April 2, 2004 by and among Basic Energy Services, Inc. and the stockholders listed therein
10.8*	—	Stock Purchase Agreement dated as of September 18, 2003, as amended on October 1, 2003, with FESCO Holdings, Inc. and the sellers named therein
10.9*	—	Asset Purchase Agreement dated as of August 14, 2003 with PWI
10.10*	—	Second Amended and Restated Credit Agreement, dated as of October 3, 2003, restated as of December 21, 2004, by and among Basic Energy Services, L.P. and the other Borrowers named therein, Basic Energy Services, Inc. and the other Guarantors named therein, the Lenders party thereto, UBS Securities LLC as Arranger, Hibernia National Bank, as Documentation Agent, and UBS AG, Stanford Branch, as Issuing Bank, Administrative Agent and Collateral Agent
10.11*	—	Second Amended and Restated 2003 Incentive Plan
10.12	—	Form of Non-Qualified Option Grant Agreement (Executive Officer — Pre-March 1, 2005)
10.13	—	Form of Non-Qualified Option Grant Agreement (Executive Officer — Post-March 1, 2005)
10.14	—	Form of Non-Qualified Option Grant Agreement (Non-Employee Director — Pre-March 1, 2005)
10.15	—	Form of Non-Qualified Option Grant Agreement (Non-Employee Director — Post-March 1, 2005)
10.16	—	Form of Restricted Stock Grant Agreement
10.17	—	Workover Unit Package Contract and Acceptance Agreement, dated as of May 17, 2005, by and between Basic Energy Services, Inc. and Taylor Rigs, LLC
21.1	—	Subsidiaries of Basic Energy Services
23.1*	—	Consent of KPMG LLP
23.2*	—	Consent of PricewaterhouseCoopers LLP
23.3	—	Consent of Andrews Kurth LLP (Contained in Exhibit 5.1)
24.1	—	Power of Attorney (included on signature page)

*

Filed herewith

EX-10.2

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.2

EMPLOYMENT AGREEMENT

        THIS EMPLOYMENT AGREEMENT (the "Agreement"), is made and entered into effective as of March 1, 2004 (the "Effective Date"), by and between BES HOLDING CO., a Delaware corporation (hereafter "Company"), and KENNETH V. HUSEMAN (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."

W I T N E S S E T H:

        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 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 hereof), the Company shall employ Executive, and Executive shall serve as, President and Chief Executive Officer ("CEO") of the Company and as a member of the Board of Directors of the Company (the "Board"). 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 $325,000 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 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 commencing on 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 (referred to herein 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. In the event that the Employment Period ends before the end of the Bonus Period, Executive shall be entitled to a prorata 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 prorata basis, unless Executive was terminated for Cause (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 on or before the beginning of the applicable Bonus Period, and Executive shall have the opportunity to meet with and discuss such criteria with the Compensation Committee prior to the finalization of such criteria. 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 thirty (30) days after the earlier of the end of the Bonus Period or his Employment Period, as applicable. Notwithstanding the foregoing, for each such one-year period, the minimum Bonus that Executive shall receive for completion of any of the performance criteria for that

period shall be $50,000.00 and the maximum Bonus shall be one (1) times his Base Salary for that year. In all matters related to setting the performance criteria and paying the earned Bonus, the Compensation Committee shall act reasonably and in good faith with respect to Executive.

        (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 and/or director position, under the terms of the Company's equity compensation plans.

        (d)Change in Control Special Bonus.    In the event of a Change in Control (as defined in Section 6(d) ), the Executive shall be entitled to receive a bonus (the "Special Bonus") in an amount equal to two (2) times the sum of Executive's annual Base Salary (as in effect immediately prior to the Change in Control) plus his current annual incentive target bonus (Section 2(b)) for the full year in which the Change in Control occurred. Notwithstanding the previous sentence, Executive shall be entitled to receive the Special Bonus only if the consideration received by shareholders incident to such Change in Control, as computed on the basis of a share of the Company's common stock, exceeds the Book Value per Share (as defined in Section 6(d)) as of the last business day prior to the Change in Control. This determination shall be made by the Board in good faith. Except to the extent set forth in Section 6(b), the Special Bonus shall not reduce or offset any other salary, bonus, severance or termination payment, or any other compensation or benefit that may be due to Executive under this Agreement.

        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 Board, or as a member of the Board, to the best of his ability and with reasonable diligence. In determining Executive's duties and responsibilities, the Board shall not assign duties and responsibilities to Executive that are inappropriate for his position as CEO. 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 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 February 28, 2007 (the "Initial Term of Employment"). Thereafter, the employment period hereunder shall be automatically extended repetitively for an additional one (1) year period on March 1, 2007, and each one-year anniversary thereof, unless Notice of Termination (pursuant to Section 7) is given by either the Company or Executive to the other Party at least ninety (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."

2

        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. 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 and/or country club as appropriate for his position. The Company shall also pay or reimburse the Executive's reasonable fees for legal and tax advice and other related expenses associated with the negotiation and completion of this Agreement.

        (b)Other Employee Benefits.    Executive shall be entitled to participate in, and shall participate in coverage under, any pension, retirement, 401(k), profit-sharing, and other employee benefits plans or programs of the Company to the same extent as available to any other officers of the Company under the terms of such plans or programs. Executive shall also be entitled to participate in any group insurance, hospitalization, medical, dental, health, life, accident, disability and other employee benefits plans or programs of the Company to the extent available to any other officers of the Company under the terms of such plans or programs.

        In addition to the employee benefits described in the previous paragraph, the Company shall purchase and maintain a term life insurance policy from a carrier that is rated A or better by A.M. Best. This policy shall cover Executive's life with a death benefit of at least $1,000,000. The Company shall pay all premiums on such policy and Executive shall designate the beneficiary(ies) under such policy. At the end of the Employment Period for any reason except death, Executive shall have the option, in his discretion, to assume such life insurance policy and pay the premiums thereunder from his personal funds in order to continue such coverage.

        Company also agrees to purchase and maintain a long-term disability insurance policy covering Executive from a reputable insurance carrier reasonably satisfactory to Executive. This policy must provide income replacement benefits at least equal to sixty percent (60%) of his Base Salary commencing no later than 90 days from the date of Executive's disability thereunder and continuing, subject to the policy's terms, at least until he attains age 65. The Company shall pay all premiums on such policy.

        (c)Paid Time Off Days and Holidays.    Executive shall be entitled to no less than the number of paid time off ("PTO") days in each calendar year determined in accordance with the Company's PTO policy for its officers as in effect from time to time, but not less than twenty (20) PTO days in any calendar year (prorated in any calendar year during which he is employed for less than the entire year in accordance with the number of days in such calendar year in which he was employed). Executive shall also be entitled to all paid holidays and personal days given by the Company to Executive or any of its other officers.

        (d)Automobile Fuel Allowance.    Company shall pay or reimburse Executive for the costs of fuel incurred by Executive in connection with his use of his automobile during the Employment Period. Executive shall submit receipts evidencing such fuel purchases to the Company pursuant to its established procedures for such purpose.

3

        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 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 to 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 unpaid salary for the full month in which his Termination Date occurred; provided, however, if Executive is terminated for Cause (as defined in Section 6(d)), he shall only be entitled to receive his accrued but unpaid salary through his Termination Date;

        (2)   his unpaid PTO days for that year 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 five (5) business 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)Other 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 "No Severance Benefits Event" (as defined in Section 6(d)), including, without limitation, due to his death, "Disability" or "Retirement" (as such terms are defined in Section 6(d)), or (ii) Executive terminates his own employment hereunder for "Good Reason" (as defined in Section 6(d)), then in either such event under clause (i) or (ii), the following severance benefits shall be provided to Executive or, in the event of termination due to 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 the sum which equals (x) plus (y). For this purpose, (x) equals three times the sum of Executive's annual Base Salary (as in effect immediately prior to his Termination Date) plus Executive's current annual incentive target Bonus (Section 2(b)) for the full year in which the termination of employment occurred; provided, if the Executive shall have been paid or become entitled to a Special Bonus within the 24 months preceding a termination of employment, (x) shall equal one (1) times such sum. For this purpose, (y) is a cash amount equal to 1.50 times the aggregate direct benefits costs that the Company would incur if it were to provide the employee benefits (as defined in Section 5(b)) to Executive (and his covered dependents as applicable), except for the group health plan coverage described in Section 6(b)(2)below, for a period of two (2) years following the Termination Date. The Company, in its discretion, shall make the Additional Payment to Executive either (i) in a cash lump sum not later than sixty (60) calendar days following the Termination Date or (ii) in substantially equal monthly installment payments over a 24-month period beginning within 30 days of the Termination Date including credited interest on the unpaid balance at six percent (6%) per annum.

        (2)   The Company shall maintain continued group health plan coverage following the Termination Date under all plans subject to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended ("COBRA") (as codified in Code Section 4980B and Part 6 of Subtitle B of Title I of ERISA) for Executive and his eligible spouse and dependents for the maximum period for which such qualified beneficiaries are eligible to receive COBRA coverage. However, Executive (and his spouse and dependents) shall not be required to pay

4

more for such COBRA coverage than is charged by the Company to its officers who are then in active service for the Company and receiving coverage under such plan. In all other respects, Executive (and his spouse and dependents) shall be treated the same as other COBRA qualified beneficiaries under the terms of such plans and the provisions of COBRA. In the event of any change to a group health plan following the 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. Executive and his spouse hereby agree 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.

        In the event that (i) Executive voluntarily resigns or otherwise voluntarily terminates his own employment, except for Good Reason or due to his death, Disability or Retirement (as such terms are defined in Section 6(d)), or (ii) Executive's employment is terminated due to a No Severance Benefits Event (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), but without regard to the special rates in paragraph (2). Executive shall still be entitled to the severance 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 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)   "Book Value per Share" means the book value of a share of the Company's fully diluted common stock using the "Treasury Method" as defined by GAAP. The determination of Book Value per Share shall be made by the Board in good faith.

        (2)   "Affiliate" means any entity in which the Company has a fifty percent (50%) or greater capital, profits or voting interest.

        (3)   "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 to such crime by the Executive; (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 Board or the Compensation Committee determines in good faith would directly result in a material injury

5

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 Board or 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 Board or 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 Board or Compensation Committee but in no event less than thirty (30) business days 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 fifty percent (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

        (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

6

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 or Bonus opportunity pursuant to Section 2(a) or (b);

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

        (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 due to a No Severance Benefits Event (as described in Section 6(d));

        (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)  at any time prior to the consummation of an initial public offering by the Company, Executive is removed from his position as a member of the Board, or he is not nominated for, or if nominated, he is not reelected to, such position; each without his consent except due to his termination of employment for any reason;

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

7

        (G)  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 Board or 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)   "No Severance Benefits Event" means termination of Executive's employment for Cause (as defined above).

        (10) "Retirement" means the termination of Executive's employment for normal retirement at or after attaining age sixty (60) provided that, on the date of his retirement, Executive has accrued at least five years of active service with the Company.

        7.    Notice of Termination.    Any termination 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 a "No Severance Benefits Event" (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 severance benefits (hereafter, the "Nonrenewal Severance Benefits") provided that he first enters into a release agreement pursuant to Section 6(c). The Nonrenewal Severance Benefits due to Executive hereunder shall be the same, in all respects, as the benefits described in Sections 6(a) and 6(b).

        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.    In the event that Executive is deemed to have received an "excess parachute payment" (as defined in Section 280G(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.

        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 any applicable surtaxes and other generally applicable taxes which have the effect of increasing the marginal federal income tax rate and, if applicable, at the highest marginal state income tax rate, to which the Tax Bonus Payment and

8

Executive are subject. An example of the calculation of the Tax Bonus Payment is set forth below. 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 × 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% × $100,000) and less income taxes on the Tax Bonus Payment of $40,000 (i.e., 40% × $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.

        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. In the event that the Company is able to establish that the amount of the excess parachute payments is less than originally anticipated by Executive, Executive shall refund to the Company any excess Tax Bonus Payment to the extent 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 him, as a condition to taking any action required by this paragraph.

        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 within 30 days of receipt by the Company 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.

        In the event that there is any change to the Code which results in the recodification of Section 280G or Section 4999 of the Code, or in the event that 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 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.

        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 of the Tax Consultant's final determination to Company and Executive.

9

        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.

        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 director, 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 of before given by, or acquired in connection with work on behalf of, the 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/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

10

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 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

11

any such writings, computer software, inventions, improvements, processes, procedures and techniques. Executive 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 discharge 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 for a period of one (1) year following the Termination Date.

        16.    Non-Competition Restriction.    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 promises between the Company and Executive in Sections 11 through 15 of this Agreement. Executive hereby covenants and agrees that for the Employment Period, and for a period of two (2) years following the Termination Date for any reason other than (a) by the Executive for Good Reason or (b) by the Company other than for Cause, Executive will not, without the prior written consent of the Board or the Compensation Committee, become interested in any capacity in which Executive would perform any similar duties to those performed while at the Company, directly or indirectly (whether as proprietor, stockholder, director, partner, employee, agent, independent contractor, consultant, trustee, beneficiary, or in any other capacity), for any customer of the Company or any Affiliate, or on behalf of any entity that is engaged in the business of operating oil and gas pulling units or workover rigs, or of completing, servicing, maintaining, or repairing oil and gas wells, or removing, transporting, or disposing of liquid wastes produced therefrom in competition with the Company or any of its Affiliates in any county in the United States in which the Company or any of its Affiliates have conducted business at any time during the Employment Period (a "Competing Enterprise"); provided, however, that the Executive shall not be deemed to be participating or engaging in a Competing Enterprise solely by virtue of his ownership of not more than five percent (5%) 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.

        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

12

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 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 Board to terminate Executive's employment for Cause (as defined in Section 6(d)); provided, however, Executive cannot be terminated for Cause hereunder unless the Board 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 Section 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 as 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 encumbrance 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 subject to attachment or seizure by any creditor of such

13

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 Board 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 the person or estate of such minor or person; or (c) to such adult or adults as have, in the good faith knowledge of the Board 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 shall enter into the Indemnification Agreement with the Executive in substantially the same form as attached hereto as Exhibit A.

        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.    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, 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.

        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.

14

        The award of the Arbitrator shall be (a) the sole and exclusive remedy of the parties, and (b) 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 (i) the parties at any time from agreeing to pursue non-binding mediation of the Dispute prior to arbitration hereunder or (ii) 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.

        34.    Waiver of Breach.    No waiver by 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 any 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 service, or (c) on the third business day following deposit in the United

15

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:

BES Holding Co.
Attn: Chairman of the Board
400 W. Illinois, Suite 800
Midland, Texas 79701

(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 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/Survival 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 March 16, 1999, 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.

[Signature page follows.]

16

        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.

WITNESS:		EXECUTIVE:
Signature:	/s/  MARION L. STEWART	Signature:	/s/  KENNETH V. HUSEMAN
Name:	Marion L. Stewart	Name:	Kenneth V. Huseman
Date:	4/5/2004	Date:	4/5/2004
		Address for Notices:            3900 Baybrook Ct.        Midland, TX 79707        (432)  699 - 4789

ATTEST:		COMPANY:
By:	/s/  MARION L. STEWART	By:	/s/  JAMES J. CARTER
Title:	Executive Assistant	Its:	Vice President
Name:	Marion L. Stewart	Name:
Date:	4/6/2004	Date:	4/5/2004

17

QuickLinks

EMPLOYMENT AGREEMENT

EX-10.3

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.3

EMPLOYMENT AGREEMENT

        This Employment Agreement, including the attached Exhibit A (together, the "Agreement"), is entered into between Basic Energy Services, L.P., a Delaware limited liability company (the "Company"), and Dub W. Harrison ("Employee") effective as of May 1, 2003 (the "Effective Date").

WITNESSETH:

        WHEREAS, the Company desires to employ Employee pursuant to the terms and conditions set forth in this Agreement, and Employee desires to be employed by the Company pursuant to such terms and conditions;

        NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, the Company and Employee agree as follows:

ARTICLE I: EMPLOYMENT AND DUTIES

        1.1   The Company agrees to employ Employee and Employee agrees to be employed by the Company subject to the terms and conditions of this Agreement, beginning as of the Effective Date and continuing until the date set forth on Exhibit A hereto (the "Term"). If Employee's employment with the Company continues after the end of the Term, Employee shall be an "at-will" employee.

        1.2   Employee shall be employed in the position set forth on Exhibit A and shall have the normal authorities, responsibilities and duties of such position, including, specifically, those set forth on Exhibit A hereto, if any. However, the Company may assign Employee such additional or different duties from time to time as may be reasonably appropriate in the good faith opinion of the Company, including duties with an affiliate. Employee shall at all times comply with the policies and procedures of the Company as in effect from time to time. While employed hereunder, the Employee shall devote his full time and attention during normal business hours to the business affairs of the Company and use his best efforts to perform faithfully and effectively his duties and responsibilities.

ARTICLE II: COMPENSATION AND BENEFITS

        2.1   During the Term the Company shall pay Employee a Monthly Base Salary as set forth on Exhibit A, which shall be paid in accordance with the Company's standard payroll practice. Such Monthly Base Salary may be increased from time-to-time by the Company, and may be decreased if a similar decrease is made to the base salaries of other employees of the Company holding positions generally comparable to that held by the Employee.

        2.2   Employee shall be eligible to participate in the cash bonus and stock option plans, if any, established and maintained for the benefit of the Company's employees, as such plans and Employee's participation therein may be approved from time to time by the Company.

        2.3   The Company may withhold from any compensation, benefits, or amounts payable to Employee all taxes as may be required pursuant to any applicable law.

        2.4   Employee shall be reimbursed by the Company for reasonable travel, lodging, meals, customer entertainment and other expenses incurred by him in connection with performing his duties hereunder in accordance with the Company's policies in effect from time to time.

        2.5   Employee will be entitled to paid days off from work and other benefits made available to other employees of the Company pursuant to policies and/or plans adopted from time to time by the Company, which paid days off work and other benefits will, when appropriate, be prorated in any calendar year during which the Employee is employed for less than the entire year with such proration to be based on the number of days in such calendar year during which he is employed.

        2.6   Employee's primary work location will be the location specified on Exhibit A hereto. Employee will be reimbursed for reasonable relocation or moving expenses incurred by Employee if the Company requires a change in such primary work location that is a greater distance than fifty (50) miles from the Employee's primary work location specified on Exhibit A hereto.

ARTICLE III: TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION

        3.1   The Company shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(i)

for "Cause", upon the determination by the Company that "Cause" exists for termination of Employee's employment (a "Termination for Cause"). As used herein, the term "Cause" means (a) Employee's gross negligence or willful misconduct in the performance of Employee's duties; (b) Employee has been convicted of a felony; (c) Employee has willfully refused without proper legal reason to perform the duties and responsibilities required of Employee under this Agreement; (d) Employee's material breach of any material provision of this Agreement which remains uncorrected for 10 business days following written notice by the Company to Employee of such breach; (e) chronic alcohol abuse or illegal drug use by Employee that is determined by the president of the managing general partner of the Company (the "President") or other officer to whom the Employee reports to materially impair Employee's ability to perform his duties and responsibilities hereunder or (f) Employee's failure to report any conflict of interest between the Employee and the Company immediately upon the occurrence of such conflict of interest;



(ii)

for any reason other than Cause (an "Involuntary Termination"); or



(iii)

if Employee becomes entitled to benefits under the Company's (or an affiliate's) long-term disability plan or, if Employee is not covered by any such plan, upon Employee becoming unable to perform substantially, with reasonable accommodation, Employee's duties as a result of a physical or mental impairment as determined by a physician selected or approved by the Company (a "Disability Termination").

        3.2   Employee shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(i)

for a material breach by the Company of a material provision of this Agreement which remains uncorrected for 10 business days following written notice of such breach by Employee to the Company (a "Good Reason Termination"); or



(ii)

for any other reason 30 days following written notice to the Company, unless such notice period is waived by the Company (a "Voluntary Termination").

        3.3   Upon a Voluntary Termination, a Termination for Cause, a Disability Termination, or a termination due to Employee's death, Employee (or Employee's spouse or, if none, Employee's legal representative) shall be paid the pro rata Monthly Base Salary earned through the date of such termination; however, Employee shall not be entitled any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.4   Upon an Involuntary Termination or a Good Reason Termination, Employee shall be paid, as soon as reasonably practical following such termination, a lump sum amount equal to six months'

2

Monthly Base Salary (however, if such termination occurs on or following a Change of Control (as defined in the Company's then current Stock Incentive Plan), "18 months"' shall be substituted for "six months"'); however, Employee shall not be entitled to receive any severance payment pursuant to this Section 3.4 unless Employee has executed (and not revoked) a general release of all claims Employee may have or assert against the Company and its affiliates relating to Employee's employment hereunder in a form of such release reasonably acceptable to the Company. Employee shall not be entitled to any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.5   In all cases, the compensation payable to Employee under this Agreement upon termination of the employment relationship shall be offset against any amounts to which Employee may otherwise be entitled under any and all severance plans and policies of the Company or its affiliates.

        3.6   Termination of the employment relationship pursuant to this Agreement shall not terminate those obligations imposed by this Agreement which are continuing obligations, including, without limitation, Employee's obligations under Articles IV and V.

ARTICLE IV: OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS

        4.1   All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Employee, individually or in conjunction with others, during Employee's employment by the Company which relate to the Company's business, products or services shall be disclosed to the Company by Employee and are and shall be the sole and exclusive property of the Company.

        4.2   Employee acknowledges that the business of the Company and its subsidiaries is highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates, all comprise confidential business information and trade secrets ("Confidential Information") which are valuable, special, and unique assets which the Company or its subsidiaries use in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company and its subsidiaries in maintaining their competitive position. Employee hereby agrees that Employee will not, at any time during or after Employee's termination of employment with the Company, make any unauthorized disclosure of any Confidential Information, or make any use thereof, except in the carrying out of Employee's employment responsibilities hereunder. The affiliates of the Company shall be third party beneficiaries of Employee's obligations under this Section. As a result of Employee's employment by the Company, Employee may also from time to time have access to, or knowledge of, confidential business information or trade secrets of third parties, such as customers, suppliers, partners, joint venturers, and the like, of the Company and its subsidiaries. Employee also agrees to preserve and protect the confidentiality of such third party confidential business information and trade secrets. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article IV by Employee, and the Company shall be entitled to enforce the provisions of this Article IV by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article IV, but shall be in addition to all remedies available at law or in equity to the Company, including the recovery of damages from Employee and his or her agents involved in such breach.

3

        4.3   All written materials, records, and other documents made by, or coming into the possession of, Employee during Employee's employment by the Company which contain or disclose Confidential Information shall be and remain the sole property of the Company and its subsidiaries, as the case may be. Upon termination of Employee's employment by the Company, for any reason, Employee promptly shall deliver the same, and all copies thereof, to the Company.

        4.4   If, during Employee's employment with the Company, Employee creates any original work of authorship fixed in any tangible medium of expression which is the subject matter of copyright (such as videotapes, written presentations on acquisitions, computer programs, drawings, maps, architectural renditions, models, manuals, brochures, or the like) relating to the Company's business, products, or services, whether such work is created solely by Employee or jointly with others (whether during business hours or otherwise and whether on the Company's premises or otherwise), Employee shall disclose such work to the Company. The Company shall be deemed the author of such work if the work is prepared by Employee within the scope of his or her employment but is specially ordered by the Company as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, or as an instructional text, then the work shall be considered to be work made for hire and the Company shall be the author of the work. If such work is neither prepared by the Employee within the scope of his or her employment nor a work specially ordered and is deemed to be a work made for hire, then Employee hereby agrees to assign, and by these presents does assign, to the Company all of Employee's worldwide right, title, and interest in and to such work and all rights of copyright therein.

ARTICLE V: NON-COMPETITION OBLIGATIONS

        5.1   As part of the consideration for the compensation and benefits to be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary, in order to protect the Company's interests in the Confidential Information that the Company will furnish and make available to Employee in the performance of his duties with the Company, and as an additional incentive for the Company to enter into this Agreement, the Company and Employee agree to the non-competition provisions of this Article V. Employee agrees that during the period of Employee's non-competition obligations hereunder, Employee will not, directly or indirectly for Employee or for others (as a principal, agent, owner, employee, consultant or otherwise), in any geographic area or market where the Company or any of its subsidiaries are conducting any business as of the date of termination of the employment relationship or have during the previous twelve months conducted any business (the "Territory"):

(i)

engage in any business competitive with the business conducted by the Company or its subsidiaries;



(ii)

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 subsidiaries;



(iii)

induce any employee of the Company or any of its subsidiaries to terminate his or her employment with the Company or its subsidiaries, or hire or assist in the hiring of any such employee by a person, association, or entity not affiliated with the Company;



(iv)

call upon any person or entity which is, at that time, or which has been, within one year prior to that time, a customer of the Company within the Territory for the purpose of soliciting customers, orders or contracts for any business competitive with the Company or its subsidiaries within the Territory; or

4

(v)

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 Employee's duty to testify as a witness if required by law.

These non-competition obligations shall apply during Employee's employment with the Company and its subsidiaries and shall extend until six months after the latest of (a) the expiration of the Stated Term or (b) Employee's actual termination of the employment with the Company and its subsidiaries if such termination occurs after the expiration of the Stated Term. Notwithstanding the foregoing, if termination of Employee's employment is the result of either an Involuntary Termination by the Company or a Good Reason Termination by the Employee, these non-competition obligations shall terminate six (6) months after the date of such Involuntary Termination or Good Reason Termination. In addition, such non-competition obligations shall not apply if Employee's employment is terminated on or following a Change of Control and shall not prohibit Employee from owning less than 2% of any class of securities of any public company even if such entity is engaged in competition with the Company or a subsidiary of the Company.

        5.2   Employee understands that the foregoing restrictions may limit Employee's ability to engage in certain businesses during the period provided for above, but acknowledges that Employee will receive sufficiently high remuneration and other benefits under this Agreement to justify such restriction. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article V by Employee, and the Company shall be entitled to enforce the provisions of this Article V by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article V, 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 Employee and his or her agents involved in such breach. Employee further agrees to waive any requirement for the Company's securing or posting of any bond in connection with such remedies.

        5.3   It is expressly understood and agreed that the Company and Employee consider the restrictions contained in this Article V to be reasonable and necessary to protect the proprietary information of the Company. Nevertheless, if any of the aforesaid 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.

        5.4   The covenants in this Article V 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 of competent 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.

        5.5   All of the covenants in this Article V 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 Employee 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 employment, during which the agreements and covenants of Employee made herein shall be effective, shall be computed by excluding from such computation any time during which Employee is in violation of any provision of this Article V.

5

ARTICLE VI: MISCELLANEOUS

        6.1   For purposes of this Agreement, all notices and other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

        If to the Company:

Basic Energy Services, L.P.
406 N. Big Spring Street
Midland, Texas 79701
Attention: President

        If to Employee, to the address last shown on the Company's records.

Either the Company or Employee may furnish a change of address to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

        6.2   This Agreement shall be governed in all respects by the laws of the State of Texas, excluding any conflict-of-law rule or principle that might refer the construction of the Agreement to the laws of another state or country. Venue for resolving any dispute arising under or in connection with this Agreement will be in the appropriate Federal or State Courts in Midland County, Texas. The parties agree that they will submit themselves to the jurisdiction of the competent State or Federal Court situated in Midland County, Texas.

        6.3   No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

        6.4   It is a desire and intent of the parties that the terms, provisions, covenants, and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law. In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

        6.5   This Agreement shall be binding upon and inure to the benefit of the Company and any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee's rights and obligations under Agreement hereof are personal and such rights, benefits, and obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of the Company.

        6.6   This Agreement replaces in full all previous agreements and discussions pertaining to the following subject matters covered herein: the nature of Employee's employment relationship with the Company and the term and termination of such relationship. This Agreement constitutes the entire agreement of the parties with regard to such subject matters, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect such subject matters. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party with respect to such subject matters, which is not embodied herein, and that no agreement, statement, or promise relating to the employment of Employee by the Company that is not contained in this Agreement shall be valid or binding. Any

6

modification of this Agreement will be effective only if it is writing and signed by each party whose rights hereunder are affected thereby, provided that any such modification must be authorized or approved by the Company.

ARTICLE VII: DISPUTE RESOLUTION

        7.1   Except with respect to injunctive relief as provided in Section 5.2 above, any dispute or controversy about the validity, interpretation, effect or alleged violation of this Agreement (an "Arbitrable Dispute") must be submitted to confidential arbitration in Midland, Texas. Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association. Arbitration shall be the exclusive remedy of any Arbitrable Dispute. Judgement may be entered on the arbitrator's award in any court having jurisdiction. The parties hereby agree that the arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. All costs and expenses, including attorneys' fees, shall be awarded as determined by the arbitrator. Should any party to this Agreement pursue any Arbitrable Dispute by any method other than arbitration, the other party shall be entitled to recover from the party initiating the use of such method all damages, costs, expenses and attorneys' fees incurred as a result of the use of such method. Notwithstanding anything herein to the contrary, nothing in this Agreement shall purport to waive or in any way limit the right of any party to seek to enforce any judgment or decision on an Arbitrable Dispute in a court of competent jurisdiction.

        IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement in multiple originals, effective for all purposes as of the Effective Date.

BASIC ENERGY SERVICES, L.P.
By:	Basic Energy Services GP, LLC,     Its General Partner
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
EMPLOYEE:
By:	/s/  DUB W. HARRISON Dub W. Harrison

7

EXHIBIT A TO
EMPLOYMENT AGREEMENT
BETWEEN BASIC ENERGY SERVICE, L.P.
AND DUB W. HARRISON

Term Ending Date:	April 30, 2006 ("Stated Term") or, if earlier, the date Employee's employment is terminated for any reason
Position:	Vice President/Equipment and Safety
Monthly Base Salary:	$10,000.00
Primary Work Location	Midland, Texas
Agreed to as of May 1, 2003.

Basic Energy Services, L.P.
By:	Basic Energy Services GP, LLC,     Its General Partner
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
/s/  DUB W. HARRISON Dub W. Harrison

8

QuickLinks

EMPLOYMENT AGREEMENT
EXHIBIT A TO EMPLOYMENT AGREEMENT BETWEEN BASIC ENERGY SERVICE, L.P. AND DUB W. HARRISON

EX-10.4

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.4

EMPLOYMENT AGREEMENT

        This Employment Agreement, including the attached Exhibit A (together, the "Agreement"), is entered into between Basic Energy Services, L.P., a Delaware limited liability company (the "Company"), and Charles W. Swift ("Employee") effective as of May 1, 2003 (the "Effective Date").

WITNESSETH:

        WHEREAS, the Company desires to employ Employee pursuant to the terms and conditions set forth in this Agreement, and Employee desires to be employed by the Company pursuant to such terms and conditions;

        NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, the Company and Employee agree as follows:

ARTICLE I: EMPLOYMENT AND DUTIES

        1.1   The Company agrees to employ Employee and Employee agrees to be employed by the Company subject to the terms and conditions of this Agreement, beginning as of the Effective Date and continuing until the date set forth on Exhibit A hereto (the "Term"). If Employee's employment with the Company continues after the end of the Term, Employee shall be an "at-will" employee.

        1.2   Employee shall be employed in the position set forth on Exhibit A and shall have the normal authorities, responsibilities and duties of such position, including, specifically, those set forth on Exhibit A hereto, if any. However, the Company may assign Employee such additional or different duties from time to time as may be reasonably appropriate in the good faith opinion of the Company, including duties with an affiliate. Employee shall at all times comply with the policies and procedures of the Company as in effect from time to time. While employed hereunder, the Employee shall devote his full time and attention during normal business hours to the business affairs of the Company and use his best efforts to perform faithfully and effectively his duties and responsibilities.

ARTICLE II: COMPENSATION AND BENEFITS

        2.1   During the Term the Company shall pay Employee a Monthly Base Salary as set forth on Exhibit A, which shall be paid in accordance with the Company's standard payroll practice. Such Monthly Base Salary may be increased from time-to-time by the Company, and may be decreased if a similar decrease is made to the base salaries of other employees of the Company holding positions generally comparable to that held by the Employee.

        2.2   Employee shall be eligible to participate in the cash bonus and stock option plans, if any, established and maintained for the benefit of the Company's employees, as such plans and Employee's participation therein may be approved from time to time by the Company.

        2.3   The Company may withhold from any compensation, benefits, or amounts payable to Employee all taxes as may be required pursuant to any applicable law.

        2.4   Employee shall be reimbursed by the Company for reasonable travel, lodging, meals, customer entertainment and other expenses incurred by him in connection with performing his duties hereunder in accordance with the Company's policies in effect from time to time.

        2.5   Employee will be entitled to paid days off from work and other benefits made available to other employees of the Company pursuant to policies and/or plans adopted from time to time by the Company, which paid days off work and other benefits will, when appropriate, be prorated in any calendar year during which the Employee is employed for less than the entire year with such proration to be based on the number of days in such calendar year during which he is employed.

        2.6   Employee's primary work location will be the location specified on Exhibit A hereto. Employee will be reimbursed for reasonable relocation or moving expenses incurred by Employee if the Company requires a change in such primary work location that is a greater distance than fifty (50) miles from the Employee's primary work location specified on Exhibit A hereto.

ARTICLE III: TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION

        3.1   The Company shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(i)

for "Cause", upon the determination by the Company that "Cause" exists for termination of Employee's employment (a "Termination for Cause"). As used herein, the term "Cause" means (a) Employee's gross negligence or willful misconduct in the performance of Employee's duties; (b) Employee has been convicted of a felony; (c) Employee has willfully refused without proper legal reason to perform the duties and responsibilities required of Employee under this Agreement; (d) Employee's material breach of any material provision of this Agreement which remains uncorrected for 10 business days following written notice by the Company to Employee of such breach; (e) chronic alcohol abuse or illegal drug use by Employee that is determined by the president of the managing general partner of the Company (the "President") or other officer to whom the Employee reports to materially impair Employee's ability to perform his duties and responsibilities hereunder or (f) Employee's failure to report any conflict of interest between the Employee and the Company immediately upon the occurrence of such conflict of interest;



(ii)

for any reason other than Cause (an "Involuntary Termination"); or



(iii)

if Employee becomes entitled to benefits under the Company's (or an affiliate's) long-term disability plan or, if Employee is not covered by any such plan, upon Employee becoming unable to perform substantially, with reasonable accommodation, Employee's duties as a result of a physical or mental impairment as determined by a physician selected or approved by the Company (a "Disability Termination").

        3.2   Employee shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(i)

for a material breach by the Company of a material provision of this Agreement which remains uncorrected for 10 business days following written notice of such breach by Employee to the Company (a "Good Reason Termination"); or



(ii)

for any other reason 30 days following written notice to the Company, unless such notice period is waived by the Company (a "Voluntary Termination").

        3.3   Upon a Voluntary Termination, a Termination for Cause, a Disability Termination, or a termination due to Employee's death, Employee (or Employee's spouse or, if none, Employee's legal representative) shall be paid the pro rata Monthly Base Salary earned through the date of such termination; however, Employee shall not be entitled any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.4   Upon an Involuntary Termination or a Good Reason Termination, Employee shall be paid, as soon as reasonably practical following such termination, a lump sum amount equal to six months'

2

Monthly Base Salary (however, if such termination occurs on or following a Change of Control (as defined in the Company's then current Stock Incentive Plan), "18 months"' shall be substituted for "six months"'); however, Employee shall not be entitled to receive any severance payment pursuant to this Section 3.4 unless Employee has executed (and not revoked) a general release of all claims Employee may have or assert against the Company and its affiliates relating to Employee's employment hereunder in a form of such release reasonably acceptable to the Company. Employee shall not be entitled to any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.5   In all cases, the compensation payable to Employee under this Agreement upon termination of the employment relationship shall be offset against any amounts to which Employee may otherwise be entitled under any and all severance plans and policies of the Company or its affiliates.

        3.6   Termination of the employment relationship pursuant to this Agreement shall not terminate those obligations imposed by this Agreement which are continuing obligations, including, without limitation, Employee's obligations under Articles IV and V.

ARTICLE IV: OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS

        4.1   All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Employee, individually or in conjunction with others, during Employee's employment by the Company which relate to the Company's business, products or services shall be disclosed to the Company by Employee and are and shall be the sole and exclusive property of the Company.

        4.2   Employee acknowledges that the business of the Company and its subsidiaries is highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates, all comprise confidential business information and trade secrets ("Confidential Information") which are valuable, special, and unique assets which the Company or its subsidiaries use in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company and its subsidiaries in maintaining their competitive position. Employee hereby agrees that Employee will not, at any time during or after Employee's termination of employment with the Company, make any unauthorized disclosure of any Confidential Information, or make any use thereof, except in the carrying out of Employee's employment responsibilities hereunder. The affiliates of the Company shall be third party beneficiaries of Employee's obligations under this Section. As a result of Employee's employment by the Company, Employee may also from time to time have access to, or knowledge of, confidential business information or trade secrets of third parties, such as customers, suppliers, partners, joint venturers, and the like, of the Company and its subsidiaries. Employee also agrees to preserve and protect the confidentiality of such third party confidential business information and trade secrets. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article IV by Employee, and the Company shall be entitled to enforce the provisions of this Article IV by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article IV, but shall be in addition to all remedies available at law or in equity to the Company, including the recovery of damages from Employee and his or her agents involved in such breach.

3

        4.3   All written materials, records, and other documents made by, or coming into the possession of, Employee during Employee's employment by the Company which contain or disclose Confidential Information shall be and remain the sole property of the Company and its subsidiaries, as the case may be. Upon termination of Employee's employment by the Company, for any reason, Employee promptly shall deliver the same, and all copies thereof, to the Company.

        4.4   If, during Employee's employment with the Company, Employee creates any original work of authorship fixed in any tangible medium of expression which is the subject matter of copyright (such as videotapes, written presentations on acquisitions, computer programs, drawings, maps, architectural renditions, models, manuals, brochures, or the like) relating to the Company's business, products, or services, whether such work is created solely by Employee or jointly with others (whether during business hours or otherwise and whether on the Company's premises or otherwise), Employee shall disclose such work to the Company. The Company shall be deemed the author of such work if the work is prepared by Employee within the scope of his or her employment but is specially ordered by the Company as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, or as an instructional text, then the work shall be considered to be work made for hire and the Company shall be the author of the work. If such work is neither prepared by the Employee within the scope of his or her employment nor a work specially ordered and is deemed to be a work made for hire, then Employee hereby agrees to assign, and by these presents does assign, to the Company all of Employee's worldwide right, title, and interest in and to such work and all rights of copyright therein.

ARTICLE V: NON-COMPETITION OBLIGATIONS

        5.1   As part of the consideration for the compensation and benefits to be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary, in order to protect the Company's interests in the Confidential Information that the Company will furnish and make available to Employee in the performance of his duties with the Company, and as an additional incentive for the Company to enter into this Agreement, the Company and Employee agree to the non-competition provisions of this Article V. Employee agrees that during the period of Employee's non-competition obligations hereunder, Employee will not, directly or indirectly for Employee or for others (as a principal, agent, owner, employee, consultant or otherwise), in any geographic area or market where the Company or any of its subsidiaries are conducting any business as of the date of termination of the employment relationship or have during the previous twelve months conducted any business (the "Territory"):

(i)

engage in any business competitive with the business conducted by the Company or its subsidiaries;



(ii)

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 subsidiaries;



(iii)

induce any employee of the Company or any of its subsidiaries to terminate his or her employment with the Company or its subsidiaries, or hire or assist in the hiring of any such employee by a person, association, or entity not affiliated with the Company;



(iv)

call upon any person or entity which is, at that time, or which has been, within one year prior to that time, a customer of the Company within the Territory for the purpose of soliciting customers, orders or contracts for any business competitive with the Company or its subsidiaries within the Territory; or

4

(v)

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 Employee's duty to testify as a witness if required by law.

These non-competition obligations shall apply during Employee's employment with the Company and its subsidiaries and shall extend until six months after the latest of (a) the expiration of the Stated Term or (b) Employee's actual termination of the employment with the Company and its subsidiaries if such termination occurs after the expiration of the Stated Term. Notwithstanding the foregoing, if termination of Employee's employment is the result of either an Involuntary Termination by the Company or a Good Reason Termination by the Employee, these non-competition obligations shall terminate six (6) months after the date of such Involuntary Termination or Good Reason Termination. In addition, such non-competition obligations shall not apply if Employee's employment is terminated on or following a Change of Control and shall not prohibit Employee from owning less than 2% of any class of securities of any public company even if such entity is engaged in competition with the Company or a subsidiary of the Company.

        5.2   Employee understands that the foregoing restrictions may limit Employee's ability to engage in certain businesses during the period provided for above, but acknowledges that Employee will receive sufficiently high remuneration and other benefits under this Agreement to justify such restriction. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article V by Employee, and the Company shall be entitled to enforce the provisions of this Article V by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article V, 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 Employee and his or her agents involved in such breach. Employee further agrees to waive any requirement for the Company's securing or posting of any bond in connection with such remedies.

        5.3   It is expressly understood and agreed that the Company and Employee consider the restrictions contained in this Article V to be reasonable and necessary to protect the proprietary information of the Company. Nevertheless, if any of the aforesaid 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.

        5.4   The covenants in this Article V 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 of competent 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.

        5.5   All of the covenants in this Article V 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 Employee 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 employment, during which the agreements and covenants of Employee made herein shall be effective, shall be computed by excluding from such computation any time during which Employee is in violation of any provision of this Article V.

5

ARTICLE VI: MISCELLANEOUS

        6.1   For purposes of this Agreement, all notices and other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

        If to the Company:

Basic Energy Services, L.P.
406 N. Big Spring Street
Midland, Texas 79701
Attention: President

        If to Employee, to the address last shown on the Company's records.

Either the Company or Employee may furnish a change of address to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

        6.2   This Agreement shall be governed in all respects by the laws of the State of Texas, excluding any conflict-of-law rule or principle that might refer the construction of the Agreement to the laws of another state or country. Venue for resolving any dispute arising under or in connection with this Agreement will be in the appropriate Federal or State Courts in Midland County, Texas. The parties agree that they will submit themselves to the jurisdiction of the competent State or Federal Court situated in Midland County, Texas.

        6.3   No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

        6.4   It is a desire and intent of the parties that the terms, provisions, covenants, and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law. In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

        6.5   This Agreement shall be binding upon and inure to the benefit of the Company and any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee's rights and obligations under Agreement hereof are personal and such rights, benefits, and obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of the Company.

        6.6   This Agreement replaces in full all previous agreements and discussions pertaining to the following subject matters covered herein: the nature of Employee's employment relationship with the Company and the term and termination of such relationship. This Agreement constitutes the entire agreement of the parties with regard to such subject matters, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect such subject matters. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party with respect to such subject matters, which is not embodied herein, and that no agreement, statement, or promise relating to the employment of Employee by the Company that is not contained in this Agreement shall be valid or binding. Any

6

modification of this Agreement will be effective only if it is writing and signed by each party whose rights hereunder are affected thereby, provided that any such modification must be authorized or approved by the Company.

ARTICLE VII: DISPUTE RESOLUTION

        7.1   Except with respect to injunctive relief as provided in Section 5.2 above, any dispute or controversy about the validity, interpretation, effect or alleged violation of this Agreement (an "Arbitrable Dispute") must be submitted to confidential arbitration in Midland, Texas. Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association. Arbitration shall be the exclusive remedy of any Arbitrable Dispute. Judgement may be entered on the arbitrator's award in any court having jurisdiction. The parties hereby agree that the arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. All costs and expenses, including attorneys' fees, shall be awarded as determined by the arbitrator. Should any party to this Agreement pursue any Arbitrable Dispute by any method other than arbitration, the other party shall be entitled to recover from the party initiating the use of such method all damages, costs, expenses and attorneys' fees incurred as a result of the use of such method. Notwithstanding anything herein to the contrary, nothing in this Agreement shall purport to waive or in any way limit the right of any party to seek to enforce any judgment or decision on an Arbitrable Dispute in a court of competent jurisdiction.

        IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement in multiple originals, effective for all purposes as of the Effective Date.

BASIC ENERGY SERVICES, L.P.
By:	Basic Energy Services GP, LLC,     Its General Partner
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
EMPLOYEE:
/s/  CHARLES W. SWIFT Charles W. Swift

7

EXHIBIT A TO
EMPLOYMENT AGREEMENT
BETWEEN BASIC ENERGY SERVICE, L.P.
AND CHARLES W. SWIFT

Term Ending Date:	April 30, 2006 ("Stated Term") or, if earlier, the date Employee's employment is terminated for any reason
Position:	Vice President/Permian Basin Division
Monthly Base Salary:	$10,833.33
Primary Work Location	Midland, Texas
Agreed to as of May 1, 2003.

Basic Energy Services, L.P.
By:	Basic Energy Services GP, LLC,     Its General Partner
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
/s/  CHARLES W. SWIFT Charles W. Swift

8

QuickLinks

EMPLOYMENT AGREEMENT
EXHIBIT A TO EMPLOYMENT AGREEMENT BETWEEN BASIC ENERGY SERVICE, L.P. AND CHARLES W. SWIFT

EX-10.5

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.5

EMPLOYMENT AGREEMENT

        This Employment Agreement, including the attached Exhibit A (together, the "Agreement"), is entered into between Basic Energy Services, L.P., a Delaware limited liability company (the "Company"), and James J. Carter ("Employee") effective as of May 1, 2003 (the "Effective Date").

WITNESSETH:

        WHEREAS, the Company desires to employ Employee pursuant to the terms and conditions set forth in this Agreement, and Employee desires to be employed by the Company pursuant to such terms and conditions;

        NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, the Company and Employee agree as follows:

ARTICLE I: EMPLOYMENT AND DUTIES

        1.1   The Company agrees to employ Employee and Employee agrees to be employed by the Company subject to the terms and conditions of this Agreement, beginning as of the Effective Date and continuing until the date set forth on Exhibit A hereto (the "Term"). If Employee's employment with the Company continues after the end of the Term, Employee shall be an "at-will" employee.

        1.2   Employee shall be employed in the position set forth on Exhibit A and shall have the normal authorities, responsibilities and duties of such position, including, specifically, those set forth on Exhibit A hereto, if any. However, the Company may assign Employee such additional or different duties from time to time as may be reasonably appropriate in the good faith opinion of the Company, including duties with an affiliate. Employee shall at all times comply with the policies and procedures of the Company as in effect from time to time. While employed hereunder, the Employee shall devote his full time and attention during normal business hours to the business affairs of the Company and use his best efforts to perform faithfully and effectively his duties and responsibilities.

ARTICLE II: COMPENSATION AND BENEFITS

        2.1   During the Term the Company shall pay Employee a Monthly Base Salary as set forth on Exhibit A, which shall be paid in accordance with the Company's standard payroll practice. Such Monthly Base Salary may be increased from time-to-time by the Company, and may be decreased if a similar decrease is made to the base salaries of other employees of the Company holding positions generally comparable to that held by the Employee.

        2.2   Employee shall be eligible to participate in the cash bonus and stock option plans, if any, established and maintained for the benefit of the Company's employees, as such plans and Employee's participation therein may be approved from time to time by the Company.

        2.3   The Company may withhold from any compensation, benefits, or amounts payable to Employee all taxes as may be required pursuant to any applicable law.

        2.4   Employee shall be reimbursed by the Company for reasonable travel, lodging, meals, customer entertainment and other expenses incurred by him in connection with performing his duties hereunder in accordance with the Company's policies in effect from time to time.

        2.5   Employee will be entitled to paid days off from work and other benefits made available to other employees of the Company pursuant to policies and/or plans adopted from time to time by the Company, which paid days off work and other benefits will, when appropriate, be prorated in any calendar year during which the Employee is employed for less than the entire year with such proration to be based on the number of days in such calendar year during which he is employed.

        2.6   Employee's primary work location will be the location specified on Exhibit A hereto. Employee will be reimbursed for reasonable relocation or moving expenses incurred by Employee if the Company requires a change in such primary work location that is a greater distance than fifty (50) miles from the Employee's primary work location specified on Exhibit A hereto.

ARTICLE III: TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION

        3.1   The Company shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(i)

for "Cause", upon the determination by the Company that "Cause" exists for termination of Employee's employment (a "Termination for Cause"). As used herein, the term "Cause" means (a) Employee's gross negligence or willful misconduct in the performance of Employee's duties; (b) Employee has been convicted of a felony; (c) Employee has willfully refused without proper legal reason to perform the duties and responsibilities required of Employee under this Agreement; (d) Employee's material breach of any material provision of this Agreement which remains uncorrected for 10 business days following written notice by the Company to Employee of such breach; (e) chronic alcohol abuse or illegal drug use by Employee that is determined by the president of the managing general partner of the Company (the "President") or other officer to whom the Employee reports to materially impair Employee's ability to perform his duties and responsibilities hereunder or (f) Employee's failure to report any conflict of interest between the Employee and the Company immediately upon the occurrence of such conflict of interest;



(ii)

for any reason other than Cause (an "Involuntary Termination"); or



(iii)

if Employee becomes entitled to benefits under the Company's (or an affiliate's) long-term disability plan or, if Employee is not covered by any such plan, upon Employee becoming unable to perform substantially, with reasonable accommodation, Employee's duties as a result of a physical or mental impairment as determined by a physician selected or approved by the Company (a "Disability Termination").

        3.2   Employee shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(i)

for a material breach by the Company of a material provision of this Agreement which remains uncorrected for 10 business days following written notice of such breach by Employee to the Company (a "Good Reason Termination"); or



(ii)

for any other reason 30 days following written notice to the Company, unless such notice period is waived by the Company (a "Voluntary Termination").

        3.3   Upon a Voluntary Termination, a Termination for Cause, a Disability Termination, or a termination due to Employee's death, Employee (or Employee's spouse or, if none, Employee's legal representative) shall be paid the pro rata Monthly Base Salary earned through the date of such termination; however, Employee shall not be entitled any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.4   Upon an Involuntary Termination or a Good Reason Termination, Employee shall be paid, as soon as reasonably practical following such termination, a lump sum amount equal to six months'

2

Monthly Base Salary (however, if such termination occurs on or following a Change of Control (as defined in the Company's then current Stock Incentive Plan), "18 months"' shall be substituted for "six months"'); however, Employee shall not be entitled to receive any severance payment pursuant to this Section 3.4 unless Employee has executed (and not revoked) a general release of all claims Employee may have or assert against the Company and its affiliates relating to Employee's employment hereunder in a form of such release reasonably acceptable to the Company. Employee shall not be entitled to any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.5   In all cases, the compensation payable to Employee under this Agreement upon termination of the employment relationship shall be offset against any amounts to which Employee may otherwise be entitled under any and all severance plans and policies of the Company or its affiliates.

        3.6   Termination of the employment relationship pursuant to this Agreement shall not terminate those obligations imposed by this Agreement which are continuing obligations, including, without limitation, Employee's obligations under Articles IV and V.

ARTICLE IV: OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS

        4.1   All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Employee, individually or in conjunction with others, during Employee's employment by the Company which relate to the Company's business, products or services shall be disclosed to the Company by Employee and are and shall be the sole and exclusive property of the Company.

        4.2   Employee acknowledges that the business of the Company and its subsidiaries is highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates, all comprise confidential business information and trade secrets ("Confidential Information") which are valuable, special, and unique assets which the Company or its subsidiaries use in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company and its subsidiaries in maintaining their competitive position. Employee hereby agrees that Employee will not, at any time during or after Employee's termination of employment with the Company, make any unauthorized disclosure of any Confidential Information, or make any use thereof, except in the carrying out of Employee's employment responsibilities hereunder. The affiliates of the Company shall be third party beneficiaries of Employee's obligations under this Section. As a result of Employee's employment by the Company, Employee may also from time to time have access to, or knowledge of, confidential business information or trade secrets of third parties, such as customers, suppliers, partners, joint venturers, and the like, of the Company and its subsidiaries. Employee also agrees to preserve and protect the confidentiality of such third party confidential business information and trade secrets. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article IV by Employee, and the Company shall be entitled to enforce the provisions of this Article IV by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article IV, but shall be in addition to all remedies available at law or in equity to the Company, including the recovery of damages from Employee and his or her agents involved in such breach.

3

        4.3   All written materials, records, and other documents made by, or coming into the possession of, Employee during Employee's employment by the Company which contain or disclose Confidential Information shall be and remain the sole property of the Company and its subsidiaries, as the case may be. Upon termination of Employee's employment by the Company, for any reason, Employee promptly shall deliver the same, and all copies thereof, to the Company.

        4.4   If, during Employee's employment with the Company, Employee creates any original work of authorship fixed in any tangible medium of expression which is the subject matter of copyright (such as videotapes, written presentations on acquisitions, computer programs, drawings, maps, architectural renditions, models, manuals, brochures, or the like) relating to the Company's business, products, or services, whether such work is created solely by Employee or jointly with others (whether during business hours or otherwise and whether on the Company's premises or otherwise), Employee shall disclose such work to the Company. The Company shall be deemed the author of such work if the work is prepared by Employee within the scope of his or her employment but is specially ordered by the Company as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, or as an instructional text, then the work shall be considered to be work made for hire and the Company shall be the author of the work. If such work is neither prepared by the Employee within the scope of his or her employment nor a work specially ordered and is deemed to be a work made for hire, then Employee hereby agrees to assign, and by these presents does assign, to the Company all of Employee's worldwide right, title, and interest in and to such work and all rights of copyright therein.

ARTICLE V: NON-COMPETITION OBLIGATIONS

        5.1   As part of the consideration for the compensation and benefits to be paid to Employee hereunder, in keeping with Employee's duties as a fiduciary, in order to protect the Company's interests in the Confidential Information that the Company will furnish and make available to Employee in the performance of his duties with the Company, and as an additional incentive for the Company to enter into this Agreement, the Company and Employee agree to the non-competition provisions of this Article V. Employee agrees that during the period of Employee's non-competition obligations hereunder, Employee will not, directly or indirectly for Employee or for others (as a principal, agent, owner, employee, consultant or otherwise), in any geographic area or market where the Company or any of its subsidiaries are conducting any business as of the date of termination of the employment relationship or have during the previous twelve months conducted any business (the "Territory"):

(i)

engage in any business competitive with the business conducted by the Company or its subsidiaries;



(ii)

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 subsidiaries;



(iii)

induce any employee of the Company or any of its subsidiaries to terminate his or her employment with the Company or its subsidiaries, or hire or assist in the hiring of any such employee by a person, association, or entity not affiliated with the Company;



(iv)

call upon any person or entity which is, at that time, or which has been, within one year prior to that time, a customer of the Company within the Territory for the purpose of soliciting customers, orders or contracts for any business competitive with the Company or its subsidiaries within the Territory; or

4

(v)

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 Employee's duty to testify as a witness if required by law.

These non-competition obligations shall apply during Employee's employment with the Company and its subsidiaries and shall extend until six months after the latest of (a) the expiration of the Stated Term or (b) Employee's actual termination of the employment with the Company and its subsidiaries if such termination occurs after the expiration of the Stated Term. Notwithstanding the foregoing, if termination of Employee's employment is the result of either an Involuntary Termination by the Company or a Good Reason Termination by the Employee, these non-competition obligations shall terminate six (6) months after the date of such Involuntary Termination or Good Reason Termination. In addition, such non-competition obligations shall not apply if Employee's employment is terminated on or following a Change of Control and shall not prohibit Employee from owning less than 2% of any class of securities of any public company even if such entity is engaged in competition with the Company or a subsidiary of the Company.

        5.2   Employee understands that the foregoing restrictions may limit Employee's ability to engage in certain businesses during the period provided for above, but acknowledges that Employee will receive sufficiently high remuneration and other benefits under this Agreement to justify such restriction. Employee acknowledges that money damages would not be sufficient remedy for any breach of this Article V by Employee, and the Company shall be entitled to enforce the provisions of this Article V by terminating any payments then owing to Employee under this Agreement and/or to specific performance and injunctive relief as remedies for such breach or any threatened breach. Such remedies shall not be deemed the exclusive remedies for a breach of this Article V, 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 Employee and his or her agents involved in such breach. Employee further agrees to waive any requirement for the Company's securing or posting of any bond in connection with such remedies.

        5.3   It is expressly understood and agreed that the Company and Employee consider the restrictions contained in this Article V to be reasonable and necessary to protect the proprietary information of the Company. Nevertheless, if any of the aforesaid 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.

        5.4   The covenants in this Article V 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 of competent 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.

        5.5   All of the covenants in this Article V 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 Employee 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 employment, during which the agreements and covenants of Employee made herein shall be effective, shall be computed by excluding from such computation any time during which Employee is in violation of any provision of this Article V.

5

ARTICLE VI: MISCELLANEOUS

        6.1   For purposes of this Agreement, all notices and other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

        If to the Company:

Basic Energy Services, L.P.
406 N. Big Spring Street
Midland, Texas 79701
Attention: President

        If to Employee, to the address last shown on the Company's records.

Either the Company or Employee may furnish a change of address to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

        6.2   This Agreement shall be governed in all respects by the laws of the State of Texas, excluding any conflict-of-law rule or principle that might refer the construction of the Agreement to the laws of another state or country. Venue for resolving any dispute arising under or in connection with this Agreement will be in the appropriate Federal or State Courts in Midland County, Texas. The parties agree that they will submit themselves to the jurisdiction of the competent State or Federal Court situated in Midland County, Texas.

        6.3   No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

        6.4   It is a desire and intent of the parties that the terms, provisions, covenants, and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law. In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

        6.5   This Agreement shall be binding upon and inure to the benefit of the Company and any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee's rights and obligations under Agreement hereof are personal and such rights, benefits, and obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of the Company.

        6.6   This Agreement replaces in full all previous agreements and discussions pertaining to the following subject matters covered herein: the nature of Employee's employment relationship with the Company and the term and termination of such relationship. This Agreement constitutes the entire agreement of the parties with regard to such subject matters, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect such subject matters. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party with respect to such subject matters, which is not embodied herein, and that no agreement, statement, or promise relating to the employment of Employee by the Company that is not contained in this Agreement shall be valid or binding. Any

6

modification of this Agreement will be effective only if it is writing and signed by each party whose rights hereunder are affected thereby, provided that any such modification must be authorized or approved by the Company.

ARTICLE VII: DISPUTE RESOLUTION

        7.1   Except with respect to injunctive relief as provided in Section 5.2 above, any dispute or controversy about the validity, interpretation, effect or alleged violation of this Agreement (an "Arbitrable Dispute") must be submitted to confidential arbitration in Midland, Texas. Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association. Arbitration shall be the exclusive remedy of any Arbitrable Dispute. Judgement may be entered on the arbitrator's award in any court having jurisdiction. The parties hereby agree that the arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. All costs and expenses, including attorneys' fees, shall be awarded as determined by the arbitrator. Should any party to this Agreement pursue any Arbitrable Dispute by any method other than arbitration, the other party shall be entitled to recover from the party initiating the use of such method all damages, costs, expenses and attorneys' fees incurred as a result of the use of such method. Notwithstanding anything herein to the contrary, nothing in this Agreement shall purport to waive or in any way limit the right of any party to seek to enforce any judgment or decision on an Arbitrable Dispute in a court of competent jurisdiction.

        IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement in multiple originals, effective for all purposes as of the Effective Date.

BASIC ENERGY SERVICES, L.P.
By:	Basic Energy Services GP, LLC,     Its General Partner
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
EMPLOYEE:
/s/  JAMES J. CARTER James J. Carter

7

EXHIBIT A TO
EMPLOYMENT AGREEMENT
BETWEEN BASIC ENERGY SERVICE, L.P.
AND JAMES J. CARTER

Term Ending Date:	April 30, 2006 ("Stated Term") or, if earlier, the date Employee's employment is terminated for any reason
Position:	Vice President and Chief Financial Officer
Monthly Base Salary:	$10,833.33
Primary Work Location	Midland, Texas
Additional Provision:	The paid off time the Employee is entitled to shall never be than fifteen (15) working days each calendar year during the term hereof.
Agreed to as of May 1, 2003.

Basic Energy Services, L.P.
By:	Basic Energy Services GP, LLC,     Its General Partner
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
/s/  JAMES J. CARTER James J. Carter

8

QuickLinks

EMPLOYMENT AGREEMENT
EXHIBIT A TO EMPLOYMENT AGREEMENT BETWEEN BASIC ENERGY SERVICE, L.P. AND JAMES J. CARTER

EX-10.6

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.6

EMPLOYMENT AGREEMENT
(Alan Krenek)

        This Employment Agreement, including the attached Exhibit A (together, the "Agreement"), is entered into between Basic Energy Services, Inc., a Delaware corporation (the "Company"), and Alan Krenek ("Employee") effective as of January 26, 2005 (the "Effective Date").

WITNESSETH:

        WHEREAS, the Company desires to employ Employee pursuant to the terms and conditions set forth in this Agreement, and Employee desires to be employed by the Company pursuant to such terms and conditions;

        NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and obligations contained herein, the Company and Employee agree as follows:

ARTICLE I: EMPLOYMENT AND DUTIES

        1.1   The Company agrees to employ Employee and Employee agrees to be employed by the Company subject to the terms and conditions of this Agreement, beginning as of the Effective Date and continuing until the date set forth on Exhibit A hereto (the "Term"). Employee's employment with the Company will continue for successive periods of one year after the end of the Term, subject to the terms and conditions of this Agreement, unless terminated by either party hereto upon written notice to the other party at least sixty (60) days prior to the end of the Term or the then current one year term.

        1.2   Employee shall be employed in the positions set forth on Exhibit A and shall have the normal authorities, responsibilities and duties of such positions. However, the Company may assign Employee such additional or different duties from time to time as may be reasonably related to Employee's position in the good faith opinion of the Company, including duties with an affiliate. Employee shall at all times comply with the policies and procedures generally applicable to executive officers of the Company as in effect from time to time. While employed hereunder, the Employee shall devote his full time and attention during normal business hours to the business affairs of the Company and use his best efforts to perform faithfully and effectively his duties and responsibilities. The Employee will report to the President and Chief Executive Officer of the Company.

ARTICLE II: COMPENSATION AND BENEFITS

        2.1   During the Term the Company shall pay Employee a Monthly Base Salary as set forth on Exhibit A, which shall be paid in accordance with the Company's standard payroll practice. Such Monthly Base Salary may be increased from time-to-time by the Company, and may be decreased if a proportional decrease is made to the base salaries of all other officers of the Company.

        2.2   In addition to the Monthly Base Salary in Section 2.1, for each calendar year period or portion thereof during the Employment Period (as defined on Exhibit A), including any extensions, with each such calendar year being defined as a "Bonus Period", Employee shall be eligible for a Performance Bonus equal to a minimum of $25,000 and a maximum of 75% of Employee's annual salary in effect at the end of the Bonus Period. The bonus percentage applicable to each Bonus Period shall be recommended to the Compensation Committee of the Board of Directors by the President and Chief Executive Officer based on the Employee's performance during the Bonus Period. If the Employment Period ends before the end of a Bonus Period, unless Employee was terminated for Cause (as defined in Section 3.1(a)) Employee shall be entitled to a prorata portion of the bonus based on

1

the number of days the Employee was actually employed by the Company, divided by 365. The Bonus approved by the Compensation Committee shall be paid within 30 days following receipt of Company's audited financial reports for the Bonus Period. In all matters related to the establishment of the performance criteria and determining the earned bonus, the President and Chief Executive Officer and Compensation Committee shall act reasonably and in good faith with respect to the Employee.

        2.3   Employee shall be paid a one-time cash bonus of Thirty-Seven Thousand Five Hundred and No/100 Dollars ($37,500.00), payable one-half on the Effective Date and one-half on March 31, 2005.

        2.4   Employee shall be eligible to participate in the stock option plans, if any, established and maintained for the benefit of the Company's senior executives, as such plans and Employee's participation therein may be approved from time to time by the Board of Directors of the Company. Employee shall also receive an initial grant of options to purchase 20,000 shares of the Company's common stock at a price of $25.79 per share, with such grant of options to be pursuant to the terms and conditions set forth in that certain Non Qualified Stock Option Agreement dated as of the Effective Date.

        2.5   The Company may withhold from any compensation, benefits or other amounts payable to Employee all taxes as may be required pursuant to any applicable law.

        2.6   Employee shall be reimbursed by the Company for reasonable travel, lodging, meals, customer entertainment and other expenses incurred by him during the Term and any extension thereof in connection with the performance of his duties hereunder in accordance with the Company's policies that are applicable to the Company's executive officers in effect from time to time.

        2.7   Employee will be entitled to paid days off from work and other benefits made available to other executive officers of the Company pursuant to policies and/or plans adopted from time to time by the Company, (but in no event, less than ten (10) paid days off per year) which paid days off from work and other benefits will, when appropriate, be prorated in any calendar year during which the Employee is employed for less than the entire year with such proration to be based on the number of days in such calendar year during which he is employed.

        2.8   Employee's primary work location will be the location specified on Exhibit A hereto. Employee will be reimbursed for reasonable relocation or moving expenses incurred by Employee if during the Term of any extension thereof, the Company requires a change in such primary work location that is a greater distance than fifty (50) miles from the city limits of the City of Midland, Texas.

        2.9   Employee agrees to accept COBRA coverage from Employee's current health care provider until Employee is eligible for enrollment under the Company's plan. The Company will reimburse Employee for the difference in the cost of his COBRA coverage and the cost Employee would normally incur as an employee of the Company under the Company's plan, including any tax incurred by Employee as a result of such reimbursement.

        2.10 In addition the foregoing, the Company will reimburse the Employee for the following, plus any taxes incurred by employee as a result of such reimbursement:

(a)

Reasonable and customary closing costs (including, without limitation, real estate commissions) actually incurred by Employee in connection with Employee's sale of his primary residence in Magnolia, Texas and Employee's purchase of a primary residence in the Midland, Texas area;



(b)

Reasonable and customary packing and transportation costs (and up to three month's storage) actually incurred by Employee in connection with the packing and moving of Employee's furniture and other household goods from Employee's Magnolia, Texas residence to Employee's residence in the Midland, Texas area;

2

(c)

Reasonable and customary living expenses actually incurred by Employee in the Midland, Texas area until employee moves into his permanent residence in the Midland, Texas area (for a period not to exceed four months); and



(d)

A moving allowance of $15,416.67 (one month's salary) to offset miscellaneous expenses incurred by Employee in moving from his Magnolia, Texas residence to the Midland, Texas area.

ARTICLE III: TERMINATION PRIOR TO EXPIRATION OF TERM AND EFFECTS OF SUCH TERMINATION

        3.1   The Company shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(a)

for "Cause", upon the determination by the Company that "Cause" exists for termination of Employee's employment (a "Termination for Cause"). As used herein, the term "Cause" means (a) Employee's gross negligence or willful misconduct in the performance of Employee's duties; (b) Employee has been convicted of a felony; (c) Employee has willfully refused without proper legal reason to perform the duties and responsibilities required of Employee under this Agreement; (d) Employee's material breach of any material provision of this Agreement which remains uncorrected for 10 business days following written notice by the Company to Employee of such breach; (e) chronic alcohol abuse or illegal drug use by Employee that materially impairs Employee's ability to perform his duties and responsibilities hereunder or (f) Employee's failure to report any material conflict of interest between the Employee and the Company immediately upon the occurrence of such conflict of interest;



(b)

for any reason other than Cause (an "Involuntary Termination"); or



(c)

if Employee becomes entitled to benefits under the Company's (or an affiliate's) long-term disability plan or, if Employee is not covered by any such plan, upon Employee becoming unable to perform substantially, with reasonable accommodation, Employee's duties as a result of a physical or mental impairment as determined by a physician selected or approved by the Company and such disability continues for at least one hundred twenty (120) days during any twelve (12) month period. (a "Disability Termination").

        3.2   Employee shall have the right to terminate Employee's employment at any time prior to the expiration of the Term:

(a)

for a material breach by the Company of a material provision of this Agreement which remains uncorrected for 10 business days following written notice of such breach by Employee to the Company (a "Good Reason Termination"); or



(b)

for any other reason 30 days following written notice to the Company, unless such notice period is waived by the Company (a "Voluntary Termination").

        3.3   Upon a Voluntary Termination, a Termination for Cause, a Disability Termination, or a termination due to Employee's death, Employee (or Employee's spouse or, if none, Employee's legal representative) shall be paid the pro rata Monthly Base Salary earned through the date of such termination; however, Employee shall not be entitled any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.4   Upon an Involuntary Termination or a Good Reason Termination, Employee shall be paid, as soon as reasonably practical following such termination, the prorated Monthly Base Salary earned by

3

Employee through the date of such termination plus a lump sum amount equal to the total of (a) twelve (12) times Employee's then current Monthly Base Salary plus (b) Employee's Performance Bonus for the year of such termination; provided, however, if such termination occurs on or following a Change in Control (as defined in Section 3.6 below), the amount payable to Employee as a lump sum shall be increased by fifty percent (50%). Notwithstanding the forgoing, the Employee shall not be entitled to receive any severance payment pursuant to this Section 3.4 unless Employee has executed (and not revoked) a general release of all claims Employee may have or assert against the Company and its affiliates relating to Employee's employment hereunder in a form of such release reasonably acceptable to the Company. Except as specifically provided in this Section 3.4, Employee shall not be entitled to any future compensation or benefits which would otherwise have been provided pursuant to this Agreement had the Term continued following such termination of employment, including, without limitation, any bonuses, incentive compensation, stock option or other equity based award that is not vested or payable pursuant to its terms at the date of such termination of employment.

        3.5   "Change in Control" of the Company for purposes of this agreement 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 l3d-3 under the Exchange Act) of fifty percent (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 for purposes of this section 3.5(a): (i) any acquisition directly from the Company or any Subidiary thereof (a "Subsidiary"), including any public offering of the Company's stock (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, or) (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



(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



(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.

        3.6   In all cases, the compensation payable to Employee under this Agreement upon termination of the employment relationship shall be offset against any amounts to which Employee may otherwise be entitled under any and all severance plans and policies of the Company or its affiliates.

4

        3.7   Termination of the employment relationship pursuant to this Agreement shall not terminate those obligations imposed by this Agreement which are continuing obligations, including, without limitation, Employee's obligations under Articles IV and V.

ARTICLE IV: OWNERSHIP AND PROTECTION OF INFORMATION; COPYRIGHTS

        4.1   All information, ideas, concepts, improvements, discoveries, and inventions, whether patentable or not, which are conceived, made, developed or acquired by Employee, individually or in conjunction with others, during Employee's employment by the Company which relate to the Company's business, products or services shall be disclosed to the Company by Employee and are and shall be the sole and exclusive property of the Company.

        4.2   Employee acknowledges that the business of the Company and its subsidiaries is highly competitive and that their strategies, methods, books, records, and documents, their technical information concerning their products, equipment, services, and processes, procurement procedures and pricing techniques, the names of and other information (such as credit and financial data) concerning their customers and business affiliates, all comprise confidential business information and trade secrets ("Confidential Information") which are valuable, special, and unique assets which the Company or its subsidiaries use in their business to obtain a competitive advantage over their competitors. Employee further acknowledges that protection of such Confidential Information against unauthorized disclosure and use is of critical importance to the Company and its subsidiaries in maintaining their competitive position. Employee hereby agrees that Employee will not, at any time during or after Employee's termination of employment with the Company, make any unauthorized disclosure of any Confidential Information, or make any use thereof, except in the carrying out of Employee's employment responsibilities hereunder. The affiliates of the Company shall be third party beneficiaries of Employee's obligations under this Section. As a result of Employee's employment by the Company, Employee may also from time to time have access to, or knowledge of, confidential business information or trade secrets of third parties, such as customers, suppliers, partners, joint venturers, and the like, of the Company and its subsidiaries. Employee also agrees to preserve and protect the confidentiality of such third party confidential business information and trade secrets. Employee acknowledges that money damages may not be sufficient remedy for any breach of this Article IV by Employee, and the Company shall be entitled to enforce the provisions of this Article IV by terminating any payments then owing to Employee under this Agreement and/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 Article IV, but shall be in addition to all remedies available at law or in equity to the Company, including the recovery of damages from Employee and his or her agents involved in such breach.

        4.3   All written materials, records, and other documents made by, or coming into the possession of, Employee during Employee's employment by the Company which contain or disclose Confidential Information shall be and remain the sole property of the Company and its subsidiaries, as the case may be. Upon termination of Employee's employment by the Company, for any reason, Employee promptly shall deliver the same, and all copies thereof, to the Company.

        4.4   If, during Employee's employment with the Company, Employee creates any original work of authorship fixed in any tangible medium of expression which is the subject matter of copyright (such as videotapes, written presentations on acquisitions, computer programs, drawings, maps, architectural renditions, models, manuals, brochures, or the like) relating to the Company's business, products, or services, whether such work is created solely by Employee or jointly with others (whether during business hours or otherwise and whether on the Company's premises or otherwise), Employee shall disclose such work to the Company. The Company shall be deemed the author of such work if the work is prepared by Employee within the scope of his or her employment but is specially ordered by the Company as a contribution to a collective work, as a part of a motion picture or other audiovisual

5

work, as a translation, as a supplementary work, as a compilation, or as an instructional text, then the work shall be considered to be work made for hire and the Company shall be the author of the work. If such work is neither prepared by the Employee within the scope of his or her employment nor a work specially ordered and is deemed to be a work made for hire, then Employee hereby agrees to assign, and by these presents does assign, to the Company all of Employee's worldwide right, title, and interest in and to such work and all rights of copyright therein.

ARTICLE V: NON-COMPETITION OBLIGATIONS

        5.1   As part of the consideration for the compensation and benefits to be paid to Employee hereunder, in order to protect the Company's interests in the Confidential Information that the Company will furnish and make available to Employee in the performance of his duties with the Company, and as an additional incentive for the Company to enter into this Agreement, the Company and Employee agree to the non-competition provisions of this Article V. Employee agrees that during the period of Employee's non-competition obligations hereunder, Employee will not, directly or indirectly for Employee or for others (as a principal, agent, owner, employee, consultant or otherwise), in any geographic area or market where the Company or any of its subsidiaries are conducting any business as of the date of termination of the employment relationship or have during the previous twelve months conducted any business (the "Territory"):

(a)

engage in any business competitive with the business conducted by the Company or its subsidiaries;



(b)

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 subsidiaries;



(c)

induce any employee of the Company or any of its subsidiaries to terminate his or her employment with the Company or its subsidiaries, or hire or assist in the hiring of any such employee by a person, association, or entity not affiliated with the Company;



(d)

call upon any person or entity which is, at that time, or which has been, within one year prior to that time, a customer of the Company within the Territory for the purpose of soliciting customers, orders or contracts for any business competitive with the Company or its subsidiaries within the Territory; or



(e)

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 Employee's duty to testify as a witness if required by law.

These non-competition obligations shall apply during Employee's employment with the Company and its subsidiaries and shall extend until twelve (12) months after Employee's actual termination of his employment with the Company. Notwithstanding the foregoing, if termination of Employee's employment is the result of either an Involuntary Termination by the Company or a Good Reason Termination by the Employee, these non-competition obligations shall terminate six (6) months after the date of such Involuntary Termination or Good Reason Termination. In addition, such non-competition obligations shall not apply if Employee's employment is terminated on or following a Change of Control and shall not prohibit Employee from owning less than 2% of any class of securities of any public company even if such entity is engaged in competition with the Company or a subsidiary of the Company.

        5.2   Employee understands that the foregoing restrictions may limit Employee's ability to engage in certain businesses during the period provided for above, but acknowledges that Employee will receive sufficiently high remuneration and other benefits under this Agreement to justify such restriction. Employee acknowledges that money damages may not be sufficient remedy for any breach

6

of this Article V by Employee, and the Company shall be entitled to enforce the provisions of this Article V by terminating any payments then owing to Employee under this Agreement and/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 Article V, 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 Employee and his or her agents involved in such breach. Employee further agrees to waive any requirement for the Company's securing or posting of any bond in connection with such remedies.

        5.3   It is expressly understood and agreed that the Company and Employee consider the restrictions contained in this Article V to be reasonable and necessary to protect the proprietary information of the Company. Nevertheless, if any of the aforesaid 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.

        5.4   The covenants in this Article V 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 of competent 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.

        5.5   All of the covenants in this Article V 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 Employee 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 employment, during which the agreements and covenants of Employee made herein shall be effective, shall be computed by excluding from such computation any time during which Employee is in material violation of any provision of this Article V.

ARTICLE VI: MISCELLANEOUS

        6.1   For purposes of this Agreement, all notices and other communications shall be in writing and shall be deemed to have been duly given when personally delivered or when mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

        If to the Company:

Basic Energy Services, L.P.
400 W. Illinois, Suite 800
Midland, Texas 79701
Attention: President

        If to Employee, to the address last shown on the Company's records.

Either the Company or Employee may furnish a change of address to the other in writing in accordance herewith, except that notices of changes of address shall be effective only upon receipt.

        6.2   This Agreement shall be governed in all respects by the laws of the State of Texas, excluding any conflict-of-law rule or principle that might refer the construction of the Agreement to the laws of another state or country. Venue for resolving any dispute arising under or in connection with this Agreement will be in the appropriate Federal or State Courts in Midland County, Texas. The parties agree that they will submit themselves to the jurisdiction of the competent State or Federal Court situated in Midland County, Texas.

7

        6.3   No failure by either party hereto at any time to give notice of any breach by the other party of, or to require compliance with, any condition or provision of this Agreement shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

        6.4   It is a desire and intent of the parties that the terms, provisions, covenants, and remedies contained in this Agreement shall be enforceable to the fullest extent permitted by law. If any such term, provision, covenant, or remedy of this Agreement or the application thereof to any person, association, or entity or circumstances shall, to any extent, be construed to be invalid or unenforceable in whole or in part, then such term, provision, covenant, or remedy shall be construed in a manner so as to permit its enforceability under the applicable law to the fullest extent permitted by law. In any case, the remaining provisions of this Agreement or the application thereof to any person, association, or entity or circumstances other than those to which they have been held invalid or unenforceable, shall remain in full force and effect.

        6.5   This Agreement shall be binding upon and inure to the benefit of the Company and any other person, association, or entity which may hereafter acquire or succeed to all or substantially all of the business or assets of the Company by any means whether direct or indirect, by purchase, merger, consolidation, or otherwise. Employee's rights and obligations under Agreement hereof are personal and such rights, benefits, and obligations of Employee shall not be voluntarily or involuntarily assigned, alienated, or transferred, whether by operation of law or otherwise, without the prior written consent of the Company.

        6.6   This Agreement replaces in full all previous agreements and discussions pertaining to the following subject matters covered herein: the nature of Employee's employment relationship with the Company and the term and termination of such relationship. This Agreement constitutes the entire agreement of the parties with regard to such subject matters, and contains all of the covenants, promises, representations, warranties, and agreements between the parties with respect such subject matters. Each party to this Agreement acknowledges that no representation, inducement, promise, or agreement, oral or written, has been made by either party with respect to such subject matters, which is not embodied herein, and that no agreement, statement, or promise relating to the employment of Employee by the Company that is not contained in this Agreement shall be valid or binding. Any modification of this Agreement will be effective only if it is writing and signed by each party whose rights hereunder are affected thereby, provided that any such modification must be authorized or approved by the Company.

ARTICLE VII: DISPUTE RESOLUTION

        7.1   Except with respect to injunctive relief as provided in Section 5.2 above, any dispute or controversy about the validity, interpretation, effect or alleged violation of this Agreement (an "Arbitral Dispute") must be submitted to confidential arbitration in Midland, Texas. Arbitration shall take place before an experienced employment arbitrator licensed to practice law in such state and selected in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association. Arbitration shall be the exclusive remedy of any Arbitral Dispute. Judgment may be entered on the arbitrator's award in any court having jurisdiction. The parties hereby agree that the arbitrator shall be empowered to enter an equitable decree mandating specific enforcement of the terms of this Agreement. All costs and expenses, including attorneys' fees, shall be awarded as determined by the arbitrator. Should any party to this Agreement pursue any Arbitral Dispute by any method other than arbitration, the other party shall be entitled to recover from the party initiating the use of such method all damages, costs, expenses and attorneys' fees incurred as a result of the use of such method. Notwithstanding anything herein to the contrary, nothing in this Agreement shall purport to waive or in any way limit the right of any party to seek to enforce any judgment or decision on an Arbitral Dispute in a court of competent jurisdiction.

8

        IN WITNESS WHEREOF, the Company and Employee have duly executed this Agreement in multiple originals, effective for all purposes as of the Effective Date.

BASIC ENERGY SERVICES, Inc.
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
EMPLOYEE:
/s/  ALAN KRENEK Alan Krenek

9

EXHIBIT A TO
EMPLOYMENT AGREEMENT
BETWEEN BASIC ENERGY SERVICE, Inc.
AND ALAN KRENEK

Employment Period:	January 26, 2005 through January 25, 2008 ("Stated Term") or, if earlier, the date Employee's employment is terminated for any reason
Position:	Chief Financial Officer, Secretary and Treasurer
Monthly Base Salary:	$15,416.67, subject to upward adjustments as a result of annual reviews.
Primary Work Location	Midland, Texas
Agreed to as of January 26, 2005.

Basic Energy Services, Inc.
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President
/s/  ALAN KRENEK Alan Krenek

10

QuickLinks

EMPLOYMENT AGREEMENT (Alan Krenek)
EXHIBIT A TO EMPLOYMENT AGREEMENT BETWEEN BASIC ENERGY SERVICE, Inc. AND ALAN KRENEK

EX-10.7

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.7

SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT

        This SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT (this "Agreement"), entered into as of April 2, 2004, is by and among Basic Energy Services, Inc. (formerly named BES Holding Co.), a Delaware corporation (the "Company"), DLJMB Funding III, Inc., a Delaware corporation, DLJ ESC II, L.P., a Delaware limited partnership, and their Affiliates who are stockholders of the Company and party hereto (the "DLJ Parties"), Southwest Royalties Holdings, Inc., a Delaware corporation, Southwest Partners II, L.P., a Delaware limited partnership, Southwest Partners III, L.P., a Delaware limited partnership (individually, a "Southwest Party" and collectively, the "Southwest Parties"), First Reserve Fund VIII, LP, a Delaware limited partnership, ("First Reserve"), Randy Spaur (a natural person), Peter O. Kane (a natural person), Michael D. Schmid (a natural person), Jay R. Anderson (a natural person), William L. Hubbell (a natural person), Sterling Trust FBO William L. Hubbell, Donald C. Busha Revocable Trust, Jay D. Hacklin (a natural person) (each, including First Reserve, a "FESCO Party" and collectively, the "FESCO Parties"), Joey D. Fields (a natural person), Dub W. Harrison (a natural person), James J. Carter (a natural person), Charles W. Swift (a natural person), Kenneth V. Huseman (a natural person), and each other holder of record of Common Stock (as defined below) who may hereafter duly and properly become bound by the terms hereof as required by Section 8.5, each person named above and each Person that hereafter may become a party hereto as contemplated hereby being referred to individually as a "Party" and collectively as the "Parties".

RECITALS

        WHEREAS, the Parties are parties to that certain Amended and Restated Stockholders' Agreement entered into as of October 3, 2003 (the "2003 Agreement"); and

        WHEREAS, the Parties desire to amend and restate the 2003 Agreement in the manner set forth herein.

        NOW, THEREFORE, in consideration of the mutual covenants and obligations hereinafter set forth, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE 1

DEFINITIONS

        1.1    Definitions.    In addition to the terms defined elsewhere herein, the following terms shall have the meanings set forth below:

        "2000 SPA" means that certain Securities Purchase Agreement dated as of December 21, 2000, by and between the DLJ Parties and Basic, whereby, among other things, the DLJ Parties acquired Common Stock in the Company.

        "2003 SPA" means that certain Securities Purchase Agreement dated October 3, 2003, by and among the Company, the FESCO Parties and FESCO Holdings, Inc. (as amended to date), whereby, among other things, the FESCO Parties acquired Common Stock in the Company.

        "Affiliate" means, with respect to any Person, any Person controlling, controlled by, or under common control with such Person. For the purposes of this definition, "control" means the possession of the power to direct or cause the direction of management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

        "Agreement" has the meaning specified in the preamble hereto.

        "Allocated Stock" has the meaning specified in Section 4.9(c).

        "Applicable Percentage" means with respect to each Party, a percentage equal to a fraction, the numerator of which is equal to the aggregate number of shares of Fully-Diluted Common Stock requested to be included in the Piggyback Registration by such party and the denominator of which is equal to the number of shares of Fully-Diluted Common Stock requested to be included in the Piggyback Registration by all such Parties.

"Basic" means Basic Energy Services, Inc., the predecessor in interest to the Company.

        "Beneficial" ownership or "beneficially" owned, with respect to any shares of Common Stock, shall have the same meaning as in Rule 13d-3 under the Securities Exchange Act of 1934, as amended.

        "Board of Directors" means the board of directors of the Company or any committee or other body acting on behalf of, and possessing the rights as may be delegated by, the board of directors of the Company.

        "Bona Fide Offer" means any bona fide offer to acquire shares of Common Stock or Common Stock Equivalents (whether in the form of a purchase of shares of Common Stock or Common Stock Equivalents, merger, business combination, recapitalization or otherwise) made by a Person which has the demonstrable financial ability to consummate such a transaction.

        "Business" means providing well site servicing to oil and gas drilling and producing Persons.

        "Business Day" means any day other than a day on which banks in the State of Texas or New York are authorized by law to close.

        "Capital Stock" means any and all shares of stock, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation), and any and all warrants, options or other rights to purchase or acquire any of the foregoing, including, without limitation, any Common Stock Equivalents.

        "Cause" means (i) with respect to any Management Holder who is a party to a written employment agreement with the Company or any Subsidiary, which agreement contains a definition of "cause" or "for cause" (or words of like import) for purposes of termination of employment thereunder by the Company or any Subsidiary, "cause" or "for cause" (or words of like import) as defined in such agreement, (ii) in all other cases, (1) any embezzlement or wrongful diversion of funds of the Company or any Subsidiary by a Management Holder, (2) gross malfeasance or gross neglect by a Management Holder in the conduct of such Management Holder's duties (including, by example, the intentional or willful failure or failure due to bad faith to substantially perform his employment duties or excessive absenteeism), (3) any misconduct that by such Management Holder that is significantly injurious to the Company or any Subsidiary or Affiliate of the Company, (4) any material breach by a Management Holder of any covenant contained in any agreement or contract with the Company or any Subsidiary of the Company (including, without limitation, this Agreement) or (5) conviction or the entry of a plea of nolo contendere or equivalent plea of a felony in a court of competent jurisdiction, or any other crime or offense involving moral turpitude.

        "Closing" has the meaning specified in Section 4.9.

        "Commitment Agreement" means that certain Commitment Agreement, dated December 21, 2000, by and between the Company and the DLJ Parties, pursuant to which the DLJ Parties have committed to purchase shares of Common Stock in order to fund certain acquisitions to be made by the Company.

2

        "Common Stock Equivalents" means (without duplication with any other shares of Common Stock or Common Stock Equivalents) rights, warrants, options, convertible securities, or exchangeable securities or indebtedness, or other rights, exercisable for or convertible or exchangeable into, directly or indirectly, shares of Common Stock or securities convertible or exchangeable into shares of Common Stock, whether at the time of issuance or upon the passage of time or the occurrence of some future event.

        "Common Stock" means the shares of common stock, par value US $0.01 per share, of the Company.

        "Contractual Lock-Up Period" has the meaning specified in Section 4.1.

        "Confidential Information" has the meaning specified in Section 8.8.

        "Confidentiality Obligations" has the meaning specified in Section 8.8.

        "Confidentiality Regulations" has the meaning specified in Section 8.8.

        "Co-Sellers" has the meaning specified in Section 4.3.

        "Co-Sellers' Stock" has the meaning specified in Section 4.3.

        "Conversion Agreement" has the meaning specified in Section 8.8.

        "Deceased Spouse" has the meaning specified in Section 4.9(c).

        "Demand Period" has the meaning specified in Section 5.1.

        "Demand Registration" has the meaning specified in Section 5.1.

        "Demand Request" has the meaning specified in Section 5.1.

        "DLJ Initial Position" has the meaning specified in Section 4.1.

        "DLJ Parties" has the meaning specified in the preamble hereto.

        "Divorced Spouse" has the meaning specified in Section 4.9(c).

        "EBITDA Contingent Warrant" means that certain EBITDA Contingent Warrant issued as of December 21, 2000 to certain Holders, pursuant to which such Holders may acquire additional shares of Common Stock, subject to the Company achieving certain earnings levels.

        "Effective Date" means the date of this Agreement.

        "Exchange Act" has the meaning specified in Section 5.4.

        "Fair Market Value" shall mean:

        (i)    Before a Qualified IPO, the value of shares of Common Stock of the Company held by any Person as determined, whenever the terms and provisions hereof call for a determination of the "Fair Market Value" of such shares (a "Subject Interest"), in good faith by the Board of Directors to be, as of any date, the fair market value of such Subject Interests.

        (ii)   After a Qualified IPO, the value of a Subject Interest is the average of the daily Closing Prices of such Subject Interest for the twenty (20) consecutive Trading Days prior to and including the date in question. "Closing Price" shall mean with respect to the Subject Interest: (A) the closing sale price on such day on the principal stock exchange on which such security is then listed or admitted to trading, (B) if no such sale takes place on such day on such exchange, the average of the reported closing bid and asked prices for such security, as officially reported on such exchange, (C) if such security is not listed or admitted to trading

3

on any such exchange, the average of the closing bid and asked prices of such security in the over-the-counter market on such day as reported by the National Association of Securities Dealers Automated Quotation System, (D) if such firm is not engaged in the business of reporting such prices, as reported by a similarly generally accepted reporting service or (E) if no such service is available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose. "Trading Day" shall mean with respect to the Subject Interest: (A) if the applicable security is listed or admitted for trading on the New York Stock Exchange or other national or international securities exchange, a day on which the New York Stock Exchange or such other national or international securities exchange is open for business, (B) if the applicable security is quoted on the National Market System of the NASDAQ, a day on which trades may be made on such National Market System or (C) if the applicable security is not otherwise listed, admitted for trading or quoted, any Business Day.

        "FESCO Parties" has the meaning specified in the preamble hereto.

        "FESCO Stockholder Agent" has the meaning set forth in Section 8.1.

        "Fully-Diluted Common Stock" means, at any time, the then outstanding shares of Common Stock of the Company plus (without duplication) all shares of Common Stock issuable, whether at such time or upon the passage of time or the occurrence of future events, upon the exercise (including, with respect to all outstanding options, the "cashless-broker" exercise, if available, through procedures approved by the Company), conversion or exchange of all then-outstanding Common Stock Equivalents.

        "GAAP" means generally accepted accounting principles as applied in the United States of America.

        "Good Reason" means (i) with respect to any Management Holder who is a party to a written employment agreement with the Company or any Subsidiary, which agreement contains a definition of "good reason" for purposes of termination of employment thereunder by the Management Holder, "good reason" as defined in the most recent of such agreements or (ii) with respect to any Management Holder who is not a party to a written employment agreement with the Company or any Subsidiary, the occurrence of one or more of the following: (1) without such Management Holder's express written consent, the assignment to such Management Holder of any duties (other than a promotion), or any limitation of such Management Holder's responsibilities, materially inconsistent with such Management Holder's duties and responsibilities with the Company or any Subsidiary as of the first to occur of the Effective Date or the date that the Management Holder first becomes subject to and bound by this Agreement, and provided that such change has remained uncured for a period of at least thirty (30) days following written notice from such Management Holder describing in reasonable detail the nature of such alleged change, (2) any failure by the Company or any Subsidiary to pay, or any reduction by the Company or any Subsidiary of, such Management Holder's annual base salary for the preceding year that remains uncured for a period of at least thirty (30) days following written notice from such Management Holder of the occurrence of such alleged failure, or (3) without such Management Holder's express written consent, the requirement by the Company or any Subsidiary that he perform the duties required of him at a location other than that where such Management Holder primarily performs his duties as of the first to occur of the Effective Date or the date such Management Holder first becomes subject to and bound by this Agreement (or such other location to which such Management Holder previously agreed to relocate), that is more than 50 miles from such original location (or such other agreed upon location).

4

        "Group" means any Person and Affiliate(s) of that Person acting in concert for the purpose of acquiring, holding or disposing of equity interests in the Company in other than a public offering of such equity interests.

        "Holder" means any Person owning shares of Common Stock of the Company.

        "Information" has the meaning set forth in Section 3.1(b).

        "Lock-Up Expiration Date" has the meaning specified in Section 4.1.

        "Management Holder" means any officer or director of the Company who owns shares of Common Stock and/or Common Stock Equivalent of the Company.

        "Management Holder Seller" has the meaning set forth in Section 4.9.

        "Merger Agreement" has the meaning specified in Section 8.8.

        "Non-Management Holder" means a Person who owns shares of Common Stock of the Company and is not a Management Holder, a DLJ Party or First Reserve but is bound by this Agreement in their capacity as a stockholder of the Company.

        "Non-Vested Stock" has the meaning specified in Section 4.9(c).

        "Notice" has the meaning specified in Section 8.7.

        "Notice Date" has the meaning specified in Section 4.3.

        "Observer" has the meaning set forth in Section 3.1(b).

        "Other Permitted Transferee" means (i) in the case of the Southwest Parties, any corporation, partnership or other entity which is a controlled subsidiary of any of the Southwest Parties and (ii) in the case of the Non-Management Holders, (A) any corporation, partnership, trust or other entity which is controlled by the applicable Non-Management Holder, (B) the applicable Non-Management Holder's heirs, executors, administrators, testamentary trustees, legatees or beneficiaries (collectively, "Associates"), (C) any trust, the beneficiaries of which, or any corporation, limited liability company or partnership, the stockholders, members or general or limited partners of which, include any of the respective Associates or their spouses or lineal descendants, (D) a voting trustee for one or more of the respective subsidiaries or Associates under the terms of a voting trust as of the Effective Date.

        "Permanent Disability" means (i) with respect to any non-director Management Holder (A) who is a party to a written employment agreement with the Company or any Subsidiary, which agreement contains a definition of "disability" or "permanent disability" (or words of like import) for purposes of termination of employment thereunder by the Company or any Subsidiary, "disability" or "permanent disability" as defined in the most recent of such agreements, or (B) in all other cases, if such Management Holder, due to a disability of a permanent nature (determined to exist in the manner provided below), is unable to perform his duties and responsibilities to the Company or the applicable Subsidiary for a period of not less than ninety (90) days during any one hundred eighty (180) consecutive day period; provided that "Permanent Disability" shall be deemed to occur upon the expiration of such one hundred eighty (180) day period and a determination by the Board of Directors that there is no reasonable accommodation (within the meaning of the Americans with Disabilities Act) which would enable such Management Holder to perform the essential functions of such Management Holder's position despite the existence of such disability, and the Board of Directors, upon the advice of a qualified physician mutually agreeable to such Management Holder (or, if appropriate, such Management Holder's representative) and the Board of Directors, shall have determined that such Management Holder is physically or mentally incapable (excluding infrequent and temporary absences due to ordinary

5

illness) of performing such Management Holder's duties and responsibilities to the Company or the applicable Subsidiary.

        "Permitted Management Holder Transferee" means (i) any corporation, limited liability company, trust, limited partnership or other comparable entity established for the benefit of a Management Holder, the spouse and/or one or more of the lineal descendants of any Management Holder which is controlled by such Management Holder or (ii) the spouse, parent, and/or one or more of the lineal descendants of any Management Holder.

        "Permitted Transferee" is defined only with respect to any DLJ Party and First Reserve, and means respectively for each (i) any Affiliate, (ii) any corporation, partnership or other entity which is an Affiliate of any DLJ Party or First Reserve, as the case may be (collectively, the "Private Equity Affiliates"), (iii) any managing director, general partner, director, limited partner, officer or employee of First Reserve or any DLJ Party, as the case may be, or a Private Equity Affiliate, or the heirs, executors, administrators, testamentary trustees, legatees or beneficiaries of any of the foregoing Persons referred to in this clause (iii) (collectively, "Private Equity Associates"), (iv) any trust, the beneficiaries of which, or any corporation, limited liability company or partnership, the stockholders, members or general or limited partners of which, include First Reserve or any DLJ Party, as the case may be, or any Private Equity Affiliates, Private Equity Associates, their spouses or their lineal descendants and (v) a voting trustee for First Reserve or any DLJ Party, as the case may be, or for one or more Private Equity Affiliates or Private Equity Associates under the terms of a voting trust.

        "Person" means any natural person, corporation, limited liability company, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, bank, trust company, land trust, business trust or other organization, whether or not a legal entity, and any government or agency or political subdivision thereof.

        "Piggyback Registration" has the meaning specified in Section 5.2.

        "Piggyback Securities" has the meaning specified in Section 5.9.

        "Post-Closing Management Stock" has the meaning specified in Section 4.9.

        "Promissory Note" has the meaning specified in Section 4.9.

        "Purchaser" has the meaning specified in Section 4.9.

        "Qualified IPO" means a consummated initial public offering of shares of Common Stock, which is underwritten on a firm commitment basis by a nationally-recognized investment banking firm.

        "Registrable Securities" means the Common Stock and any shares of Common Stock that are issuable upon the exercise of any right, including pursuant to any option, warrant or security convertible into shares of Common Stock or similar right and any other securities issued or issuable with respect to such shares of Common Stock by way of a stock dividend or stock split or in connection with a combination of stock, recapitalization, merger, consolidation or reorganization; provided, that any Registrable Security will cease to be a Registrable Security when (i) a registration statement covering such Registrable Security has been declared effective by the SEC and it has been disposed of pursuant to such effective registration statement, (ii) it is sold under circumstances in which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the Securities Act are met or it is eligible for sale under Rule 144 without respect to any volume limitations, unless the Company fails, upon request of the Holder accompanied by an opinion of counsel to the Holder, reasonably acceptable to the Company, to the effect that the Registrable Securities are eligible for resale under Rule 144(k), to remove all restrictive legends on certificates representing such Registrable Security in connection with an

6

anticipated transfer of such Common Stock that is otherwise permitted by this Agreement, or (iii) (A) it has been otherwise transferred and (B) the Company has delivered a new certificate or other evidence of ownership for it not bearing any restrictive legend, other than the legend required pursuant to Section 8.6 of this Agreement, if applicable, and (C) it may be resold without registration under the Securities Act.

        "Registration Expenses" has the meaning specified in Section 6.2.

        "Required Filing Date" has the meaning specified in Section 5.1(c).

        "Required Sale" has the meaning specified in Section 4.3.

        "Required Sale Notice" has the meaning specified in Section 4.3.

        "Required Sale Date" has the meaning specified in Section 4.3.

        "Restriction" has the meaning specified in Section 8.6.

        "Retirement" means a termination of employment of a Management Holder, which is the result of (i) the expiration (including any available extensions) of such Management Holder's most recent employment agreement with the Company or any Subsidiary, (ii) a Management Holder being an employee with the Company or any Subsidiary for a certain number of years as determined by the Board of Directors, or (iii) the Management Holder obtaining the age of sixty (60) years old; provided that upon obtaining such age, the Management Holder has been an employee of the Company or any Subsidiary for a continuous period of at least five (5) years.

        "Sale Price" has the meaning specified in Section 4.3.

        "Sale Stock" has the meaning specified in Section 4.3.

        "SEC" means the United States Securities and Exchange Commission or any successor governmental agency.

        "Securities Act" means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

        "Seller" has the meaning specified in Section 4.3.

        "Selling Holder" means a holder of Registrable Securities who is selling Registrable Securities pursuant to a registration statement under the Securities Act.

        "Southwest Parties" has the meaning specified in the preamble hereto.

        "Subsequent Notice" has the meaning specified in Section 3.7.

        "Subsequent Registration" has the meaning specified in Section 4.1.

        "Subsequent Restricted Period" has the meaning specified in Section 4.1.

        "Subsidiary" means (i) any corporation or other entity a majority of the Capital Stock or other equity securities of which having ordinary voting power to elect a majority of the board of directors or other Persons performing similar functions is at the time owned, directly or indirectly, with power to vote, by the Company or any direct or indirect Subsidiary of the Company, (ii) any limited liability company in which the Company or any direct or indirect Subsidiary is the sole managing member or (iii) any partnership in which the Company or any direct or indirect Subsidiary is a general partner.

        "Suspension Period" has the meaning specified in Section 6.3.

        "Transferor" has the meaning specified in Section 4.2.

7

        "Transferor's Notice" has the meaning specified in Section 4.2.

        "Third Party" has the meaning specified in Section 4.3.

        "Underwriter" means a securities dealer that purchases any shares of Common Stock as principal and not as part of such dealer's market-making activities.

        1.2    References; Gender; Number; Certain Phrases.    References to this "Agreement" shall mean this Stockholders' Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to the Agreement as the same may be in effect at the time such reference becomes operative. All references in this Agreement to an "Article," "Section," "Exhibit" or "Schedule" are to an Article, Section, Exhibit or Schedule of this Agreement, unless the context requires otherwise. Unless the context requires otherwise, the words "this Agreement," "hereof," "hereunder," "herein," "hereby" or words of similar import refer to this Agreement as a whole and not to a particular Article, Section, subsection, clause or other subdivision hereof. Whenever the context requires, the words used herein include the masculine, feminine and neuter gender, and the singular and the plural. The words "include", "includes" and "including" shall mean "include, without limitation,", "includes, without limitation" and "including, without limitation,", respectively. All references herein to "dollars" or "$" refer to currency of the United States of America. Any accounting term used in this Agreement shall have, unless otherwise specifically provided herein, the meaning customarily given in accordance with GAAP.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

        2.1   Each of the Southwest Parties, the DLJ Parties, each of the FESCO Parties that is not a natural person, and each other Party that is not a natural person (as to itself only) hereby represents and warrants to the Company and the other Parties that:

        (a)   it is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation or organization, as the case may be, with full power and authority under its certificate of incorporation and/or other organizational document(s) to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by it of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action;

        (b)   this Agreement has been duly and validly executed and delivered by it and, upon the Effective Date, constitutes the binding obligation enforceable against it in accordance with its terms, except to the extent that enforcement may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally, to general principles of equity (including a court's discretionary authority with respect to granting specific performance) and to mandatory provisions of public policy; and

        (c)   the execution, delivery and performance by it of this Agreement and the consummation by it of the transactions contemplated hereby will not, with or without the giving of notice or the lapse of time, or both, (A) violate any provision of law, statute, rule or regulation to which it is subject, (B) violate any order, judgment, or decree applicable to it or (C) conflict with, or result in a breach or default under, any term or condition of its certificate of incorporation, by-laws or such other comparable organizational and governing document(s), as the case may be, or any agreement or other instrument to which it is a party or by which it is bound.

8

        2.2   Each Party who is a natural person, including both Management Holders and Non-Management Holders, hereby represents and warrants (as to himself or herself only) to the Company and the other Parties that:

        (a)   he has full power and authority to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by him (or her) of this Agreement and the consummation by him (or her) of the transactions contemplated hereby have been duly authorized by all necessary action;

        (b)   this Agreement has been duly and validly executed and delivered by him (or her) and, upon the Effective Date, constitutes the binding obligation thereof enforceable against him (or her) in accordance with its terms, except to the extent that enforcement may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally, to general principles of equity (including a court's discretionary authority with respect to granting specific performance) and to mandatory provisions of public policy; and

        (c)   the execution, delivery and performance by him (or her) of this Agreement and the consummation by him (or her) of the transactions contemplated hereby will not, with or without the giving of notice or the lapse of time, or both, (A) violate any provision of law, statute, rule or regulation to which he (or she) is subject, (B) violate any order, judgment or decree applicable to him (or her) or (C) conflict with, or result in a breach or default under, any term or condition of any agreement or other instrument to which he (or she) is a party or by which he (or she) is bound.

        2.3   The Company hereby represents and warrants to each other Party that:

        (a)   it is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware with full corporate power and authority under its certificate of incorporation and other organizational documents to execute, deliver and perform this Agreement and to consummate the transactions contemplated hereby, and the execution, delivery and performance by it of this Agreement and the consummation by it of the transactions contemplated hereby have been duly authorized by all necessary action;

        (b)   this Agreement has been duly and validly executed and delivered by the Company and, upon the Effective Date, constitutes the binding obligation thereof enforceable against the Company in accordance with its terms, except to the extent that enforcement may be limited by or subject to any bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to creditors' rights generally, to general principles of equity (including a court's discretionary authority with respect to granting specific performance) and to mandatory provisions of public policy; and

        (c)   the execution, delivery and, upon the Effective Date, performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated hereby will not, with or without the giving of notice or the lapse of time, or both, (A) violate any provision of law, statute, rule or regulation to which the Company is subject, (B) violate any order, judgment or decree applicable to the Company or (C) conflict with, or result in a breach or default under, any term or condition of its certificate of incorporation, bylaws or such other comparable organizational and governing document(s), as the case may be, or any agreement or other instrument to which the Company is a party or by which it is bound.

9

ARTICLE 3

MANAGEMENT OF THE COMPANY;
ACTIVITIES OF THE PARTIES

        3.1    Board of Directors.    

        (a)   Generally. The Board of Directors of the Company shall manage the operation and affairs of the Company in accordance with the Company's certificate of incorporation and bylaws and, in accordance therewith, shall select, appoint and remove the officers of the Company. The six (6) directors comprising the Board of Directors as of the Effective Date shall meet the requirements of Sections 3.2 through 3.4. After the effective date of the 2003 Agreement, the Board of Directors may consist of such numbers of directors as in accordance with the provisions contained herein and in the Company's certificate of incorporation and bylaws. Following a Qualified IPO,

(i)

the rights in Section 3.1, including Observer rights in Section 3.1(b) below, shall terminate and be of no further force an effect on the later of (i) the date 180 days following the effective date of the Qualified IPO and (ii) the date First Reserve ceases to beneficially own 5% or more of the Company's outstanding Common Stock;



(ii)

the rights set forth in Sections 3.2, 3.3 and 3.4 regarding the election of directors shall terminate and be of no further force or effect effective as of the closing date of the Qualified IPO;



(iii)

the preemptive rights set forth in Section 3.7 shall terminate and be of no further force or effect effective as of the closing date of the Qualified IPO;



(iv)

the obligations set forth in Section 3.8 shall be deemed satisfied by the Company by its filing of such financial statements with the SEC.

        (b)   Board Observer. The Company shall permit a representative of First Reserve (the "Observer") to attend all meetings of the Board of Directors and all committees thereof to which the Observer is assigned by the Board of Directors (whether in person, telephonic or other) in a non-voting, observer capacity and shall provide to First Reserve, the right (A) to receive all notices, reports and other communications sent to directors, at the same time they are transmitted to directors, (B) to consult with and advise members of senior management of the Company, and (C) upon reasonable notice, to have access to the books and records of the Company. The Observer may be excluded from any meeting or portion thereof and need not be provided such materials if a majority of the Board of Directors reasonably believes that the Observer's attendance at such meeting or access to such information would: (i) adversely affect attorney-client privilege between the Company and its counsel or (ii) involve a conflict of interest between the Company and First Reserve. First Reserve agrees and acknowledges that it and the Observer will be bound by the confidentiality provisions of Section 8.8 of this Agreement. The Company acknowledges that First Reserve and the Observer may have, from time to time, information ("Information") that may be of interest to the Company regarding a wide variety of matters including, by way of example only, current and future investments First Reserve has made, may make, may consider or may become aware of with respect to other companies that may be competitive with the Company's. The Information may or may not be known by the Observer. The Company agrees that First Reserve and the Observer shall have no duty to disclose any Information to the Company or permit the Company to participate in any investments based on any Information, or to otherwise take advantage of any opportunity that may be of interest to the Company if it were aware of such Information, and hereby waives, to the extent permitted by law, any claim based on the corporate opportunity doctrine or otherwise that could limit First Reserve's ability to pursue

10

opportunities based on such Information or that would require First Reserve or the Observer to disclose any such Information to the Company or offer any opportunity relating thereto to the Company. First Reserve's initial Observer shall be Ben A. Guill. From time to time, First Reserve may, upon written notice to and approval by the Company, appoint a different Observer to replace Mr. Ben A. Guill.

        3.2    Election of Directors Designated by the DLJ Parties.    The Parties to this Agreement (and any successor(s) in interest), shall take or cause to be taken all action within their power, including, but not limited to, the voting of shares of Capital Stock of the Company (to the extent that any such Person holds shares of Capital Stock of the Company entitled to vote thereon), required to cause the Board of Directors to nominate and elect or appoint as directors four (4) directors designated by the DLJ Parties on and after the Effective Date or, if on such date or at any time thereafter the aggregate number of directors exceeds six, such number of directors as most closely approximates two-thirds (²/3) of the aggregate number of directors.

        3.3    Election of a Director designated by the Southwest Parties.    For as long as the Southwest Parties and their Affiliates in the aggregate own a percentage interest of the outstanding Common Stock that is equal to or greater than 50% of the percentage interest of the number of outstanding shares of Common Stock owned by the Southwest Parties immediately following the closing of the 2000 SPA, the Parties to this Agreement (and any successor(s) in interest), shall take or cause to be taken all action within their power, including, but not limited to, the voting of shares of Capital Stock of the Company (to the extent that any such Person holds shares of Capital Stock of the Company entitled to vote thereon), required to cause the Board of Directors to nominate and elect or appoint as a director one (1) director designated by the Southwest Parties.

        3.4   Election of CEO as Director. The Parties to this Agreement (and any successor(s) in interest), shall take or cause to be taken all action within their power, including, but not limited to, the voting of shares of Capital Stock of the Company (to the extent that any such Person holds shares of Capital Stock of the Company entitled to vote thereon), required to cause the Board of Directors to nominate and elect or appoint as a director the chief executive officer of the Company as long as such officer is a party to an employment agreement with the Company that requires such officer to receive a position on the Company's Board of Directors. In the event the chief executive officer of the Company is not a party to an employment agreement that entitles such officer to be a director of the Company, the DLJ Parties shall be entitled to designate the director to fill such directorship.

        3.5    Director Compensation.    Members of the Board of Directors who are non-employees and are not Affiliates of any of the Parties shall receive compensation for their services as board members as determined by the other members of the Board of Directors.

        3.6    Repurchase of Stock from Certain Executives.    Each Party hereto shall take all action within its power, including but not limited to, the voting of shares of Capital Stock of the Company (to the extent that any such Person holds shares of Capital Stock of the Company entitled to vote thereon), required to approve any resolution submitted to the stockholders of the Company for the approval of payments by the Company to executives, pursuant to employment agreements between such executives and the Company or any of its subsidiaries, for the repurchase by the Company of shares of Capital Stock of the Company held by such executives.

        3.7    Stockholders' Preemptive Rights.    If the Company proposes to sell any of its Capital Stock to any Person in a transaction or transactions, as the case may be, other than (a) pursuant to a Qualified IPO or other public offering of any of its Capital Stock, (b) as consideration for the acquisition of any other Person, assets or businesses, (c) equity securities offered to employees or directors of, or consultants or advisors to, the Company in accordance with the approval of the Board of Directors, or (d) any equity securities (including convertible debt or warrants) issued as or in connection with a loan to or debt financing of the Company, each Party shall have the right to purchase, at the same price per

11

share and upon substantially similar terms and conditions, up to a number of shares of such Capital Stock sufficient for it to maintain the same percentage ownership of outstanding securities of such class of Capital Stock of the Company as it owned immediately prior to such issuance. In the event of a proposed transaction or transactions, as the case may be, that would give rise to preemptive rights of a Party or Parties under this Section 3.7, the Company shall provide notice to such Party or Parties no later than thirty (30) days prior to the expected consummation of such transaction or transactions. Each Party possessing preemptive rights hereunder shall provide notice of its election to exercise such rights within ten (10) Business Days after delivery of such notice from the Company. If any Party having a right to purchase shares of the Company's Capital Stock under the preceding sentence shall elect not to exercise such right, then the other Parties that have elected to exercise their rights with respect hereto shall have the right to purchase additional shares of such Capital Stock from those upon which such right was not exercised, on a pro rata basis insofar as more than one such Party desires to so purchase additional shares of Capital Stock; provided, however, that if, in connection with any proposed transaction or transactions giving rise to rights hereunder (including pursuant to a Subsequent Notice as described below), any shares of Capital Stock remain from those that were available in the Parties pursuant to their rights hereunder, no Party shall have any preemptive rights under this Section and the proposed transaction or transactions shall be consummated without any exercise of preemptive rights hereunder. In the event of a situation described in the preceding sentence in which a Party elects not to exercise its preemptive rights with respect to a proposed transaction or transactions, the Company shall provide notice (the "Subsequent Notice") of such fact within five (5) Business Days following the receipt of all of the notices concerning such elections from the Parties possessing such preemptive rights. Each Party possessing the right to purchase the additional shares of Capital Stock upon which the preemptive rights were not exercised shall respond to this Subsequent Notice by sending a response notice with respect thereto within five (5) Business Days after delivery of the Subsequent Notice. Failure of any Party to respond to such Subsequent Notice with a notice stating the election of such Party to purchase such additional shares of Capital Stock shall be deemed to be an election not to purchase such shares of Capital Stock and the proposed transaction or transactions shall be consummated without any exercise of preemptive rights hereunder.

        3.8    Financial Statements.    

        (a)   As soon as practicable following the end of each fiscal year of the Company (in no event later than one hundred twenty (120) days after the end of such fiscal year), the Company shall cause its independent accounts to prepare and deliver to the DLJ Parties and the FESCO Stockholder Agent an audited consolidated balance sheet of the Company as of the end of such fiscal year and the related audited consolidated statement of operations, changes in stockholders' equity and cash flows of the Company for such fiscal year (or similar statements if such statements change as the result of changes in GAAP), together with the notes related thereto. Such financial statements shall be accompanied by a report of the Company's independent accountants to the effect that such financial statements have been prepared in conformity with GAAP applied on a basis consistent with prior years (except as otherwise specified in such report) and that the audit of such financial statements has been performed in accordance with GAAP.

        (b)   As soon as practicable following the end of the each fiscal quarter of the Company, including the final fiscal quarter (in no event later than sixty (60) days after the end of any such fiscal quarter), the Company shall prepare and deliver to the DLJ Parties and the FESCO Stockholder Agent an unaudited consolidated balance sheet of the Company as of the end of such fiscal quarter and the related unaudited consolidated statement of operations, changes in stockholders' equity and cash flows of the Company for such fiscal quarter and for the fiscal year to date (or similar statements if such statements change as the result of changes in GAAP), in each case setting forth in comparative form the corresponding figures for the preceding fiscal

12

quarter and for the fiscal quarter of the prior fiscal year corresponding to the fiscal quarter just completed.

        (c)   As soon as practicable following the end of the each month (and in any event not later than thirty (30) days after the end of any such month), the Company shall prepare and deliver to the DLJ Parties an unaudited consolidated balance sheet of the Company as of the end of such month and the related unaudited consolidated statement of operations and cash flows of the Company for such month.

ARTICLE 4

TRANSFER OF SECURITIES

        4.1    Transfer of Capital Stock.    

        (a)   No Party may transfer any shares of Capital Stock of the Company prior to December 21, 2007, except as contemplated by Sections 4.2, 4.3, 4.7, 4.8 or 4.9 hereof or pursuant to an offering of equity securities registered under the Securities Act by the Company. The terms and provisions of this Article 4 (other than Section 4.9) shall terminate and be of no further force and effect with respect to Capital Stock owned by any of the Parties at such time as: (i) prior to a Qualified IPO, the percentage ownership of the DLJ Parties, their Affiliates and their Permitted Transferees, of the outstanding Common Stock of the Company is less than 25% of their percentage ownership of outstanding Common Stock immediately following the purchase of Common Stock pursuant to both the 2000 SPA and the Commitment Agreement (the "DLJ Initial Position") or (ii) after a Qualified IPO, (x) with respect to Section 4.9, the closing date of the Qualified IPO, and (y) with respect to all other Sections under Article 4, the date that the "lock-up" period, as specified in lock-up letters required under Section 5.12 or otherwise (the "Contractual Lock-Up Period"), relating to the Qualified IPO terminates (the "Lock-Up Expiration Date"); provided, however, that if between the Lock-Up Expiration Date and the one year anniversary of the Qualified IPO the Company files a registration statement for which a Piggyback Registration under Section 5.2 would be available (a "Subsequent Registration"), then the terms and provisions of this Article 4 shall be in effect from date of filing of such registration statement until the expiration of the Contractual Lock-Up Period relating to such Subsequent Registration (a "Subsequent Restricted Period"); provided, further, that if such Subsequent Registration is filed pursuant to Rule 415 under the Act, the Subsequent Restricted Period shall only be applicable during any Contractual Lock-Up Period relating to such Subsequent Registration that is commenced within one year of the date of the Qualified IPO.

        (b)   In the event any of the Holders is given the opportunity to participate in a Piggyback Registration or is entitled to a right of Participation Transaction and (i) such Holder declines to participate in the Piggyback Registration or Participation Transaction and (ii) the sale of securities in the offering related to such declined Piggyback Registration or Participation Transaction is actually completed, then such Holder may, notwithstanding the provisions of this Article 4(but subject to its obligations under any lock-up letter to which such Holder is subject pursuant to Section 5.12 or otherwise), transfer a number of shares equal to the number of shares it would have been able to sell in connection with the applicable Piggyback Registration or Participation Transaction, subject to Section 4.6 of this Agreement.

        (c)   Notwithstanding the terms of this Section 4.1, after a Qualified IPO, the DLJ Parties, in their sole and absolute discretion, may permit any of the other Holders to transfer shares of Capital Stock of the Company without the consent of the other Parties hereto.

13

        4.2    Right of Participation.    

        (a)   If one or more of the DLJ Parties, or any of its Permitted Transferees who have acquired Common Stock without the DLJ Parties making a Participation Offer under this Section 4.2, proposes to sell shares of Common Stock for value (any such DLJ Party and any Permitted Transferees being referred to herein as a "Transferor") in one transaction or a series of related transactions (such transaction, the "Participation Transaction"), but excluding (i) a sale pursuant to a Qualified IPO or other public offering, and (ii) any sale in which all of the Parties agree to participate, then such Transferor shall offer (the "Participation Offer") to each stockholder Party to include in the proposed sale a number of shares of Common Stock designated by any of the Parties, not to exceed, in respect of any such Party, that number of shares of Common Stock determined by application of the following formula: (A) the number of all shares of Common Stock to be sold by the Transferors in the Participation Transaction multiplied by (B)(i) the number of outstanding shares of Common Stock held by such Party divided by (ii) the number of outstanding shares of Common Stock held by all Parties.

        (b)   The Transferor shall give written notice to each Party of the Participation Offer (the "Transferor's Notice") at least 20 days prior to the proposed sale. The Transferor's Notice shall specify the proposed transferee, the number of shares of Common Stock to be sold to such transferee, the amount and type of consideration to be received therefor, and the place and date on which the sale is to be consummated. Each Party who wishes to include shares of Common Stock in the proposed sale in accordance with the terms of this Section 4.2 shall so notify the Transferor not more than 20 days after the date of the Transferor's Notice. The Participation Offer shall be conditioned upon the Transferor's sale of shares of Common Stock pursuant to the transactions contemplated in the Transferor's Notice with the transferee named therein. If any Party accepts the Participation Offer, the Transferor shall reduce to the extent necessary the number of shares of Common Stock it otherwise would have sold in the proposed sale so as to permit other Parties who have accepted the Participation Offer to sell the number of shares of Common Stock that they are entitled to sell under this Section 4.2, and the Transferor and such other Party or Parties shall sell the number of shares of Common Stock specified in the Participation Offer to the proposed transferee in accordance with the terms of such sale set forth in the Transferor's Notice.

        (c)   For purposes of this Section 4.2, the number of shares of Common Stock shall be deemed to include the shares of Common Stock represented by Common Stock Equivalents. Notwithstanding the foregoing, no Common Stock Equivalents shall receive the benefits of this Section 4.2 prior to the time such Common Stock Equivalents are exercisable for or convertible or exchangeable into shares of Common Stock and, in order to obtain the benefits of this Section 4.2, any such Common Stock Equivalents in the form of options, warrants or other securities convertible or exchangeable into or exercisable for shares of Common Stock must be exercised or canceled prior to or simultaneously with the consummation of the sale pursuant to this Section 4.2.

        (d)   Following the consummation of a Qualified IPO, the provisions of Section 4.2 shall not apply to any sales of shares of Common Stock by a Transferor, in one transaction or a series of related transactions, of less than 10% of all of the then-outstanding shares of Common Stock of the Company.

14

        4.3    Drag-Along Rights.    

        (a)   Notwithstanding any other provision in this Article 4, if any of the DLJ Parties or their Affiliates (such DLJ Parties and/or their Affiliates being referred to in this Section 4.3 as the "Seller") propose to sell shares of Common Stock and Common Stock Equivalents representing 50% or more of all of the Common Stock and Common Stock Equivalents held by the DLJ Parties and their Affiliates (the "Sale Stock") at such time to a third party or parties that are not an Affiliate of the Seller (collectively, a "Third Party") pursuant to a Bona Fide Offer, then Seller shall have the right, subject to the provisions of this Section 4.3, to require all other Parties that are not the Seller (collectively, the "Co-Sellers") to include in such sale (a "Required Sale") a portion of each such Party's shares of Common Stock and Common Stock Equivalents held by the Co-Sellers (the "Co-Sellers' Stock"), by delivering notice (the "Required Sale Notice") to such other Parties. The portion that each such Co-Seller shall be required to include in such sale shall equal the number derived by multiplying (x) the percentage of the Common Stock or Common Stock Equivalents held by the Seller that it proposes to sell by (y) the number of shares of Common Stock and Common Stock Equivalents held by each such other Party.

        (b)   The Required Sale Notice shall set forth: (i) the date of such notice (the "Notice Date"); (ii) the name and address of the Third Party; (iii) the proposed amount and type of consideration to be paid per share of Common Stock for the Sale Stock (the "Sale Price"), and a description in reasonable detail of the terms and conditions of payment offered by the Third Party, together with written proposals or agreements, if any, with respect thereto; (iv) the aggregate number of shares of Sale Stock; and (v) the proposed date of the Required Sale (the "Required Sale Date"), which shall be not less than 30 nor more than 180 days after the Notice Date.

        (c)   The Co-Sellers shall cooperate in good faith with Seller in connection with consummating the Required Sale (including, without limitation, the giving of consents and the voting of any shares of Common Stock of the Company held by the Co-Sellers to approve such Required Sale). On the Required Sale Date, each of the Co-Sellers shall deliver, free and clear of all liens, claims or encumbrances, and on the same terms and conditions applicable to the Seller's sale of the Sale Stock, a certificate or certificates and/or other instrument or instruments for all of its shares of Common Stock and Common Stock Equivalents, duly endorsed and in proper form for transfer, with the signature guaranteed, to such Third Party in the manner and at the address indicated in the Required Sale Notice and Seller shall cause each Co-Seller's share of the purchase price to be paid to such Co-Seller.

        (d)   In the event of any Required Sale, all Co-Sellers that hold Common Stock Equivalents in the form of options, warrants or other securities convertible or exchangeable into or exercisable for shares of Common Stock must exercise or cancel all such options, warrants or conversion or other rights prior to or simultaneously with the consummation of the Required Sale.

        (e)   The terms, rights and obligations under this Section 4.3 shall terminate and be of no further force and effect on such date that the number of outstanding shares of Common Stock held by the Parties to this Agreement is less than 30% of the then outstanding shares of Common Stock of the Company.

        4.4    Prohibited Transfers.    Any purported transfer of shares of Common Stock or Common Stock Equivalents by a Party that is not permitted by the provisions of Article 4, or which is in violation of such provisions, shall be void and of no force and effect whatsoever.

        4.5    Certain Events Not Deemed Transfers.    Except as contemplated by Section 4.3 hereof, in no event shall any of the following constitute a transfer of shares of Common Stock for purposes of Sections 4.1, 4.2 or 4.3 or be subject to the terms hereof: (i) an exchange, reclassification or other conversion of shares of Common Stock into any cash, securities or other property pursuant to a

15

merger, consolidation or recapitalization of the Company or any Subsidiary with, or a sale or transfer by the Company or any Subsidiary of all or substantially all its assets to, any Person; or (ii) an exercise or conversion of Common Stock Equivalents into shares of Common Stock in accordance with the terms thereof.

        4.6    Transfers Subject to Compliance with Securities Act and Other Applicable Law.    No shares of Common Stock may be transferred by a Party (other than pursuant to an effective registration statement under the Securities Act) unless such Party first delivers to the Company an opinion of counsel, which opinion and counsel shall be reasonably satisfactory to the Company, to the effect that such transfer is not required to be registered under the Securities Act and any other applicable law.

        4.7    Permitted Transferees.    

        (a)   Notwithstanding anything in this Agreement to the contrary (other than Section 4.6), any of the DLJ Parties or First Reserve, or any Affiliate of any of the DLJ Parties or First Reserve, or any Permitted Transferee thereof may, without the consent of the Company or any of the Parties and without compliance with Sections 4.1, 4.2 or 4.3, at any time transfer any or all of its shares of Common Stock and Common Stock Equivalents to one or more Permitted Transferees, provided that (i) the transfer to such Person is not in violation of applicable U.S. federal or state securities laws, or other similar laws, and (ii) such Person(s), by accepting such shares of Common Stock or Common Stock Equivalents, shall be deemed to have agreed to be bound by the terms of this Agreement on the same terms as the transferring Party generally. In the event that any DLJ Party or First Reserve, or any Affiliate of any of the DLJ Parties or First Reserve, or any Permitted Transferee thereof transfers any shares of Common Stock or Common Stock Equivalents to any transferee in accordance with the terms of this Agreement, other than to a Permitted Transferee or any Person that is a Party to this Agreement, such shares of Common Stock or Common Stock Equivalents, as the case may be, shall thereafter be free from the restrictions set forth in this Agreement and no longer subject thereto and such transferee shall have no rights hereunder, and the definition of Party hereunder shall not include such transferee.

        (b)   Notwithstanding anything in this Agreement to the contrary (other than Section 4.6), any Southwest Party or any Non-Management Holder, respectively, or any Other Permitted Transferees may, without the consent of the Company or any of the Parties and without compliance with Sections 4.1, 4.2 or 4.3, at any time transfer any or all of its shares of Common Stock and Common Stock Equivalents to one or more Other Permitted Transferees, provided that (i) the transfer to such Person is not in violation of applicable U.S. federal or state securities laws, or other similar laws, (ii) such Person(s) shall execute and deliver to the Company a written acknowledgement, in form and substance satisfactory to the Company, stating that such Person(s) agrees to be bound by the terms of this Agreement (on the same terms as such Southwest Party or such Non-Management Holder, respectively, and (iii) if any such Other Permitted Transferee shall cease to qualify as an Other Permitted Transferee after such transfer, the Common Stock and Common Stock Equivalents of such Other Permitted Transferee (A) shall continue to be subject to the terms and conditions of this Agreement and the acceptance of such shares of Common Stock or Common Stock Equivalents by such Person(s) shall be deemed as agreement to be so bound and (B) shall be deemed to be owned by the Southwest Party or Non-Management Holder, as the case may be, that originally transferred such shares pursuant to this Section 4.7(b) for the purpose of calculating such Southwest Party's or Non-Management Holder's percentage ownership of Common Stock and/or Common Stock Equivalents as such calculation may be required under the terms hereof. In the event that any Southwest Party or any Non-Management Holder, respectively, or any Other Permitted Transferee transfers any shares of Common Stock or Common Stock Equivalents to any transferee in accordance with the terms of this Agreement, other than to an Other Permitted Transferee or any Person that is a Party to this Agreement, such shares of Common Stock or Common Stock Equivalents, as the case may be, shall thereafter be free from

16

the restrictions set forth in this Agreement and no longer subject thereto and such transferee shall have no rights hereunder, and the definition of Party hereunder shall not include such transferee.

        (c)   Notwithstanding anything in this Agreement to the contrary, upon the death of any Party who is a natural person, the transfer of any or all of such Party's shares of Common Stock or Common Stock Equivalents to one or more of such Party's legatees, heirs or trustees of a testamentary trust, or to an executor or administrator of the estate of such deceased Party incident to guardianship or probate proceedings involving such estate shall not require the consent of the Company or any of the Parties and shall not be subject to compliance with Sections 4.1, 4.2, 4.3 or 4.4 so long as (i) such heir shall have agreed in writing to be bound by the terms of this Agreement and (ii) the transfer to such heir is not in violation of applicable law.

        4.8    Management Holder Transfers.    Notwithstanding anything in this Agreement to the contrary, any Management Holder or Permitted Management Holder Transferee may, without the consent of the Company or any of the Parties and without compliance with Sections 4.1, 4.2 or 4.3, at any time transfer any or all of its shares of Common Stock and Common Stock Equivalents to one or more Permitted Management Holder Transferees or Management Holders, provided that (i) the transfer to such Person is not in violation of applicable U.S. federal or state securities laws, or other similar laws, and (ii) such Person(s) shall execute and deliver to the Company a written acknowledgement, in form and substance satisfactory to the Company, stating that such Person(s) agrees to be bound by the terms of this Agreement (on the same terms as the Management Holder); and further provided that any such Person(s) shall, in any event, be deemed to have so agreed by accepting such shares of Common Stock and Common Stock Equivalents. In the event that any Management Holder or any Permitted Management Holder Transferee transfers any shares of Common Stock or Common Stock Equivalents to any transferee, in accordance with the terms of this Agreement, other than a Permitted Management Holder Transferee or any Person that is a Party to this Agreement, such shares of Common Stock or Common Stock Equivalents, as the case may be, shall thereafter be free from the restrictions set forth in this Agreement and no longer subject thereto and such transferee shall have no rights hereunder, and the definition of Party hereunder shall not include such transferee.

        4.9    Management's Shares of Stock.    The provisions of Section 4.9 shall apply only to Common Stock or Common Stock Equivalents (including, without limitation, Common Stock acquired pursuant to the exercise of the EBITDA Contingent Warrant) acquired by Management Holders after December 21, 2000 (the "Post-Closing Management Stock"), and shall terminate upon the closing of a Qualified IPO.

        (a)   Optional Purchase of Post-Closing Management Stock. In the event the Company terminates a Management Holder as an employee of the Company or any Subsidiary for Cause or a Management Holder terminates his employment with the Company or any Subsidiary without Good Reason, then such Management Holder and his Permitted Management Holder Transferees holding any Post-Closing Management Stock (the "Management Holder Sellers") shall have the obligation to offer to sell and the Company shall have the right and option, but shall not be required, to purchase all or a portion of the Post-Closing Management Stock of the Management Holder Sellers at the price and on the terms dictated in Section 4.9(f) and Section 4.9(g). The Company shall have the period described in Section 4.9(e) to notify the Management Holder Sellers of the Company's election to purchase all or a portion of the Post-Closing Management Stock.

        (b)   Mandatory Purchase of Post-Closing Management Stock. In the event (i) the Company terminates a Management Holder as an employee of the Company or any Subsidiary other than for Cause, (ii) a Management Holder terminates his employment with the Company or any Subsidiary for Good Reason, (iii) a Management Holder's employment as an employee of the Company or any Subsidiary terminates as a result of Permanent Disability or Retirement, (iv) if a

17

Management Holder is not an employee of the Company or any Subsidiary but is a member of the Board of Directors, and such Management Holder ceases to be a member of the Board of Directors, or (v) a Management Holder dies, then such Management Holder or the legal representative of the Management Holder and his Management Holder Permitted Transferees holding any Post-Closing Management Stock (again, the "Management Holder Sellers") shall have the obligation to sell and the Company shall have the obligation to purchase all of the Post-Closing Management Stock held by such Management Holder Sellers at the price and on the terms set forth in Section 4.9(f) and Section 4.9(g).

        (c)   Termination of a Management Holder's Marital Relationship.

        (i)    If, upon the divorce of a Management Holder, all or any portion of that Management Holder's Post-Closing Management Stock is allocated or set aside ("Allocated Stock") to his spouse ("Divorced Spouse"), such Management Holder and the Company shall have the right, but shall not be required, to purchase all or a portion of such Allocated Stock pursuant to Section 4.9(c)(iii). However, any such Post-Closing Management Stock allocated or set aside to a Divorced Spouse who is a registered shareholder prior to such divorce shall not be deemed to be Allocated Stock.

        (ii)   If the spouse ("Deceased Spouse") of a Management Holder dies, and it is determined that all or any portion of a Management Holder's Post-Closing Management Stock or any of the Post-Closing Management Stock held of record by the Deceased Spouse would not vest in such Management Holder ("Non-Vested Stock"), such Management Holder and the Company shall have the right, but shall not be required, to purchase all or a portion of such Non-Vested Stock pursuant to Section 4.9(c)(iii).

        (iii)  Upon the divorce of his spouse and the determination that there is Allocated Stock, a Management Holder shall have, for thirty (30) days following the date of such determination, the right, but shall not be required, to purchase all or a portion of such Allocated Stock. Upon the death of his spouse and the determination that there is Non-Vested Stock, a Management Holder shall have, for thirty (30) days following the date of such determination, the right, but shall not be required, to purchase all or a portion of such Non-Vested Stock. If within such thirty (30) day period such Management Holder does not purchase all of the Allocated Stock or Non-Vested Stock, then such Management Holder shall notify the Company of its right to purchase all or a portion of the remaining Allocated Stock or Non-Vested Stock pursuant to Section 4.9(c)(iv).

        (iv)  The Company shall have the period described in Section 4.9(e) to notify the Divorced Spouse or the legal representatives of the Deceased Spouse of the Company's election to purchase all or a portion of the remaining Allocated Stock or Non-Vested Stock. For purposes of Section 4.9(e), the date on which the event that gives the Company the right to purchase such Stock occurs will be deemed to be the date the Company receives notice that a Management Holder has purchased less than all the Allocated Stock or Non-Vested Stock, or in the absence of any notice, thirty (30) days from the determination that there is Allocated Stock or Non-Vested Stock.

        (v)   All purchases of Post-Closing Management Stock made pursuant to this Section 4.9(c) shall be made at a price determined under Section 4.9(f) and on such terms as determined by Section 4.9(g).

        (vi)  The undersigned spouse of each of the Management Holders joins in the execution of this Agreement to evidence her knowledge of its existence and content, to acknowledge that this Section 4.9 is fair, equitable and in her best interest, and to bind her community interest, if any, and her interest in Allocated Stock or Non-Vested Stock, if any, and her heirs,

18

beneficiaries, assigns, executors, administrators, and legal representatives to the covenants, agreements, terms, and conditions contained in this Section 4.9.

        (d)   Bankruptcy or Reorganization of Management Holder. In the event a Management Holder or any of his Management Holder Permitted Transferees holding any Post-Closing Management Stock shall file a voluntary petition in bankruptcy, or shall be adjudged a bankrupt or insolvent, or shall file any petition or answer seeking for relief under any present or future statute, law, or regulation, or shall file any answer admitting the material allegations of a petition filed against it in any bankruptcy proceeding, or if a decree or order by a court shall have been entered adjudging such Management Holder or such Management Holder Permitted Transferee to be bankrupt or insolvent under federal bankruptcy laws or any applicable law of the United States of America or any state law, or appointing a receiver, trustee or assignee in bankruptcy or insolvency of such Management Holder or such Management Holder Permitted Transferee, or their respective assets, and such decree or order shall have continued undischarged or unstayed for a period of thirty (30) days, the Company shall have the right, but shall not be required in accordance with the provisions of this Section 4.9(d), to purchase all or a portion of the Post-Closing Management Stock held by such Management Holder or such Management Holder Permitted Transferee at the price and on the terms set forth in Section 4.9(f) and Section 4.9(g). The Company shall have the period described in Section 4.9(e) to notify the Management Holder or the Management Holder Permitted Transferee, as the case may be, of the Company's election to purchase all or a portion of the applicable Post-Closing Management Stock.

        (e)   Procedure for Purchase of Post-Closing Management Stock. Within forty-five (45) days after the date which is the date the Company receives notice of the occurrence of an event which gives the Company the right to purchase Post-Closing Management Stock pursuant to Section 4.9, the Chief Executive Officer of the Company, or in his absence any authorized person, shall call and cause to be held a special meeting of the Board of Directors to determine (i) if the Company has the option to purchase any portion of such Post-Closing Management Stock, whether the Company desires to purchase any portion or all of such Post-Closing Management Stock, and (ii) if the Company elects to purchase any portion or all of such Post-Closing Management Stock or is required to purchase any portion or all of such Post-Closing Management Stock, whether such purchase shall be for cash or on the terms set forth in Section 4.9(g). The Board of Directors shall have forty-five (45) days from the date of the special meeting to exercise, by written notice, the right of the Company to purchase any or all of such Post-Closing Management Stock. If no written notice is given, or the special meeting is not held within the prescribed time limits, the Company shall be deemed (a) with respect to the decision whether to exercise the option to purchase any portion of such Post-Closing Management Stock, to have determined to purchase none of such Post-Closing Management Stock, and (b) with respect to the decision whether to purchase any portion or all of such Post-Closing Management Stock for cash or on the terms set forth in Section 4.9(g), to have determined to purchase such portion or all of such Post-Closing Management Stock on the terms set forth in Section 4.9(g).

        (f)    Price Per Share for Post-Closing Management Stock. Except as otherwise provided in this Section (f), the price per share at which shares of Post-Closing Management Stock may be purchased pursuant to this Section 4.9 shall be their Fair Market Value. The price per share at which Post-Closing Management Stock may be purchased pursuant to Section 4.9(a) shall be the lesser of (i) their Fair Market Value and (ii) the net book value per share of the Company, computed in accordance with United States generally accepted accounting principles consistently applied, as of the end of the most recent completed fiscal quarter.

19

        (g)   Terms of Purchase of Post-Closing Management Stock by the Company.

        (i)    Any purchaser of Post-Closing Management Stock pursuant to this Section 4.9 (the "Purchaser") may pay the full amount of the purchase price for the Post-Closing Management Stock being purchased in cash at the time of purchase ("Closing") or, at his or its option, elect to defer a portion of the purchase price. If an election is made to defer payment, no less than twenty percent (20%) of the purchase price must be paid in cash at the Closing. Any deferred portion of the purchase price shall be evidenced by a promissory note ("Promissory Note") of the Purchaser.

        (ii)   The Promissory Note shall bear interest at a fixed rate equal to the prime rate in effect by JP Morgan Chase Bank, N.A. on the date of the Closing, may be prepaid at any time without penalty (any principal prepayment shall be applied against the next maturing installment of principal), shall provide for acceleration upon default, penalty interest, notice and opportunity to cure upon default, and such other standard and customary terms as the parties may agree. Except during any period in which the payments due under the Promissory Note are tolled pursuant to Section 4.9(g)(v), the Promissory Note shall require equal annual payments of principal plus accrued interest over a term of four (4) years. The first such payment shall be due on the first anniversary of the Closing, and subsequent payments shall be due consecutively on the subsequent anniversaries of such date until the fourth anniversary date at which time the unpaid balance of the Promissory Note plus accrued interest shall be due and payable.

        (iii)  The payment of the Promissory Note shall be secured at any time and from time to time by that number of shares of Post-Closing Management Stock which equals one hundred ten percent (110%) of the value of the unpaid principal amount remaining under the Promissory Note at such time. For purposes of this Section 4.9(g)(iii), the value of the shares of Post-Closing Management Stock held as security for the payment of the Promissory Note shall be determined in accordance with the provisions of Section 4.9(f). At any time and from time to time, the Purchaser shall be entitled to a release of collateral to the extent that the value of the Post-Closing Management Stock held by the holder of the Promissory Note exceeds the unpaid principal amount remaining under the Promissory Note by more than twenty-five percent (25%). Upon request by the Purchaser for such release, the holder of the Promissory Note shall exchange the stock certificate held as collateral for a new stock certificate which reflects the release of shares pursuant to this provision. In addition to the release of collateral described above, the Purchaser shall have the right, at any time and from time to time, to substitute certificates of deposit issued by any state or national bank as security for the Purchaser's obligations. The shares of Post-Closing Management Stock shall be released in such amount so that the sum of the face value of the certificate of deposit and one hundred ten percent (110%) of the value of the shares of Post-Closing Management Stock retained by the holder of the Promissory Note (calculated in accordance with the provisions of Section 4.9(f)) equals the unpaid principal amount remaining under the Promissory Note. So long as the Purchaser is not in default under the Promissory Note, the Purchaser shall be entitled to receive all interest paid on such substituted collateral.

        (iv)  Notwithstanding any provision herein to the contrary, the Company shall only be required to purchase Post-Closing Management Stock pursuant to this Section 4.9 to the extent permitted by law.

        (v)   Any Promissory Note issued by the Company pursuant to this Section 4.9 shall provide that it is payable only out of "surplus" (as described in §154 of the Delaware General Corporation Law), and shall further provide that, in the event the Company shall not, at the time set for any payment, have available an adequate surplus from which to make such

20

payment, or any portion thereof, the Company shall not make such payment, or such portion thereof, as the case may be, and the date for payment, or such portion thereof, shall be tolled, with interest accruing thereon until such surplus is available. The provisions of this Agreement regarding the Company's issuance and payment of Promissory Notes only from surplus shall not be construed to impose on the Company any obligation to create or generate any surplus of any type whatsoever. However, each year the Company shall not declare any cash or stock dividend or voluntarily cause any other charge to be made against surplus if the result thereof would be to cause surplus to fall below the level needed to make any payment(s) on a Promissory Note(s) which is payable during such year period or whose payment has been and is, at the time of such dividend or charge, tolled pursuant to this Section 4.9(g)(v).

        (vi)  In the event the payment of any installment on any Promissory Note is tolled for a period of more than twelve (12) months, such Promissory Note shall be in default, and the holder of such Promissory Note may declare the principal and all interest accrued thereon to be due and payable and may foreclose on any shares of Post-Closing Management Stock or other collateral which shall be the security therefor.

        (h)   Closing of Purchases. The Closing of the purchase of Post-Closing Management Stock pursuant to this Section 4.9 shall take place within forty-five (45) days from the date the procedures set forth in Section 4.9 are complied with, at the time and place chosen by the Company, which shall be reasonably convenient to all parties.

        (i)    Termination of Rights to Sell and Obligations to Purchase. Notwithstanding any other provision contained in this Agreement, the rights and obligations to sell or purchase Post-Closing Management Stock set forth in this Section 4.9 shall terminate upon the later to occur of the Lock-Up Expiration Date or the date that is the expiration of the Subsequent Restricted Period.

        (j)    Insurance. At its discretion, the Company may purchase insurance coverage on the life of a Management Holder to ensure adequate surplus or funds to purchase the applicable Management Holder Sellers' Post-Closing Management Stock under this Section 4.9. If it obtains this coverage, the Company is obligated to use any insurance proceeds to purchase the maximum number of shares possible. After purchasing all of the Post-Closing Management Stock of the applicable Management Holder Sellers, the Company shall retain any excess insurance proceeds. Each Management Holder agrees to use his best effort to assist the Company in obtaining insurance coverage.

ARTICLE 5

REGISTRATION RIGHTS;
PIGGYBACK REGISTRATION

        5.1    Demand Registration Rights.    

        (a)   At any time after a date that is the earlier to occur of either (i) December 21, 2008 or (ii) after a Qualified IPO (the "Demand Period"), the DLJ Parties may, on up to three (3) occasions, make a written request of the Company (a "Demand Request") for registration under the Securities Act (a "Demand Registration") of Registrable Securities held by the DLJ Parties, provided that such Registrable Securities shall have proposed offering proceeds for such offering that equals or exceeds US $10 million (or US $5 million in the event the Company is able to register such Registrable Securities on Form S-3). The Southwest Parties, collectively, and the FESCO Parties (acting through the FESCO Stockholder Agent), collectively, may each make one (1) such Demand Request for a Demand Registration, provided (i) they meet the threshold valuations for the offering proceeds as set forth in the foregoing sentence, (ii) the Demand Period has commenced and (iii) the DLJ Parties' percentage ownership of outstanding Common Stock of

21

the Company is less than 25% of their percentage ownership of outstanding Common Stock immediately following the closing of the 2000 SPA.

        (b)   The Company may defer the filing (but not the preparation) of a registration statement required by this Section until a date not later than 60 days after the Required Filing Date (as defined below) if (i) at the time the Company receives the Demand Request, the Company or its Subsidiaries are engaged in confidential negotiations, other confidential business activities or is otherwise in possession of material non-public information, disclosure of which would be required in such registration statement (but would not be required if such registration statement were not filed), and the Board of Directors of the Company determines in good faith that such disclosure would be materially detrimental to the Company and its stockholders, (ii) an investment banking firm advises the Company that effecting such registration would materially and adversely affect an offering of securities of the Company, or (iii) prior to receiving the Demand Request, the Board of Directors had determined to effect a registered underwritten public offering of the Company's equity securities for the Company's account and the Company had taken substantial steps (including, but not limited to, selecting (subject to the terms of this Agreement) and entering into a letter of intent with the managing Underwriter for such offering) and is proceeding with reasonable diligence to effect such offering. A deferral of the filing of a registration statement pursuant to this subsection (b) shall be lifted, and the requested registration statement shall be filed forthwith, if: in the case of a deferral pursuant to clause (i) of the preceding sentence, the negotiations or other activities are disclosed or terminated; in the case of a deferral pursuant to clause (ii) of the preceding sentence, such investment banking firm advises the Company that effecting such registration would no longer materially and adversely affect an offering of securities of the Company; or, in the case of a deferral pursuant to clause (iii) of the preceding sentence, the proposed registration for the Company's account is abandoned. In order to defer the filing of a registration statement pursuant to this subsection (b), the Company shall promptly, upon determining to seek such deferral, deliver to a requesting holder a certificate signed by the President or CEO of the Company stating that the Company is deferring such filing pursuant to this subsection (b) and the basis therefor in reasonable detail. Within twenty (20) days after receiving such certificate, the requesting holder for which registration was previously requested may withdraw such request by giving notice to the Company; if withdrawn, the Demand Request shall be deemed not to have been made for all purposes of this Agreement. Notwithstanding the foregoing, the Company may not defer the filing a registration statement pursuant to this subsection (b) more than twice every 12 months.

        (c)   Each Demand Request shall specify the number of shares of Registrable Securities proposed to be sold. Subject to subsection (b) of this Section 5.1, the Company shall use its commercially reasonable efforts to file the Demand Registration within 60 days after receiving a Demand Request (the "Required Filing Date") and shall use all commercially reasonable efforts to cause the same to be declared effective by the SEC as promptly as practicable after such filing, provided that the Company need effect only one Demand Registration at any time in accordance with this Section. The Company shall pay all of its fees, costs and expenses, other than underwriting discounts and commissions, related to any such Demand Registration; provided, however, if the Demand Registration is subsequently withdrawn by the Party or Parties initiating the Demand Registration, the Party or Parties may decide either (i) to pay pro rata any expenses of such registration and retain their rights to such Demand Registration or (ii) to elect to have the Company bear such expenses (in which event such Demand Registration shall count as one of such Party's demands for Demand Registration).

        (d)   Notwithstanding anything to the contrary contained in this Agreement, the Company shall not be required to register any Person's Registrable Securities pursuant to a Demand Registration

22

unless such Person accepts the terms of the underwriting agreement between the Company and the Underwriter.

        5.2    Notice; Piggyback Registration.    Subject to the provisions of this Agreement, if the Company proposes to file a registration statement under the Securities Act with respect to an offering of any equity securities by the Company for its own account or for the account of any of its equity holders, including a registration statement filed pursuant to Section 5.1, (other than a registration statement on Form S-4 or Form S-8 (or such corresponding forms adopted by the SEC for use by foreign issuers), or any substitute form that may be adopted by the SEC, or any registration statement filed in connection with an exchange offer or offering of securities solely to the Company's existing security holders), then the Company shall give written notice of such proposed filing to the Parties as soon as practicable (but in no event less than 30 days before the anticipated effective date of such registration statement), and such notice shall offer each such Person the opportunity to register the Applicable Percentage of the Registrable Securities held by each such Person (a "Piggyback Registration"). Subject to the limitations in the preceding sentence based on the Applicable Percentage for each such Person and Sections 5.3, 5.4, 5.5, 5.6 and 5.7 hereof, the Company shall include in each such Piggyback Registration all Registrable Securities requested to be included in the registration for such offering. Each such holder of Registrable Securities shall be permitted to withdraw all or part of such holder's Registrable Securities from a Piggyback Registration at any time prior to the effective date thereof.

        5.3    Obligations of the Company.    Whenever required under this Section 5 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:

        (a)   Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause such registration statement to be declared effective, and keep such registration statement effective for up to 120 days; provided, however, that if Holders of Registrable Securities holding shares having an aggregate value in excess of $10 million request that such registration statement be filed on Form S-3 under Rule 415 on a continuous basis and such filing is permitted under applicable SEC rules, the Company shall keep such registration statement effective until all such Registrable Securities are sold thereunder and/or cease to be Registrable Securities, or for two years if earlier, provided that the aggregate value of shares registered under such registration statement also exceeds $10 million.

        (b)   Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement for up to 120 days, or such longer period in connection with a Rule 415 offering described in Section 5.3(a) above.

        (c)   Furnish to the Parties such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.

        (d)   Use its reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or "blue sky" laws of such jurisdictions in the United States as shall be reasonably requested by the Parties, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

        (e)   In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering.

23

        (f)    Notify each Party covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, such obligation to continue for 120 days, or such longer period in connection with a Rule 415 offering described in Section 5.3(a) above.

        (g)   Use its reasonable efforts to cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which the same securities issued by the Company are then listed.

        (h)   Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereto and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration.

        (i)    Use its reasonable efforts to furnish, at the request of any Party requesting registration of Registrable Securities pursuant to this Article 5, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Article 5, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Party or Parties requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Parties requesting registration of Registrable Securities.

        5.4    Indemnification.    In the event any Registrable Securities are included in a registration statement under this Section 5:

        (a)   To the extent permitted by law, the Company will indemnify and hold harmless each Party, each of its officers, directors, partners, legal counsel, accountants, and any underwriter (as defined in the Securities Act) for such Party and each person, if any, who controls such Party or underwriter within the meaning of the Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each such Party, each of its officers, directors, partners, legal counsel, accountants, and any underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this subsection 5.4(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability, or action if such settlement

24

is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable to any Party, each of its officers, directors, partners, legal counsel, accountants, and any underwriter or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by any such Party, underwriter or controlling person.

        (b)   To the extent permitted by law, each selling Party will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, legal counsel for the Company, accountants for the Company, any underwriter, any other Party selling securities in such registration statement and any controlling person of any such underwriter or other Party, against any losses, claims, damages, or liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Party expressly for use in connection with such registration; and each such Party will pay, as incurred, any legal or other expenses reasonably incurred by any person intended to be indemnified pursuant to this Section 5.4(b), in connection with investigating or defending any such loss, claim, damage, liability, or action; provided, however, that the indemnity agreement contained in this Section 5.4(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Party, which consent shall not be unreasonably withheld; provided, that in no event shall any indemnity under this Section 5.4(b) exceed the net proceeds from the offering received by such Party, except in the case of willful fraud by such Party.

        (c)   Promptly after receipt by an indemnified party under this Section 5.4 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 5.4, deliver to the indemnifying party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 5.4, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 5.4.

        (d)   If the indemnification provided for in this Section 5.4 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that resulted in

25

such loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, that in no event shall any contribution by a Party under this Section 5.4(d) exceed the net proceeds from the offering received by such Party, except in the case of willful fraud by such Party. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission.

        (e)   Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control with respect to the Company and the Parties.

        (f)    The obligations of the Company and Parties under this Section 5.4 shall survive the completion of any offering of Registrable Securities in a registration statement under this Article 5, and otherwise.

        5.5    Reports Under Securities Exchange Act of 1934.    With a view to making available to the Parties the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a Party to sell securities of the Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to:

        (a)   make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all times after 90 days after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public so long as the Company remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act;

        (b)   take such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act, as is necessary to enable the Parties, if requested pursuant to a Demand Registration, to utilize Form S-3 for the sale of their Registrable Securities, such action to be taken as soon as practicable after the end of the fiscal year in which the first registration statement filed by the Company for the offering of its securities to the general public is declared effective;

        (c)   file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

        (d)   furnish to any Party, so long as the Party owns any Registrable Securities, forthwith upon request (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after 90 days after the effective date of the first registration statement filed by the Company), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Party of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form.

        5.6    No Assignment of Demand Rights.    The rights to cause the Company to register Registrable Securities pursuant to Section 5.1 may not be assigned to third parties, including Permitted Transferees or Other Permitted Transferees.

26

        5.7    Limitations on Subsequent Registration Rights.    From and after the date of this Agreement, the Company shall not enter into any agreement with any holder or prospective holder of any securities of the Company which would grant such holder or prospective holder registration rights that are more favorable than the registration rights of the Parties.

        5.8    Selection of Underwriters.    The Board of Directors shall have the right to designate, in their sole and absolute discretion, the book-running managing Underwriter (the "Managing Underwriter") with respect to any Piggyback Registration or Demand Registration, or with respect to any other underwritten public offering of Registrable Securities or other securities of the Company and shall select such additional Underwriters to be used in connection with the offering, if any. The Board of Directors shall also have the right to select one or more co-managers for each such offering if the Board of Directors, in their sole discretion, shall determine that any be necessary, and the underwriting fees related to any such offering shall be allocated among any such co-managers in such proportions as the Board of Directors shall determine. In the event of any such offering, the Managing Underwriter, the Company and any Selling Stockholders will enter into an agreement appropriate to the circumstances, containing provisions for, among other things, compensation, indemnification, contribution, and representations and warranties, which are usual and customary for similar agreements entered into by the Managing Underwriter or other investment bankers of national standing acting in similar transactions.

        5.9    Underwriters' Cut-Backs.    The Company shall use all commercially reasonable efforts to cause the Managing Underwriter or any other managing Underwriter of a proposed underwritten offering (including an offering pursuant to a Demand Registration), as the case may be, to permit the Registrable Securities requested to be included in the registration statement for such offering under Section 5.2 or pursuant to other piggyback registration rights, if any, granted by the Company ("Piggyback Securities") to be included on the same terms and conditions as any similar securities included therein. Notwithstanding the foregoing, the Company shall not be required to include any Party's Piggyback Securities in such offering unless such Party accepts the terms of the underwriting agreement between the Company and the Managing Underwriter (or other managing Underwriter) or Underwriters, and otherwise complies with the provisions of Section 5.10 below. If the managing Underwriter or Underwriters of a proposed underwritten offering advise the Company in writing that in its or their opinion the total amount of securities, including Piggyback Securities, to be included in such offering is sufficiently large to potentially impede or interfere with the offering, then in such event the securities to be included in such offering shall be allocated first to the Company and then, to the extent that any additional securities can, in the opinion of such managing Underwriter or Underwriters, be sold without any such potential to impede or interfere with the offering, pro rata among the holders of Registrable Securities on the basis of the number of Registrable Securities requested to be included in such registration by each such holder. In addition, if the Managing Underwriter or Underwriters of a proposed underwritten offering advise the Company in writing that in its or their opinion the total amount of Piggyback Securities of the Management Holders to be included in such offering is, as a result of such Management Holders' positions as employees and officers of the Company, sufficiently large to potentially impede or interfere with the offering, then the amount of Piggyback Securities of such Management Holders to be included in such offering shall be reduced to an amount, and allocated in a manner, that, in the opinion of the Management Underwriter or Underwriters, will not so impede or interfere with the offering.

        5.10    Participation.    No Party may participate in any underwritten registration under this Article 5 unless such Party (i) agrees to sell such Party's Registrable Securities on the basis provided in any underwriting arrangements approved by the Person entitled hereunder to approve such arrangements, (ii) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Agreement and (iii) if requested by another Person participating in such underwritten registration,

27

agrees that all securities convertible or exchangeable into shares of Common Stock that are included in such underwritten registration shall be so converted or exchanged on or prior to the consummation thereof.

        5.11    Termination or Postponement by the Company.    Notwithstanding anything herein to the contrary except in the case of a Demand Registration, at any time prior to the effectiveness of any registration statement filed pursuant hereto, the Company shall have the right, in its sole and absolute discretion, not to proceed with the registration of any securities pursuant to such registration statement and, in the event that the Company exercises such right, no holder of Registrable Securities shall have any right to require the Company to register any such Registrable Securities except in accordance with the express provisions of this Agreement. In the case of a registration statement filed pursuant Section 5.1, at any time after the filing of such registration statement but prior to the effectiveness thereof, the Company shall have the right to postpone requesting that the SEC declare such registration statement effective:

        (a)   for the Contractual Lock-up Period relating to any underwritten public offering of Company securities or any private placement of Company securities made pursuant to Rule 144A; and

        (b)   for a period of up to 90 days if the Company is engaged in confidential negotiations, other confidential business activities or is otherwise in possession of material non-public information, disclosure of which would be required in such registration statement (but would not be required if such registration were not filed), and the Board of Directors of the Company determines in good faith that such disclosure would be materially detrimental to the Company and its stockholders;

provided, however, that the Company may not postpone requesting the effectiveness of a registration statement filed pursuant to Section 5.1 pursuant to this Section 5.11 more than twice every 12 months. The Company may only terminate a Demand Registration and withdraw a registration statement filed pursuant to Section 5.1 with the consent of the Party submitting the Demand Request relating thereto or upon receipt of a request for such withdrawal from the SEC.

        5.12    Lock-Up Letters.    Each holder of Registrable Securities (whether or not such Registrable Securities are included in a registration statement pursuant hereto) agrees to execute a written agreement not to effect any public sale or distribution of the issue being registered or of any securities convertible into or exchangeable or exercisable for such securities, including a sale pursuant to Rule 144 under the Securities Act, during the 14 days prior to, and during the 180-day period (or shorter period permitted by the Managing Underwriter, if applicable) beginning on, the effective date of a registration statement filed pursuant hereto except as part of such registration if and to the extent requested by the Company, in the case of a non-underwritten public offering, or if and to the extent requested by the Managing Underwriter or managing Underwriter or Underwriters, as the case may be, in the case of an underwritten public offering.

ARTICLE 6

REGISTRATION PROCEDURES

        6.1    Procedures.    

        (a)   The Company may require each Selling Holder to promptly furnish in writing to the Company such information regarding the distribution of the Registrable Securities as it may from time to time reasonably request and such other information as may be legally required in connection with any registration. Notwithstanding anything herein to the contrary, the Company

28

shall have the right to exclude from any offering the Registrable Securities of any Selling Holder who does not comply with the provisions of the immediately preceding sentence.

        (b)   Each Selling Holder agrees that, upon receipt of any notice from the Company of the happening of any event that makes any statement made in a registration statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect, or that requires the making of any changes in such registration statement, prospectus or documents so that, in the case of the registration statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, (A) such Selling Holder will forthwith discontinue disposition of Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Selling Holder's receipt of the copies of a supplemented or amended prospectus contemplated by the description in this sentence and (B) if so directed by the Company, such Selling Holder will deliver to the Company all copies, other than permanent file copies, then in such Selling Holder's possession, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. In the event the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective by the number of days during the period from and including the date of the giving of notice pursuant to this sentence to the date when the Company shall make available to the Selling Holders of Registrable Securities covered by such registration statement a prospectus supplemented or amended to conform with the requirements of this sentence.

        6.2    Registration Expenses.    In connection with any registration statement required to be filed hereunder, the Company shall pay the following registration expenses (the "Registration Expenses"): (i) all registration and filing fees (including, without limitation, with respect to filings to be made with the National Association of Securities Dealers, Inc.), (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, (iv) internal expenses of the Company (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), (v) the fees and expenses incurred in connection with the listing on a securities exchange or inter-dealer or similar quotation system of the Registrable Securities if the Company shall choose to list such Registrable Securities, (vi) fees and disbursements of counsel for the Company and customary fees and expenses for independent certified public accountants retained by the Company, (vii) the reasonable fees and expenses of one counsel for the Selling Holders (collectively), (viii) the fees and expenses of any special experts retained by the Company in connection with such registration, and (ix) fees and expenses of any "qualified independent underwriter" or other independent appraiser participating in an offering pursuant to Rule 2720(c) of the National Association of Securities Dealers, Inc. The Company shall not have any obligation to pay any underwriting fees, discounts, or commissions attributable to the sale of Registrable Securities or, except as provided by clause (ii) or (vii) above, any out-of-pocket expenses of the Selling Holders (or the agents who manage their accounts).

        6.3    Suspension Periods.    In the event the Company has filed a registration statement that has been declared effective by the SEC (including a registration statement on Form S-3 under Rule 415 that provides for periodic resales by a Selling Holder), the Company may provide notice to the Parties hereto that the Company has elected to require the suspension of the sale by the Parties of Registrable

29

Securities (including securities registered under any such effective registration statement) (a "Suspension Period"):

        (a)   for the Contractual Lock-up Period relating to any underwritten public offering of Company securities or any private placement of Company securities made pursuant to Rule 144A; and

        (b)   for a period of up to 90 days if the Company is engaged in confidential negotiations, other confidential business activities or is otherwise in possession of material non-public information, disclosure of which would be required in such registration statement (but would not be required if such registration were not filed), and the Board of Directors of the Company determines in good faith that such disclosure would be materially detrimental to the Company and its stockholders;

provided, however, that the Company may not cause a Suspension Period to occur more than twice every 12 months.

ARTICLE 7

TERMINATION

        7.1    Termination.    This Agreement shall terminate upon the earlier of (i) the dissolution, liquidation or winding-up of the Company or (ii) December 21, 2010. A Person who ceases to hold any shares of Common Stock or Common Stock Equivalents and who ceases to beneficially own any shares of Common Stock or Common Stock Equivalents shall cease to be a Party and shall have no further rights or obligations under this Agreement.

ARTICLE 8

MISCELLANEOUS

        8.1    FESCO Stockholder Agent.    Each of the FESCO Parties hereby irrevocably appoints First Reserve Corporation to be the representative (the "FESCO Stockholder Agent") of the FESCO Parties following the Closing Date in any matter arising out of this Agreement. For any matter in which The Company is entitled to rely on or otherwise deal with the FESCO Parties, The Company shall be entitled to communicate solely with the FESCO Stockholder Agent and shall be entitled to rely on any such communications as being the desire and will of the FESCO Parties. Notice delivered to the FESCO Stockholder Agent in accordance with Section 8.7 hereof shall be deemed notice to all of the FESCO Parties. For purposes of this Agreement, each FESCO Party, without any further action on its part, shall be deemed to have consented to the appointment of First Reserve Corporation as the attorney-in-fact for and on behalf of each such FESCO Party, and the taking by the FESCO Stockholder Agent of any and all actions and the making of any decisions required or permitted to be taken by him under this Agreement. Accordingly, the FESCO Stockholder Agent has unlimited authority and power to act on behalf of each FESCO Party with respect to this Agreement and the disposition, settlement or other handling of all indemnification claims, amendments, waivers, and other rights or obligations arising from and taken pursuant to this Agreement. The FESCO Parties will be bound by all actions taken by the FESCO Stockholder Agent in connection with this Agreement, and the Company shall be entitled to rely on any action or decision of the FESCO Stockholder Agent. The FESCO Stockholder Agent will not incur any liability with respect to any action taken or suffered by it in reliance upon any notice, direction, instruction, consent, statement or other document believed by it to be genuine and to have been signed by the proper person (and shall have no responsibility to determine the authenticity thereof), nor for any other action or inaction, except its own willful misconduct, bad faith or gross negligence. In all questions arising under this Agreement, the FESCO

30

Stockholder Agent may rely on the advice of counsel, and the FESCO Stockholder Agent will not be liable to the FESCO Parties for anything done, omitted or suffered in good faith by the FESCO Stockholder Agent based on such advice. Notwithstanding the foregoing, none of the other Parties hereto will incur any liability to any FESCO Party with respect to any action taken or suffered by it in reliance upon any notice, direction, instruction, consent, statement, in each case whether written or oral, or other document provided by the FESCO Stockholder Agent, and no action or inaction on the part to FESCO Stockholder Agent shall relieve any FESCO Party of its obligations hereunder to the other Parties hereto.

        8.2    Amendment.    Any provision of this Agreement may be altered, supplemented, amended or waived only by the written consent of each of (i) the Company (ii) the DLJ Parties and (iii) a majority of the outstanding shares of Common Stock owned by all Holders (including the DLJ Parties), except that (i) any Party may unilaterally waive any of its rights hereunder so long as such waiver is in writing and (ii) any provision of this Agreement may be altered, supplemented, amended or waived without the consent of the Management Holders unless such alteration, supplementation or amendment materially and adversely affects the rights set forth herein of the Management Holders differently from the manner in which such alteration, supplementation or amendment affects the rights hereunder of the other Parties. Notwithstanding the foregoing, no provision of this Agreement may be altered, supplemented, or waived in a manner adversely affecting the rights of any FESCO Party set forth herein, without the consent of such Party.

        8.3    Specific Performance.    The Parties and the Company recognize that the obligations imposed on them in this Agreement are special, unique, and of extraordinary character, and that in the event of breach by any party, damages will be an insufficient remedy; consequently, it is agreed that the Parties and the Company may have specific performance and injunctive relief (in addition to damages) as a remedy for the enforcement hereof, without proving damages.

        8.4    Assignment.    Except as otherwise expressly provided herein, the terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties and the Company. No such assignment shall relieve the assignor from any liability hereunder. Any purported assignment made in violation of this Section 8.4 shall be void and of no force and effect.

        8.5    Stock Subject to this Agreement.    All shares of Common Stock and Common Stock Equivalents now owned or hereafter acquired by any of the Parties shall be subject to, and entitled to the benefits of, the terms of this Agreement. The Company shall cause any transferee or recipient of an original issuance of any shares of Common Stock or Common Stock Equivalents, other than such transferee or recipient in a Qualified IPO or any other public offering, to become a Party and be bound as if an original Party hereto.

        8.6    Legends.    

        (a)   Each certificate for shares of Common Stock and Common Stock Equivalents held by any Person a party hereto shall bear (i) a legend to the effect that such shares have not been registered under the Securities Act or any state securities laws and (ii) a legend in substantially the following form:

THIS SECURITY IS SUBJECT TO CERTAIN VOTING AGREEMENTS, RESTRICTIONS ON TRANSFER, AND OTHER TERMS AND CONDITIONS SET FORTH IN THE SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, DATED AS OF APRIL 2, 2004, AS THE SAME MAY BE AMENDED FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS PRINCIPAL EXECUTIVE OFFICES.

31

        (b)   The restrictions on transfer of shares of Common Stock set forth in such legends (each, a "Restriction") shall cease and terminate as to any particular share of Common Stock when, in the opinion of counsel to a Holder, which opinion and counsel are reasonably satisfactory to the Company and which opinion shall be delivered to the Company in writing, either or both of such Restrictions are no longer required. Whenever any such Restriction shall cease and terminate as to any share of Common Stock, the holder thereof shall be entitled to receive from the Company, without expense to such older, new certificate(s) not bearing a legend or legends, as the case may be, stating such Restriction(s).

        8.7    Notices.    Any and all notices, designations, consents, offers, acceptances or other communications provided for herein (each a "Notice") shall be given in writing by (i) reputable overnight courier, (ii) registered letter or (iii) telecopy with receipt confirmed, which shall be addressed or sent to the respective addresses as follows (or such other address as the Company or any Party may specify to the Company and all other Parties by Notice):

The Company:

Basic Energy Services, Inc.
400 W. Illinois, Suite 800
Midland, TX 79701
Phone: (432) 620-5500
Fax: (318) 570-0437

with a copy to:

Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas 77002
Attention: David C. Buck
Phone: (713) 220-4200
Fax: (713) 220-4285

DLJ Parties:

DLJMB Funding III, Inc.
c/o Credit Suisse First Boston
Eleven Madison Avenue, 16^th Floor
New York, New York 10010
Attn: Ben Silbert
Fax: (917) 326-8076

DLJMB Funding III, Inc.
c/o Global Energy Partners
1000 Louisiana, Suite 4600
Houston, Texas 77002
Attn: Steve Webster
Fax: (713) 890-1500

with a copy to:

Steven D. Rubin, Esq.
Weil, Gotshal & Manges LLP
700 Louisiana, Suite 1600
Houston, Texas 77002
(713) 546-5000
Fax: (713) 224-9511

32

First Reserve Fund VIII, LP:

First Reserve Fund VIII, L.P.
One Lafayette Place
Greenwich, Connecticut 06830
Attention: Thomas R. Denison
Phone: (203) 661-6601
Facsimile: (203) 661-6729

with a copy to:

Gibson, Dunn & Crutcher LLP
1801 California, Suite 4100
Denver, Colorado 80202
Attention: Steven K. Talley
Phone: (303) 298-5700
Facsimile: (303) 296-5310

Southwest Royalties Holdings, Inc.:

Southwest Royalties Holdings, Inc.
406 North Big Spring
Midland, Texas 79701
Attention: President

Southwest Partners II, L.P.:

Southwest Partners II, L.P.
406 North Big Spring
Midland, Texas 79701
Attention: General Partner

Southwest Partners III, L.P.:

Southwest Partners III, L.P.
406 North Big Spring
Midland, Texas 79701
Attention: General Partner

All Other Stockholders

At the address set forth immediately below their respective signatures on the signature pages hereto.

All Notices shall be deemed effective and received (i) if given by telecopy, when such telecopy is transmitted to the telecopy number specified above and receipt thereof is confirmed; (ii) if given by overnight courier, on the business day immediately following the day on which such Notice is delivered to a reputable overnight courier service; or (iii) if given in person or by registered letter, when such Notice is delivered at the address specified above. No Party shall be entitled to receive a Notice hereunder (or a copy of a Notice delivered to the Company) if, at the time such Notice is to be sent, such Party (including its Affiliates and the employees of such Party and its Affiliates) no longer owns any shares of Common Stock.

        8.8    Confidentiality.    

        (a)   The Parties shall, and shall cause their respective officers, directors, employees and agents and the respective subsidiaries and Affiliates of the Parties and their respective officers, directors, employees and agents to, hold confidential and not use in any manner detrimental to the Company

33

or any of its Subsidiaries all information they may have or obtain concerning the Company or any of its Subsidiaries and their respective assets, business, operations or prospects ("Confidential Information"); provided, however, that the foregoing shall not apply to (i) information that is or becomes generally available to the public other than as a result of a disclosure by a Party or any of its employees, agents, accountants, legal counsel or other representatives, (ii) information that is or becomes available to a Party or any of its employees, agents, accountants, legal counsel or other representatives on a nonconfidential basis prior to its disclosure by the Company or its employees, agents, accountants, legal counsel or other representatives, and (iii) information that is required to be disclosed by a Party or any of its employees, agents, accountants, legal counsel or other representatives as a result of any applicable law, rule or regulation of any governmental authority or stock exchange. If any Party desires to sell shares of Common Stock and in connection with such potential sale desires to disclose information regarding the Company to the potential purchaser in such sale which it is not permitted to disclose pursuant to the preceding sentence, such Party shall notify the Company of such Party's desire to disclose such information and shall identify the potential purchaser in such notification. The Company may require any such potential purchaser of shares of Common Stock to enter into a confidentiality agreement with respect to Confidential information on customary terms used in confidentiality agreements in connection with corporate acquisitions.

        (b)   Notwithstanding anything to the contrary set forth herein or in any other agreement to which the Parties hereto are Parties or by which they are bound, the obligations of confidentiality contained herein and therein (the "Confidentiality Obligations"), as they relate to the transactions contemplated by the Merger Agreement, dated as of January 7, 2003 (the "Merger Agreement"), by and among Basic, the Company and BES Merger Sub, Inc., a Delaware corporation, and the Agreement and Plan of Conversion, dated as of January 7, 2003 (the "Conversion Agreement"), by and among Basic, the Company, Basic Energy Services GP, LLC and Basic Energy Services LP, LLC, shall not apply to the "structure or tax aspects" (as such phrase is used in Section 1.6011-4T(a)(3) (or any successor provision) of the Treasury Regulations (the "Confidentiality Regulations") promulgated under Section 6011 of the Internal Revenue Code of 1986, as amended) of the transactions contemplated by the Merger Agreement and the Conversion Agreement; provided, however, that the Confidentiality Regulations nevertheless shall apply to any and all items of information not required to be freely disclosable in order for the transactions contemplated by the Merger Agreement and the Conversion Agreement not to be treated as "offered under conditions of confidentiality" within the meaning of the Confidentiality Regulations.

        8.9    Counterparts.    This Agreement may be executed in two or more counterparts and each counterpart shall be deemed to be an original and all such counterparts together shall constitute one and the same agreement of the parties hereto.

        8.10    Section Headings.    Headings contained in this Agreement are inserted only as a matter of convenience and in no way define, limit or extend the scope or intent of this Agreement or any provisions hereof

        8.11    Choice of Law.    This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to choice of law rules (other than New York General Obligations Law Section 5-1401), except to the extent, if any, that mandatory choice of law rules in effect in the State of New York require that any provision hereof be governed by and construed in accordance with the laws of the State of Delaware.

        8.12    Entire Agreement.    This Agreement contains the entire understanding of the parties hereto respecting the subject matter hereof and supersedes all prior agreements, discussions and understandings with respect thereto.

34

        8.13    Cumulative Rights.    The rights of the Parties and the Company under this Agreement are cumulative and in addition to all similar and other rights of the parties under other agreements.

        8.14    Severability.    If any term, provision, covenant, or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated.

        8.15    Submission to Jurisdiction.    

        (a)   Any legal action or proceeding with respect to this Agreement, the shares of Common Stock or any document related thereto shall be brought solely in the courts of the State of New York or of the United States of America for the Southern District of New York, and, by execution and delivery of this Agreement, the Company and each Party hereby accepts for itself and in respect of its property, generally and unconditionally, the jurisdiction of the aforesaid courts. The parties hereto hereby irrevocably waive any objection, including, without limitation, any objection to the laying of venue or based on the grounds of forum non conveniens, which any of them may now or hereafter have to the bringing of any such action or proceeding in such respective jurisdictions.

        (b)   The Company and each Party irrevocably consent to the service of process of any of the aforesaid courts in any such action or proceeding by the mailing of copies thereof by registered or certified mail, postage prepaid, to the Company or such Party, respectively, at its address provided herein.

        (c)   Nothing contained in this Section 8.15 shall affect the right of any party hereto to serve process in any other manner permitted by law.

        8.16    Waiver of Jury Trial.    Each of the Parties hereto waives any right it may have to trial by jury in respect of any litigation based on, or arising out of, under or in connection with this Agreement, any shares of Common Stock, Common Stock Equivalents or any course of conduct, course of dealing, verbal or written statement or action of any Party hereto.

SIGNATURES CONTAINED ON SUCCEEDING PAGES

35

        IN WITNESS WHEREOF, the Parties hereto have executed this Stockholders' Agreement as of the date first above written, and shall become effective as of (and subject to the occurrence of) the Effective Date.

Basic Energy Services, Inc.
By:	/s/  KENNETH V. HUSEMAN
Name:	Kenneth V. Huseman
Title:	President
DLJMB FUNDING III, INC.*
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
DLJ ESC II, L.P.*
By:	DLJ LBO PLANS MANAGEMENT CORPORATION, its General Partner
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
DLJ OFFSHORE PARTNERS III, C.V.*
By:	DLJ Merchant Banking III, Inc., Managing General Partner
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
* DLJ Party. Notices shall be given to the New York address set forth in Section 8.7.

36

DLJMB PARTNERS III GMBH & CO. KG*
By:	DLJ Merchant Banking III, Inc., Manager of
	DLJMB III, LLC, General Partner of
	DLJ Merchant Banking III, L.P., Managing Limited Partner
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
DLJ MERCHANT BANKING PARTNERS III, L.P.*
By:	DLJ Merchant Banking III, Inc., Managing General Partner
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
DLJ MERCHANT BANKING III, INC., as Advisory General Partner on behalf of DLJ Offshore Partners III, C.V.*
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
* DLJ Party. Notices shall be given to the New York address set forth in Section 8.7.

37

DLJ MERCHANT BANKING III, INC., as Advisory General Partner on behalf of DLJ Offshore Partners III-1, C.V. and as attorney-in-fact for DLJ Merchant Banking III, L.P., as Associate General Partner of DLJ Offshore Partners III-1, C.V.*
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
DLJ MERCHANT BANKING III, INC., as Advisory General Partner on behalf of DLJ Offshore Partners III-2, C.V. and as attorney-in-fact for DLJ Merchant Banking III, L.P., as Associate General Partner of DLJ Offshore Partners III-2, C.V.*
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
DLJ OFFSHORE PARTNERS III-1, C.V.*
By:	DLJ Merchant Banking III, Inc., Managing General Partner
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
DLJ OFFSHORE PARTNERS III-2, C.V.*
By:	DLJ Merchant Banking III, Inc., Managing General Partner
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
* DLJ Party. Notices shall be given to the New York address set forth in Section 8.7.

38

MILLENIUM PARTNERS II, L.P.*
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
MBP III PLAN INVESTORS, L.P.*
By:	DLJ LBO Plans Management Corporation II, as General Partner
By:	/s/  MICHAEL ISIKOW
Name:	Michael Isikow
Title:	Attorney-in-Fact
SOUTHWEST ROYALTIES HOLDINGS, INC.
By:	/s/  H. H. WOMMACK III
Name:	H. H. Wommack III
Title:	President
SOUTHWEST PARTNERS II, L.P.
By:	SOUTHWEST ROYALTIES HOLDINGS, INC., its General Partner
By:	/s/  H. H. WOMMACK III
Name:	H. H. Wommack III
Title:	President
* DLJ Party. Notices shall be given to the New York address set forth in Section 8.7.

39

SOUTHWEST PARTNERS III, L.P.
By:	SOUTHWEST ROYALTIES HOLDINGS, INC., its General Partner
By:	/s/  H. H. WOMMACK III
Name:	H. H. Wommack III
Title:	President
FIRST RESERVE FUND VIII, LP
By:
Name:
Title:
PETER O. KANE
Address:
MICHAEL D. SCHMID
Address:
JAY R. ANDERSON
Address:
	P.O. Box 4448 116 North Piney Cottonwood Lane Marbleton, WY 83113
WILLIAM L. HUBBELL
/s/  WILLIAM L. HUBBELL
Address:
	4505 S. Yosemite St., Unit 344 Denver, CO 80237

40

DONALD C. BUSHA REVOCABLE TRUST
By:	/s/  DONALD C. BUSHA
Name:	Donald C. Busha
Title:	Trustee
Address:
	2735 64th Avenue Greeley, CO 80634
JAY D. HACKLIN
Address:
RANDY SPAUR
/s/  RANDY SPAUR
Address:
JOEY D. FIELDS
/s/  JOEY FIELDS
Address:
	400 W. Illinois, Suite 800 Midland, TX 79701
DUB W. HARRISON
/s/  DUB W. HARRISON
Address:
	400 W. Illinois, Suite 800 Midland, TX 79701

41

KENNETH V. HUSEMAN
/s/  KENNETH V. HUSEMAN
Address:
	400 W. Illinois, Suite 800 Midland, TX 79701
JAMES J. CARTER
/s/  JAMES J. CARTER
Address:
	400 W. Illinois, Suite 800 Midland, TX 79701
CHARLES W. SWIFT
/s/  CHARLES W. SWIFT
Address:
	400 W. Illinois, Suite 800 Midland, TX 79701

42

QuickLinks

SECOND AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
RECITALS
ARTICLE 1 DEFINITIONS
ARTICLE 2 REPRESENTATIONS AND WARRANTIES
ARTICLE 3 MANAGEMENT OF THE COMPANY; ACTIVITIES OF THE PARTIES
ARTICLE 4 TRANSFER OF SECURITIES
ARTICLE 5 REGISTRATION RIGHTS; PIGGYBACK REGISTRATION
ARTICLE 6 REGISTRATION PROCEDURES
ARTICLE 7 TERMINATION
ARTICLE 8 MISCELLANEOUS

EX-10.8

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.8

STOCK PURCHASE AGREEMENT

Among

The Sellers Named Herein

FESCO Holdings, Inc.,

as the Company

and

BES Holding Co., a Delaware corporation,

as Buyer

For the Purchase of All of the Outstanding Capital Stock of the Company

September 18, 2003

TABLE OF CONTENTS

ARTICLE 1 PURCHASE AND SALE		1
1.1	Agreement to Sell and to Purchase	1
1.2	Purchase Price	2
1.3	Deliveries at Closing	2
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS		3
2.1	Organizational Matters; Company Subsidiaries	3
2.2	Capitalization; Title to Shares	3
2.3	Validity of Agreement; Authorization	4
2.4	No Conflict or Violation	4
2.5	Consents and Approvals	4
2.6	Financial Statements	4
2.7	Absence of Undisclosed Liabilities	4
2.8	Absence of Certain Changes or Events	5
2.9	Title to and Condition of Properties	5
2.10	Intellectual Property	5
2.11	Licenses, Permits and Governmental Approvals	6
2.12	Compliance with Law	7
2.13	Material Contracts	7
2.14	Labor Matters	8
2.15	ERISA	8
2.16	Taxes	11
2.17	Litigation	12
2.18	Environmental Matters	13
2.19	Insurance	13
2.20	Bank Accounts	13
2.21	Customers and Suppliers	14
2.22	Seller Representations	14
2.23	Finder's Fees	15
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER		15
3.1	Organizational Matters; Buyer Subsidiaries	15
3.2	Capitalization; Title to Shares	16
3.3	Validity of Agreement; Authorization	16
3.4	No Conflict or Violation	16
3.5	Consents and Approvals	17
3.6	Financial Statements	17
3.7	Absence of Undisclosed Liabilities	17
3.8	Absence of Certain Changes	17
3.9	Title to and Condition of Properties	17
3.10	Intellectual Property	18
3.11	Licenses, Permits and Governmental Approvals	18
3.12	Compliance with Law	18
3.13	Material Contracts	18
3.14	Labor Matters	18
3.15	ERISA	19
3.16	Taxes	21
3.17	Litigation	21
3.18	Environmental Matters	22

i

3.19	Insurance	22
3.20	Customers and Suppliers	22
3.21	Finder's Fees	22
ARTICLE 4 ADDITIONAL AGREEMENTS		23
4.1	Access to Information; Confidentiality	23
4.2	Conduct of Business	24
4.3	Negotiation with Others	26
4.4	Information; Supplements to Schedules	26
4.5	Delivery of Documents and Other Materials	27
4.6	Further Assurances	27
4.7	Covenant Not to Compete With the Business	28
4.8	Non-Solicitation of Employees	28
4.9	Release	29
4.10	Tax Matters	29
4.11	Continuation of Business by Buyer	29
4.12	No Public Announcement	30
4.13	Termination of Certain Agreements	30
4.14	Expenses	30
4.15	Management of Arbitration Proceeding	30
ARTICLE 5 BUYER'S CONDITIONS		30
5.1	Representations, Warranties and Covenants	31
5.2	Good Standing	31
5.3	Closing Deliveries	31
5.4	Subscription Agreements	31
5.5	No Litigation	31
5.6	No Company Material Adverse Event	31
5.7	Licenses, Consents and Approvals	31
5.8	Consents of Third Persons	31
5.9	Legal Opinion	32
5.10	Payment of Obligations	32
5.11	Resolutions	32
5.12	Director Resignations	32
5.13	Employment Arrangements	32
5.14	Audited 2002 Financial Statements	32
ARTICLE 6 SELLERS' CONDITIONS		32
6.1	Representations, Warranties and Covenants	32
6.2	Good Standing	32
6.3	Closing Deliveries	32
6.4	Licenses, Consents and Approvals	33
6.5	No Litigation	33
6.6	No Buyer Material Adverse Effect	33
6.7	Resolutions	33
6.8	Legal Opinion	33
ARTICLE 7 INDEMNIFICATION		33
7.1	Indemnification by the Sellers	33
7.2	Indemnification by Buyer	34
7.3	Limits on Indemnification; Payment	34
7.4	Procedure	36
7.5	Failure to Pay Indemnification	37

ii

7.6	Express Negligence	37
7.7	Tax Treatment of Indemnity Payments	37
ARTICLE 8 NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS, REPRESENTATIONS, WARRANTIES AND AGREEMENTS		37
ARTICLE 9 TERMINATION		38
9.1	Termination	38
9.2	Liability Upon Termination	38
9.3	Notice of Termination	39
ARTICLE 10 DEFINITIONS OF CERTAIN TERMS		39
ARTICLE 11 MISCELLANEOUS		43
11.1	Stockholder Agent	43
11.2	Notices	43
11.3	Specific Performance	44
11.4	Assignment and Successors	44
11.5	Entire Agreement; Amendment	44
11.6	Governing Law	45
11.7	Waiver	45
11.8	Severability	45
11.9	No Third Party Beneficiaries	45
11.10	Arbitration	45
11.11	Counterparts	47
11.12	Headings	47
11.13	Negotiated Transaction	47

iii

DISCLOSURE SCHEDULES

Company Disclosure Schedule

Schedule 2.1(a)(ii)—Company Foreign Qualifications

Schedule 2.1(b)—Company Subsidiaries

Schedule 2.1(c)(i)—Company Subsidiary Incorporation and Organization

Schedule 2.1(c)(ii)—Company Subsidiary Foreign Qualifications

Schedule 2.2—Company Certificate of Incorporation and Bylaws

Schedule 2.4—Conflicts or Violations

Schedule 2.5—Consents and Approvals

Schedule 2.6—Company Financial Statements

Schedule 2.7—Undisclosed Liabilities

Schedule 2.8—Certain Changes or Events

Schedule 2.9(a)—Owned Real Property

Schedule 2.9(b)—Leased Real Property

Schedule 2.9(d)—Sufficiency of Property

Schedule 2.10(a)—Intellectual Property

Schedule 2.10(b)—Intellectual Property Agreements

Schedule 2.10(c)—Infringements

Schedule 2.10(d)—Corporate Names

Schedule 2.11—Licenses, Permits and Approvals

Schedule 2.13(a)—Material Contracts

Schedule 2.13(b)—Validity and Breaches

Schedule 2.13(c)—Enforceability

Schedule 2.14(d)—Labor Matters

Schedule 2.14(g)—Labor Complaints

Schedule 2.15(b)—ERISA

Schedule 2.16(c)—Taxes

Schedule 2.17—Litigation

Schedule 2.18—Environmental Matters

Schedule 2.19(a)—Insurance Policies

Schedule 2.19(b)—Insurance Claims

Schedule 2.20—Bank Accounts

Schedule 2.23—Finder's Fees

Schedule 4.13—Certain Agreements

Schedule 5.10—Indebtedness or Obligations

Schedule 5.13—Key Officers

Buyer Disclosure Schedule

Schedule 3.1(b)—Buyer Subsidiaries

Schedule 3.1(c)—Buyer Subsidiary Incorporation and Organization

Schedule 3.2—Options, Warrants and Convertible Securities

Schedule 3.5—Consents and Approvals

Schedule 3.6—Buyer Financial Statements

Schedule 3.7—Undisclosed Liabilities

Section 3.8—Certain Changes of Events

Schedule 3.9(a)—Owned Real Property

Schedule 3.9(b)—Leased Real Property

Schedule 3.10—Intellectual Property

Schedule 3.11—Licenses, Permits and Approvals

Schedule 3.12—Compliance With Law

Schedule 3.13—Material Contracts

Schedule 3.14(d)—Labor Matters

Schedule 3.14(g)—Labor Complaints

Schedule 3.16(c)—Taxes

Schedule 3.17—Litigation

Schedule 3.18—Environmental Matters

Schedule 3.19—Insurance

Schedule 5.13—Key Officers

iv

EXHIBITS

Exhibit A	— Sellers and Purchase Price
	— Sellers
	— Remaining Stockholders
Exhibit B	— Form of Subscription Agreement
Exhibit C	— Form of Amended and Restated Stockholders' Agreement of Buyer
Exhibit D	— Form of Escrow Agreement
Exhibit E	— Form of Opinion of Counsel for Sellers
Exhibit F	— Form of Opinion of Counsel for Buyer

v

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made and entered into as of September 18, 2003, by and among FESCO Holdings, Inc., a Delaware corporation (the "Company"), each of the "Sellers" named on Exhibit A hereto (each a "Seller" and collectively the "Sellers") and BES Holding Co., a Delaware corporation ("Buyer").

R E C I T A L S:

WHEREAS, the Company is the parent company of First Energy Service Company, a Delaware corporation ("FESCO"), based in Littleton, Colorado principally engaged in the oil-field services business;

WHEREAS, the Sellers own in the aggregate 376,846 shares (the "Initial Shares") of common stock, par value $0.001 per share, of the Company ("Company Common Stock"), which represent approximately 93% of the outstanding capital stock of the Company;

WHEREAS, the "Remaining Stockholders" named on Exhibit A hereto (the "Remaining Stockholders") own an aggregate of 29,761 shares of Company Common Stock (the "Remaining Shares," and with the Initial Shares, the "Shares");

WHEREAS, each of the Sellers desires to sell the Initial Shares to Buyer, and Buyer desires to purchase the same, all upon the terms and subject to the conditions set forth herein;

WHEREAS, immediately upon execution of this Agreement, First Reserve Fund VIII, L.P., a Delaware limited partnership (the "First Reserve Fund"), shall deliver a Compelled Transfer Notice (as defined in the First Energy Services Company Stockholder Agreement, dated June 16, 2000 (the "Seller Agreement"), by and among FESCO (as predecessor-in-interest to the Company), the Sellers and the Remaining Stockholders) to each of the Remaining Stockholders compelling such Remaining Stockholders to sell their respective Remaining Shares to Buyer for the same consideration and upon the same terms as the Sellers as provided herein;

WHEREAS, in accordance with the Seller Agreement, each of the Remaining Stockholders shall be required to execute and deliver at or prior to Closing a Subscription Agreement in the form attached as Exhibit B hereto, pursuant to which the Remaining Stockholders shall sell, and Buyer shall purchase, all of the Remaining Shares; and

WHEREAS, for Federal income tax purposes, the transaction contemplated by this Agreement is intended to qualify as a tax-free reorganization pursuant to Section 368 of the Internal Revenue Code of 1986, as amended.

NOW, THEREFORE, in consideration of the premises, the respective representations, warranties and covenants and agreements contained herein, and other good and valuable consideration, the legal sufficiency of which are herby acknowledged, the parties hereto agree as follows:

ARTICLE 1
PURCHASE AND SALE

        1.1Agreement to Sell and to Purchase.

        (a)   On the Closing Date, upon the terms and subject to the conditions contained herein, each Seller shall transfer, sell, assign and convey to Buyer, and Buyer shall purchase from each Seller, the Initial Shares, free and clear of any pledges, restrictions on transfer, proxies and noting or other agreements, liens, claims, charges, mortgages, security interests or other legal or equitable encumbrances, limitation or restrictions of any nature whatsoever ("Encumbrances").

        (b)   Subject to the conditions set forth in this Agreement, the closing of such sale and purchase (the "Closing") shall take place at the offices of Gibson, Dunn & Crutcher LLP located at 1801 California, Suite 4100, Denver, Colorado 80202 on the third Business Day following the satisfaction of

the conditions in Articles 5 and 6 hereto (other than those conditions that by their nature are to be fulfilled at Closing) or at such other time, date and place as the parties hereto shall mutually agree upon in writing (the "Closing Date"). Failure to consummate the transactions contemplated hereby on such date shall not result in a termination of this Agreement or relieve any party hereto of any obligation hereunder. Title to, ownership of and control over the Initial Shares shall pass to Buyer at the Closing.

        1.2Purchase Price.    In consideration of the transfer to Buyer of the Initial Shares, Buyer shall pay to the Sellers at Closing an aggregate of 676,569 shares of common stock of Buyer, par value $0.01 per share ("Buyer Common Stock"), such shares to be allocated among the Sellers as set forth on Exhibit A hereto (the "Purchase Price"); provided, however, that 169,143 of such shares of Buyer Common Stock (the "Escrowed Shares"), which shall also be allocated among the Sellers as set forth on Exhibit A hereto, shall be held in escrow pursuant to the terms of the Escrow Agreement, a form of which is attached as Exhibit D hereto.

        1.3Deliveries at Closing.    At Closing:

        (a)   Each Seller shall make the following deliveries to Buyer:

        (i)    a duly executed certificate, countersigned by the appropriate officers of the Company, representing all of the shares of Company Common Stock owned by such Seller in the name of Buyer, (ii) a copy of a letter from such Seller, addressed to and acknowledged by the Company, as registrar with respect to the Company Common Stock, instructing such registrar to cancel the certificate(s) representing the Initial Shares and to reissue a new certificate representing the same number of shares of Company Common Stock in the name of Buyer and (iii) a copy of the cancelled certificates(s) representing the applicable Initial Shares; and

        (ii)   a duly executed Amended and Restated Stockholders' Agreement of Buyer, in the form attached as Exhibit C hereto.

        (b)   Buyer shall deliver:

        (i)    to each Seller, a duly executed certificate, countersigned by the appropriate officer(s) of Buyer, representing the number of shares of Buyer Common Stock set forth opposite the name of such Seller on Exhibit A hereto, which in the aggregate shall be equal to the Purchase Price less the Escrowed Shares;

        (ii)   to each Remaining Stockholder (upon execution and delivery by such Remaining Stockholder of a Subscription Agreement (in the form attached as Exhibit B hereto), the Escrow Agreement (in the form attached as Exhibit D hereto) and the Amended and Restated Stockholder's Agreement of Buyer (in the form attached as Exhibit C hereto)), a duly executed certificate, countersigned by the appropriate officer(s) of Buyer, representing the number of shares of Buyer Common Stock set forth opposite the name of such Remaining Stockholder on Exhibit A hereto, which in the aggregate shall be equal to 53,431 shares of Buyer Common Stock less 13,356 of such shares that will be held in escrow pursuant to the terms of the Escrow Agreement, a form of which is attached as Exhibit D hereto;

        (iii)  to the Escrow Agent, duly executed certificates countersigned by the appropriate officer(s) of Buyer, (i) the Escrowed Shares, issued in each Seller's name and (ii) the 13,356 shares of Buyer Common Stock, issued in each Remaining Stockholder's name, that will also be held in escrow pursuant to the terms of the Escrow Agreement; and

        (iv)  a duly executed Amended and Restated Stockholders' Agreement of Buyer, in the form attached as Exhibit C hereto.

2

ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

        The Sellers, jointly and severally (except for Section 2.22 hereof, which representations are made severally and not jointly) hereby represent and warrant to Buyer as follows:

        2.1Organizational Matters; Company Subsidiaries.

        (a)   The Company: (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction set forth on Schedule 2.1(a)(ii) hereto and there is no other jurisdiction where the Company's ownership, operation or lease of property or the conduct of its business would require such qualification, except where the failure to be so qualified would not result in exposure to the Company of losses, damages or liabilities in excess of $50,000 in the aggregate, taking into account any such failures by the Company or any of the Company Subsidiaries; and (iii) has the requisite power and authority and the legal right to own and operate its properties, to lease the property it operates under lease and to conduct its business as now, heretofore and proposed to be conducted.

        (b)   Each direct or indirect Subsidiary of the Company is set forth on Schedule 2.1(b) hereto (each, a "Company Subsidiary"). Except as set forth thereon, neither the Company nor any Company Subsidiary: (i) is engaged in any joint venture, partnership or similar arrangement with any other Person; (ii) is an Affiliate of any other Person; or (iii) otherwise holds any equity interest any other Person.

        (c)   Each Company Subsidiary: (i) is a corporation, duly incorporated, validly existing and in good standing under the laws of its respective jurisdiction of incorporation, as set forth on Schedule 2.1(c)(i) hereto; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction listed on Schedule 2.1(c)(ii) hereto and there is no other jurisdiction where any Company Subsidiary's ownership, operation or lease of property or the conduct of its business would require such qualification, except where the failure to be so qualified would not result in exposure to losses, damages or liabilities in excess of $50,000 in the aggregate, taking into account any such failures by the Company or any of the Company Subsidiaries; and (iii) has the requisite power and authority and the legal right to own and operate its properties, to lease the property it operates under lease and to conduct its business as now, heretofore and proposed to be conducted.

        2.2Capitalization; Title to Shares.    Attached as Schedule 2.2 hereto are true and correct copies of the Certificate of Incorporation and Bylaws of the Company as amended and in full force and effect. The authorized capital of the Company consists of 500,000 shares of Company Common Stock, par value $0.001 per share, of which 406,607 shares are issued and outstanding and issued of record to the Sellers as set forth on Exhibit A hereto, and 500,000 shares of preferred stock, par value $.001 per share, of which no shares are issued and outstanding. The issued and outstanding shares of Company Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive, preferential purchase or other similar rights of any Person. The Company has outstanding options to acquire 8,990 shares of Company Common Stock, of which 2,138.5 have vested as of the date hereof. Other than as set forth in this Section 2.2 hereof, the Company has no outstanding options, warrants, convertible securities, calls, rights, commitments, preemptive rights, agreements, arrangements or understandings of any character obligating the Company (i) to issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of the Company or any securities or obligations convertible into or exchangeable for shares of capital stock of the Company; or (ii) to grant, extend or enter into any such option, warrant, convertible security, call, right, commitment, preemptive right, agreement, arrangement or understanding.

3

        2.3Validity of Agreement; Authorization.    The Company has all requisite power and authority to enter into this Agreement, to consummate the transactions contemplated hereby and to perform its obligations under this Agreement. The execution and delivery of this Agreement and the performance of the Company's obligations hereunder have been duly and validly authorized by the board of directors of the Company and no other proceedings on the part, or on behalf, of the Company are necessary to effect such execution, delivery and performance. This Agreement has been duly authorized, executed and delivered by the Company and is a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally or by general equitable principles).

        2.4No Conflict or Violation.    The execution, delivery and performance of this Agreement by the Sellers and the consummation of the transactions contemplated hereby do not and will not: (a) violate any provision of the charter, bylaws or other organizational documents of the Company or any of the Company Subsidiaries; (b) violate any applicable Law or any judgment, order or decree of any Governmental Entity applicable to the Sellers, the Company, the Company Subsidiaries or any of the respective properties or assets of the Company or the Company Subsidiaries; (c) subject to the consents required as set forth on Schedule 2.4 hereto, violate or result in a breach of or constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty or premium to arise or accrue under any contract, lease, credit or loan agreement, mortgage, security agreement, indenture or other agreement or instrument to which the Company or any of the Company Subsidiaries is a party or by which any of them is bound or to which any of the respective properties or assets of the Company or the Company Subsidiaries is subject; (d) result in the creation of imposition of any Encumbrance upon any of the properties or assets of the Company or any of the Company Subsidiaries; or (e) result in the cancellation, modification, revocation or suspension of any License (as defined in Section 2.11 hereof) of the Company or any of the Company Subsidiaries, except in the case of clauses (b), (c), (d) and (e) above that would not result in liabilities that could reasonably be expected to exceed $75,000 in the aggregate or otherwise have a Company Material Adverse Effect.

        2.5Consents and Approvals.    Except as disclosed on Schedule 2.5 hereto, no consent, approval, waiver or authorization of, or filing, registration or qualification with, any Governmental Entity or any other Person (on the part of the Company, the Sellers, or any of the Company Subsidiaries) is required for the Company or the Sellers to execute and deliver this Agreement or to perform their respective obligations hereunder, except as would not result in liabilities that could reasonably be expected to exceed $75,000 in the aggregate or otherwise have a Company Material Adverse Effect.

        2.6Financial Statements.    Attached as Schedule 2.6 hereto are true, correct and complete copies of: (a) the audited consolidated balance sheets, statements of income and statements of cash flows of the Company as of and for the years ended December 31, 2000 and December 31, 2001 and (b) the unaudited consolidated balance sheet, statement of income and statement of cash flows of the Company as of and for the year ended December 31, 2002 and the three-month period ended March 31, 2003 and the six-month period ended June 30, 2003 (collectively, the "Company Financial Statements"). The Company Financial Statements: (x) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered; (y) fairly present the financial position of the Company as of their respective dates and the results of operations of the Company for the periods indicated therein; and (z) have not been rendered untrue, incomplete or unfair as representations of the financial condition of the Company as of the respective dates of the Company Financial Statements by events subsequent to the respective dates of the Company Financial Statements.

        2.7Absence of Undisclosed Liabilities.    Except as disclosed on Schedule 2.7 hereto or on the unaudited Company Financial Statements as of June 30, 2003, neither the Company nor any of the Company Subsidiaries has any indebtedness or liability, absolute or contingent, which is not shown or provided for in the Company Financial Statements, other than (a) liabilities incurred or accrued in the

4

ordinary course of business consistent with past practice since June 30, 2003 or (b) liabilities of the Company or any Company Subsidiary that individually or in the aggregate are not material to the Company and that are not required by GAAP to be included in the Company Financial Statements.

        2.8Absence of Certain Changes or Events.    Except as set forth on Schedule 2.8 hereto, since December 31, 2002, the business of the Company and each of the Company Subsidiaries has been conducted in the ordinary course of business consistent with past practices and neither the Company nor any of the Company Subsidiaries has taken any of the actions described in Sections 4.2(a) through (v) hereof, except in connection with entering into this Agreement.

        2.9Title to and Condition of Properties.

        (a)   Schedule 2.9(a) hereto sets forth a complete and accurate list of all of the real property owned by the Company or each Company Subsidiary. Except as set forth on Schedule 2.9(a) hereto, the Company and each Company Subsidiary has good and marketable title to all of such owned real property, free and clear of all Encumbrances, except for Permitted Encumbrances.

        (b)   Schedule 2.9(b) hereto sets forth a complete and accurate list of all leases of real property to which the Company or any of the Company Subsidiaries is a party on the date hereof or by which any of them is presently bound (whether as lessee or lessor). Except as set forth on Schedule 2.9(b) hereto, (i) all of such leases are in full force and effect and are valid and enforceable in accordance with their terms, (ii) there is not under any such lease any default by the Company or any Company Subsidiary or, to the Company's Knowledge, any other Person, or any event that with notice or lapse of time or both would constitute a default and (iii) the Company or any Company Subsidiary is in possession of the real property covered under each lease set forth on Schedule 2.9(b) hereto in which it is a lessee.

        (c)   The Company and the Company Subsidiaries have good and marketable title to, or valid and subsisting leasehold interests in, all of the personal property reflected on the Company Financial Statements or used or useful in their respective businesses, free and clear of all Encumbrances, except for Permitted Encumbrances.

        (d)   Except as set forth on Schedule 2.9(d) hereto, the Company and its Subsidiaries own or control all of the assets, contracts, leases or Licenses required to enable them to collectively operate their respective businesses after the Closing Date in the same manner as such businesses are presently conducted. Except as set forth on Schedule 2.9(d) hereto, the businesses of the Company and its Subsidiaries as presently conducted are not dependent on the right to use the assets or property of others.

        2.10Intellectual Property.

        (a)   Schedule 2.10(a) hereto sets forth a true and complete list of all Intellectual Property used in the businesses of the Company and the Company Subsidiaries, and, for each item listed, a statement as to whether such Intellectual Property is (i) wholly owned (in which such case the owner shall be named), (ii) licensed from a third party (in which such case the licensee and third-party licensor shall be named), or (iii) licensed to third parties by the Company or any Company Subsidiary (in which such case the third-party licensee shall be named).

        (b)   Schedule 2.10(b) hereto sets forth a true and complete list of all agreements, whether in the form of a development, license, assignment, confidentiality or other agreements, relating to the Intellectual Property to which the Company or any Company Subsidiary is a party or by which the Company or any Company Subsidiary is bound.

        (c)   Except as set forth on Schedule 2.10(c) hereto: (i) the Company or a Company Subsidiary owns all right, title and interest in and to, or has a valid and enforceable license or other right to use lawfully, all the Intellectual Property used by the Company or the Company Subsidiaries in connection with their businesses, free and clear of any Encumbrances; (ii) neither the Company nor any of the

5

Company Subsidiaries has infringed or otherwise violated the Intellectual Property of any other Person; (iii) to the Company's Knowledge, no Person has infringed or otherwise violated the Intellectual Property of the Company and the Company Subsidiaries; (iv) the consummation of the transactions contemplated by this Agreement will not alter, impair or extinguish any Intellectual Property of the Company and the Company Subsidiaries; and (v) to the Company's Knowledge, there are no agreements, judicial orders or settlement agreements which limit or restrict the Company's or any of the Company Subsidiaries' rights to use any Intellectual Property.

        (d)   The Intellectual Property of the Company includes the corporate names "First Energy Services" and "FESCO" and any derivations thereof and each corporate name or derivation thereof currently or formerly used by a Company Subsidiary, including without limitation the corporate names listed on Schedule 2.10(d) hereto. All goodwill with respect to the use of such names will inure to the benefit of Buyer, and none of the Sellers shall have any right to sue or recover against any Person with respect to the use of such name.

        (e)   For purposes hereof, "Intellectual Property" shall mean all:

        (i)    all letters patent of the United States or of any other country, all registrations and recordings thereof, and all applications for letters patent of the United States or of any other country, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State, or any other country, and all reissues, continuations, continuations in part or extensions thereof (collectively, "Patents");

        (ii)   all copyrights and general intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including all registrations, recordings and applications in the United States Copyright Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof, and all reissues, extensions or renewals thereof (collectively, "Copyrights"); and

        (iii)  all trademarks, trade names, corporate names, business names, trade styles, service marks, logos, other source or business identifiers, prints and labels on which any of the foregoing have appeared or appear, designs and general intangibles of like nature (whether registered or unregistered), all registrations and recordings thereof, and all applications in connection therewith, including registrations, recordings and applications in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state or territory thereof, or any other country or any political subdivision thereof; all reissues, extensions or renewals thereof; and all goodwill associated with or symbolized by any of the foregoing (collectively, "Marks").

        2.11Licenses, Permits and Governmental Approvals.    Except as set forth on Schedule 2.11 hereto, (a) the Company and each Company Subsidiary has all material consents, licenses, permits, certificates, franchises, authorizations and approvals issued or granted to any of them by, and has made all material registrations and filings with, any Governmental Entity as are necessary for the conduct of their respective businesses as currently conducted (each a "License" and, collectively, the "Licenses"); (b) each License has been issued to, and duly obtained and fully paid for by, the holder thereof and is valid, in full force and effect, except where such invalidity or failure to be in full force and effect would not have a Material Adverse Effect; and (c) subject to the receipt of all consents listed on Schedule 2.5 hereto, none of such Licenses will terminate or become terminable as a result of the transactions contemplated by this Agreement. Notwithstanding anything to the contrary in this Section 2.11, the representations and warranties in this Section 2.11 shall not apply to (x) any right to Intellectual Property (which shall be subject to the representations in Section 2.10 hereof) or (y) any License required under applicable Environmental Law (which shall be subject to the representations in Section 2.18 hereof).

6

        2.12Compliance with Law.    Except with respect to Tax matters (which are provided for in Section 2.16 hereof), Intellectual Property matters (which are provided for in Section 2.10 hereof) or environmental, health and safety matters (which are provided for in Section 2.18 hereof) and except as set forth on Schedule 2.12 hereto, the operations of each of the Company and the Company Subsidiaries are and have been conducted in material compliance with all applicable laws, regulations, orders and other requirements of all Governmental Authorities having jurisdiction over the Company and the Company Subsidiaries and their respective assets, properties and operations.

        2.13Material Contracts.

        (a)   Schedule 2.13(a) hereto sets forth a true and complete list of the contracts, agreements, instruments and commitments, whether written or oral ("Contracts"), to which the Company or any Company Subsidiary is a party, by which any of them is bound or otherwise relating or affecting any of their assets, properties or operations, in each of the following categories:

        (i)    each partnership, limited liability company or joint venture agreement;

        (ii)   each Contract (or group of related Contracts) for the purchase by the Company and/or any Company Subsidiary of goods and/or services involving total annual payments in excess of $20,000 in 2002 or $10,000 in the first six months of 2003;

        (iii)  each Contract (or group of related Contracts) for the sale by the Company or any Company Subsidiary of goods and/or services involving total annual revenues in excess of $20,000 in 2002 or $10,000 in the first six months of 2003;

        (iv)  each Contract (or group of related Contracts) relating to a Debt Obligation;

        (v)   each Contract relating to a loan or advance to, or investment in, any Person or any agreement, contract, commitment or understanding relating to the making of any such loan, advance or investment;

        (vi)  each Contract limiting or purporting to limit the ability of the Company or any Company Subsidiary to engage or compete in any line of business with any person or in any geographic area;

        (vii) any Contract with the stockholders or any Affiliate of the Company;

        (viii) any labor union, management service, employment, consulting or other similar type of Contract;

        (ix)  any Contract obligating the Company or that would obligate or require any subsequent owner of the Company to provide for indemnification or contribution with respect to any matter;

        (x)   any sales, distributorship, agency or similar agreement relating to the products sold or services provided by the Company;

        (xi)  any license, royalty or similar Contract;

        (xii) any Contract (or group of related Contracts) not entered into in the ordinary course of business consistent with past practices not cancelable by the Company, without penalty to the Company, within 30 calendar days; or

        (xiii) any other Contract that might reasonably be expected to be material to the Company or its business.

Each of the above, a "Company Material Contract."

        (b)   Except as set forth on Schedule 2.13(b) hereto, (i) each such Contract is (A) in full force and effect and is a valid and binding obligation of the Company or the Company Subsidiary party to such Contract and (B) to Company's Knowledge, a valid and binding obligation of each other party thereto,

7

(ii)(A) the Company or the Company Subsidiary party to such Contract is not in breach thereof or default thereunder (and no event or circumstance has occurred that with notice, or lapse of time or both, would constitute an event of default), (B) to the Company's Knowledge, no other party to any such Contract is in breach thereof or default thereunder and (iii) there is no pending or, to Company's Knowledge, threatened litigation with respect to any such Contract.

        (c)   Except as set forth on Schedule 2.13(c) hereto, the enforceability of the Contracts set forth on Schedule 2.13(a) hereto will not be affected in any manner by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby nor will the counterparties thereto be subject to any additional rights or privileges thereunder as a result thereof because of a "change of control" or otherwise.

        2.14Labor Matters.    As of the date hereof, (a) no strikes or other material labor disputes against the Company or any Company Subsidiary are pending or, to the Company's Knowledge, threatened; (b) the hours worked by and payments made to employees of the Company and each Company Subsidiary comply with the Fair Labor Standards Act and each other federal, state, local or foreign Law applicable to such matters; (c) all payments due from the Company and each Company Subsidiary for employee health and welfare insurance have been paid or accrued as a liability on the books of the Company or such Company Subsidiary; (d) except as set forth on Schedule 2.14(d) hereto, neither the Company nor any Company Subsidiary is a party to or bound by any collective bargaining agreement, management agreement, consulting agreement, employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement; (e) there is no organizing activity involving the Company or any Company Subsidiary pending or, to the Company's Knowledge, threatened by any labor union or group of employees; (f) there are no representation proceedings pending or, to the Company's Knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of the Company or any Company Subsidiary has made a pending demand for recognition; and (g) except as set forth in Schedule 2.14(g) hereto, there are no material complaints or charges against the Company or any Company Subsidiary pending or, to the Company's Knowledge, threatened to be filed with any Governmental Entity or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by the Company or any Company Subsidiary of any individual.

        2.15ERISA.    For purposes of this Section 2.15, unless otherwise indicated, all references to the "Company" shall include the Company and each ERISA Affiliate of the Company.

        (a)   Since December 31, 2002, there has not been any adoption or amendment by the Company of any collective bargaining agreement or any bonus, pension, profit sharing, deferred compensation, incentive compensation, stock ownership, stock purchase, stock option, phantom stock, retirement, vacation, severance, disability, death benefit, hospitalization, medical, dependent care, cafeteria, employee assistance, scholarship or other plan, program, arrangement or understanding (whether or not covered under Section 3(3) of ERISA and whether or not legally binding) maintained in whole or in part, contributed to, or required to be contributed to by the Company for the benefit of any present or former officer, employee or director of the Company (collectively, and including all amendments thereto, "Benefit Plans").

        (b)   Schedule 2.15(b) hereto contains a list and brief description of all "employee pension benefit plans" (as defined in Section 3(2) of ERISA) ("Pension Plans"), "employee welfare benefit plans" (as defined in Section 3(1) of ERISA) ("Welfare Plans") and all other Benefit Plans maintained in whole or in part, contributed to, or required to be contributed to, within six years prior to the Closing Date by the Company for the benefit of any present or former officer, employee or director of the Company. The Company has made available to Buyer true, complete and correct copies of (i) each Benefit Plan, including, without limitation, participating employer agreements (or, in the case of any unwritten

8

Benefit Plans, descriptions thereof), (ii) the six annual reports on Form 5500 most recently filed with the IRS and the related summary annual report distributed to participants with respect to each Benefit Plan (if any such report was required), (iii) all minutes of meetings of any committee established to administer any Benefit Plan other than minutes that would be subject to privacy laws relating to disclosure of medical information, (iv) the most recent actuarial report for each Benefit Plan for which an actuarial report is required by ERISA or other applicable law, (v) all summary plan descriptions for each Benefit Plan for which such summary plan description is required by ERISA or other applicable Law and each summary of material modifications prepared, as required by ERISA or other applicable law, (vi) each trust agreement relating to any Benefit Plan, (vii) all applications, including all attachments, submitted to the IRS by the Company for IRS determination letters or rulings with respect to Benefit Plans and the IRS determination letters or rulings issued as a result of such applications and all other material correspondence for the last six consecutive years prior to the Closing Date with the IRS or the United States Department of Labor relating to plan qualification, filing of required forms, or pending, contemplated and announced plan audits, (viii) descriptions of all claims filed and pending (other than for benefits in the normal course), lawsuits pending, grievances pending and similar actions pending with respect to Benefit Plans of the Company, (ix) a listing of all employees or former employees receiving long term disability benefits under a Benefit Plan of the Company, (x) a listing of all prior mergers, consolidations or transfers of Benefit Plan assets or liabilities described in Section 414(l) of the Code or the regulations thereunder that have occurred within the last six years prior to the Closing Date, (xi) copies of all collective bargaining agreements (and any related side letters of understanding) that relate to any Benefit Plans of the Company, and (xii) a listing of all Company employees indicating date of birth, date of commencement of service, job title or brief job description, the amount of the employee's salary and bonus, if applicable, the date of the last salary increase for each salaried employee, any material commitments, arrangements, promises or understandings with the employee as to salary or bonus, if applicable, and any other contract or payment agreement between the Company and the employee.

        (c)   The Company does not sponsor, maintain, participate in or contribute to, and has not at any time sponsored, maintained, participated in or contributed to (and never has been required to contribute to), any (i) "multiemployer plan" as that term is defined in Section 414(f) of the Code or Section 4001(a)(3) of ERISA; (ii) foreign Benefit Plans; or (iii) voluntary employee benefit associations intended to be exempt from federal income tax under Section 501(c)(9) of the Code, and neither the Company nor any Benefit Plan maintains or contributes to any group annuity contract.

        (d)   Each Pension Plan that is subject to Section 201, 301 or 401 of ERISA has been the subject of a determination letter from the IRS to the effect that such Pension Plan is qualified under Section 401(a) of the Code, as currently in effect, or can still be submitted in a timely manner to the IRS for such a letter, and no such determination letter has been revoked nor, to the Company's Knowledge, has revocation of any such letter been threatened, nor has any such Pension Plan been amended since the date of its most recent determination letter or application therefor in any respect that would adversely affect its qualification or increase its costs, and to the Company's Knowledge, nothing has occurred or failed to occur in connection with the adoption or maintenance of such Pension Plan which would cause the loss of such qualification, and all amendments required to be adopted before the Closing Date for any such Pension Plan to continue to be so qualified have been or will be duly and timely adopted. Each Pension Plan that is not subject to Section 201, 301 or 401 of ERISA has timely filed the statement required by 29 CFR 2520.104-23. The Company and each ERISA Affiliate has paid all premiums (including any applicable interest, charges and penalties for late payment) due the Pension Benefit Guaranty Corporation (the "PBGC") with respect to each Pension Plan for which premiums to the PBGC are required. No Pension Plan in whole or in part ever maintained by the Company or any ERISA Affiliate has been terminated or partially terminated under circumstances which would result in liability to the PBGC.

9

        (e)   Each of the Benefit Plans which is sponsored by the Company or any ERISA Affiliate: (i) is in compliance with all reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA or other applicable law, (ii) has had the appropriate required Form 5500 (or equivalent annual report) timely filed with the appropriate governmental authority for each year of its existence, (iii) has at all times complied with the bonding requirements of Section 412 of ERISA or other applicable law, (iv) has no issue pending (other than the payment of benefits in the normal course) nor any issue resolved adversely to the Company which may subject the Company to the payment of any material penalty, interest, tax or other obligation, nor is there any basis for any imposition of any such liability, and (v) has been maintained in all material respects with the requirements of ERISA and the Code and other applicable Law (including all rules and regulations issued thereunder) not otherwise covered hereunder so as not to give rise to any liabilities to the Company.

        (f)    The execution of this Agreement or the consummation of the transactions contemplated by this Agreement will not give rise to any, or trigger any, change of control, accelerated vesting, severance or other similar provisions in any Benefit Plan.

        (g)   No Pension Plan that is subject to Title IV of ERISA and which the Company or any ERISA Affiliate maintains, or to which the Company or any ERISA Affiliate is obligated to contribute had, as of December 31, 2002, an "unfunded benefit liability" (as such term is defined in Section 4001(a)(18) of ERISA), based on actuarial assumptions which have been furnished to Buyer. None of the Pension Plans of the Company or any ERISA Affiliate which are subject to Section 302 of ERISA or Section 412 of the Code has an "accumulated funding deficiency" (as such term is defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived. No Pension Plan sponsored by the Company or any ERISA Affiliate has a "liquidity shortfall" as defined in Section 412(m)(5) of the Code. No notice has been required under Section 4011 of ERISA with respect to any Pension Plan sponsored by the Company or any ERISA Affiliate, or to which the Company or any ERISA Affiliate is obligated to contribute. No event described in Section 401(a)(29) of the Code has occurred or can reasonably be expected to occur with respect to the Company. No "reportable event" (as that term is defined in Section 4043 of ERISA and for which the 30-day notice requirement has not been waived) has occurred with respect to any such Pension Plan within the last six years prior to the Closing Date, other than as may arise as a result of the consummation of the transactions contemplated by this Agreement. Each such Pension Plan of the Company or any ERISA Affiliate (including any such plan covering retirees or other former employees) may be amended or terminated without liability (other than with respect to pension benefits in the ordinary course) to the Company on or at any time after the consummation of the transactions contemplated by this Agreement without contravening the terms of such plan, or any Law or agreement that pertains to the Company.

        (h)   None of the Company, the officers of the Company, the Benefit Plans (including the Pension Plans) or any fiduciary of any Benefit Plan which are subject to ERISA, or any trustee or administrator thereof, has engaged in a "prohibited transaction" (as such term is defined in Section 406, 407 or 408 of ERISA or Section 4975 of the Code) or any other breach of fiduciary responsibility that could subject the Company or the officers of the Company to the tax or penalty on prohibited transactions imposed by such Section 4975 or to any liability under Section 502(i) or (1) of ERISA, or any other provision of ERISA, which would have any adverse effect on the properties, business, results of operation or financial condition of the Company.

        (i)    With respect to any Welfare Plan, (i) each such Welfare Plan that is a group health plan, as such term is defined in Section 5000(b)(1) of the Code, complies in all material respects with the applicable requirements of Part 6 of Title I of ERISA and Section 4980B(f) of the Code and other applicable Law and (ii) each such Welfare Plan (including any such plan covering retirees or other former employees) may be amended (including, without limitation, to prospectively curtail or discontinue benefits and/or impose or increase employee, retiree or other former employee participant contribution requirements) or terminated without liability (other than with respect to welfare benefits

10

in the ordinary course) to the Company on the consummation of the transactions contemplated by this Agreement without contravening the terms of such plan, or any Law or agreement that pertains to the Company.

        (j)    All contributions required by Law or by a collective bargaining or other agreement to be made under the Benefit Plans with respect to all periods through the Closing Date, including a pro rata share of contributions due for the current plan year, will have been made by such date or provided for by adequate reserves properly reflected on the books of the Company in accordance with GAAP. No changes in contributions or benefit levels have been implemented or negotiated (but not yet implemented), with respect to any Benefit Plan since the date on which the information provided in the attached Disclosure Schedule has been provided, and no such changes are scheduled to occur other than in the ordinary course of business.

        (k)   The Company does not have and will not have any liability or obligation for taxes, penalties, contributions, losses, claims, damages, judgments, settlement costs, expenses, costs, or any other liability or liabilities of any nature whatsoever arising out of or in any manner relating to any Benefit Plan that has been, or is, contributed to (or required to be contributed to) by the Company or any ERISA Affiliate.

        (l)    The Company shall, and the Sellers shall cause the Company to, take all necessary action to assure that neither the Company, any officer of the Company nor or any fiduciary of any Benefit Plan who is an employee of the Company makes any generally disseminated written or oral representation to any employee or any participant in any Benefit Plan prior to the Closing concerning the transactions contemplated by this Agreement or the effect such transactions will have on the Benefit Plans that is inconsistent with the terms of such Benefit Plans and without the prior written consent of Buyer (which consent shall not unreasonably be withheld). The Company has not made any such representation to any employee or any participant in any Benefit Plan prior to the signing of this Agreement.

        2.16Taxes.    (a) The Company and each of the Company Subsidiaries has filed (or joined in the filing of) when due all U.S. and other material Tax Returns required by applicable Law to be filed with any Governmental Entity, (b) all such Tax Returns were true, correct and complete in all material respects as of the time of such filing; (c) all Taxes relating to periods ending on or before the Closing Date owed by the Company or any of the Company Subsidiaries (whether or not shown on any Tax Return) at any time on or prior to the Closing Date, if required to have been paid, have been or will be timely paid (except for Taxes that are being contested in good faith in appropriate proceedings and that are set forth on Schedule 2.16(c)) hereto; (d) any material liability of the Company or any of the Subsidiaries for Taxes not yet due and payable, or that is being contested in good faith in appropriate proceedings, has been adequately provided for on the Company's Financial Statements in accordance with GAAP and the amount of the liability of the Company and the Company Subsidiaries for unpaid Taxes for all periods (or portions thereof) ending on or before the Closing Date shall not, in the aggregate, exceed the amount of current liability accruals for Taxes (excluding reserves for deferred Taxes net of any provision for net operating losses) as such accruals are reflected in the Company Financial Statements, except to the extent of Taxes arising out of operations and transactions in the ordinary course of business of the Company and the Company Subsidiaries since the date of such financial statements in accordance with past practice the accruals for which have been made in a manner consistent with past practice; (e) there is no action, suit, proceeding, investigation, audit or claim now pending against, or with respect to, the Company or any of the Company Subsidiaries in respect of any material Tax or Tax assessment, nor has any claim for additional material Tax or Tax assessment been asserted in writing or, to the Company's Knowledge been proposed by any Tax authority; (f) no written claim has been made by any Government Authority in a jurisdiction where the Company and the Company Subsidiaries do not currently file any Tax Returns that any of them is or may be subject to Tax by such jurisdiction, nor to the Company's Knowledge has any such assertion been threatened or proposed in writing; (g) neither the Company nor any of the Company Subsidiaries

11

is a party to any tax sharing agreement or other agreement, whether written or unwritten, providing for the payment of Taxes, payment for Tax losses, entitlements to refunds or similar Tax matters; (h) the Company and each of the Company Subsidiaries has withheld and paid all material Taxes required to be withheld by the Company or such Company Subsidiary in connection with any amounts paid or owing to any employee, creditor, independent contractor or other third party; (i) none of the Tax Returns of the Company or any Company Subsidiary are currently being audited by the IRS or any other applicable Governmental Entity; (j) neither the Company nor any Company Subsidiary has executed or filed with the Internal Revenue Service or any other Governmental Entity any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Taxes; (k) neither the Company nor any of the Company Subsidiaries is or has been a member of any affiliated, combined, unitary or similar group for Tax purposes (other than a group the common parent of which is the Company); and (l) there are no liens for Taxes (other than current Taxes not yet due and payable) upon the assets of the Company or any of the Company Subsidiaries.

        For purposes of this Agreement, "Tax Returns" shall mean all returns, reports, exhibits, schedules, information statements and other documentation (including any additional or supporting material) filed or maintained, or required to be filed or maintained, in connection with the calculation, determination, assessment or collection of any Tax and shall include any amended returns required as a result of examination adjustments made by the Internal Revenue Service or other Governmental Entity. For purposes of this Agreement, "Tax" or "Taxes" shall mean any and all federal, state, local, foreign and other taxes, levies, fees, imposts and duties of whatever kind (including any interest, penalties or additions to the tax imposed in connection therewith or with respect thereto), including, without limitation, taxes imposed on, or measured by, income, franchise, profits or gross receipts, and also ad valorem, value added, sales, use, service, real or personal property, capital stock, license, payroll, withholding, employment, social security, workers' compensation, unemployment compensation, utility, severance, production, excise, stamp, occupation, premium, windfall profits, transfer and gains taxes and customs duties.

        2.17Litigation.

        (a)   No action, claim, lawsuit, demand, investigation or proceeding is now pending or, to the Company's Knowledge, threatened against the Sellers, any Affiliate of the Sellers, the Company or any Company Subsidiary, before any Governmental Entity or before any arbitrator or panel of arbitrators (collectively, "Litigation") which the Company reasonably expects will (a) have a Material Adverse Effect on the Company or any Company Subsidiary or (b) materially impair or delay the ability of any of the Sellers to perform their obligations under this Agreement or consummate the transactions contemplated hereby. Except as set forth on Schedule 2.17 hereto, there is no Litigation pending or, to the Company's Knowledge, threatened, that seeks damages in excess of $75,000 or injunctive relief against, or alleges criminal misconduct of, the Company or any Company Subsidiary.

        (b)   The Company is involved in an arbitration proceeding relating to the termination of employment of a former employee, and related matters with the former shareholders of Schmid Oilfield Services, Inc., with respect to which the Company has accrued $848,652 as of June 30, 2003 as reflected in the Company Financial Statements as of such date. The Company reasonably believes the amount of this accrual is sufficient to cover any liability to the Company that may result from any award made by the arbitrator(s) in such proceeding or any settlement thereof.

12

        2.18Environmental Matters.    Except as set forth on Schedule 2.18 hereto, (i) the real property listed on Schedule 2.9 hereto is free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or marketability of such real property in any material respect and that would not result in liabilities that could reasonably be expected to exceed $75,000; (ii) neither the Company nor any Company Subsidiary has caused or suffered to occur any use, release, transportation, storage, or disposal of Hazardous Materials on, at, in, under, above, to, from or about any of its real properties except where such use, release, transportation, storage or disposal would not adversely impact the value or marketability of such real property in any material respect and would not result in liabilities that could reasonably be expected to exceed $75,000; (iii) the Company and each of the Company Subsidiaries are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in liabilities which could reasonably be expected to exceed $75,000; (iv) the Company and each of the Company Subsidiaries have obtained, and are in compliance with, all Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Permits would not result in liabilities that could reasonably be expected to exceed $75,000, and all such permits are valid, uncontested and in good standing; (v) neither the Company nor any Company Subsidiary is involved in operations or knows of any facts, circumstances or conditions, including any use, release, transportation, storage, or disposal of Hazardous Materials, that are likely to result in any liabilities which could reasonably be expected to exceed $75,000, and neither the Company nor any Company Subsidiary has permitted any current or former tenant or occupant of its real property to engage in any such operations; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $75,000 or injunctive relief against, or that alleges criminal misconduct by, the Company or any Company Subsidiary; (vii) no notice has been received by the Company or any Company Subsidiary identifying the addressee as a "potentially responsible party" or requesting information under CERCLA or analogous state statutes, and to the Company's Knowledge, there are no facts, circumstances or conditions that may result in the Company or any Company Subsidiary being identified as a "potentially responsible party" under CERCLA or analogous state statutes; and (viii) the Company and the Company Subsidiaries have provide to Buyer copies of all existing environmental reports, reviews and audits relating to their real property and all other material written information pertaining to actual or potential Environmental Liabilities. Notwithstanding the foregoing, except as disclosed in Schedule 2.18 hereto, none of the matters addressed in clauses (i) through (viii) above, individually or in the aggregate, could reasonably be expected to have a Company Material Adverse Effect.

        2.19Insurance.Schedule 2.19(a) hereto lists all insurance policies of any nature maintained, for current occurrences by the Company or any Company Subsidiary, as well as a summary of the terms of each such policy. All such policies are in full force and effect. All premiums due on such policies have been paid and no notice of cancellation or termination or intent to cancel has been received by the Company or any Company Subsidiary with respect to such policies. There is no dispute with respect to such policies. Schedule 2.19(b) hereto sets forth a list of all pending claims (including with respect to insurance obtained but not currently maintained) and the claims history for the Company and each Company Subsidiary during the last five years (including with respect to insurance obtained but not currently maintained).

        2.20Bank Accounts.Schedule 2.20 hereto lists all banks and other financial institutions at which the Company and each Company Subsidiary maintains deposit or other accounts or safe deposit boxes and such Schedule correctly identifies the name, address and telephone number of each depository, the name in which the account is held, a description of the purpose of the account, the complete account number therefor and the authorized signatories or persons having access to such accounts.

13

        2.21Customers and Suppliers.    There is no actual nor, to the Company's Knowledge, threatened termination or cancellation of, or any material adverse modification or change in the business relationship of the Company or any Company Subsidiary with any customer or group of customers whose purchases during the twelve months ended June 30, 2003 caused them to be ranked among the ten largest customers of the Company and the Company Subsidiaries, in the aggregate, or the business relationship of the Company or any Company Subsidiary with any supplier material to its operations.

        2.22Seller Representations.

        (a)   Each Seller is not a "foreign person" within the meaning of Section 1445 if the Code and (i) if an individual, he has reached the age of majority and is a United States citizen or resident; (ii) if a corporation, limited liability company or partnership, it is formed under the laws of a state of the United States and is authorized and otherwise duly qualified to hold real property and interests therein; and (iii) if the undersigned is a trustee, the undersigned and each co-trustee is such a citizen of such age or a corporation organized under the laws of the United States, and all trust beneficiaries are such citizens of such age and United States citizens or residents.

        (b)   Each of the First Reserve Fund and Randy D. Spaur is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the "Securities Act"). Each Seller understands that Buyer will rely upon the exemptions provided by the Securities Act, Regulation D thereunder and various state securities laws and will rely on the representations and warranties of such Seller contained herein for purposes of such determination. Each Seller is acquiring Buyer Common Stock for its own account and not with a view to, or for the offer or sale in connection with, any distribution thereof. Each Seller acknowledges that the shares of Buyer Common Stock have not been registered under the Securities Act, or any state securities laws, and that the shares of Buyer Common Stock may not be transferred or sold except pursuant to a registration statement filed in accordance with the Securities Act or pursuant to any applicable exemption therefrom under the Securities Act and state securities laws.

        (c)   Each Seller has such knowledge of Buyer and its business and such experience in financial and business matters to enable it to evaluate the merits and risks of an investment in Buyer Common Stock. Each Seller has made an informed investment decision with respect to the shares of Buyer Common Stock to be acquired pursuant to this Agreement. Each Seller understands that there can be no assurance as to the federal or state tax result of an investment in Buyer Common Stock. Each Seller understands that no state or federal governmental authority has made any finding or determination relating to the fairness of an investment in Buyer Common Stock and no state or federal governmental authority has recommended or endorsed or will recommend or endorse an investment in Buyer Common Stock. Each Seller understands that there has been no public market for Buyer Common Stock and it is not likely that after the Closing there will be such a market. Each Seller understands that the transferability of Buyer Common Stock will be restricted by Buyer's Stockholders' Agreement.

        (d)   Each Seller owns the Initial Shares set forth opposite its name on Exhibit A hereto of record and beneficially, free and clear of any Encumbrances. Each Seller has full power and legal right to cause such Initial Shares to be sold, assigned, transferred and delivered to Buyer, and upon delivery of such Initial Shares as provided for hereunder, Buyer will acquire good and valid title thereto.

        (e)   Each Seller has all requisite power and authority to enter into this Agreement, to consummate the transactions contemplated hereunder and to perform its obligations under this Agreement. If such Seller is not an individual person, the execution and delivery of this Agreement and the performance of its obligations hereunder have been duly and validly authorized by such Seller's board of directors, the board of directors of such Seller' general partner or established trust procedures, as applicable, and no other proceedings on the part, or on behalf, of such Seller is necessary for such execution, delivery and performance. This Agreement has been duly authorized, executed and delivered by such Seller and is a legal, valid and binding obligation of such Seller, enforceable against such Seller in accordance with its

14

terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally or by general equitable principles).

        (f)    The execution, delivery and performance of this Agreement by each Seller and the consummation of the transactions contemplated hereby do not and will not: (i) violate any provision of the charter, bylaws or other organizational documents of such Seller; (ii) violate any applicable Law or any judgment, order or decree of any Governmental Entity applicable to such Seller; or (iii) violate or result in a breach of or constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty or premium to arise or accrue under any contract, lease, credit or loan agreement, mortgage, security agreement, indenture or other agreement or instrument to which such Seller is a party or by which he or it is bound or to which any of the properties or assets of such Seller is subject.

        (g)   Immediately following Closing, no Seller shall own or otherwise control any assets or properties necessary for the Company and the Company Subsidiaries to conduct their respective businesses in substantially the same manner as conducted immediately prior to Closing.

        2.23Finder's Fees.    Except for remaining fees owed by the Company to Simmons & Company International that shall not exceed $307,000 (the "Simmons Fee"), neither the Sellers, the Company nor any of their Affiliates have employed or retained any investment banker, broker, agent, finder or other party, or incurred any obligation for brokerage fees, finder's fees, advisory fees or commissions, with respect to the sale by the Sellers of the Initial Shares or with respect to the transactions contemplated by this Agreement, or otherwise dealt with anyone purporting to act in the capacity of a finder or broker with respect thereto whereby any party hereto may be obligated to pay such a fee or commission. The Sellers agree to jointly and severally indemnify and hold Buyer and its Affiliates harmless from and against any and all claims, liabilities or obligations with respect to all fees, commissions or expenses (other than the Simmons Fee) asserted by any Person on the basis of any act, statement, agreement or commitment alleged to have been made by the Sellers or any of the Affiliates of the Sellers with respect to any such fee, commission or expense.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF BUYER

        Buyer hereby represents and warrants to the Sellers as follows:

        3.1Organizational Matters; Buyer Subsidiaries.

        (a)   Buyer: (i) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction where Buyer's ownership, operation or lease of property or the conduct of its business would require such qualification, except where the failure to be so qualified would not result in exposure to Buyer of losses, damages or liabilities in excess of $100,000 in the aggregate, taking into account any such failures by Buyer or any of its subsidiaries; and (iii) has the requisite power and authority and the legal right to own and operate its properties, to lease the property it operates under lease and to conduct its business as now, heretofore and proposed to be conducted.

        (b)   Each direct or indirect Subsidiary of Buyer is set forth on Schedule 3.1(b) hereto (each, a "Buyer Subsidiary"). Except as set forth thereon, neither Buyer nor any Buyer Subsidiary: (i) is engaged in any joint venture, partnership or similar arrangement with any other Person; (ii) is an Affiliate or any other Person; or (iii) otherwise holds any equity interest any other Person.

        (c)   Each Buyer Subsidiary: (i) is a corporation, limited liability company or limited partnership, as the case may be, duly organized, validly existing and in good standing under the laws of its respective jurisdiction of incorporation or organization, as set forth on Schedule 3.1(c) hereto; (ii) is duly qualified to conduct business and is in good standing in each other jurisdiction where any Buyer Subsidiary's ownership, operation or lease of property or the conduct of its business would require such

15

qualification, except where the failure to be so qualified would not result in exposure to losses, damages or liabilities in excess of $100,000 in the aggregate, taking into account any such failures by Buyer or any of the Buyer Subsidiaries; and (iii) has the requisite power and authority and the legal right to own and operate its properties, to lease the property it operates under lease and to conduct its business as now, heretofore and proposed to be conducted.

        3.2Capitalization; Title to Shares.

        (a)   The authorized capital of Buyer consists of 6,500,000 shares of Buyer Common Stock, par value $0.01 per share, of which 4,228,070 shares are issued and outstanding, and 500,000 shares of preferred stock, par value $0.01 per share, of which 225,000 shares have been designated shares of Series A 10% Cumulative Preferred Stock (the "Preferred Stock"), of which 159,012.604 such shares are issued and outstanding; provided, however, that prior to the Closing Buyer may increase the authorized number of shares of Buyer Common Stock to 7,500,000 shares and may exchange and convert its outstanding shares of Preferred Stock into shares of Buyer Common Stock (the "Preferred Stock Exchange"). The issued and outstanding shares of Buyer Common Stock have been duly authorized and validly issued and are fully paid and non-assessable and were not issued in violation of any preemptive, preferential purchase or other similar rights of any Person. Buyer has outstanding (i) warrants to acquire 870,000 shares of Buyer Common Stock and (ii) options to acquire 261,160 shares of Buyer Common Stock. Other than as (i) set forth on Schedule 3.2 hereto, (ii) set forth in the Stockholders' Agreement, dated December 21, 2000 (the "Buyer Stockholders' Agreement") by and among Basic Energy Services, Inc. (as predecessor-in-interest to Buyer) and the stockholders named therein, as amended through the date hereof, or (iii) contemplated by the Preferred Stock Exchange, Buyer has no outstanding options, warrants, convertible securities, calls, rights, commitments, preemptive rights, agreements, arrangements or understandings of any character obligating Buyer to (a) issue, deliver or sell, or cause to be issued, delivered or sold, additional shares of capital stock of Buyer or any securities or obligations convertible into or exchangeable for shares of capital stock of Buyer or (b) grant, extend or enter into any such option, warrant, convertible security, call, right, commitment, preemptive right, agreement, arrangement or understanding.

        (b)   Upon delivery of the shares of Buyer Common Stock to the Sellers as provided hereunder, each Seller will acquire good and valid title thereto, and such shares of Buyer Common Stock will be validly issued, fully paid and non-assessable.

        3.3Validity of Agreement; Authorization.    Buyer has all requisite power and authority to enter into this Agreement, to consummate the transactions contemplated hereunder and to perform its obligations under this Agreement. The execution and delivery of this Agreement and the performance of its obligations hereunder have been duly and validly authorized by Buyer's board of directors and no other proceedings on the part, or on behalf, of Buyer are necessary to effect such execution, delivery and performance. This Agreement has been duly authorized, executed and delivered by Buyer and is a legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms (except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting creditors' rights generally or by general equitable principles).

        3.4No Conflict or Violation.    The execution, delivery and performance of this Agreement by Buyer and the consummation of the transactions contemplated hereby do not and will not: (a) violate any provision of the charter, bylaws or other organizational documents of Buyer or any of the Buyer Subsidiaries; (b) violate any applicable Law or any judgment, order or decree of any Governmental Entity applicable to Buyer, the Buyer Subsidiaries or any of the respective properties or assets of Buyer or the Buyer Subsidiaries; (c) violate or result in a breach of or constitute (with due notice or lapse of time or both) a default or cause any obligation, penalty or premium to arise or accrue under any contract, lease, credit or loan agreement, mortgage, security agreement, indenture or other agreement or instrument to which Buyer or any of the Buyer Subsidiaries is a party or by which any of them is

16

bound or two which any of the respective properties or assets of Buyer or the Buyer Subsidiaries is subject; (d) result in the creation of imposition of any Encumbrance upon any of the properties or assets of Buyer or any of the Buyer Subsidiaries; or (e) result in the cancellation, modification, revocation or suspension of any License of Buyer or any of the Buyer Subsidiaries, except in the case of clauses (b), (c), (d) and (e) above that would not have a Buyer Material Adverse Effect.

        3.5Consents and Approvals.    Except as disclosed on Schedule 3.5 hereto, no consent, approval, waiver or authorization of, or filing, registration or qualification with, any Governmental Entity or any other Person (on the part of Buyer or any of the Buyer Subsidiaries) is required for Buyer to execute and deliver this Agreement or to perform its respective obligations hereunder, except that would not have a Buyer Material Adverse Effect..

        3.6Financial Statements.    Attached as Schedule 3.6 hereto are true, correct and complete copies of: (a) the audited consolidated balance sheets, statements of income and statements of cash flows of Buyer as of and for the years ended December 31, 2000, December 31, 2001 and December 31, 2002 and (b) the unaudited consolidated balance sheet, statement of income and statement of cash flows of Buyer as of and for the three-month period ended March 31, 2003 and the six-month period ended June 30, 2003 (collectively, the "Buyer Financial Statements"). The Buyer Financial Statements: (x) have been prepared in accordance with GAAP applied on a consistent basis throughout the periods covered; (y) fairly present the financial position of Buyer as of their respective dates and the results of operations of Buyer for the periods indicated therein; and (z) have not been rendered untrue, incomplete or unfair as representations of the financial condition of Buyer as of the respective dates of the Buyer Financial Statements by events subsequent to the respective dates of the Buyer Financial Statements.

        3.7Absence of Undisclosed Liabilities.

        Except as disclosed on Schedule 3.7 hereto or on the unaudited Buyer Financial Statements as of June 30, 2003, neither Buyer nor any of the Buyer Subsidiaries has any indebtedness or liability, absolute or contingent, which is not shown or provided for in the Buyer Financial Statements, other than (a) liabilities incurred or accrued in the ordinary course of business consistent with past practice since June 30, 2003 or (b) liabilities of Buyer or any Buyer Subsidiary that individually or in the aggregate are not material to Buyer and that are not required by GAAP to be included in the Buyer Financial Statements.

        3.8Absence of Certain Changes.    Except as set forth on Schedule 3.8 hereto, since December 31, 2002, the business of Buyer and each of the Buyer Subsidiaries has been conducted in the ordinary course of business consistent with past practices and neither Buyer nor any of the Buyer Subsidiaries has taken any of the actions described in Sections 4.2(a) through (g), (j) through (q), (t) and (v) hereof, except in connection with entering into this Agreement.

        3.9Title to and Condition of Properties.

        (a)   Except as set forth on Schedule 3.9(a) hereto, Buyer has good and marketable title to all of its owned real property, free and clear of all Encumbrances, except for Permitted Encumbrances.

        (b)   Except as set forth on Schedule 3.9(b) hereto, (i) all leases of real property to which Buyer or any of the Buyer Subsidiaries is a party on the date hereof or by which any of them is presently bound (whether as lessee or lessor) are in full force and effect and are valid and enforceable in accordance with their terms, (ii) there is not under any such lease any default by Buyer or any of the Buyer Subsidiaries or, to Buyer's Knowledge, any other Person, or any event that with notice or lapse of time or both would constitute a default and (iii) Buyer or any Buyer Subsidiary is in possession of the real property covered under any such lease except as set forth on Schedule 3.9(b) hereto in which it is a lessee.

17

        (c)   Except as pledges made pursuant to the Buyer Credit Facility, Buyer and the Buyer Subsidiaries have good and indefeasible title to, or valid and subsisting leasehold interests in, all of the personal property reflected on the Buyer Financial Statements or used or useful in their respective businesses, free and clear of all Encumbrances.

        3.10Intellectual Property.    Except as set forth on Schedule 3.10 hereto: (i) Buyer or a Buyer Subsidiary owns all right, title and interest in and to, or has a valid and enforceable license or other right to use lawfully, all the Intellectual Property used by Buyer or the Buyer Subsidiaries in connection with their businesses, free and clear of any Encumbrances; (ii) neither Buyer nor any of the Buyer Subsidiaries has infringed or otherwise violated the Intellectual Property of any other Person; (iii) to Buyer's Knowledge, no Person has infringed or otherwise violated the Intellectual Property of Buyer and the Buyer Subsidiaries; (iv) the consummation of the transactions contemplated in this Agreement will not alter, impair or extinguish any Intellectual Property of Buyer and the Buyer Subsidiaries; and (v) to Buyer's Knowledge, there are no agreements, judicial orders or settlement agreements which limit or restrict Buyer's or any of the Buyer Subsidiaries' rights to use any Intellectual Property.

        3.11Licenses, Permits and Governmental Approvals.    Except as set forth on Schedule 3.11 hereto, (a) Buyer and each Buyer Subsidiary have all Licenses as are necessary for the conduct of their respective businesses as currently conducted; (b) each License has been issued to, and duly obtained and fully paid for by, the holder thereof and is valid, in full force and effect, except where such invalidity or failure to be in full force and effect would not have a Buyer Material Adverse Effect, and (c) none of such Licenses will terminate or become terminable as a result of the transactions contemplated by this Agreement. Notwithstanding anything to the contrary in this Section 3.11, the representations and warranties in this Section 3.11 shall not apply to (x) any right to Intellectual Property (which shall be subject to the representations in Section 3.10 hereof) or (y) any License required under applicable Environmental Law (which shall be subject to the representations in Section 3.18 hereof).

        3.12Compliance with Law.    Except with respect to Tax matters (which are provided for in Section 3.16 hereof), Intellectual Property matters (which are provided for in Section 3.10 hereof) or environmental, health and safety matters (which are provided for in Section 3.18 hereof) and except as set forth on Schedule 3.12 hereto, the operations of Buyer and each of the Buyer Subsidiaries are and have been conducted in material compliance with all applicable laws, regulations, orders and other requirements of all Governmental Authorities having jurisdiction over Buyer and the Buyer Subsidiaries and their respective assets, properties and operations.

        3.13Material Contracts.    Except as set forth on Schedule 3.13 hereto, (i) each Contract (or group of related Contracts) to which Buyer or any Buyer Subsidiary is a party, by which any of them is bound or otherwise relating or affecting any of their assets, properties or operations that involves the payment to or by Buyer or any Buyer Subsidiary of more than $75,000 over the course of twelve consecutive months (a "Buyer Material Contract") is (A) in full force and effect and is a valid and binding obligation of Buyer or the Buyer Subsidiary party to such Contract and (B) to Buyer's Knowledge, a valid and binding obligation of each other party thereto, (ii)(A) Buyer or the Buyer Subsidiary party to such Contract is not in breach thereof or default thereunder (and no event or circumstance has occurred that with notice, or lapse of time or both, would constitute an event of default), (B) to Buyer's Knowledge, no other party to any such Contract is in breach thereof or default thereunder; (iii) there is no pending or, to Buyer's Knowledge, threatened litigation with respect to any such Contract; and (iv) the enforceability of all of such Contracts will not be affected in any manner by the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.

        3.14Labor Matters.    As of the date hereof, (a) no strikes or other material labor disputes against Buyer or any Buyer Subsidiary are pending or, to Buyer's Knowledge, threatened; (b) the hours worked

18

by and payments made to employees of Buyer and each Buyer Subsidiary comply with the Fair Labor Standards Act and each other federal, state, local or foreign Law applicable to such matters; (c) all payments due from Buyer and each Buyer Subsidiary for employee health and welfare insurance have been paid or accrued as a liability on the books of Buyer or such Buyer Subsidiary; (d) except as set forth on Schedule 3.14(d) hereto, neither Buyer nor any Buyer Subsidiary is a party to or bound by any collective bargaining agreement, management agreement, consulting agreement, employment agreement, bonus, restricted stock, stock option, or stock appreciation plan or agreement or any similar plan, agreement or arrangement; (e) there is no organizing activity involving Buyer or any Buyer Subsidiary pending or, to Buyer's Knowledge, threatened by any labor union or group of employees; (f) there are no representation proceedings pending or, to Buyer's Knowledge, threatened with the National Labor Relations Board, and no labor organization or group of employees of Buyer or any Buyer Subsidiary has made a pending demand for recognition; and (g) except as set forth in Schedule 3.14(g) hereto, there are no material complaints or charges against Buyer or any Buyer Subsidiary pending or, to Buyer's Knowledge, threatened to be filed with any Governmental Entity or arbitrator based on, arising out of, in connection with, or otherwise relating to the employment or termination of employment by Buyer or any Buyer Subsidiary of any individual.

        3.15ERISA.    For purposes of this Section 3.15, unless otherwise indicated, all references to "Buyer" include Buyer and each ERISA Affiliate of Buyer.

        (a)   Since December 31, 2002, there has not been any adoption or amendment by Buyer of any Benefit Plans.

        (b)   Buyer does not sponsor, maintain, participate in or contribute to, and has not at any time sponsored, maintained, participated in or contributed to (and never has been required to contribute to), any (i) "multiemployer plan" as that term is defined in Section 414(f) of the Code or Section 4001(a)(3) of ERISA; (ii) foreign Benefit Plans; or (iii) voluntary employee benefit associations intended to be exempt from Federal income Tax under Section 501(c)(9) of the Code, and neither the Buyer nor any Benefit Plan maintains or contributes to any group annuity contract.

        (c)   Each Pension Plan that is subject to Section 201, 301 or 401 of ERISA has been the subject of a determination letter from the IRS to the effect that such Pension Plan is qualified under Section 401(a) of the Code, as currently in effect, or can still be submitted in a timely manner to the IRS for such a letter, and no such determination letter has been revoked nor, to Buyer's Knowledge, has revocation of any such letter been threatened, nor has any such Pension Plan been amended since the date of its most recent determination letter or application therefor in any respect that would adversely affect its qualification or increase its costs, and to Buyer's Knowledge, nothing has occurred or failed to occur in connection with the adoption or maintenance of such Pension Plan which would cause the loss of such qualification, and all amendments required to be adopted before the Closing Date for any such Pension Plan to continue to be so qualified have been or will be duly and timely adopted. Each Pension Plan that is not subject to Section 201, 301 or 401 of ERISA has timely filed the statement required by 29 CFR 2520.104-23. Buyer and each ERISA Affiliate has paid all premiums (including any applicable interest, charges and penalties for late payment) due the PBGC with respect to each Pension Plan for which premiums to the PBGC are required. No Pension Plan in whole or in part ever maintained by Buyer or any ERISA Affiliate has been terminated or partially terminated under circumstances which would result in liability to the PBGC.

        (d)   Each of the Benefit Plans which is sponsored by Buyer or any ERISA Affiliate: (i) is in compliance with all reporting and disclosure requirements of Part 1 of Subtitle B of Title I of ERISA or other applicable law, (ii) has had the appropriate required Form 5500 (or equivalent annual report) timely filed with the appropriate governmental authority for each year of its existence, (iii) has at all times complied with the bonding requirements of Section 412 of ERISA or other applicable law, (iv) has no issue pending (other than the payment of benefits in the normal course) nor any issue

19

resolved adversely to Buyer which may subject Buyer to the payment of any material penalty, interest, tax or other obligation, nor is there any basis for any imposition of any such liability, and (v) has been maintained in all material respects with the requirements of ERISA and the Code and other applicable Law (including all rules and regulations issued thereunder) not otherwise covered hereunder so as not to give rise to any liabilities to Buyer.

        (e)   The execution of this Agreement or the consummation of the transactions contemplated by this Agreement will not give rise to any, or trigger any, change of control, accelerated vesting, severance or other similar provisions in any Benefit Plan.

        (f)    No Pension Plan that is subject to Title IV of ERISA and which Buyer or any ERISA Affiliate maintains, or to which Buyer or any ERISA Affiliate is obligated to contribute had, as of December 31, 2002, an "unfunded benefit liability" (as such term is defined in Section 4001(a)(18) of ERISA), based on actuarial assumptions which have been furnished to the Company. None of the Pension Plans of Buyer or any ERISA Affiliate which are subject to Section 302 of ERISA or Section 412 of the Code has an "accumulated funding deficiency" (as such term is defined in Section 302 of ERISA or Section 412 of the Code), whether or not waived. No Pension Plan sponsored by Buyer or any ERISA Affiliate has a "liquidity shortfall" as defined in Section 412(m)(5) of the Code. No notice has been required under Section 4011 of ERISA with respect to any Pension Plan sponsored by Buyer or any ERISA Affiliate, or to which Buyer or any ERISA Affiliate is obligated to contribute. No event described in Section 401(a)(29) of the Code has occurred or can reasonably be expected to occur with respect to Buyer. No "reportable event" (as that term is defined in Section 4043 of ERISA and for which the 30-day notice requirement has not been waived) has occurred with respect to any such Pension Plan within the last six years prior to the Closing Date, other than as may arise as a result of the consummation of the transactions contemplated by this Agreement. Each such Pension Plan of Buyer or any ERISA Affiliate (including any such plan covering retirees or other former employees) may be amended or terminated without liability (other than with respect to pension benefits in the ordinary course) to Buyer on or at any time after the consummation of the transactions contemplated by this Agreement without contravening the terms of such plan, or any Law or agreement that pertains to Buyer.

        (g)   None of Buyer, the officers of Buyer, the Benefit Plans (including the Pension Plans) or any fiduciary of any Benefit Plan which are subject to ERISA, or any trustee or administrator thereof, has engaged in a "prohibited transaction" (as such term is defined in Section 406, 407 or 408 of ERISA or Section 4975 of the Code) or any other breach of fiduciary responsibility that could subject Buyer or the officers of Buyer to the tax or penalty on prohibited transactions imposed by such Section 4975 or to any liability under Section 502(i) or (1) of ERISA, or any other provision of ERISA, which would have any adverse effect on the properties, business, results of operation or financial condition of Buyer.

        (h)   With respect to any Welfare Plan, (i) each such Welfare Plan that is a group health plan, as such term is defined in Section 5000(b)(1) of the Code, complies in all material respects with the applicable requirements of Part 6 of Title I of ERISA and Section 4980B(f) of the Code and other applicable Law and (ii) each such Welfare Plan (including any such plan covering retirees or other former employees) may be amended (including, without limitation, to prospectively curtail or discontinue benefits and/or impose or increase employee, retiree or other former employee participant contribution requirements) or terminated without liability (other than with respect to welfare benefits in the ordinary course) to Buyer on the consummation of the transactions contemplated by this Agreement without contravening the terms of such plan, or any Law or agreement that pertains to Buyer.

        (i)    All contributions required by Law or by a collective bargaining or other agreement to be made under the Benefit Plans with respect to all periods through the Closing Date, including a pro rata share of contributions due for the current plan year, will have been made by such date or provided for

20

by adequate reserves properly reflected on the books of Buyer in accordance with GAAP. No changes in contributions or benefit levels have been implemented or negotiated (but not yet implemented), with respect to any Benefit Plan since the date on which the information provided in the attached Disclosure Schedule has been provided, and no such changes are scheduled to occur other than in the ordinary course of business.

        (j)    Buyer does not have and will not have any liability or obligation for taxes, penalties, contributions, losses, claims, damages, judgments, settlement costs, expenses, costs, or any other liability or liabilities of any nature whatsoever arising out of or in any manner relating to any Benefit Plan that has been, or is, contributed to (or required to be contributed to) by Buyer or any ERISA Affiliate.

        3.16Taxes.    (a) Buyer and each of the Buyer Subsidiaries has filed (or joined in the filing of) when due all U.S. and other material Tax Returns required by applicable Law to be filed with any Governmental Entity; (b) all such Tax Returns were true, correct and complete in all material respects as of the time of such filing; (c) all Taxes relating to periods ending on or before the Closing Date owed by Buyer or any of the Buyer Subsidiaries (whether or not shown on any Tax Return) at any time on or prior to the Closing Date, if required to have been paid, have been or will be timely paid (except for Taxes that are being contested in good faith in appropriate proceedings and, to the extent the amount being contested exceeds $50,000, that are set forth on Schedule 3.16(c) hereto); (d) any material liability of Buyer or any of the Purchaser Subsidiaries for Taxes not yet due and payable, or that is being contested in good faith in appropriate proceedings, has been adequately provided for on the financial statements of Buyer in accordance with GAAP and the amount of the liability of Buyer and the Buyer Subsidiaries for unpaid Taxes for all periods (or portions thereof) ending on or before the Closing Date shall not, in the aggregate, exceed the amount of the current liability accruals for Taxes (excluding reserves for deferred Taxes) as such accruals are reflected in the Company Financial Statements, except to the extent of Taxes arising out of operations and transactions in the ordinary course of business of the Company and the Company Subsidiaries since the date of such financial statements in accordance with past practice the accruals for which have been made in a manner consistent with past practice; (e) there is no action, suit, proceeding, investigation, audit or claim now pending against, or with respect to, Buyer or any of the Buyer Subsidiaries in respect of any material Tax or Tax assessment, nor has any claim for additional material Tax or Tax assessment been asserted in writing or, to Buyer's Knowledge been proposed by any Tax authority; (f) no written claim has been made by any Government Authority in a jurisdiction where Buyer and the Buyer Subsidiaries do not currently file any Tax Returns that any of them is or may be subject to Tax by such jurisdiction, nor to Buyer's Knowledge has any such assertion been threatened or proposed in writing; (g) neither Buyer nor any of the Buyer Subsidiaries is a party to any tax sharing agreement or other agreement, whether written or unwritten, providing for the payment of Taxes, payment for Tax losses, entitlements to refunds or similar Tax matters; (h) Buyer and each of the Buyer Subsidiaries has withheld and paid all material Taxes required to be withheld by Buyer or such Buyer Subsidiary in connection with any amounts paid or owing to any employee, creditor, independent contractor or other third party; (i) none of the Tax Returns of Buyer or any Buyer Subsidiary are currently being audited by the IRS or any other applicable Governmental Entity; and (j) neither Buyer nor any Buyer Subsidiary has executed or filed with the Internal Revenue Service or any other Governmental Entity any agreement or other document extending, or having the effect of extending, the period for assessment or collection of any Taxes.

        3.17Litigation.    No Litigation is now pending nor, to Buyer's Knowledge, threatened against Buyer, any Affiliate of Buyer, or any Buyer Subsidiary, before any Governmental Entity or before any arbitrator or panel of arbitrators which Buyer reasonably expects will (a) have a Material Adverse Effect on Buyer or any Buyer Subsidiary or (b) materially impair or delay the ability of Buyer or any Buyer Subsidiary to perform its obligations under this Agreement or consummate the transactions contemplated hereby. Except as set forth on Schedule 3.17 hereto, there is no Litigation pending nor, to

21

Buyer's Knowledge, threatened, that seeks damages in excess of $150,000 or injunctive relief against, or alleges criminal misconduct of, Buyer or any Buyer Subsidiary.

        3.18Environmental Matters.    Except as set forth on Schedule 3.18 hereto, (i) the real property owned or leased by Buyer or any Buyer Subsidiary is free of contamination from any Hazardous Material except for such contamination that would not adversely impact the value or marketability of such real property in any material respect and that would not result in liabilities that could reasonably be expected to exceed $150,000; (ii) neither Buyer nor any Buyer Subsidiary has caused or suffered to occur any use, release, transportation, storage, or disposal of Hazardous Materials on, at, in, under, above, to, from or about any of its real properties except where such use, release, transportation, storage or disposal would not adversely impact the value or marketability of such real property in any material respect and would not result in liabilities that could reasonably be expected to exceed $150,000; (iii) Buyer and each of the Buyer Subsidiaries are and have been in compliance with all Environmental Laws, except for such noncompliance that would not result in liabilities which could reasonably be expected to exceed $150,000; (iv) Buyer and each of the Buyer Subsidiaries have obtained, and are in compliance with, all Permits required by Environmental Laws for the operations of their respective businesses as presently conducted or as proposed to be conducted, except where the failure to so obtain or comply with such Permits would not result in liabilities that could reasonably be expected to exceed $150,000, and all such Permits are valid, uncontested and in good standing; (v) neither Buyer nor any Buyer Subsidiary is involved in operations or knows of any facts, circumstances or conditions, including any use, release, transportation, storage, or disposal of Hazardous Materials, that are likely to result in any liabilities which could reasonably be expected to exceed $150,000, and neither Buyer nor any Buyer Subsidiary has permitted any current or former tenant or occupant of its real property to engage in any such operations; (vi) there is no Litigation arising under or related to any Environmental Laws, Environmental Permits or Hazardous Material that seeks damages, penalties, fines, costs or expenses in excess of $150,000 or injunctive relief against, or that alleges criminal misconduct by, Buyer or any Buyer Subsidiary; (vii) no notice has been received by Buyer or any Buyer Subsidiary identifying the addressee as a "potentially responsible party" or requesting information under CERCLA or analogous state statutes, and to Buyer's Knowledge, there are no facts, circumstances or conditions that may result in Buyer or any Buyer Subsidiary being identified as a "potentially responsible party" under CERCLA or analogous state statutes; and (viii) Buyer and the Buyer Subsidiaries have provide to Sellers copies of all existing environmental reports, reviews and audits relating to their real property and all other material written information pertaining to actual or potential Environmental Liabilities. Notwithstanding the foregoing, except as disclosed in Schedule 3.18 hereto, none of the matters addressed in clauses (i) through (viii) above, individually or in the aggregate, could reasonably be expected to have a Buyer Material Adverse Effect.

        3.19Insurance.Schedule 3.19 hereto lists all insurance policies of any nature maintained, for current occurrences by Buyer or any Buyer Subsidiary, as well as a summary of the terms of each such policy. All such policies are in full force and effect. All premiums due on such policies have been paid and no notice of cancellation or termination or intent to cancel has been received by Buyer or any Buyer Subsidiary with respect to such policies. There is no dispute with respect to such policies.

        3.20Customers and Suppliers.    There is no actual nor, to Buyer's Knowledge, threatened termination or cancellation of, or any material adverse modification or change in the business relationship of Buyer or any Buyer Subsidiary with any customer or group of customers whose purchases during the twelve months ended June 30, 2003 caused them to be ranked among the ten largest customers of Buyer and the Buyer Subsidiaries, in the aggregate, or the business relationship of Buyer or any Buyer Subsidiary with any supplier material to its operations.

        3.21Finder's Fees.    Neither Buyer nor any Affiliate of Buyer has employed or retained any investment banker, broker, agent, finder or other party, or incurred any obligation for brokerage fees, finder's fees or commissions, with respect to the transactions contemplated by this Agreement, or

22

otherwise dealt with anyone purporting to act in the capacity of a finder or broker with respect thereto whereby any party hereto may be obligated to pay such a fee or a commission. Buyer agrees to indemnify and hold the Sellers and their respective Affiliates harmless from and against any and all claims, liabilities or obligations with respect to all fees, commissions or expenses asserted by any Person on the basis of any act, statement, agreement or commitment alleged to have been made by Buyer or any Affiliate of Buyer with respect to any such fee, commission or expense.

ARTICLE 4
ADDITIONAL AGREEMENTS

        4.1Access to Information; Confidentiality.

        (a)   Until the Closing, the Sellers will furnish, and will cause the Company to furnish, Buyer and its employees, officers, accountants, attorneys, agents, investment bankers and other authorized representatives (the "Buyer Representatives") with all financial, operating and other data and information concerning the assets, commitments and properties of the Company and the Company Subsidiaries as Buyer shall from time to time reasonably request and will afford Buyer Representatives reasonable access to the offices, properties, books, records, contracts and documents of the Company and the Company Subsidiaries and will be given the opportunity to ask questions of, and receive answers from, representatives of the Company and the Company Subsidiaries. As part of its investigation, Buyer shall have the right to conduct environmental assessments of the Company's and the Company Subsidiaries' properties, including soil and groundwater sampling, as it deems appropriate. No investigations by Buyer or the other Buyer Representatives shall reduce or otherwise affect the obligation or liability of the Sellers with respect to any representations, warranties, covenants or agreements made herein or in any exhibit, schedule or other certificate, instrument, agreement or document, including the Schedules referred to in Article 2 hereof, executed and delivered in connection with this Agreement, except as specifically provided in Section 7.3(a)(iii) hereof. The Company, the Company Subsidiaries and the Sellers will cooperate with Buyer and the Buyer Representatives in the preparation of any documents or other materials that may be required by any Governmental Entity.

        (b)   Until the Closing, Buyer and the Buyer Subsidiaries will furnish each Seller and its employees, officers, accountants, attorneys, agents, investment bankers and other authorized representatives (the "Seller Representatives") with all financial, operating and other data and information concerning the assets, commitments and properties of Buyer and the Buyer Subsidiaries as Sellers shall from time to time reasonably request and will afford the Seller Representatives reasonable access to the offices, properties, books, records, contracts and documents of Buyer and the Buyer Subsidiaries and will be given the opportunity to ask questions of, and receive answers from, representatives of Buyer and the Buyer Subsidiaries; provided, however, that Buyer and the Buyer Subsidiaries shall not be required to violate any of their obligations under any confidentiality agreement with a Person other than a party to this Agreement or an Affiliate thereof. No investigations by Sellers or the other Sellers Representatives shall reduce or otherwise affect the obligation or liability of Buyer and the Buyer Subsidiaries with respect to any representations, warranties, covenants or agreements made herein or in any exhibit, schedule or other certificate, instrument, agreement or document, including the Schedules referred to in Article 3 hereof, executed and delivered in connection with this Agreement, except as specifically provided in Section 7.3(a)(iv) hereof. Buyer and the Buyer Subsidiaries will cooperate with Sellers and the Seller Representatives in the preparation of any documents or other materials that may be required by any Governmental Entity.

        (c)   The parties to the Mutual Confidentiality and Nondisclosure Agreement, dated as of June 24, 2003 (the "Nondisclosure Agreement"), among the Company, First Reserve Corporation and the Basic Energy Services, Inc. agree to the continued terms thereof.

23

        (d)   Each Seller (other than the First Reserve Fund, which is bound by the Nondisclosure Agreement) agrees to hold in confidence all, and not to disclose to others for any reason whatsoever any, non-public information received by it or its representatives from the other party hereto in connection with the transactions contemplated by this Agreement except (i) as required by law; (ii) for disclosure to officers, directors, employees and representatives of such party as necessary in connection with the transactions contemplated hereby or as necessary to the operation of such party's business; and (iii) for information that becomes publicly available other than through such party. If the transactions contemplated by this Agreement are not consummated, each party hereto (a) will return to the other party hereto all non-public documents and other material obtained from such other party, and all copies, summaries and extracts thereof, or certify to such other party that such information has been destroyed and (b) agrees not to use for its own benefit or for the benefit of any other Person any non-public information received by it or its representatives or Affiliates from the other party in connection with the transactions contemplated by this Agreement.

        (e)   Notwithstanding anything to the contrary in this Agreement, each party hereto may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated hereby, and all materials of any kind (including opinions, if any or other tax analyses, if any) that are provided to it relating to such tax treatment and tax structure; provided, however, that this sentence shall not permit any disclosure that otherwise is prohibited by this Agreement (i) until the earlier of (x) the date of the public announcement of discussions relating to the Transaction, (y) the date of the public announcement of the Transaction, and (z) the date of the execution of an agreement (with or without conditions) to enter into the Transaction; or (ii) if such disclosure would result in a violation of federal or state securities laws; or (iii) to the extent not related to the tax structure or tax aspects of the transaction. Moreover, nothing in this Agreement shall be construed to limit in any way any party's ability to consult any tax advisor regarding the tax treatment or tax structure of the transactions contemplated hereby. For the purposes of the foregoing sentence, (i) the "tax treatment" of a transaction means the purported or claimed federal income tax treatment of the transaction, and (ii) the "tax structure" of a transaction means any fact that may be relevant to understanding the purported or claimed federal income tax treatment of the transaction. Thus, for the avoidance of doubt, the parties acknowledge and agree that the tax treatment and tax structure of any transaction does not include the name of any party to a transaction or any sensitive business information unless such information is related or relevant to the purported or claimed federal income tax treatment of the transaction.

        4.2Conduct of Business.    The Company and the Sellers, on the one hand, and Buyer, on the other hand, covenant and agree with such other party that from and after the date hereof until the Closing, except as expressly contemplated by this Agreement or as expressly consented to in writing by such other party, to, and to cause the Company Subsidiaries (in the case of the Company and the Sellers) and the Buyer Subsidiaries (in the case of the Buyer) to, as the case may be:

        (a)   operate each such entity only in the usual, regular and ordinary manner consistent with past practice with a view to maintaining the goodwill that each such entity now enjoys and, to the extent consistent with such operation, use all reasonable efforts to preserve intact its present business organization, keep available the services of their respective employees and preserve their relationships with their respective customers, suppliers, jobbers, distributors and other Persons having business relations with each such entity;

        (b)   use all reasonable efforts to maintain the assets of each such entity in a state of repair, order and condition consistent with past practice;

        (c)   maintain the books of account and records relating to each such entity in the usual, regular and ordinary manner, in accordance with the usual accounting practices of each such entity applied on a consistent basis and not increase the carrying value of any assets above their historical costs;

24

        (d)   comply in all material respects with all statutes, laws, orders and regulations applicable to each such entity and to the businesses, operations, properties or assets of each such entity;

        (e)   not sell, assign, transfer, lease or otherwise dispose of any assets or properties of any such entity, except for dispositions of the inventories for value in the usual and ordinary course of business consistent with past practice;

        (f)    preserve and maintain all rights that each such entity now enjoys in and to its respective Intellectual Property and not sell, assign, transfer, lease or otherwise dispose of any of such Intellectual Property;

        (g)   not mortgage, pledge or otherwise create a security interest or permit there to be created or exist any Encumbrances on the existing assets or properties of each such entity;

        (h)   not incur any obligation for borrowed money or purchase money indebtedness whether or not evidenced by a note, bond, debenture or similar instrument, except in the ordinary course of business consistent with past practice (and in no event in an amount greater than $250,000 in the aggregate);

        (i)    not enter into any Contract that is not in the ordinary course of business consistent with past practice or that is with an Affiliate of any such entity;

        (j)    not amend or modify any Company Material Contract (in the case of the Company or any Company Subsidiary) or Buyer Material Contract (in the case of Buyer or any Buyer Subsidiary), except in the ordinary course of business consistent with past practices and as would not material adversely effect such entity's rights under any such contract;

        (k)   not consent to the termination of any Company Material Contract (in the case of the Company or any Company Subsidiary) or Buyer Material Contract (in the case of Buyer or any Buyer Subsidiary) or waive any of the rights of any of such entities with respect thereto;

        (l)    not permit any insurance policy naming any such entity as a beneficiary or a loss payee to be canceled or terminated or any of the coverage thereunder to lapse unless simultaneously with such termination or cancellation replacement policies providing substantially the same coverage are in full force and effect;

        (m)  pay when due all accounts payable, all payments required by any Company Material Contract or Buyer Material Contract, and all Taxes (other than Taxes that are being contested in good faith and for which adequate reserves exist in the Company Financial Statements or Buyer Financial Statements and that would not result in an Encumbrance being imposed on any assets or properties of any of such entities);

        (n)   not make or rescind any material express or deemed election relating to Taxes, settle or compromise any material claim, action, suit, litigation, proceeding, arbitration, investigation, audit or controversy relating to Taxes, or except as may be required by applicable Law, make any change to any of its material methods of reporting income or deductions for federal income tax purposes from those employed in the preparation of its most recently filed federal income tax return;

        (o)   not make or change any method of accounting or application of any principles under GAAP;

        (p)   not change the terms of employment of any officer or senior employee or increase the compensation or rate of compensation or commissions or bonuses payable by any of such entities to any of their respective employees;

        (q)   not declare or pay any dividend on or make any other distribution in respect of any of the shares in the capital stock of any of such entities, or purchase, redeem or otherwise acquire any of such shares other than in the Preferred Stock Exchange;

25

        (r)   not authorize or issue, sell, pledge, dispose of or encumber any shares of capital stock of the Company or any Company Subsidiary; provided, that Buyer may issue shares of capital stock or securities convertible thereinto having an aggregate value of up to $20 million (based on the Buyer Per Share Value) and Buyer may issue shares of Buyer Common Stock in connection with the Preferred Stock Exchange;

        (s)   not grant any stock options, warrants or other rights to acquire capital stock (including any "phantom" shares) of the Company or any Company Subsidiary, other than, in the case of Buyer, in connection with any employee compensation arrangement;

        (t)    not amend or otherwise modify the Certificate of Incorporation, bylaws, or organizational documents of any of such entities, except as contemplated by Section 3.2 hereof;

        (u)   not amend any Benefit Plan except as required by Law or this Agreement; and

        (v)   promptly notify such other party in writing if any of such entities becomes aware of any change in the business or operations of any of such entities that shall have occurred or that shall have been threatened (or any development that shall have occurred or that shall have been threatened involving a prospective change) that would reasonably be expected to have Company Material Adverse Effect (in the case of the Company or any Company Subsidiary) or a Buyer Material Adverse Effect (in the case of Buyer or any Buyer Subsidiary).

Notwithstanding the foregoing, (x) clauses (h), (i), and (u) above apply only to the Sellers, the Company and the Company Subsidiaries and do not apply to Buyer or any of the Buyer Subsidiaries; (y) Buyer may amend the Buyer Credit Facility or enter into a new credit facility or replace the Buyer Credit Facility; and (z) Buyer may make such changes to the terms and provisions of its outstanding equity securities and options or warrants convertible thereinto and its outstanding indebtedness, including the maturities thereof (including, without limitation, any amendments or modifications to the documents described in clause (t) above), (A) as may be required by the lenders in connection with amending the Buyer Credit Facility or the Company Credit Facility or in connection with entering into a new credit facility to replace either of such facilities or (B) as may be requested by the holders of such securities.

        4.3Negotiation with Others.    The Company and the Sellers agree that from the date hereof until the Closing Date or the termination of this Agreement pursuant to Article 9 hereof, none of the Sellers or any of their respective Affiliates, including the Company, will, directly or indirectly, through any representative or otherwise, solicit or entertain offers from, negotiate with or in any manner encourage, discuss or accept or consider any proposal or offer from any Person not a party hereto or not affiliated with a party hereto with respect to a merger, consolidation, asset purchase, stock purchase or any similar transaction involving the Company or any Company Subsidiary or their assets or properties. During such period, the Sellers will immediately notify Buyer regarding any such contact between the Sellers, any Affiliate or any of their representatives and any Person regarding any such offer or proposal or any related inquiry and shall return without discussion all offers or proposals regarding any such transaction involving the Company, any Company Subsidiary or their assets or properties.

        4.4Information; Supplements to Schedules.

        (a)   During the period from the date of this Agreement to the Closing Date, Buyer and the Sellers will promptly inform each other in writing of any claim, action or any proceeding commenced against such party with respect to the transactions contemplated by this Agreement or any assets or property of the Company.

        (b)   Buyer and the Sellers shall from time to time up to the date that is two (2) weeks prior to the Closing (the "Schedule Freeze Date"), by notice in accordance with this Agreement, supplement, amend or create any Schedule to reflect changes in any disclosure from the date of this Agreement or

26

items mistakenly omitted from disclosure at the time of this Agreement. No such supplemental, amended or additional Schedule shall be evidence, in and of itself, that the representations and warranties in the corresponding section are no longer true and correct in all material respects. It is specifically agreed that such Schedules may be supplemented or amended to add immaterial, as well as material, items thereto. Notwithstanding the foregoing, (i) for purposes of satisfaction of the conditions set forth in Article 5 and 6 hereof, the Schedules of Buyer and the Sellers, respectively, shall be deemed to include only that information contained therein on the date of this Agreement and shall be deemed to exclude all information contained in any supplement or amendment thereto and (ii) for purposes of the indemnification provisions set forth in Article 7 hereof, the Schedules of Buyer and the Sellers, respectively, shall be deemed to include all information included in any supplement or amendment thereto after the date of this Agreement through the Schedule Freeze Date.

        4.5Delivery of Documents and Other Materials.

        (a)   The Sellers shall maintain all documents, agreements, instruments, certificates, writings, notices, consents, affidavits, letters, telegrams, telexes, statements, files, computer disks, microfiches or other documents in electronic format, schedules, exhibits or any other paper or record whatsoever relating to the Company or any Company Subsidiary that are in the possession or control of the Company or any Company Subsidiary, including, without limitation, all files relating to the Company Financial Statements, computer disks reflecting any books or records, documents or other papers, or other information or data relating to the operation of the Company stored on any electronic media, including computers ("Documents and Other Materials"). The Sellers shall deliver at or prior to Closing any Documents and Other Materials that are the property of the Company or any Company Subsidiary that are not in the possession of the Company or that are otherwise not the exclusive property of one or more of the Sellers. For a period of three (3) years after the Closing Date, Buyer agrees to provide the Sellers with access to such Documents and Other Materials to the extent required for tax, financial accounting or legal purposes on a reasonable basis during normal business hours and to permit copies to be made of such Documents and Other Materials as may be reasonably needed.

        (b)   The Sellers agree to provide Buyer with access to any Documents and Materials not delivered to Seller pursuant to paragraph (a) above to extent required for tax, financial, accounting, legal, operational or other reasonable purpose on a reasonable basis during normal business hours and to permit copies to be made of such Documents and Other Materials as may be reasonably needed; provided, however, that if any of such Documents and Other Materials retained by Sellers and not otherwise delivered to Buyer at Closing are material to business or operation of the Company or any of the Company Subsidiaries, copies of such Documents and Other Materials shall be provided to Buyer at Closing.

        (c)   All such Documents and Other Materials so copied by any party pursuant to paragraphs (a) and (b) above shall be maintained by such party in confidence, except to the extent required to be disclosed under Law or in furtherance of any defense by such party or any thereof to any action, suit or proceeding against such party or such Affiliate; provided, however, that the party possessing such Documents and Other Materials shall be advised of any such proposed disclosure in advance and be entitled to seek a limitation on the use of such information and scope of such disclosure.

        4.6Further Assurances.    Each of the Sellers shall execute, acknowledge and deliver or cause to be executed, acknowledged and delivered to Buyer such bills of sale, assignments (including but not limited to assignments of leases) and other instruments of transfer, assignment and conveyance, in form and substance satisfactory to counsel for Buyer, as shall be necessary to vest in Buyer all the right, title and interest in and to the Shares free and clear of all Encumbrances and shall use his or its best efforts to cause to be taken such other action as Buyer may require to more effectively implement and carry into effect the transactions contemplated by this Agreement, including (i) using commercially reasonable efforts to assist or cause any of the Remaining Stockholders to implement and carry into effect the transactions contemplated hereby, including causing the Company to bring an action to enforce the Seller Agreement if requested by Buyer, and (ii) promptly providing access to and copies of any Documents and Other Materials requested by Buyer pursuant to Section 4.5(b) hereof.

27

        4.7Covenant Not to Compete With the Business.    Each of (i) the First Reserve Fund, on behalf of itself and any other private equity fund currently under common control with the First Reserve Fund ("Affiliated Funds") or any entity in which the First Reserve Fund or any Affiliate Fund owns more than 50% of the outstanding voting securities or has the ability to appoint a majority of the board of directors or similar body (a "Control Investment," and with the First Reserve Fund and the Affiliated Funds, the "First Reserve Entities") and (ii) the other Sellers on behalf of themselves and their respective Affiliates (together with the First Reserve Entities, the "Non-Compete Parties") agrees that, effective as of the Closing Date and for a period of two (2) years thereafter, none of the Non-Compete Parties shall, without the consent of Buyer, directly or indirectly, design, develop, market, produce, manufacture, rent, provide or sell any products or services currently provided by the Company or any Company Subsidiary in any geographic location in which the Company or any Company Subsidiary currently conducts its business or operations or solicit any customers of the Company or any Company Subsidiary regarding the same or, except for the benefit of Buyer and its Affiliates, assist any Person to do the same; provided, that the foregoing provisions of this sentence shall not apply to (x) any existing business of the First Reserve Entities; (y) any business acquired by a First Reserve Entity after the date hereof (an "Acquired Business"), to the extent that the revenues from the portion of the Acquired Business that would otherwise violate the foregoing provisions represent less than 25% of the overall revenues of the Acquired Business; (z) an Acquired Business, if the acquiring First Reserve Entity or Entities divests within six (6) months the portion of the Acquired Business such that the Acquired Business then satisfies clause (y) above. Each of the Sellers acknowledges that a remedy at Law for any breach or attempted breach of this Section 4.7 will be inadequate and further agrees that any breach of this Section 4.7 will result in irreparable harm to the Company and Buyer, and, accordingly, Buyer, shall, in addition to any other remedy that may be available to it, be entitled to specific performance and injunctive and other equitable relief in case of any such breach or attempted breach. Each of the Sellers acknowledges that this covenant not to compete is being provided as an inducement to Buyer to acquire the Initial Shares and that this Section 4.7 contains reasonable limitations as to time, geographical area and scope of activity to be restrained that do not impose a greater restraint than is necessary to protect the goodwill or other business interest of Buyer. Whenever possible, each provision of this Section 4.7 shall be interpreted in such a manner as to be effective and valid under applicable Law but if any provision of this Section 4.7 shall be prohibited by or invalid under applicable Law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of this Section 4.7. If any provision of this Section 4.7 shall, for any reason, be judged by any court of competent jurisdiction to be invalid or unenforceable, such judgment shall not affect, impair or invalidate the remainder of this Section 4.7 but shall be confined in its operation to the provision of this Section 4.7 directly involved in the controversy in which such judgment shall have been rendered. In the event that the provisions of this Section 4.7 should ever be deemed to exceed the time or geographic limitations permitted by applicable laws, then such provision shall be reformed to the maximum time or geographic limitations permitted by applicable law. The provisions of this Section 4.7 shall be in addition to and shall not limit or be limited by the provisions of any other agreement to which the Company or any Affiliate, on the one hand, and any Seller or an Affiliate, on the other hand, are parties.

        4.8Non-Solicitation of Employees.    For a period of two (2) years after the Closing Date, each Seller agrees not to, and to cause any Non-Compete Party not to, directly or indirectly, (i) induce or attempt to induce any employee of BES, the Company or any Affiliate thereof (a "Covered Employee") to discontinue his employment with BES, the Company or any Affiliate thereof or (ii) offer employment to, employ or otherwise engage as an employee, independent contractor or otherwise, any such employees; provided, however, that no Non-Compete Party shall be restricted in any general solicitation for employees or public advertising of employment not specifically directed at such employees; provided, further, that a Non-Compete Party with fifty (50) or more employees may hire a

28

Covered Employee, but only if such hiring directly results from such general solicitation or advertising and Sellers have no Actual Knowledge (as defined below) that a Covered Employee was hired.

        4.9Release.

        (a)   As of the Closing Date, each of the Sellers does hereby for himself or itself and his or its successors and assigns release, acquit and forever discharge Buyer, the Company and their respective Affiliates, the officers, directors, employees and agents thereof and their respective successors and assigns, of and from any and all claims, demands, liabilities, responsibilities, disputes, causes of action and obligations of every nature whatsoever, liquidated or unliquidated, known or unknown, matured or unmatured, fixed or contingent, that such Seller or its Affiliates now has, owns or holds or has at any time previously had, owned or held against such parties, including, without limitation, all liabilities created as a result of the negligence, gross negligence and willful acts of the Company or the Company Subsidiaries and their employees and agents, or under a theory of strict liability, existing as of the Closing Date or relating to any action, omission or event occurring on or prior to the Closing Date; provided, however, that any claims, liabilities, debts or causes of action that may arise in the connection with the failure of any of the parties hereto to perform any of their obligations hereunder or under any other agreement relating to the transactions contemplated hereby or from any breaches by any of them of any representations or warranties herein or in connection with any of such other agreements shall not be released or discharged pursuant to this Agreement.

        (b)   Each of the Sellers represents and warrants that he or it has not previously assigned or transferred, or purported to assign or transfer, to any Person or entity whatsoever all or any part of the claims, demands, liabilities, responsibilities, disputes, causes of action or obligations released herein. Each of the Sellers covenants and agrees that such Seller will not assign or transfer to any Person or entity whatsoever all or any part of the claims, demands, liabilities, responsibilities, disputes, causes of action or obligations to be released herein. Each of the Sellers represents and warrants that such Seller has read and understands all of the provisions of this Section 4.9 and that he or it has been represented by legal counsel of his or its own choosing in connection with the negotiation, execution and delivery of this Agreement.

        (c)   The release provided by the Sellers pursuant to this Section 4.9 shall apply notwithstanding that the matter for which release is provided may relate to the ordinary, sole or contributory negligence, gross negligence, willful misconduct or violation of Law by a released party, including Buyer, its Affiliates, officers, directors, employees and agents, and for liabilities based on theories of strict liability, and shall be applicable whether or not negligence of the released party is alleged or proven, it being the intention of the parties to release the released party from and against its ordinary, sole and contributory negligence and gross negligence as well as liabilities based on the willful actions or omissions of the released party and liabilities based on theories of strict liability.

        4.10Tax Matters.

        (a)   After the Closing Date, each of Buyer, the Company and its Subsidiaries, and the Sellers shall cooperate fully in preparing any Tax Returns of the Company and its Subsidiaries and in preparing for any audits of, or disputes or litigation with, taxing authorities regarding any Tax Returns with respect to the Company and its Subsidiaries and make available to the other parties and to any taxing authority as reasonably requested all information and documents relating to Taxes of the Company and its Subsidiaries.

        (b)   The Sellers shall pay, and shall indemnify Buyer from and against all sales, use, transfer, stock transfer, real property transfer, and recording Taxes, and other similar Taxes and fees arising out of or in connection with the transactions effected pursuant to this Agreement.

        4.11Continuation of Business by Buyer.    Nothing in this Agreement, in any exhibit or schedule hereto or in any agreement, instrument or other document executed or delivered in connection with

29

this Agreement shall require Buyer to manage and operate the business conducted by the Company or the Company Subsidiaries with any duty or standard of care to the Sellers. Notwithstanding the foregoing, following Closing, Buyer will continue the historic business of the Company or continue to use a significant portion of the historic business assets of the Company in a business in accordance with Treas. Reg. 1.368-1(d).

        4.12No Public Announcement.    None of Buyer, the Company or any Seller or any of their respective Affiliates shall, without the written approval of Buyer and the Stockholder Agent make any press release or other public announcement concerning the transactions contemplated by this Agreement, except as and to the extent that any such Person shall be so obligated by Law, in which case the other parties to this Agreement shall be advised and the parties shall use their best efforts to cause a mutually agreeable release or announcement to be issued; provided, however, that the foregoing shall not preclude communications or disclosures necessary to implement the provisions of this Agreement (including communications or disclosures to lenders or rating agencies or in connection with the receipt of any consents or contractual notices) or to comply with applicable accounting, tax and disclosure obligations of any Governmental Entity.

        4.13Termination of Certain Agreements.    Except for the employment agreements listed on Schedule 4.13 hereto, effective prior to or as of the Closing, the Sellers and the Company (as applicable) shall have terminated or cancelled all existing agreements between the Company or any Company Subsidiary, on the one hand, and the Sellers, the Remaining Stockholders, or their respective Affiliates, on the other hand, including without limitation the Seller Agreement. Furthermore, in accordance with Section 3.5(a) of the Seller Agreement, each Seller agrees that upon the consummation of the sale of Initial Shares in accordance with this Agreement, any and all options to acquire Company Common Stock (whether vested or unvested) shall automatically be terminated and any transaction involving such unvested options shall be void and of no effect.

        4.14Expenses.    Except as otherwise provided in this Agreement, Buyer, the Company and each Seller shall pay their respective costs and expenses incident to the negotiation and preparation of this Agreement and their respective performance and compliance with all agreements and conditions contained herein on its part to be performed or complied with, including fees, expenses and disbursements of counsel, investment bankers and independent public accountants. Furthermore, as between the Company and the Sellers, each Seller agrees that it shall bear its own such costs and expenses and that the only costs and expenses to be borne by the Company in connection with this Agreement and the transactions contemplated hereby are those actually incurred by the Company in its own behalf, which specifically include the fees of Gibson, Dunn & Crutcher, LLP and PricewaterhouseCoopers LLP.

        4.15Management of Arbitration Proceeding.    In the event that the arbitration proceeding referred to in Section 2.17(b) hereof has not been finally resolved and any settlement or award paid prior to Closing, those individuals affiliated with the First Reserve Fund that have been managing such arbitration proceeding on behalf of the Company through Closing shall continue to do so afterwards until such final resolution, settlement or award payment. Any costs and expenses incurred by such individuals after Closing in connection therewith, if requested, shall be promptly reimbursed by the Company, but such costs and expenses so reimbursed shall be subject to the indemnification provisions of Section 7.1(c) hereof.

ARTICLE 5
BUYER'S CONDITIONS

        The obligation of Buyer to purchase the Initial Shares as contemplated hereby is, at the option of Buyer, subject to the satisfaction on or before the Closing Date of the conditions set forth below, any of which may be waived by Buyer in writing.

30

        5.1Representations, Warranties and Covenants.    The representations and warranties of each of the Sellers contained in this Agreement that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects on and as of the Closing Date, and all representations and warranties of each of the Sellers that are qualified by materiality or Material Adverse Effect shall be true and correct on and as of the Closing Date, in each case with the same force and effect as though such representations and warranties had been made or given on and as of the Closing Date; each and all of the agreements and covenants of the Sellers to be performed or complied with by them on or before the Closing Date pursuant to this Agreement shall have been performed or complied with in all respects; and each of the Sellers shall have delivered to Buyer a certificate, dated the Closing Date, regarding the matters set forth in this Section 5.1.

        5.2Good Standing.    The Sellers shall have delivered to Buyer certificates issued by appropriate Governmental Entities evidencing the status of the Company and each of the Company Subsidiaries, as of a date not more than five calendar days prior to the Closing Date, in the State of Delaware, and as of a date not more than five calendar days prior to the Closing Date, or such longer period as is reasonably practicable under the circumstances, in each other jurisdiction specified in Schedule 2.1(a) hereto.

        5.3Closing Deliveries.    The Sellers shall have delivered or be standing ready to deliver to Buyer each of the items specified in Section 1.3(a) hereof, including stock certificates representing the Initial Shares and any such additional instruments of transfer of the Initial Shares as shall be reasonably requested by Buyer to vest in Buyer all the right, title and interest in and to the Initial Shares, in each case executed and dated the Closing Date.

        5.4Subscription Agreements.    Each of the Remaining Stockholders shall have delivered or be standing ready to deliver to Buyer: (i) a duly executed Subscription Agreement (in the form attached as Exhibit B hereto), (ii) a duly executed Escrow Agreement (in the form attached as Exhibit D hereto), (iii) a duly executed Amended and Restated Stockholder's Agreement of Buyer (in the form attached as Exhibit C hereto), (iv) stock certificates representing the Remaining Shares endorsed in blank or accompanied by stock powers so endorsed, and any such additional instruments of transfer of such Remaining Shares as shall be reasonably requested by Buyer to vest in Buyer all the right, title and interest in and to such Remaining Shares and (v) any document or instruments required to be delivered pursuant to the agreements referred to in clauses (i) through (iii) above, in each case executed and dated the Closing Date.

        5.5No Litigation.    No preliminary or permanent injunction or other order of any court or other Governmental Entity shall be in effect or threatened nor shall there be in effect any statute, rule, regulation or executive order promulgated or enacted by any Governmental Entity that, in any such case, prevents the consummation of the transactions contemplated by this Agreement. No suit, action, claim, proceeding or investigation before any Governmental Entity shall have been commenced or threatened by any Person (other than Buyer or its Affiliates) seeking to prevent the sale of the Shares or asserting that the sale of all or a portion of the Shares would be unlawful.

        5.6No Company Material Adverse Event.    No Company Material Adverse Effect shall have occurred since the date of this Agreement.

        5.7Licenses, Consents and Approvals.    All licenses, consents or approvals of Governmental Entities required for the Sellers to consummate the transactions contemplated by this Agreement shall have been obtained. The Sellers shall have delivered to Buyer a copy of each of the licenses, consents, approvals and other authorizations from Governmental Entities necessary or appropriate for the Sellers to consummate the transactions contemplated by this Agreement.

        5.8Consents of Third Persons.    All consents from third Persons listed on Schedule 2.5 hereto shall have been obtained on terms satisfactory to Buyer.

31

        5.9Legal Opinion.    Buyer shall have been furnished an opinion of counsel to the Company and the First Reserve Fund in the form attached as Exhibit E hereto.

        5.10Payment of Obligations.    Immediately prior to the Closing, the Sellers and their respective Affiliates shall pay to the Company all indebtedness and other obligations that each such Person owes to the Company as of the Closing, except for the indebtedness listed on Schedule 5.10 hereto.

        5.11Resolutions.    If and as applicable, the Sellers shall have delivered to Buyer certified copies of resolutions of the board of directors or other equivalent body of each of the Sellers and the Company approving this Agreement and the transactions contemplated hereby in a form reasonably acceptable to Buyer.

        5.12Director Resignations.    Buyer shall have received the effective resignations of each of the directors of the Company and each Company Subsidiary, unless otherwise agreed to in writing by Buyer, and all actions shall have been taken so that immediately upon the Closing designees or nominees of Buyer shall constitute all of the members of the Board of Directors of the Company and each Company Subsidiary.

        5.13Employment Arrangements.    Buyer shall have arranged acceptable employment arrangements with each of the officers of the Company or a Company Subsidiary listed on Schedule 5.13 hereto.

        5.14Audited 2002 Financial Statements.    Prior to or at Closing, the Sellers shall have delivered to Buyer an audited consolidated balance sheet, statement of income and statement of cash flows of the Company as of and for the year ended December 31, 2002, which financial statements shall be substantially identical in form and substance (including the amounts set forth therein) to the unaudited consolidated balance sheet, statement of income and statement of cash flows of the Company as of and for the year ended December 31, 2002 attached on Schedule 2.6 hereto.

ARTICLE 6
SELLERS' CONDITIONS

        The obligation of each Seller to transfer the Initial Shares as contemplated hereby is, at the option of each Seller, subject to the satisfaction on or before the Closing Date of the conditions set forth below, any of which may be waived by the Seller in writing.

        6.1Representations, Warranties and Covenants.    The representations and warranties of each of Buyer contained in this Agreement that are not qualified by materiality or Material Adverse Effect shall be true and correct in all material respects on and as of the Closing Date, and all representations and warranties of Buyer that are qualified by materiality or Material Adverse Effect shall be true and correct on and as of the Closing Date, in each case with the same force and effect as though such representations and warranties had been made or given on and as of the Closing Date; each and all of the agreements and covenants of Buyer to be performed or complied with by it on or before the Closing Date pursuant to this Agreement shall have been performed or complied with in all respects; and Buyer shall have delivered to the Sellers a certificate signed by one of its duly authorized officers, dated the Closing Date, regarding the matters set forth in this Section 6.1.

        6.2Good Standing.    Buyer shall have delivered to each of the Sellers a copy of a certificate issued by appropriate Governmental Entities evidencing the status of Buyer, as of a date not more than five calendar days prior to the Closing Date, in the State of Delaware.

        6.3Closing Deliveries.    Buyer shall have delivered or be standing ready to deliver to the Sellers each of the items specified in Section 1.3(b) hereof, including stock certificates representing the shares of Buyer Common Stock representing the Purchase Price (other than the Escrowed Shares), in each case executed and dated the Closing Date.

32

        6.4Licenses, Consents and Approvals.    All licenses, consents or approvals of Governmental Entities required for Buyer to consummate the transactions contemplated by this Agreement shall have been obtained. Buyer shall have delivered to the Sellers a copy of each of the licenses, consents, approvals and other authorizations from Governmental Entities necessary or appropriate for Buyer to consummate the transactions contemplated by this Agreement.

        6.5No Litigation.    No preliminary or permanent injunction or other order of any Governmental Entity shall be in effect or threatened nor shall there be any statute, rule, regulation or executive order promulgated or enacted by any Governmental Entity that, in any such case, prevents the consummation of the transactions contemplated by this Agreement. No suit, action, claim, proceeding or investigation before any court or other Governmental Entity shall have been commenced or threatened by any Person (other than the Sellers or any of their respective Affiliates) seeking to prevent the sale of the Initial Shares or asserting that the sale of all or a portion of the Initial Shares would be unlawful.

        6.6No Buyer Material Adverse Effect.    No Buyer Material Adverse Effect shall have occurred since the date of this Agreement.

        6.7Resolutions.    Buyer shall have delivered to each of the Sellers a copy of certified resolutions of the board of directors of Buyer approving this Agreement and the transactions contemplated hereby.

        6.8Legal Opinion.    The Sellers shall have been furnished an opinion of counsel to Buyer substantially in the form attached as Exhibit F hereto.

ARTICLE 7
INDEMNIFICATION

        7.1Indemnification by the Sellers.

        (a)   Except as otherwise limited by this Article 7 and Article 8 hereof, the Sellers, jointly and severally, agree to indemnify, defend and hold Buyer, each of its Affiliates and each of their respective officers, directors, employees, agents, stockholders and controlling Persons and their respective successors and assigns, harmless from and against and in respect of any liabilities, losses, damages, demands, assessments, claims, costs and expenses (including interest, awards, judgments, penalties, settlements, fines, costs of remediation, diminutions in value, consequential damages, costs and expenses incurred in connection with investigating and defending any claims or causes of action (including, without limitation, attorneys' fees and expenses and all fees and expenses of consultants and other professionals)) actually suffered, incurred or realized by such party (collectively, "Losses"), arising out of or resulting from or relating to any misrepresentation, breach of representation or warranty (excluding the representations and warranties referenced in Section 7.1(b) hereof) or breach of any covenant or agreement made or undertaken by the Company in this Agreement or any misrepresentation or omission from any other agreement, certificate or document delivered to Buyer pursuant to this Agreement, including the Company Disclosure Schedule.

        (b)   Except as otherwise limited by this Article 7 and Article 8 hereof, each Seller, severally and not jointly, agrees to indemnify, defend and hold Buyer, each of its Affiliates and each of their respective officers, directors, employees, agents, stockholders and controlling Persons and their respective successors and assigns, harmless from and against and in respect of any Losses arising out of or resulting from or relating to any misrepresentation or breach of representation or warranty contained in Section 2.22 hereof.

        (c)   Notwithstanding the foregoing provisions of this Section 7.1, the Sellers jointly and severally agree to indemnify Buyer in full to the extent any settlement or award under the arbitration proceeding referred to in Section 2.17(b) hereof results in a liability to Buyer, the Company or any Affiliate(s) thereof, in the aggregate, in excess of the amount set forth in such Section 2.17(b) as having been

33

accrued by the Company as of June 30, 2003, as reflected in the Company Financial Statements as of such date.

        7.2Indemnification by Buyer.    Except as otherwise limited by this Article 7 and Article 8 hereof, Buyer agrees to indemnify, defend and hold the Sellers, the Remaining Stockholder and their respective successors and assigns harmless from and against and in respect of any Losses arising out of or resulting from or relating to any misrepresentation, breach of warranty or breach of any covenant or agreement made or undertaken by Buyer in this Agreement or any misrepresentation in or omission from any other agreement, certificate or document delivered to the Sellers pursuant to this Agreement.

        7.3Limits on Indemnification; Payment.

        (a)   Notwithstanding anything in this Article 7, the foregoing indemnification obligations shall be subject to the following limits:

        (i)    no Seller shall be liable for indemnification obligations under Sections 7.1(a) and 7.1(b) hereof, in the aggregate, in excess of 25% of the Purchase Price received by such Seller at Closing;

        (ii)   Buyer shall not be liable indemnification obligations under Section 7.2 hereof in excess of 25% of the Purchase Price paid by Buyer at Closing;

        (iii)  Sellers shall have no indemnification obligations with respect to a Claim by Buyer to the extent that prior to Closing Buyer had Actual Knowledge of the material facts required to constitute such claim;

        (iv)  Buyer shall have no indemnification obligations with respect to a Claim by a Seller to the extent that prior to Closing any Seller had Actual Knowledge of the material facts required to constitute such claim;

        (v)   for purposes of this Section 7.3(a), the amount of the Purchase Price received by any Seller or paid by Buyer, as the case may be, shall be calculated by multiplying the number of shares of Buyer Common Stock received (or paid) times the Buyer Per Share Value. For purposes of this Section 7.3, the parties hereto agree that the "Buyer Per Share Value" shall be the "Fair Market Value" per share of Buyer Common Stock as such term is defined in the Amended and Restated Stockholder's Agreement of Buyer; provided, that if the board of directors of Buyer is required to determine fair market value pursuant to such definition, it may do so in its sole discretion without obligation to engage any third-party to assist in such determination, as soon as practicable following delivery of notice by an Indemnitee with respect to a Claim hereunder;

        (vi)  no party shall have any indemnification obligation hereunder to the extent that a claim for indemnification is related to a representation, warranty or covenant that has expired pursuant to Article 8 hereof and is brought after such expiration; and

        (vii) for purposes hereof, "Actual Knowledge" of a fact shall mean the actual knowledge of the individuals named in the last sentence of this clause (vii), and shall not include any facts of which such individuals are not consciously aware, even if such individuals reasonably should have been aware of such facts through the normal exercise of their duties or such facts could reasonably be inferred from the existence of other facts of which such individuals have Actual Knowledge. Moreover, for the avoidance of doubt, none of such individuals shall be deemed to have Actual Knowledge of any such facts notwithstanding the fact that (A) a subordinate of any of such individuals was consciously aware of such materials facts or (B) documents disclosing such material facts were included among due diligence or other materials provided to either the Buyer Representatives or the Seller Representatives, as applicable. "Actual Knowledge" of Buyer shall mean the actual knowledge, as limited above, of Ken Huseman, Jim Carter, Bill Fox or Dub Harrison, and "Actual Knowledge" of the Sellers shall mean the actual knowledge, as limited above, of Ben Guill, Thomas Denison, Randy Spaur, Tim O'Keefe or Peter Kane.

34

        (b)   (i) except as set forth in clause (c) below, no party entitled to receive indemnification hereunder (the "Indemnitee") shall be entitled to assert any right under this Agreement against a party obligated to indemnify an Indemnitee hereunder (the "Indemnitor") unless and until the aggregate amount of the Losses suffered by the Indemnitee, collectively, exceed $400,000 (the "Basket"); provided, however, that once the amount of Losses suffered exceeds the Basket amount with respect to any Indemnitee, the Indemnitor shall be obligated to indemnify the Indemnitee to the full extent of such Losses, including the Basket amount; and

        (ii)   upon final resolution of the arbitration proceeding referred to in Section 2.17(b) hereof, to the extent any payments required to be made by the Company in connection with any settlement of award thereunder are, together with any and all costs and expenses incurred in connection therewith (including any costs and expenses reimbursed pursuant to Section 4.15 hereof), less than the amount set forth in such Section 2.17(b) as having been accrued by the Company as of June 30, 2003, as reflected in the Company Financial Statements as of such date (such difference, the "Over-Accrual Amount"), then any Losses for which Buyer or its Affiliates would be entitled to indemnification, after giving effect to the Basket if applicable, shall be reduced by such Over-Accrual Amount.

        (c)   For purposes of calculating the aggregate amount of Losses claimed against an Indemnitor, the amount of each Loss shall be reduced by (i) any third-party insurance benefits which the Indemnitee received in respect of or as a result of such Losses, less the reasonable costs incurred by the Indemnitee to recover those insurance benefits to the extent such costs are not otherwise recovered and (ii) any net Tax benefit actually recognized and realized by an Indemnitee, as determined in the sole discretion of such Indemnitee upon filing of its or his final tax return for any applicable taxable year, with respect to such Losses in the taxable year or years in which such Losses occur as a result of a deduction to such Indemnitee's taxable income in such year; provided, however, upon receipt of a request for payment by such Indemnitee, the Indemnitor shall not be entitled to withhold or delay payment of any amounts owing under this Article 7 in reliance upon this clause (ii) above.

        (d)   Notwithstanding the foregoing, the limitations set forth in Sections 7.3(a) and 7.3(b) hereof shall not apply with respect to (i) the Sellers' liability to Buyer with respect to (A) breaches of the representations set forth in clause (d) of Section 2.16 hereof, (B) breaches of the covenants set forth in Section 4.10(b) hereof, (C) breaches under Section 7.1(b) hereof (with respect to breaches of the representations set forth in Section 2.22 hereof, including, without limitation, any defects or Encumbrances with respect to title to the Initial Shares, and Section 2.16 hereof) and (D) breaches under Section 7.1 (c) hereof and (ii) Buyer's liability to the Sellers with respect to Section 3.2(b) hereof.

        (e)   The responsibility for making payment to Buyer for any indemnification obligations of the Sellers under Section 7.1(a) hereof shall be apportioned among the Sellers and the Remaining Stockholders by multiplying the amount of the Loss by the percentage interest set forth opposite the name of each Seller and Remaining Stockholder on Exhibit Ahereto. Any indemnification obligation of Buyer to the Sellers under Section 7.1(a) hereof shall be apportioned among the Sellers by multiplying the amount of the aggregate Loss by the percentage interest set forth opposite the name of each Seller on Exhibit A hereto.

        (f)    (i) Any indemnification obligations of a Seller under this Article 7 shall be satisfied by such Seller by paying to Buyer the portion of such Loss for which such Seller is responsible (the "Individual Seller Amount") (A) in immediately available funds by wire transfer to a bank account designated by Buyer or, at such Seller's election, (B) in shares of Buyer Common Stock. The number of shares of Buyer Common Stock to paid by a Seller pursuant to clause (B) above shall be quotient of the Individual Seller Amount divided by Buyer Per Share Value. Any shares of Buyer Common Stock paid to Buyer pursuant to clause (B) above shall first be drawn from the Escrowed Shares attributable to such Seller until none remain before such Seller shall be required to pay any additional shares of Buyer

35

Common Stock to Buyer. Notwithstanding the foregoing, in the event that such Seller does not have a sufficient number of shares of Buyer Common Stock to satisfy its indemnification obligations in full with respect to any Loss, such Seller shall pay to Buyer cash in the manner provided in clause (A) above; and

        (ii)   The difference between (A) the total Loss for which Buyer is entitled to indemnification under Section 7.1(a) hereof and (B) the aggregate amount of Individual Seller Amounts determined under Section 7.3(e) hereof (the "Remaining Stockholder Amount") shall be drawn from the shares of Buyer Common Stock attributable to the Remaining Stockholders that are deposited in escrow pursuant to the terms of the Escrow Agreement (the "Remaining Stockholder Escrow Shares"). Such Remaining Stockholder Amount shall be allocated among the Remaining Stockholder Escrow Shares in the manner set forth in Section 7.3(e) hereof. Notwithstanding the omission of the Remaining Stockholders from the indemnity obligations set forth in Section 7.1(a) hereof, the Remaining Stockholder Escrow Shares shall be considered issued subject to the provisions of this Section 7.3(f)(ii) hereof, and release of the Remaining Stockholder Escrow Shares shall extinguish the Sellers' indemnity obligations hereunder to the extent of the value of such released shares (valued at the Buyer Per Share Value).

        (g)   Any indemnification obligations of Buyer under this Article 7 shall be satisfied by Buyer paying to each Seller and Remaining Stockholder the portion of such Loss which such Seller or Remaining Stockholder is entitled to receive (A) in immediately available funds by wire transfer to a bank account designated by Buyer or, at Buyer's election, (B) in shares of Buyer Common Stock. The number of shares of Buyer Common Stock to paid by Buyer pursuant to clause (B) above shall be quotient of the amount of the Loss for which Buyer is responsible divided by "fair market value" of such shares of Buyer Common Stock, as defined in the Buyer Stockholders Agreement, as a date not more than 30 days prior to the payment of such shares of Buyer Common Stock.

        (h)   Payment of any amounts due pursuant to this Article 7, including any delivery of shares of Buyer Common Stock by a Seller as permitted under Section 7.3(a) hereof, shall be made within ten (10) Business Days after notice is sent by the Indemnitee.

        (i)    The remedies provided for in this Article 7 shall be the sole and exclusive remedy for the indemnified parties with respect to any claim for money damages resulting from any alleged breach of any representation, warranty or covenant made in this Agreement.

        7.4Procedure.    Subject to the limitations set forth in Article 8 hereof, all claims for indemnification under this Article 7 shall be asserted and resolved as follows:

        (a)   An Indemnitee shall promptly give the Indemnitor notice of any matter that an Indemnitee has determined has given or could give rise to a right of indemnification under this Agreement, stating the amount of the Loss, if known, and method of computation thereof, all with reasonable particularity, and stating with particularity the nature of such matter. Failure to provide such notice shall not affect the right of the Indemnitee to indemnification except to the extent such failure shall have resulted in liability to the Indemnitor that could have been actually avoided had such notice been provided within such required time period or to the extent such notice shall not have been sent within the time limitations set forth in Article 8 hereof.

        (b)   The obligations and liabilities of an Indemnitor under this Article 7 with respect to Losses arising from claims or actions of any third party that are subject to the indemnification provided for in this Article 7 ("Claims") shall be governed by and contingent upon the following additional terms and conditions: if an Indemnitee shall receive notice of any Claim, the Indemnitee shall give the Indemnitor prompt notice of such Claim and the Indemnitor may, at its option, assume and control the defense of such Claim at the Indemnitor's expense and through counsel of the Indemnitor's choice reasonably acceptable to the Indemnitee. In the event the Indemnitor assumes the defense against any such Claim

36

as provided above, the Indemnitee shall have the right to participate in the defense of such asserted liability, shall cooperate with the Indemnitor in such defense and will attempt to make available on a reasonable basis to the Indemnitor all witnesses, pertinent records, materials and information in its possession or under its control relating thereto as is reasonably required by the Indemnitor. The Indemnitee shall have the right to employ separate counsel in any such action and participate in the defense thereof; provided, the fees and expenses of such separate counsel shall be at the expense of the Indemnitee unless (i) the employment of such counsel shall have been specifically authorized in writing by the Indemnitor, (ii) the named parties to any such Claim (including any impleaded parties) include both the Indemnitee and the Indemnitor, and (iii) the Indemnitee shall have been advised by such counsel that there is one or more legal defenses available to it that are different from or additional to those available to the Indemnitor. In any such case, the Indemnitor shall not, in connection with any one action or separate but substantially similar or related action in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to local counsel) for the Indemnitee. In the event the Indemnitor does not elect to conduct the defense against any such Claim, the Indemnitor shall pay all reasonable costs and expenses of such defense as incurred and shall cooperate with the Indemnitee (and be entitled to participate) in such defense and attempt to make available to it on a reasonable basis all such witnesses, records, materials and information in its possession or under its control relating thereto as is reasonably required by the Indemnitee. Except for the settlement of a Claim that involves the payment of money only and for which the Indemnitee is totally indemnified by the Indemnitor, no Claim may be settled without the written consent of the Indemnitee, which shall not be unreasonably withheld.

        7.5Failure to Pay Indemnification.    If and to the extent the Indemnitee shall make written demand upon the Indemnitor for indemnification for which amounts are due and payable pursuant to this Article 7 and the Indemnitor shall refuse or fail to pay in full within ten (10) Business Days of such written demand the amounts demanded pursuant hereto and in accordance herewith, then the Indemnitee may utilize any legal or equitable remedy to collect from the Indemnitor the amount of its Losses. Nothing contained herein is intended to limit or constrain the Indemnitee's rights against the Indemnitor for indemnity, the remedies herein being cumulative and in addition to all other rights and remedies of the Indemnitee.

        7.6Express Negligence.    THE INDEMNITIES SET FORTH IN THIS ARTICLE 7 ARE INTENDED TO BE ENFORCEABLE AGAINST THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF NOTWITHSTANDING TEXAS' EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE OR PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF ANY OF THE INDEMNIFIED PARTIES.

        7.7Tax Treatment of Indemnity Payments.    Each party, to the extent permitted by applicable law, agrees to treat any payments made pursuant to this Article 7 as adjustments to the Purchase Price for all federal and state income and franchise Tax purposes.

ARTICLE 8
NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS,
REPRESENTATIONS, WARRANTIES AND AGREEMENTS

        The representations and warranties of Buyer and the Sellers contained herein shall survive the Closing for ending on the date that is 30 days after the delivery to Buyer of an audited consolidated balance sheet, statement of income and statement of cash flows of the Company as of and for the year ended December 31, 2003; provided, however, that (i) the representations and warranties set forth in Sections 2.18 and 3.18 hereof (Environmental) shall survive until and through December 31, 2005;

37

(ii) the representations and warranties set forth in Sections 2.2 and 3.2 hereof (Capitalization; Title to Shares), Sections 2.3 and 3.3 hereof (Authorization), Section 2.22 hereof (Seller Individual Representations), and Sections 2.23 and 3.21 hereof (Finder's Fees) shall survive indefinitely; and (iii) the representations and warranties set forth in Sections 2.16 and 3.16 hereof (Taxes) shall survive for a period equal to thirty (30) days after the expiration of the applicable statute of limitations (including extensions) for each Tax and taxable year.

        The covenants and agreements in this Article 8 shall survive the Closing and shall remain in full force and effect for such period as is necessary to resolve any claim made with respect to any representation, warranty, covenant or agreement contained herein during the survival period thereof, and the covenants and agreements of Buyer, the Company and each of the Sellers contained in Article 4 hereof shall survive the Closing for (x) the time period(s) set forth in the respective Sections contained in the Articles, or (y) if no time period is specified, without any contractual limitation on the period of survival.

        No party may bring a Claim for indemnification pursuant to Article 7 hereof to the extent notice of such Claim is sent after the expiration of the survival periods set forth above.

ARTICLE 9
TERMINATION

        9.1Termination.    The obligation of the parties to close the transactions contemplated by this Agreement may be terminated:

        (a)   at any time, by mutual agreement of Buyer and the Stockholder Agent;

        (b)   at any time, by Buyer, (i) if a material default shall be made by any of the Sellers in the observance or in the due and timely performance by any of the Sellers of any agreements and covenants of the Sellers herein contained or if there shall have been a breach by any of the Sellers of any of the warranties and representations of the Sellers herein contained, and such default or breach has not been waived or has not been cured to Buyer's reasonable satisfaction within 15 days after receipt by the Stockholder Agent from Buyer of written notice of its intention to terminate the pursuant to this clause (b)(i), or (ii) if Buyer reasonably believes that it will be unable, despite the exercise of commercially reasonable efforts, to obtain the waivers, consents or amendments that may be required by the lenders under the Buyer Credit Facility or the Company Credit Facility (including LaSalle Business Credit and General Electric Capital Corporation);

        (c)   at any time, by the Stockholder Agent, if a material default shall be made by Buyer in the observance or in the due and timely performance by Buyer of any agreements and covenants of Buyer herein contained or if there shall have been a breach by Buyer of any of the warranties and representations of Buyer herein contained and such default or breach has not been waived or has not been cured to the Stockholder Agent's reasonable satisfaction within 15 days after receipt by Buyer from the Stockholder Agent of written notice of its intention to terminate pursuant to this clause (c); or

        (d)   Buyer or the Stockholder Agent (provided the terminating party has not materially breached any of its agreements, covenants or representations and warranties) if the Closing shall not have occurred on or before October 31, 2003.

        9.2Liability Upon Termination.    If the obligation to close the transactions contemplated by this Agreement is terminated pursuant to any provision of Section 9.1 hereof, then this Agreement shall forthwith become void and there shall not be any liability or obligation with respect to the terminated provisions of this Agreement on the part of the Sellers or Buyer except and to the extent such termination results from the willful breach by a party of any of its representations, warranties or

38

agreements hereunder. The termination of this Agreement shall not relieve any party of its obligations under this Section 9.2.

        9.3Notice of Termination.    The parties hereto may exercise their respective rights of termination under this Article 9 only by delivering written notice to that effect to the other party or parties, and such notice is received on or before the Closing Date.

ARTICLE 10
DEFINITIONS OF CERTAIN TERMS

        In addition to terms defined elsewhere in this Agreement, the following terms shall have the meanings assigned to them herein, unless the context otherwise indicates, both for purposes of this Agreement and all Exhibits hereto and any Disclosure Schedule:

        "AAA" shall have the meaning given such term in Section 11.10.

        "AAA Rules" shall have the meaning given such term in Section 11.10.

        "Acquired Business" shall have the meaning given such term in Section 4.7.

        "Actual Knowledge" shall have the meaning given such term in Section 7.3(a)(vii).

        "Affiliate" shall mean, with respect to any specified Person, any officer, director, Seller or any other Person that directly or indirectly controls, is controlled by or is under common control with such specified Person.

        "Affiliated Funds" shall have the meaning given such term in Section 4.7.

        "Agreement" shall have the meaning given such term in the introduction of this Agreement.

        "Arbitration Notice" shall have the meaning given such term in Section 11.10(a).

        "Arbitrator" shall have the meaning given such term in Section 11.10(b).

        "Arbitrator List" shall have the meaning given such term in Section 11.10(b).

        "Benefit Plan" shall have the meaning given such term in Section 2.15(a).

        "Buyer Stockholders' Agreement" shall have the meaning given to such term in Section 3.2(a).

        "Business Day" shall mean any day other than a Saturday, Sunday or other day on which commercial banks in Houston, Texas are authorized by Law to close.

        "Buyer" shall have the meaning given such term in the introduction to this Agreement.

        "Buyer Common Stock" shall have the meaning given such term in Section 1.2.

        "Buyer Credit Facility" shall mean the Credit Agreement, dated January 24, 2003, by and among Basic Energy Services, Inc., TAT (Turn Around Trucking), Inc., TAT (Turn Around Trucking), Inc. II and Harrison Well Services, Inc., as borrowers, the other credit parties and lenders signatory thereto, and General Electric Capital Corporation, as term loan agent and lender, as such agreement may be further supplemented or amended.

        "Buyer Disclosure Schedule" shall mean the disclosure schedule of even date delivered to the Sellers by Buyer.

        "Buyer Financial Statements" shall have the meaning given such term in Section 3.6.

        "Buyer Material Adverse Effect" shall mean a Material Adverse Effect on Buyer and the Buyer Subsidiaries, taken as a whole.

        "Buyer Material Contract" shall have the meaning given such term in Section 3.13.

39

        "Buyer Per Share Value" shall have the meaning given such term in Section 7.3(a)(v).

        "Buyer Representatives" shall have the meaning given such term in Section 4.1(a).

        "Buyer's Knowledge" shall mean the knowledge of the executive officers and directors of Buyer.

        "Buyer Subsidiary" shall the meaning given such term in Section 3.1(b).

        "Closing" shall have the meaning given such term in Section 1.1(b).

        "Closing Date" shall have the meaning given such term in Section 1.1(b).

        "Code" shall mean the Internal Revenue Code of 1986, as amended.

        "Company" shall hall have the meaning given such term in the introduction to this Agreement.

        "Company Common Stock" shall have the meaning given such term in the recitals to this Agreement.

        "Company Credit Facility" shall mean the Amended and Restated Credit Agreement, dated August 30, 2002, by and among First Energy Services Company and H. B. & R., Inc., as borrowers, the other credit parties and lenders signatory thereto, and General Electric Capital Corporation, as agent and lender, as such agreement may be further supplemented or amended.

        "Company Disclosure Schedule" shall mean the disclosure schedule of even date herewith delivered to Buyer by the Company on behalf of the Sellers.

        "Company Financial Statements" shall have the meaning given such term in Section 2.6.

        "Company Material Adverse Effect" means a Material Adverse Effect on the Company and the Company Subsidiaries, taken as a whole.

        "Company Material Contract" shall have the meaning given such term in Section 2.13(a).

        "Company Subsidiary" shall have the meaning given such term in Section 2.1(b).

        "Company's Knowledge" means the knowledge of (i) the executive officers and directors of the Company or FESCO, (ii) each Seller and, (iii) if applicable, the executive officers and directors of such Seller.

        "Control Investment" shall have the meaning given such term in Section 4.7.

        "Copyrights" shall have the meaning given such term in Section 2.10(e)(iii).

        "Covered Employee" shall have the meaning given such term in Section 4.8.

        "Debt Obligation" shall mean any contract, agreement, indenture, note or other instrument relating to the borrowing of money, any capitalized lease obligation, any obligation properly classified as indebtedness or debt under GAAP or any guarantee or other contingent liability in respect of any indebtedness or obligation of any Person (other than the endorsement of negotiable instruments for deposit or collection in the ordinary course of business) and shall specifically include any loans or advances to or from the Sellers or their respective Affiliates.

        "Dispute" shall have the meaning given such term in Section 11.10.

        "Documents and Other Materials" shall have the meaning given such term in Section 4.5(a).

        "Encumbrances" shall have the meaning given such term in Section 1.1(a).

        "Environmental Laws" shall mean all Laws relating to (a) the control of any potential pollutant or protection of the air, water or land, (b) solid, gaseous or liquid waste generation, handling, treatment,

40

storage, disposal or transportation and (c) the regulation of or exposure to hazardous, toxic or other substances alleged to be harmful.

        "Environmental Liabilities" shall mean any and all Losses (including remediation, removal, response, abatement, clean-up, investigative and/or monitoring costs and any other related costs and expenses) incurred or imposed (a) pursuant to any agreement, order, notice, requirement, responsibility or directive (including directives embodied in Environmental Laws), injunction, judgment or similar documents (including settlements) arising out of, in connection with or under Environmental Laws, or (b) pursuant to any claim by a Governmental Entity or other third Person or entity for personal injury, property damage, damage to natural resources, remediation or similar costs or expenses incurred or asserted by such entity or person pursuant to Law and arising out of or in connection with a release, as such term is defined in Environmental Laws, of Hazardous Materials.

        "Environmental Permit" shall mean any permit, license, approval, registration, identification number or other authorization with respect to the Company under any Environmental Law.

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as amended.

        "ERISA Affiliate" shall mean any entity that is treated as a single employee together with the Company under Section 414 of the Code.

        "Escrowed Shares" shall have the meaning given such term in Section 1.2.

        "FESCO" shall have the meaning given such term in the recitals of this Agreement.

        "First Reserve Fund" shall have the meaning given such term in the recitals to this Agreement.

        "First Reserve Entities" shall have the meaning given such term in Section 4.7.

        "GAAP" shall mean United States generally accepted accounting principles applied on a consistent basis.

        "Governmental Entity" shall mean any national, state or local government or any subdivision thereof or any arbitrator, court, administrative or regulatory agency, commission, department, board or bureau or body or other government or authority or instrumentality or any entity or Person exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government.

        "Hazardous Materials" shall mean (a) any substance or material that is listed, defined or otherwise designated as a hazardous substance under any Environmental Law, (b) any petroleum or petroleum products, (c) radioactive materials, urea formaldehyde, asbestos and PCBs, and (d) any other chemical, substance or waste that is regulated by any Governmental Entity under any Environmental Law.

        "Indemnitee" shall have the meaning given such term in Section 7.3(b)(i).

        "Indemnitor" shall have the meaning given such term in Section 7.3(b)(i).

        "Individual Seller Amount" shall have the meaning given such term in Section 7.3(f)(i).

        "Initial Shares" shall have the meaning given such term in the recitals to this Agreement.

        "Intellectual Property" shall have the meaning given such term in Section 2.10(e).

        "Law" shall mean any applicable federal, state, municipal, local or foreign statute, law, ordinance, rule, regulation, order, judgment, writ, injunction or decree enacted, adopted, issued or promulgated by any Governmental Entity.

        "License" and "Licenses" shall have the meaning given to such terms as set forth in Section 2.11.

        "Litigation" shall have the meaning given to such term as set forth in Section 2.17(b).

        "Losses" shall have meaning given to such term as set forth in Section 7.1(a).

41

        "Material Adverse Effect" shall mean, with respect to any Person, a material adverse effect on the business, operations, assets, properties, prospects or material customer relationships of such Person.

        "Non-Compete Parties" shall have the meaning given such term in Section 4.7.

        "Nondisclosure Agreement" shall have the meaning given such term Section 4.1(c).

        "Over-Accrual Amount" shall have the meaning given such term in Section 7.3(b)(ii).

        "Patents" shall have the meaning given such term in Section 2.10(e)(i)).

        "Pension Plans" shall have the meaning given such term in Section 2.15(b).

        "Permitted Encumbrances" shall mean (i) Encumbrances for taxes or assessments or other governmental Charges not yet due and payable or which are being contested in good faith; (ii) pledges or deposits of money securing statutory obligations under workmen's compensation, unemployment insurance, social security or public liability laws or similar legislation (excluding Encumbrances under ERISA); (iii) inchoate or unperfected workers', mechanics or similar liens arising in the ordinary course of business or if choate and perfected are being contested in good faith and do not exceed $50,000 at any one time, so long as such Encumbrances attach only to equipment, fixtures and real estate; (iv) carrier's, warehousemen's, suppliers' or other similar possessory liens arising in the ordinary course of business and securing liabilities which are not yet due or, if past due are being contested in good faith and do not in the aggregate, exceed $50,000 at any time, as long as such Encumbrances attach only to inventory; (v) zoning restrictions, easements, licenses or other restrictions on the use of any real estate or other minor irregularities in title (including leasehold title) thereto, so long as the same do not materially impair the use, value or marketability of such real estate; and (vi) with respect to the Company, liens under the Company Credit Facility and equipment financing liens incurred in the ordinary course of business consistent with past practice.

        "Person" shall mean a corporation, an association, a partnership, an organization, a business, an individual or a Governmental Entity.

        "Preferred Stock" shall have the meaning given such term in Section 3.2.

        "Preferred Stock Exchange" shall have the meaning given such term in Section 3.2.

        "Purchase Price" shall have the meaning such term is given in Section 1.2.

        "Remaining Shares" shall have the meaning given such term in the recitals to this Agreement.

        "Remaining Stockholders" shall have the meaning such term is given in the recitals to this Agreement.

        "Remaining Stockholder Amount" shall have the meaning given such term in Section 7.3(f)(ii).

        "Remaining Stockholder Escrow Shares" shall have the meaning given such term in Section 7.3(f)(ii).

        "Schedule Freeze Date" shall have the meaning given such term in Section 4.4(b).

        "Seller" or "Sellers" shall have the meaning given such terms in the recitals to this Agreement.

        "Seller Agreement" shall have the meaning given such tem in the recitals of this Agreement.

        "Seller Representatives" shall have the meaning given such term in Section 4.1(b).

        "Shares" shall have the meaning given such term in the recitals to this Agreement.

        "Stockholder Agent" shall have the meaning given such term in Section 11.1.

        "Tax or Taxes" shall have the meaning given such term in Section 2.16.

        "Tax Returns" shall have the meaning given such term in Section 2.16.

42

        "Welfare Plans" shall have the meaning given such term in Section 2.15(b).

ARTICLE 11
MISCELLANEOUS

        11.1Stockholder Agent.    Each of the Sellers hereby irrevocably appoints First Reserve Corporation to be the representative (the "Stockholder Agent") of the Sellers following the Closing Date in any matter arising out of this Agreement. For any matter in which Buyer is entitled to rely on or otherwise deal with the Sellers, Buyer shall be entitled to communicate solely with the Stockholder Agent and shall be entitled to rely on any such communications as being the desire and will of the Sellers. Notice delivered to the Stockholder Agent in accordance with Section 11.2 hereof shall be deemed notice to all of the Sellers. For purposes of this Agreement, each Seller, without any further action on its part, shall be deemed to have consented to the appointment of First Reserve Corporation as the attorney-in-fact for and on behalf of each such Seller, and the taking by the Stockholder Agent of any and all actions and the making of any decisions required or permitted to be taken by him under this Agreement. Accordingly, the Stockholder Agent has unlimited authority and power to act on behalf of each Seller with respect to this Agreement and the disposition, settlement or other handling of all indemnification claims, amendments, waivers, and other rights or obligations arising from and taken pursuant to this Agreement. The Sellers will be bound by all actions taken by the Stockholder Agent in connection with this Agreement, and Buyer shall be entitled to rely on any action or decision of the Stockholder Agent. The Stockholder Agent will not incur any liability with respect to any action taken or suffered by it in reliance upon any notice, direction, instruction, consent, statement or other document believed by it to be genuine and to have been signed by the proper person (and shall have no responsibility to determine the authenticity thereof), nor for any other action or inaction, except its own willful misconduct, bad faith or gross negligence. In all questions arising under this Agreement, the Stockholder Agent may rely on the advice of counsel, and the Stockholder Agent will not be liable to the Sellers for anything done, omitted or suffered in good faith by the Stockholder Agent based on such advice. Notwithstanding the foregoing, Buyer will not incur any liability to any Seller with respect to any action taken or suffered by it in reliance upon any notice, direction, instruction, consent, statement, in each case whether written or oral, or other document provided by the Stockholder Agent, and no action or inaction on the part to Stockholder Agent shall relieve any Seller of its obligations to Buyer hereunder.

        11.2Notices.    All notices, requests, consents, directions and other instruments and communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered (a) in person, (b) by courier, (c) by overnight delivery service with proof of delivery or (d) by prepaid registered or certified first-class mail, return receipt requested, in each such case addressed to the respective party at the address set forth below, or (e) if sent by facsimile or other similar form of communication (with receipt confirmed) to the respective party at the facsimile number set forth below:

If to the Seller or the Stockholder Agent, to:

First Reserve Fund VIII, L.P.
One Lafayette Place
Greenwich, Connecticut 06830
Attention: Thomas R. Denison
Facsimile: (203) 661-6729
Confirm: (203) 661-6601

43

With a copy to:

Gibson, Dunn & Crutcher LLP
1801 California, Suite 4100
Denver, Colorado 80202
Attention: Steven K. Talley
Facsimile: (303) 296-5310
Confirm: (303) 298-5700

If to Buyer, to:

BES Holding Co.
400 W. Illinois, Suite 800
Midland, Texas 79701
Attention: President
Facsimile: (432) 620-5501
Confirm: (432) 620-5500

With a copy to:

Andrews & Kurth L.L.P.
600 Travis, Suite 4200
Houston, Texas 77002
Attention: Bill Cooper
Facsimile: (713) 220-4285
Confirm: (713) 220-4200

or to such other address or facsimile number and to the attention of such other Person as either party may designate by written notice. Any notice mailed shall be deemed to have been given and received on the third Business Day following the day of mailing.

        11.3Specific Performance.    It is specifically understood and agreed that any breach by the Sellers of the provisions of this Agreement is likely to result in irreparable harm to Buyer and that an action at Law for damages alone will be an inadequate remedy for such breach. Accordingly, in addition to any other remedy that may be available to it, in the event of breach or threatened breach by any of the Sellers of the provisions of this Agreement, including, without limitation, Sections 4.7 and 4.8 hereof, Buyer shall be entitled to enforce the specific performance of this Agreement by the Sellers and to seek both temporary and permanent injunctive relief (to the extent permitted by law), without the necessity of providing actual damages, and such other relief as the court may allow.

        11.4Assignment and Successors.    Except as specifically contemplated by this Agreement, no party hereto shall assign this Agreement or any part hereof without the prior written consent of the other party; provided, however, that Buyer may assign its rights and obligations in this Agreement to an Affiliate of Buyer. This Agreement shall inure to the benefit of, be binding upon and be enforceable by the parties hereto and their respective successors and assigns.

        11.5Entire Agreement; Amendment.    This Agreement, the Exhibits hereto, the Company Disclosure Schedule, the Buyer Disclosure Schedule and the Confidentiality Agreement constitute the entire agreement and understanding between the parties relating to the subject matter hereof and thereof and supersede all prior representations, endorsements, premises, agreements, memoranda communications, negotiations, discussions, understandings and arrangements, whether oral, written or inferred, between the parties relating to the subject matter hereof. This Agreement (or any provision hereof) may not be modified, amended, rescinded, canceled, altered or supplemented, in whole or in part, except upon the execution and delivery of a written instrument executed by a duly authorized

44

representative of Buyer and Sellers holding a majority of the outstanding shares of Company Common Stock.

        11.6Governing Law.    This Agreement shall be governed by, construed and interpreted in accordance with the internal laws of the State of New York, without regard to choice of law rules (other than New York General Obligations Law Section 5-1401), except to the extent, if any, that mandatory choice of law rules in effect in the State of New York require that any provision hereof be governed by and construed in accordance with the laws of the State of Delaware.

        11.7Waiver.    The waiver of any breach of any term or condition of this Agreement shall not be deemed to constitute the waiver of any other breach of the same or any other term or condition.

        11.8Severability.    Any provision hereof that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

        11.9No Third Party Beneficiaries.    Any agreement contained, expressed or implied in this Agreement shall be only for the benefit of the parties hereto and their respective legal representatives, successors and assigns, and such agreements shall not inure to the benefit of the obligees of any indebtedness of any party hereto, it being the intention of the parties hereto that no Person shall be deemed a third party beneficiary of this Agreement, except to the extent a third party is expressly given rights herein.

        11.10Arbitration.    Except for injunctive relief that a party may seek in any court having jurisdiction, any and all disputes, controversies or claims (legal, equitable, tort, or statutory) between the parties that arise out of or relate to this Agreement or the other agreements contemplated hereby (collectively "Disputes") shall be resolved by binding arbitration administered by the American Arbitration Association ("AAA") in accordance with, to the extent permitted by applicable law, the following, which shall have controlling priority in the order listed: (i) the arbitration provisions in this Agreement, (ii) the AAA Commercial Arbitration Rules ("AAA Rules"), (iii) the Federal Arbitration Act (Title 9 of the United States Code); and (iv) to the extent (i), (ii) or (iii) are inapplicable, unenforceable or invalid, the laws of the State of New York.

        (a)    Commencement of Arbitration.    An arbitration proceeding is commenced by serving a notice ("Arbitration Notice") on the other party (with a copy to the AAA in accordance with the AAA Rules) in accordance with the notice provisions set forth in Section 11.3 hereof. The Arbitration Notice shall contain a reasonably detailed description of the Dispute and the remedy sought.

        (b)    Selection of Arbitrator.    The arbitration shall be conducted by one (1) neutral arbitrator whom the parties will choose, via the "alternate strike" process set forth below, from an initial list the AAA provides of eleven (11) persons whom the AAA deems meet the criteria of being a practicing attorney with experience in the area of mergers and acquisitions of domestic oil and gas or oilfield services companies (the "Arbitrator List"). By 5:00 p.m. Houston, Texas time on the fifth (5) business day after receipt of the Arbitrator List from the AAA, the responding party shall strike one arbitrator by faxed letter or email to the claiming party in accordance with the notice provisions set forth in Section 11.3 hereof. By 5:00 p.m. Houston, Texas time the following business day, the claiming party shall strike one arbitrator by faxed letter or email to the responding party in accordance with the notice provisions set forth in Section 11.3 hereof. Thereafter, the parties similarly shall continue alternating striking one arbitrator from the Arbitrator List each business day by 5:00 p.m. Houston, Texas time until remaining is one person, whom will be the parties' chosen arbitrator for the arbitration (the "Arbitrator"). If a party fails to communicate a strike timely, that strike is forfeited and it shall be made by the other party by its making two strikes by its deadline for its next strike. If the arbitrator selected by this process cannot serve for any reason, then within five (5) business days of being notified the selected

45

arbitrator cannot serve the parties will attempt to agree on an alternative method for selecting an arbitrator. If no agreement is reached within the five days, the parties will request the AAA to issue a new list of eleven (11) arbitrators and the striking process set forth herein will be repeated to select the Arbitrator.

        (c)    Governing Law And Rules.    The Arbitrator is empowered to resolve Disputes by summary rulings in accordance with the standards followed by New York courts for motions to dismiss or summary judgments. Except for claims brought under federal law, in which event federal laws and federal common laws and statute of limitations shall govern, all Disputes shall be governed by and the Arbitrator shall resolve all Disputes in accordance with the internal laws of the State of New York (including the statutes of limitations governing under New York laws), without regard to choice of law rules (other than New York General Obligations Law Section 5-1401), except to the extent, if any, that mandatory choice of law rules in effect in the State of New York require that any Dispute be governed by and construed in accordance with the laws of the State of Delaware. The Arbitrator may grant any remedy or relief available under the applicable law that the Arbitrator deems just and equitable or that the Arbitrator deems necessary to make effective the award, provided that in no event may the Arbitrator award special, incidental, consequential, punitive or exemplary damages, and the parties agree they waive their right to all special, incidental, consequential, punitive or exemplary damages that may arise from circumstances giving rise to a Dispute. The Arbitrator shall award pre- and post-decision interest on all amounts awarded in accordance with pre- and post-judgment interest rules and statutes of the State of New York.

        (d)    Discovery.    After appointment of the Arbitrator, the parties may conduct discovery, including taking of depositions and requesting production of documents, that is directly relevant to the Dispute. The Arbitrator and AAA are empowered to enforce this discovery provision and impose sanctions for or provide protection against discovery abuses as the Arbitrator or AAA deem just and necessary.

        (e)    Commencement of Hearing.    To the maximum extent possible, the parties, the AAA and the Arbitrator shall take all action necessary to require that an arbitration proceeding and hearing be concluded within 180 days of the Arbitration Notice being filed with the AAA.

        (f)    Venue: Unless the parties agree in writing otherwise, arbitration of Disputes shall be conducted in Houston, Harris County, Texas.

        (g)   Decision: The Arbitrator shall have thirty (30) days from the conclusion of the hearing or any post-hearing motions in which to render a decision. Unless the parties agree in writing or on the record otherwise, the decision shall be a written opinion and shall be in the form of a findings of fact and conclusions of law setting forth the bases for the opinion reached.

        (h)    Fees and Costs.    The Arbitrator shall award the substantially prevailing party the reasonable and necessary attorneys' fees and expenses the substantially prevailing party incurred in connection with resolving the Dispute, and the Arbitrator shall assess all arbitration costs, including the Arbitrator's fees and costs, against the party not substantially prevailing. If the Arbitrator deems neither party substantially prevailed on the Disputes submitted, the Arbitrator may decide that each party shall bear its own attorneys' fees and costs and that each party shall pay equally the arbitration expenses and the Arbitrator's fees and expenses.

        (i)    Finality.    All decisions by the Arbitrator or AAA shall be binding on the parties and shall not be subject to review or appeal. All Disputes decided shall have res judicata or collateral estoppel effect in accordance with the governing law.

        (j)    Survival.    Unless the parties agree in writing otherwise, the arbitration provisions in this Section 11.10 shall survive any termination, amendment or expiration of this Agreement and they shall be effective and binding upon a party and its successors and assigns notwithstanding a bankruptcy filing.

46

        (k)    Confidentiality.    Each party agrees that all Disputes and all matters conducted, decided or settled in connection with arbitrating a Dispute, including discovery and arbitration hearing, shall be kept strictly confidential, except to the extent applicable law, a party's legal obligations or a party's legal position asserted in an action requires disclosure of such information.

        11.11Counterparts.    This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

        11.12Headings.    Each statement set forth in the Disclosure Schedule with respect to a particular section herein shall be deemed made solely with respect to such section and not with respect to any other section hereof unless specifically set forth in the Disclosure Schedule as also being made with respect to such other section. The headings of the Articles and Sections of this Agreement have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof or affect in any way the meaning or interpretation of this Agreement.

        11.13Negotiated Transaction.    The provisions of this Agreement were negotiated by the parties hereto, and this Agreement shall be deemed to have been drafted by all of the parties hereto.

47

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

COMPANY:
FESCO Holdings, Inc.
By:	/s/  RANDY SPAUR
Name:	Randy Spaur
Title:	Interim CEO
BUYER:
BES HOLDING CO.
By:	/s/  KENNETH V. HUSEMAN
Name:	Kenneth V. Huseman
Title:	President

SELLERS:
First Reserve Fund VIII, L.P.
By:	First Reserve GP VIII, L.P., its general partner
	By:	First Reserve Corporation, its general partner
By:	/s/  THOMAS R. DENISON
Name:	Thomas R. Denison
Title:

48

Sterling Trust FBO Randy Spaur
By:	Sterling Trust Company as Trustee
By:	/s/  SHARON HIABAL
Name:	Sharon Hiabal
Title:
Randy D. Spaur
/s/  RANDY D. SPAUR
Spouse Acknowledgement
I, the spouse of Randy D. Spaur, have read and hereby approve the foregoing Agreement. In consideration of Buyer granting my spouse the right to purchase the number of shares of Buyer Common Stock set forth on Exhibit A hereto on terms set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement (and the Amended and Restated Stockholders' Agreement of Buyer and the Escrow Agreement referred to in the Agreement) and further agree that any community property or similar interest that I may have in such shares of Buyer Common Stock shall hereby be similarly bound. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any right under the Agreement.
/s/  CAROLYN A. SPAUR Name: Carolyn A. Spaur

49

Peter O. Kane

/s/  PETER O. KANE

Spouse Acknowledgement

I, the spouse of Peter O. Kane, have read and hereby approve the foregoing Agreement. In consideration of Buyer granting my spouse the right to purchase the number of shares of Buyer Common Stock set forth on Exhibit A hereto on terms set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement (and the Amended and Restated Stockholders' Agreement of Buyer and the Escrow Agreement referred to in the Agreement) and further agree that any community property or similar interest that I may have in such shares of Buyer Common Stock shall hereby be similarly bound. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise of any right under the Agreement.

/s/  SANDY KANE Name: Sandy Kane

50

AMENDMENT TO STOCK PURCHASE AGREEMENT

THIS AMENDMENT (this "Amendment") is made and entered into as of October 1, 2003, by and among FESCO Holdings, Inc., a Delaware corporation (the "Company"), BES Holding Co., a Delaware corporation ("Buyer"), and First Reserve Fund VIII, L.P., a Delaware limited partnership (the "First Reserve Fund"), and amends that certain Stock Purchase Agreement, dated as of September 18, 2003 (the "Stock Purchase Agreement"), by and among the Company, each of the "Sellers" named on Exhibit A thereto (each a "Seller" and collectively the "Sellers") and Buyer. The Stock Purchase Agreement as amended by this Amendment is referred to herein as the "Amended Stock Purchase Agreement").

R E C I T A L S:

WHEREAS, Section 11.5 of the Stock Purchase Agreement provides that the Stock Purchase Agreement may be amended by delivery of a written instrument executed by a duly authorized representative of Buyer and Sellers holding a majority of the outstanding shares of Company Common Stock (as defined in the Stock Purchase Agreement);

WHEREAS, the Company, Buyer and the First Reserve Fund, as the holder of a majority of the outstanding shares of Company Common Stock, desire to amend the Stock Purchase Agreement as provided in this Amendment to account for the fact that (x) Sterling Trust FBO Randy Spaur has effected a distribution of all of its assets to Randy Spaur ("Spaur") and is therefore no longer the holder of 1,100 shares of Company Common Stock (the "Spaur Shares"), which shares are now held directly by Spaur in his own name and (y) Sterling Trust FBO William L. Hubbell has effected a distribution of all of its assets to William L. Hubbell ("Hubbell") and is therefore no longer the holder of 3,000 shares of Company Common Stock (the "Hubbell Shares"), which shares are now held directly by Hubbell in his own name; and

WHEREAS, Spaur desires to become, and the Company, Buyer and the First Reserve Fund desire that Spaur become, a party to this Amendment in place of Sterling Trust FBO Randy Spaur to reflect Spaur's agreement to transfer the Spaur Shares to Buyer on the same terms and subject to the same conditions as Sterling Trust FBO Randy Spaur was previously to have transferred such shares to Buyer pursuant to the Stock Purchase Agreement.

NOW, THEREFORE, in consideration of the premises, covenants and agreements contained herein, and for other good and valuable consideration, the legal sufficiency of which are hereby acknowledged, the Company, Buyer and the First Reserve Fund hereby amend the Stock Purchase Agreement as provided herein, and the Company, Buyer, the First Reserve Fund and Spaur hereby agree as follows:

ARTICLE 1
PURCHASE AND SALE

        1.1Agreement to Sell and to Purchase; Assumption of Rights and Obligations.

        (a)   On the Closing Date (as defined in the Stock Purchase Agreement), upon the terms and subject to conditions contained in the Stock Purchase Agreement and this Amendment, Spaur shall transfer, sell, assign and convey to Buyer, and Buyer shall purchase from Spaur, the Spaur Shares free and clear of any Encumbrances (as defined in the Stock Purchase Agreement). In consideration of the transfer to Buyer of the Spaur Shares, Buyer shall issue to Spaur an aggregate of 1,975 shares of Buyer Common Stock (as defined in the Stock Purchase Agreement).

        (b)   The purchase and sale provided for in Section 1.1(a) of this Amendment (the "Spaur Exchange") shall occur at the Closing referenced in Section 1.1(b) of the Stock Purchase Agreement. The Spaur Exchange shall be in lieu of the purchase and sale by Sterling Trust FBO Randy Spaur provided for in Section 1.1 of the Stock Purchase Agreement (the "Sterling Exchange"), and pursuant to this Amendment, the Sterling Exchange shall be cancelled, vacated and rendered null and void.

Except for the substitution of the Spaur Exchange for the Sterling Exchange, the Spaur Exchange shall be in addition to, and not in lieu of, the remaining purchases and sales provided for in Section 1.1 of the Stock Purchase Agreement. Exhibit A to the Stock Purchase Agreement shall be amended and restated in its entirety to reflect Spaur replacing Sterling Trust FBO Randy Spaur as a Seller and to provide for (x) the purchase and sale of shares of Company Common Stock and (y) the holding of shares of Buyer Common Stock issued in consideration therefor in escrow, in each case in the manner specified in Exhibit A to this Amendment.

        (c)   Any obligations under the Stock Purchase Agreement from Buyer to Sterling Trust FBO Randy Spaur or Sterling Trust FBO William L. Hubbell, on the one hand, or from Sterling Trust FBO Randy Spaur or Sterling Trust FBO William L. Hubbell to Buyer, on the other hand, shall be voided and shall have no further force or effect.

        (d)   With respect to the Spaur Shares, Spaur hereby makes all of the representations and warranties to Buyer as were made by Sellers to Buyer under Article 2 of the Stock Purchase Agreement. Other than the representations and warranties contained in Section 2.22 of the Stock Purchase Agreement, Spaur hereby makes each such representation and warranty jointly and severally with the other Sellers as if Spaur occupied the position of Sterling Trust FBO Randy Spaur under the Stock Purchase Agreement. Spaur further represents and warrants to Buyer that as of the date hereof and as of the Closing Date (as defined in the Stock Purchase Agreement) he (i) is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, (ii) has reached the age of majority, (iii) is a United States citizen or resident, (iv) is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, (v) has such knowledge of Buyer and its business and such experience in financial and business matters as to enable him to evaluate the risks and merits of an investment in the Buyer Common Stock, (vi) owns the Spaur Shares of record and beneficially, free and clear of any Encumbrances and (vii) has full power and legal right to sell, assign, transfer and deliver the Spaur Shares to Buyer.

        (e)   The definition of Sellers set forth in the Stock Purchase Agreement is expressly amended to include Spaur and to exclude Sterling Trust FBO Randy Spaur. Spaur hereby agrees that he shall be subject to all of the rights and obligations that Sterling Trust FBO Randy Spaur was subject to under the Stock Purchase Agreement.

        1.2Deliveries at Closing.    At Closing (as defined in the Stock Purchase Agreement):

        (a)   Spaur shall deliver to Buyer:

        (i)    a duly executed certificate(s), countersigned by the appropriate officers of the Company, representing the Spaur Shares in the name of Buyer, (ii) a copy of a letter from Spaur addressed to and acknowledged by the Company, as registrar with respect to the Company Common Stock, instructing such registrar to cancel the certificates representing the Spaur Shares and to reissue new certificates representing the same number of shares of Company Common Stock in the name of Buyer and (iii) a copy of the cancelled certificates representing the Spaur Shares;

        (ii)   a duly executed Amended and Restated Stockholders' Agreement of Buyer, in the form attached as Exhibit C to the Stock Purchase Agreement; and

        (iii)  a duly executed Escrow Agreement, in the form attached as Exhibit D to the Stock Purchase Agreement.

        (b)   Buyer shall deliver to Spaur duly executed certificate(s) representing the number of shares of Buyer Common Stock set forth opposite his name on Exhibit A to this Amendment.

        (c)   The deliveries made pursuant to this Section 1.2 shall be in addition to, and not in lieu of, the deliveries contemplated by Section 1.3 of the Stock Purchase Agreement; provided, however, that no deliveries shall be made from Buyer to Sterling Trust FBO Randy Spaur or Sterling Trust FBO William L. Hubbell, on the one hand, or from Sterling Trust FBO Randy Spaur or Sterling Trust FBO William L. Hubbell to Buyer, on the other hand.

ARTICLE 2
SCOPE OF AMENDMENT

        2.1Effect of Amendment.

        Except (x) as expressly set forth in this Amendment, (y) for Exhibit A to the Stock Purchase Agreement which is amended and restated in its entirety to read as provided in Exhibit A to this Amendment and (z) for those representations and warranties made by Spaur to Buyer under Section 1.1(c) of this Amendment which are made in addition to, and not in lieu of, the representations and warranties made by the First Reserve Fund and Peter O. Kane to Buyer under Article 2 of the Stock Purchase Agreement, this Amendment only amends the Stock Purchase Agreement to the extent (A) that the provisions of this Amendment and the provisions of the Stock Purchase Agreement are inconsistent and (B) necessary to substitute Spaur for Sterling Trust FBO Randy Spaur under the Stock Purchase Agreement. Other than (i) the removal of Sterling Trust FBO Randy Spaur as a party to the Amended Stock Purchase Agreement, (ii) the elimination of Sterling Trust FBO William L. Hubbell as a Remaining Stockholder (as defined in the Stock Purchase Agreement), (iii) the termination of any obligations on the part of Buyer to Sterling Trust FBO Randy Spaur as Seller or Sterling Trust FBO William L. Hubbell as Remaining Stockholder and (iv) the termination of any obligations on the part of Sterling Trust FBO Randy Spaur or Sterling Trust FBO William L. Hubbell to Buyer, the rights, duties, obligations and commitments of the parties to the Stock Purchase Agreement shall continue under the Amended Stock Purchase Agreement.

        2.2Definitions.

        Capitalized terms used but not defined in this Amendment have the meanings assigned to such terms in the Stock Purchase Agreement.

ARTICLE 3
MISCELLANEOUS

        3.1Amendment.

        This Amended Stock Purchase Agreement cannot be further amended, modified, cancelled, rescinded, altered or modified, in whole or in part, except upon the execution and delivery of a written instrument executed by a duly authorized representative of the Company, a duly authorized representative of Buyer, a duly authorized representative of the First Reserve Fund and Spaur.

        3.2Governing Law.

        This Amendment shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to choice of law rules (other than New York General Obligation Law Section 5-1401), except to the extent, if any, that mandatory choice of law rules in effect in the State of New York require that any provision hereof be governed by and construed in accordance with the laws of the State of Delaware.

        3.3Waiver.

        The waiver of any breach of any term or condition of this Amendment shall not be deemed to constitute the waiver of any other breach of the same or any other term or condition.

        3.4Severability.

        Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Amendment, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

        3.5No Third Party Beneficiaries.

        Any agreement contained, expressed or implied in this Amendment shall be only for the benefit of the parties hereto and their respective legal representatives, successors and assigns, and such

agreements shall not inure to the benefit of the obligees of any indebtedness of any party hereto, it being the intention of the parties hereto that no Person shall be deemed a third party beneficiary of this Amendment, except to the extent a third party is expressly given rights herein.

        3.6Specific Performance.

        It is specifically understood and agreed that any breach by Spaur or Hubbell of the provisions of this Amendment is likely to result in irreparable harm to Buyer and that an action at Law for damages alone will be an inadequate remedy for such breach. Accordingly, in addition to any other remedy that may be available to it, in the event of breach or threatened breach by Spaur or Hubbell of the provisions of this Amendment, Buyer shall be entitled to enforce the specific performance of this Amendment by Spaur or Hubbell and to seek both temporary and permanent injunctive relief (to the extent permitted by law), without the necessity of providing actual damages, and such other relief as the court may allow.

        3.7Arbitration.

        The parties to this Amendment agree that any and all disputes, controversies or claims (legal, equitable, tort or statutory) between such parties that arise out of or relate to this Amendment shall be resolved by binding arbitration administrated in the manner contemplated by Section 11.10 of the Stock Purchase Agreement.

        3.8Counterparts.

        This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

        3.9Headings.

        The headings of the Articles and Sections of this Amendment have been inserted for convenience of reference only and shall in no way restrict or otherwise modify any of the terms or provisions hereof or affect in any way the meaning or interpretation of this Amendment.

        3.10Negotiated Transaction.

        The provisions of this Amendment were negotiated by the parties hereto, and this Amendment shall be deemed to have been drafted by all of the parties hereto.

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

COMPANY:
FESCO Holdings, Inc.
By:	/s/  RANDY SPAUR
Name:	Randy Spaur
Title:	Interim CEO
BUYER:
BES Holding Co.
By:	/s/  KENNETH V. HUSEMAN
Name:	Kenneth V. Huseman
Title:	President
THE FIRST RESERVE FUND:
First Reserve Fund VIII, L.P.
By:	First Reserve Fund GP VIII, L.P., its general partner
	By:	First Reserve Corporation, its general partner
By:	/s/  THOMAS R. DENISON
Name:	Thomas R. Denison
Title:	Managing Director

SPAUR:

Randy D. Spaur

/s/  RANDY D. SPAUR Randy D. Spaur

Spouse Acknowledgement

I, Carolyn Spaur, the spouse of Randy D. Spaur, have read and hereby approve the foregoing Amendment. I hereby agree to be bound irrevocably by the Amendment. I hereby appoint my spouse as my attorney- in-fact with respect to any amendment or the exercise of any right under the Amendment.

Carolyn Spaur

/s/  CAROLYN A. SPAUR Carolyn Spaur

QuickLinks

TABLE OF CONTENTS
DISCLOSURE SCHEDULES
EXHIBITS
STOCK PURCHASE AGREEMENT
ARTICLE 1 PURCHASE AND SALE
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE SELLERS
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF BUYER
ARTICLE 4 ADDITIONAL AGREEMENTS
ARTICLE 5 BUYER'S CONDITIONS
ARTICLE 6 SELLERS' CONDITIONS
ARTICLE 7 INDEMNIFICATION
ARTICLE 8 NATURE OF STATEMENTS AND SURVIVAL OF COVENANTS, REPRESENTATIONS, WARRANTIES AND AGREEMENTS
ARTICLE 9 TERMINATION
ARTICLE 10 DEFINITIONS OF CERTAIN TERMS
ARTICLE 11 MISCELLANEOUS
AMENDMENT TO STOCK PURCHASE AGREEMENT
ARTICLE 1 PURCHASE AND SALE
ARTICLE 2 SCOPE OF AMENDMENT
ARTICLE 3 MISCELLANEOUS

EX-10.9

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.9

ASSET PURCHASE AGREEMENT

        THIS ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as of the 14th day of August, 2003, by and between BASIC ENERGY SERVICES, L.P., a Delaware limited partnership (the "Purchaser"), PARKER WINDHAM, LTD., a Texas limited partnership, ("Parker Windham"), PWI, INC., a Texas corporation ("PWI"), PWI RENTALS, L.P., a Texas limited partnership ("PWI Rentals"), PWI CONSTRUCTION, L.P., a Texas limited partnership ("PWI Construction"), PWI DISPOSAL, L.P., a Texas limited partnership ("PWI Disposal") and MORRIS B. WINDHAM and PAIGE WINDHAM, individuals residing in the State of Texas (the "Owners"). Parker Windham, PWI, PWI Rentals, PWI Construction and PWI Disposal are sometimes referred to herein individually as a "Seller" and collective as the "Sellers."

RECITALS:

        A.    The Sellers own and operate an oil and gas field trucking business, an oil and gas field construction business, an oil and gas field equipment rental business, an oil and gas field extraction, hauling and disposal business and a pressure testing and sale and storage business, all of which are based in Beaumont, Texas with additional facilities at Dayton, Ganado, Refugio, Groesbeck, Van Vleck, Bryan and Hallettsville, Texas (collectively, the "Businesses");

        B.    The Purchaser desires to purchase and acquire, and the Sellers are willing to sell and transfer, all of the properties and assets comprising the Businesses except for the Excluded Assets (as hereinafter defined);

        C.    The Owners, Parker Windham, Ltd. and PWI, Inc. each own the real estate described on Exhibit A hereto and the improvements thereon, all of which are used by the Sellers in the Businesses (the "Real Property") that the Owners, Parker Windham, Ltd. and PWI, Inc. desire to sell and the Purchaser desires to purchase the Real Property pursuant to separate Real Property Purchase and Sale Agreements (the "Real Estate Purchase Agreements") substantially in the form of that attached hereto as Exhibit A-1; and

        D.    The Owners are the sole owners of the Sellers.

        NOW, THEREFORE, in consideration of the premises and of the mutual covenants and agreements contained in this Agreement, the parties agree as follows:

ARTICLE I

PURCHASE AND SALE

        1.01Transfer of Assets.    At the Closing, which shall occur on the Closing Date (both terms as defined in Section 6.01 hereof), and subject to the terms and conditions of this Agreement, the Sellers will grant, sell, convey, assign and deliver to the Purchaser, and the Purchaser will pay for and accept from the Sellers, all of the following assets, effective as of 12:01 a.m., Beaumont, Texas time on the Closing Date:

(a)

All of the assets, properties, equipment, inventories and rights of the Sellers of every kind, character and description, whether tangible or intangible, save and except the Excluded Assets (hereinafter defined), all such items being sold hereunder being hereinafter collectively referred to as the "Assets." The Sellers are not selling and the Assets will not include any deposits, prepayments, bank accounts, cash, accounts receivable, unbilled work in process, prepaid insurance, bonds or other financial assets of Sellers not used in the Businesses as of the Closing Date, or any other assets specifically

1

defined herein as being excluded from the sale and purchase, all of which are hereinafter collectively referred to as the "Excluded Assets".

(b)

Without limiting the foregoing, the Assets shall include the following assets, properties and rights of the Sellers:



(i)

the transport tractors, vacuum trucks, winch trucks, trailers, pump trucks, storage tanks, frac tanks, backhoes, dozers, forklifts, light plants, pumps, light vehicles, miscellaneous support trucks and tractors and other equipment described on Exhibit B hereto, together with all tools and accessories located on and used in connection with the same;



(ii)

all spare oil and gas field servicing components, tools, fittings and accessories, replacements parts and operating supplies, inventories, all shop equipment, tools, accessories and shop supply inventories, all office equipment and improvements owned by Sellers (the Assets described under Section 1.01(b) (i) and (ii) are sometimes referred to as the "Tangible Personalty");



(iii)

all licenses, permits, easements and other authorizations or grants owned by or in favor of the Sellers which are in any way used or useful in the ownership and operation of the Assets and the Businesses;



(iv)

all of the Sellers' rights under the contracts, commitments and agreements which are described on Exhibit C attached hereto and made a part hereof for all purposes (the "Contracts");



(v)

any usable and salable raw materials and supplies of the Sellers as of the Closing (the "Inventory");



(vi)

all technologies, methods, formulations, data bases, patents, trademarks (including any trademark on the name "Turbo Tank" or the design of such tank), trade secrets, know-how and other intellectual property used in the Businesses;



(vii)

all existing and assignable guaranties and warranties (express or implied), if any, issued in connection with the purchase, lease, construction, alteration, and/or repair of any real or personal property included within the Assets;



(viii)

all information, files, records, data, plans and recorded information, including supplier lists and customer lists, relating to the ownership and operation of the Businesses, provided that the Sellers shall be entitled to keep, retain and utilize copies of all corporate, accounting and tax records maintained by the Sellers;



(ix)

all right, title and interest of the Sellers in and to the names "Parker Windham, Ltd.", "PWI, Inc.," "PWI Rentals, L.P.", "PWI Construction, L.P", "PWI Disposal, L.P.", "Turbo Tank" and any other trade names used by the Sellers in the operation of the Businesses;



(x)

the Real Property;



(xi)

all goodwill of the Sellers; and



(xii)

any and all other assets of the Sellers other than the Excluded Assets.

        1.02Purchase Price.    At the Closing, in accordance with the terms and conditions of this Agreement and in reliance on the representations, warranties and covenants of the Sellers and the Owners, the Purchaser shall purchase the Assets from the Sellers for a total purchase price (the "Purchase Price") not to exceed Twenty-Six Million Five Hundred Thousand and No/100 Dollars ($26,500,000.00), plus (i) One Million One Hundred Fifty-Four Thousand Eighty-Five and 34/100

2

($1,154,085.34) to reimburse Sellers for the expansion capital expenditures made by the Sellers between February 15, 2003 and June 27, 2003, which are identified on Annex 1 hereto and (ii) such amount as is required to reimburse Sellers for any other expansion capital expenditures made by them between June 28, 2003 and the Closing Date, with Purchaser's knowledge and approval (collectively, the "Expansion Capital Reimbursement Amount"). The amount by which the Purchase Price will be increased pursuant to the provisions of (i) and (ii) above will be decreased by an amount equal to 1/60^th of the purchase price paid by Sellers for such equipment times the number of full months such equipment is owned by Sellers prior to Closing. The Purchaser shall pay the Sellers in immediately available funds at the Closing, the sum of Twenty-Four Million and No/100 Dollars ($24,000,000.00), plus the Expansion Capital Reimbursement Amount (as adjusted) and less (a) Five Hundred Thousand and No/100 Dollars ($500,000.00) to be placed in escrow as provided in Section 1.03 below (the Escrowed Funds), (b) the amounts allocated to the Non-Competition Agreements to be executed by the Sellers, (c) the amounts payable to the Owners, Parker Windham, Ltd. and PWI, Inc. under the Real Property Purchase Agreements ($200,000.00) and (d) the amounts, if any, paid by Purchaser to creditors of Sellers pursuant to Sellers' instructions. The amount payable by Purchaser at Closing will also be adjusted for any prorations of taxes, rents, lease payments, assumed vacation obligations and other obligations requiring proration under the terms of this Agreement. The Sellers and the Purchaser agree that they will, as a condition to Closing allocate the Purchase Price among the Assets, which allocation will be binding on them for federal income tax and all other purposes incident to this Agreement. In addition, Purchaser agrees to pay Owners up to an additional Two Million Five Hundred Thousand and No/100 Dollars ($2,500,000.00) (the "Earn-Out Amount") pursuant to the terms of a Contingent Earn-Out Agreement substantially in the form attached hereto as Exhibit D, with appropriate insertions. The Contingent Earn-Out Agreement will be expressly subject to a Subordination Agreement (the "Subordination Agreement") between the Owners and General Electric Capital Corporation and LaSalle Business Credit LLC (the "Senior Lenders") to which Purchaser's payments to the Owners under the Contingent Earn-Out Agreement will be subordinated to the Senior Lender.

        1.03Escrowed Funds.    At the Closing, Sellers, Purchaser and the Escrow Agent (as defined in the Escrow Agreement) shall enter into an escrow agreement that is substantially identical in form and substance to that attached hereto as Exhibit E (the "Escrow Agreement"), pursuant to which Purchaser shall deposit a portion of the Purchase Price (the "Escrowed Funds") equal to the sum of Five Hundred Thousand and No/100 Dollars ($500,000.00) (the "Escrow Account"), to serve as a source of security for the payment of any claims asserted by Purchaser within one hundred twenty (120) days from the Closing Date (hereinafter defined) against Sellers for the breach of any of their representations, warranties and/or covenants under this Agreement and the instruments and documents executed by Sellers at Closing pursuant hereto (the "Settlement Period"). The establishment of the Escrow Account and any exercise of recourse thereon by Purchaser shall not operate or be deemed to operate to limit or restrict any other legal or equitable rights or remedies available to Purchaser for any such breach by Sellers. The Escrow Account shall be administered as set forth in Article VII of this Agreement and as otherwise provided in the Escrow Agreement.

        1.04Assumed Contractual Liabilities.    At the Closing, the Purchaser shall assume and agree to pay, discharge or perform, as appropriate, all liabilities and obligations of the Sellers arising following the Closing Date under only those Contracts specifically described on attached Exhibit C; provided the Sellers obtain and deliver at or before Closing any requisite consents to assignment to and assumption of such Contracts by the Purchaser (collectively, the "Assumed Contractual Liabilities").

        1.05Liabilities Not Assumed.    Except for the Assumed Contractual Liabilities and the Assumed Environmental Liabilities (hereinafter defined), the Purchaser does not assume or agree hereunder to pay, perform or discharge any debt, obligation, tax or liability, known or unknown, contingent or otherwise, of the Sellers of any kind or nature whatsoever. Without limiting the foregoing, in no event

3

shall the Purchaser assume or incur any liability or obligation under this Agreement or otherwise in respect of any of the following:

(a)

any claim for injury to person or property, regardless of when made or asserted, which arises out of or is based upon any express or implied representation, warranty, agreement or guarantee made by the Sellers or alleged to have been made by the Sellers, or, except for the Assumed Environmental Liabilities, which is imposed or asserted to be imposed by operation of law, in connection with any service performed or product sold or leased by or on behalf of the Sellers or arising from any actions or inactions of the Sellers or any events occurring prior to the Closing Date;



(b)

any federal, state or local income or other tax payable with respect to the Businesses, Assets, properties or operations of the Sellers or any member of any affiliated group of which the Sellers' are a member or incident to or arising as a consequence of the negotiation or consummation by the Sellers of this Agreement and the transaction contemplated hereby, save and except: (i) any applicable property taxes for the calendar year 2003 which will be prorated by the parties as of the Closing Date with an appropriate credit to the Purchaser at the Closing, and (ii) any sales or transfer taxes resulting from the consummation of this transaction, which will be the responsibility of the Purchaser;



(c)

except for the Assumed Environmental Liabilities, any liability or obligation arising prior to the Closing Date under any law, ordinance or governmental or regulatory rule or regulation, whether federal, state or local, to which the Sellers or Sellers' business operations, assets or properties are subject relating to pollution or protection of the environment;



(d)

any liability or obligation arising prior to or as a result of the Closing to any employees, agents or independent contractors of the Sellers, whether or not employed by the Purchaser after the Closing Date, or under any benefit arrangement with respect thereto, including any obligations of the Sellers under any defined benefit plan, employee benefit plan or severance plan; and



(e)

any liability or obligation of the Sellers incurred in connection with the negotiation, preparation and execution of this Agreement and the transactions contemplated hereby, including fees and expenses of counsel, accountants and other professionals.

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE SELLERS
AND THE OWNERS

        The Sellers and the Owners hereby, jointly and severally, represent, warrant and covenant to and with the Purchaser as follows:

        2.01Existence and Good Standing; No Subsidiaries.    Parker Windham, PWI Rentals, PWI Construction and PWI Disposal are each limited partnerships organized, validly existing and in good standing under the laws of the State of Texas. PWI is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas. Each Seller has all requisite power and authority to carry on the Businesses now being conducted by such Seller. Each Seller is in good standing and is duly qualified to do business in all jurisdictions where the character of its properties or assets or the nature of its activities makes such qualification necessary. No Seller has any subsidiaries. The Owners are residents of the State of Texas.

4

        2.02Authority; Enforceability.    The Sellers each have full power, authority and legal right to enter into this Agreement and to consummate the transactions provided for herein. The Owners are each above the age of eighteen (18) years and have the legal capacity and requisite power and authority to enter into and perform their obligations under this Agreement. All actions on the part of each of the Sellers and the Owners necessary to consummate the transaction contemplated by this Agreement and the Real Estate Purchase Agreements have been duly taken as required by applicable law and any applicable agreements. This Agreement has been, and the other agreements, documents and instruments required to be delivered by the Sellers or the Owners in accordance with the provisions hereof (including, specifically, the Real Property Purchase Agreements) have been or will be, duly executed and delivered by the Sellers and the Owners and constitute (or will at Closing constitute) the valid and binding obligations of each of the Sellers and each of the Owners, enforceable against each of the Sellers and the Owners in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or limiting creditors' rights or by legal principles of general applicability governing the availability of equitable remedies.

        2.03Absence of Violation or Conflicts.    The execution, delivery and performance of the transactions contemplated by this Agreement and the Real Property Purchase Agreements by the Sellers and the Owners do not and will not (a) violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any other person under, (i) any law, ordinance or governmental rule or regulation known to the Sellers or the Owners and to which the Sellers or the Owners, the Assets or the Businesses are subject, (ii) any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is known to the Sellers or the Owners and which is applicable to any of the Sellers or the Owners, the Assets or the Businesses, (iii) the governing documents of or any securities issued by the Sellers, or (iv) any mortgage, indenture or other instrument, document or understanding, oral or written, to which any of the Sellers or the Owners are a party, by which any of the Sellers or the Owners may have rights or by which any of the Assets or the Businesses may be bound or affected, and (b) give any party with rights thereunder the right to terminate, modify, accelerate or otherwise change the existing rights or obligations of the Sellers thereunder. Except for certain consents to assignment to be obtained on a post-Closing basis, as set forth in Section 2.13, no authorization, approval or consent of, and no registration or filing with any governmental or regulatory official, body or authority is required in connection with the execution, delivery or performance of this Agreement by the Sellers or the Owners.

        2.04Title to Assets.    The Sellers have (or will have at Closing) good, indefeasible and marketable title to all of their properties and assets which are included in the Assets, specifically including, without limitation, the Real Property, the Tangible Personalty and the Inventory, free and clear of all mortgages, liens, pledges, security interests, charges, claims, rights of first refusals, options, restrictions or conditions to transfer or assignment, liabilities, obligations and other encumbrances and defects of title of any nature whatsoever (collectively referred to as "Encumbrances"), except for liens for current ad valorem or similar taxes which are not yet due and payable (collectively, the "Permitted Encumbrances"). Each of the Sellers has the absolute right to sell the Assets to the Purchaser, and upon the consummation of the transaction contemplated hereby, the Purchaser will have good and marketable title to the Assets, free and clear of any encumbrances.

        2.05Contracts.    All Contracts (including lease agreements) to be assumed by the Purchaser at the Closing are described on attached Exhibit C and the Sellers and the Owners have provided or made available to the Purchaser true, correct and complete copies of all such Contracts, including any amendments or supplements thereto. To the best of the Sellers' and the Owners' knowledge, after reasonable investigation, neither the Sellers or the Owners are in default (nor is there any event which with notice or lapse of time or both would constitute a default) under any such Contract. Except as contemplated by Section 2.13, no consents or approvals of any person other than the Sellers and the

5

Owners are necessary to sell, assign, convey, transfer and deliver any and all rights and interest in and to the Contracts to the Purchaser. There are no agreements with third parties, either written or verbal, that are material or necessary to the operation of the Businesses other than the Contracts.

        2.06Condition of the Assets.    To the best of the Sellers' and the Owners' knowledge after reasonable investigation, the equipment and other tangible property comprising any portion of the Assets are structurally sound and in good repair and operating condition, normal wear and tear excluded. Except for the Excluded Assets, the Assets constitute all property, assets and contractual rights necessary for the conduct of the Businesses as presently conducted. All of the Assets conform to all applicable laws governing their use. No notice of any violation of any law, statute, ordinance regulation has been received by the Sellers or the Owners, nor, to the knowledge of any of the Sellers, is there any basis for any of the foregoing.

        2.07Trade Secrets and Customer Lists.    The Sellers have the right to use, free and clear of any claims or rights of others, all trade secrets, customer lists and proprietary information required for the conduct of the Businesses. The Sellers are not using or in any way making use of any confidential information or trade secrets of any third party, including, without limitation, any past or present employee of either of the Sellers.

        2.08Suppliers and Customers.    The Sellers and the Owners have no knowledge that any of the Sellers' suppliers or customers expect or intend to materially reduce their business with the Businesses.

        2.09Compliance with Law; Authorizations.    To the best of Sellers' and Owners' knowledge after reasonable investigation, the Sellers have complied with each (and are not in violation of any), law, ordinance or governmental or regulatory rule or regulation, whether federal, state, local or foreign, known to the Sellers and to which the Sellers and Sellers' Businesses, operations, assets and properties are subject ("Regulations"). The Sellers own, hold, possess or lawfully uses in the operation of the Assets and the Businesses all licenses, permits, patents, easements, rights, applications, filings, registrations and other authorizations ("Authorizations") which are known to the Sellers or the Owners and which are in any manner necessary for such ownership and use by the Sellers, free and clear of all liens, charges, restrictions and Encumbrances and, to the best of the Sellers' and the Owners' knowledge after reasonable investigation, in compliance with all Regulations. To the best of the Sellers' and the Owners' knowledge after reasonable investigation, the Sellers are not in material default, nor have they received any notice of any claim of default, with respect to any such Authorization.

        2.10Litigation.    Except for litigation which has been initiated by Sellers in an attempt to collect accounts receivable owed to Sellers (all of which litigation, together with the claims underlying the same will be retained by Sellers) and except as disclosed on Schedule 2.10, no litigation, including any arbitration, investigation or other proceeding of or before any court, arbitrator or governmental or regulatory official, body or authority, is pending in which the Sellers are a party and in which the Sellers or the Owners have been served with process or otherwise notified or, to the knowledge of the Sellers or the Owners after reasonable investigation, threatened against the Sellers or the Owners which relate to the Assets, the Businesses or the transactions contemplated by this Agreement, nor do the Sellers or the Owners know of any reasonably likely basis for any such litigation, arbitration, investigation or proceeding, the result of which could materially adversely affect the Assets, the Businesses or the transaction contemplated hereby. The Sellers and the Owners are neither a party to nor subject to the provisions of any judgment, order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which may materially adversely affect the Sellers, the Assets, the Businesses or the transactions contemplated hereby.

        2.11Environmental Matters.

        (a)   To the best knowledge of the Sellers and the Owners after reasonable investigation, the Assets are in compliance with all federal, state and local laws and regulations relating to pollution

6

or protection of the environment (collectively, "Environmental Laws"), including, without limitation, Environmental Laws governing emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment. To the best knowledge of the Sellers and the Owners after reasonable investigation, the Sellers have obtained all permits, licenses and other authorizations that are required under Environmental Laws with respect to the operation of the Assets and the conduct of the Businesses and is in compliance therewith.

        (b)   There is no civil, criminal or administrative action, suit, demand, claim, hearing, notice or demand letter, notice of violation, investigation or proceeding pending in which any of the Sellers is a party and in which any of the Sellers has been served with process or otherwise notified or, to the knowledge of any of the Sellers or the Owners, threatened against the Sellers based upon any violation or alleged violation of any Environmental Laws.

        (c)   The Sellers and Owners will, at least ten (10) days prior to the Closing Date, deliver to Purchaser Phase I Environmental Assessments covering the Real Properties and the leased real properties at Beaumont, Dayton, Ganado, Refugio, Groesbeck, Van Vleck, and Hallettsville, Texas, all of which properties are utilized by Sellers in the operation of their Businesses. The Sellers and the Owners agree to cooperate reasonably with the Purchaser in connection with the Purchaser's application for the transfer, renewal or issuance of any permits, licenses, approvals or other authorizations or to satisfy any regulatory requirements involving the transfer of the Businesses to the Purchaser.

        2.12Tax and Other Returns and Reports.    Neither the Sellers or the Owners have received any notice of assessment or proposed assessment in connection with any of the Assets or the Businesses and, to the knowledge of the Sellers or the Owners, there are no pending tax examinations or tax claims asserted against any of the Assets or the Businesses. There are no tax liens (other than any lien for current ad valorem taxes not yet due and payable) on any of the Assets or the Businesses.

        2.13Consents.    Except for governmental consents routinely obtained on a post closing basis, the Sellers or the Owners are not aware of any consent, approval, order or authorization of, or registration, qualification, designation, declaration or filing with, any federal, state or local governmental authority or any other person on the part of the Sellers which is required in connection with the completion of the transactions contemplated by this Agreement and the operation by the Purchaser of the Businesses in the manner in which they are currently conducted. The Sellers and the Owners agree that they will utilize their best efforts to obtain any governmental consents within thirty (30) days following Closing. If the Sellers and the Owners, notwithstanding such best efforts, shall fail to obtain such consents within that time period, the Purchaser, at its option, may reassign the applicable leases, contracts or other rights for which consent was not obtained to the Sellers, whereupon the Sellers will immediately refund to the Purchaser that portion of the Purchase Price allocated thereto on the allocation schedule required under Section 1.02 above or such other amount as the parties may agree upon to the Purchaser. No such reassignment and reimbursement will in any way operate to negate, diminish or alter the obligations of the Owners or the Sellers under their respective Non-Competition Agreements (hereinafter defined).

        2.14Financial Matters.

        (a)    Financial Statements.    Each Seller has previously furnished to the Purchaser internally prepared Balance Sheets of such Seller for the period ended May 31, 2003, together with internally prepared Statements of Income for the twelve month periods ended December 31, 2001 and December 31, 2002 and for the period ended May 31, 2003. These financial statements represent the books and records of the Sellers and present fairly the information contained therein in the same manner as such information has been historically reported by the each of the Sellers.

7

        (b)    Liabilities.    Except for the liabilities specifically disclosed by the Sellers to the Purchaser in writing, the Sellers have and on the Closing Date will have, no other material liabilities of any nature, whether accrued, absolute, contingent or otherwise and whether due or to become due, or arising out of transactions entered into, or any state of facts existing, prior to the Closing Date which will encumber the Assets or impair the use, value or ownership thereof by the Purchaser following the Closing. There has been no material adverse change in the financial condition, results of operations, assets, liabilities, business or prospects of the Sellers since March 31, 2003.

        2.15Absence of Certain Changes.    Since March 31, 2003, there has not been (i) any material amendment, termination or revocation, or threatened termination, revocation or modification of any license, permit or franchise required for the continued operation of the Businesses; (ii) any sale or transfer of the Assets (other than in the ordinary course of Sellers' businesses); (iii) any pledge or subjection to lien, charge or encumbrance of any kind, of, on or affecting any of the Assets, or (iv) any damage, destruction or loss of or to the Assets, whether or not covered by insurance.

        2.16Disclosure.    No material written statement, representation, warranty or information provided or furnished by or on behalf of the Sellers or the Owners to the Purchaser in this Agreement or otherwise in connection with the transactions contemplated by this Agreement or the Real Estate Purchase Agreements contains as of the date made any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading.

        2.17Expansion Capital Expenditures.    All expenditures made by the Sellers since February 15, 2003 that constitute Expansion Capital Reimbursement Amounts have been for equipment that expanded the capabilities of the Businesses and none of such expenditures were for purchases of equipment to replace existing equipment.

ARTICLE III

PURCHASER'S REPRESENTATIONS AND WARRANTIES

        The Purchaser hereby represents and warrants to the Sellers and the Owners as of the date hereof as follows:

        3.01Organization.    The Purchaser is a limited partnership duly organized and existing in good standing, under the laws of the State of Delaware and has the power and authority to carry on its business as contemplated by this Agreement.

        3.02Authority.    The Purchaser has full power, authority and legal right to enter into this Agreement and the Real Estate Purchase Agreements and to consummate the transactions provided for herein and therein. The execution and delivery of this Agreement and the other instruments specified herein and the consummation of the transaction provided for herein, by the Purchaser have been duly and validly authorized by all necessary action on the part of the Purchaser and are in compliance with applicable law. This Agreement has been and the other agreements, documents and instruments required to be delivered by the Purchaser in accordance with the provisions hereof have been or will be, duly executed and delivered by the Purchaser and constitute (or will at Closing constitute) the valid and binding obligations of the Purchaser, enforceable against the Purchaser in accordance with their terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws now or hereafter in effect relating to or limiting creditors' rights or by legal principles of general applicability governing the availability of equitable remedies.

        3.03Absence of Violations or Conflicts.    The execution, delivery and performance of the transactions contemplated by this Agreement and the Real Estate Purchase Agreements by the Purchaser do not and will not violate, conflict with or result in the breach of any term, condition or provision of, or require the consent of any other person under, (a) any law, ordinance or governmental rule or regulation known to the Purchaser and to which the Purchaser is subject, (b) any judgment,

8

order, writ, injunction, decree or award of any court, arbitrator or governmental or regulatory official, body or authority which is applicable to the Purchaser (c) the governing documents of the Purchaser or any securities issued by the Purchaser, or (d) any mortgage, indenture or other instrument, document or understanding, oral or written, to which the Purchaser is a party or by which the Purchaser may have rights. No authorization, approval or consent of and no registration or filing with, any governmental or regulatory official, body or authority is required in connection with the execution, delivery or performance of this Agreement by the Purchaser.

        3.04Disclosure.    No written statement, representation, warranty or information provided or furnished by or on behalf of the Purchaser to the Sellers in this Agreement or otherwise in connection with the transactions contemplated by this Agreement and the Real Estate Purchase Agreements contains as of the date made any untrue statement of a material fact or omits to state any material fact necessary to make the statements herein or therein not misleading.

ARTICLE IV

INDEMNIFICATIONS

        4.01General Indemnification by the Sellers and the Owners.    The Sellers and the Owners, jointly and severally, agree to indemnify, hold harmless and defend the Purchaser after the Closing Date against and in respect of any of the following matters which may be asserted or established:

(a)

Any and all damages, losses, expenses, liabilities or deficiencies resulting from any breach of the warranties, representations and covenants of the Sellers and the Owners contained herein or in any schedule hereto;



(b)

Any and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Purchaser as a result of the nonpayment or assessment of taxes with respect to the Assets or the Businesses attributable to periods prior to the Closing Date;



(c)

Any and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Purchaser as a result of a claim of any kind arising from the ownership or operation of the Assets or the Businesses prior to the Closing Date (except for the Assumed Environmental Liabilities);



(d)

All demands, assessments, judgments, costs and expenses (including reasonable legal fees and other expenses of litigation, both at the trial and appellate level) arising from or in connection with any action, suit, proceeding or claim incident to any of the matters indemnified in subparts (a)-(c) of this Section 4.01.

        4.02General Indemnification by the Purchaser.    The Purchaser agrees to indemnify, hold harmless, and defend the Sellers and the Owners after the Closing Date against and in respect of any of the following matters which may be asserted or established:

(a)

Any and all damages, losses, expenses, liabilities or deficiencies resulting from any breach of the warranties, representations and covenants of the Purchaser contained herein or in any schedule hereto;



(b)

Any and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Sellers as a result of the nonpayment or assessment of taxes with respect to the Assets or the Businesses attributable to periods on and after the Closing Date;



(c)

Any and all damages, losses, expenses, liabilities or deficiencies incurred or paid by the Sellers as a result of a claim of any kind arising from the ownership or operation of the Assets or the Businesses by the Purchaser on and after the Closing Date; and

9

(d)

All demands. assessments, judgments, costs and expenses (including reasonable legal fees and other expenses of litigation, both at the trial and appellate level) arising from or in connection with any action, suit, proceeding or claim incident to any of the matters identified in subparts (a)-(c) of this Section 4.02.

        4.03.Environmental Indemnification by the Sellers and the Owners.    The Sellers and the Owners, jointly and severally, agree to indemnify, defend and hold the Purchaser harmless from and against any and all claims, demands, causes of action, liabilities, losses, fines, penalties, and/or expenses (including reasonable attorneys' fees and other expenses of litigation) which the Purchaser may incur or suffer based upon or arising from any occurrence, event, circumstance or omission occurring prior to the Closing Date and involving or affecting the environmental condition of the Assets, including, without limitation, or any such matters attributable to alleged violations of or non-compliance with Environmental Laws, save and except the Assumed Environmental Liabilities.

        4.04Environmental Assumption and Indemnification by Purchaser.    Purchaser agrees to indemnify, defend and hold Sellers harmless from and against any and all claims, demands, causes of action, liabilities, losses, fines, penalties and/or expenses (including reasonable attorneys' fees and other expenses of litigation) which Sellers may incur or suffer based upon or arising from any occurrence, event, circumstance or omission occurring following the Closing Date and involving or affecting the environmental condition of the Assets including, specifically, any obligation of Purchaser to plug and abandon any salt water disposal well assigned or conveyed by Sellers to Purchaser hereunder ("Assumed Environmental Liabilities").

        4.05Conditions of Indemnification.    The respective obligations and liabilities of the Sellers, the Owners and the Purchaser (the "indemnifying party") to the other (the "party to be indemnified") under this Article IV and under the Real Estate Purchase Agreements with respect to claims resulting from the assertion of liability by third parties shall be subject to the following terms and conditions:

(a)

Within 20 days (or such earlier time as might be required to avoid prejudicing the indemnifying party's position) after receipt of notice of commencement of any claim, whether meritorious or not, or any action evidenced by service of process or other legal pleading, the party to be indemnified shall give the indemnifying party written notice thereof together with a copy of such claim, process or other legal pleading, and the indemnifying party shall have the right to undertake the defense thereof by representatives of its own choosing and at its own expenses; provided that the party to be indemnified may participate in the defense with counsel of its own choice, the fees and expenses of which counsel shall be paid by the party to be indemnified unless (i) the indemnifying party has agreed to pay such fees and expenses, or (ii) the indemnifying party has failed to assume the defense of such claim or action.



(b)

If the indemnifying party, by the 30^th day after receipt of notice of any such claim (or, if earlier, by the 10^th day preceding the day on which an answer or other pleading must be served in order to prevent judgment by default in favor of the person asserting such claim), does not elect to defend against such claim, the party to be indemnified will (upon further notice to the indemnifying party) have the right to undertake the defense, compromise or settlement of such claim on behalf of and for the account and risk of the indemnifying party and at the indemnifying party's expense, subject to the right of the indemnifying party to assume the defense of such claims at any time prior to settlement, compromise or final determination thereof.



(c)

Notwithstanding the foregoing, the indemnifying party shall not settle any claim without the consent of the party to be indemnified unless such settlement involves only the payment of money and the claimant provides to the party to be indemnified a release from all liability in respect of such claim. If the settlement of the claim involves more

10

than the payment of money, the indemnifying party shall not settle the claim without the prior consent of the party to be indemnified.

(d)

The party to be indemnified and the indemnifying party will each cooperate with all reasonable requests to the other.

        4.06Limitation.    The obligations under this Article IV and liability for failure or breach of any warranties, representations, or covenants shall be limited as follows:

(a)

Except as provided in (c) below, the representations and warranties of the parties and indemnification obligations of the parties with respect to breaches thereof, and any other claims with regard to, or arising out of, the transactions contemplated by this Agreement shall survive for a period of three year(s) after the Closing Date, provided that if notice of a bona fide claim by either party has been given in writing as provided in Section 8.03 by a party against the other within such three year period the obligations with respect to such claim shall survive until resolved.



(b)

Except as provided in (c) and (d) below, the Sellers' and Owners' liability with respect to breaches of warranties and representations and indemnifications therefor shall be limited to an aggregate of One Million Eight Hundred Thousand and No/100 Dollars ($1,800,000.00).



(c)

The indemnity obligations of the Sellers and the Owners hereunder with respect to sites which are under remediation prior to Closing and with respect to any other sites identified by the Phase 1 Environmental Studies as having conditions unacceptable to Purchaser with respect to which the Sellers and the Owners accept responsibility shall continue indefinitely and shall not be limited in amount.



(d)

The indemnity obligations of Purchaser hereunder with respect to the Assumed Environmental Liabilities shall continue indefinitely and shall not be limited in amount.

ARTICLE V

OTHER AGREEMENTS

        5.01Purchaser's Due Diligence.    Pending Closing, the Purchaser shall have the complete and unfettered right to inspect, review and audit the Assets and all books, records, data and other information of the Sellers relating to the Assets and the conduct of the Businesses. All expenses incurred by the Purchaser relating to its inspection and review of the Assets and the Businesses shall be borne and paid exclusively by the Purchaser. The Sellers and the Owners will cooperate with the Purchaser in all reasonable respects in facilitating such inspection and review. Without limiting the foregoing, the Sellers and the Owners each agree that, until Closing, they will (a) provide or cause to be provided to the Purchaser or its representatives, during normal business hours or otherwise, if necessary, full access to all of its properties, assets, books, agreements, commitments and records; (b) furnish the Purchaser and its representatives with such information concerning any of its operations and affairs as they may reasonably request; and (c) furnish to the Purchaser true copies of all requested financial data and operating statements of the Sellers.

        5.02Exclusive Dealing.    During the period from the date of this Agreement through the Closing Date, the Sellers or the Owners will not, directly or indirectly, encourage, initiate or engage in discussions or negotiations with or provide any information to, or enter into any agreement to sell the Assets or any equity interest in any of the Sellers with, any person, firm, company or other entity, other than the Purchaser.

        5.03Employees.    Employees of Sellers who successfully pass Purchaser's preemployment screening test and otherwise qualify for employment by Purchaser and who are actually employed by

11

Purchaser immediately following Closing will be eligible to participate in Purchaser's current benefit programs as of the date of Closing (to the extent any waiting periods can be waived by Purchaser pursuant to its benefit plan documents) and their length of service with Sellers will be honored in considering their eligibility for Purchaser's benefit programs. Except as may be specifically provided in this Agreement, the Purchaser will assume no liability for any agreements, arrangements, commitments, policies or understandings of any kind relating to employment, compensation or benefits for present or former employees of the Sellers prior to the Closing Date, including, but not limited to, severance pay, retirement benefits, accrued vacation pay or benefits or medical claims incurred before the Closing Date. Without limiting the foregoing, the Sellers shall bear the full cost and expense of any severance expenses and benefits which result from the termination of any employees of the Sellers by Sellers. Notwithstanding the foregoing, Purchaser will assume the liability for accrued vacations for those employees of Sellers who are hired by Purchaser at Closing, provided an appropriate reduction in the Purchase Price is made for the vacation benefits assumed.

        5.04Expenses.    Except as otherwise provided herein, each party hereto will pay its own expenses and costs incurred in connection with the negotiation and consummation of this Agreement and the transaction contemplated hereby. The Purchaser will pay all federal, state and local sales, documentary and other transfer taxes, if any, due as a result of the purchase, sale or transfer of the Assets.

        5.05Brokers.    Each of the parties hereto shall be solely responsible for any brokerage commissions or finder's fees arising from this transaction based upon arrangements made by or on behalf of such party and agrees to indemnify and hold the other party harmless from any claims or liabilities (including reasonable attorneys' fees and court costs) with respect thereto.

        5.06Loss.    If, before the Closing Date, any individual asset making up the Assets is destroyed, or if there has been damage to any individual asset making up the Assets which would cost in excess of $50,000 to repair or replace and such repair or replacement is not completed by the Closing Date to the Purchaser's reasonable satisfaction, then the Purchaser, at its option, may either (a) proceed to Closing, in which event the Sellers shall assign to the Purchaser at Closing all insurance proceeds payable with respect to such loss and the Purchaser shall receive a credit at Closing against the Purchase Price for any remaining sums necessary to effectuate such repairs (including, without limitation, applicable deductibles) or (b) terminate this Agreement, in which event, except as otherwise expressly provided in this Agreement, neither party shall have any further rights or obligations hereunder. If, before the Closing Date, there has been damage to any individual asset making up the Assets which would cost $50,000 or less to repair or replace and such repair or replacement shall not have been completed by the Closing Date to the Purchaser's reasonable satisfaction, then the parties shall remain obligated to close this transaction, but Purchaser shall be entitled to an assignment at Closing of all insurance proceeds payable with respect to such loss and shall additionally receive a credit at Closing against the Purchase Price in an amount to be agreed upon by the Purchaser and the Sellers for any remaining sums necessary to effectuate such repairs (including, without limitation, applicable deductibles).

        5.07Assignment of Contracts.    At least ten (10) days prior to Closing, the Purchaser shall notify the Sellers of those Contracts, if any, which the Purchaser desires to assume at Closing. If the Purchaser does not issue such notification, the Purchaser shall be deemed to desire to assume all of the Contracts at Closing. Any Contracts the Purchaser elects not to assume will be considered to be Excluded Assets.

ARTICLE VI

THE CLOSING

        6.01Time, Date and Place of Closing.    Closing ("the Closing") of the transactions contemplated hereby and by the Real Estate Purchase Agreements shall take place at the offices of the Sellers' legal

12

counsel in Beaumont, Texas at 10:00 a.m. on or before September 29, 2003, or at such other time and place as the parties may hereafter mutually agree in writing. Such date or any alternative date selected in accordance with this Section 6.01 is referred to in this Agreement as the "Closing Date."

        6.02Conditions to Obligations of the Purchaser.    The obligation of the Purchaser to close under this Agreement and the Real Estate Purchase Agreements is subject to the fulfillment prior to or at the Closing Date of each of the following conditions, any one or more of which may be waived by the Purchaser:

(a)

The representations, warranties and covenants of the Sellers and the Owners contained herein or otherwise delivered pursuant hereto shall be true in all material respects as of the date when made, shall be deemed to be made again at and as of the Closing Date, and shall be true at and as of the Closing Date;



(b)

The Sellers and the Owners shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by the Sellers and the Owners prior to or at the Closing Date;



(c)

No material adverse change in the Businesses or in the Assets shall have occurred between March 31, 2003 and the Closing Date;



(d)

No federal, state or local governmental unit, agency, body or authority with competent jurisdiction over the subject matter shall have given official written notice of its intention to institute proceedings to prohibit the transaction contemplated by this Agreement and the Real Estate Purchase Agreements, or which would interfere with the use of the Assets or the operation of the Businesses;



(e)

No judgment, order or decree shall have been rendered by any governmental authority and no action shall have been instituted or threatened by any person which has the effect of enjoining or which seeks to enjoin the consummation of the transaction contemplated by this Agreement and the Real Estate Purchase Agreements;



(f)

The Sellers and the Owners shall have delivered to the Purchaser an opinion of its legal counsel, Orgain, Bell & Tucker, L.L.P., in form and substance reasonably acceptable to the Purchaser and its counsel, addressing the due and proper authorization, execution and delivery and the enforceability of this Agreement and the Real Estate Purchase Agreements and the instruments and documents executed in connection herewith and therewith and such other matters as the Purchaser or its counsel may reasonably require; and



(g)

The Phase One Environmental Assessments delivered by Sellers and Owners to Purchaser pursuant to Section 2.11(c) above disclose only conditions that are acceptable to Purchaser; and



(h)

All deliveries pursuant to Section 6.04 shall have been made and shall be reasonably acceptable to the Purchaser.

        6.03Conditions to Obligations of the Sellers and Owners.    The obligation of the Sellers and Owners to close under this Agreement and the Real Estate Purchase Agreements is subject to the fulfillment prior to or on the Closing Date of each of the following conditions, any one or more of which may be waived by the Sellers and Owners:

(a)

The representations, warranties and covenants of the Purchaser contained herein or otherwise delivered pursuant hereto shall be true in all material respects as of the date when made, shall be deemed to be made again at and as of the Closing Date, and shall be true at and as of the Closing Date;

13

(b)

The Purchaser shall have performed and complied with all agreements and conditions required by this Agreement to be performed or complied with by the Purchaser prior to or at the Closing Date;



(c)

No federal, state or local governmental unit, agency, body or authority with competent jurisdiction over the subject matter shall have given official written notice of its intention to institute proceedings to prohibit the transaction contemplated by this Agreement and the Real Estate Purchase Agreements or which would interfere with the use of the Assets or the operation of the Businesses; and



(d)

No judgment, order or decree shall have been rendered by any governmental authority and no action shall have been instituted or threatened by any person which has the effect of enjoining or which seeks to enjoin the consummation of the transaction contemplated by this Agreement and the Real Estate Purchase Agreements.



(e)

The Purchaser shall have delivered to the Sellers and Owners an opinion of its legal counsel, Lynch, Chappell & Alsup, P.C., in form and substance reasonably acceptable to the Sellers and Owners and their counsel, addressing the due and proper authorization, execution and delivery and the enforceability of this Agreement and the Real Estate Purchase Agreements and the instruments and documents executed in connection herewith and therewith and such other matters as the Sellers and Owners or their counsel may reasonably require; and



(f)

All deliveries pursuant to Section 6.05 shall have been made and shall be reasonably acceptable to Sellers and Owners.

        6.04Deliveries by the Sellers and the Owners at the Closing.    At the Closing, the Sellers and the Owners shall execute, acknowledge, and/or deliver, as appropriate, to the Purchaser the following:

(a)

Evidence that all consents (other than consents to be obtained on a post Closing basis pursuant to Section 2.13) necessary in connection with this transaction have been obtained (which shall consist of the original copies of all consents required to be obtained in writing and a certificate from each of the Sellers stating that all other consents have been obtained);



(b)

Evidence that all liens or encumbrances of any kind on the Assets other than Permitted Encumbrances shall have been released and/or a termination statement shall have been filed as of the Closing Date;



(c)

An officer's certificate of each of the Sellers and certificate of the Owners, dated as of the Closing Date, as to the material truth and correctness of all of the representations and warranties of the Sellers and the Owners contained in this Agreement and the Real Estate Purchase Agreements;



(d)

An officer's certificate from each of the Sellers and a certificate of the Owners, dated as of the Closing Date, as to the material performance of and compliance by the Sellers and the Owners with all covenants of the Seller contained in this Agreement and the Real Estate Purchase Agreements;



(e)

A certificate from each of the Sellers, dated as of the Closing Date, as to approval of the transactions contemplated by this Agreement and the Real Estate Purchase Agreements by the Owners and directors or general partner of each of the Sellers;



(f)

Opinion of Counsel from Orgain, Bell & Tucker, L.L.P.;



(g)

A Contingent Earn-Out Agreement that is substantially identical in form and substance to that attached hereto as Exhibit D executed by the Owners;

14

(h)

An assignment, conveyance and bill of sale substantially identical in form and substance to that attached hereto as Exhibit F (the "Conveyance"); conveying the Assets to the Purchaser;



(i)

All title certificates and other registration documents necessary to transfer to the Purchaser the titles to the, motor vehicles, trailers, equipment and other tangible personalty which are a part of the Assets, including, but not limited to, those shown on attached Exhibit B to the Purchaser;



(j)

Non-competition agreements that are substantially identical in form and substance to that attached hereto as Exhibit G, duly executed by each of the Owners and each of the Sellers (the "Non-Competition Agreements");



(k)

An employment agreement that is substantially identical in form and substance to that attached hereto as Exhibit H, duly executed by Morris B. Windham (the "Employment Agreement");



(l)

The Special Warranty Deeds required by the Real Estate Purchase Agreements; and



(m)

The Escrow Agreement.

        6.05Deliveries by the Purchaser at the Closing.    At the Closing, the Purchaser shall execute, acknowledge, and/or deliver, as appropriate, to the Sellers and the Owners the following:

(a)

An officer's certificate of the Purchaser, dated as of the Closing Date, as to the material truth and correctness of all of the representations and warranties of the Purchaser contained in this Agreement and the Real Estate Purchase Agreements;



(b)

An officer's certificate of the Purchaser, dated as of the Closing Date, as to the material performance of and compliance by the Purchaser with all covenants of the Purchaser contained in this Agreement and the Real Estate Purchase Agreements;



(c)

An officer's certificate of the Purchaser, dated as of the Closing Date, as to approval of the transactions contemplated by this Agreement and the Real Estate Purchase Agreements by the general partner of the Purchaser;



(d)

The Purchase Price in immediately available funds, less (i) the portion of the Purchase Price paid to the Escrow Account, (ii) the portion of the Purchase Price allocated to the Non-Competition Agreements to be executed by the Sellers, (iii) the portion of the Purchase Price allocated to the Real Estate Purchase Agreements, and (iv) payments, if any, made by Purchaser to creditors of Sellers pursuant to Sellers' instructions;



(e)

Opinion of Counsel of Counsel from Lynch, Chappell & Alsup, P.C.;



(f)

The Contingent Earn Out Agreement;



(g)

The Special Warranty Deed required by the Real Estate Purchase Agreements;



(h)

The Escrow Agreement;



(i)

The Non-Competition Agreements; and



(j)

The Employment Agreement.

ARTICLE VII

POST CLOSING REMEDIES OF THE PURCHASER

        7.01In General.    After the Closing, the Purchaser, without limitation of its other rights and remedies, shall have recourse upon the Escrowed Funds for breaches of the representations, warranties,

15

covenants and agreements of the Sellers or the Owners under this Agreement (including all costs, expenses and attorney's fees related thereto) in accordance with the procedure set forth in the Escrow Agreement.

        7.02Dispute Resolution.

        (a)   The parties shall attempt in good faith to resolve any controversy or claim arising out of or relating to this Agreement or the breach hereof, including, without limitation, any controversies or claims arising out of, under, or with respect to the retained portion of the Purchase Price being held in the Escrow Account, promptly by negotiations between representatives who have authority to settle the controversy. Any party may give the other party written notice of any dispute not resolved in the normal course of business together with a request that the parties meet and confer ("Notice of Dispute"). Within twenty (20) days after delivery of the Notice of Dispute, the parties or their representatives shall meet at a mutually acceptable time and place, and thereafter as often as they reasonably deem necessary, to exchange relevant information and to attempt to resolve the dispute. If the matter has not been resolved within thirty (30) days after delivery of the Notice of Dispute, or if the parties fail to meet within twenty (20) days after delivery of the Notice of Dispute, either party may initiate mediation of the claim or dispute as provided hereafter.

        If a party or its representative intends to be accompanied at a meeting by an attorney, the other parties shall be given advance notice of such intention and may also be accompanied by an attorney. All negotiations pursuant to this clause are confidential and shall be treated as compromise and settlement negotiations for purposes of the Federal Rules of Evidence and any state's rules of evidence.

        (b)    Mediation.    If a claim or controversy has not been resolved by negotiation as provided in Section 7.02 (a), the parties shall endeavor to settle the claim or dispute by mediation under the Center for Public Resources ("CPR") Model Procedure for Mediation of Business Disputes. A neutral third party will be selected from the CPR panel of neutrals. If the parties encounter difficulty in agreeing on a neutral third party, they will seek the assistance of CPR in the selection process. Mediation under this Section 7.02 (b) will commence within sixty (60) days of the Notice of Dispute.

        (c)    Statutes of Limitation Tolled During Meeting and Mediation.    All applicable statutes of limitation and defenses based upon the passage of time shall be tolled while the procedure specified in Sections 7.02(a) and (b) are pending. The parties will take such action, if any, required to effectuate such tolling.

        (d)    Performance To Continue Pending Dispute Resolution.    Each party is required to continue to perform its obligations under this Agreement pending final resolution of any claim or dispute covered by this Article VII.

ARTICLE VIII

MISCELLANEOUS PROVISIONS

        8.01Survival.    The parties agree that all of the representations, warranties and covenants contained in this Agreement or in any document, certificate, instrument, schedule or exhibit delivered pursuant to this Agreement shall survive the Closing and continue to be binding upon the parties.

        8.02Further Assurances; Further Cooperation.    The parties to this Agreement shall undertake to perform their obligations under this Agreement, to satisfy all conditions, and to cause the transaction contemplated by this Agreement to be carried out in accordance with the terms of this Agreement. Upon the execution of this Agreement and thereafter, each party shall do such things as may be

16

reasonably requested by the other party hereto in order more effectively to consummate or document the transaction contemplated by this Agreement.

        8.03Notices.    Any notice or communication required or permitted hereunder shall be given in writing, shall refer specifically to the section of this Agreement under which it is given or to which it is applicable, and shall be sent by (a) personal delivery, (b) expedited delivery service with proof of delivery, (c) United States mail, postage prepaid, registered or certified mail, or (d) telecopy (provided that such telecopy is confirmed by expedited delivery service or by mail in the manner previously described) addressed as follows:

If to the Sellers or the Owners:	Mr. Morris B. Windham 2295 Thomas Road Beaumont, Texas 77706 Telephone: (409) 892-5370
With a copy to:	Orgain, Bell & Tucker, L.L.P. 4th Floor, 470 Orleans Street P. O. Box 1751 Beaumont, Texas 77704-1751 Attn: Mr. John Creighton, III Telephone: (409) 838-6412 Facsimile: (409) 838-6959
If to the Purchaser:	Basic Energy Services, L.P. 400 W. Illinois, Suite 800 Midland, Texas 79701 Attn: Mr. Kenneth V. Huseman, President Telephone: (432) 620-5500 Facsimile: (432) 620-5501
With a copy to:	Lynch, Chappell & Alsup, P.C. 300 N. Marienfeld, Suite 700 Midland, Texas 79701 Attn: Mr. James M. Alsup Telephone: (432) 683-3351 Facsimile: (432) 683-2587

or to such other address or to the attention of such other persons as hereafter shall be designated in writing by the applicable party sent in accordance herewith. Any such notice or communication shall be deemed to have been given either at the time of personal delivery or, in the case of delivery service or mail, as of the date of first attempted delivery at the address and in the manner provided herein, or in the case of telecopy upon receipt.

        8.04Binding Effect.    This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.

        8.05Captions; Definitions.    The titles or captions of articles, sections and subsections contained in this Agreement are inserted only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof. The parties agree to all definitions in the statement of parties to this Agreement and in the other introductory language to this Agreement.

        8.06Controlling Law; Amendment; Waiver; Remedies Cumulative.    This Agreement shall be construed and enforced in accordance with the laws of the State of Texas. This Agreement may not be altered or amended except in writing signed by the Purchaser, the Seller and the Owners. The failure

17

of any party hereto at any time to require performance of any provisions hereof shall in no manner affect the right to enforce the same. No waiver by any party hereto of any condition, or of the breach of any term, provision, warranty, representation, agreement or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of the breach of any other term, provision, warranty, representation, agreement or covenant herein contained. Except as otherwise expressly provided herein, this Agreement is performable in Midland County, Texas.

        8.07Post Closing Access and Audit.    The Sellers and the Purchaser shall have reasonable access to all books and records of the Businesses, and the parties hereto shall furnish to each other any information or copies of any document which may be relevant in connection with any tax matter requiring such information and shall provide such other assistance in this connection as the parties reasonably request, at no cost to the party to which the request is made. Without limiting the foregoing, the Sellers further agree that, upon request by the Purchaser following Closing, the Sellers will execute and deliver to the Purchaser or its accountants such audit response letters and further confirmations as the Purchaser or its accountants may reasonably require for purposes of verification of the accuracy, validity and completeness of all financial and other information provided or made available by the Sellers in connection with the transactions contemplated by this Agreement. Sellers and Owners further agree that they will fully cooperate with Purchaser in connection with any audit of the books and records relating to the conduct of the Businesses by Sellers during the three (3) calendar year preceding the Closing, provided the cost of such audit is borne by Purchaser.

        8.08Entire Agreement.    This Agreement constitutes the entire agreement among the parties hereto with respect to the transaction contemplated and supersedes all prior negotiations. understandings and agreements, both written and oral, among the parties with respect thereto.

        8.09No Presumption.    Neither this Agreement nor any other agreement between the parties nor any uncertainty or ambiguity herein or therein shall be construed or resolved using any presumption against any party hereto or thereto, whether under any rule of construction or otherwise. On the contrary, this Agreement and the other agreements between the parties have been reviewed by the parties and their counsel and, in the case of any ambiguity or uncertainty, shall be construed according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto.

        8.10Counterparts.    This Agreement may be executed by each party upon a separate copy, and in such case one counterpart of this Agreement shall consist of enough of such copies to reflect the signatures of all of the parties to this Agreement. This Agreement shall become effective when one or more counterparts have been signed by each of the parties to this Agreement and delivered to each of the other parties to this Agreement. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, and it shall not be necessary in making proof of this Agreement or the terms of this Agreement to produce or account for more than one of such counterparts.

(The balance of this page is left blank intentionally)

18

        DULY EXECUTED by the parties hereto as of the day and year first above written.

SELLERS:
PARKER WINDHAM, LTD.
By:	PWI Management, L.L.C., General Partner
By:	/s/  MORRIS B. WINDHAM Morris B. Windham, Manager
PWI, INC.
By:	/s/  MORRIS B. WINDHAM Morris B. Windham, President
PWI RENTALS, L.P.
By:	PWI, Inc., General Partner
By:	/s/  MORRIS B. WINDHAM Morris B. Windham, President
PWI CONSTRUCTION, L.P.
By:	PWI Management, L.L.C., General Partner
By:	/s/  MORRIS B. WINDHAM Morris B. Windham, Manager
PWI DISPOSAL, L.P.
By:	PWI Management, L.L.C., General Partner
By:	/s/  MORRIS B. WINDHAM Morris B. Windham, Manager

19

OWNERS:
/s/  MORRIS B. WINDHAM Morris B. Windham
/s/  PAIGE WINDHAM Paige Windham
PURCHASER:
BASIC ENERGY SERVICES, L.P.
By:	Basic Energy Services G.P., L.L.C., Its General Partner
By:	/s/  KENNETH V. HUSEMAN Kenneth V. Huseman, President

20

QuickLinks

ASSET PURCHASE AGREEMENT
ARTICLE I PURCHASE AND SALE
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE OWNERS
ARTICLE III PURCHASER'S REPRESENTATIONS AND WARRANTIES
ARTICLE IV INDEMNIFICATIONS
ARTICLE V OTHER AGREEMENTS
ARTICLE VI THE CLOSING
ARTICLE VII POST CLOSING REMEDIES OF THE PURCHASER
ARTICLE VIII MISCELLANEOUS PROVISIONS

EX-10.10

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.10

$220,000,000

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

dated as of October 3, 2003,

Amended and Restated as of December 21, 2004,

among

BASIC ENERGY SERVICES, L.P., a Delaware limited partnership,
FIRST ENERGY SERVICES COMPANY, a Delaware corporation,
H.B. & R., INC., a Montana corporation,
and
FESCO ALASKA, INC., an Alaska corporation,
collectively as Borrowers,

BASIC ENERGY SERVICES, INC.,
BASIC ENERGY SERVICES GP, LLC,
BASIC ENERGY SERVICES LP, LLC,
and
THE OTHER GUARANTORS PARTY HERETO,
as Guarantors,

THE LENDERS PARTY HERETO

and

UBS SECURITIES LLC,
as Arranger,

and

HIBERNIA NATIONAL BANK,
as Documentation Agent

and

UBS AG, STAMFORD BRANCH,
as Issuing Bank, Administrative Agent and Collateral Agent

Cahill Gordon & Reindel LLP
80 Pine Street
New York, New York 10005

TABLE OF CONTENTS

		Page
ARTICLE I DEFINITIONS
SECTION 1.01.	Defined Terms	2
SECTION 1.02.	Classification of Loans and Borrowings	26
SECTION 1.03.	Terms Generally	26
SECTION 1.04.	Accounting Terms; GAAP	26
ARTICLE II THE CREDITS
SECTION 2.01.	Commitments	27
SECTION 2.02.	Loans	27
SECTION 2.03.	Borrowing Procedure	28
SECTION 2.04.	Evidence of Debt; Repayment of Loans	29
SECTION 2.05.	Fees	29
SECTION 2.06.	Interest on Loans	30
SECTION 2.07.	Termination and Reduction of Commitments	31
SECTION 2.08.	Interest Elections	31
SECTION 2.09.	Amortization of Term B Borrowings	32
SECTION 2.10.	Optional and Mandatory Prepayments of Loans	33
SECTION 2.11.	Alternate Rate of Interest	35
SECTION 2.12.	Increased Costs	36
SECTION 2.13.	Breakage Payments	37
SECTION 2.14.	Payments Generally; Pro Rata Treatment; Sharing of Setoffs	37
SECTION 2.15.	Taxes	38
SECTION 2.16.	Mitigation Obligations; Replacement of Lenders	40
SECTION 2.17.	Swingline Loans.	40
SECTION 2.18.	Letters of Credit	42
SECTION 2.19.	Joinder of Additional Borrowers	47
SECTION 2.20.	Joint and Several Liability	47
SECTION 2.21.	[Intentionally omitted]	48
SECTION 2.22.	Increase in Revolving Commitments	48
SECTION 2.23.	Term B Loans	49
ARTICLE III REPRESENTATIONS AND WARRANTIES
SECTION 3.01.	Organization; Powers	50
SECTION 3.02.	Authorization; Enforceability	50
SECTION 3.03.	Governmental Approvals; No Conflicts	50
SECTION 3.04.	Financial Statements	50
SECTION 3.05.	No Claims	51
SECTION 3.06.	Properties	51
SECTION 3.07.	Intellectual Property	52
SECTION 3.08.	Condition and Maintenance of Equipment	52
SECTION 3.09.	Equity Interests and Subsidiaries	53
SECTION 3.10.	Litigation; Compliance with Laws	53

i

SECTION 3.11.	Agreements	53
SECTION 3.12.	Federal Reserve Regulations	54
SECTION 3.13.	Investment Company Act; Public Utility Holding Company Act	54
SECTION 3.14.	Use of Proceeds	54
SECTION 3.15.	Taxes	54
SECTION 3.16.	No Material Misstatements	54
SECTION 3.17.	Labor Matters	54
SECTION 3.18.	Solvency	55
SECTION 3.19.	Employee Benefit Plans	55
SECTION 3.20.	Environmental Matters	55
SECTION 3.21.	Insurance	56
SECTION 3.22.	Security Documents	56
SECTION 3.23.	Acquisition Documents; Representations and Warranties in Agreement	57
SECTION 3.24.	No Material Adverse Effect	57
ARTICLE IV CONDITIONS TO CREDIT EXTENSIONS
SECTION 4.01.	Conditions to Initial Credit Extension	58
SECTION 4.02.	Conditions to All Credit Extensions	62
SECTION 4.03.	Initial Borrowing by Each Additional Borrower	63
SECTION 4.04.	Conditions to Effectiveness of the Amendment and Restatement	64
ARTICLE V AFFIRMATIVE COVENANTS
SECTION 5.01.	Financial Statements, Reports, etc.	64
SECTION 5.02.	Litigation and Other Notices	66
SECTION 5.03.	Existence; Businesses and Properties	66
SECTION 5.04.	Insurance	67
SECTION 5.05.	Obligations and Taxes	67
SECTION 5.06.	Employee Benefits	68
SECTION 5.07.	Maintaining Records; Access to Properties and Inspections	68
SECTION 5.08.	Use of Proceeds	68
SECTION 5.09.	Compliance with Environmental Laws; Environmental Reports	68
SECTION 5.10.	Interest Rate Protection	69
SECTION 5.11.	Additional Collateral; Additional Guarantors	69
SECTION 5.12.	Security Interests; Further Assurances	70
SECTION 5.13.	Information Regarding Collateral	70
SECTION 5.14.	Post Closing Matters	71
SECTION 5.15.	Post Closing Equity Matter	71
ARTICLE VI NEGATIVE COVENANTS
SECTION 6.01.	Indebtedness	71
SECTION 6.02.	Liens	72
SECTION 6.03.	Sale and Leaseback Transactions	74
SECTION 6.04.	Investment, Loan and Advances	74
SECTION 6.05.	Mergers, Consolidations, Sales of Assets and Acquisitions	75
SECTION 6.06.	Dividends	76

ii

SECTION 6.07.	Transactions with Affiliates	77
SECTION 6.08.	Financial Covenants	78
SECTION 6.09.	Limitation on Modifications or Prepayment of Indebtedness; Modifications of Certificate of Incorporation, or Other Constitutive Documents, By laws and Certain Other Agreements, etc.	78
SECTION 6.10.	Limitation on Certain Restrictions on Subsidiaries	79
SECTION 6.11.	Limitation on Issuance of Capital Stock	79
SECTION 6.12.	Limitation on Creation of Subsidiaries	79
SECTION 6.13.	Business	80
SECTION 6.14.	Limitation on Accounting Changes	80
SECTION 6.15.	Fiscal Year	80
SECTION 6.16.	Lease Obligations	80
SECTION 6.17.	Limitation on Further Negative Pledges	80
SECTION 6.18.	Limitation on Activities of Holdings	80
ARTICLE VII GUARANTEE
SECTION 7.01.	The Guarantee	80
SECTION 7.02.	Obligations Unconditional	81
SECTION 7.03.	Reinstatement	82
SECTION 7.04.	Subrogation; Subordination	82
SECTION 7.05.	Remedies	82
SECTION 7.06.	Instrument for the Payment of Money	83
SECTION 7.07.	Continuing Guarantee	83
SECTION 7.08.	General Limitation on Guarantee Obligations	83
ARTICLE VIII EVENTS OF DEFAULT
SECTION 8.01.	Events of Default	83
ARTICLE IX COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS
SECTION 9.01.	Collateral Account	85
SECTION 9.02.	Proceeds of Destruction, Taking and Collateral Dispositions	86
SECTION 9.03.	Application of Proceeds	86
ARTICLE X THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
SECTION 10.01.	Appointment	87
SECTION 10.02.	Agent in Its Individual Capacity	87
SECTION 10.03.	Exculpatory Provisions	87
SECTION 10.04.	Reliance by Agent	88
SECTION 10.05.	Delegation of Duties	88
SECTION 10.06.	Successor Agent	88
SECTION 10.07.	Non Reliance on Agent and Other Lenders	89
SECTION 10.08.	No Other Administrative Agent	89
SECTION 10.09.	Indemnification	89

iii

ARTICLE XI MISCELLANEOUS
SECTION 11.01.	Notices	90
SECTION 11.02.	Waivers; Amendment	91
SECTION 11.03.	Expenses; Indemnity	92
SECTION 11.04.	Successors and Assigns	93
SECTION 11.05.	Survival of Agreement	96
SECTION 11.06.	Counterparts; Integration; Effectiveness	96
SECTION 11.07.	Severability	97
SECTION 11.08.	Right of Setoff	97
SECTION 11.09.	Governing Law; Jurisdiction; Consent to Service of Process	97
SECTION 11.10.	Waiver of Jury Trial	97
SECTION 11.11.	Headings	98
SECTION 11.12.	Confidentiality	98
SECTION 11.13.	Interest Rate Limitation	98
SECTION 11.14.	Lender Addendum	98
SECTION 11.15.	Integration	98

iv

ANNEXES
Annex I	Applicable Margin
Annex II	Amortization Table
SCHEDULES
Schedule 1.01(a)	Mortgaged Properties
Schedule 1.01(b)	Refinancing Indebtedness To Be Repaid
Schedule 1.01(c)	Guarantors
Schedule 3.03	Governmental Approvals; Compliance with Laws
Schedule 3.06(b)	Real Property
Schedule 3.07(c)	Violations or Proceedings
Schedule 3.09(a)	Subsidiaries and Equity Interests Shares Issued and Outstanding
Schedule 3.09(c)	Corporate Organizational Chart
Schedule 3.11(c)	Material Agreements
Schedule 3.20	Environmental Matters
Schedule 3.21	Insurance
Schedule 3.23	Acquisition Documents
Schedule 4.01(g)	Local Counsel
Schedule 4.01(n)	Landlord Lien Waiver and Access Agreements
Schedule 4.01(o)(iii)	Title Insurance Amounts
Schedule 5.14	Post Closing Matters
Schedule 6.01(b)	Existing Indebtedness
Schedule 6.02(c)	Existing Liens
Schedule 6.04(b)	Existing Investments
EXHIBITS
Exhibit A	Form of Administrative Questionnaire
Exhibit B	Form of Assignment and Acceptance
Exhibit C 1	Form of Borrowing Request
Exhibit C 2	Form of LC Request
Exhibit D	Form of Interest Election Request
Exhibit E	Form of Joinder Agreement
Exhibit F	Form of Landlord Lien Waiver, Access Agreement and Consent
Exhibit G-1	Form of Original Term B Note
Exhibit G-2	Form of Term B Note
Exhibit G-3	Form of Revolving Note
Exhibit G-4	Form of Swingline Note
Exhibit H-1	Form of Perfection Certificate
Exhibit H-2	Form of Perfection Certificate Supplement
Exhibit I	Form of Security Agreement
Exhibit J 1	Form of Opinion of Company Counsel
Exhibit J 2	Form of Opinion of Local Counsel
Exhibit K	Form of Intercompany Note
Exhibit L	Form of Compliance Certificate
Exhibit M	Form of Solvency Certificate
Exhibit N	Form of Lender Addendum
Exhibit O-1	Form of Additional Borrower Agreement
Exhibit O-2	Form of Additional Borrower Termination Agreement
Exhibit P	Confidential Lender Authorization

v

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

        This SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement") dated as of October 3, 2003, amended and restated as of November 17, 2003 and as further amended and restated as of December 21, 2004, among BASIC ENERGY SERVICES, L.P., a Delaware limited partnership ("Basic"), FIRST ENERGY SERVICES COMPANY, a Delaware corporation ("Fesco"), H.B.& R., INC., a Montana corporation ("HBR"), and FESCO ALASKA, INC., an Alaska corporation ("Fesco AK" and collectively with Basic, Fesco and HBR, the "Borrowers"), BASIC ENERGY SERVICES, INC., a Delaware corporation ("Holdings"), BASIC ENERGY SERVICES GP, LLC ("GP"), BASIC ENERGY SERVICES LP, LLC ("LP"), and THE OTHER GUARANTORS PARTY HERETO, as the Guarantors (such term and each other capitalized term used but not defined herein having the meaning given to it in Article I), the Lenders, UBS SECURITIES LLC, as lead arranger (in such capacity, "Arranger") and as syndication agent (in such capacity, "Syndication Agent"), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, "Swingline Lender") and as a Lender, HIBERNIA NATIONAL BANK, as documentation agent (in such capacity, "Documentation Agent") for the Secured Parties and the Issuing Bank, and UBS AG, STAMFORD BRANCH, as issuing bank (in such capacity, "Issuing Bank"), as administrative agent (in such capacity, "Administrative Agent") for the Lenders and as collateral agent (in such capacity, "Collateral Agent") for the Secured Parties and the Issuing Bank.

WITNESSETH:

        WHEREAS, this Agreement was originally entered into on October 3, 2003 (the "Original Credit Agreement") and amended and restated on November 17, 2003, and the parties hereto desire to further amend and restate this Agreement as herein set forth;

        WHEREAS, the Borrowers desire to create a new Class of Term Loans under this Agreement in an aggregate principal amount of $170.0 million, having terms identical to the Original Term B Loans and having the same rights and obligations as the Original Term B Loans as set forth in this Agreement and the other Loan Documents, except in each case, as set forth herein;

        WHEREAS, each Original Lender who holds Original Term B Loans (other than Reduced Lenders (as defined below)) and who executes and delivers a counterpart of this Agreement shall be deemed, upon effectiveness of this Agreement as amended and restated on the date hereof (the "Second Amendment and Restatement"), to have exchanged its Original Term B Loans (which Original Term B Loans shall thereafter be deemed paid in full and extinguished) for Term B Loans in equal outstanding principal amounts;

        WHEREAS, each Original Lender who holds outstanding Original Term B Loans in an amount greater than its Term B Commitment (such Lender, a "Reduced Lender") and who executes and delivers a counterpart of this Agreement shall be deemed, upon effectiveness of this Amendment and Restatement, to have, upon the funding thereof, to have made Term B Loans in amount equal to its Term B Commitment;

        WHEREAS, a portion of the proceeds from the Term B Loans shall be used on the Second Amendment and Restatement Effective Date (as defined below) to repay the entire aggregate principal amount of the Original Term B Loans held by Original Lenders who do not execute and deliver a counterpart of this Agreement and to the Reduced Lenders in accordance with Section 2.23 of this Agreement, together with accrued and unpaid interest thereon to the Second Amendment and Restatement Effective Date;

        WHEREAS, the Borrowers further desire to amend and restate this Agreement to increase the Revolving Commitments to $50.0 million and to make certain other changes as provided herein;

        WHEREAS, the proceeds of the Loans were or are to be used in accordance with Section 3.14;

        NOW, THEREFORE, the Lenders are willing to extend such credit to the Borrowers and the Issuing Bank is willing to issue letters of credit for the account of the Borrowers on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01.Defined Terms.    As used in this Agreement, the following terms shall have the meanings specified below:

        "ABR", when used in reference to any Loan or Borrowing, is used when such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

        "ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.

        "ABR Loan" shall mean any ABR Term Loan or ABR Revolving Loan.

        "ABR Revolving Borrowing" shall mean a Borrowing comprised of ABR Revolving Loans.

        "ABR Revolving Loan" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

        "ABR Term Loan" shall mean any Term B Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II.

        "Acquired Businesses" shall mean (i) those certain assets of Pennant Service Company, a Colorado corporation, (ii) the capital stock of Fesco Holdings, Inc., a Delaware corporation and (iii) those certain assets of Parker Windham, Ltd., a Texas corporation, PWI, Inc., a Texas corporation, PWI Rentals, L.P., a Texas limited partnership, PWI Construction, L.P., a Texas limited partnership, PWI Disposal, L.P., a Texas limited partnership, and Morris B. Windham and Paige Windham, individuals residing in the State of Texas, each of which were acquired by Basic (the "Acquisitions") with the proceeds of the Loans under the Original Credit Agreement.

        "Acquisition Agreements" shall mean (i) the stock purchase agreement dated September 18, 2003 pursuant to which Basic acquired all of the capital stock of Fesco Holdings, Inc., (ii) the asset purchase agreement dated as of October 3, 2003 pursuant to which Basic acquired certain assets of Parker Windham, Ltd., a Texas corporation, PWI, Inc., a Texas corporation, PWI Rentals, L.P., a Texas limited partnership, PWI Construction, L.P., a Texas limited partnership, PWI Disposal, L.P., a Texas limited partnership and (iii) the asset purchase agreement dated as of September 29, 2003 pursuant to which Basic acquired certain assets of Pennant Service Company, a Colorado corporation.

        "Acquisition Consideration" shall mean the purchase consideration for any Permitted Acquisition and all other payments by Holdings, Borrowers or any of their Subsidiaries in exchange for, or as part of, or in connection with, any Permitted Acquisition, whether paid in cash or by exchange of Equity Interests or of assets or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness, "earn outs" and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business.

        "Acquisition Documents" shall mean the collective reference to the Acquisition Agreements, the Pennant LOI and each of the other documents set forth on Schedule 3.23.

2

        "Acquisitions" shall have the meaning assigned to such term in the definition of "Acquired Businesses" herein.

        "Additional Borrower" shall have the meaning assigned to such term in Section 2.19 hereto.

        "Additional Borrower Agreement" shall mean an Additional Borrower Agreement substantially in the form of Exhibit O-1.

        "Additional Borrower Termination Agreement" shall mean an Additional Borrower Termination Agreement substantially in the form of Exhibit O-2.

        "Adjusted LIBOR Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period, (a) an interest rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) determined by the Administrative Agent to be equal to the LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period divided by (b) 1 minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest Period.

        "Administrative Agent" shall have the meaning assigned to such term in the preamble hereto and includes each other person appointed as the successor pursuant to Article X.

        "Administrative Agent Fees" shall have the meaning assigned to such term in Section 2.05(b).

        "Administrative Questionnaire" shall mean an Administrative Questionnaire in the form of Exhibit A, or such other form as may be supplied from time to time by the Administrative Agent.

        "Affiliate" shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified; provided, however, that, for purposes of Section 6.07, the term "Affiliate" shall also include any person that directly or indirectly owns more than 10% of any class of Equity Interests of the person specified or that is an executive officer or director of the person specified.

        "Agents" shall mean the Arranger, Documentation Agent, Syndication Agent, Administrative Agent and the Collateral Agent.

        "Agreement" shall have the meaning assigned to such term in the preamble hereto.

        "Alternate Base Rate" shall mean, for any day, a rate per annum (rounded upward, if necessary, to the next 1/100th of 1%) equal to the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b) of the preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Base Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Base Rate or the Federal Funds Effective Rate, respectively.

        "Applicable Fee" shall mean, for any day, with respect to any Term B Loan or Revolving Loan, as the case may be, the applicable percentage set forth in Annex I under the caption "Applicable Fee".

        "Applicable Margin" shall mean, for any day, with respect to any Revolving Loan or Term B Loan, as the case may be, the applicable percentage set forth in Annex I under the appropriate caption.

        "Arranger" shall have the meaning assigned to such term in the preamble hereto.

3

        "Asset Sale" shall mean (a) any conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any sale and leaseback transaction) of any property (including stock of any Subsidiary of Holdings by the holder thereof) by Holdings, any Borrower or any of their Subsidiaries to any person other than any Borrower or any Subsidiary Guarantor and (b) any issuance or sale by any Subsidiary of Holdings (other than any Borrower) of its Equity Interests to any person (other than to any Borrower or any Subsidiary Guarantor).

        "Assignment and Acceptance" shall mean an assignment and acceptance entered into by a Lender or, if dated prior to the Second Amendment and Restatement Effective Date, an Original Lender, and an assignee, and accepted by the Administrative Agent, in the form of Exhibit B, or such other form as shall be approved by the Administrative Agent.

        "Attributable Indebtedness" shall mean, when used with respect to any sale and leaseback transaction, as at the time of determination, the present value (discounted at a rate equivalent to the relevant Borrower's then current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such sale and leaseback transaction.

        "Base Rate" shall mean, for any day, a rate per annum that is equal to the corporate base rate of interest established by the Administrative Agent from time to time; each change in the Base Rate shall be effective on the date such change is effective. The corporate base rate is not necessarily the lowest rate charged by the Administrative Agent to its customers.

        "Basic" shall have the meaning assigned to such term in the preamble hereto.

        "Board" shall mean the Board of Governors of the Federal Reserve System of the United States.

        "Borrower Agent" shall mean Basic, which for convenience shall act on behalf of Borrowers for purposes of giving and receiving certain notices and taking certain other actions, as more fully set forth herein.

        "Borrowers" shall mean Basic, Fesco, HBR and Fesco AK and each other Additional Borrower that becomes a party to this Agreement.

        "Borrowing" shall mean (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan.

        "Borrowing Request" shall mean a request by Basic in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C-1, or such other form as shall be approved by the Administrative Agent.

        "Business Day" shall mean any day other than a Saturday, Sunday or other day on which banks in New York City are authorized or required by law to close; provided, however, that when used in connection with a Eurodollar Loan, the term "Business Day" shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

        "Capital Expenditures" shall mean, with respect to any person, for any period, the aggregate amount of all expenditures by such person and its Subsidiaries during that period for fixed or capital assets or improvements thereto or replacements thereof that, in accordance with GAAP, are or should be classified as capital expenditures in the consolidated statement of cash flows of such person and its Consolidated Subsidiaries; provided, however, that Capital Expenditures shall not include (x) expenditures made in connection with any Permitted Acquisition or (y) expenditures by any person prior to the time such person was acquired pursuant to a Permitted Acquisition.

4

        "Capital Lease Obligations" of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

        "Cash Equivalents" shall mean, as to any person: (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or any agency or instrumentality thereof (provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person; (b) time deposits and certificates of deposit of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia having, capital and surplus aggregating in excess of $300.0 million and a rating of "A" (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such person; (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a) above entered into with any bank meeting the qualifications specified in clause (b) above, which repurchase obligations are secured by a valid perfected security interest in the underlying securities; (d) commercial paper issued by any person incorporated in the United States rated at least A-1 or the equivalent thereof by Standard & Poor's Rating Service ("S&P") or at least P-1 or the equivalent thereof by Moody's Investors Service, Inc. ("Moody's") or an equivalent rating by a nationally recognized rating agency if both S&P and Moody's cease publishing ratings of commercial paper issuers generally, and in each case maturing not more than one year after the date of acquisition by such person; (e) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a) through (d) above; and (f) demand deposit accounts maintained in the ordinary course of business.

        "Casualty Event" shall mean, with respect to any property (including Real Property) of any person, any loss of title with respect to such property or any loss of or damage to or destruction of, or any condemnation or other taking (including by any Governmental Authority) of, such property for which such person or any of its Subsidiaries receives insurance proceeds or proceeds of a condemnation award or other compensation in each case to the extent that such proceeds or other compensation exceeds $250,000. "Casualty Event" shall include but not be limited to any taking of all or any part of any Real Property of any person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any person or any part thereof by any Governmental Authority, civil or military.

        "CERCLA" shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq.

        A "Change in Control" shall be deemed to have occurred if:

        (a)   Holdings at any time ceases to own, directly or indirectly, 100% of the capital stock of any Borrower;

        (b)   prior to an IPO, (i) the Permitted Holders cease to own, or to have the power to vote or direct the voting of, Voting Stock representing at least a majority of the voting power of the total outstanding Voting Stock of Holdings or (ii) the Permitted Holders cease to own Equity Interests representing at least 40% of the total economic interests of the Equity Interests of Holdings;

        (c)   following an IPO, any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders, is or becomes the

5

beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such person or group shall be deemed to have "beneficial ownership" of all securities that any such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock representing 50% or more of the voting power of the total outstanding Voting Stock of Holdings; or

        (d)   following an IPO, during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Holdings (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of 66²/3% of the directors of Holdings then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of Holdings.

        "Change in Law" shall mean (a) the adoption of any law, treaty, order, rule or regulation after the Closing Date, (b) any change in any law, treaty, order, rule or regulation or in the interpretation or application thereof by any Governmental Authority after the Closing Date or (c) compliance by any Lender or Issuing Bank (or for purposes of Section 2.12(b), by any lending office of such Lender or by such Lender's or Issuing Bank's holding company, if any) with any request, guideline or directive (whether or not having the force of law) of any Governmental Authority made or issued after the Closing Date.

        "Charges" shall have the meaning assigned to such term in Section 11.13.

        "Class", when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term B Loans or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Term B Commitment or Swingline Commitment.

        "Closing Date" shall mean October 3, 2003.

        "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.

        "Collateral" shall mean, collectively, all of the Security Agreement Collateral, the Mortgaged Property and all other property of whatever kind and nature pledged as collateral under any Security Document.

        "Collateral Account" shall mean a collateral account or sub account in the form of a deposit account established and maintained by the Collateral Agent for the benefit of the Secured Parties, in accordance with the provisions of Section 9.01.

        "Collateral Agent" shall have the meaning assigned to such term in the preamble hereto.

        "Commercial Letter of Credit" shall mean any letter of credit or similar instrument issued for the account of any Borrower for the benefit of any Borrower or any of its Subsidiaries, for the purpose of providing the primary payment mechanism in connection with the purchase of materials, goods or services by any Borrower or any of its Subsidiaries in the ordinary course of their businesses.

        "Commitment" shall mean, with respect to any Lender or Original Lender, such Lender's or Original Lender's Revolving Commitment, Original Term B Commitment, Term B Commitment or Swingline Commitment.

        "Commitment Fee" shall have the meaning assigned to such term in Section 2.05(a).

        "Companies" shall mean Holdings and its Subsidiaries; and "Company" shall mean any one of them.

6

        "Compliance Certificate" shall mean a certificate of a Financial Officer substantially in the form of Exhibit L.

        "Confidential Information Memorandum" shall mean that certain confidential information memorandum prepared in connection with the syndication of the Commitments and the Loans.

        "Confidential Lender Authorization" shall mean a Confidential Lender Authorization in the form of Exhibit P.

        "Consolidated Companies" shall mean Holdings and its Consolidated Subsidiaries.

        "Consolidated EBITDA" shall mean, for any period, Consolidated Net Income for such period, adjusted, in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income (and with respect to the portion of Consolidated Net Income attributable to any Subsidiary of Holdings only if a corresponding amount would be permitted at the date of determination to be distributed to Holdings by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its organizational documents and all agreements, instruments, judgments, decrees, orders, statutes, rules and regulations applicable to such Subsidiary or its stockholders), by (x) adding thereto (i) the amount of Consolidated Interest Expense, (ii) provision for taxes based on income, (iii) amortization expense, (iv) depreciation expense, (v) dividends paid to Holdings pursuant to Section 6.06(d), (vi) all other non cash items (excluding any non cash charge that results in an accrual or a reserve for cash charges in any future period), (vii) amortization of intangibles (including, but not limited to, goodwill) and organization costs, and (viii) any extraordinary expenses or losses (including whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, losses on sales of assets outside the ordinary course of business), and (y) subtracting (i) dividends paid to Holdings pursuant to Section 6.06(c) and (ii) the aggregate amount of all non cash items, determined on a consolidated basis, to the extent such items increased Consolidated Net Income for such period, and (iii) interest income, (iv) any extraordinary income or gains (including whether or not otherwise includable as a separate item in the statement of such Consolidated Net Income for such period, gains on the sales of assets outside the ordinary course of business. Consolidated EBITDA shall be calculated on a Pro Forma Basis to give effect to the Acquisitions, any other Permitted Acquisition and any Asset Sale (or series of Asset Sales other than related dispositions of used, worn out, obsolete or surplus property pursuant to Section 6.05(a)(ii)) resulting in aggregate sale proceeds of $5.0 million or more consummated during the fiscal period of the relevant Borrower ended on the Test Period thereof as if each such Permitted Acquisition had been effected on the first day of such period and as if each such Asset Sale had been consummated on the day prior to the first day of such period; provided, however, that no effect shall be given to the Acquisitions or any other Permitted Acquisition unless the Administrative Agent shall have received consolidated statements of income for such Test Period, all in form reasonably satisfactory to the Administrative Agent.

        "Consolidated Fixed Charge Coverage Ratio" shall mean, for any Test Period, the ratio of (a) Consolidated EBITDA (i) less maintenance Capital Expenditures, (ii) less cash payments in respect of income taxes, (iii) less for such Test Period scheduled principal payments in respect of Capital Lease Obligations to (b) Consolidated Fixed Charges for such Test Period.

        "Consolidated Fixed Charges" shall mean, for any period, the sum, without duplication, of (a) Consolidated Interest Expense less the sum of (i) Non-Cash Interest Expense and (ii) cash interest income for such period and (b) the scheduled principal amount of all amortization payments on all Indebtedness (excluding the principal component of all Capital Lease Obligations) of Holdings and its Subsidiaries for such period (as determined on the first day of the respective period).

        "Consolidated Indebtedness" shall mean, as at any date of determination, the aggregate amount of all Indebtedness (but including in any event the then outstanding principal amount of all Loans, all

7

Capital Lease Obligations and all LC Exposure) of Holdings and its Consolidated Subsidiaries on a consolidated basis as determined in accordance with GAAP.

        "Consolidated Interest Coverage Ratio" shall mean, for any Test Period, the ratio of (x) Consolidated EBITDA for such Test Period to (y) Consolidated Interest Expense (excluding any Non-Cash Interest Expense) less cash interest income for such Test Period.

        "Consolidated Interest Expense" shall mean, for any period, the total consolidated interest expense (whether cash or non-cash) of Holdings and its Consolidated Subsidiaries determined in accordance with GAAP for the relevant period, including interest expense with respect to any Funded Debt of Holdings and its Consolidated Subsidiaries and interest expense for the relevant period that has been capitalized on the balance sheet of Holdings and its Consolidated Subsidiaries.

        "Consolidated Net Income" shall mean, for any period, the consolidated net income of Holdings and its Consolidated Subsidiaries determined in accordance with GAAP, but excluding in any event (a) after tax extraordinary gains or extraordinary losses; (b) after tax gains or losses realized from (i) the acquisition of any securities, or the extinguishment of any Indebtedness, of Holdings or any of its Subsidiaries or (ii) any sales of assets; (c) net earnings or loss of any other person (other than a Subsidiary of Holdings) in which Holdings or any Consolidated Subsidiary has an ownership interest, except (in the case of any such net earnings) to the extent such net earnings shall have actually been received by Holdings or such Consolidated Subsidiary (subject to the limitation in clause (d) below) in the form of cash dividends or distributions; (d) the net income of any Consolidated Subsidiary to the extent that the declaration or payment of dividends or similar distributions by such Consolidated Subsidiary of its net income is not at the time of determination permitted without approval under applicable law or regulation or under such Consolidated Subsidiary's organizational documents or any agreement or instrument applicable to such Consolidated Subsidiary or its stockholders; (e) gains or losses from the cumulative effect of any change in accounting principles; (f) earnings resulting from any reappraisal, revaluation or write up of assets; and (g) the income (or loss) of any person accrued prior to the date it becomes a Subsidiary of Holdings or any Consolidated Subsidiary or is merged into or consolidated with Holdings or any Consolidated Subsidiary or that person's assets are acquired by Holdings or such Consolidated Subsidiary (other than pursuant to the Acquisitions).

        "Consolidated Subsidiary" shall mean, as to any person, all subsidiaries of such person which are consolidated with such person for financial reporting purposes in accordance with GAAP.

        "Contested Collateral Lien Conditions" shall mean, with respect to any Permitted Lien of the type described in clauses (a), (b) and (f) of Section 6.02, the following conditions:

        (a)   the relevant Borrower shall cause any proceeding instituted contesting such Lien to stay the sale or forfeiture of any portion of the Collateral on account of such Lien;

        (b)   to the extent such Lien is in an amount in excess of $500,000, the appropriate Loan Party shall maintain cash reserves or, at the option and upon request of the Administrative Agent, obtain a bond in an amount sufficient to pay and discharge such Lien and the Administrative Agent's reasonable estimate of all interest and penalties related thereto; and

        (c)   such Lien shall in all respects be subject and subordinate in priority to the Lien and security interest created and evidenced by the Security Documents, except if and to the extent that the law or regulation creating, permitting or authorizing such Lien provides that such Lien is or must be superior to the Lien and security interest created and evidenced by the Security Documents.

8

        "Contingent Obligation" shall mean, as to any person, any obligation, agreement, understanding or arrangement of such person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations ("primary obligations") of any other person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of such person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; (d) with respect to bankers' acceptances and letters of credit, until a reimbursement obligation arises (which obligation shall constitute Indebtedness); or (e) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however, that the term "Contingent Obligation" shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties for deposit or collection in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such person may be liable, whether severally or jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.

        "Control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms "Controls" and "Controlled" shall have meanings correlative thereto.

        "Control Agreement" shall have the meaning assigned to such term in the Security Agreement.

        "Credit Extension" shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the amendment, extension or renewal of any existing Letter of Credit, by the Issuing Bank.

        "Debt Issuance" shall mean the incurrence by Holdings or any of its Subsidiaries of any Indebtedness after the Closing Date (other than as permitted by Section 6.01).

        "Default" shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

        "Disqualified Capital Stock" shall mean any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to 90 days after the Term B Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in (a) above, in each case at any time prior to the 90 days after the Term B Maturity Date, or (c) contains any repurchase obligation which may come into effect prior to payment in full of all Obligations.

        "Dividend" with respect to any person shall mean that such person has declared or paid a dividend or returned any equity capital to its stockholders or authorized or made any other distribution, payment or delivery of property (other than common stock of such person) or cash to its stockholders as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for a consideration any shares of any class of its capital stock outstanding (or any options or warrants issued by such person

9

with respect to its capital stock), or set aside any funds for any of the foregoing purposes, or shall have permitted any of its subsidiaries to purchase or otherwise acquire for a consideration any shares of any class of the capital stock of such person outstanding (or any options or warrants issued by such person with respect to its capital stock). Without limiting the foregoing, "Dividends" with respect to any person shall not include all payments made or required to be made by such person with respect to any stock appreciation rights, plans, equity incentive or achievement plans or any similar plans or setting aside of any funds for the foregoing purposes to the extent such payments do not exceed $2.0 million in the aggregate.

        "Documentation Agent" shall have the meaning assigned to such term in the preamble hereto.

        "dollars" or "$" shall mean lawful money of the United States.

        "Domestic Subsidiary" shall means any Wholly Owned Subsidiary of Basic that is not a Foreign Subsidiary.

        "Earn Out Escrow" shall mean an escrow account and agreement pursuant to which any Borrower escrows some portion of an Earn Out Obligation with an independent third party escrow agent.

        "Earn Out Obligation" shall mean those contingent obligations of any Borrower incurred in favor of a seller (or other third party entitled thereto) under or with respect to any Permitted Acquisition.

        "Engagement Letter" shall mean the confidential Engagement Letter, dated September 16, 2003, between Basic Energy Services, LP and UBS Securities LLC.

        "Environment" shall mean ambient air, surface water and groundwater (including, without limitation, potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources, the workplace or as otherwise defined in any Environmental Law.

        "Environmental Claim" shall mean any claim, notice, demand, order, action, suit, proceeding or other communication alleging liability for investigation, remediation, removal, cleanup, response, corrective action, damages to natural resources, personal injury, property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release in or into the Environment of Hazardous Material at any location or (ii) any violation of Environmental Law, and shall include, without limitation, any claim seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from, related to or arising out of the presence, Release or threatened Release of Hazardous Material or alleged injury or threat of injury to health, safety, the Environment.

        "Environmental Law" shall mean any and all applicable present and future treaties, laws, statutes, ordinances, regulations, rules, decrees, orders, judgments, consent orders, consent decrees or other binding requirements, and the common law, relating to protection of public health or the Environment, the Release or threatened Release of Hazardous Material, natural resources or natural resource damages, or occupational safety or health.

        "Environmental Permit" shall mean any permit, license, approval, consent or other authorization required by or from a Governmental Authority under Environmental Law.

        "Equity Interest" shall mean, with respect to any person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or non voting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distributions of assets of, such partnership (excluding Earn Out Obligations), whether outstanding on the Closing Date or issued after the Closing Date, but excluding debt securities convertible or exchangeable into such equity.

10

        "Equity Issuance" shall mean, without duplication, any issuance in a registered offering or sale pursuant to a private placement (other than an equity issuance consisting of Sponsor Securities) by Holdings or any Borrower (other than to Holdings) after the Closing Date of (a) any Equity Interests (including any Equity Interests issued upon exercise of any warrant or option) or any warrants or options to purchase Equity Interests or (b) any other security or instrument representing an Equity Interest (or the right to obtain any Equity Interest) in the issuing or selling person.

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

        "ERISA Affiliate" shall mean any trade or business (whether or not incorporated) that, together with any Borrower, is treated as a single employer under Section 414(b) or (c) of the Code, or solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code.

        "ERISA Event" shall mean (a) any "reportable event," as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30 day notice period is waived by regulation); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived, the failure to make by its due date a required installment under Section 412(m) of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by any Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (f) the incurrence by any Company or any of its ERISA Affiliates of any liability with respect to the withdrawal from any Plan or Multiemployer Plan; (g) the receipt by any Company or its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (h) the making of any amendment to any Plan which could result in the imposition of a lien or the posting of a bond or other security; and (i) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) which could result in liability to any Company.

        "Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar Loans.

        "Eurodollar Loan" shall mean any Eurodollar Revolving Loan or Eurodollar Term B Loan.

        "Eurodollar Revolving Borrowing" shall mean a Borrowing comprised of Eurodollar Revolving Loans.

        "Eurodollar Revolving Loan" shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II.

        "Eurodollar Term B Borrowing" shall mean a Borrowing comprised of Eurodollar Term B Loans.

        "Eurodollar Term B Loan" shall mean any Term B Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II.

        "Event of Default" shall have the meaning assigned to such term in Article VIII.

        "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

        "Existing Lien" shall have the meaning assigned to such term in the applicable Security Document.

11

        "Excluded Taxes" shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of any Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by the United States, or by the jurisdiction under the laws of which such recipient is organized or in which its principal office is located or, in the case of any Lender, in which its applicable lending office is located, and (b) in the case of a Foreign Lender (other than an assignee pursuant to a request by Borrower Agent under Section 2.16), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party to this Agreement (or designates a new lending office) or is attributable to such Foreign Lender's failure to comply with Section 2.15(e), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from Borrowers with respect to such withholding tax pursuant to Section 2.15(a) (it being understood and agreed, for the avoidance of doubt, that any withholding tax imposed on a Foreign Lender as a result of a Change in Law or regulation or interpretation thereof occurring after the time such Foreign Lender became a party to this Agreement shall not be an Excluded Tax).

        "Federal Funds Effective Rate" shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

        "Fee Letter" shall mean the confidential Fee Letter, dated November 19, 2004, among Basic Energy Services, L.P., UBS AG, Cayman Islands Branch, and UBS Securities LLC.

        "Fees" shall mean the Commitment Fees, the Administrative Agent Fees, the LC Participation Fees and the Fronting Fees.

        "Fesco" shall have the meaning assigned to such term in the preamble hereto.

        "Fesco AK" shall have the meaning assigned to such term in the preamble hereto.

        "Financial Officer" of any person shall mean the Chief Financial Officer, principal accounting officer, Treasurer or Controller of such person.

        "FIRREA" shall mean the Federal Institutions Reform, Recovery and Enforcement Act of 1989.

        "Foreign Lender" shall mean any Lender that is not, for United States federal income tax purposes, (i) a citizen or resident of the United States, (ii) a corporation or entity treated as a corporation created or organized in or under the laws of the United States, or any political subdivision thereof, (iii) an estate the income of which is subject to U.S. federal income taxation regardless of its source or (iv) a trust if a court within the United States is able to exercise primary supervision over the administration of such trust and one or more United States persons have the authority to control all substantial decisions of such trust.

        "Foreign Subsidiary" shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia.

        "Fronting Fees" shall have the meaning assigned to such term in Section 2.05(c).

        "Funded Debt" shall mean, with respect to any person, without duplication, all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or similar evidences of Indebtedness that by its terms matures more than one year from, or is directly or indirectly renewable or extendible at such person's option under a revolving credit or similar agreement obligating the lender or lenders thereunder to extend credit or incur letter of credit obligations over a period of more than one year

12

from the date of creation thereof, and specifically including Capital Lease Obligations, current maturities of long-term debt, revolving credit and short-term debt extendible beyond one year at the option of the debtor, and also including, in the case of Borrowers, the Obligations and, without duplication, Contingent Obligations in respect of Funded Debt of other persons.

        "GAAP" shall mean generally accepted accounting principles in the United States applied on a consistent basis.

        "Governmental Authority" shall mean any federal, state, local or foreign court, central bank or governmental agency, authority, instrumentality or regulatory body.

        "Governmental Real Property Disclosure Requirements" shall mean any Requirement of Law of any Governmental Authority requiring notification of the buyer, lessee, mortgagee, assignee or other transferee of any Real Property, facility, establishment or business, or notification, registration or filing to or with any Governmental Authority, in connection with the sale, lease, mortgage, assignment or other transfer (including, without limitation, any transfer of control) of any Real Property, facility, establishment or business, of the actual or threatened presence or Release in or into the Environment, or the use, disposal or handling of Hazardous Material on, at, under or near the Real Property, facility, establishment or business to be sold, leased, mortgaged, assigned or transferred.

        "Guaranteed Obligations" shall have the meaning assigned to such term in Section 7.01.

        "Guarantees" shall mean the guarantees issued pursuant to Article VII by Holdings and the Subsidiary Guarantors.

        "Guarantors" shall mean Holdings and the Subsidiary Guarantors.

        "Hazardous Materials" shall mean the following: hazardous substances; hazardous wastes; polychlorinated biphenyls ("PCBs") or any substance or compound containing PCBs; asbestos or any asbestos containing materials in any form or condition; radon or any other radioactive materials including any source, special nuclear or by product material; petroleum, crude oil or any fraction thereof; and any other pollutant or contaminant chemicals, wastes, materials, compounds, constituents or substances, subject to regulation or which can give rise to liability under any Environmental Laws.

        "HBR" shall have the meaning assigned to such term in the preamble hereto.

        "Hedging Agreement" shall mean any Interest Rate Agreement, foreign currency exchange agreement, commodity price protection agreement or other interest or currency exchange rate or commodity price hedging arrangement.

        "Holdings" shall have the meaning assigned to such term in the preamble hereto.

        "Increased Amount Date" shall have the meaning assigned to such term in Section 2.22(a).

        "Indebtedness" of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or advances; (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments; (c) all obligations of such person upon which interest charges are customarily paid or accrued; (d) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person; (e) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business on normal trade terms and not overdue by more than 90 days); (f) all Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed to the extent of the fair market value of such property; (g) all Capital Lease Obligations, Purchase Money Obligations and synthetic lease obligations of such person; (h) all obligations of such person in respect of Hedging Agreements to the extent required to be reflected on a balance sheet of

13

such person; (i) all Attributable Indebtedness of such person; (j) all obligations for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers' acceptances and similar credit transactions; and (k) all Contingent Obligations (other than contingent Earn Out Obligations) of such person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a) through (j) above. The Indebtedness of any person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person's ownership interest in or other relationship with such entity, except to the extent that terms of such Indebtedness provide that such person is liable therefor. The Indebtedness of any person shall not include ordinary course financings of insurance premiums consistent with the past practices of such person.

        "Indemnified Taxes" shall mean Taxes other than Excluded Taxes.

        "Indemnitee" shall have the meaning assigned to such term in Section 11.03(b).

        "Information" shall have the meaning assigned to such term in Section 11.12.

        "Intellectual Property" shall have the meaning assigned to such term in Section 3.07(a).

        "Interest Election Request" shall mean a request by a Borrower to convert or continue a Revolving Borrowing or Term B Borrowing in accordance with Section 2.08(b), substantially in the form of Exhibit D.

        "Interest Payment Date" shall mean (a) with respect to any ABR Loan (other than a Swingline Loan), the last day of each March, June, September and December to occur during the period that such Loan is outstanding and the final maturity date of such Loan, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months' duration, the last day of such Interest Period that occurs at intervals of three months' duration after the first day of such Interest Period, and (c) with respect to any Swingline Loan, the day that such Loan is required to be repaid.

        "Interest Period" shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the relevant Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing; provided, however, that an Interest Period shall be limited to seven days to the extent required under Section 2.03(e).

        "Interest Rate Agreement" shall mean any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or similar agreement or arrangement.

        "Investments" shall have the meaning assigned to such term in Section 6.04.

        "IPO" shall mean the first underwritten public offering by Holdings of its Equity Interests after the Closing Date pursuant to a registration statement filed with the Securities and Exchange Commission in accordance with the Securities Act.

14

        "Issuing Bank" shall mean, as the context may require, (a) UBS AG, Stamford Branch, with respect to Letters of Credit issued by it; (b) any other Lender that may become an Issuing Bank pursuant to Section 2.18(j), with respect to Letters of Credit issued by such Lender; or (c) collectively, all of the foregoing.

        "Joinder Agreement" shall mean that certain joinder agreement substantially in the form of Exhibit E.

        "Landlord Lien Waiver and Access Agreement" shall mean the Landlord Lien Waiver and Access Agreement, substantially in the form of Exhibit F.

        "LC Commitment" shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.18.

        "LC Disbursement" shall mean a payment or disbursement made by the Issuing Bank pursuant to a Letter of Credit.

        "LC Exposure" shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all Reimbursement Obligations outstanding at such time. The LC Exposure of any Revolving Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time.

        "LC Participation Fee" shall have the meaning assigned to such term in Section 2.05(c).

        "LC Request" shall mean a request by a Borrower in accordance with the terms of Section 2.18(b) and substantially in the form of Exhibit C-2, or such other form as shall be approved by the Administrative Agent.

        "LC Sub Account" shall have the meaning assigned to such term in Section 9.01(d).

        "Leases" shall mean any and all leases, subleases, tenancies, options, concession agreements, rental agreements, occupancy agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, affecting the use or occupancy of all or any portion of any Real Property.

        "Lender Addendum" shall mean with respect to any Original Lender on the Closing Date, a lender addendum in the form of Exhibit N, executed and delivered by such Original Lender on the Closing Date as provided in Section 11.14.

        "Lender Affiliate" shall mean with respect to any Lender that is a fund that invests in bank loans, any other fund that invests in commercial loans and is managed or advised by the same investment advisor as such Lender or by an Affiliate of such advisor.

        "Lenders" shall mean (a) the financial institutions that are signatory hereto (pursuant to the provisions of Section 11.06) and (b) any financial institution that has become a party hereto pursuant to an Assignment and Acceptance, in each case, other than any such financial institution that has ceased to be a party hereto pursuant to another Assignment and Acceptance. Unless the context clearly indicates otherwise, the term "Lenders" shall include the Swingline Lender.

        "Letter of Credit" shall mean any (i) Standby Letter of Credit and (ii) Commercial Letter of Credit, in each case, issued or to be issued by an Issuing Bank for the account of a Borrower pursuant to Section 2.18.

        "Letter of Credit Expiration Date" shall mean the date which is fifteen Business Days prior to the Revolving Maturity Date.

15

        "Leverage Ratio" shall mean, at any date of determination, the ratio of Consolidated Indebtedness less unrestricted cash as reflected on the most recent balance sheet of the Consolidated Companies to Consolidated EBITDA for the Test Period then most recently ended.

        "LIBOR Rate" shall mean, with respect to any Eurodollar Borrowing for any Interest Period therefor, the rate per annum determined by the Administrative Agent to be the arithmetic mean (rounded to the nearest 1/100th of 1%) of the offered rates for deposits in dollars with a term comparable to such Interest Period that appears on the Telerate British Bankers Assoc. Interest Settlement Rates Page (as defined below) at approximately 11:00 a.m., London, England time, on the second full Business Day preceding the first day of such Interest Period; provided, however, that (i) if no comparable term for an Interest Period is available, the LIBOR Rate shall be determined using the weighted average of the offered rates for the two terms most nearly corresponding to such Interest Period and (ii) if there shall at any time no longer exist a Telerate British Bankers Assoc. Interest Settlement Rates Page, "LIBOR Rate" shall mean, with respect to each day during each Interest Period pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the rate per annum equal to the rate at which the Administrative Agent is offered deposits in dollars at approximately 11:00 a.m., London, England time, two Business Days prior to the first day of such Interest Period in the London interbank market for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to its portion of the amount of such Eurodollar Borrowing to be outstanding during such Interest Period. "Telerate British Bankers Assoc. Interest Settlement Rates Page" shall mean the display designated as Page 3750 on the Telerate System Incorporated Service (or such other page as may replace such page on such service for the purpose of displaying the rates at which dollar deposits are offered by leading banks in the London interbank deposit market).

        "Lien" shall mean, with respect to any property, (a) any mortgage, deed of trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation, security interest or encumbrance of any kind, any other type of preferential arrangement in respect of such property or any filing of any financing statement under the UCC or any other similar notice of Lien under any similar notice or recording statute of any Governmental Authority, including any easement, right of way or other encumbrance on title to Real Property, in each of the foregoing cases whether voluntary or imposed by law, and any agreement to give any of the foregoing; (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property; and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities.

        "Loan Documents" shall mean this Agreement, the Letters of Credit, the Notes (if any), the Security Documents and each Hedging Agreement entered into with any counterparty that was a Lender or an Affiliate of a Lender at the time such Hedging Agreement was entered into, and solely for the purposes of Section 8(e) hereof, the Fee Letter.

        "Loan Parties" shall mean Holdings, each Borrower and the Subsidiary Guarantors.

        "Loans" shall mean, as the context may require, a Revolving Loan, an Original Term B Loan, a Term B Loan or a Swingline Loan (and shall include any Loans under the New Revolving Commitments).

        "Margin Stock" shall have the meaning assigned to such term in Regulation U.

        "Material Adverse Effect" shall mean (a) a material adverse effect on the business, property, results of operations, prospects or condition, financial or otherwise, of Borrowers and the Subsidiaries, taken as a whole; (b) material impairment of the ability of the Loan Parties to fully and timely perform their material obligations under any Loan Document; (c) material impairment of the rights of or benefits or remedies available to the Lenders or the Collateral Agent under any Loan Document; or

16

(d) a material adverse effect on the Collateral or the Liens in favor of the Collateral Agent (for its benefit and for the benefit of the other Secured Parties) on the Collateral or the priority of such Liens.

        "Maximum Rate" shall have the meaning assigned to such term in Section 11.13.

        "Moody's" shall have the meaning assigned to such term in the definition of "Cash Equivalents" in Section 1.01.

        "Mortgage" shall mean an agreement, including, but not limited to, a mortgage, deed of trust or any other document, creating and evidencing a Lien on a Mortgaged Property, which shall be in form and substance acceptable to the Collateral Agent, with such schedules and including such provisions as shall be necessary to conform such document to applicable local or foreign law or as shall be customary under applicable local or foreign law.

        "Mortgaged Property" shall mean (a) each Real Property identified on Schedule 1.01(a) hereto and (b) each Real Property, if any, which shall be subject to a Mortgage delivered after the Closing Date pursuant to Section 5.11(d).

        "Multiemployer Plan" shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA (a) to which any Company or any ERISA Affiliate is then making or accruing an obligation to make contributions; (b) to which any Company or any ERISA Affiliate has within the preceding five plan years made contributions; or (c) with respect to which any Company could incur liability.

        "Net Cash Proceeds" shall mean:

        (a)   with respect to any Asset Sale, the cash proceeds received by any Loan Party (including cash proceeds subsequently received (as and when received by any Loan Party) in respect of noncash consideration initially received) net of (i) selling expenses (including reasonable brokers' fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and Borrowers' good faith estimate of income taxes paid or payable in connection with such sale); (ii) amounts provided as a reserve, in accordance with GAAP, against any liabilities under any indemnification obligations associated with such Asset Sale (provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) Borrowers' good faith estimate of payments required to be made with respect to unassumed liabilities relating to the assets sold within 90 days of such Asset Sale (provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 90 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by a senior Lien on the asset sold in such Asset Sale and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such asset);

        (b)   with respect to any Debt Issuance or Equity Issuance, the cash proceeds thereof, net of customary fees, commissions, costs and other expenses incurred in connection therewith; and

        (c)   with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, net of all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event.

        "New Revolving Commitments" shall have the meaning assigned to such term in Section 2.22(a).

        "New Revolving Lenders" shall have the meaning assigned to such term in Section 2.22(a).

        "Non-Cash Interest Expense" shall mean, for any Test Period, all amounts included in Consolidated Interest Expense which will require no cash payment at any time in the future.

17

        "Non Guarantor Subsidiary" shall mean each Subsidiary that is not a Subsidiary Guarantor.

        "Notes" shall mean any notes evidencing the Original Term B Loans, Term B Loans, Revolving Loans or Swingline Loans issued pursuant to this Agreement, if any, substantially in the form of Exhibits G-1, G-2, G-3 or G-4.

        "Obligations" shall mean (a) obligations of each Borrower and any and all of the other Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by any Borrower and any and all of the other Loan Parties under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of Reimbursement Obligations, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of any Borrower and any and all of the other Loan Parties under this Agreement and the other Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of each Borrower and each Loan Party under or pursuant to this Agreement and the other Loan Documents, (c) the due and punctual payment and performance of all obligations of each Borrower and any and all of the other Loan Parties under each Hedging Agreement relating to Loans entered into with any counterparty that was a Lender, an Original Lender or an Affiliate of a Lender or Original Lender at the time such Hedging Agreement was entered into and (d) the due and punctual payment and performance of all obligations in respect of overdrafts and related liabilities owed to any Lender, Original Lender or any Affiliate of a Lender or Original Lender, the Administrative Agent or the Collateral Agent arising from treasury, depositary and cash management services or in connection with any automated clearinghouse transfer of funds.

        "Officers' Certificate" shall mean a certificate executed by the Chairman of the Board (if an officer), the Chief Executive Officer or the President and one of the Financial Officers, each in his or her official (and not individual) capacity.

        "Original Lenders" shall mean the financial institutions that were parties to the Original Credit Agreement as "Lenders" thereunder. Any reference in Section 4.02 to "Original Lender" shall mean Original Lenders who were party to the Original Credit Agreement on the Closing Date.

        "Original Credit Agreement" shall have the meaning set forth in the recitals hereto.

        "Original Term B Borrowing" shall mean a Borrowing comprised of Original Term B Loans.

        "Original Term B Commitment" shall mean with respect to each Original Lender, the commitment, if any, of such Original Lender to make a Term B Loan hereunder on the Closing Date in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Original Lender, or in the Assignment and Acceptance pursuant to which such Original Lender shall have assumed its Term B Commitment, as applicable, as such commitment may be (a) terminated or reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Original Lender pursuant to Section 11.04. The initial aggregate amount of the Original Lenders' Original Term B Commitments was $140.0 million.

        "Original Term B Loans" shall mean the term loans made by the Original Lenders to the Borrowers pursuant to Section 2.01(a) of the Original Credit Agreement. Each Original Term B Loan was either an ABR Term B Loan or a Eurodollar Term B Loan.

18

        "Other Taxes" shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies (including interest, fines, penalties and additions to tax) arising from any payment made or required to be made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

        "Participant" shall have the meaning assigned to such term in Section 11.04(e).

        "PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

        "PCBs" shall have the meaning assigned to such term in the definition of "Hazardous Materials" in Section 1.01.

        "Perfection Certificate" shall mean a certificate in the form of Exhibit H-1 or any other form approved by the Collateral Agent, as the same shall be supplemented from time to time by a Perfection Certificate Supplement or otherwise.

        "Perfection Certificate Supplement" shall mean a certificate supplement in the form of Exhibit H-2 or any other form approved by the Collateral Agent.

        "Permitted Acquisition" shall mean, with respect to any Borrower or any Subsidiary Guarantor, any transaction or series of related transactions for the direct or indirect (a) acquisition of all or substantially all of the property of any other person, or of any business or division of any other person; (b) acquisition of in excess of 50% of the Equity Interests of any other person, or otherwise causing any other person to become a subsidiary of such person; or (c) merger or consolidation or any other combination with any other person, if, for any such acquisitions involving Acquisition Consideration under $3.0 million individually, no more than $15.0 million in the aggregate during any fiscal year during the term hereof and no more than $35.0 million in the aggregate for the period ending on the Term B Maturity Date, no Default then exists or would result therefrom and, for all other acquisitions, each of the following conditions are met:

        (i)    no Default then exists or would result therefrom;

        (ii)   after giving effect to such acquisition on a Pro Forma Basis, (A) the relevant Borrower shall be in compliance with all covenants set forth in Section 6.08 as of the most recent Test Period (assuming, for purposes of Section 6.08, that such acquisition, and all other Permitted Acquisitions consummated since the first day of the relevant Test Period for each of the financial covenants set forth in Section 6.08 ending on or prior to the date of such acquisition, had occurred on the first day of such relevant Test Period), (B) unless expressly approved by the Administrative Agent, the relevant Borrower shall have generated positive Consolidated EBITDA for the Test Period most recently ended prior to the date of consummation of such acquisition and (C) the relevant Borrower shall have cash on hand/working capital availability equal to or greater than $10.0 million;

        (iii)  no Company shall, in connection with any such acquisition, assume or remain liable with respect to any Indebtedness or other liability (including any material tax or ERISA liability) of the related seller or the business, person or assets acquired, except to the extent permitted under Section 6.01 and any other such liabilities or obligations not permitted to be assumed or otherwise supported by any Company hereunder shall be paid in full or released as to the business, persons or assets being so acquired on or before the consummation of such acquisition;

        (iv)  the acquired person shall be engaged in a business of the same or similar type conducted by the relevant Borrower and the Subsidiaries on the Closing Date and the property acquired in connection with any such acquisition shall be made subject to the Lien of the Security Documents and shall be free and clear of any Liens, other than Permitted Liens;

19

        (v)   the board of directors or other similar governing body of the acquired person shall not have indicated publicly its opposition to the consummation of such acquisition;

        (vi)  all transactions in connection therewith shall be consummated in accordance with all applicable laws of all applicable Governmental Authorities;

        (vii) with respect to any acquisition involving Acquisition Consideration of more than $7.5 million, the relevant Borrower shall have provided the Administrative Agent and the Lenders with (A) historical financial statements for the last three fiscal years, if available, of the person or business to be acquired (audited if available without undue cost or delay) and unaudited financial statements thereof for the most recent interim period which are available, (B) reasonably detailed projections for the succeeding five years pertaining to the person or business to be acquired and updated projections for such Borrower after giving effect to such acquisition, (C) a reasonably detailed description of all material information relating thereto and copies of all material documentation pertaining to such acquisition, and (D) all such other information and data relating to such acquisition or the person or business to be acquired as may be reasonably requested by the Administrative Agent or the Required Lenders;

        (viii) at least 10 Business Days prior to the proposed date of consummation of the acquisition, the relevant Borrower shall have delivered to the Agents and the Lenders an Officers' Certificate certifying that (A) such acquisition complies with this definition (which shall have attached thereto reasonably detailed backup data and calculations showing such compliance), and (B) such acquisition could not reasonably be expected to result in a Material Adverse Effect; and

        (ix)  the Acquisition Consideration for such acquisition shall not exceed $20.0 million plus the Available Acquisition Cash (defined below) at the time of such acquisition, and the aggregate amount of the Acquisition Consideration for all Permitted Acquisitions in any fiscal year shall not exceed the sum of (A) $40.0 million plus (B) the aggregate of the amounts of Available Acquisition Cash applied in respect of all Permitted Acquisitions in such fiscal year plus (C) the Net Cash Proceeds from any Equity Issuance during such fiscal year; provided that any Equity Interests constituting all or a portion of such Acquisition Consideration shall be Qualified Capital Stock; for the purposes of this clause (ix), "Available Acquisition Cash" shall mean a dollar amount equal to the amount by which Basic's unrestricted cash as reflected on its most recent balance sheet exceeds $5.0 million.

        "Permitted Holders" shall mean Credit Suisse First Boston, First Reserve Corporation and their respective Affiliates.

        "Permitted Liens" shall have the meaning assigned to such term in Section 6.02.

        "Permitted Subordinated Indebtedness" shall mean unsecured subordinated debt of Basic that is expressly subordinated to the Obligations under this Agreement; provided that (i) the terms of such debt (x) do not provide for any scheduled repayment, mandatory redemption or sinking fund obligation prior to 90 days after the Term B Loan Maturity Date and (y) do not materially restrict, limit or adversely affect the ability of Holdings or Borrowers or any of their respective subsidiaries to perform their obligations under any of the Loan Documents and (ii) the covenants, events of default, subsidiary guarantees, credit support and subordination terms are customary for similar offerings by issuers with credit ratings comparable to that of the issuer of such debt and the subordination terms are otherwise satisfactory to the Administrative Agent.

        "person" shall mean any natural person, corporation, business, trust, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision thereof, in any case, whether acting in a personal, fiduciary or other capacity.

20

        "Plan" shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA which is maintained or contributed to by any Company or its ERISA Affiliate or with respect to which any Company could incur liability (including, without limitation, under Section 4069 of ERISA).

        "Pro Forma Basis" shall mean on a basis in accordance with GAAP and Regulation S X under the Securities Act and otherwise reasonably satisfactory to the Administrative Agent.

        "Pro Rata Percentage" of any Revolving Lender at any time shall mean the percentage of the total Revolving Commitment represented by such Lender's Revolving Commitment.

        "property" shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any person and whether now in existence or owned or hereafter entered into or acquired, including, without limitation, all Real Property.

        "Purchase Money Obligation" shall mean, for any person, the obligations of such person in respect of Indebtedness incurred for the purpose of financing all or any part of the purchase price of any property (including Equity Interests of any person) or the cost of installation, construction or improvement of any property or assets and any refinancing thereof; provided, however, that such Indebtedness is incurred within 90 days after such acquisition of such property by such person.

        "PWI Acquisition" shall mean the acquisition by Basic of certain assets of Parker Windham, Ltd., a Texas corporation, PWI, Inc., a Texas corporation, PWI Rentals, L.P., a Texas limited partnership, PWI Construction, L.P., a Texas limited partnership, PWI Disposal, L.P., a Texas limited partnership.

        "Qualified Capital Stock" of any person shall mean any capital stock of such person that is not Disqualified Capital Stock.

        "Real Property" shall mean, collectively, all right, title and interest (including any leasehold estate) in and to any and all parcels of or interests in real property owned, leased or operated by any person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.

        "Reduced Lender" shall have the meaning assigned to such term in the recitals hereto.

        "Refinancing" shall mean the repayment in full and the termination of any commitment to make extensions of credit under all of the outstanding indebtedness of Holdings and Borrowers and their respective subsidiaries listed on Schedule 1.01(b).

        "Register" shall have the meaning assigned to such term in Section 11.04(c).

        "Regulation D" shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

        "Regulation S-X" shall mean Regulation S-X promulgated under the Securities Act as from time to time in effect and all official rulings and interpretations thereunder or thereof.

        "Regulation T" shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

        "Regulation U" shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

        "Regulation X" shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

21

        "Release" shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment.

        "Reimbursement Obligations" shall mean Borrowers' obligations under Section 2.18(e) to reimburse LC Disbursements.

        "Required Lenders" shall mean, at any time, Lenders having Loans, LC Exposure and unused Revolving and Term B Commitments representing more than 50% of the sum of all Loans outstanding, LC Exposure and unused Revolving and Term B Commitments at such time.

        "Requirements of Law" shall mean, collectively, any and all requirements of any Governmental Authority including any and all laws, ordinances, rules, regulations or similar statutes or case law.

        "Response" shall mean (a) "response" as such term is defined in CERCLA, 42 U.S.C. § 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to: (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material; or (iii) perform studies and investigations in connection with, or as a precondition to, clause (i) or (ii) above.

        "Responsible Officer" of any corporation shall mean any executive officer or Financial Officer of such corporation and any other officer or similar official thereof with responsibility for the administration of the obligations of such corporation in respect of this Agreement.

        "Revolving Availability Period" shall mean the period from and including the Closing Date to but excluding the earlier of the Business Day proceeding the Revolving Maturity Date and the date of termination of the Revolving Commitments.

        "Revolving Borrowing" shall mean a Borrowing comprised of Revolving Loans.

        "Revolving Commitment" shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans hereunder up to the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Lender, or in the Assignment and Acceptance pursuant to which such Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.04. The aggregate amount of the Lenders' Revolving Commitments immediately prior to the Second Amendment and Restatement Date is $30.0 million and the aggregate amount of the Lenders' Revolving Commitments on the Second Amendment and Restatement Effective Date is $50.0 million.

        "Revolving Exposure" shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender's LC Exposure, plus the aggregate amount at such time of such Lender's Swingline Exposure.

        "Revolving Lender" shall mean a Lender with a Revolving Commitment (including any New Revolving Lender).

        "Revolving Loans" shall mean a Loan made by the Lenders to Borrowers pursuant to Section 2.01(a) or a New Revolving Lender pursuant to Section 2.22.

        "Revolving Maturity Date" shall mean October 3, 2008.

        "S&P" shall have the meaning assigned to such term in the definition of "Cash Equivalents" in Section 1.01.

22

        "Sarbanes Oxley Act" shall mean the United States Sarbanes Oxley Act of 2002, as from time to time in effect and all rules and regulations promulgated thereunder.

        "Second Amendment and Restatement Effective Date" shall have the meaning assigned to such term in Section 4.04.

        "Secured Parties" shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the Lenders and each party to a Hedging Agreement relating to the Loans if at the date of entering into such Hedging Agreement such person was a Lender or an Affiliate of a Lender and such person executes and delivers to the Administrative Agent a letter agreement in form and substance acceptable to the Administrative Agent pursuant to which such person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Section 9.3.

        "Securities Act" shall mean the Securities Act of 1933, as amended.

        "Securities Collateral" shall have the meaning assigned to such term in the Security Agreement.

        "Security Agreement" shall mean a Security Agreement substantially in the form of Exhibit I among the Loan Parties and Collateral Agent for the benefit of the Secured Parties.

        "Security Agreement Collateral" shall mean all property pledged or granted as collateral pursuant to the Security Agreement delivered on the Closing Date or thereafter pursuant to Section 5.11.

        "Security Documents" shall mean the Security Agreement, the Mortgages, if any, the Perfection Certificate and each other security document or pledge agreement delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property, and all UCC or other financing statements or instruments of perfection required by this Agreement, any security agreement or any Mortgage to be filed with respect to the security interests in property and fixtures created pursuant to the Security Agreement or any Mortgage and any other document or instrument utilized to pledge as collateral for the Obligations any property of whatever kind or nature.

        "Shareholders' Agreement" shall mean that certain shareholders' agreement dated as of December 21, 2000 among Basic Energy Services, Inc., DLJMB Funding III, Inc., DLJ ESCII, L.P., Southwest Royalties Holdings, Inc., Southwest Partners III, L.P., Joey D. Fields, Dub W. Harrison and Kenneth V. Huseman, as amended and provided to the Administrative Agent through the Second Amendment and Restatement Effective Date.

        "Sponsor Securities" shall mean preferred securities or subordinated debt securities issued or sold to any shareholder that is party to (or hereafter becomes a party to) the Shareholders' Agreement, or any of their respective controlled affiliates; provided that (i) the terms of such securities do not provide for any collateral security, subsidiary guaranties, offers to purchase or redeem, scheduled repayment of principal, payment of interest, covenants, events of default, mandatory redemption or sinking fund obligation prior to three months after maturity of the Term B Loan facility and (ii) the subordination terms are otherwise satisfactory to the Administrative Agent.

        "Standby Letter of Credit" shall mean any standby letter of credit or similar instrument issued for the purpose of supporting (a) workers' compensation liabilities of the relevant Borrower or any of its Subsidiaries, (b) the obligations of third party insurers of the relevant Borrower or any of its Subsidiaries arising by virtue of the laws of any jurisdiction requiring third party insurers to obtain such letters of credit, or (c) performance, payment, deposit or surety obligations of the relevant Borrower or any of its Subsidiaries if required by law or governmental rule or regulation or in accordance with custom and practice in the industry.

        "Statutory Reserves" shall mean, for any Interest Period for any Eurodollar Borrowing, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves)

23

are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollars against "Eurodollar liabilities" (as such term is used in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurodollar liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D.

        "subsidiary" shall mean, with respect to any person (the "parent") at any date, (i) any person the accounts of which would be consolidated with those of the parent in the parent's consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, (ii) any other corporation, limited liability company, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the board of directors thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent, (iii) any partnership (a) the sole general partner or the managing general partner of which is the parent or a subsidiary of the parent or (b) the only general partners which are the parent and/or one or more subsidiaries of the parent and (iv) any other person that is otherwise Controlled by the parent and/or one or more subsidiaries of the parent.

        "Subsidiary" shall mean any subsidiary of Holdings.

        "Subsidiary Guarantor" shall mean each Subsidiary listed on Schedule 1.01(c) (except for Holdings), and each other Subsidiary that is or becomes a party to this Agreement pursuant to Section 5.11, other than a Foreign Subsidiary.

        "Supermajority Lenders" shall mean at any time, Lenders having Loans, LC Exposure and unused Revolving and Term B Commitments representing at least 66²/3% of the sum of all Loans outstanding, LC Exposure and unused Revolving and Term B Commitments at such time.

        "Survey" shall mean a survey of any Mortgaged Property (and all improvements thereon) (i) prepared by a surveyor or engineer licensed to perform surveys in the state where such Mortgaged Property is located, (ii) dated (or redated) not earlier than six months prior to the date of delivery thereof unless there shall have occurred within six months prior to such date of delivery any exterior construction on the site of such Mortgaged Property, in which event such survey shall be dated (or redated) after the completion of such construction or if such construction shall not have been completed as of such date of delivery, not earlier than 20 days prior to such date of delivery, (iii) certified by the surveyor (in a manner reasonably acceptable to the Administrative Agent) to the Administrative Agent, the Collateral Agent and the Title Company, (iv) complying in all respects with the minimum detail requirements of the American Land Title Association as such requirements are in effect on the date of preparation of such survey and (v) sufficient for the Title Company to remove all standard survey exceptions from the title insurance policy (or commitment) relating to such Mortgaged Property and issue the endorsements of the type required by Section 4.01(o)(iii) .

        "Swingline Commitment" shall mean the commitment of the Swingline Lender to make loans pursuant to Section 2.17, as the same may be reduced from time to time pursuant to Section 2.07 or Section 2.17.

        "Swingline Exposure" shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time.

24

        "Swingline Lender" shall have the meaning assigned to such term in the preamble hereto.

        "Swingline Loan" shall mean any loan made by the Swingline Lender pursuant to Section 2.17.

        "Syndication Agent" shall have the meaning assigned to such term in the preamble hereto.

        "Tax Return" shall mean all returns, statements, filings, attachments and other documents or certifications required to be filed in respect of Taxes.

        "Tax Sharing Agreements" shall mean all tax sharing, tax allocation and other similar agreements entered into by Holdings or any subsidiary of Holdings.

        "Taxes" shall mean (i) any and all present or future taxes, duties, levies, imposts, assessments, deductions, withholdings or other similar charges, whether computed on a separate, consolidated, unitary, combined or other basis and any and all liabilities (including interest, fines, penalties or additions to tax) with respect to the foregoing, and (ii) any transferee, successor, joint and several, contractual or other liability (including, without limitation, liability pursuant to Treasury Regulation § 1.1502-6 (or any similar provision of state, local or non U.S. law)) in respect of any item described in clause (i).

        "Term B Borrowing" shall mean a Borrowing comprised of Term B Loans.

        "Term B Commitment" shall mean, with respect to each Lender, the commitment, if any, of such Lender to make a Term B Loan hereunder on the Second Amendment and Restatement Effective Date in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Lender, or in the Assignment and Acceptance pursuant to which such Lender shall have assumed its Term B Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 11.04. The aggregate amount of the Lenders' Term B Commitments on the Second Amendment and Restatement Effective Date shall be $170.0 million.

        "Term B Lender" shall mean a Lender with a Term B Commitment or an outstanding Term B Loan. Each Term B Loan shall be either an ABR Term Loan or a Eurodollar Term B Loan.

        "Term B Loan" shall mean the term loans made by the Lenders to Borrowers pursuant to Section 2.01(b).

        "Term B Loan Repayment Date" shall have the meaning assigned to such term in Section 2.09(a).

        "Term B Loans" shall mean the Term B Loans, collectively.

        "Term B Maturity Date" shall mean October 3, 2009, or if such day is not a Business Day, the immediately preceding Business Day.

        "Test Period" shall mean, at any time, the four consecutive fiscal quarters of Holdings then last ended (in each case taken as one accounting period) for which financial statements have been or are required to be delivered pursuant to Section 5.01(a) or (b).

        "Title Company" shall mean any title insurance company as shall be retained by the relevant Borrower and reasonably acceptable to the Administrative Agent.

        "Title Policy" shall have the meaning assigned to such term in Section 4.01(o)(iii).

        "Transaction Documents" shall mean the Acquisition Documents and the Loan Documents.

        "Transactions" shall mean, collectively, the transactions to occur on or prior to the Closing Date pursuant to the Transaction Documents, including (a) the consummation of the Acquisitions; (b) the execution and delivery of the Loan Documents and the initial borrowings hereunder; (c) the

25

Refinancing; and (d) the payment of all fees and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing.

        "Type," when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.

        "UCC" shall mean the Uniform Commercial Code as in effect in the applicable state or jurisdiction.

        "Voting Stock" shall mean any class or classes of capital stock of Holdings pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of Holdings.

        "Wholly Owned Subsidiary" shall mean, as to any person, (a) any corporation 100% of whose capital stock (other than directors' qualifying shares) is at the time owned by such person and/or one or more Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or other entity in which such person and/or one or more Wholly Owned Subsidiaries of such person have a 100% equity interest at such time.

        "Withdrawal Liability" shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02.Classification of Loans and Borrowings.    For purposes of this Agreement, Loans may be classified and referred to by Class (e.g., a "Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type (e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and referred to by Class (e.g., a "Revolving Borrowing", "Term B Borrowing") or by Type (e.g., a "Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving Borrowing").

SECTION 1.03.Terms Generally.    The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words "include", "includes" and "including" shall be deemed to be followed by the phrase "without limitation". The word "will" shall be construed to have the same meaning and effect as the word "shall". Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument of other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person's successors and assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, and (e) the words "asset" and "property" shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04.Accounting Terms; GAAP.    Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP, as in effect on the date hereof unless agreed to by Borrower Agent and the Required Lenders.

26

ARTICLE II

THE CREDITS

SECTION 2.01.Commitments.    Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly:

        (a)   to make Revolving Loans to Borrowers on a joint and several basis, at any time and from time to time after the Closing Date until the earlier of the Business Day preceding the Revolving Maturity Date and the termination of the Commitment of such Lender in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender's Revolving Exposure exceeding such Lender's Revolving Commitment; and

        (b)   to make a Term B Loan to Borrowers on the Second Amendment and Restatement Effective Date in a principal amount not to exceed its Term B Commitment, on a joint and several basis on the Closing Date in a principal amount not to exceed its Term B Commitment.

        Amounts paid or prepaid in respect of Term B Loans may not be reborrowed. Within the limits set forth in clause (a) above and subject to the terms, conditions and limitations set forth herein, Borrowers may borrow, pay or prepay and reborrow Revolving Loans.

SECTION 2.02.Loans.    (a) Each Loan (other than Swingline Loans) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided that the failure of any Lender to make any Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.17, (x) ABR Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1.0 million and not less than $1.0 million or (ii) equal to the remaining available balance of the applicable Commitments and (y) the Eurodollar Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1.0 million and not less than $1.0 million or (ii) equal to the remaining available balance of the applicable Commitments.

        (b)   Subject to Sections 2.11 and 2.12, each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as Borrower Agent may request pursuant to Section 2.03. Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of any Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided that Borrower Agent shall not be entitled to request any Borrowing that, if made, would result in more than seven Eurodollar Borrowings outstanding hereunder at any one time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

        (c)   Except with respect to Loans made pursuant to Section 2.17, each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 3:00 p.m., New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account as directed by Borrower Agent in the applicable Borrowing Request maintained with the Administrative Agent or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

        (d)   Unless the Administrative Agent shall have received notice from a Lender by at least 10:00 a.m., New York City time, on the date of any Borrowing that such Lender will not make available

27

to the Administrative Agent such Lender's portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent on the date of such Borrowing in accordance with paragraph (c) above, and the Administrative Agent may, in reliance upon such assumption, make available to the relevant Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, such Lender and the relevant Borrower severally agree to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to the relevant Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of any Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender's Loan as part of such Borrowing for purposes of this Agreement.

        (e)   Notwithstanding any other provision of this Agreement, Borrower Agent shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date or the Term B Maturity Date, as applicable.

SECTION 2.03.Borrowing Procedure.    To request a Revolving Borrowing or Term B Borrowing, the relevant Borrower shall deliver, by hand delivery or telecopy, a duly completed and executed Borrowing Request to the Administrative Agent (i) in the case of a Eurodollar Borrowing in dollars, not later than noon., New York City time, three Business Days before the date of the proposed Borrowing or (ii) in the case of an ABR Borrowing, not later than 1:00 p.m., New York City time, on the date of the proposed Borrowing. Each Borrowing Request shall be irrevocable and shall specify the following information in compliance with Section 2.02:

        (a)   whether the requested Borrowing is to be a Revolving Borrowing or a Term B Borrowing;

        (b)   the aggregate amount of such Borrowing;

        (c)   the date of such Borrowing, which shall be a Business Day;

        (d)   whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

        (e)   in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term "Interest Period"; provided that until the date on which the Syndication Agent shall have notified Borrower Agent that the primary syndication of the Commitments has been completed, the Interest Period shall be seven days;

        (f)    the location and number of the relevant Borrower's account to which funds are to be disbursed, which shall comply with the requirements of Section 2.02; and

        (g)   that the conditions set forth in Sections 4.02 (b)-(e) are satisfied as of the date of the notice.

        If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Revolving Borrowing, then the relevant Borrower shall be deemed to have selected an Interest Period of one month's duration (subject to the proviso in clause (e) above). Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender's Loan to be made as part of the requested Borrowing.

28

SECTION 2.04.Evidence of Debt; Repayment of Loans.    (a) Borrowers hereby jointly and severally and unconditionally promise to pay (i) to the Administrative Agent for the account of each Lender holding Term B Loans, the principal amount of each Term B Loan of such Lender as provided in Section 2.09, (ii) to the Administrative Agent for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of such Lender on the Revolving Maturity Date and (iii) to the Swingline Lender the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, Borrowers shall, jointly and severally, repay all Swingline Loans that were outstanding on the date such Borrowing was requested.

        (b)   Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the indebtedness of each Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement.

        (c)   The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from the relevant Borrower to each Lender hereunder; and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender's share thereof.

        (d)   The entries made in the accounts maintained pursuant to paragraphs (b) and (c) above shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of Borrowers to repay the Loans in accordance with their terms.

        (e)   Any Lender may request that Loans of any Class made by it be evidenced by a promissory note. In such event, Borrowers shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in the form of Exhibits G-1, G-2, G-3 and G-4, as the case may be. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 11.04) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.05.Fees.    

        (a)    Commitment Fee.    Borrowers agree, jointly and severally, to pay to the Administrative Agent for the account of each Lender a commitment fee (a "Commitment Fee"), equal to the Applicable Fee per annum on the average daily unused amount of each Commitment of such Lender during the period from and including the Closing Date to but excluding the date on which such Commitment terminates. Accrued Commitment Fees shall be payable in arrears on the last day of March, June, September and December of each year and on the date on which the Revolving Commitments terminate, commencing on the first such date to occur after the date hereof. All Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing Commitment Fees with respect to Revolving Commitments, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose).

        (b)    Administrative Agent Fees.    Borrowers agree, jointly and severally, to pay to the Administrative Agent, for its own account, the administrative fees set forth in the Fee Letter or such

29

other fees payable in the amounts and at the times separately agreed upon between the Basic and the Administrative Agent (the "Administrative Agent Fees").

        (c)    LC and Fronting Fees.    Borrowers agree, jointly and severally, to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee ("LC Participation Fee") with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Margin from time to time used to determine the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06 on the average daily amount of such Lender's LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date on which such Lender's Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee ("Fronting Fee"), which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. LC Participation Fees and Fronting Fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Closing Date; provided that all such fees shall be payable on the date on which the Revolving Commitments terminate and any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 days after demand. All LC Participation Fees and Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

        (d)   All Fees shall be paid on the dates due, in immediately available funds, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that Borrowers shall pay the Fronting Fees directly to the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.06.Interest on Loans.    (a) Subject to the provisions of Section 2.06(c), the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time.

        (b)   Subject to the provisions of Section 2.06(c), the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time.

        Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by any Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in paragraph (a) of this Section 2.06.

        (c)   Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and, in the case of Revolving Loans, upon termination of the Revolving Commitments; provided that (i) interest accrued pursuant to paragraph (b) of this Section shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan prior to the end of the Revolving Availability Period), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in

30

the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

        All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error.

SECTION 2.07.Termination and Reduction of Commitments.    (a) The Original Term B Commitments terminated on the Closing Date. The Term B Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Second Amendment and Restatement Effective Date. The Revolving Commitments and the Swingline Commitment shall automatically terminate on the Revolving Maturity Date and the LC Commitment shall automatically terminate on the date that is fifteen Business Days prior to the Revolving Maturity Date. Notwithstanding the foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New York City time, on October 3, 2003, if the initial Credit Extension shall not have occurred by such time.

        (b)   Borrower Agent may at any time terminate, or from time to time reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1.0 million and not less than $1.0 million and (ii) the Revolving Commitments shall not be terminated or reduced if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10, the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments.

        (c)   Borrower Agent shall notify the Administrative Agent of any election to terminate or reduce the Commitments under paragraph (b) of this Section at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by Borrower Agent pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by Borrower Agent may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by Borrower Agent (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

SECTION 2.08.Interest Elections.    (a) Each Revolving Borrowing and Term B Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the relevant Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. The relevant Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. Notwithstanding anything to the contrary, such Borrower shall not be entitled to request any conversion or continuation that, if made, would result in more than seven Eurodollar Borrowings outstanding hereunder at any one time. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

        (b)   To make an election pursuant to this Section, the relevant Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if such Borrower were requesting a Revolving Borrowing or Term B

31

Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or telecopy to the Administrative Agent of a written Interest Election Request substantially in the form of Exhibit D.

        (c)   Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02:

        (i)    the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii) and (iv) below shall be specified for each resulting Borrowing);

        (ii)   the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

        (iii)  whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

        (iv)  if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term "Interest Period"; provided that until the date on which the Syndication Agent shall have notified Borrower Agent that the primary syndication of the Commitments has been completed, the Interest Period shall be seven days.

        If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then such Borrower shall be deemed to have selected an Interest Period of one month's duration (subject to the proviso in clause (iv) above).

        (d)   Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender's portion of each resulting Borrowing.

        (e)   If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing and the Administrative Agent, at the request of the Required Lenders, so notifies Borrower Agent, then, after the occurrence and during the continuance of such Event of Default (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

SECTION 2.09.Amortization of Term B Borrowings.    (a) Borrowers shall, jointly and severally, pay to the Administrative Agent, for the account of the Lenders, on the dates set forth on Annex II, or if any such date is not a Business Day, on the next preceding Business Day (each such date being a "Term B Loan Repayment Date"), a principal amount of the Term B Loans (as adjusted from time to time pursuant to Section 2.10(h) ) equal to the amount set forth on Annex II for such date, together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment.

        (b)   To the extent not previously paid, (i) all Term B Loans shall be due and payable on the Term B Maturity Date.

        (c)   Any prepayment of a Term B Borrowing of any Class shall be applied to reduce the subsequent scheduled repayments of the Term B Borrowings of such Class to be made pursuant to this Section ratably. Notwithstanding the foregoing, any prepayment of Eurodollar Term B Borrowings

32

made pursuant to Section 2.10 on a date that is (i) the last day of an Interest Period and (ii) no more than five days prior to a scheduled amortization payment pursuant this Section 2.09 shall be applied, first, to reduce such scheduled payment, and any excess shall be applied as required by the preceding sentence.

SECTION 2.10.Optional and Mandatory Prepayments of Loans.    

        (a)    Optional Prepayments.    Borrowers shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, subject to the requirements of this Section; provided that each partial prepayment shall be in an amount that is an integral multiple of $250,000 and not less than $1.0 million.

        (b)    Revolving Loan Prepayments.    (i) In the event of the termination of all the Revolving Commitments, Borrowers shall, jointly and severally, on the date of such termination, repay or prepay all its outstanding Revolving Borrowings and all outstanding Swingline Loans and replace all outstanding Letters of Credit and/or deposit an amount equal to the LC Exposure in the LC Sub Account.

        (ii)   In the event of any partial reduction of the Revolving Commitments, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify Borrower Agent and the Revolving Lenders of the sum of the Revolving Exposures after giving effect thereto and (y) if the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments after giving effect to such reduction, then Borrowers shall, jointly and severally, on the date of such reduction, first, repay or prepay Swingline Loans, second, repay or prepay Revolving Borrowings and third, replace or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i), in an amount sufficient to eliminate such excess.

        (iii)  In the event that the sum of all Lenders' Revolving Exposures exceeds the Revolving Commitments then in effect, the Borrowers shall, without notice or demand, immediately first, repay or prepay Revolving Borrowings, second, replace or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i).

        (iv)  In the event that the aggregate LC Exposure exceeds the LC Commitment then in effect, the Borrowers shall, without notice or demand, immediately replace or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i).

        (c)    Asset Sales.    Not later than five Business Days following the receipt of any Net Cash Proceeds of any Asset Sale, Holdings or any of its Subsidiaries or any Borrower shall apply 100% of the Net Cash Proceeds received with respect thereto to make prepayments in accordance with Sections 2.10(h) and (i); provided that:

        (i)    no such prepayment shall be required with respect to (A) any Asset Sale permitted by Section 6.05(a)(i), (c), (d) or (g), (B) the disposition of assets subject to a condemnation or eminent domain proceeding or insurance settlement to the extent it does not constitute a Casualty Event, or (C) Asset Sales for fair market value resulting in no more than $1.0 million in Net Cash Proceeds per Asset Sale (or series of related Asset Sales) and less than $5.0 million in Net Cash Proceeds in any fiscal year, and in each of the cases of (A), (B) and (C), the proceeds of such dispositions shall not be deposited in the Collateral Account; and

        (ii)   so long as no Default shall then exist or would arise therefrom and the aggregate of such Net Cash Proceeds of Asset Sales shall not exceed $5.0 million in any fiscal year of Holdings, such proceeds shall not be required to be so applied on such date to the extent that (A) the relevant Borrower shall have delivered an Officers' Certificate to the Administrative Agent on or prior to such date stating that such Net Cash Proceeds shall be used to purchase replacement assets or acquire 100% of the Equity Interests of any person that owns such assets no later than 180 days

33

following the date of such Asset Sale (which Officers' Certificate shall set forth the estimates of the proceeds to be so expended); and (B) all such Net Cash Proceeds in excess of $5.0 million in the aggregate at any time shall be held in the Collateral Account and released therefrom only in accordance with the provisions of Article IX; provided that if all or any portion of such Net Cash Proceeds not required to be applied to the prepayment of outstanding Term B Loans shall not be utilized to purchase replacement assets or acquire such Equity Interests within such 180 day period, such unused portion shall be applied on the last day of such period as a mandatory prepayment of principal of outstanding Term B Loans as provided in this Section 2.10(c); and provided, further, that if the property subject to such Asset Sale constituted Collateral, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12.

        (d)    Debt Issuance.    Upon any Debt Issuance after the Closing Date, Borrowers shall make prepayments in accordance with Sections 2.10(h) and (i) in an aggregate principal amount equal to 100% of the Net Cash Proceeds of such Debt Issuance.

        (e)    Equity Issuance.    Upon any Equity Issuance after the Closing Date, Basic shall make prepayments in accordance with Sections 2.10(h) and (i) in an aggregate principal amount equal to 50% of the Net Cash Proceeds of such Equity Issuance.

        (f)    Casualty Events.    Not later than five Business Days following the receipt (or, if received by the Collateral Agent, notice to Borrower Agent of such receipt) of any Net Cash Proceeds from a Casualty Event, Basic shall apply an amount equal to 100% of such Net Cash Proceeds to make prepayments in accordance with Sections 2.10(h) and (i); provided that:

        (i)    so long as no Default shall then exist or arise therefrom, such proceeds shall not be required to be so applied on such date to the extent that (A) in the event such Net Cash Proceeds shall not exceed $1.0 million, Basic shall have delivered an Officers' Certificate to the Administrative Agent on or prior to such date stating that such proceeds shall be used; or (B) in the event that such Net Cash Proceeds exceed $1.0 million, the Administrative Agent has elected by notice to Basic on or prior to such date to require such proceeds to be used, in each case, to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid no later than 180 days following the date of receipt of such proceeds (which Officers' Certificate shall set forth the estimates of the proceeds to be so expended); provided that if the property subject to such Casualty Event constituted Collateral under the Security Documents, then all property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12;

        (ii)   all such Net Cash Proceeds in excess of $5.0 million in the aggregate shall be held in the Collateral Account and released therefrom only in accordance with the provisions of Article IX;

        (iii)  if all or any portion of such Net Cash Proceeds shall not be so applied within such 180 day period, such unused portion shall be applied on the last day of such period as a mandatory prepayment of principal of outstanding Term B Loans as provided in this Section 2.10(f); and

        (iv)  in the event Collateral Agent receives any Net Cash Proceeds that would otherwise be from a Casualty Event except that such proceeds do not exceed $1.0 million, Collateral Agent will promptly deliver such Net Cash Proceeds to Borrower Agent.

        (g)   [Intentionally omitted]

34

        (h)    Application of Prepayments.    Any prepayments of Term B Loans pursuant to Section 2.10(c), (d), (e) or (f) shall be applied to reduce scheduled payments required under Section 2.09(a) on a pro rata basis among the payments due on each Term B Loan Repayment Date based on the payments then due on each Term B Loan Repayment Date. After application of mandatory prepayments described above in this paragraph (h) and to the extent there are mandatory prepayment amounts remaining after such application, the Revolving Commitments shall be reduced ratably among the Revolving Lenders in accordance with their applicable Revolving Commitments in an aggregate amount equal to such excess, and Borrowers shall comply with Section 2.10(b).

        Amounts to be applied pursuant to this Section 2.10 to the prepayment of Term B Loans and Revolving Loans shall be applied, as applicable, first to reduce outstanding ABR Term Loans and ABR Revolving Loans, respectively. Any amounts remaining after each such application shall be applied to prepay Eurodollar Term B Loans or Eurodollar Revolving Loans, as applicable. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.10 shall be in excess of the amount of the ABR Loans at the time outstanding, only the portion of the amount of such prepayment as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid and, at the election of the relevant Borrower, the balance of such required prepayment shall be either (A) deposited in the Collateral Account and applied to the prepayment of Eurodollar Loans on the last day of the then next expiring Interest Period for Eurodollar Loans (with all interest accruing thereon for the account of the relevant Borrower) or (B) prepaid immediately, together with any amounts owing to the Lenders under Section 2.13. Notwithstanding any such deposit in the Collateral Account, interest shall continue to accrue on such Loans until prepayment.

        (i)    Notice of Prepayment.    Borrower Agent shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment or (iii) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.07, then such notice of prepayment may be revoked if such termination is revoked in accordance with Section 2.07(c) . Each such notice shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02, except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 2.06.

SECTION 2.11.Alternate Rate of Interest.    If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

        (a)   the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or

        (b)   the Administrative Agent is advised by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

35

then the Administrative Agent shall give notice thereof to Borrower Agent and the Lenders by telephone or telecopy as promptly as practicable thereafter and, until the Administrative Agent notifies Borrower Agent and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.12.Increased Costs.    (a) If any Change in Law shall:

        (i)    impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended by, any Lender (except any such reserve requirement reflected in the Adjusted LIBOR Rate) or the Issuing Bank; or

        (ii)   impose on any Lender or the Issuing Bank or the London interbank market any other condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder (whether of principal, interest or otherwise), then Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

        (b)   If any Lender or the Issuing Bank determines that any Change in Law regarding capital requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Bank's capital or on the capital of such Lender's or the Issuing Bank's holding company, if any, as a consequence of this Agreement or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Bank's policies and the policies of such Lender's or the Issuing Bank's holding company with respect to capital adequacy), then from time to time Borrowers will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender's or the Issuing Bank's holding company for any such reduction suffered.

        (c)   A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section shall be delivered to Borrower Agent and shall be conclusive absent manifest error. Borrowers shall, jointly and severally, pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 days after receipt thereof.

        (d)   Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Bank's right to demand such compensation; provided that Borrowers shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions incurred more than 180 days prior to the date that such Lender or the Issuing Bank, as the case may be, notifies Borrower Agent of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Bank's intention to claim compensation therefor; provided, further, that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the 180 day period referred to above shall not begin earlier than the date of effectiveness of the Change in Law.

36

SECTION 2.13.Breakage Payments.    In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term B Loan on the date specified in any notice delivered pursuant hereto or (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by a Borrower pursuant to Section 2.16, then, in any such event, Borrowers shall, jointly and severally, compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section shall be delivered to Borrower Agent and shall be conclusive absent manifest error. Borrower Agent shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

SECTION 2.14.Payments Generally; Pro Rata Treatment; Sharing of Setoffs.    (a) Borrowers shall, jointly and severally, make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 2.12, 2.13 or 2.15, or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices at 677 Washington Boulevard, Stamford, Connecticut, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.12, 2.13, 2.15 and 11.03 shall be made directly to the persons entitled thereto and payments pursuant to other Loan Documents shall be made to the persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars.

        (b)   If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, Reimbursement Obligations, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and Reimbursement Obligations then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and Reimbursement Obligations then due to such parties.

        (c)   If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Revolving Loans, Term B Loans or

37

participations in LC Disbursements or Swingline Loans resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Revolving Loans, Term B Loans and participations in LC Disbursements and Swingline Loans and accrued interest thereon than the proportion received by any other Lender, then the Lender receiving such greater proportion shall purchase (for cash at face value) participations in the Revolving Loans, Term B Loans and participations in LC Disbursements and Swingline Loans of other Lenders to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Revolving Loans, Term B Loans and participations in LC Disbursements and Swingline Loans; provided that (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest, and (ii) the provisions of this paragraph shall not be construed to apply to any payment made by any Borrower pursuant to and in accordance with the express terms of this Agreement or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to Borrowers or any Subsidiary or Affiliate thereof (as to which the provisions of this paragraph shall apply). Each Borrower consents to the foregoing and agrees, to the extent it may effectively do so under applicable law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against Borrowers rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of any Borrower in the amount of such participation.

        (d)   Unless the Administrative Agent shall have received notice from Borrower Agent prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that Borrowers will not make such payment, the Administrative Agent may assume that Borrowers have made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if Borrowers have not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

        (e)   If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c), 2.14(d), 2.17(d) , 2.18(d) or 11.03(d), then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender's obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.15.Taxes.    (a) Any and all payments by or on account of any obligation of Borrowers hereunder or under any other Loan Document shall be made without setoff, counterclaim or other defense and free and clear of and without deduction or withholding for any and all Indemnified Taxes; provided that if Borrowers shall be required by law to deduct any Indemnified Taxes from such payments, then (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions or withholdings applicable to additional sums payable under this Section) the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to the sum it would have received had no such deductions or withholdings been made, (ii) such Borrower shall make such deductions or withholdings and (iii) such Borrower shall pay the full amount deducted or withheld to the relevant Governmental Authority in accordance with applicable law.

        (b)   In addition, Borrowers shall, jointly and severally, pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

38

        (c)   Borrowers shall indemnify the Administrative Agent, each Lender and the Issuing Bank, within 10 Business Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or on account of any obligation of Borrowers hereunder or under any other Loan Document (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable to amounts payable under this Section 2.15) and any penalties, interest and reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such payment or liability delivered to Borrower Agent by a Lender or the Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive absent manifest error.

        (d)   As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrowers to a Governmental Authority, Borrower Agent shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

        (e)   Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which a Borrower is located, or any treaty to which such jurisdiction is a party, with respect to payments under this Agreement shall deliver to Borrower Agent (with a copy to the Administrative Agent), at the time or times prescribed by applicable law, such properly completed and executed documentation prescribed by applicable law or reasonably requested by Borrower Agent as will permit such payments to be made without withholding or at a reduced rate. In the case of a U.S. Borrower, each Foreign Lender either (1) (i) agrees to furnish either U.S. Internal Revenue Service Form W 8ECI or U.S. Internal Revenue Service Form W 8BEN (or successor form) and (ii) agrees (for the benefit of Borrowers and the Administrative Agent), to the extent it may lawfully do so at such times, upon reasonable request by Borrower Agent or the Administrative Agent, to provide a new Form W 8ECI or Form W 8BEN (or successor form) upon the expiration or obsolescence of any previously delivered form to reconfirm any complete exemption from, or any entitlement to a reduction in, U.S. federal withholding tax with respect to any interest payment hereunder or (2) in the case of any such Foreign Lender that is not a "bank" within the meaning of Section 881(c)(3)(A) of the Code, (i) agrees to furnish either (a) a "Non Bank Certificate" in a form acceptable to the Administrative Agent and Borrower Agent and two accurate and complete original signed copies of Internal Revenue Service Form W 8BEN (or successor form) or (b) an Internal Revenue Form W 8ECI (or successor form), certifying (in each case) to such Foreign Lender's legal entitlement to an exemption or reduction from U.S. federal withholding tax with respect to all interest payments hereunder and (ii) agrees (for the benefit of Borrowers and the Administrative Agent) to the extent it may lawfully do so at such times, upon reasonable request by Borrower Agent or the Administrative Agent, to provide a new Form W 8BEN or W 8ECI (or successor form) upon the expiration or obsolescence of any previously delivered form to reconfirm any complete exemption from, or any entitlement to a reduction in, U.S. federal withholding tax with respect to any interest payment hereunder.

        (f)    If the Administrative Agent or a Lender (or an assignee) determines in its reasonable discretion that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by a Borrower or with respect to which a Borrower has paid additional amounts pursuant to this Section 2.15, it shall pay over such refund to such Borrower (but only to the extent of indemnity payments made, or additional amounts paid, by such Borrower under this Section 2.15 with respect to the Indemnified Taxes or the Other Taxes giving rise to such refund), net of all out of pocket expenses of the Administrative Agent or such Lender (or assignee) and without interest (other than any interest paid by the relevant Governmental Authority with respect to such refund); provided, however, that the

39

relevant Borrower, upon the request of the Administrative Agent or such Lender (or assignee), agrees to repay the amount paid over to such Borrower (plus any penalties, interest or other charges imposed by the relevant Governmental Authority) to the Administrative Agent or such Lender (or assignee) in the event the Administrative Agent or such Lender (or assignee) is required to repay such refund to such Governmental Authority. Nothing contained in this Section 2.15(f) shall require the Administrative Agent or any Lender (or assignee) to make available its tax returns or any other information which it deems confidential to Borrowers or any other person. Notwithstanding anything to the contrary, in no event will any Lender be required to pay any amount to any Borrower the payment of which would place such Lender in a less favorable net after tax position than such Lender would have been in had the additional amounts giving rise to such refund of any Indemnified Taxes or Other Taxes never been paid in the first place.

SECTION 2.16.Mitigation Obligations; Replacement of Lenders.    

        (a)    Mitigation of Obligations.    If any Lender requests compensation under Section 2.12, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.12 or 2.15, as the case may be, in the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. Each Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment.

        (b)    Replacement of Lenders.    If any Lender requests compensation under Section 2.12, or if any Borrower is required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.15, or if any Lender defaults in its obligation to fund Loans hereunder, then Borrower Agent may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in Section 11.04), all of its interests, rights and obligations under this Agreement to an assignee selected by Borrower Agent that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that (i) Borrower Agent shall have received the prior written consent of the Administrative Agent (and, if a Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender), which consent shall not unreasonably be withheld, (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding principal and accrued interest and fees) or Borrower Agent (in the case of all other amounts) and (iii) in the case of any such assignment resulting from a claim for compensation under Section 2.12 or payments required to be made pursuant to Section 2.15, such assignment will result in a material reduction in such compensation or payments. A Lender shall not be required to make any such assignment and delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling Borrower Agent to require such assignment and delegation cease to apply.

SECTION 2.17.Swingline Loans.

        (a)    Swingline Commitment.    Subject to the terms and conditions set forth herein, the Swingline Lender agrees to make Swingline Loans to Borrowers from time to time during the Revolving Availability Period, in an aggregate principal amount at any time outstanding that will not result in (i) the aggregate principal amount of outstanding Swingline Loans exceeding $2.5 million or (ii) the sum of the total Revolving Exposures exceeding the total Revolving Commitments; provided that the

40

Swingline Lender shall not be required to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and conditions set forth herein, Borrowers may borrow, repay and reborrow Swingline Loans.

        (b)    Swingline Loans.    To request a Swingline Loan, Borrower Agent shall notify the Administrative Agent of such request by telephone (confirmed by telecopy), not later than 2:00 p.m., New York City time, on the day of a proposed Swingline Loan. Each such notice shall be irrevocable, shall specify the requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The Administrative Agent will promptly advise the Swingline Lender of any such notice received from Borrower Agent. The Swingline Lender shall make each Swingline Loan available to the relevant Borrower by means of a credit to the general deposit account of such Borrower with the Swingline Lender (or, in the case of a Swingline Loan made to finance the reimbursement of an LC Disbursement as provided in Section 2.18(e), by remittance to the Issuing Bank) by 3:00 p.m., New York City time, on the requested date of such Swingline Loan. Borrower Agent shall not request a Swingline Loan if at the time of and immediately after giving effect to such request a Default has occurred and is continuing. Swingline Loans shall be made in minimum amounts of $500,000 and integral multiples of $100,000 above such amount.

        (c)    Prepayment.    Borrowers shall have the right at any time and from time to time to repay any Swingline Loan, in whole or in part, upon giving written or telecopy notice (or telephone notice promptly confirmed by written, or telecopy notice) to the Swingline Lender and to the Administrative Agent before 12:00 (noon), New York City time on the date of repayment at the Swingline Lender's address for notices specified in the Swingline Lender's Administrative Questionnaire. All principal payments of Swingline Loans shall be accompanied by accrued interest on the principal amount being repaid to the date of payment.

        (d)    Participations.    The Swingline Lender may by written notice given to the Administrative Agent not later than 12:00 noon, New York City time, on any Business Day require the Revolving Lenders to acquire participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will participate. Promptly upon receipt of such notice, the Administrative Agent will give notice thereof to each Revolving Lender, specifying in such notice such Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees, upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of the Swingline Lender, such Lender's Pro Rata Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges and agrees that its obligation to acquire participations in Swingline Loans pursuant to this paragraph is absolute and unconditional and shall not be affected by any circumstance whatsoever, including the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever (provided that such payment shall not cause such Lender's Revolving Exposure to exceed such Lender's Revolving Commitment). Each Revolving Lender shall comply with its obligation under this paragraph by wire transfer of immediately available funds, in the same manner as provided in Section 2.14 with respect to Loans made by such Lender (and Section 2.02 shall apply, mutatis mutandis, to the payment obligations of the Revolving Lenders), and the Administrative Agent shall promptly pay to the Swingline Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall notify Borrower Agent of any participations in any Swingline Loan acquired pursuant to this paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender from a Borrower or Borrower Agent (or other party on behalf of any Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be promptly remitted to the Administrative Agent; any such amounts received by the Administrative Agent shall be promptly remitted by the

41

Administrative Agent to the Revolving Lenders that shall have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests may appear. The purchase of participations in a Swingline Loan pursuant to this paragraph shall not relieve Borrowers of any default in the payment thereof.

SECTION 2.18.Letters of Credit.    

        (a)    General.    Subject to the terms and conditions set forth herein, any Borrower may request the Issuing Bank, and the Issuing Bank agrees, to issue Letters of Credit for its own account or the account of a Subsidiary in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Revolving Availability Period (provided that the other Borrowers shall be co applicants, and be jointly and severally liable, with respect to each Letter of Credit issued for the account of or in favor of such Borrower). The Issuing Bank shall have no obligation to issue, and such Borrower shall not request the issuance of, any Letter of Credit at any time if after giving effect to such issuance, the LC Exposure would exceed the LC Commitment or the total Revolving Exposure would exceed the total Revolving Commitments. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by such Borrower to, or entered into by such Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

        (b)    Request for Issuance, Amendment, Renewal, Extension; Certain Conditions.    To request the issuance of a Letter of Credit or the amendment, renewal or extension of an outstanding Letter of Credit, a Borrower shall hand deliver or telecopy (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) an LC Request to the Issuing Bank and the Administrative Agent not later than 11:00 a.m. on the third Business Day preceding the requested date of issuance, amendment, renewal or extension (or such later date and time as is acceptable to the Issuing Bank).

        A request for an initial issuance of a Letter of Credit shall specify in form and detail satisfactory to the Issuing Bank:

        (i)    the proposed issuance date of the requested Letter of Credit (which shall be a Business Day);

        (ii)   the amount thereof;

        (iii)  the expiry date thereof (which shall not be later than the close of business 15 days prior to the Revolving Maturity Date);

        (iv)  the name and address of the beneficiary thereof;

        (v)   whether the Letter of Credit is to be issued for its own account or for the account of one if its Subsidiaries (provided that the other Borrowers shall be co applicants, and jointly and severally liable, with respect to each Letter of Credit issued for the account of such Borrower);

        (vi)  the documents to be presented by such beneficiary in connection with any drawing thereunder;

        (vii) the full text of any certificate to be presented by such beneficiary in connection with any drawing thereunder; and

        (viii) such other matters as the Issuing Bank may reasonably require.

        A request for an amendment, renewal or extension of any outstanding Letter of Credit shall specify in form and detail satisfactory to the Issuing Bank:

        (i)    the Letter of Credit to be amended, renewed or extended;

42

        (ii)   the proposed date of amendment, renewal or extension thereof (which shall be a Business Day);

        (iii)  the nature of the proposed amendment, renewal or extension; and

        (iv)  such other matters as the Issuing Bank may reasonably require.

        If requested by the Issuing Bank, the relevant Borrower also shall submit a letter of credit application on the Issuing Bank's standard form in connection with any request for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if (and upon issuance, amendment, renewal or extension of each Letter of Credit, Borrowers shall be deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or extension (i) the LC Exposure shall not exceed $20.0 million and (ii) the total Revolving Exposures shall not exceed the total Revolving Commitments. Unless the Issuing Bank shall agree otherwise, no Letter of Credit shall be in an initial amount less than $100,000, in the case of a Commercial Letter of Credit, or $500,000, in the case of a Standby Letter of Credit.

        (c)    Expiration Date.    (i) Each Letter of Credit shall expire at or prior to the close of business on the earlier of (x) in the case of a Standby Letter of Credit, (1) the date which is one year after the date of the issuance of such Standby Letter of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (2) the Letter of Credit Expiration Date and (y) in the case of a Commercial Letter of Credit, (1) the date that is 180 days after the date of issuance of such Commercial Letter of Credit (or, in the case of any renewal or extension thereof, 180 days after such renewal or extension) and (2) the Letter of Credit Expiration Date.

        (ii)   If the Borrower so requests in any Letter of Credit Request, then the Issuing Bank may, in its sole and absolute discretion, agree to issue a Letter of Credit that has automatic renewal provisions (each, an "Auto-Renewal Letter of Credit"); provided that any such Auto-Renewal Letter of Credit must permit the Issuing Bank to prevent any such renewal at least once in each twelve-month period (commencing with the date of issuance of such Letter of Credit) by giving prior notice to the beneficiary thereof not later than a day in each such twelve-month period to be agreed upon at the time such Letter of Credit is issued. Unless otherwise directed by the Issuing Bank, the Borrower shall not be required to make a specific request to the Issuing Bank for any such renewal. Once an Auto-Renewal Letter of Credit has been issued, the Revolving Lenders shall be deemed to have authorized (but may not require) the Issuing Bank to permit the renewal of such Letter of Credit at any time to an expiry date not later than the earlier of (x) one year from the date of such renewal and (y) the Letter of Credit Expiration Date; provided that the Issuing Bank shall not permit any such renewal if (1) the Issuing Bank has determined that it would have no obligation at such time to issue such Letter of Credit in its renewed form under the terms hereof (by reason of the provisions of Section 2.18 or otherwise), or (2) it has received notice (which may be by telephone or in writing) on or before the day that is two Business Days before the date which has been agreed upon pursuant to the proviso of the first sentence of this paragraph, (A) from the Administrative Agent that any Revolving Lender directly affected thereby has elected not to permit such renewal or (B) from the Administrative Agent, any Lender or the Borrower that one or more of the applicable conditions specified in Section 4.01 is not then satisfied.

        (d)    Participations.    By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby irrevocably grants to each Revolving Lender, and each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender's Pro Rata Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender's Pro Rata Percentage of each LC Disbursement made by the Issuing Bank and not

43

reimbursed by Borrowers on the date due as provided in paragraph (e) of this Section, or of any reimbursement payment required to be refunded to a Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

        (e)    Reimbursement.    If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, Borrowers shall, jointly and severally, reimburse such LC Disbursement by paying to the Issuing Bank an amount equal to such LC Disbursement not later than 3:00 p.m., New York City time, on the date that such LC Disbursement is made, if Borrower Agent shall have received notice of such LC Disbursement prior to 11:00 a.m., New York City time, on such date, or, if such notice has not been received by Borrower Agent prior to such time, on such date, then not later than 2:00 p.m., New York City time on the Business Day immediately following the day that Borrower Agent receives such notice; provided that Borrower Agent may, subject to the conditions to borrowing set forth herein, request in accordance with Section 2.03 that such payment be financed with an ABR Revolving Borrowing in an equivalent amount and, to the extent so financed, Borrowers' obligation to make such payment shall be discharged and replaced by the resulting ABR Revolving Borrowing.

        If any Borrower fails to make such payment when due, the Issuing Bank shall notify the Administrative Agent and the Administrative Agent shall notify each Revolving Lender of the applicable LC Disbursement, the payment then due from such Borrower in respect thereof and such Lender's Pro Rata Percentage thereof. Each Revolving Lender shall pay by wire transfer of immediately available funds to the Administrative Agent on such date (or, if such Revolving Lender shall have received such notice later than 12:00 noon on any day, not later than 11:00 a.m. on the immediately following Business Day), an amount equal to such Revolving Lender's Pro Rata Percentage of the unreimbursed LC Disbursement in the same manner as provided in Section 2.02 with respect to Loans made by such Lender, and the Administrative Agent will promptly pay to the Issuing Bank the amounts so received by it from the Revolving Lenders. The Administrative Agent will promptly pay to the Issuing Bank any amounts received by it from such Borrower pursuant to the above paragraph prior to the time that any Revolving Lender makes any payment pursuant to the preceding sentence; any such amounts received by the Administrative Agent thereafter will be promptly remitted by the Administrative Agent to the Revolving Lenders that shall have made such payments and to the Issuing Bank, as appropriate.

        If any Revolving Lender shall not have made its Pro Rata Percentage of such LC Disbursement available to the Administrative Agent as provided above, each of such Revolving Lender and such Borrower severally agrees to pay interest on such amount, for each day from including the date such amount is required to be paid in accordance with the foregoing to but excluding the date such amount is paid, to the Administrative Agent for the account of the Issuing Bank at (i) in the case of such Borrower, the rate per annum set forth in Section 2.18(h) and (ii) in the case of such Lender, at a rate determined by the Administrative Agent in accordance with banking industry rules or practices on interbank compensation.

44

        (f)    Obligations Absolute.    The Reimbursement Obligation of Borrowers as provided in Section 2.18(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit or this Agreement, or any term or provision therein; (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent, invalid or insufficient in any respect or any statement therein being untrue or inaccurate in any respect; (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not substantially comply with the terms of such Letter of Credit; (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.18, constitute a legal or equitable discharge of, or provide a right of setoff against, the obligations of Borrowers hereunder; (v) the fact that a Default or Event of Default shall have occurred and be continuing; and (vi) any adverse change in the business, assets, property, results of operations, prospects or condition, financial or otherwise, of Holdings and its Subsidiaries. None of the Agents, the Lenders, the Issuing Bank or any of their Affiliates, shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to Borrowers to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by such Borrower to the extent permitted by applicable law) suffered by such Borrower that are caused by the Issuing Bank's failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

        (g)    Disbursement Procedures.    The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and Borrower Agent by telephone (confirmed by telecopy) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve any Borrower of its Reimbursement Obligation to the Issuing Bank and the Revolving Lenders with respect to any such LC Disbursement (other than with respect to the timing of such Reimbursement Obligation set forth in Section 2.18(e)).

        (h)    Interim Interest.    If the Issuing Bank shall make any LC Disbursement, then, unless Borrowers shall reimburse such LC Disbursement in full on the date such LC Disbursement is made, the unpaid amount thereof shall bear interest payable on demand, for each day from and including the date such LC Disbursement is made to but excluding the date that such Borrower reimburses such LC Disbursement, at the rate per annum set forth in the second paragraph of Section 2.06(b). Interest accrued pursuant to this paragraph shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Revolving Lender pursuant to paragraph (e) of this

45

Section to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

        (i)    Cash Collateralization.    If any Event of Default shall occur and be continuing, on the Business Day that Borrower Agent receives notice from the Administrative Agent or the Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash collateral pursuant to this paragraph, Borrowers shall deposit in the LC Sub Account, in the name of the Collateral Agent and for the benefit of the Lenders, an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the any Borrower described in clause (g) or (h) of Article VIII. Each such deposit shall be held by the Collateral Agent as collateral for the payment and performance of the obligations of Borrowers under this Agreement. The Collateral Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over such account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Collateral Agent and at the risk and expense of Borrowers, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in such account. Moneys in such account shall be applied by the Collateral Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of Borrowers for the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to the consent of Revolving Lenders with LC Exposure representing greater than two thirds of the total LC Exposure), be applied to satisfy other Obligations of Borrowers under this Agreement. If any Borrower is required to provide an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such amount plus any accrued interest or realized profits of such amounts (to the extent not applied as aforesaid) shall be returned to such Borrower within three Business Days after all Events of Default have been cured or waived. If any Borrower is required to provide an amount of such collateral hereunder pursuant to Section 2.10(b), such amount plus any accrued interest or realized profits on account of such amount (to the extent not applied as aforesaid) shall be returned to such Borrower as and to the extent that, after giving effect to such return, such Borrower would remain in compliance with Section 2.10(b) and no Default or Event of Default shall have occurred and be continuing.

        (j)    Resignation or Removal of the Issuing Bank.    The Issuing Bank may resign as Issuing Bank hereunder at any time upon at least 30 days' prior notice to the Lenders, the Administrative Agent and Borrower Agent. The Issuing Bank may be replaced at any time by written agreement among Borrower Agent, each Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank or any such additional Issuing Bank. At the time any such resignation or replacement shall become effective, Borrowers shall, jointly and severally, pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 2.05(c) . From and after the effective date of any such resignation or replacement or addition, as applicable, (i) the successor or additional Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed to refer to such successor or such addition or to any previous Issuing Bank, or to such successor or such addition and all previous Issuing Banks, as the context shall require. After the resignation or replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such resignation or replacement, but shall not be required to issue additional Letters of Credit. If at any time there is more than one Issuing Bank hereunder, Borrower Agent may, in its discretion, select which Issuing Bank is to issue any particular Letter of Credit.

46

        (k)    Additional Issuing Banks.    Borrower Agent may, at any time and from time to time with the consent of the Administrative Agent (which consent shall not be unreasonably withheld) and such Lender, designate one or more additional Lenders to act as an issuing bank under the terms of this Agreement, with the consent of the Administrative Agent (which consent shall not be unreasonable withheld), the Issuing Bank and such Revolving Lender. Any Lender designated as an issuing bank pursuant to this paragraph (k) shall be deemed (in addition to being a Lender) to be the Issuing Bank with respect to Letters of Credit issued or to be issued by such Lender, and all references herein and in the other Loan Documents to the term "Issuing Bank" shall, with respect to such Letters of Credit, be deemed to refer to such Lender in its capacity as Issuing Bank, as the context shall require.

        The Issuing Bank shall be under no obligation to issue any Letter of Credit if:

        (i)    any order, judgment or decree of any Governmental Authority or arbitrator shall by its terms purport to enjoin or restrain the Issuing Bank from issuing such Letter of Credit, or any law applicable to the Issuing Bank or any request or directive (whether or not having the force of law) from any Governmental Authority with jurisdiction over the Issuing Bank shall prohibit, or request that the Issuing Bank refrain from, the issuance of letters of credit generally or such Letter of Credit in particular or shall impose upon the Issuing Bank with respect to such Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Bank is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Bank any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Bank in good faith deems material to it; or

        (ii)   the issuance of such Letter of Credit would violate one or more policies of the Issuing Bank.

        The Issuing Bank shall be under no obligation to amend any Letter of Credit if (A) the Issuing Bank would have no obligation at such time to issue such Letter of Credit in its amended form under the terms hereof, or (B) the beneficiary of such Letter of Credit does not accept the proposed amendment to such Letter of Credit.

SECTION 2.19.Joinder of Additional Borrowers.    (a) On or after the Closing Date, Borrower Agent may designate any Domestic Subsidiary as an additional borrower (an "Additional Borrower"), by delivery to the Administrative Agent of an Additional Borrower Agreement executed by such Additional Borrower and Borrower Agent, and upon such delivery such Additional Borrower shall for all purposes of this Agreement be a party to and a Borrower under this Agreement, jointly and severally liable with the other Borrowers and Guarantors for the Obligations under this Agreement. Such Subsidiary shall be subject to compliance with the provisions of Section 5.11 hereof.

        (b)   Upon the execution by Basic and delivery to the Administrative Agent of an Additional Borrower Termination Agreement with respect to any Additional Borrower, such Additional Borrower shall cease to be a Borrower; provided that no Additional Borrower Termination Agreement will become effective as to such Additional Borrower (other than to terminate its right to make further Borrowings under this Agreement) at a time when any principal of or interest on any Loan to such Additional Borrower shall be outstanding hereunder, unless the obligations of such Additional Borrower in respect of such Loan shall have been assumed by another Borrower. In the event any such Additional Borrower shall cease to be a Subsidiary, Borrower Agent will promptly execute and deliver to the Administrative Agent an Additional Borrower Termination Agreement terminating such Subsidiary's status as a Borrower, subject to the proviso of the immediately preceding sentence.

SECTION 2.20.Joint and Several Liability.    (a) Borrowers shall have joint and several liability in respect of all Obligations hereunder and under any other Loan Document to which any Borrower is a party, without regard to any defense (other than the defense that payment in full has been made), setoff or counterclaim which may at any time be available to or be asserted by any other Loan Party

47

against the Lenders, or by any other circumstance whatsoever (with or without notice to or knowledge of Borrowers) which constitutes, or might be construed to constitute, an equitable or legal discharge of Borrowers' liability hereunder, in bankruptcy or in any other instance, and the Obligations of Borrowers hereunder shall not be conditioned or contingent upon the pursuit by the Lenders or any other person at any time of any right or remedy against Borrowers or against any other person which may be or become liable in respect of all or any part of the Obligations or against any Collateral or Guarantee therefor or right of offset with respect thereto. Borrowers hereby acknowledge that this Agreement is the independent and several obligation of each Borrower (regardless of which Borrower shall have delivered a Notice of Borrowing) and may be enforced against each Borrower separately, whether or not enforcement of any right or remedy hereunder has been sought against any other Borrower. Each Borrower hereby expressly waives, with respect to any of the Loans made to any other Borrower hereunder and any of the amounts owing hereunder by such other Loan Parties in respect of such Loans, diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Administrative Agent or any Lender exhaust any right, power or remedy or proceed against such other Loan Parties under this Agreement or any other agreement or instrument referred to herein or against any other person under any other guarantee of, or security for, any of such amounts owing hereunder.

        (b)   Notwithstanding any other provisions of this Agreement or the other Loan Documents, the maximum aggregate amount for which a Borrower shall be liable hereunder with respect to Loans to any other Borrower and other Obligations of any other Borrower shall equal the greater of (i) 95% of the excess of the fair saleable value of the property of such Borrower over the total liabilities of such Borrower (including the maximum amount reasonably expected to become due in respect of contingent liabilities, other than any such contingent liabilities hereunder and under the other Loan Documents), such excess to be determined on the date hereof or the date on which, from time to time, enforcement against such Borrower of its joint and several liability hereunder is sought by the Administrative Agent or a Lender or realization against any of the property or assets of such Borrower is effected by the Administrative Agent or a Lender, whichever is higher, or (ii) the maximum aggregate amount of Obligations which does not render this Section 2.20, as it relates to such Borrower, void or voidable under applicable laws relating to fraudulent conveyance or fraudulent transfer. Subject to the preceding sentence, each Borrower understands, agrees and confirms that each Borrower shall be liable for payment of Obligations when due and not for collection thereof and that each Lender may, from time to time, enforce this provision against any Borrower up to the full amount of the Obligations owed to such Lender without proceeding against any other Borrower, against any security for the Obligations, against any Guarantor or under any Guarantee covering the Obligations.

SECTION 2.21.[Intentionally omitted].    

SECTION 2.22.Increase in Revolving Commitments.    (a) New Revolving Commitments. At any time following the completion of the syndication of the Loans (as reasonably determined by the Administrative Agent), the Borrower Agent may by written notice to the Administrative Agent and without the consent of the other Lenders hereunder request an increase to the existing Revolving Commitments (any such increase, the "New Revolving Commitments") in an aggregate amount not to exceed an amount equal to $10.0 million and in minimum amounts of at least $5.0 million. Such notice shall specify the date (an "Increased Amount Date") on which the Borrower Agent proposes that the New Revolving Commitments be made available, which shall be a date not less than 5 Business Days after the date on which such notice is delivered to the Administrative Agent. The Administrative Agent shall notify the Borrower Agent in writing of the identity of each Revolving Lender or other financial institution reasonably acceptable to the Administrative Agent (each, a "New Revolving Lender") to whom the New Revolving Commitments have been allocated and the amounts of such allocations; provided that any Lender approached to provide all or portion of the New Revolving Commitments may elect or decline, in its sole discretion, to provide a New Revolving Commitment. Such New

48

Revolving Commitments shall become effective as of such Increased Amount Date; provided that (1) no Default or Event of Default has occurred and is continuing or would result after giving effect to the making of such New Revolving Commitments and Loans or the application of the proceeds therefrom and (2) such increase in the Revolving Commitments shall be evidenced by one or more joinder agreements executed and delivered to Administrative Agent by each New Lender, as applicable, and each shall be recorded in the register, each of which shall be subject to the requirements set forth in Section 2.15(e). All terms and conditions of any Revolving Loans or other Obligations relating to New Revolving Commitments shall be on the same terms and conditions as those applicable to Revolving Commitments, Revolving Loans and other Obligations under this Agreement.

        (b)   On any Increased Amount Date on which New Revolving Commitments are effected, subject to the satisfaction of the foregoing terms and conditions, (i) each of the existing Revolving Lenders shall assign to each of the New Revolving Lenders, and each of the New Revolving Lenders shall purchase from each of the existing Revolving Lenders, at the principal amount thereof, such interests in the outstanding Revolving Loans and participations in Letters of Credit and Swingline Loans outstanding on such Increased Amount Date that will result in, after giving effect to all such assignments and purchases, such Revolving Loans and participations in Letters of Credit and Swingline Loans being held by existing Revolving Lenders and New Revolving Lenders ratably in accordance with their Revolving Commitments after giving effect to the addition of such New Revolving Commitments to the Revolving Commitments, (ii) each New Revolving Commitment shall be deemed for all purposes a Revolving Commitment and each Loan made thereunder shall be deemed, for all purposes, a Revolving Loan and have the same terms as any existing Revolving Loan and (iii) each New Revolving Lender shall become a Lender with respect to the Revolving Commitments and all matters relating thereto. Assignments made to effect this Section 2.22(b) shall be made in accordance with Section 11.04.

The Administrative Agent shall notify the Lenders promptly upon receipt of the Borrower Agent's notice of an Increased Amount Date and, in respect thereof, the New Revolving Commitments and the New Revolving Lenders.

SECTION 2.23.Term B Loans.    (a) Subject to the terms and conditions hereof, each Original Lender with an Original Term B Loan (other than a Reduced Lender) who executes and delivers a counterpart of this Amendment and Restatement severally agrees to exchange its Original Term B Loans for a like outstanding principal amount of Term B Loans on the Second Amendment and Restatement Effective Date, which exchange shall be deemed to be the making of a Term B Loan by such Lender for such amount.

        (b)   The Borrower shall prepay all Original Term B Loans of Original Lenders that do not execute and deliver a counterpart of this Amendment and Restatement on the Second Amendment and Restatement Effective Date and the Reduced Lenders with a portion of the gross proceeds of such Term B Loans and, by its signature below, each Lender exchanging its Original Term B Loan for a Term B Loan and each Reduced Lender consents to such prepayment. Any such prepayment may be effected on the Second Amendment and Restatement Effective Date without regard to any notice requirement, minimum principal amount or pro rata allocation provision otherwise applicable thereto under this Agreement.

        (c)   The Borrower shall pay all accrued and unpaid interest under the Original Credit Agreement on the Original Term B Loans to the Original Lenders holding Original Term B Loans on the Second Amendment and Restatement Effective Date and any breakage loss or expense under Section 2.13 of this Agreement. On the Second Amendment and Restatement Effective Date, the Original Term B Loans shall be deemed paid in full and discharged.

        (d)   The holders of the Term B Loans shall be entitled to the same guarantees and security interests pursuant to the Security Agreement and the other Security Documents from and after the

49

Second Amendment and Restatement Effective Date as the benefits which the holders of the Original Term B Loans had been entitled immediately prior to the Second Amendment and Restatement Effective Date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

        Each Loan Party represents and warrants to the Administrative Agent, the Collateral Agent, the Issuing Bank and each of the Lenders (with references to the Companies being references thereto after giving effect to the Transactions unless otherwise expressly stated) that:

SECTION 3.01.Organization; Powers.    Each Company (a) is duly organized and validly existing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority to carry on its business as now conducted and to own and lease its property and (c) is qualified and in good standing (to the extent such concept is applicable in the applicable jurisdiction) to do business in every jurisdiction where such qualification is required, except in such jurisdictions where the failure to so qualify or be in good standing, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.02.Authorization; Enforceability.    The Transactions to be entered into by each Loan Party are within such Loan Party's powers and have been duly authorized by all necessary action. This Agreement has been duly executed and delivered by each Loan Party and constitutes, and each other Loan Document to which any Loan Party is to be a party, when executed and delivered by such Loan Party, will constitute, a legal, valid and binding obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

SECTION 3.03.Governmental Approvals; No Conflicts.    Except as set forth on Schedule 3.03, the Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority, except (i) such as have been obtained or made and are in full force and effect, (ii) filings necessary to perfect Liens created under the Loan Documents and (iii) consents, approvals, registrations, filings or actions the failure of which to obtain or perform could not reasonably be expected to result in a Material Adverse Effect, (b) will not violate the charter, by laws or other organizational documents of any Company or any order of any Governmental Authority, (c) will not violate, result in a default or require any consent or approval under any applicable law or regulation, indenture, agreement or other instrument binding upon any Company or its assets, or give rise to a right thereunder to require any payment to be made by any Company, except for violations, defaults or the creation of such rights that could not reasonably be expected to result in a Material Adverse Effect, and (d) will not result in the creation or imposition of any Lien on any property of any Company, except Liens created under the Loan Documents and Permitted Liens.

SECTION 3.04.Financial Statements.    (a) Borrower Agent has heretofore furnished to the Lenders (i) the consolidated balance sheets as of December 31, 2001 and 2002 and related statements of income, stockholders' equity and cash flows of Basic as of and for the fiscal years ended December 31, 2000, 2001 and 2002, audited by and accompanied by the opinion of KPMG LLP, independent public accountants, and (ii) the unaudited consolidated balance sheets and related statements of income, stockholders' equity and cash flows of Basic as of and for the latest twelve-month and six month periods ended June, 2003, and for the latest twelve-month and seven-month periods ended July 31, 2003, and for the comparable periods of the preceding fiscal year, in each case, certified by the Chief Financial Officer of Basic. Such financial statements (and all financial statements delivered pursuant to Section 5.01) have been prepared in accordance with GAAP consistently applied and present fairly and accurately the financial condition and results of operations and cash flows of Basic as

50

of such dates and for such periods. Except as set forth in such financial statements (and all financial statements delivered pursuant to Section 5.01), there are no liabilities of any Company of any kind, whether accrued, contingent, absolute, determined, determinable or otherwise, which could reasonably be expected to result in a Material Adverse Effect, and there is no existing condition, situation or set of circumstances which could reasonably be expected to result in such a liability, other than liabilities under the Loan Documents.

        (b)   Borrower has heretofore delivered to the Lenders Holdings' (i) unaudited pro forma consolidated statements of income for the fiscal years ended December 31, 2001 and 2002 and (ii) an unaudited pro forma consolidated statement of income for the six month period ended June 30, 2003, in each case after giving effect to the Transactions as if they had occurred on first day of such period. Such pro forma statements of income have been prepared in good faith by the Loan Parties based on the assumptions stated therein (which assumptions are believed by the Loan Parties on the date hereof and on the Closing Date to be reasonable), are based on the best information available to the Loan Parties as of the date of delivery thereof, accurately reflect all adjustments that would be required to be made to give effect to the Transactions in accordance with Regulation S-X under the Securities Act, and present fairly on a pro forma basis the estimated results of operations of Holdings as of and for such dates, assuming that the Transactions had actually occurred on the first day of such periods. In addition, Borrower has heretofore delivered to the Lenders an unaudited model pro forma consolidated balance sheet of Holdings as of and for July 31, 2003, which model balance sheet been prepared in good faith by the Loan Parties based on the assumptions stated therein (which assumptions are believed by the Loan Parties on the date hereof and on the Closing Date to be reasonable), are based on the best information available to the Loan Parties as of the date of delivery thereof, accurately reflect all adjustments that would be required to be made to give effect to the Transactions in accordance with Regulation S-X under the Securities Act, and present fairly on a pro forma basis the estimated consolidated financial position of Holdings as of and for such date, assuming that the Transactions had actually occurred on such date.

SECTION 3.05.No Claims.    Each Company owns or has rights to use all of the Collateral and all rights with respect to any of the foregoing used in, necessary for or material to each Company's business as currently conducted. The use by each Company of such Collateral and all such rights with respect to the foregoing do not infringe on the rights of any person other than such infringement which would not, individually or in the aggregate, result in a Material Adverse Effect. No claim has been made and remains outstanding that any Company's use of any Collateral does or may violate the rights of any third person that would individually, or in the aggregate, have a Material Adverse Effect.

SECTION 3.06.Properties.    (a) Each Company has good title to, or valid leasehold interests in, all its property material to its business, except for minor irregularities or deficiencies in title that, individually or in the aggregate, do not interfere with its ability to conduct its business as currently conducted or to utilize such property for its intended purpose. Title to all such property held by such Company is free and clear of all Liens except for Permitted Liens. The property of the Companies, taken as a whole, (i) is in good operating order, condition and repair (ordinary wear and tear excepted) (except to the extent that the failure to be in such condition could not reasonably be expected to result in a Material Adverse Effect) and (ii) constitutes all the property which is required for the business and operations of the Companies as presently conducted.

        (b)   Schedule 3.06(b) contains a true and complete list of each interest in Real Property owned by any Company as of the date hereof and describes the type of interest therein held by such Company. Schedule 3.06(b) contains a true and complete list of each Real Property leased, subleased or otherwise occupied or utilized by any Company, as lessee, sublessee, franchisee or licensee, as of the date hereof and describes the type of interest therein held by such Company and whether such lease, sublease or other instrument requires the consent of the landlord thereunder or other parties thereto to the

51

Transactions. Schedule 1.01(a) contains a true and complete list of all property listed in Schedule 3.06(b) that has a fair market value equal to or exceeding $2.0 million.

        (c)   (i) No Company has received any notice of, nor has any knowledge of, the occurrence or pendency or contemplation of any Casualty Event affecting all or any portion of the property and (ii) no Mortgage encumbers improved Real Property that is located in an area that has been identified by the Secretary of Housing and Urban Development as an area having special flood hazards and with respect to which flood insurance has been made available under the National Flood Insurance Act of 1968.

SECTION 3.07.Intellectual Property.    

        (a)   Ownership/No Claims. Each Loan Party owns, or is licensed to use, all patents, patent applications, trademarks, trade names, service marks, copyrights, technology, trade secrets, proprietary information, domain names, know how and processes necessary for the conduct of its business as currently conducted (the "Intellectual Property"), except for those the failure to own or license which, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. No claim has been asserted and is pending by any person challenging or questioning the use of any such Intellectual Property or the validity or effectiveness of any such Intellectual Property, nor does any Loan Party know of any valid basis for any such claim. The use of such Intellectual Property by each Loan Party does not infringe the rights of any person, except for such claims and infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

        (b)   Registrations. Except pursuant to licenses and other user agreements entered into by each Loan Party in the ordinary course of business that are listed in Schedules 15(a) and 15(b) annexed to the Perfection Certificate (as such term is defined in the Security Agreement), on and as of the date hereof (i) each Loan Party owns and possesses the right to use, and has done nothing to authorize or enable any other person to use, any Copyright, Patent or Trademark (as such terms are defined in the Security Agreement) listed in Schedules 15(a) and 15(b) annexed to the Perfection Certificate and (ii) all registrations listed in Schedules 15(a) and 15(b) annexed to the Perfection Certificate are valid and in full force and effect, except for such lack of rights or failures to register that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

        (c)   No Violations or Proceedings. To each Loan Party's knowledge, on and as of the date hereof, (i) except as set forth in Schedule 3.07(c) annexed hereto, there is no material violation by others of any right of such Loan Party with respect to any Copyright, Patent or Trademark listed in Schedules 15(a) and 15(b) annexed to the Perfection Certificate, respectively, pledged by it under the name of such Loan Party, (ii) such Loan Party is not infringing upon any Copyright, Patent or Trademark of any other person other than such infringement that, individually or in the aggregate, would not (or would not reasonably be expected to) result in a Material Adverse Effect on the value or utility of the Intellectual Property or any portion thereof material to the use and operation of the Collateral or Mortgaged Property and (iii) no proceedings have been instituted or are pending against such Loan Party or, to such Loan Party's knowledge, threatened, and no claim against such Loan Party has been received by such Loan Party, alleging any such violation, except as may be set forth in this Section 3.07(c).

SECTION 3.08.Condition and Maintenance of Equipment.    The equipment of each Company is in good repair, working order and condition, reasonable wear and tear excepted. Each Company shall cause the equipment to be maintained and preserved in good repair, working order and condition, reasonable wear and tear excepted, and shall as quickly as commercially practicable make or cause to be made all repairs, replacements and other improvements which are necessary or appropriate in the conduct of each Company's ordinary course of business.

52

SECTION 3.09.Equity Interests and Subsidiaries.    (a) Schedule 3.09(a) sets forth a list of (i) all the Subsidiaries and their jurisdiction of organization as of the Closing Date and (ii) the number of shares of each class of its Equity Interests authorized, and the number outstanding, on the Closing Date and the number of shares covered by all outstanding options, warrants, rights of conversion or purchase and similar rights at the Closing Date. All Equity Interests of each Company (other than Holdings) are duly and validly issued and are fully paid and non assessable and are owned by Holdings or any Borrower, directly or indirectly through Wholly Owned Subsidiaries, and all Equity Interests of any Borrower are owned directly by Holdings. Each Loan Party is the record and beneficial owner of, and has good and marketable title to, the Equity Interests pledged by it under the Security Agreement, free of any and all Liens, rights or claims of other persons, except the security interest created by the Security Agreement, and there are no outstanding warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements outstanding with respect to, or property that is convertible into, or that requires the issuance or sale of, any such Equity Interests.

        (b)   No consent of any person including any other general or limited partner, any other member of a limited liability company, any other shareholder or any other trust beneficiary is necessary or desirable in connection with the creation, perfection or first priority status of the security interest of the Collateral Agent in any Equity Interests pledged to the Collateral Agent for the benefit of the Secured Parties under the Security Agreement or the exercise by the Collateral Agent of the voting or other rights provided for in the Security Agreement or the exercise of remedies in respect thereof.

        (c)   An accurate organization chart, showing the ownership structure of Holdings, Borrowers and each Subsidiary on the Closing Date, and after giving effect to the Transaction, is set forth on Schedule 3.09(c).

SECTION 3.10.Litigation; Compliance with Laws.    (a) There are no actions, suits or proceedings at law or in equity by or before any Governmental Authority now pending or, to the knowledge of any Company, threatened against or affecting any Company or any business, property or rights of any such person (i) that involve any Loan Document or the Transactions or (ii) as to which there is a reasonable possibility of an adverse determination and that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect.

        (b)   Except for matters covered by Section 3.20, no Company or any of its property is in violation of, nor will the continued operation of their property as currently conducted violate, any Requirements of Law (including any zoning or building ordinance, code or approval or any building permits) or any restrictions of record or agreements affecting the Real Property or is in default with respect to any judgment, writ, injunction, decree or order of any Governmental Authority, where such violation or default could reasonably be expected to result in a Material Adverse Effect.

SECTION 3.11.Agreements.    (a) No Company is a party to any agreement or instrument or subject to any corporate or other constitutional restriction that has resulted or could reasonably be expected to result in a Material Adverse Effect.

        (b)   No Company is in default in any manner under any provision of any indenture or other agreement or instrument evidencing Indebtedness, or any other agreement or instrument to which it is a party or by which it or any of its property are or may be bound, where such default could reasonably be expected to result in a Material Adverse Effect.

        (c)   Schedule 3.11(c) accurately and completely lists all material agreements (other than leases of Real Property set forth on Schedule 3.06(b)) to which any Company is a party which are in effect on the date hereof in connection with the operation of the business conducted thereby and Borrowers have delivered to the Administrative Agent complete and correct copies of all such material agreements, including any amendments, supplements or modifications with respect thereto.

53

SECTION 3.12.Federal Reserve Regulations.    (a) No Company is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of buying or carrying Margin Stock.

        (b)   No part of the proceeds of any Loan or any Letter of Credit will be used, whether directly or indirectly, and whether immediately, incidentally or ultimately, for any purpose that entails a violation of, or that is inconsistent with, the provisions of the regulations of the Board, including Regulation T, U or X. The pledge of the Securities Collateral pursuant to the Security Agreement does not violate such regulations.

SECTION 3.13.Investment Company Act; Public Utility Holding Company Act.    No Company is (a) an "investment company" or a company "controlled" by an "investment company," as defined in, or subject to regulation under, the Investment Company Act of 1940, as amended, or (b) a "holding company," an "affiliate" of a "holding company" or a "subsidiary company" of a "holding company," as defined in, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended.

SECTION 3.14.Use of Proceeds.    Borrowers used the proceeds of the Original Term B Loans to effect the Acquisitions and the Refinancing and pay related fees and expenses on the Closing Date. Borrowers will use the proceeds of the Revolving Loans for working capital and general corporate purposes (including to effect Permitted Acquisitions). The proceeds of the Term B Loans shall be used to repay the Original Term B Loans.

SECTION 3.15.Taxes.    Each Company has (a) timely filed or caused to be timely filed all federal Tax Returns and all material, state, local and foreign Tax Returns or materials required to have been filed by it and all such Tax Returns are true and correct in all material respects and has (b) duly and timely paid or caused to be duly and timely paid all Taxes (whether or not shown on any Tax Return) due and payable by it and all assessments received by it, except Taxes (i) that are being contested in good faith by appropriate proceedings and for which such Company shall have set aside on its books adequate reserves in accordance with GAAP or (ii) which could not, individually or in the aggregate, have a Material Adverse Effect; provided that any such contest of Taxes with respect to Collateral shall also satisfy the Contested Collateral Lien Conditions. Each Company has made adequate provision in accordance with GAAP for all Taxes not yet due and payable. Each Company is unaware of any proposed or pending tax assessments, deficiencies or audits that could be reasonably expected to, individually or in the aggregate, result in a Material Adverse Effect.

SECTION 3.16.No Material Misstatements.    Except for the financial information furnished to the Administrative Agent and the Lenders pursuant to Section 5.01(a) and 5.01(b) which has been restated as described in Note 20 to the audited consolidated financial statements of Holdings and its Subsidiaries for the year ended December 31, 2003, no information, report, financial statement, exhibit or schedule furnished by or on behalf of any Company to the Administrative Agent or any Lender in connection with the negotiation of any Loan Document or included therein or delivered pursuant thereto (including the Confidential Information Memorandum) contained, contains or will contain, any material misstatement of fact or omitted, omits or will omit to state any material fact necessary to make the statements therein, taken as a whole, in the light of the circumstances under which they were, are or will be made, not misleading as of the date such information is dated or certified; provided that to the extent any such information, report, financial statement, exhibit or schedule was based upon or constitutes a forecast or projection, each Company represents only that it acted in good faith and utilized reasonable assumptions and due care in the preparation of such information, report, financial statement, exhibit or schedule.

SECTION 3.17.Labor Matters.    As of the date hereof and the Closing Date, there are no strikes, lockouts or slowdowns against any Company pending or, to the knowledge of any Company, threatened. The hours worked by and payments made to employees of any Company have not been in

54

violation of the Fair Labor Standards Act or any other applicable federal, state, local or foreign law dealing with such matters in any manner which could reasonably be expected to result in a Material Adverse Effect. All payments due from any Company, or for which any claim may be made against any Company, on account of wages and employee health and welfare insurance and other benefits, have been paid or accrued as a liability on the books of such Company except where the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The consummation of the Transactions will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which any Company is bound.

SECTION 3.18.Solvency.    Immediately after the consummation of the Transactions to occur on the Closing Date and immediately following the making of each Loan and after giving effect to the application of the proceeds of each Loan, (a) the fair value of the assets of each Loan Party (individually and on a consolidated basis with its Subsidiaries) will exceed its debts and liabilities, subordinated, contingent or otherwise; (b) the present fair saleable value of the property of each Loan Party (individually and on a consolidated basis with its Subsidiaries) will be greater than the amount that will be required to pay the probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as such debts and other liabilities become absolute and matured; (c) each Loan Party (individually and on a consolidated basis with its Subsidiaries) will be able to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured; and (d) each Loan Party (individually and on a consolidated basis with its Subsidiaries) will not have unreasonably small capital with which to conduct its business in which it is engaged as such business is now conducted and is proposed to be conducted following the Closing Date.

SECTION 3.19.Employee Benefit Plans.    Each Company and its ERISA Affiliates is in compliance in all material respects with the applicable provisions of ERISA and the Code and the regulations and published interpretations thereunder. No ERISA Event has occurred or is reasonably expected to occur that, when taken together with all other such ERISA Events, could reasonably be expected to result in material liability of any Company or any of its ERISA Affiliates or the imposition of a Lien on any of the assets of a Company. The present value of all accumulated benefit obligations of all underfunded Plans (based on the assumptions used for purposes of Statement of Financial Accounting Standards No. 87) did not, as of the date of the most recent financial statements reflecting such amounts, exceed by more than $250,000 the fair market value of the assets of all such underfunded Plans. Using actuarial assumptions and computation methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of each Company or its ERISA Affiliates to all Multiemployer Plans in the event of a complete withdrawal therefrom, as of the close of the most recent fiscal year of each such Multiemployer Plan, could not reasonably be expected to result in a Material Adverse Effect.

SECTION 3.20.Environmental Matters.    (a) Except as set forth in this Schedule 3.20 and except as, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect:

        (1)   The Companies and their businesses, operations and Real Property are and in the last six years have been in compliance with, and the Companies have no liability under, Environmental Law;

        (2)   The Companies have obtained all Environmental Permits required for the conduct of their businesses and operations, and the ownership, operation and use of their assets, under Environmental Law, all such Environmental Permits are valid and in good standing and, under the currently effective business plan of the Companies, no expenditures or operational adjustments will be required in order to renew or modify such Environmental Permits during the next five years;

        (3)   There has been no Release or threatened Release of Hazardous Material on, at, under or from any real property or facility presently or formerly owned, leased or operated by the

55

Companies or their predecessors in interest that could result in liability by the Companies under Environmental Law;

        (4)   There is no Environmental Claim pending or, to the knowledge of the Companies, threatened against the Companies, or relating to the real property currently or formerly owned, leased or operated by the Companies or relating to the operations of the Companies, and there are no actions, activities, circumstances, conditions, events or incidents that could form the basis of such an Environmental Claim; and

        (5)   No person with an indemnity or contribution obligation to the Companies relating to compliance with or liability under Environmental Law is in default with respect to such obligation.

        (b)   Except as set forth in Schedule 3.20:

        (1)   No Company is obligated to perform any action or otherwise incur any expense under Environmental Law pursuant to any order, decree, judgment or agreement by which it is bound or has assumed by contract or agreement, and no Company is conducting or financing any Response pursuant to any Environmental Law with respect to any Real Property or any other location;

        (2)   No Real Property or facility owned, operated or leased by the Companies and, to the knowledge of the Companies, no real property or facility formerly owned, operated or leased by the Companies or any of their predecessors in interest is (i) listed or proposed for listing on the National Priorities List promulgated pursuant to CERCLA or (ii) listed on the Comprehensive Environmental Response, Compensation and Liability Information System promulgated pursuant to CERCLA or (iii) included on any similar list maintained by any Governmental Authority including, without limitation, any such list relating to petroleum;

        (3)   No Lien has been recorded or, to the knowledge of any Company, threatened under any Environmental Law with respect to any Real Property or assets of the Companies;

        (4)   The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby will not require any notification, registration, filing, reporting, disclosure, investigation, remediation or cleanup pursuant to any Governmental Real Property Disclosure Requirements or any other Environmental Law; and

        (5)   The Companies have made available to Lenders all material records and files in the possession, custody or control of, or otherwise reasonably available to, the Companies concerning compliance with or liability under Environmental Law including, without limitation, those concerning the existence of Hazardous Material at real property or facilities currently or formerly owned, operated, leased or used by the Companies.

SECTION 3.21.Insurance.    Schedule 3.21 sets forth a true, complete and correct description of all insurance maintained by each Company as of the Closing Date. As of each such date, such insurance is in full force and effect and all premiums have been duly paid. Each Company has insurance in such amounts and covering such risks and liabilities as are in accordance with normal industry practice.

SECTION 3.22.Security Documents.    (a) The Security Agreement is effective to create in favor of the Collateral Agent for the benefit of the Secured Parties, a legal, valid and enforceable security interest in and Lien on the Security Agreement Collateral and, when (i) financing statements and other filings in appropriate form are filed in the offices specified on Schedule 7 to the Perfection Certificate and (ii) upon the taking of possession or control by the Collateral Agent of the Security Agreement Collateral with respect to which a security interest may be perfected only by possession or control (which possession or control shall be given to the Collateral Agent to the extent possession or control by the Collateral Agent is required by each Security Agreement), the Lien created by the Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest

56

of the grantors thereunder in the Security Agreement Collateral (other than (A) the Intellectual Property Collateral (as defined in the Security Agreement) and (B) such Security Agreement Collateral in which a security interest cannot be perfected under the UCC as in effect at the relevant time in the relevant jurisdiction), in each case subject to no Liens other than Permitted Liens.

        (b)   When the Security Agreement or a short form thereof is filed in the United States Patent and Trademark Office and the United States Copyright Office, the Lien created by such Security Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the grantors thereunder in the Intellectual Property Collateral (as defined in such Security Agreement), in each case subject to no Liens other than Permitted Liens.

        (c)   Each Mortgage executed and delivered as of the Closing Date, if any, is, or, to the extent any Mortgage is duly executed and delivered thereafter by the relevant Loan Party, will be, effective to create, in favor of the Collateral Agent, for its benefit and the benefit of the Secured Parties, a legal, valid and enforceable first priority Lien on and security interest in all of the Loan Parties' right, title and interest in and to the Mortgaged Properties thereunder and the proceeds thereof, and when the Mortgages are filed in the offices specified on Schedule 1.01(a) (or, in the case of any Mortgage executed and delivered after the date thereof in accordance with the provisions of Sections 5.11 and 5.12, when such Mortgage is filed in the offices specified in the local counsel opinion delivered with respect thereto in accordance with the provisions of Sections 5.11 and 5.12), the Mortgages shall constitute fully perfected Liens on, and security interests in, all right, title and interest of the Loan Parties in the Mortgaged Properties and the proceeds thereof, in each case prior and superior in right to any other person, other than Liens reasonably acceptable to Administrative Agent.

        (d)   Each Security Document delivered pursuant to Sections 5.11 and 5.12 will, upon execution and delivery thereof, be effective to create in favor of the Collateral Agent, for the benefit of the Secured Parties, a legal, valid and enforceable security interest in and Lien on all of the Loan Parties' right, title and interest in and to the Collateral thereunder, and when all appropriate filings or recordings are made in the appropriate offices as may be required under applicable law, such Security Document will constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in such Collateral, in each case subject to no Liens other than the applicable Permitted Liens.

SECTION 3.23.Acquisition Documents; Representations and Warranties in Agreement.    (a) Schedule 3.23 lists (i) each exhibit, schedule, annex or other attachment to the Acquisition Agreements and (ii) each agreement, certificate, instrument, letter or other document contemplated by the Acquisition Agreements or any item referred to in clause (i) entered into, executed or delivered or to become effective in connection with the Acquisitions. The Original Lenders have been furnished true and complete copies of each Acquisition Document to the extent executed and delivered on or prior to the Closing Date.

        (b)   All representations and warranties of each Company controlled by Holdings prior to the Acquisitions set forth in the Acquisition Agreements were true and correct in all material respects as of the time such representations and warranties were made and shall be true and correct in all material respects as of the Closing Date as if such representations and warranties were made on and as of such date, unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date.

SECTION 3.24.No Material Adverse Effect.    Since December 31, 2002, there has been no event, change or occurrence that, individually or in the aggregate, has had or could reasonably be expected to result in a Material Adverse Effect.

57

ARTICLE IV

CONDITIONS TO CREDIT EXTENSIONS

SECTION 4.01.Conditions to Initial Credit Extension.    The obligation of each Original Lender and, if applicable, each Issuing Bank to fund the initial Credit Extension requested to be made by it shall be subject to the prior or concurrent satisfaction of each of the conditions precedent set forth in this Section 4.01.

        (a)   Loan Documents. All legal matters incident to this Agreement, the Borrowings and extensions of credit hereunder and the other Loan Documents shall be satisfactory to the Original Lenders, to the Issuing Bank and to the Administrative Agent and there shall have been delivered to the Administrative Agent an executed counterpart of each of the Loan Documents, including this Agreement and the Security Agreement, each Mortgage, the Perfection Certificate and each other applicable Loan Document.

        (b)   Corporate Documents. The Administrative Agent shall have received:

        (i)    a certificate of the Secretary or Assistant Secretary or general partner of each Loan Party dated the Closing Date and certifying (A) that attached thereto is a true and complete copy of the certificate or articles of incorporation or other constitutive documents, including all amendments thereto certified as of a recent date by the Secretary of State of the state of its organization, (B) that attached thereto is a true and complete copy of the by laws of such Loan Party as in effect on the Closing Date and at all times since a date prior to the date of the resolutions described in clause (C) below, (C) that attached thereto is a true and complete copy of resolutions duly adopted by the board of directors of such Loan Party authorizing the execution, delivery and performance of the Loan Documents to which such person is a party and, in the case of Borrowers, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, and (D) as to the incumbency and specimen signature of each officer executing any Loan Document or any other document delivered in connection herewith on behalf of such Loan Party (together with a certificate of another officer as to the incumbency and specimen signature of the Secretary or Assistant Secretary executing the certificate in this clause (i);

        (ii)   a long form certificate as to the good standing of each Loan Party as of a recent date, from such Secretary of State; and

        (iii)  such other documents as the Original Lenders, the Issuing Bank or the Administrative Agent may reasonably request.

        (c)   Officers' Certificate. The Administrative Agent shall have received a certificate, dated the Closing Date and signed by the Chief Executive Officer and the Chief Financial Officer of Holdings, confirming compliance with the conditions precedent set forth in paragraphs (b), (c), (d) and (e) of Section 4.02.

        (d)   Financings and Other Transactions, Etc. (i) The Original Lenders shall be satisfied with the form and substance of the Transaction Documents, the total financing requirements for the Transactions shall not exceed $122.0 million and the Transactions shall have been consummated or shall be consummated simultaneously on the Closing Date, in each case in all material respects in accordance with the terms hereof and the terms of the Transaction Documents (and without the waiver or amendment of any such terms not approved by the Administrative Agent and the Arranger); provided, that, if the PWI Acquisition and/or the Pennant Acquisition shall not be consummated simultaneously on the Closing Date, proceeds of the Term B Loans equal to $25.1 million in respect of the PWI Acquisition and/or $7.3 million in respect of the Pennant Acquisition shall have been deposited in the Restricted Acquisition Account.

58

        (ii)   The Original Lenders shall be satisfied with the capitalization, the terms and conditions of any equity arrangements and the corporate or other organizational structure of the Companies. The Original Lenders shall be satisfied that Basic and its subsidiaries have adequate working capital and capital expenditure funds and availability.

        (iii)  The Administrative Agent shall be reasonably satisfied that all steps necessary to effect the Refinancing shall have been completed in full (but for the funding of the Loans hereunder and application of the proceeds thereof), with all preparations completed that will be sufficient to cause all liens in favor of the existing lenders to be unconditionally released; the Administrative Agent shall have received "pay off" letters with respect to all debt being refinanced in the Refinancing; the Administrative Agent shall have received from any person holding any Lien securing any such debt, such UCC termination statements, releases of assignments of leases and rents and other instruments, in each case in proper form for recording, as the Administrative Agent shall have reasonably requested to release and terminate of record the Liens securing such debt.

        (e)   Financial Statements; Pro Forma Balance Sheet; Projections. The Original Lenders shall have received and shall be satisfied with the form and substance of the financial statements described in Section 3.04 and with the forecasts of the financial performance of Holdings, Basic, the Acquired Business and their respective Subsidiaries.

        (f)    Indebtedness. After giving effect to the Transactions and the other transactions contemplated hereby, no Company shall have outstanding any Indebtedness, preferred stock or minority interests other than (i) the Loans and extensions of credit hereunder, (ii) up to $8.0 million of Purchase Money Obligations and the other Indebtedness listed on Schedule 6.01(b), (iii) Indebtedness owed to Borrowers or any Guarantor and (iv) preferred stock to be converted, exchanged or extended in term as set forth in Section 5.15.

        (g)   Opinions of Counsel. The Administrative Agent shall have received, on behalf of itself, the other Agents, the Arranger, the Original Lenders and the Issuing Bank, a favorable written opinion of (i) Andrews Kurth LLP, special counsel for the Loan Parties, substantially to the effect set forth in Exhibit J-1, (ii) each local counsel listed on Schedule 4.01(g), substantially to the effect set forth in Exhibit J-2, and any legal opinions delivered under the Acquisition Documents, in each case (A) dated the Closing Date, (B) addressed to the Agents, the Issuing Bank and the Original Lenders and (C) covering such other matters relating to the Loan Documents and the Transactions as the Administrative Agent shall reasonably request, and (iii) a copy of each legal opinion delivered under the other Transaction Documents, and Holdings and Borrowers shall use their best efforts to deliver reliance letters from the party delivering such opinion authorizing the Agents, Original Lenders and the Issuing Bank to rely thereon as if such opinion were addressed to them.

        (h)   Solvency Certificate, Other Reports and Transaction Structure. (i) The Original Lenders shall have received all other reports and opinions of appraisers, consultants or other advisors retained by it to review the business, operation or condition of Holdings and its Subsidiaries giving effect to the Transactions, and shall be satisfied with such reports and opinions.

        (ii)   The Administrative Agent shall have received a solvency certificate in the form of Exhibit M, dated the Closing Date and signed by the Chief Financial Officer of Holdings and an equivalent officer for each Borrower.

        (iii)  The Original Lenders shall have reviewed, and be satisfied with, the ownership, corporate, legal, tax, management and capital structure of Holdings and its Subsidiaries (after giving effect to the Transactions) and any securities issued, and any indemnities, employment and other arrangements entered into, in connection with the Transactions.

59

        (i)    Requirements of Law. The Original Lenders shall be satisfied that the Transactions shall be in full compliance with all material Requirements of Law, including without limitation Regulations T, U and X of the Board. The Original Lenders shall have received satisfactory evidence of compliance with all applicable Requirements of Law, including all applicable environmental laws and regulations.

        (j)    Consents. The Original Lenders shall be satisfied that all requisite Governmental Authorities and third parties shall have approved or consented to the Transactions, and there shall be no governmental or judicial action, actual or threatened, that has or would have, singly or in the aggregate, a reasonable likelihood of restraining, preventing or imposing burdensome conditions on the Transactions or the other transactions contemplated hereby.

        (k)   Litigation. There shall be no litigation, public or private, or administrative proceedings, governmental investigation or other legal or regulatory developments, actual or threatened, that, singly or in the aggregate, could reasonably be expected to result in a Material Adverse Effect, or could materially and adversely affect the ability of Holdings, Borrowers and the Subsidiaries to fully and timely perform their respective obligations under the Transaction Documents, or the ability of the parties to consummate the financings contemplated hereby or the other Transactions.

        (l)    Sources and Uses. The sources and uses of the Loans shall be as set forth in Section 3.14.

        (m)  Fees. The Arranger and Administrative Agent shall have received all Fees and other amounts due and payable on or prior to the Closing Date, including, to the extent invoiced, reimbursement or payment of all out of pocket expenses (including the legal fees and expenses of Cahill Gordon & Reindel llp, special counsel to the Agents, and the fees and expenses of any local counsel, appraisers, consultants and other advisors) required to be reimbursed or paid by Borrowers hereunder or under any other Loan Document.

        (n)   Personal Property Requirements. The Collateral Agent shall have received:

        (i)    all certificates, agreements or instruments representing or evidencing the Pledged Securities and the Pledged Intercompany Notes (each as defined in the Security Agreement) accompanied by instruments of transfer and stock powers endorsed in blank shall have been delivered to the Collateral Agent;

        (ii)   all other certificates, agreements, including control agreements, or instruments necessary to perfect the Collateral Agent's security interest in all Chattel Paper, all Instruments, all Deposit Accounts and all Investment Property of each Loan Party (as each such term is defined in the Security Agreement and to the extent required by Section 3.3 of the Security Agreement);

        (iii)  UCC financing statement s in appropriate form for filing under the UCC, filings with the United States Patent, Trademark and Copyright offices and such other documents under applicable Requirements of Law in each jurisdiction as may be necessary or appropriate or, in the opinion of the Collateral Agent, desirable to perfect the Liens created, or purported to be created, by the Security Documents and, with respect to all UCC financing statement s required to be filed pursuant to the Loan Documents, evidence satisfactory to the Administrative Agent that the Borrowers have retained, at its sole cost and expense, a service provider acceptable to the Administrative Agent for the tracking of all such financing statements and notification to the Administrative Agent, of, among other things, the upcoming lapse or expiration thereof;

        (iv)  certified copies of UCC, tax and judgment lien searches, bankruptcy and pending lawsuit searches or equivalent reports or searches, listing all effective financing statements, lien notices or comparable documents that name any Loan Party as debtor and that are filed

60

in those state and county jurisdictions in which any property of any Loan Party is located and the state and county jurisdictions in which any Loan Party is organized or maintains its principal place of business, none of which encumber the Collateral covered or intended to be covered by the Security Documents (other than those relating to Liens acceptable to the Collateral Agent);

        (v)   with respect to each Real Property set forth on Schedule 4.01(n), such Loan Party shall use its commercially reasonable efforts to obtain a Landlord Lien Waiver and Access Agreement; and

        (vi)  evidence acceptable to the Collateral Agent of payment by the Loan Parties of all applicable recording taxes, fees, charges, costs and expenses required for the recording of the Security Documents.

        (o)   Real Property Requirements. The Collateral Agent shall have received:

        (i)    a Mortgage encumbering each Mortgaged Property that, together with any improvements thereon, individually has a fair market value of at least $2.0 million, in favor of the Collateral Agent, for the benefit of the Secured Parties, duly executed and acknowledged by each Loan Party that is the owner or holder of any interest in such Mortgaged Property, and otherwise in proper form for recording in the recording office of each political subdivision where such Mortgaged Property is situated, together with such certificates, affidavits, questionnaires or returns as shall be required in connection with the recording or filing thereof to create a lien under applicable law, and such UCC 1 financing statements, all of which shall be in form and substance reasonably satisfactory to the Collateral Agent, and any other instruments necessary to grant a mortgage lien under the laws of any applicable jurisdiction, all of which Mortgages and instruments shall be duly recorded or filed in such manner and in such places as are required by law to establish, perfect, preserve and protect the Liens in favor of the Collateral Agent required to be granted pursuant to the Mortgages and all taxes, fees and other charges payable in connection therewith shall be paid in full. Such Mortgages shall constitute valid and enforceable perfected Liens subject only to Liens reasonably acceptable to the Administrative Agent;

        (ii)   with respect to each Mortgaged Property, such consents, approvals, amendments, supplements, estoppels, tenant subordination agreements, access agreements or other instruments as necessary or required to consummate the Transactions or as shall reasonably be deemed necessary by the Collateral Agent in order for the owner or holder of the fee or leasehold interest constituting such Mortgaged Property to grant the Lien contemplated by the Mortgage with respect to such Mortgaged Property;

        (iii)  with respect to each Mortgage, a policy of title insurance (on ALTA 1992 form) (or commitment to issue a title policy) insuring (or committing to insure) the Lien of such Mortgage as a valid first mortgage Lien on the Mortgaged Property and fixtures described therein in the amount set forth on Schedule 4.01(o)(iii) hereto with respect to such Mortgaged Property 115% of the fair market value of such Mortgaged Property, which policies (each, a "Title Policy") shall (A) be issued by the Title Company, (B) to the extent necessary, include such reinsurance arrangements (with provisions for direct access, if necessary) as shall be reasonably acceptable to the Collateral Agent, (C) contain a "tie in" or "cluster" endorsement (if available under applicable law) (i.e., policies which insure against losses regardless of location or allocated value of the insured property up to a stated maximum coverage amount), (D) have been supplemented by such endorsements (or where such endorsements are not available, opinions of special counsel, architects or other professionals reasonably acceptable to the Collateral Agent to the extent that such opinions can be obtained at a cost which is reasonable with respect to the value of the Mortgaged Property subject to such Mortgage) as

61

shall be reasonably requested by the Collateral Agent (including, without limitation, endorsements on matters relating to usury, first loss, last dollar, zoning, contiguity, revolving credit, doing business, non imputation, public road access, survey, variable rate, environmental lien and so called comprehensive coverage over covenants and restrictions), and (E) contain no exceptions to title other than exceptions acceptable to the Collateral Agent;

        (iv)  with respect to each Mortgaged Property, such affidavits, certificates, information (including financial data) and instruments of indemnification (including, without limitation, a so called "gap" indemnification) as shall be required to induce the Title Company to issue the Title Policy/ies and endorsements contemplated in subparagraph (iii) above;

        (v)   evidence reasonably acceptable to the Collateral Agent of payment by the relevant Borrower of all Title Policy premiums, search and examination charges, escrow charges, and related charges, mortgage recording taxes, fees, charges, costs and expenses required for the recording of the Mortgages and issuance of the Title Policies referred to subparagraph (iii) above;

        (vi)  with respect to each Real Property or Mortgaged Property, copies of all Leases in which such Borrower or any Subsidiary holds the lessor's interest or other agreements relating to possessory interests, if any. To the extent any of the foregoing affect any Mortgaged Property, such agreement shall be subordinate to the Lien of the Mortgage to be recorded against such Mortgaged Property, either expressly by its terms or pursuant to a subordination, non disturbance and attornment agreement, and shall otherwise be acceptable to the Collateral Agent;

        (vii) with respect to each Mortgaged Property, each Borrower and each Subsidiary shall have made all notification, registrations and filings, to the extent required by, and in accordance with, all Governmental Real Property Disclosure Requirements applicable to such Mortgaged Property;

        (viii) Surveys with respect to each Mortgaged Property; and

        (ix)  with respect to each Mortgaged Property, local counsel opinions in form and substance reasonably satisfactory to the Collateral Agent;

        (x)   with respect to each Mortgaged Property, policies or certificates of insurance, all as required by the Mortgage related thereto and Section 5.04 hereof, which policies or insurance shall comply with the insurance requirements contained in Section 5.04 hereof; and

        (xi)  a Real Property Officer's Certificate in form and substance reasonably satisfactory to the Collateral Agent;.

        (p)   Insurance. The Administrative Agent shall have received a copy of, or a certificate as to coverage under, the insurance policies required by Section 5.04 and the applicable provisions of the Security Documents, each of which shall be endorsed or otherwise amended to include a "standard" or "New York" lender's loss payable endorsement and to name the Collateral Agent as additional insured, in form and substance satisfactory to the Administrative Agent.

        (q)   EBITDA. The Original Lenders shall have received a written certificate of the Chief Executive Officer and the Chief Financial Officer Holdings that the Consolidated EBITDA for the last four quarter period ending more than 30 days prior to the Closing Date (last twelve months ended July 31, 2003) calculated on a pro forma basis consistent with the requirements set forth in Section 5.01(a) was not less than $37.0 million.

SECTION 4.02.Conditions to All Credit Extensions.    The obligation of each Lender (or, Original Lender, as the case may be) and each Issuing Bank to make any Credit Extension (including the initial

62

Credit Extension) shall be subject to, and to the satisfaction of, each of the conditions precedent set forth below.

        (a)   Notice. The Administrative Agent shall have received a Borrowing Request as required by Section 2.03 (or such notice shall have been deemed given in accordance with Section 2.03) if Loans are being requested or, in the case of the issuance, amendment, extension or renewal of a Letter of Credit, the Issuing Bank and the Administrative Agent shall have received a notice requesting the issuance, amendment, extension or renewal of such Letter of Credit as required by Section 2.18(b) or, in the case of the Borrowing of a Swingline Loan, the Swingline Lender and the Administrative Agent shall have received a notice requesting such Swingline Loan as required by Section 2.17(b).

        (b)   No Default. Each Borrower and each other Loan Party shall be in compliance in all material respects with all the terms and provisions set forth herein and in each other Loan Document on its part to be observed or performed, and, at the time of and immediately after such Credit Extension, no Default shall have occurred and be continuing on such date or after giving effect to the Credit Extension requested to be made on such date.

        (c)   Representations and Warranties. Each of the representations and warranties made by any Loan Party set forth in Article III hereof or in any other Loan Document shall be true and correct in all material respects (except that any representation and warranty that is qualified as to "materiality" or "Material Adverse Effect" shall be true and correct in all respects) on and as of the date of such Credit Extension with the same effect as though made on and as of such date, except to the extent such representations and warranties expressly relate to an earlier date.

        (d)   No Material Adverse Effect. There has been no event, condition and/or contingency that has had or is reasonably likely to have a Material Adverse Effect.

        (e)   No Legal Bar. No order, judgment or decree of any Governmental Authority shall purport to restrain any Lender from making any Loans to be made by it. No injunction or other restraining order shall have been issued, shall be pending or noticed with respect to any action, suit or proceeding seeking to enjoin or otherwise prevent the consummation of, or to recover any damages or obtain relief as a result of, the transactions contemplated by this Agreement or the making of Loans hereunder.

        Each of the delivery of a Borrowing Request or notice requesting the issuance, amendment, extension or renewal of a Letter of Credit and the acceptance by the Borrowers of the proceeds of such Credit Extension shall constitute a representation and warranty by Borrowers and each other Loan Party that on the date of such Credit Extension (both immediately before and after giving effect to such Credit Extension and the application of the proceeds thereof) the conditions contained in this Section 4.02 have been satisfied. Each Borrower shall provide such information (including calculations in reasonable detail of the covenants in Section 6.08) as the Administrative Agent may reasonably request to confirm that the conditions in this Section 4.02 have been satisfied.

SECTION 4.03.Initial Borrowing by Each Additional Borrower.    The obligation of each Lender to make Loans to any Additional Borrower is subject to the satisfaction of the following conditions:

        (a)   The Administrative Agent (or its counsel) shall have received such Additional Borrower's Additional Borrower Agreement, duly executed by all parties thereto.

        (b)   The Administrative Agent shall have received such documents and certificates, including such opinions of counsel, as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing (to the extent such concept is relevant to such Additional Borrower in its jurisdiction of organization) of such Additional Borrower, the authorization of the Transactions insofar as they related to the Additional Borrower and any other legal matters reasonably relating to such Additional Borrower, its Additional Borrower Agreement or such Transactions, all in form and substance reasonably satisfactory to the Administrative Agent and its counsel.

63

SECTION 4.04.Conditions to Effectiveness of the Amendment and Restatement.    This Second Amended and Restated Credit Agreement shall become effective on and as of the first date (the "Second Amendment and Restatement Effective Date") on which all of the following conditions precedent shall have been satisfied:

        (a)   Expenses. All of the reasonable fees and expenses of counsel for the Agents in connection with the amendment and restatement shall have been paid in full.

        (b)   No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing on the Second Amendment and Restatement Effective Date.

        (c)   Representations and Warranties. Each of the representations and warranties made in or pursuant to Article III or which are contained in any other Loan Document shall be true and correct in all material respects on and as of the Second Amendment and Restatement Effective Date as if made on and as of such date (unless stated to relate to a specific earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date).

        (d)   Authorization. The execution, delivery and performance of this Agreement shall have been duly authorized by all necessary action on the part of the Borrowers and the Guarantors, and the Administrative Agent shall have received satisfactory evidence thereof.

        (e)   Opinions and Certificates. The Administrative Agent shall have received opinions and certificates dated the Second Amendment and Restatement Effective Date, in form and substance substantially similar to those delivered pursuant to Sections 4.01 (b), (c) and (g)(i) and including a representation by the Chief Financial Officer of Holdings that, as of the Second Amendment and Restatement Effective Date, no tax or judgment liens have been filed against any Loan Party or any of their respective properties since the Closing Date.

ARTICLE V

AFFIRMATIVE COVENANTS

        Each Loan Party covenants and agrees with each Lender that so long as this Agreement shall remain in effect (except for provisions which by their terms survive termination, such as indemnification provisions) and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document shall have been paid in full and all Letters of Credit have been canceled or have expired or been fully cash collateralized and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, each Loan Party will, and will cause each of its subsidiaries to:

SECTION 5.01.Financial Statements, Reports, etc.    Holdings will furnish to the Administrative Agent and each Lender:

        (a)   Annual Reports. Within 120 days after the end of each fiscal year, (i) the consolidated balance sheet of Holdings and its Subsidiaries as of the end of such fiscal year and related consolidated statements of income, cash flows and stockholders' equity for such fiscal year, and notes thereto, all prepared in accordance with Regulation S-X under the Securities Act and accompanied by an opinion of KPMG LLP or other independent public accountants of recognized national standing satisfactory to the Administrative Agent (which opinion shall not be qualified as to scope or contain any going concern or other qualification), stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations, cash flows and changes in stockholders' equity of the Consolidated Companies as of the end of and for such fiscal year in accordance with GAAP consistently applied, (ii) a management report

64

in a form reasonably satisfactory to the Administrative Agent setting forth, on a consolidated basis, the financial condition, results of operations and cash flows of the Consolidated Companies as of the end of and for such fiscal year, as compared to the Consolidated Companies' budgeted financial conditions, results of operations and cash flows, and (iii) a management's discussion and analysis of the financial condition and results of operations for such fiscal year, as compared to the previous fiscal year;

        (b)   Quarterly Reports. Within 45 days after the end of each of the first three fiscal quarters of each fiscal year, (i) the consolidated balance sheet of Holdings and its Subsidiaries as of the end of such fiscal quarter and related consolidated statements of income and cash flows for such fiscal quarter and for the then elapsed portion of the fiscal year, in comparative form with the consolidated statements of income and cash flows for the comparable periods in the previous fiscal year, all prepared in accordance with Regulation S-X under the Securities Act and accompanied by a certificate of a Financial Officer stating that such financial statements fairly present, in all material respects, the consolidated financial condition, results of operations and cash flows of the Consolidated Companies as of the date and for the periods specified in accordance with GAAP consistently applied, and on a basis consistent with audited financial statements referred to in clause (a) if this Section, subject to normal year end audit adjustments, and (ii) a management's discussion and analysis of the financial condition and results of operations for such fiscal quarter and the then elapsed portion of the fiscal year, as compared to the comparable periods in the previous fiscal year;

        (c)   [Intentionally omitted];

        (d)   Financial Officer's Certificate. (i) Concurrently with any delivery of financial statements under paragraph (a), (b) or (c) above, a Compliance Certificate of a Financial Officer certifying that no Default has occurred or, if such a Default has occurred, specifying the nature and extent thereof and any corrective action taken or proposed to be taken with respect thereto; (ii) concurrently with any delivery of financial statements under subparagraph (a) or (b) above, a certificate of a Financial Officer setting forth computations in reasonable detail satisfactory to the Administrative Agent demonstrating compliance with the covenants contained in Section 6.08; and (iii) in the case of paragraph (a) above, a report of the accounting firm opining on or certifying such financial statements stating that in the course of its regular audit of the financial statements of Holdings and its Subsidiaries, which audit was conducted in accordance with GAAP, such accounting firm obtained no knowledge that any Default has occurred or, if in the opinion of such accounting firm such a Default has occurred, specifying the nature and extent thereof;

        (e)   Financial Officer's Certificate Regarding Collateral. Concurrently with any delivery of financial statements under paragraph (a), above, a Perfection Certificate or Perfection Certificate Supplement;

        (f)    Public Reports. Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by any Company with the Securities and Exchange Commission, or any Governmental Authority succeeding to any or all of the functions of said Commission, or with any national securities exchange, or distributed to holders of its Indebtedness pursuant to the terms of the documentation governing such Indebtedness (or any trustee, agent or other representative therefor), as the case may be;

        (g)   Management Letters. Promptly after the receipt thereof by any Company, a copy of any "management letter" received by any such person from its certified public accountants and the management's responses thereto;

        (h)   Budgets. Until the date on which the Syndication Agent shall have notified Borrower Agent that the primary syndication of the Commitments has been completed, no later than the

65

second day of each fiscal year of Holdings and its Subsidiaries, a budget in form reasonably satisfactory to the Administrative Agent (including budgeted statements of income, sources and uses of cash and balance sheets of the Consolidated Companies) for each fiscal month of such fiscal year prepared in detail and on a consolidated basis, with appropriate presentation and discussion of the principal assumptions upon which such budgets are based, accompanied by the statement of a Financial Officer of Holdings to the effect that the budget of the Consolidated Companies is a reasonable estimate for the period covered thereby;

        (i)    Annual Meetings with Lenders. Within 120 days after the close of each fiscal year of Holdings, Holdings and each Borrower shall, at the request of the Administrative Agent or Required Lenders, hold a meeting (at a mutually agreeable location and time) with all Lenders who choose to attend such meeting at which meeting shall be reviewed the financial results of the previous fiscal year and the financial condition of the Companies and the budgets presented for the current fiscal year of the Companies; and

        (j)    Other Information. Promptly, from time to time, such other information regarding the operations, business affairs and financial condition of any Company, or compliance with the terms of any Loan Document, as the Administrative Agent or any Lender may reasonably request.

SECTION 5.02.Litigation and Other Notices.    Furnish to the Administrative Agent and each Lender prompt written notice of the following:

        (a)   any Default, specifying the nature and extent thereof and the corrective action (if any) taken or proposed to be taken with respect thereto;

        (b)   the filing or commencement of, or any threat or notice of intention of any person to file or commence, any action, suit or proceeding, whether at law or in equity by or before any Governmental Authority, (i) against any Company or any Affiliate thereof that could reasonably be expected to result in a Material Adverse Effect or (ii) with respect to any Loan Document;

        (c)   any development that has resulted in, or could reasonably be expected to result in a Material Adverse Effect;

        (d)   the occurrence of a Casualty Event and will ensure that the Net Cash Proceeds of any such event (whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and applied in accordance with the applicable provisions of this Agreement and the Security Documents; and

        (e)   (i) the incurrence of any material Lien (other than Permitted Liens) on, or claim asserted against any of the Collateral or (ii) the occurrence of any other event which could materially affect the value of the Collateral.

SECTION 5.03.Existence; Businesses and Properties.    (a) Do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence, except as otherwise expressly permitted under Section 6.05 or, in the case of any Subsidiary, where the failure to perform such obligations, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

        (b)   Do or cause to be done all things necessary to obtain, preserve, renew, extend and keep in full force and effect the rights, licenses, permits, franchises, authorizations, patents, copyrights, trademarks and trade names material to the conduct of its business; maintain and operate such business in substantially the manner in which it is presently conducted and operated; comply with all applicable Requirements of Law (including any and all zoning, building, Environmental Law, ordinance, code or approval or any building permits or any restrictions of record or agreements affecting the Real Property) and decrees and orders of any Governmental Authority, whether now in effect or hereafter enacted, except where the failure to comply, individually or in the aggregate, could not reasonably be

66

expected to result in a Material Adverse Effect; pay and perform its obligations under all Leases and Transaction Documents; and at all times maintain and preserve all property material to the conduct of such business and keep such property in good repair, working order and condition and from time to time make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and replacements thereto necessary in order that the business carried on in connection therewith may be properly conducted in the ordinary course at all times; provided that nothing in this Section 5.03(b) shall prevent (i) sales of assets, consolidations or mergers by or involving any Company in accordance with Section 6.05; (ii) the withdrawal by any Company of its qualification as a foreign corporation in any jurisdiction where such withdrawal, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect; or (iii) the abandonment by any Company of any rights, franchises, licenses, trademarks, trade names, copyrights or patents that such person reasonably determines are not useful to its business.

SECTION 5.04.Insurance.    (a) Keep its insurable property adequately insured at all times by financially sound and reputable insurers; maintain such other insurance, to such extent and against such risks, including fire and other risks insured against by extended coverage, as is customary with companies in the same or similar businesses operating in the same or similar locations, including public liability insurance against claims for personal injury or death or property damage occurring upon, in, about or in connection with the use of any property owned, occupied or controlled by it; and maintain such other insurance as may be required by law; and, with respect to the Collateral, otherwise maintain all insurance coverage required under each applicable Security Document, such policies to be in such form and amounts and having such coverage as may be reasonably satisfactory to the Administrative Agent and the Collateral Agent.

        (b)   All such insurance shall (i) provide that no cancellation, material reduction in amount or material change in coverage thereof shall be effective until at least 30 days after receipt by the Collateral Agent of written notice thereof, (ii) name the Collateral Agent as mortgagee (in the case of property insurance) or additional insured (in the case of liability insurance) or loss payee (in the case of casualty insurance), as applicable, (iii) if reasonably requested by the Collateral Agent, include a breach of warranty clause and (iv) be reasonably satisfactory in all other respects to the Collateral Agent.

        (c)   Notify the Administrative Agent and the Collateral Agent immediately whenever any separate insurance concurrent in form or contributing in the event of loss with that required to be maintained under this Section 5.04 is taken out by any Company; and promptly deliver to the Administrative Agent and the Collateral Agent a duplicate original copy of such policy or policies.

        (d)   Obtain flood insurance in such total amount as the Administrative Agent or the Required Lenders may from time to time require, if at any time the area in which any improvements located on any real property covered by a Mortgage is designated a "flood hazard area" in any Flood Insurance Rate Map published by the Federal Emergency Management Agency (or any successor agency) and otherwise comply with the National Flood Insurance Program as set forth in the Flood Disaster Protection Act of 1975, as amended from time to time.

        (e)   Deliver to the Administrative Agent and the Collateral Agent and the Lenders a report of a reputable insurance broker with respect to such insurance and such supplemental reports with respect thereto as the Administrative Agent or the Collateral Agent may from time to time reasonably request.

SECTION 5.05.Obligations and Taxes.    (a) Pay its Indebtedness and other obligations promptly and in accordance with their terms and pay and discharge promptly when due all Taxes, assessments and governmental charges or levies imposed upon it or upon its income or profits or in respect of its property, before the same shall become delinquent or in default, as well as all lawful claims for labor, materials and supplies or otherwise that, if unpaid, might give rise to a Lien other than a Permitted Lien upon such properties or any part thereof; provided that such payment and discharge shall not be

67

required with respect to any such Tax, assessment, charge, levy or claim so long as the validity or amount thereof shall be contested in good faith by appropriate proceedings and the applicable Company shall have set aside on its books adequate reserves with respect thereto in accordance with GAAP and such contest operates to suspend collection of the contested obligation, Tax, assessment or charge and enforcement of a Lien other than a Permitted Lien and, in the case of Collateral, the applicable Company shall have otherwise complied with the Contested Collateral Lien Conditions.

        (b)   Timely and correctly file all material Tax Returns required to be filed by it.

SECTION 5.06.Employee Benefits.    (a) Comply in all material respects with the applicable provisions of ERISA and the Code and (b) furnish to the Administrative Agent (x) as soon as possible after, and in any event within 10 days after any Responsible Officer of the Companies or their ERISA Affiliates or any ERISA Affiliate knows or has reason to know that, any ERISA Event has occurred that, alone or together with any other ERISA Event, could reasonably be expected to result in a Material Adverse Effect or the imposition of a Lien, a statement of a Financial Officer of Holdings setting forth details as to such ERISA Event and the action, if any, that the Companies propose to take with respect thereto, and (y) upon request by the Administrative Agent, copies of: (i) each Schedule B (Actuarial Information) to the annual report (Form 5500 Series) filed by any Company or any ERISA Affiliate with the Internal Revenue Service with respect to each Plan; (ii) the most recent actuarial valuation report for each Plan; (iii) all notices received by any Company or any ERISA Affiliate from a Multiemployer Plan sponsor or any governmental agency concerning an ERISA Event; and (iv) such other documents or governmental reports or filings relating to any Plan (or employee benefit plan sponsored or contributed to by any Company) as the Administrative Agent shall reasonably request.

SECTION 5.07.Maintaining Records; Access to Properties and Inspections.    Keep proper books of record and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law are made of all dealings and transactions in relation to its business and activities. Each Company will permit any representatives designated by the Administrative Agent or any Lender to visit and inspect the financial records and the property of such Company at reasonable times and as often as reasonably requested and to make extracts from and copies of such financial records, and permit any representatives designated by the Administrative Agent or any Lender to discuss the affairs, finances and condition of any Company with the officers thereof and, after reasonable notice to such Company, the independent accountants therefor.

SECTION 5.08.Use of Proceeds.    Use the proceeds of the Loans and request the issuance of Letters of Credit only for the purposes set forth in Section 3.14.

SECTION 5.09.Compliance with Environmental Laws; Environmental Reports.    (a) Comply, and cause all lessees and other persons occupying Real Property owned, operated or leased by any Company to comply, in all material respects with all Environmental Laws and Environmental Permits applicable to its operations and Real Property; obtain and renew all material Environmental Permits applicable to its operations and Real Property; and conduct any Response in accordance with Environmental Laws; provided that no Company shall be required to undertake any Response to the extent that its obligation to do so is being contested in good faith and by proper proceedings and appropriate reserves are being maintained with respect to such circumstances in accordance with GAAP.

        (b)   If a Default caused by reason of a breach of Section 3.20 or Section 5.09(a) shall have occurred and be continuing for more than 20 days without the Companies commencing activities reasonably likely to cure such Default, at the written request of the Required Lenders through the Administrative Agent, provide to the Lenders within 45 days after such request, at the expense of Borrowers, an environmental assessment report regarding the matters which are the subject of such default, including where appropriate, any soil and/or groundwater sampling, prepared by an environmental consulting firm and in the form and substance reasonably acceptable to the

68

Administrative Agent and indicating the presence or absence of Hazardous Materials and the estimated cost of any compliance or Response to address them.

SECTION 5.10.Interest Rate Protection.    No later than the 270th day after the Closing Date, Borrowers shall enter into, and for a minimum of two years thereafter maintain, Interest Rate Agreements acceptable to the Administrative Agent that result in at least $65,000,000 of the aggregate principal amount of Holdings' Consolidated Indebtedness being effectively subject to a fixed or maximum interest rate acceptable to the Administrative Agent through May 28, 2006.

SECTION 5.11.Additional Collateral; Additional Guarantors.    (a) Subject to this Section 5.11, with respect to any property acquired on or after the Closing Date by any Borrower or any other Loan Party that is intended to be subject to the Lien created by any of the Security Documents but is not so subject (but, in any event, excluding any property described in paragraph (b) of this subsection) promptly (and in any event within 30 days after the acquisition thereof and within 60 days in the case of any Real Property described in Section 5.11(d)): (i) execute and deliver to the Administrative Agent and the Collateral Agent such amendments or supplements to the relevant Security Documents or such other documents as the Administrative Agent or the Collateral Agent shall deem necessary or advisable to grant to the Collateral Agent, for its benefit and for the benefit of the other Secured Parties, a Lien on such property subject to no Liens other than Permitted Liens, and (ii) take all actions necessary to cause such Lien to be duly perfected to the extent required by such Security Document in accordance with all applicable Requirements of Law, including, without limitation, the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent. Borrowers shall otherwise take such actions and execute and/or deliver to the Collateral Agent such documents as the Administrative Agent or the Collateral Agent shall require to confirm the validity, perfection and priority of the Lien of the Security Documents against such after-acquired properties or assets.

        (b)   With respect to any person that is or becomes a Wholly Owned Subsidiary (other than any Non-Guarantor Subsidiary or any Foreign Subsidiary that is not a direct Subsidiary of a Loan Party) promptly (and in any event within 30 days after such person becomes a Subsidiary) (i) deliver to the Collateral Agent the certificates, if any, representing the Equity Interests of such Subsidiary (provided that with respect to any Foreign Subsidiary of Borrower, in no event shall more than 66% of the Equity Interests of any Foreign Subsidiary be subject to any Lien or pledged under any Security Document), together with undated stock powers or other appropriate instruments of transfer executed and delivered in blank by a duly authorized officer of such Subsidiary's parent, as the case may be, and all intercompany notes owing from such Subsidiary to any Loan Party together with instruments of transfer executed and delivered in blank by a duly authorized officer of such Subsidiary, and (ii) cause such new Subsidiary (other than any Non-Guarantor Subsidiary or any Foreign Subsidiary) (A) to execute a Joinder Agreement or such comparable documentation and a joinder agreement to the Security Agreement, and (B) to take all actions necessary or advisable in the opinion of the Administrative Agent or the Collateral Agent to cause the Lien created by the Security Agreement to be duly perfected to the extent required by such agreement in accordance with all applicable Requirements of Law, including, without limitation, the filing of financing statements in such jurisdictions as may be reasonably requested by the Administrative Agent or the Collateral Agent.

        (c)   If at any time any two or more Wholly Owned Subsidiaries in the aggregate (other than any Foreign Subsidiary of any Borrower that is not a "first-tier" Foreign Subsidiary) not otherwise subject to Section 5.11(b) have assets having either a book value or fair market value in excess of $10,000,000, then the relevant Borrower shall, and shall cause one or more of such Subsidiaries to, comply with Section 5.11(b) within the time frames set forth in such subsection so that no two or more such Subsidiaries hold assets having either a book value or fair market value in excess of $10,000,000.

        (d)   Real Property. Each Loan Party will promptly grant to the Collateral Agent, within 60 days of the acquisition thereof, a security interest in and Mortgage Lien on each owned or leased Real

69

Property of such Loan Party as is acquired by such Loan Party after the Closing Date and that, together with any improvements thereon, individually has a fair market value of at least $2.0 million, as additional security for the Obligations (unless the subject property is already mortgaged to a third party to the extent permitted by Section 6.02), in accordance with the provisions of Sections 4.01(o)(i)-(x) and 4.01(p).

SECTION 5.12.Security Interests; Further Assurances.    Promptly, upon the reasonable request of the Administrative Agent, the Collateral Agent or any Lender, at Borrowers' expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record, or cause to be registered, filed or recorded, in an appropriate governmental office, any document or instrument supplemental to or confirmatory of the Security Documents or otherwise deemed by the Administrative Agent or the Collateral Agent reasonably necessary or desirable for the continued validity, perfection and priority of the Liens on the Collateral covered thereby superior to and prior to the rights of all third persons other than the holders of Existing Liens and subject to no other Liens except as permitted by the applicable Security Document, or obtain any consents, including, without limitation, landlord or similar lien waivers and consents, as may be necessary or appropriate in connection therewith. Deliver or cause to be delivered to the Administrative Agent and the Collateral Agent from time to time such other documentation, consents, authorizations, approvals and orders in form and substance reasonably satisfactory to the Administrative Agent and the Collateral Agent as the Administrative Agent and the Collateral Agent shall reasonably deem necessary to perfect or maintain the Liens on the Collateral pursuant to the Security Documents. Upon the exercise by the Administrative Agent, the Collateral Agent or the Lenders of any power, right, privilege or remedy pursuant to any Loan Document which requires any consent, approval, registration, qualification or authorization of any Governmental Authority execute and deliver all applications, certifications, instruments and other documents and papers that the Administrative Agent, the Collateral Agent or the Lenders may be so required to obtain. If the Administrative Agent, the Collateral Agent or the Required Lenders determine that they are required by law or regulation to have appraisals prepared in respect of the Real Property of any Loan Party constituting Collateral, Borrowers shall provide to the Administrative Agent appraisals that satisfy the applicable requirements of the Real Estate Appraisal Reform Amendments of FIRREA and are otherwise in form and substance satisfactory to the Administrative Agent and the Collateral Agent.

SECTION 5.13.Information Regarding Collateral.    (a) Furnish to the Administrative Agent and the Collateral Agent prompt written notice of any change (i) in any Loan Party's corporate name or in any trade name used to identify it in the conduct of its business or in the ownership of its properties, (ii) in the location of any Loan Party's chief executive office, its principal place of business, any office in which it maintains books or records relating to Collateral owned by it or any office or facility at which Collateral owned by it is located (including the establishment of any such new office or facility), (iii) in any Loan Party's identity or corporate structure, (iv) in any Loan Party's Federal Taxpayer Identification Number or (v) in any Loan Party's jurisdiction of organization. Each Borrower agrees not to effect or permit any change referred to in the preceding sentence unless all filings have been made under the UCC or otherwise that are required in order for the Collateral Agent to continue at all times following such change to have a valid, legal and perfected security interest in all the Collateral. Each Borrower also agrees promptly to notify the Administrative Agent and the Collateral Agent if any material portion of the Collateral is subject to a Casualty Event.

        (b)   Each year, at the time of delivery of annual financial statements with respect to the preceding fiscal year pursuant to clause (a) of Section 5.01, deliver to the Administrative Agent and the Collateral Agent a certificate of a Financial Officer and the chief legal officer of each Borrower and a Perfection Certificate Supplement confirming that there has been no change in such information since the date of the Perfection Certificate delivered on the Closing Date or the date of the most recent certificate delivered pursuant to this Section 5.13(b) and (ii) certifying that all UCC financing statements

70

(including fixture filings, as applicable) or other appropriate filings, recordings or registrations, including all refilings, rerecordings and reregistrations, containing a description of the Collateral have been filed of record in each governmental, municipal or other appropriate office in each jurisdiction identified pursuant to clause (i) above to the extent necessary to protect and perfect the security interests and Liens under the Security Documents for a period of not less than 18 months after the date of such certificate (except as noted therein with respect to any continuation statements to be filed within such period).

SECTION 5.14.Post Closing Matters.    Execute and deliver the documents and complete the tasks set forth on Schedule 5.14, in each case within the time limits specified on such schedule.

SECTION 5.15.Post Closing Equity Matter.    On or prior to October 7, 2003, cause the existing preferred securities held by CSFB Global Energy Partners to be either (i) converted or exchanged into common Equity Interests or (ii) extended in term to a date at least 90 days after the Term B Maturity Date.

ARTICLE VI

NEGATIVE COVENANTS

        Each Loan Party covenants and agrees with each Lender that, so long as this Agreement shall remain in effect (except for provisions which by their terms survive termination, such as indemnification provisions) and until the Commitments have been terminated and the principal of and interest on each Loan, all Fees and all other expenses or amounts payable under any Loan Document have been paid in full and all Letters of Credit have been canceled or have expired or been fully cash collateralized and all amounts drawn thereunder have been reimbursed in full, unless the Required Lenders shall otherwise consent in writing, no Loan Party will, nor will they cause or permit any Subsidiaries to:

SECTION 6.01.Indebtedness.    Incur, create, assume or permit to exist, directly or indirectly, any Indebtedness, except:

        (a)   Indebtedness incurred pursuant to this Agreement and the other Loan Documents;

        (b)   (i) Indebtedness actually outstanding on the Closing Date and listed on Schedule 6.01(b) or (ii) refinancings or renewals thereof; provided that (A) any such refinancing Indebtedness is in an aggregate principal amount not greater than the aggregate principal amount of the Indebtedness being renewed or refinanced, plus the amount of any premiums required to be paid thereon and fees and expenses associated therewith, (B) such refinancing Indebtedness has a later or equal final maturity and longer or equal weighted average life than the Indebtedness being renewed or refinanced and (C) the covenants, events of default subordination and other provisions thereof (including any guarantees thereof) shall be, in the aggregate, no less favorable to the Lenders than those contained in the Indebtedness being renewed or refinanced;

        (c)   Indebtedness of any Company under Interest Rate Agreements entered into in order to fix the effective rate of interest on the Loans in compliance with Section 5.10 and such other non speculative Interest Rate Agreements which may be entered into from time to time by any Company and which such Company in good faith believes will provide protection against fluctuations in interest rates with respect to floating rate Indebtedness then outstanding, and permitted to remain outstanding, pursuant to the other provisions of this Section 6.01;

        (d)   Indebtedness under Hedging Agreements (other than Interest Rate Agreements) entered into from time to time by any Company in accordance with Section 6.04(d);

        (e)   intercompany Indebtedness of the Companies outstanding to the extent permitted by Sections 6.04(e) and (i);

71

        (f)    Indebtedness in respect of Purchase Money Obligations and Capital Lease Obligations and refinancings or renewals thereof, in an aggregate amount not to exceed $30.0 million at any time outstanding;

        (g)   Permitted Subordinated Indebtedness; provided that the proceeds thereof are applied in accordance with Sections 2.10(d) and (h) .

        (h)   Indebtedness in respect of workers' compensation claims, self insurance obligations, performance bonds, surety appeal or similar bonds and completion guarantees provided by a Company in the ordinary course of its business;

        (i)    Contingent Obligations of any Loan Party in respect of Indebtedness otherwise permitted under Section 6.01; and

        (j)    other unsecured Indebtedness of the Companies not to exceed $10.0 million in aggregate principal amount at any time outstanding.

SECTION 6.02.Liens.    Create, incur, assume or permit to exist, directly or indirectly, any Lien on any property now owned or hereafter acquired by it or on any income or revenues or rights in respect of any thereof, except (the "Permitted Liens"):

        (a)   inchoate Liens for taxes, assessments or governmental charges or levies not yet due and payable or delinquent and Liens for taxes, assessments or governmental charges or levies, which (i) are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien, or (ii) in the case of any such charge or claim which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions.

        (b)   Liens in respect of property of any Company imposed by law, which were incurred in the ordinary course of business and do not secure Indebtedness for borrowed money, such as carriers', warehousemen's, materialmen's, landlords', workmen's, suppliers', repairmen's and mechanics' Liens and other similar Liens arising in the ordinary course of business, and (i) which do not in the aggregate materially detract from the value of the property of the Companies, taken as a whole, and do not materially impair the use thereof in the operation of the business of the Companies, taken as a whole, (ii) which are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings (or orders entered in connection with such proceedings) have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien, and (iii) in the case of any such Lien which has or may become a Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions.

        (c)   Liens in existence on the Closing Date and set forth on Schedule 6.02(c); provided that (i) the aggregate principal amount of the Indebtedness, if any, secured by such Liens does not increase; and (ii) such Liens do not encumber any property other than the property subject thereto on the Closing Date;

        (d)   easements, rights of way, restrictions (including zoning restrictions), covenants, encroachments, protrusions and other similar charges or encumbrances, and minor title deficiencies on or with respect to any Real Property, in each case whether now or hereafter in existence, not (i) securing Indebtedness, (ii) individually or in the aggregate materially impairing the value or marketability of such Real Property and (iii) individually or in the aggregate materially interfering with the conduct of the business of the Companies at such Real Property;

72

        (e)   Liens arising out of judgments or awards not resulting in a Default and in respect of which such Company shall in good faith be prosecuting an appeal or proceedings for review in respect of which there shall be secured a subsisting stay of execution pending such appeal or proceedings; provided that the aggregate amount of all such judgments or awards (and any cash and the fair market value of any property subject to such Liens) does not exceed $1.0 million at any time outstanding;

        (f)    Liens (other than any Lien imposed by ERISA) (i) imposed by law or deposits made in connection therewith in the ordinary course of business in connection with workers' compensation, unemployment insurance and other types of social security, (ii) incurred in the ordinary course of business to secure the performance of tenders, statutory obligations (other than excise taxes), surety, stay, customs and appeal bonds, statutory bonds, bids, leases, government contracts, trade contracts, performance and return of money bonds and other similar obligations (exclusive of obligations for the payment of borrowed money) or (iii) arising by virtue of deposits made in the ordinary course of business to secure liability for premiums to insurance carriers; provided that (w) with respect to clauses (i), (ii) and (iii) hereof, such Liens are for amounts not yet due and payable or delinquent or, to the extent such amounts are so due and payable, such amounts are being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, which proceedings for orders entered in connection with such proceedings have the effect of preventing the forfeiture or sale of the property or assets subject to any such Lien, (x) to the extent such Liens are not imposed by law, such Liens shall in no event encumber any property other than cash and Cash Equivalents, (y) in the case of any such Lien against any of the Collateral, such Lien and the contest thereof shall satisfy the Contested Collateral Lien Conditions and (z) the aggregate amount of deposits at any time pursuant to clause (ii) and clause (iii) shall not exceed $500,000 in the aggregate;

        (g)   Leases with respect to the assets or properties of any Company, in each case entered into in the ordinary course of such Company's business so long as such Leases are subordinate in all respects to the Liens granted and evidenced by the Security Documents and do not, individually or in the aggregate, (i) interfere in any material respect with the ordinary conduct of the business of any Company or (ii) materially impair the use (for its intended purposes) or the value of the property subject thereto;

        (h)   Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into by any Company in the ordinary course of business in accordance with the past practices of such Company;

        (i)    Liens arising pursuant to Purchase Money Obligations or Capital Lease Obligations incurred pursuant to Section 6.01(f); provided that (i) the Indebtedness secured by any such Lien (including refinancings thereof) does not exceed 100% of the cost of the property being acquired or leased at the time of the incurrence of such Indebtedness and (ii) any such Liens attach only to the property being financed pursuant to such Purchase Money Obligations or Capital Lease Obligations and do not encumber any other property of any Company;

        (j)    bankers' Liens, rights of setoff and other similar Liens existing solely with respect to cash and Cash Equivalents on deposit in one or more accounts maintained by any Company, in each case granted in the ordinary course of business in favor of the bank or banks with which such accounts are maintained, securing amounts owing to such bank with respect to cash management and operating account arrangements, including those involving pooled accounts and netting arrangements; provided that in no case shall any such Liens secure (either directly or indirectly) the repayment of any Indebtedness;

        (k)   Liens on property of a person existing at the time such person is acquired or merged with or into or consolidated with any Company (and not created in anticipation or contemplation

73

thereof); provided that such Liens do not extend to property not subject to such Liens at the time of acquisition (other than improvements thereon) and are no more favorable to the lienholders than the existing Lien;

        (l)    Liens granted pursuant to the Security Documents;

        (m)  licenses of Intellectual Property granted by any Company in the ordinary course of business and not interfering in any material respect with the ordinary conduct of the business of such Company;

        (n)   other Liens incurred in the ordinary course of business of any Company with respect to obligations (other than Indebtedness) that do not in the aggregate exceed $1.0 million at any time outstanding; and

        (o)   the filing of financing statements solely as a precautionary measure in connection with operating leases or consignment of goods;

provided, however, that no Liens shall be permitted to exist, directly or indirectly, on any Securities Collateral.

SECTION 6.03.Sale and Leaseback Transactions.    Enter into any arrangement, directly or indirectly, with any person whereby it shall sell or transfer any property, real or personal, used or useful in its business, whether now owned or hereafter acquired, and thereafter rent or lease such property or other property which it intends to use for substantially the same purpose or purposes as the property being sold or transferred unless (i) the sale of such property is permitted by Section 6.05 and (ii) any Liens arising in connection with its use of such property are permitted by Section 6.02.

SECTION 6.04.Investment, Loan and Advances.    Directly or indirectly, lend money or credit or make advances to any person, or purchase or acquire any stock, obligations or securities of, or any other interest in, or make any capital contribution to, any other person, or purchase or own a futures contract or otherwise become liable for the purchase or sale of currency or other commodities at a future date in the nature of a futures contract (all of the foregoing, collectively, "Investments"), except that the following shall be permitted:

        (a)   the Companies may consummate the Transactions in accordance with the provisions of the Transaction Documents;

        (b)   Investments outstanding on the Closing Date and identified on Schedule 6.04(b);

        (c)   the Companies may (i) acquire and hold accounts receivables owing to any of them if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary terms, (ii) acquire and hold cash and Cash Equivalents, (iii) endorse negotiable instruments for collection in the ordinary course of business endorse negotiable instruments for collection in the ordinary course of business or (iv) make lease, utility and other similar deposits in the ordinary course of business;

        (d)   Borrowers may enter into Interest Rate Agreements to the extent permitted by Section 6.01(c) and may enter into and perform their obligations under Hedging Agreements entered into in the ordinary course of business and so long as any such Hedging Agreement is not speculative in nature and is (i) related to income derived from foreign operations of any Company or otherwise related to purchases permitted hereunder from foreign suppliers or (ii) entered into to protect such Companies against fluctuations in the prices of raw materials used in their businesses;

        (e)   any Company may make intercompany loans to any Loan Party (other than Holdings except to the extent necessary to fund its franchise taxes and ordinary and reasonable operating expenses incurred in the ordinary course of business and other corporate overhead costs and

74

expenses (including legal and accounting expenses and similar expenses and customary fees to non-officer directors of Holdings) and any Loan Party may make intercompany loans and advances to any other Loan Party (other than Holdings); provided that such loan shall be evidenced by a promissory notes and shall be pledged (and delivered) by such Loan Party that is the lender of such intercompany loan as Collateral pursuant to the Security Agreement, provided further that (i) no Loan Party may make loans to any Foreign Subsidiary or Non Guarantor Subsidiary pursuant to this paragraph (e) and (ii) any loans made by any Foreign Subsidiary or Non Guarantor Subsidiary to any Loan Party pursuant to this paragraph (e) shall be subordinated to the obligations of the Loan Parties pursuant to an intercompany note in substantially the form of Exhibit K;

        (f)    Borrowers and the Subsidiaries may make loans and advances (including payroll, travel and entertainment related advances) in the ordinary course of business to their respective employees (other than any loans or advances to any director or executive officer (or equivalent thereof) that would be in violation of Section 402 of the Sarbanes Oxley Act) so long as the aggregate principal amount thereof at any time outstanding (determined without regard to any write downs or write offs of such loans and advances) shall not exceed $50,000 individually and $250,000 in the aggregate outstanding at one time;

        (g)   Borrowers and the Subsidiaries may sell or transfer amounts to the extent permitted by Section 6.05;

        (h)   Borrowers may establish (i) Wholly Owned Subsidiaries to the extent permitted by Section 6.12 and (ii) non Wholly Owned Subsidiaries and/or joint ventures to the extent that Investments in such non Wholly Owned Subsidiaries and/or joint ventures shall not exceed $10.0 million at any time outstanding, after taking into account amounts returned in cash (including upon disposition);

        (i)    Investments (other than as described in Section 6.04(e)) (i) by any Borrower in any Subsidiary Guarantor, (ii) by any Company in any Borrower or any Subsidiary Guarantor, (iii) by Holdings in any Borrower and (iv) by a Subsidiary Guarantor in another Subsidiary Guarantor;

        (j)    Investments in securities of trade creditors or customers in the ordinary course of business and consistent with such Company's past practices that are received in settlement of bona fide disputes or pursuant to any plan of reorganization or liquidation or similar arrangement upon the bankruptcy or insolvency of such trade creditors or customers;

        (k)   Investments made by any Borrower or any Subsidiary as a result of consideration received in connection with an Asset Sale made in compliance with Section 6.05;

        (l)    each Borrower may make loans to senior management of such Borrower and its Subsidiary Guarantors for purposes of purchasing the capital stock of such Borrower in an aggregate principal amount for all Borrowers not to exceed $1.0 million at any one time outstanding; and

        (m)  scheduled payments of Earn Out Obligations of 1.0 million individually and $5.0 million in any fiscal year of Holdings.

SECTION 6.05.Mergers, Consolidations, Sales of Assets and Acquisitions.    Wind up, liquidate or dissolve its affairs or enter into any transaction of merger or consolidation, or convey, sell, lease or otherwise dispose of (or agree to do any of the foregoing at any future time) all or any part of its property or assets, or purchase or otherwise acquire (in one or a series of related transactions) any part

75

of the property or assets of any person (or agree to do any of the foregoing at any future time), except that:

        (a)   (i) purchases or other acquisitions of inventory, materials, equipment and intangible assets in the ordinary course of business shall be permitted, (ii) subject to Section 2.10(c), Asset Sales of used, worn out, obsolete or surplus property by any Company in the ordinary course of business and the abandonment or other Asset Sale of Intellectual Property that is, in the reasonable judgment of the relevant Borrower, no longer economically practicable to maintain or useful in the conduct of the business of the Companies taken as a whole shall be permitted and (iii) subject to Section 2.10(c), the sale, lease or other disposal of any assets shall be permitted; provided that the aggregate consideration received in respect of all Asset Sales pursuant to this clause (a)(iii) shall not exceed $1,000,000 individually or $5,000,000 in any four consecutive fiscal quarters of Holdings;

        (b)   Investments in connection with any such transaction may be made to the extent permitted by Section 6.04;

        (c)   Borrowers and the Subsidiaries may sell Cash Equivalents in the ordinary course of business;

        (d)   Borrowers and the Subsidiaries may lease (as lessee or lessor) real or personal property and may guaranty such lease, in each case, in the ordinary course of business and in accordance with the applicable Security Documents;

        (e)   the Transactions shall be permitted as contemplated by the Transaction Documents;

        (f)    Borrowers and the Subsidiaries may consummate Permitted Acquisitions;

        (g)   any Loan Party may transfer property or lease to or acquire or lease property from any Loan Party and any Loan Party may be merged into another Loan Party (as long as such Loan Party is the surviving corporation of such merger and remains a direct or indirect Wholly Owned Subsidiary of Holdings) or any other Wholly Owned Subsidiary Guarantor; provided that the Lien on and security interest in such property granted or to be granted in favor of the Collateral Agent under the Security Documents shall be maintained or created in accordance with the provisions of Section 5.11 or Section 5.12, as applicable;

        (h)   any Subsidiary may dissolve, liquidate or wind up its affairs at any time; provided that such dissolution, liquidation or winding up, as applicable, could not reasonably be expected to have a Material Adverse Effect; and

        (i)    Asset Sales by any Company to any other Company shall be permitted; provided that such Asset Sale involving a Subsidiary that it is not a Loan Party be made in compliance with Section 6.05.

To the extent the Required Lenders waive the provisions of this Section 6.05 with respect to the sale of any Collateral, or any Collateral is sold as permitted by this Section 6.05, such Collateral (unless sold to a Company) shall be sold free and clear of the Liens created by the Security Documents, and the Agents shall take all actions deemed appropriate in order to effect the foregoing.

SECTION 6.06.Dividends.    Authorize, declare or pay, directly or indirectly, any Dividends with respect to any Company, except that:

        (a)   any Subsidiary of any Borrower (i) may pay cash Dividends to any Borrower or any Wholly Owned Subsidiary of any Borrower and (ii) if such Subsidiary is not a Wholly Owned Subsidiary of any Borrower, may pay cash Dividends to its shareholders generally so long as such Borrower or its Subsidiary which owns the equity interest or interests in the Subsidiary paying such Dividends receives at least its proportionate share thereof (based upon its relative holdings of

76

equity interests in the Subsidiary paying such Dividends and taking into account the relative preferences, if any, of the various classes of equity interests in such Subsidiary);

        (b)   so long as no Default exists or would result therefrom, a Borrower may pay Dividends to Holdings for the purpose of enabling Holdings to, and Holdings may, repurchase outstanding shares of its common stock (or options to purchase such common stock) following the death, disability, retirement or termination of employment of employees, officers or directors of any Company upon the exercise by any such person of any "put" right in respect of any such capital stock or options; provided that the aggregate amount of Dividends paid by Holdings pursuant to this paragraph (b) shall not exceed $2.0 million in any fiscal year of Holdings;

        (c)   Borrowers may pay cash Dividends to Holdings for the purpose of paying, so long as all proceeds thereof are promptly used by Holdings to pay, its franchise taxes and ordinary and reasonable operating expenses incurred in the ordinary course of business and other corporate overhead costs and expenses (including legal and accounting expenses and similar expenses and customary fees to non officer directors of Holdings); and

        (d)   Borrowers may pay cash Dividends to Holdings for the purpose of paying, so long as all proceeds thereof are promptly used by Holdings to pay, its income tax when and as due.

SECTION 6.07.Transactions with Affiliates.    Enter into, directly or indirectly, any transaction or series of related transactions, whether or not in the ordinary course of business, with any Affiliate of any Company (other than between or among Borrowers and the Subsidiary Guarantors), other than in the ordinary course of business and on terms and conditions substantially as favorable to such Company as would reasonably be obtained by such Company at that time in a comparable arm's length transaction with a person other than an Affiliate, except that:

        (a)   Dividends may be paid to the extent provided in Section 6.06;

        (b)   loans may be made and other transactions may be entered into between and among any Company and its Affiliates to the extent permitted by Sections 6.01 and 6.04;

        (c)   customary fees may be paid to non officer directors of Holdings and customary indemnities may be provided to all directors of Holdings;

        (d)   Borrowers may pay management fees to Holdings from time to time in an amount not in excess of Holdings' compensation expenses for its employees;

        (e)   Borrowers or any Subsidiary may make payments to Holdings pursuant to a Tax Sharing Agreement in an amount not in excess of the federal and state (in such states that permit consolidated or combined tax returns) income tax liability that Borrowers and the Subsidiaries would have been liable for if any of the Companies had filed their taxes on a stand alone basis; provided that such payments shall be made by Holdings no earlier than five days prior to the date on which Holdings is required to make its payments to the Internal Revenue Service, as applicable; and

        (f)    the Transactions may be effected.

77

SECTION 6.08.Financial Covenants.    

        (a)    Maximum Leverage Ratio.    Permit the Leverage Ratio, as of the last day of any Test Period ending during any period set forth in the table below, to exceed the ratio set forth opposite such period in the table below:

	Leverage Ratio
Closing Date - December 31, 2003	3.60 to 1.00
January 1, 2004 - March 31, 2004	3.60 to 1.00
April 1, 2004 - June 30, 2004	3.60 to 1.00
July 1, 2004 - September 30, 2004	3.60 to 1.00
October 1, 2004 - December 31, 2004	3.25 to 1.00
January 1, 2005 - March 31, 2005	3.25 to 1.00
April 1, 2005 - June 30, 2005	3.25 to 1.00
July 1, 2005 - September 30, 2005	3.25 to 1.00
October 1, 2005 - December 31, 2005	3.00 to 1.00
January 1, 2006 and thereafter	3.00 to 1.00

        (b)    Minimum Interest Coverage Ratio.    Permit the Consolidated Interest Coverage Ratio for any Test Period to be less than 3.00 to 1.0.

        (c)    Minimum Fixed Charge Coverage Ratio.    Permit the Consolidated Fixed Charge Coverage Ratio for any Test Period to be less than 1.15 to 1.0.

SECTION 6.09.Limitation on Modifications or Prepayment of Indebtedness; Modifications of Certificate of Incorporation, or Other Constitutive Documents, By laws and Certain Other Agreements, etc.    (i) Optionally prepay, retire, redeem, purchase, defease or exchange, or make or arrange for any mandatory prepayment, retirement, redemption, purchase or defeasance of, any outstanding Indebtedness (other than (1) any refinancing of Indebtedness permitted by this Agreement, (2) the Obligations and (3) the conversion or exchange of Indebtedness for or into Equity Interest); (ii) amend or modify, or permit the amendment or modification of, any provision of existing Indebtedness or of any agreement (including any purchase agreement, indenture, loan agreement or security agreement) relating thereto other than any amendments or modifications to Indebtedness which do not in any way materially adversely affect the interests of the Lenders and are otherwise permitted under Section 6.01(b); (iii) make (or give any notice in respect thereof) any voluntary or optional payment or prepayment on or redemption or acquisition for value of, or any prepayment or redemption as a result of any asset sale, change of control or similar event of, any indebtedness outstanding under any document or agreement relating to any Permitted Subordinated Indebtedness; (iv) amend or modify, or permit the amendment or modification of, any provision of any document or agreement relating to any Permitted Subordinated Indebtedness other than amendments or modifications which do not in any way materially adversely affect the interests of the Lenders; (v) amend or modify, or permit the amendment or modification of, any other Transaction Document, in each case except for amendments or modifications which are not in any way adverse in any material respect to the interests of the Lenders; or (vi) amend, modify or change its articles of incorporation or other constitutive documents (including by the filing or modification of any certificate of designation) or by laws, or any agreement entered into by it, with respect to its capital stock (including the Shareholders' Agreement, any other shareholders' agreement, limited liability company operating agreement or limited partnership agreement), or enter into any new agreement with respect to its capital stock, other than any amendments, modifications, agreements or changes pursuant to this clause (vi) or any such new agreements pursuant to this clause (vi) which do not in any way materially adversely affect in any material respect the interests of the Lenders; and provided that Holdings may issue such capital stock as is not prohibited by Section 6.11 or any other provision of this Agreement and may amend articles of incorporation or other constitutive documents to authorize any such capital stock.

78

SECTION 6.10.Limitation on Certain Restrictions on Subsidiaries.    Directly or indirectly, create or otherwise cause or suffer to exist or become effective any encumbrance or restriction on the ability of any Subsidiary to (a) pay dividends or make any other distributions on its Equity Interests owned by any Borrower or any Subsidiary of such Borrower, or pay any Indebtedness owed to any Borrower or a Subsidiary of such Borrower, (b) make loans or advances to any Borrower or any of such Borrower's Subsidiaries or (c) transfer any of its properties to any Borrower or any of such Borrower's Subsidiaries, except for such encumbrances or restrictions existing under or by reason of (i) applicable law; (ii) this Agreement and the other Loan Documents; (iii) any document or agreement relating to Permitted Subordinated Indebtedness; (iv) customary provisions restricting subletting or assignment of any lease governing a leasehold interest of any Borrower or a Subsidiary of such Borrower; (v) customary provisions restricting assignment of any agreement entered into by any Borrower or a Subsidiary of such Borrower in the ordinary course of business; (vi) any holder of a Lien permitted by Section 6.02 may restrict the transfer of the asset or assets subject thereto; (vii) restrictions which are not more restrictive than those contained in this Agreement contained in any documents governing any Indebtedness incurred after the Closing Date in accordance with the provisions of this Agreement; (viii) customary restrictions and conditions contained in any agreement relating to the sale of any property permitted under Section 6.05 pending the consummation of such sale; (ix) any agreement in effect at the time such Subsidiary becomes a Subsidiary of a Borrower, so long as such agreement was not entered into in contemplation of such person becoming a Subsidiary of such Borrower; or (x) in the case of any joint venture which is not a Loan Party in respect of any matters referred to in clauses (b) and (c) above, restrictions in such person's organizational or governing documents or pursuant to any joint venture agreement or stockholders agreements solely to the extent of the Equity Interests of or assets held in the subject joint venture or other entity.

SECTION 6.11.Limitation on Issuance of Capital Stock.    (a) With respect to Holdings, issue any Equity Interest that is not Qualified Capital Stock.

        (b)   Borrowers will not, and will not permit any Subsidiary to, issue any Equity Interest (including by way of sales of treasury stock) or any options or warrants to purchase, or securities convertible into, Equity Interest, except (i) for stock splits, stock dividends and additional Equity Interests issuances which do not decrease the percentage ownership of a Borrower or any Subsidiaries in any class of the Equity Interest of such Subsidiary; (ii) Subsidiaries of Borrower formed after the Closing Date pursuant to Section 6.12 may issue Equity Interests to a Borrower or the Subsidiary of such Borrower which is to own such stock; and (iii) Borrowers may issue common stock that is Qualified Capital Stock to Holdings. All Equity Interests issued in accordance with this Section 6.11(b) shall, to the extent required by Section 5.12 or the Security Agreement, be delivered to the Collateral Agent for pledge pursuant to the Security Agreement.

SECTION 6.12.Limitation on Creation of Subsidiaries.    Establish, create or acquire any additional Subsidiaries without the prior written consent of the Required Lenders; provided that any Borrower may establish, create or acquire one or more Wholly Owned Subsidiaries of such Borrower or one of its Wholly Owned Subsidiaries without such consent so long as (a) 100% of the Equity Interest of any new Subsidiary is upon the creation or establishment of any such new Subsidiary pledged and delivered to the Collateral Agent for the benefit of the Secured Parties under the Security Agreement, (other than non-Wholly Owned Subsidiaries acquired in connection with a Permitted Acquisition or pursuant to Investments pursuant to Section 6.04(h)); (b) upon the creation or establishment of any such new Wholly Owned Subsidiary, such Subsidiary becomes a party to the applicable Security Documents and shall become a Subsidiary Guarantor hereunder and execute a Joinder Agreement and the other Loan Documents all in accordance with Section 5.11(a) above and (c) such new Subsidiary is a Domestic Subsidiary.

79

SECTION 6.13.Business.    (a) With respect to Holdings, engage in any business activities or have any assets or liabilities, other than (i) its ownership of the Equity Interests of Borrowers, (ii) obligations under the Loan Documents and (iii) activities and assets incidental to the foregoing clauses (i) and (ii).

        (b)   With respect to Borrowers and their Subsidiaries, engage (directly or indirectly) in any business other than those businesses in which Borrowers and their Subsidiaries are engaged on the Closing Date (or which are substantially related thereto or are reasonable extensions thereof).

SECTION 6.14.Limitation on Accounting Changes.    Make or permit, any change in accounting policies or reporting practices, without the consent of the Required Lenders, which consent shall not be unreasonably withheld, except changes that, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect or are required by GAAP.

SECTION 6.15.Fiscal Year.    Change its fiscal year end to a date other than December 31.

SECTION 6.16.Lease Obligations.    Create, incur, assume or suffer to exist any obligations as lessee for the rental or hire of real or personal property of any kind under leases or agreements to lease having an original term of one year or more that would cause the direct and contingent liabilities of the Borrowers and their Subsidiaries, on a consolidated basis, in respect of all such obligations to exceed $2.0 million payable in any period of 12 consecutive months.

SECTION 6.17.Limitation on Further Negative Pledges.    Except with respect to prohibitions against other encumbrances on specific property encumbered to secured payment of particular Indebtedness permitted hereunder or prohibitions in license agreements under which Holdings or any of its Subsidiaries is the licensee, enter into any agreement to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except pursuant to (a) the Loan Documents, (b) any other agreement that does not restrict in any manner (directly or indirectly) Liens created pursuant to the Loan Documents on property or assets of Holdings or any of its Subsidiaries (whether now owned or hereafter acquired) securing the Loans or any Interest Rate Agreement and does not require the direct or indirect granting of any Lien securing any Indebtedness or other obligation by virtue of the granting of Liens on or pledge of property of Holdings of any of its Subsidiaries to secure the Loans or any Interest Rate Agreement and (c) any industrial revenue or development bonds, acquisition agreement or operating leases of real property and equipment entered into in the ordinary course of business. Notwithstanding any of the foregoing, Indebtedness incurred by a Non Guarantor Subsidiary may contain a provision that no Lien on the assets of such Non Guarantor Subsidiary may exist unless such Indebtedness is equally and ratably secured with any other Indebtedness secured by such assets.

SECTION 6.18.Limitation on Activities of Holdings.    Notwithstanding anything to the contrary set forth herein, Holdings shall not conduct any business or hold or acquire any assets (other than the Equity Interests of Borrowers and cash sufficient to pay amounts owing under its Indebtedness permitted to be incurred hereunder and to pay its ordinary course operating expenses) and shall have no operations other than holding such Equity Interests.

ARTICLE VII

GUARANTEE

SECTION 7.01.The Guarantee.    The Guarantors hereby jointly and severally guarantee as a primary obligor and not as a surety to each Secured Party and their respective successors and assigns the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the principal of and interest (including any interest, fees, costs or charges that would accrue but for the provisions of the Title 11 of the United States Code after any bankruptcy or insolvency petition under Title 11 of the United States Code) on the Loans made by the Lenders to, and the Notes held by each

80

Lender of, Borrowers, and all other Obligations from time to time owing to the Secured Parties by any Loan Party under any Loan Document or Interest Rate Agreement relating to the Loans, in each case strictly in accordance with the terms thereof (such obligations being herein collectively called the "Guaranteed Obligations"). The Guarantors hereby jointly and severally agree that if Borrowers or other Guarantor(s) shall fail to pay in full when due (whether at stated maturity, by acceleration or otherwise) any of the Guaranteed Obligations, the Guarantors will promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at extended maturity, by acceleration or otherwise) in accordance with the terms of such extension or renewal.

SECTION 7.02.Obligations Unconditional.    The obligations of the Guarantors under Section 7.01 shall constitute a guaranty of payment and are absolute, irrevocable and unconditional, joint and several, irrespective of the value, genuineness, validity, regularity or enforceability of the Guaranteed Obligations of Borrowers under this Agreement, the Notes, if any, or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of or security for any of the Guaranteed Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor (except for payment in full). Without limiting the generality of the foregoing, it is agreed that the occurrence of any one or more of the following shall not alter or impair the liability of the Guarantors hereunder which shall remain absolute, irrevocable and unconditional under any and all circumstances as described above:

        (i)    at any time or from time to time, without notice to the Guarantors, the time for any performance of or compliance with any of the Guaranteed Obligations shall be extended, or such performance or compliance shall be waived;

        (ii)   any of the acts mentioned in any of the provisions of this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein shall be done or omitted;

        (iii)  the maturity of any of the Guaranteed Obligations shall be accelerated, or any of the Guaranteed Obligations shall be amended in any respect, or any right under the Loan Documents or any other agreement or instrument referred to herein or therein shall be amended or waived in any respect or any other guarantee of any of the Guaranteed Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

        (iv)  any lien or security interest granted to, or in favor of, Issuing Bank or any Lender or Agent as security for any of the Guaranteed Obligations shall fail to be perfected; or

        (v)   the release of any other Guarantor.

        The Guarantors hereby expressly waive diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that any Loan Party thereof exhaust any right, power or remedy or proceed against Borrowers under this Agreement or the Notes, if any, or any other agreement or instrument referred to herein or therein, or against any other person under any other guarantee of, or security for, any of the Guaranteed Obligations. The Guarantors waive any and all notice of the creation, renewal, extension, waiver, termination or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by any Secured Party upon this Guarantee or acceptance of this Guarantee, and the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred in reliance upon this Guarantee, and all dealings between Borrowers and the Secured Parties shall likewise be conclusively presumed to have been had or consummated in reliance upon this Guarantee. This Guarantee shall be construed as a continuing, absolute, irrevocable and unconditional guarantee of payment without regard to any right of offset with respect to the Guaranteed Obligations at any time or from time to time held by Secured Parties, and

81

the obligations and liabilities of the Guarantors hereunder shall not be conditioned or contingent upon the pursuit by the Secured Parties or any other person at any time of any right or remedy against Borrowers or against any other person which may be or become liable in respect of all or any part of the Guaranteed Obligations or against any collateral security or guarantee therefor or right of offset with respect thereto. This Guarantee shall remain in full force and effect and be binding in accordance with and to the extent of its terms upon the Guarantors and the successors and assigns thereof, and shall inure to the benefit of the Lenders, and their respective successors and assigns, notwithstanding that from time to time during the term of this Agreement there may be no Guaranteed Obligations outstanding.

SECTION 7.03.Reinstatement.    The obligations of the Guarantors under this Article VII shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of Borrowers or other Loan Party in respect of the Guaranteed Obligations is rescinded or must be otherwise restored by any holder of any of the Guaranteed Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise. The Guarantors jointly and severally agree that they will indemnify each Secured Party on demand for all reasonable costs and expenses (including reasonable fees of counsel) incurred by such Secured Party in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or similar law, other than any costs or expenses resulting from the bad faith or willful misconduct of such Secured Party.

SECTION 7.04.Subrogation; Subordination.    Each Guarantor hereby agrees that until the indefeasible payment and satisfaction in full in cash of all Guaranteed Obligations and the expiration and termination of the Commitments of the Lenders under this Agreement it shall not exercise any right or remedy arising by reason of any performance by it of its guarantee in Section 7.01, whether by subrogation or otherwise, against Borrowers or any other Guarantor of any of the Guaranteed Obligations or any security for any of the Guaranteed Obligations. The payment of any amounts due with respect to any Indebtedness of Borrowers or any other Guarantor now or hereafter owing to any Guarantor or Borrowers by reason of any payment by such Guarantor under the Guarantee in this Article VII is hereby subordinated to the prior indefeasible payment in full in cash of the Guaranteed Obligations. In addition, any Indebtedness of the Guarantors now or hereafter held by any Guarantor is hereby subordinated in right of payment in full in cash to the Guaranteed Obligations. Each Guarantor agrees that it will not demand, sue for or otherwise attempt to collect any such Indebtedness of Borrowers to such Guarantor until the Obligations shall have been indefeasibly paid in full in cash. If, notwithstanding the foregoing sentence, any Guarantor shall prior to the indefeasible payment in full in cash of the Guaranteed Obligations collect, enforce or receive any amounts in respect of such Indebtedness, such amounts shall be collected, enforced and received by such Guarantor as trustee for the Secured Parties and be paid over to Administrative Agent on account of the Guaranteed Obligations without affecting in any manner the liability of such Guarantor under the other provisions of the guaranty contained herein.

SECTION 7.05.Remedies.    The Guarantors jointly and severally agree that, as between the Guarantors and the Lenders, the obligations of Borrowers under this Agreement and the Notes, if any, may be declared to be forthwith due and payable as provided in Article VIII (and shall be deemed to have become automatically due and payable in the circumstances provided in said Article VIII) for purposes of Section 7.01, notwithstanding any stay, injunction or other prohibition preventing such declaration (or such obligations from becoming automatically due and payable) as against Borrowers and that, in the event of such declaration (or such obligations being deemed to have become automatically due and payable), such obligations (whether or not due and payable by Borrowers) shall forthwith become due and payable by the Guarantors for purposes of Section 7.01.

82

SECTION 7.06.Instrument for the Payment of Money.    Each Guarantor hereby acknowledges that the guarantee in this Article VII constitutes an instrument for the payment of money, and consents and agrees that any Lender or Agent, at its sole option, in the event of a dispute by such Guarantor in the payment of any moneys due hereunder, shall have the right to bring a motion action under New York CPLR Section 3213.

SECTION 7.07.Continuing Guarantee.    The guarantee in this Article VII is a continuing guarantee of payment, and shall apply to all Guaranteed Obligations whenever arising.

SECTION 7.08.General Limitation on Guarantee Obligations.    In any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of any Guarantor under Section 7.01 would otherwise be held or determined to be void, voidable, invalid or unenforceable, or subordinated to the claims of any other creditors, on account of the amount of its liability under Section 7.01, then, notwithstanding any other provision to the contrary, the amount of such liability shall, without any further action by such Guarantor, any Loan Party or any other person, be automatically limited and reduced to the highest amount that is valid and enforceable and not subordinated to the claims of other creditors as determined in such action or proceeding.

ARTICLE VIII

EVENTS OF DEFAULT

SECTION 8.01.Events of Default.    In case of the happening of any of the following events ("Events of Default"):

        (a)   default shall be made in the payment of any principal of any Loan or any Reimbursement Obligation when and as the same shall become due and payable, whether at the due date thereof (including a Term B Loan Repayment Date) or at a date fixed for prepayment thereof or by acceleration thereof or otherwise;

        (b)   default shall be made in the payment of any interest on any Loan or any Fee or any other amount (other than an amount referred to in (a) above) due under any Loan Document, when and as the same shall become due and payable, and such default shall continue unremedied for a period of 10 Business Days;

        (c)   any representation or warranty made or deemed made in or in connection with any Loan Document or the borrowings or issuances of Letters of Credit hereunder, or any representation, warranty, statement or information contained in any report, certificate, financial statement or other instrument furnished in connection with or pursuant to any Loan Document, shall prove to have been false or misleading in any material respect when so made, deemed made or furnished;

        (d)   default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in Section 5.02, 5.03 or 5.08 or in Article VI;

        (e)   default shall be made in the due observance or performance by any Company of any covenant, condition or agreement contained in any Loan Document (other than those specified in (a), (b) or (d) above) and such default shall continue unremedied or shall not be waived for a period of 30 days after written notice thereof from the Administrative Agent or any Lender to Borrower Agent;

        (f)    any Company shall (i) fail to pay any principal or interest, regardless of amount, due in respect of any Indebtedness (other than the Obligations), when and as the same shall become due and payable, or (ii) fail to observe or perform (after applicable grace periods, if any) any other term, covenant, condition or agreement contained in any agreement or instrument evidencing or

83

governing any such Indebtedness if the effect of any failure referred to in this clause (ii) is to cause, or to permit the holder or holders of such Indebtedness or a trustee on its or their behalf (with or without the giving of notice, the lapse of time or both) to cause, such Indebtedness to become due prior to its stated maturity; provided that it shall not constitute an Event of Default pursuant to this paragraph (f) unless the aggregate amount of all such Indebtedness referred to in clauses (i) and (ii) exceeds $1.0 million at any one time;

        (g)   an involuntary proceeding shall be commenced or an involuntary petition shall be filed in a court of competent jurisdiction seeking (i) relief in respect of any Company, or of a substantial part of the property or assets of any Company, under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Company or for a substantial part of the property or assets of any Company; or (iii) the winding up or liquidation of any Company; and such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

        (h)   any Company shall (i) voluntarily commence any proceeding or file any petition seeking relief under Title 11 of the United States Code, as now constituted or hereafter amended, or any other federal, state or foreign bankruptcy, insolvency, receivership or similar law; (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or the filing of any petition described in (g) above; (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for any Company or for a substantial part of the property or assets of any Company; (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding; (v) make a general assignment for the benefit of creditors; (vi) become unable, admit in writing its inability or fail generally to pay its debts as they become due; (vii) take any action for the purpose of effecting any of the foregoing; or (viii) wind up or liquidate;

        (i)    one or more judgments for the payment of money in an aggregate amount in excess of $1.0 million shall be rendered against any Company or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to levy upon assets or properties of any Company to enforce any such judgment;

        (j)    an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other such ERISA Events, could reasonably be expected to result in liability of any Company and its ERISA Affiliates in a Material Adverse Effect or the imposition of a Lien on any assets of a Company;

        (k)   any security interest and Lien purported to be created by any Security Document shall cease to be in full force and effect, or shall cease to give the Collateral Agent, for the benefit of the Secured Parties, the Liens, rights, powers and privileges purported to be created and granted under such Security Documents (including a perfected first priority security interest in and Lien on, all of the Collateral thereunder (except as otherwise expressly provided in such Security Document)) in favor of the Collateral Agent, or shall be asserted by Borrowers or any other Loan Party not to be, a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Document) security interest in or Lien on the Collateral covered thereby unless such occurrence results solely from action of the Collateral Agent or any Lender and involves no Default by the Borrowers or any Guarantor hereunder or under any Security Document;

        (l)    the Guarantees shall cease to be in full force effect;

84

        (m)  any Loan Document or any material provisions thereof shall at any time and for any reason be declared by a court of competent jurisdiction to be null and void, or a proceeding shall be commenced by any Loan Party or any other person, or by any Governmental Authority, seeking to establish the invalidity or unenforceability thereof (exclusive of questions of interpretation of any provision thereof), or any Loan Party shall repudiate or deny that it has any liability or obligation for the payment of principal or interest or other obligations purported to be created under any Loan Document;

        (n)   there shall have occurred a Change in Control;

        (o)   any Loan Party shall be prohibited or otherwise restrained from conducting the business theretofore conducted by it in any manner that has or could reasonably be expected to result in a Material Adverse Effect by virtue of any determination, ruling, decision, decree or order of any court or Governmental Authority of competent jurisdiction; or

        (p)   the Acquisitions shall not have occurred on the Closing Date in accordance with the terms and conditions of the Acquisition Agreements;

then, and in every such event (other than an event with respect to Holdings or Borrowers described in paragraph (g) or (h) above), and at any time thereafter during the continuance of such event, the Administrative Agent may, and at the request of the Required Lenders shall, by notice to Borrower Agent, take either or both of the following actions, at the same or different times: (i) terminate forthwith the Commitments and (ii) declare the Loans and Reimbursement Obligations then outstanding to be forthwith due and payable in whole or in part, whereupon the principal of the Loans and Reimbursement Obligations so declared to be due and payable, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of Borrowers accrued hereunder and under any other Loan Document, shall become forthwith due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by Borrowers and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding; and in any event with respect to Holdings or Borrowers described in paragraph (g) or (h) above, the Commitments shall automatically terminate and the principal of the Loans then outstanding, together with accrued interest thereon and any unpaid accrued Fees and all other liabilities of Borrowers accrued hereunder and under any other Loan Document, shall automatically become due and payable, without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived by Borrowers and the Guarantors, anything contained herein or in any other Loan Document to the contrary notwithstanding.

ARTICLE IX

COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS

SECTION 9.01.Collateral Account.    (a) The Collateral Agent is hereby authorized to establish and maintain at its office at 677 Washington Boulevard, Stamford, Connecticut 06901, in the name of the Collateral Agent and pursuant to a Control Agreement, a restricted deposit account designated "Basic Energy Services Collateral Account". Each Loan Party shall deposit into the Collateral Account from time to time (i) the cash proceeds of any of the Collateral (including pursuant to any disposition thereof) to the extent contemplated herein or in any other Loan Document, (ii) the cash proceeds of any Casualty Event with respect to Collateral, to the extent contemplated herein or in any other Loan Document, and (iii) any cash such Loan Party is required to pledge as additional collateral security hereunder pursuant to the Loan Documents.

        (b)   The balance from time to time in the Collateral Account shall constitute part of the Collateral and shall not constitute payment of the Obligations until applied as hereinafter provided. So long as no Event of Default has occurred and is continuing or will result therefrom, the Collateral Agent shall

85

within two Business Days of receiving a request of the applicable Loan Party for release of cash proceeds (i) from the Collateral Account constituting Net Cash Proceeds relating to any Casualty Event or Asset Sale remit such cash proceeds on deposit in the Collateral Account to or upon the order of such Loan Party, so long as such Loan Party has satisfied the conditions relating thereto set forth in Section 9.02 and (ii) with respect to the LC Sub Account, remit such Net Cash Proceeds on deposit in the LC Sub Account to or upon the order of such Loan Party at such time as all Letters of Credit shall have been terminated and all of the liabilities in respect of the Letters of Credit have been paid in full. At any time following the occurrence and during the continuance of an Event of Default, the Collateral Agent may (and, if instructed by the Required Lenders as specified herein, shall) in its (or their) discretion apply or cause to be applied (subject to collection) the balance from time to time outstanding to the credit of the Collateral Account to the payment of the Obligations in the manner specified in Section 9.03 hereof subject, however, in the case of amounts deposited in the LC Sub Account, to the provisions of Sections 2.18(i) and 9.03. The Loan Parties shall have no right to withdraw, transfer or otherwise receive any funds deposited in the Collateral Account except to the extent specifically provided herein.

        (c)   Amounts on deposit in the Collateral Account shall be invested from time to time in Cash Equivalents as the applicable Loan Party (or, after the occurrence and during the continuance of an Event of Default, the Collateral Agent) shall determine, which Cash Equivalents shall be held in the name and be under the control of the Collateral Agent (or any sub agent); provided that at any time after the occurrence and during the continuance of an Event of Default, the Collateral Agent may (and, if instructed by the Required Lenders as specified herein, shall) in its (or their) discretion at any time and from time to time elect to liquidate any such Cash Equivalents and to apply or cause to be applied the proceeds thereof to the payment of the Obligations in the manner specified in Section 9.03 hereof.

        (d)   Amounts deposited into the Collateral Account as cover for liabilities in respect of Letters of Credit under any provision of this Agreement requiring such cover shall be held by the Administrative Agent in a separate sub account designated as the "LC Sub Account" (the "LC Sub Account") and, notwithstanding any other provision hereof to the contrary, all amounts held in the LC Sub Account shall constitute collateral security first for the liabilities in respect of Letters of Credit outstanding from time to time and second for the other Obligations hereunder until such time as all Letters of Credit shall have been terminated and all of the liabilities in respect of Letters of Credit have been paid in full.

SECTION 9.02.Proceeds of Destruction, Taking and Collateral Dispositions.    So long as no Event of Default shall have occurred and be continuing, in the event the applicable Loan Party elects to reinvest Net Cash Proceeds in respect of any Asset Sale or Casualty Event in accordance with the provisions of Sections 2.10(c) and 2.10(f) as applicable, the Collateral Agent shall receive at least 10 days' prior notice of each request for payment and shall not release any part of such Net Cash Proceeds, until the applicable Loan Party has furnished to the Collateral Agent (i) an Officers' Certificate setting forth: (A) a brief description of the reinvestment to be made, (B) the dollar amount of the expenditures to be made, or costs incurred by such Loan Party in connection with such reinvestment and (C) evidence that the properties or assets acquired in connection with such reinvestment have a fair market value at least equal to the amount of such Net Cash Proceeds requested to be released from the Collateral Account and (ii) all security agreements and Mortgages and other items required by the provisions of Sections 5.11 and 5.12 to, among other things, subject such reinvestment properties or assets to the Lien of the Security Documents in favor of the Collateral Agent, for its benefit and for the benefit of the other Secured Parties.

SECTION 9.03.Application of Proceeds.    The proceeds received by the Collateral Agent in respect of any sale of, collection from or other realization upon all or any part of the Collateral pursuant to the exercise by the Collateral Agent of its remedies shall be applied, together with any

86

other sums then held by the Collateral Agent pursuant to this Agreement, promptly by the Collateral Agent as follows:

        (a)   First, to the payment of all reasonable costs and expenses, fees, commissions and taxes of such sale, collection or other realization including, without limitation, compensation to the Collateral Agent and its agents and counsel, and all expenses, liabilities and advances made or incurred by the Collateral Agent in connection therewith, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;

        (b)   Second, to the payment of all other reasonable costs and expenses of such sale, collection or other realization including, without limitation, compensation to the other Secured Parties and their agents and counsel and all costs, liabilities and advances made or incurred by the other Secured Parties in connection therewith, together with interest on each such amount at the highest rate then in effect under this Agreement from and after the date such amount is due, owing or unpaid until paid in full;

        (c)   Third, without duplication of amounts applied pursuant to clauses (a) and (b) above, to the indefeasible payment in full in cash, pro rata, of (i) interest, principal and other amounts constituting Obligations (other than the obligations arising under the Hedging Agreements and the principal amount of Reimbursement Obligations) in each case equally and ratably in accordance with the respective amounts thereof then due and owing and (ii) the obligations arising under the Hedging Agreements in accordance with the terms of the Hedging Agreements;

        (d)   Fourth, to the indefeasible payment in full in cash, pro rata, of the principal amount of Reimbursement Obligations; and

        (e)   Fifth, the balance, if any, to the person lawfully entitled thereto (including the applicable Loan Party or its successors or assigns).

        In the event that any such proceeds are insufficient to pay in full the items described in clauses (a) through (e) of this Section 9.03, the Loan Parties shall remain jointly and severally liable for any deficiency.

ARTICLE X

THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT

SECTION 10.01.Appointment.    Each Lender hereby irrevocably designates and appoints each of the Administrative Agent and the Collateral Agent as an agent of such Lender under this Agreement and the other Loan Documents. Each Lender irrevocably authorizes each Agent, in such capacity, through its agents or employees, to take such actions on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to such Agent by the terms of this Agreement and the other Loan Documents, together with such actions and powers as are reasonably incidental thereto.

SECTION 10.02.Agent in Its Individual Capacity.    Each person serving as an Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not an Agent, and such person and its Affiliates may accept deposits from, lend money to and generally engage in any kind of business with Borrowers or any Subsidiary or other Affiliate thereof as if it were not an Agent hereunder.

SECTION 10.03.Exculpatory Provisions.    No Agent shall have any duties or obligations except those expressly set forth in the Loan Documents. Without limiting the generality of the foregoing, (a) no Agent shall be subject to any fiduciary or other implied duties, regardless of whether a Default

87

has occurred and is continuing, (b) no Agent shall have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated by the Loan Documents that such Agent is required to exercise in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 11.02), and (c) except as expressly set forth in the Loan Documents, no Agent shall have any duty to disclose or shall be liable for the failure to disclose, any information relating to Borrowers or any of its Subsidiaries that is communicated to or obtained by the bank serving as such Agent or any of its Affiliates in any capacity. No Agent shall be liable for any action taken or not taken by it with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary under the circumstances as provided in Section 11.02) or in the absence of its own gross negligence or willful misconduct. No Agent shall be deemed to have knowledge of any Default unless and until written notice thereof is given to such Agent by Borrower Agent or a Lender, and no Agent shall be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with any Loan Document, (ii) the contents of any certificate, report or other document delivered thereunder or in connection therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth in any Loan Document, (iv) the validity, enforceability, effectiveness or genuineness of any Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Article IV or elsewhere in any Loan Document.

SECTION 10.04.Reliance by Agent.    Each Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing believed by it to be genuine and to have been signed or sent by a proper person. Each Agent also may rely upon any statement made to it orally or by telephone and believed by it to be made by a proper person, and shall not incur any liability for relying thereon. Each Agent may consult with legal counsel (who may be counsel for Borrowers), independent accountants and other advisors selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or advisors.

SECTION 10.05.Delegation of Duties.    Each Agent may perform any and all its duties and exercise its rights and powers by or through any one or more sub agents appointed by such Agent. Each Agent and any such sub agent may perform any and all its duties and exercise its rights and powers through their respective Affiliates. The exculpatory provisions of the preceding paragraphs shall apply to any such sub agent and to the Affiliates of each Agent and any such sub agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Agent.

SECTION 10.06.Successor Agent.    Each Agent may resign as such at any time upon at least 30 days' prior notice to the Lenders, the Issuing Bank and Borrower Agent. Upon any such resignation, the Required Lenders shall have the right, in consultation with Borrower Agent, to appoint a successor Agent from among the Lenders. If no successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days after the retiring Agent gives notice of its resignation, then the retiring Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Agent, which successor shall be a commercial banking institution organized under the laws of the United States (or any State thereof) or a United States branch or agency of a commercial banking institution, in each case, having combined capital and surplus of at least $250 million; provided that if such retiring Agent is unable to find a commercial banking institution which is willing to accept such appointment and which meets the qualifications set forth above, the retiring Agent's resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Agent hereunder until such time, if any, as the Required Lenders appoint a successor Agent.

        Upon the acceptance of its appointment as an Agent hereunder by a successor, such successor shall succeed to and become vested with all the rights, powers, privileges and duties of the retiring

88

Agent, and the retiring Agent shall be discharged from its duties and obligations hereunder. The fees payable by Borrowers to a successor Agent shall be the same as those payable to its predecessor unless otherwise agreed between Borrower Agent and such successor. After an Agent's resignation hereunder, the provisions of this Article X and Section 11.03 shall continue in effect for the benefit of such retiring Agent, its sub agents and their respective Affiliates in respect of any actions taken or omitted to be taken by any of them while it was acting as Agent.

SECTION 10.07.Non Reliance on Agent and Other Lenders.    Each Lender acknowledges that it has, independently and without reliance upon the any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or related agreement or any document furnished hereunder or thereunder.

SECTION 10.08.No Other Administrative Agent.    The Lenders identified in this Agreement, the Syndication Agent and the Documentation Agent shall not have any right, power, obligation, liability, responsibility or duty under this Agreement other than those applicable to all Lenders. Without limiting the foregoing, neither the Syndication Agent nor the Documentation Agent shall have or be deemed to have a fiduciary relationship with any Lender. Each Lender hereby makes the same acknowledgments with respect to the Syndication Agent and the Documentation Agent as it makes with respect to the Administrative Agent or any other Lender in this Article X. Notwithstanding the foregoing, the parties hereto acknowledge that the Documentation Agent and the Syndication Agent hold such titles in name only, and that such titles confer no additional rights or obligations relative to those conferred on any Lender hereunder.

SECTION 10.09.Indemnification.    The Lenders severally agree to indemnify each Agent in its capacity as such (to the extent not reimbursed by the Borrowers or the Guarantors and without limiting the obligation of the Borrowers or the Guarantors to do so), ratably according to their respective outstanding Loans and Commitments in effect on the date on which indemnification is sought under this Section (or, if indemnification is sought after the date upon which all Commitments shall have terminated and the Loans and Reimbursement Obligations shall have been paid in full, ratably in accordance with such outstanding Loans and Commitments as in effect immediately prior to such date), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever that may at any time (whether before or after the payment of the Loans and Reimbursement Obligations) be imposed on, incurred by or asserted against such Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by such Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements that are found by a final and nonappealable decision of a court of competent jurisdiction to have resulted from such Agent's gross negligence or willful misconduct. The agreements in this Section shall survive the payment of the Loans and all other amounts payable hereunder.

89

ARTICLE XI

MISCELLANEOUS

SECTION 11.01.Notices.    Notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by telecopy, as follows:

(a)	if to any Loan Party, to Borrower Agent at:
	Basic Energy Services, L.P. 400 W. Illinois Midland, Texas 79701 Attention: Kenneth V. Huseman Telecopy No.: (432) 620 5501 Telephone No.: (432) 620 5500 E mail: ken.huseman@basicenergyservices.com
	with a copy to:
	Andrews Kurth LLP 600 Travis, Suite 4200 Houston, Texas 77002 Attention: Douglas Dillon, Esq. Telecopy No.: (713) 220 4285 Telephone No.: (713) 220 4200 E mail: ddillon@akllp.com
(b)	if to the Administrative Agent or the Collateral Agent, to it at:
	UBS AG, Stamford Branch 677 Washington Boulevard Stamford, Connecticut 06901 Attention: Joselin Fernandes Telecopy No.: (203) 719-4308;
	with a copy to:
	Cahill Gordon & Reindel llp 80 Pine Street New York, New York 10005 Attention: Michael E. Michetti, Esq. Telecopy: (212) 269 5420 Telephone: (212) 701 3000 E mail: mmichetti@cahill.com
(c)	if to the Documentation Agent, to it at:
	Hibernia National Bank 313 Carondelet Street, 10th Floor New Orleans, Louisiana 70130 Attention: Energy/Maritime Division Telecopy No.: (504) 533-5434

90

        (d)   if to a Lender, to it at its address (or telecopy number) set forth on the applicable Lender Addendum or in the Assignment and Acceptance pursuant to which such Lender shall have become a party hereto.

All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt if delivered by hand or overnight courier service or sent by telecopy or by certified or registered mail, in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 11.01 or in accordance with the latest unrevoked direction from such party given in accordance with this Section 11.01 and failure to deliver courtesy copies of notices and other communications shall in no event affect the validity or effectiveness of such notices and other communications.

SECTION 11.02.Waivers; Amendment.    (a) No failure or delay by any Agent, the Collateral Agent, the Issuing Bank or any Lender in exercising any right or power hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of each Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of any Loan Document or consent to any departure by any Loan Party therefrom shall in any event be effective unless the same shall be permitted by paragraph (b) of this Section 11.02, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether any Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

        (b)   Neither this Agreement nor any other Loan Document nor any provision hereof or thereof may be waived, amended or modified except, in the case of this Agreement, pursuant to an agreement or agreements in writing entered into by Borrower Agent and the Required Lenders or, in the case of any other Loan Document, pursuant to an agreement or agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties that are parties thereto, in each case with the written consent of the Required Lenders; provided that no such agreement shall:

        (i)    increase the Commitment of any Lender without the written consent of such Lender;

        (ii)   reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any Fees payable hereunder, without the written consent of each Lender affected thereby;

        (iii)  postpone or extend the maturity of any Loan, or any scheduled date of payment of or the installment otherwise due on the principal amount of any Term B Loan under Section 2.09, or the required date of payment of any Reimbursement Obligation, or any date for the payment of any interest or fees payable hereunder, or reduce the amount of, waive or excuse any such payment, or postpone the scheduled date of expiration of any Commitment or postpone the scheduled date of expiration of any Letter of Credit beyond the Revolving Maturity Date, without the written consent of each Lender affected thereby;

        (iv)  change Section 2.14(b) or (c) in a manner that would alter the pro rata sharing of payments or setoffs required thereby, without the written consent of each Lender;

        (v)   change the percentage set forth in the definition of "Required Lenders" or any other provision of any Loan Document (including this Section) specifying the number or percentage of Lenders (or Lenders of any Class) required to waive, amend or modify any rights thereunder or

91

make any determination or grant any consent thereunder, without the written consent of each Lender (or each Lender of such Class, as the case may be);

        (vi)  release Holdings or any Subsidiary Guarantor from its Guarantee (except as expressly provided in Article VII), or limit its liability in respect of such Guarantee, without the written consent of each Lender;

        (vii) release all or substantially all of the Collateral from the Liens of the Security Documents or alter the relative priorities of the Obligations entitled to the Liens of the Security Documents (except in connection with securing additional Obligations equally and ratably with the other Obligations), in each case without the written consent of each Lender; or

        (viii) change any provisions of any Loan Document in a manner that by its terms adversely affects the rights in respect of payments due to Lenders holding Loans of any Class differently than those holding Loans of any other Class, without the written consent of Lenders holding a majority in interest of the outstanding Loans and unused Commitments of each affected Class;

provided, further, that (1) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, the Collateral Agent, the Issuing Bank or the Swingline Lender without the prior written consent of the Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be, (2) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Term B Lenders), or the Term B Lenders (but not the Revolving Lenders) may be effected by an agreement or agreements in writing entered into by Borrower Agent and requisite percentage in interest of the affected Class of Lenders that would be required to consent thereto under this Section if such Class of Lenders were the only Class of Lenders hereunder at the time and (3) any waiver, amendment or modification of this Agreement that by its terms affects the rights or duties under this Agreement of the Revolving Lenders (but not the Term B Lenders) at a time in which an Affiliate of the Administrative Agent is a Revolving Lender shall also require the approval of at least one Revolving Lender not affiliated with the Administrative Agent (if any such Revolving Lenders exist at such time). Notwithstanding the foregoing, any provision of this Agreement may be amended by an agreement in writing entered into by Borrower Agent, the Required Lenders and the Administrative Agent (and, if their rights or obligations are affected thereby, the Issuing Bank and the Swingline Lender) if (x) by the terms of such agreement the Commitment of each Lender not consenting to the amendment provided for therein shall terminate upon the effectiveness of such amendment and (y) at the time such amendment becomes effective, each Lender not consenting thereto receives payment in full of the principal of and interest accrued on each Loan made by it and all other amounts owing to it or accrued for its account under this Agreement.

        (c)   If, in connection with any proposed change, waiver, discharge or termination of the provisions of this Agreement as contemplated by Section 11.02(b) (other than clause (iii) of such Section), the consent of the Supermajority Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained, then Borrower Agent shall have the right to replace all, but not less than all, of such non consenting Lender or Lenders (so long as all non consenting Lenders are so replaced) with one or more persons pursuant to Section 2.16 so long as at the time of such replacement each such new Lender consents to the proposed change, waiver, discharge or termination; provided, however, that Borrower Agent shall not have the right to replace a Lender solely as a result of the exercise of such Lender's rights (and the withholding of any required consent by such Lender) pursuant to clause (iii) of Section 11.02(b).

SECTION 11.03.Expenses; Indemnity.    (a) Borrowers agree, jointly and severally, to promptly pay all reasonable out of pocket costs and expenses (including but not limited to expenses incurred in connection with due diligence and travel, courier, reproduction, printing and delivery expenses) incurred by the Administrative Agent and Collateral Agent, the Swingline Lender and the Issuing Bank

92

in connection with the syndication of the credit facilities provided for herein and the preparation, execution, delivery and administration of this Agreement and the other Loan Documents and the perfection and maintenance of the Liens securing the Collateral or in connection with any amendments, consents, enforcement costs, documentary taxes or waivers of the provisions hereof or thereof (whether or not the transactions hereby or thereby contemplated shall be consummated) or incurred by the Agents or after the occurrence and during the continuation of an Event of Default any Lender in connection with the enforcement or protection of its rights in connection with this Agreement and the other Loan Documents or in connection with the Loans made or Letters of Credit issued hereunder, including the reasonable fees, charges and disbursements of Cahill Gordon & Reindel llp, counsel for the Administrative Agent and the Collateral Agent, and any auditors, accountants, consultants, appraisers or other advisors and, in connection with any such enforcement or protection, the fees, charges and disbursements of any other counsel for the Agents or any Lender.

        (b)   The Loan Parties agree, jointly and severally, to indemnify the Agents, each Lender, the Issuing Bank and the Swingline Lender, each Affiliate of any of the foregoing persons and each of their respective partners, controlling persons, directors, officers, trustees, employees and agents (each such person being called an "Indemnitee") against, and to hold each Indemnitee harmless from, all reasonable out of pocket costs and any and all losses, claims, damages, liabilities, penalties, judgments, suits and related expenses, including reasonable counsel fees, charges and disbursements, incurred by or asserted against any Indemnitee arising out of, in any way connected with, or as a result of (i) the execution, delivery, performance, administration or enforcement of the Loan Documents, (ii) any actual or proposed use of the proceeds of the Loans or issuance of Letters of Credit, (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, or (iv) any actual or alleged presence or Release or threatened Release of Hazardous Materials, on, at, under or from any property owned, leased or operated by any Company, or any Environmental Claim related in any way to any Company; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee.

        (c)   The provisions of this Section 11.03 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans or Reimbursement Obligations, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Agents, the Issuing Bank or any Lender. All amounts due under this Section 11.03 shall be payable on written demand therefor accompanied by reasonable documentation with respect to any reimbursement, indemnification or other amount requested.

        (d)   To the extent that any Borrower fails to promptly pay any amount required to be paid by it to the Administrative Agent and the Collateral Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this Section, each Lender severally agrees to pay to the Agents, the Issuing Bank or the Swingline Lender, as the case may be, such Lender's pro rata share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against any of the Agents, the Issuing Bank or the Swingline Lender in its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be determined based upon its share of the sum of the total Revolving Exposure, outstanding Term B Loans and unused Commitments at the time.

SECTION 11.04.Successors and Assigns.    (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit), except

93

that no Borrower may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Agents and each Lender (and any attempted assignment or transfer by any Borrower without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any person (other than the parties hereto, their respective successors and assigns permitted hereby (including any Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the extent expressly contemplated hereby, the Affiliates of each of the Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement.

        (b)   Any Lender shall have the right at any time to assign to one or more banks, insurance companies, investment companies or funds or other institutions (other than any Borrower, Holdings or any Affiliate or Subsidiary thereof) all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that (i) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Lender Affiliate, each of Borrower Agent and the Administrative Agent (and, in the case of an assignment of all or a portion of a Revolving Commitment or any Lender's obligations in respect of its LC Exposure or Swingline Exposure, the Issuing Bank and the Swingline Lender) must give their prior written consent to such assignment (which consent shall not be unreasonably withheld or delayed), (ii) except in the case of an assignment to a Lender, an Affiliate of a Lender or a Lender Affiliate, any assignment made in connection with the syndication of the Commitment and Loans by the Arranger or an assignment of the entire remaining amount of the assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) shall not be less than (x) in the case of Revolving Loans, $2.5 million, and (y) in the case of Term B Commitments and Term B Loans, $1.0 million unless each of Borrower Agent and the Administrative Agent otherwise consent, (iii) each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement, except that this clause (iii) shall not be construed to prohibit the assignment of a proportionate part of all the assigning Lender's rights and obligations in respect of one Class of Commitments or Loans, (iv) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance in the form of Exhibit B, together with a processing and recordation fee of $3,500, and (v) the assignee, if it shall not be a Lender, shall deliver to the Administrative Agent an Administrative Questionnaire; and provided, further, that any consent of Borrower Agent otherwise required under this paragraph shall not be required if an Event of Default has occurred and is continuing or prior to the date on which the Syndication Agent shall have notified Borrower Agent that the primary syndication of the Commitments has been completed (in which case the Administrative Agent shall consult with Borrower Agent). Subject to acceptance and recording thereof pursuant to paragraph (d) of this Section, from and after the effective date specified in each Assignment and Acceptance the assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement (provided that any liability of Borrowers to such assignee under Section 2.12, 2.13 or 2.15 shall be limited to the amount, if any, that would have been payable thereunder by Borrower in the absence of such assignment, except to the extent any such amounts are attributable to a Change in Law occurring after the date of such assignment), and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Sections 2.12, 2.13, 2.15 and 11.03).

        (c)   The Administrative Agent, acting for this purpose as an agent of Borrowers, shall maintain at one of its offices a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount

94

of the Loans and LC Disbursements owing to, each Lender pursuant to the terms hereof from time to time (the "Register"). The entries in the Register shall be conclusive in the absence of manifest error, and s, the Administrative Agent, the Issuing Bank and the Lenders may treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. The Register shall be available for inspection by Borrower Agent, the Issuing Bank, the Collateral Agent, the Swingline Lender and any Lender (with respect to its own interest only), at any reasonable time and from time to time upon reasonable prior notice.

        (d)   Upon its receipt of a duly completed Assignment and Acceptance executed by an assigning Lender and an assignee, the assignee's completed Administrative Questionnaire (unless the assignee shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph (b) of this Section and any written consent to such assignment required by paragraph (b) of this Section, the Administrative Agent shall accept such Assignment and Acceptance and record the information contained therein in the Register. No assignment shall be effective for purposes of this Agreement unless it has been recorded in the Register as provided in this paragraph.

        (e)   Any Lender shall have the right at any time, without the consent of Borrower Agent, the Administrative Agent, the Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a "Participant") in all or a portion of such Lender's rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) Borrower Agent, the Administrative Agent, the Issuing Bank and the other Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce the Loan Documents and to approve any amendment, modification or waiver of any provision of the Loan Documents; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in clause (i), (ii) or (iii) of the first proviso to Section 11.02(b) that affects such Participant. Subject to paragraph (f) of this Section, Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.12, 2.13 and 2.15 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 11.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 2.14(c) as though it were a Lender. Each Lender shall, acting for this purpose as an agent of the Borrowers, maintain at one of its offices a register for the recordation of the names and addresses of its Participants, and the amount and terms of its participations, provided that no Lender shall be required to disclose or share the information contained in such register with the Borrowers or any other party, except as required by applicable law.

        (f)    A Participant shall not be entitled to receive any greater payment under Section 2.12, 2.13or 2.15 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the prior written consent of Borrower Agent (which consent shall not be unreasonably withheld or delayed). A Participant that would be a Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.15 unless Borrower Agent is notified of the participation sold to such Participant and such Participant agrees, for the benefit of Borrowers, to comply with Sections 2.15(e) and (f) as though it were a Lender.

95

        (g)   Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. In the case of any Lender that is a fund that invests in bank loans, such Lender may, without the consent of Borrower Agent or the Administrative Agent, collaterally assign or pledge all or any portion of its rights under this Agreement, including the Loans and Notes or any other instrument evidencing its rights as a Lender under this Agreement, to any holder of, trustee for, or any other representative of holders of, obligations owed or securities issued, by such fund, as security for such obligations or securities.

SECTION 11.05.Survival of Agreement.    All covenants, agreements, representations and warranties made by the Loan Parties in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of the Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Agents, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Sections 2.12, 2.14, 2.15 and 11.03 and Article X shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the payment of the Reimbursement Obligations, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement or any provision hereof.

SECTION 11.06.Counterparts; Integration; Effectiveness.    This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement, the other Loan Documents, the Fee Letter and the Engagement Letter constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof, including the Original Credit Agreement, except to the extent set forth in Section 11.05 of the Original Credit Agreement. Except as provided in Sections 4.01, 4.02 and 4.04, this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Borrowers, the Guarantors, the Agents and the Lenders agree that (a) all obligations under the Original Credit Agreement shall continue to exist under and be evidenced by this Agreement and the other Loan Documents and shall constitute Obligations except to the extent prepaid and exchanged into Term B Loans in accordance with Section 2.23 and (b) except as expressly stated herein or amended, the other Loan Documents are ratified and confirmed as remaining unmodified and in full force and effect with respect to all Obligations. Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement. Notwithstanding the foregoing, each Lender by signing a Confidential Lender Authorization with the Administrative Agent shall be deemed to have consented to the Administrative Agent signing this Agreement on its behalf pursuant to the provisions thereof and, effective upon the Administrative Agent signing a counterpart of such Confidential Lender Authorization, shall be further deemed in this Agreement and the other Loan Documents to have been

96

a signatory hereto. Each Lender signatory to a Confidential Lender Authorization agrees that such Lender shall not be entitled to receive a copy of any other Lender's Confidential Lender Authorization.

SECTION 11.07.Severability.    Any provision of this Agreement held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 11.08.Right of Setoff.    If an Event of Default shall have occurred and be continuing, each Lender and each of its Affiliates are hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by such Lender or Affiliate to or for the credit or the account of Borrowers against any of and all the obligations of Borrowers now or hereafter existing under this Agreement held by such Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement and although such obligations may be unmatured. The rights of each Lender under this Section are in addition to other rights and remedies (including other rights of setoff) which such Lender may have.

SECTION 11.09.Governing Law; Jurisdiction; Consent to Service of Process.    (a) This Agreement shall be construed in accordance with and governed by the law of the State of New York, without regard to conflicts of law principles that would require the application of the laws of another jurisdiction.

        (b)   Each Loan Party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to any Loan Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such federal court. Each of the parties hereto 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. Nothing in this Agreement or any other Loan Document shall affect any right that the Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against any Loan Party or its properties in the courts of any jurisdiction.

        (c)   Each Loan Party hereby irrevocably and unconditionally 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 Agreement or any other Loan Document in any court referred to in paragraph (b) of this Section 11.09. Each of the parties hereto hereby irrevocably 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.

        Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 11.01. Nothing in this Agreement or any other Loan Document will affect the right of any party to this Agreement to serve process in any other manner permitted by applicable law.

SECTION 11.10.Waiver of Jury Trial.    Each party hereto hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arising out of or relating to this Agreement, any other Loan Document or the transactions contemplated hereby (whether based on contract, tort or any other theory). Each party hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or

97

otherwise, that such other party would not, in the event of litigation, seek to enforce the foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section.

SECTION 11.11.Headings.    Article and Section headings and the Table of Contents used herein are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

SECTION 11.12.Confidentiality.    Each of the Administrative Agent, the Issuing Bank and the Lenders agrees to maintain the confidentiality of the Information (as defined below), except that Information may be disclosed (a) to its and its Lender Affiliates' directors, officers, employees and agents, including accountants, legal counsel and other advisors (it being understood that the persons to whom such disclosure is made will be informed of the confidential nature of such Information and instructed to keep such Information confidential pursuant to the terms hereof), (b) to the extent requested by any regulatory authority, (c) to the extent required by applicable laws or regulations or by any subpoena or similar legal process, (d) to any other party to this Agreement, (e) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement containing provisions substantially the same as those of this Section 11.12, to (i) any assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights or obligations under this Agreement or (ii) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to Borrowers and their obligations, (g) with the consent of Borrower Agent or (h) to the extent such Information (i) is publicly available at the time of disclosure or becomes publicly available other than as a result of a breach of this Section 11.12 or (ii) becomes available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis from a source other than Borrowers or any Subsidiary. For the purposes of this Section, "Information" means all information received from Borrowers or any Subsidiary relating to any Borrower or any Subsidiary or its business that is clearly identified at the time of delivery as confidential, other than any such information that is available to the Administrative Agent, the Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by Borrowers or any Subsidiary. Any person required to maintain the confidentiality of Information as provided in this Section 11.12 shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such Information as such person would accord to its own confidential information.

SECTION 11.13.Interest Rate Limitation.    Notwithstanding anything herein to the contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and other amounts which are treated as interest on such Loan under applicable law (collectively, the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate") which may be contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance with applicable law, the rate of interest payable in respect of such Loan hereunder, together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent lawful, the interest and Charges that would have been payable in respect of such Loan but were not payable as a result of the operation of this Section shall be cumulated and the interest and Charges payable to such Lender in respect of other Loans or periods shall be increased (but not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

SECTION 11.14.Lender Addendum.    Each Original Lender to become a party to this Agreement on the Closing Date shall do so by delivering to the Administrative Agent a Lender Addendum duly executed by such Original Lender, the Borrower Agent and the Administrative Agent.

SECTION 11.15.Integration.    This Agreement and the other Loan Documents constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all

98

previous agreements and understandings, oral or written, relating to the subject matter hereof. The Borrowers, the Guarantors, the Agents and the Lenders agree that (a) all obligations under the Original Credit Agreement as amended and restated hereby, shall continue to exist under and be evidenced by this Agreement and the other Loan Documents and shall constitute Obligations and (b) except as expressly stated herein or amended, the other Loan Documents are ratified and confirmed as remaining unmodified and in full force and effect with respect to all Obligations.

[Signature Pages Follow]

99

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written.

BASIC ENERGY SERVICES, L.P., as a Borrower
By:	BASIC ENERGY SERVICES GP, LLC, its General Partner
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President
FIRST ENERGY SERVICES COMPANY, as a Borrower
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President
H. B. & R., INC., as a Borrower
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President
FESCO ALASKA, INC., as a Borrower
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President
BASIC ENERGY SERVICES, INC., as Parent Guarantor
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President

100

BASIC ENERGY SERVICES GP, LLC, as a Subsidiary Guarantor
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President
BASIC ENERGY SERVICES LP, LLC, as a Subsidiary Guarantor
By:	/s/  SCOTT KINNAMON Name:  Scott Kinnamon Title:    President
BASIC ESA, INC., as a Subsidiary Guarantor
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President
WESTERN OIL WELL SERVICE CO., as a Subsidiary Guarantor
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President
ENERGY AIR DRILLING COMPANY, as a Subsidiary Guarantor
By:	/s/  KENNETH V. HUSEMAN Name:  Kenneth V. Huseman Title:    President

101

UBS SECURITIES LLC, as Arranger and Syndication Agent
By:	/s/  JAMES P. BOLAND Name:  James P. Boland Title:    Executive Director
By:	/s/  OLIVER O. TRUMBO Name:  Oliver O. Trumbo Title:    Director
UBS AG, STAMFORD BRANCH, as Issuing Bank, Administrative Agent and Collateral Agent
By:	/s/  WILFRED V. SAINT Name:  Wilfred V. Saint Title:    Director
By:	/s/  JOSELIN FERNANDES Name:  Joselin Fernandes Title:    Associate Director
UBS AG, CAYMAN ISLANDS BRANCH, as a Lender and Swingline Lender
By:	/s/  WILFRED V. SAINT Name:  Wilfred V. Saint Title:    Director
By:	/s/  JOSELIN FERNANDES Name:  Joselin Fernandes Title:    Associate Director

102

Annex I

Applicable Margin

	Revolving Loans				Term B Loans
Applicable Leverage Ratio									Applicable Fee
	Eurodollar		ABR		Eurodollar		ABR
Level I ³ 2.75:1.0	3.00	%	2.00	%	3.00	%	2.00	%	0.50	%
Level II < 2.75:1.0 but > 2.0:1.0	2.75	%	1.75	%	3.00	%	2.00	%	0.375	%
Level III £ 2.0:1.0	2.50	%	1.50	%	3.00	%	2.00	%	0.375	%

        Each change in the Applicable Margin or Applicable Fee resulting from a change in the Leverage Ratio shall be effective with respect to all Loans and Letters of Credit outstanding on and after the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(d), respectively, indicating such change until the date immediately preceding the next date of delivery of such financial statements and certificates indicating another such change. Notwithstanding the foregoing, the Leverage Ratio shall be deemed to be in Level I for purposes of determining the Applicable Fee (i) from the Closing Date to the date of delivery to the Administrative Agent of the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(d) for the fiscal period ended at least six months after the Closing Date, (ii) at any time during which Borrowers have failed to deliver the financial statements and certificates required by Section 5.01(a) or (b) and Section 5.01(d), respectively, and (iii) at any time during the existence of an Event of Default.

Annex I-1

Annex II

Amortization Table

Payment Date	Installment Amount
December 31, 2004	$	3,500,000.00
March 31, 2005	$	1,750,000.00
June 30, 2005	$	1,750,000.00
September 30, 2005	$	1,750,000.00
December 31, 2005	$	1,750,000.00
March 31, 2006	$	2,625,000.00
June 30, 2006	$	2,625,000.00
September 30, 2006	$	2,625,000.00
December 31, 2006	$	2,625,000.00
March 31, 2007	$	2,625,000.00
June 30, 2007	$	2,625,000.00
September 30, 2007	$	2,625,000.00
December 31, 2007	$	2,625,000.00
March 31, 2008	$	3,500,000.00
June 30, 2008	$	3,500,000.00
September 30, 2008	$	3,500,000.00
December 31, 2008	$	3,500,000.00
March 31, 2009	$	31,500,000.00
June 30, 2009	$	31,500,000.00
Term B Maturity Date	$	61,500,000.00

Annex II-1

QuickLinks

TABLE OF CONTENTS
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
WITNESSETH
ARTICLE I DEFINITIONS
ARTICLE II THE CREDITS
ARTICLE III REPRESENTATIONS AND WARRANTIES
ARTICLE IV CONDITIONS TO CREDIT EXTENSIONS
ARTICLE V AFFIRMATIVE COVENANTS
ARTICLE VI NEGATIVE COVENANTS
ARTICLE VII GUARANTEE
ARTICLE VIII EVENTS OF DEFAULT
ARTICLE IX COLLATERAL ACCOUNT; APPLICATION OF COLLATERAL PROCEEDS
ARTICLE X THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
ARTICLE XI MISCELLANEOUS
Applicable Margin
Amortization Table

EX-10.11

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 10.11

Second Amended and Restated
Basic Energy Services, Inc.
2003 Incentive Plan

SECTION 1. Purpose of the Plan.

        The Second Amended and Restated Basic Energy Services, Inc. 2003 Incentive Plan (the "Plan") is intended to promote the interests of Basic Energy Services, Inc. (formerly named BES Holding Co.), a Delaware corporation (the "Company"), by encouraging officers, employees, directors and consultants of the Company and its Affiliates to acquire or increase their equity interest in the Company and to provide a means whereby they may develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to remain with and devote their best efforts to the business of the Company thereby advancing the interests of the Company and its stockholders. The Plan is also contemplated to enhance the ability of the Company and its Affiliates to attract and retain the services of individuals who are essential for the growth and profitability of the Company.

        Effective as of the effective date of the Plan as set forth in Section 10 hereunder, all outstanding stock options and other Awards granted under the Plan (including Awards previously assumed by the Company under predecessor plans) prior to this amendment and restatement, are assumed and continued hereunder. All outstanding Awards that are assumed and continued under this Plan, as amended and restated, shall remain subject to their individual Award Agreements for each such outstanding Award.

SECTION 2. Definitions.

        As used in the Plan, the following terms shall have the meanings set forth below:

        "Affiliate" shall mean (i) any entity in which the Company, directly or indirectly, owns 50% or more of the combined voting power, as determined by the Committee, (ii) any "parent corporation" of the Company (as defined in Section 424(e) of the Code) and (iii) any "subsidiary corporation" of any such parent (as defined in Section 424(f) of the Code) thereof.

        "Award" shall mean any Option, Restricted Stock, Performance Award, Phantom Shares, Bonus Shares, Other Stock-Based Award or Cash Award.

        "Award Agreement" shall mean any written or electronic agreement, contract, or other instrument or document evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.

        "Board" shall mean the Board of Directors of the Company.

        "Bonus Shares" shall mean an award of Shares granted pursuant to Section 6(d) of the Plan.

        "Cash Award" shall mean an award payable in cash granted pursuant to Section 6(f) of the Plan.

1

        "Change in Control" shall mean the occurrence of any one of the following:

        (a)   the consummation of any transaction (including without limitation, any merger, consolidation, tender offer, or exchange offer) the result of which is that any individual or "person" (as such term is used in Sections 13(d)(3) and 14(d)(2), of the Securities Exchange Act of 1934 (the "Exchange Act")), other than (i) Southwest Royalties Holdings, Inc. and its "affiliates" (as such term is defined in Rule 144 under the Exchange Act), (ii) Credit Suisse First Boston Corporation and its "affiliates" (as such term is defined in Rule 144 under the Exchange Act), (iii) the Company or any Affiliates controlled by the Company, (iv) any employee benefit plan of the Company or any of its Affiliates or (v) an underwriter temporarily holding securities pursuant to an offering of such securities, becomes the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company's then-outstanding securities;

        (b)   the individuals who, as of the effective date of the Plan, constitute the Board (the "Incumbent Board"), cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either (i) an actual or threatened election contest (as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act), or an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board, or (ii) a plan or agreement to replace a majority of the members of the Board then comprising the Incumbent Board;

        (c)   the sale, lease, transfer, conveyance or other disposition (including by merger or consolidation) in one or a series of related transactions, of all or substantially all of the assets of the Company to an unrelated person; or

        (d)   the adoption of a plan relating to the liquidation or dissolution of the Company.

        Solely with respect to any Award that is subject to Section 409A of the Code, this definition is intended to comply with the definition of change in control under Section 409A of the Code as in effect commencing January 1, 2005 and, to the extent that the above definition does not so comply, such definition shall be void and of no effect and, to the extent required to ensure that this definition complies with the requirements of Section 409A of the Code, the definition of such term set forth in regulations or other regulatory guidance issued under Section 409A of the Code by the appropriate governmental authority is hereby incorporated by reference into and shall form part of this Plan as fully as if set forth herein verbatim and the Plan shall be operated in accordance with the above definition of Change in Control as modified to the extent necessary to ensure that the above definition complies with the definition prescribed in such regulations or other regulatory guidance insofar as the definition relates to any Award that is subject to Section 409A of the Code.

        "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations thereunder.

        "Committee" shall mean the committee appointed by the Board to administer the Plan or, if none, the Board.

        "Company" shall mean the corporation described in Section 1 of the plan.

2

        "Consultant" shall mean any individual, other than a Director or an Employee, who renders consulting or advisory services to the Company or an Affiliate for a fee.

        "Covered Person" shall mean any of the Chief Executive Officer of the Company and the four (4) highest paid officers of the Company other than the Chief Executive Officer as described in Section 162(m)(3) of the Code.

        "Director" shall mean a "non-employee director" of the Company, as defined in Rule 16b-3.

        "Employee" shall mean any employee of the Company or an Affiliate.

        "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

        "Fair Market Value" shall mean, with respect to Shares, the fair market value determined in good faith by the Committee, which may be conclusively deemed by the Committee to be the closing sales price (or, if applicable, the highest reported bid price) of a Share on the applicable date (or if there is no trading in the Shares on such date, on the next preceding date on which there was trading) as reported in The Wall Street Journal (or other reporting service approved by the Committee). If the Shares are not publicly traded at the time a determination of its fair market value is required to be made hereunder, the determination of fair market value shall be made in good faith by the Committee.

        "Option" shall mean an option granted under Section 6(a) of the Plan. Options granted under the Plan may constitute "incentive stock options" for purposes of Section 422 of the Code or nonqualified stock options that are not intended to satisfy the requirements of Section 422 of the Code.

        "Other Stock-Based Award" shall mean an award granted pursuant to Section 6(g) of the Plan that is not otherwise specifically provided for, the value of which is based in whole or in part upon the value of a Share.

        "Participant" shall mean any Director, Employee or Consultant granted an Award under the Plan.

        "Performance Award" shall mean any right granted under Section 6(c) of the Plan.

        "Performance Objectives" means the objectives, if any, established by the Committee that are to be achieved with respect to an Award granted under this Plan, which may be described in terms of Company-wide objectives, in terms of objectives that are related to performance of a division, subsidiary, department or function within the Company or a subsidiary in which the Participant receiving the Award is employed or in individual or other terms, and which will relate to the period of time determined by the Committee. The Performance Objectives intended to qualify under Section 162(m) of the Code shall be with respect to one or more of the following: (i) net earnings; (ii) operating income; (iii) earnings before interest and taxes ("EBIT"); (iv) earnings before interest, taxes, depreciation, and amortization expenses ("EBITDA"); (v) earnings before taxes and unusual or nonrecurring items; (vi) net income before interest, income and franchise taxes, depreciation and amortization expenses, and any unusual or non-recurring non-cash expenses or income ("Company EBITDA"); (vii) revenue; (viii) return on investment; (ix) return on equity; (x) return on total capital; (xi) return on assets; (xii) total stockholder return; (xiii) return on capital employed in the business; (xiv) stock price performance; (xv) earnings per share growth; and (xvi) cash flows. Which objectives to use with respect to an Award, the weighting of the objectives if more than one is used, and whether the objective is to be measured against a Company-established budget or target, an index or a peer group of companies, shall be determined by the Committee in its discretion at the time of grant of the Award. A Performance Objective need not be based on an increase or a positive result under a particular business criterion and may include, for example, maintaining the status quo or limiting economic losses.

        "Person" shall mean individual, corporation, partnership, association, joint-stock company, trust, unincorporated organization, government or political subdivision thereof or other entity.

3

        "Phantom Shares" shall mean an Award of the right to receive Shares issued at the end of a Restricted Period which is granted pursuant to Section 6(e) of the Plan.

        "Plan" shall mean the plan described in Section 1 of the Plan and set forth in this document, as amended from time to time.

        "Restricted Period" shall mean the period established by the Committee with respect to an Award during which the Award either remains subject to forfeiture or is not exercisable by the Participant.

        "Restricted Stock" shall mean any Share, prior to the lapse of restrictions thereon, granted under Sections 6(b) of the Plan.

        "Rule 16b-3" shall mean Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulation thereto as in effect from time to time.

        "SEC" shall mean the Securities and Exchange Commission, or any successor thereto.

        "Shares" or "Common Shares" or "Common Stock" shall mean the common stock of the Company, $.01 par value, and such other securities or property as may become the subject of Awards under the Plan.

        "Termination for Cause" shall mean, unless eliminated or otherwise defined by the Committee in a Participant's Award, the occurrence of any of the following events:

          (i)  the commission by Participant of a material act of willful misconduct including, but not limited to, the willful violation of any material law, rule, regulation or cease and desist order applicable to Participant or the Company (other than a law, rule or regulation relating to a minor traffic violation or similar offense), or an act which constitutes a breach of a fiduciary duty owed to the Company by Participant involving personal profit;

         (ii)  the commission by Participant of an act of dishonesty relating to the performance of Participant's duties, habitual unexcused absence from work, willful failure to perform duties in any material respect (other than any such failure resulting from Participant's incapacity due to physical or mental illness or disability), or gross negligence in the performance of duties resulting in material damage or injury to the Company, its reputation or goodwill (provided, however, that in the event of Participant's willful failure to perform duties in any material respect, Participant shall be provided with written notice of such event and shall be provided with a reasonable opportunity, and in no event more than 30 days, to cure such failure to perform his duties); or

        (iii)  any felony conviction of Participant or any conviction involving dishonesty, fraud or breach of trust (other than for a minor traffic violation or similar offense), whether or not in the line of duty.

        "Termination for Good Reason" shall mean, unless eliminated or otherwise defined by the Committee in a Participant's Award, any nonconsentual (i) material reduction in the Participant's authority, duties or responsibilities; (ii) reduction in the Participant's compensation by more than 20 percent from the compensation (excluding Awards pursuant to this Plan or other stock-based compensation) paid by the Company during the completed fiscal year prior to the Change of Control; or (iii) change caused by the Company in the Participant's office location of more than 35 miles from its location on the date of the Change in Control; provided, however, that the Participant terminates his employment with the Company and its Affiliates hereunder within 120 days following the date on which the Participant has actual notice of the event that gives rise to the Termination for Good Reason.

4

SECTION 3. Administration.

        (a)   General. The Plan shall be administered by the Committee. Should any class of Common Stock be registered under Section 12(g) of the Exchange Act, the Committee shall be composed of not less than two (2) members of the Board, each of whom shall meet the definition of "nonemployee director" for purposes of Rule 16b-3 promulgated by the SEC under the Exchange Act and an "outside director" under Section 162(m) of the Code. A majority of the Committee shall constitute a quorum, and the acts of a majority of the members of the Committee who are present at any meeting thereof at which a quorum is present, or the acts unanimously approved by the members of the Committee in writing, shall be the acts of the Committee.

        (b)   Committee Authority. Subject to the terms of the Plan and applicable law, and in addition to other express powers and authorizations conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to a Participant; (iii) determine the number of Shares to be covered by, or with respect to which payments, rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms and conditions of any Award; (v) determine whether, to what extent, and under what circumstances Awards may be settled or exercised in cash, Shares, other securities, other Awards or other property, or canceled, forfeited, or suspended and the method or methods by which Awards may be settled, exercised, canceled, forfeited, or suspended; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other securities, other Awards, other property, and other amounts payable with respect to an Award shall be deferred either automatically or at the election of the holder thereof or of the Committee; (vii) interpret and administer the Plan and any instrument or agreement relating to an Award made under the Plan; (viii) establish, amend, suspend, or waive such rules and regulations and appoint such agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan; provided, however, the Committee shall not take any action otherwise authorized under this Section 3(b) to the extent that (i) such action would cause (A) the application of Section 162(m) or 409A of the Code to the Award or (B) create adverse tax consequences under Section 162(m) or 409A of the Code should either or both of those Code sections apply to the Award or (ii) materially reduce the benefit to the Participant without the consent of the Participant. No member of the Committee shall vote or act upon any matter relating solely to himself and grants of Awards to members of the Committee must be ratified by the Board. Unless otherwise expressly provided in the Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any Participant, any holder or beneficiary of any Award, any stockholder and any Employee. No member of the Board or Committee shall be liable for any action or determination made in good faith with respect to the Plan or any Award granted hereunder and the members of the Board and Committee shall be entitled to indemnification and reimbursement by the Company and its Affiliates in respect of any claim, loss, damage or expense (including legal fees) arising therefrom to the full extent permitted by law.

5

SECTION 4. Shares Available for Awards.

        (a)   Shares Available. Subject to adjustment as provided in Section 4(c), the aggregate number of Shares with respect to which Awards may be granted under the Plan shall be up to 1,000,000 Shares. Except for withholding of Shares for payment of taxes or exercise price, if any Award is exercised, paid, forfeited, terminated or canceled without the delivery of Shares, then the Shares covered by such Award, to the extent of such payment, exercise, forfeiture, termination or cancellation, shall again be Shares with respect to which Awards may be granted. Awards will not reduce the number of Shares that may be issued pursuant to the Plan if the settlement of the Award will not require the issuance of Shares, as, for example, an Other Stock-Based Award that can be satisfied only by the payment of cash.

        (b)   Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award may consist, in whole or in part, of authorized and unissued Shares or of treasury Shares and shall be fully paid and nonassessable.

        (c)   Adjustments. In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company, or other similar corporate transaction or event affects the Shares such that an adjustment is determined by the Committee to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i) the number and type of Shares (or other securities or property) with respect to which Awards may be granted, (ii) the maximum number and type of Shares (or other securities or property) with respect to which Awards may be granted to any single individual during any calendar year, (iii) the number and type of Shares (or other securities or property) subject to outstanding Awards, and (iv) the grant or exercise price with respect to any Award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award.

SECTION 5. Eligibility.

        Any Employee, Director or Consultant shall be eligible to be designated a Participant and receive an Award under the Plan.

SECTION 6. Awards.

        (a)   Options. Subject to the provisions of the Plan, the Committee shall have the authority to determine the Participants to whom Options shall be granted, the number of Shares to be covered by each Option, the purchase price therefor and the conditions and limitations applicable to the exercise of the Option, including the following terms and conditions and such additional terms and conditions, as the Committee shall determine, that are not inconsistent with the provisions of the Plan.

          (i)  Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee at the time the Option is granted, but shall not be less than the Fair Market Value per Share on such grant date.

6

         (ii)  Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised in whole or in part (which may include the achievement of one or more Performance Objectives), and the method or methods by which, and the form or forms, in which payment of the exercise price with respect thereto may be made or deemed to have been made (which may include, without limitation, cash, check acceptable to the Company, Shares held for the period required to avoid a charge to the Company's reported financial earnings and owned free and clear of any liens, claims, encumbrances or security interests, outstanding Awards, a "cashless-broker" exercise (through procedures approved by the Committee and the Company), other securities or other property, notes approved by the Committee, or any combination thereof, having a Fair Market Value on the exercise date equal to the relevant exercise price); provided, however, in order to exercise an Option, the Person or Persons entitled to exercise the Option shall deliver to the Company payment in full for the Shares being purchased and, unless other arrangements have been made with, or procedures have been established and approved by, the Committee, any required withholding taxes.

        (iii)  Incentive Stock Options. The terms of any Option granted under the Plan intended to be an incentive stock option shall comply in all respects with the provisions of Section 422 of the Code, or any successor provision, and any regulations promulgated thereunder. Incentive stock options may be granted only to employees of the Company and its parent corporation and subsidiary corporations, within the meaning of Section 424 of the Code while each such entity is a "Corporation" described in Section 7701(a)(3) of the Code and Treas. Reg. Section 1.421-1(i)(1). To the extent the aggregate Fair Market Value of the Shares (determined as of the date of grant) of an Option to the extent exercisable for the first time during any calendar year (under all plans of the Company and its parent and subsidiary corporations) exceeds $100,000, such Option Shares in excess of $100,000 shall be nonqualified stock options. No Option that is an incentive stock option shall be exercisable after the expiration of 10 years from its date of grant. Notwithstanding anything herein to the contrary, in no event shall any person owning stock possessing more than 10% of the total combined voting power of the Company and its Affiliates be granted an incentive stock option hereunder unless (1) the Option exercise price shall be at least 110% of the Fair Market Value of the Shares subject to such Option at the time the Option is granted and (2) the term during which such Option is exercisable does not exceed five years from its date of grant.

        (iv)  Limits. Subject to adjustment as provided in Section 4(c), the maximum number of Options that may be granted to any Participant during any calendar year shall not exceed 100,000 Shares.

        (b)   Restricted Stock. Subject to the provisions of the Plan, the Committee shall have the authority to determine the Participants to whom Restricted Stock shall be granted, the number of Shares of Restricted Stock to be granted to each such Participant, the duration of the Restricted Period during which, and the conditions, including Performance Objectives, if any, under which if not achieved, the Restricted Stock may be forfeited to the Company, and the other terms and conditions of such Awards.

          (i)  Dividends. Dividends paid on Restricted Stock may be paid directly to the Participant, may be subject to risk of forfeiture and/or transfer restrictions during any period established by the Committee or sequestered and held in a bookkeeping cash account (with or without interest) or reinvested on an immediate or deferred basis in additional shares of Common Stock, which account or shares may be subject to the same restrictions as the underlying Award or such other restrictions, all as determined by the Committee in its discretion.

7

         (ii)  Registration. Any Restricted Stock may be evidenced in such manner as the Committee shall deem appropriate, including, without limitation, book-entry registration or issuance of a stock certificate or certificates. In the event any stock certificate is issued in respect of Restricted Stock granted under the Plan, such certificate shall be registered in the name of the Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.

        (iii)  Forfeiture and Restrictions Lapse. Except as otherwise determined by the Committee or the terms of the Award that granted the Restricted Stock, upon termination of a Participant's employment (as determined under criteria established by the Committee) for any reason during the applicable Restricted Period, all Restricted Stock shall be forfeited by the Participant and reacquired by the Company. Unrestricted Shares, evidenced in such manner as the Committee shall deem appropriate, shall be issued to the holder of Restricted Stock promptly after the applicable restrictions have lapsed or otherwise been satisfied.

        (iv)  Transfer Restrictions. During the Restricted Period, Restricted Stock will be subject to the limitations on transfer as provided in Section 6(h)(i).

         (v)  Limits. Subject to adjustment as provided in Section 4(c), the maximum number of Shares of Restricted Stock that may be granted to any Participant during any calendar year shall not exceed 100,000 Shares.

        (c)   Performance Awards. The Committee shall have the authority to determine the Participants who shall receive a Performance Award, which shall be denominated as a cash amount (e.g., $100 per award unit) at the time of grant and confer on the Participant the right to receive payment of such Award, in whole or in part, upon the achievement of such Performance Objectives during such performance periods as the Committee shall establish with respect to the Award.

          (i)  Terms and Conditions. Subject to the terms of the Plan and any applicable Award Agreement, the Committee shall determine the Performance Objectives to be achieved during any performance period, the length of any performance period, the amount of any Performance Award and the amount of any payment or transfer to be made pursuant to any Performance Award. In the case of any Performance Award granted to a Covered Employee in any calendar year in which any class of Common Stock is registered under Section 12(g) of the Exchange Act, performance goals shall be designed to be objective and shall otherwise meet the requirements of Section 162(m) of the Code and regulations issued thereunder (including Treasury Regulation Section 1.162-27 and any successor regulation thereto), including the requirement that the level or levels of performance targeted by the Committee are such that the achievement of performance goals is "substantially uncertain" at the time of grant. In addition, achievement of performance goals in respect of Performance Awards shall be measured over a performance period of not less than six (6) months and not more than ten (10) years, as specified by the Committee. Performance goals in the case of any Performance Award granted to a Covered Person in any year in which any class of Common Stock is registered under Section 12(g) of the Exchange Act shall be established not later than ninety (90) days after the beginning of any performance period applicable to such Performance Award, or at such other date as may be required or permitted for "performance-based compensation" under Section 162(m) of the Code. Subject to Section 8, the Committee shall not exercise discretion to increase any amount payable in respect of a Performance Award which is intended to comply with Section 162(m) of the Code.

8

         (ii)  Payment of Performance Awards. Performance Awards, to the extent earned, shall be paid (in cash and/or in Shares, in the sole discretion of the Committee) in a lump sum following the close of the performance period. Except as may otherwise be required under Section 409A of the Code, payment described in the immediately preceding sentence shall be made by the later of (i) the date that is 2¹/2 months after the end of the Participant's first taxable year in which the Performance Award is earned and payable under the Plan and (ii) the date that is 2¹/2 months after the end of the Company's first taxable year in which the Performance Award is earned and payable under the Plan, and such payment shall not be subject to any election by the Participant to defer the payment to a later period. To the extent that settlement is to be made in Shares, the amount payable under a Performance Award shall be divided by the FMV Per Share of Common Stock on the determination date and a stock certificate evidencing the resulting shares of Common Stock (to the nearest full share) shall be delivered to the Participant, or his personal representative, and the value of any fractional shares will be paid in cash.

        (iii)  Limits. The maximum value of Performance Awards that may be granted to any Participant during any calendar year shall not exceed $500,000.

        (d)   Bonus Shares. The Committee shall have the authority, in its discretion, to grant Bonus Shares to Participants. Each Bonus Share shall constitute a transfer of an unrestricted Share to the Participant, without other payment therefor, as additional compensation for the Participant's services to the Company. Bonus Shares shall be in lieu of a cash bonus that otherwise would be granted.

        (e)   Phantom Shares. The Committee shall have the authority to grant Awards of Phantom Shares to Participants upon such terms and conditions as the Committee may determine.

          (i)  Terms and Conditions. Each Phantom Share Award shall constitute an agreement by the Company to issue or transfer a specified number of Shares or pay an amount of cash equal to a specified number of Shares, or a combination thereof to the Participant in the future, subject to the fulfillment during the Restricted Period of such conditions, including Performance Objectives, if any, as the Committee may specify at the date of grant. During the Restricted Period, the Participant shall not have any right to transfer any rights under the subject Award, shall not have any rights of ownership in the Phantom Shares and shall not have any right to vote such shares.

         (ii)  Dividends. Any Phantom Share award may provide that an amount equal to any or all dividends or other distributions paid on Shares during the Restricted Period be credited in a cash bookkeeping account (without interest) or that equivalent additional Phantom Shares be awarded, which account or shares may be subject to the same restrictions as the underlying Award or such other restrictions as the Committee may determine.

        (iii)  Limits. Subject to adjustment as provided in Section 4(c), the maximum number of Phantom Shares that may be granted to any Participant during any calendar year shall not exceed 100,000.

        (iv)  Additional Limitations. Notwithstanding any other provision of this Section 6(e) to the contrary, any such Phantom Shares Award granted under the Plan shall contain terms that (i) are designed to avoid application of Section 409A of the Code to the Award or (ii) are designed to avoid adverse tax consequences under Section 409A of the Code should that Code section apply to the Award.

9

        (f)    Cash Awards. The Committee shall have the authority to determine the Participants to whom Cash Awards shall be granted, the amount, and the terms or conditions, if any, as additional compensation for the Participant's services to the Company or its Affiliates. If granted, a Cash Award shall be granted (simultaneously or subsequently) in tandem with another Award and shall entitle a Participant to receive a specified amount of cash from the Company upon such other Award becoming taxable to the Participant, which cash amount may be based on a formula relating to the anticipated taxable income associated with such other Award and the payment of the Cash Award; provided, however, a Cash Award shall not be granted in tandem or in combination with any other Award if that would (i) cause application of Section 409A of the Code to either Award or (ii) result in adverse tax consequences under Section 409A of the Code should that Code section apply to either Award.

        (g)   Other Stock-Based Awards. The Committee may also grant to Participants an Other Stock-Based Award, which shall consist of a right which is an Award denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares as is deemed by the Committee to be consistent with the purposes of the Plan. Subject to the terms of the Plan, including the Performance Objectives, if any, applicable to such Award, the Committee shall determine the terms and conditions of any such Other Stock-Based Award. Notwithstanding any other provision of the Plan to the contrary, any Other Stock-Based Award shall contain terms that (i) are designed to avoid application of Section 409A of the Code or (ii) are designed to avoid adverse tax consequences under Section 409A should that Code section apply to such Award. Subject to adjustment as provided in Section 4(c) insofar as that provision relates to Shares, the maximum number of Shares or value for which Other Stock-Based Awards may be granted to any Participant during any calendar year shall not exceed 100,000 Shares, if the Award is in Shares, or $500,000, if the Award is in dollars.

        (h)   General.

          (i)  Limits on Transfer of Awards.

A.

Except as provided in (C) below, each Award, and each right under any Award, shall be exercisable only by the Participant during the Participant's lifetime, or by the person to whom the Participant's rights shall pass by will or the laws of descent and distribution.



B.

Except as provided in (C) below, no Award and no right under any such Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a Participant otherwise than by will or by the laws of descent and distribution (or, in the case of Restricted Stock, to the Company). Any such attempted or purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance shall be void, ineffective and unenforceable against the Company or any Affiliate, and shall give no right to the purported transferee, and shall at the sole discretion of the Committee result in the forfeiture of the Award with respect to the Award involved in such attempted or perpetual transfer or encumbrance.



C.

Notwithstanding anything in the Plan to the contrary, to the extent specifically provided by the Committee with respect to a grant, (1) a nonqualified stock option may be transferred to immediate family members or related family trusts, or similar entities on such terms and conditions as the Committee may establish, and (2) an Award other than an Incentive Stock Option may be transferred pursuant to a qualified domestic relations order described in Section 414(p) of the Code.

10

         (ii)  Term of Awards. Subject to the terms of the Plan, the term of each Award shall be for such period as may be determined by the Committee; provided, that in no event shall the term of any Award exceed a period of 10 years from the date of its grant.

        (iii)  Share Certificates. All certificates for Shares or other securities of the Company delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the SEC, any stock exchange upon which such Shares or other securities are then listed, and any applicable federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

        (iv)  Consideration for Grants. Awards may be granted for no cash consideration or for such consideration as the Committee determines including, without limitation, such minimal cash consideration as may be required by applicable law.

         (v)  Delivery of Shares or other Securities upon Payment by Participant of Consideration. No Shares or other securities shall be delivered pursuant to any Award until payment in full of any amount required to be paid pursuant to the Plan or the applicable Award Agreement is received by the Company.

        (vi)  Section 409A Considerations. Notwithstanding any other provision of the Plan to the contrary, any Award granted after December 31, 2004 shall contain terms that (i) are designed to avoid application of Section 409A of the Code to the Award or (ii) are designed to avoid adverse tax consequences under Section 409A of the Code should that Code Section apply to the Award.

SECTION 7. Amendment and Termination.

        Except to the extent prohibited by applicable law and unless otherwise expressly provided in an Award Agreement or in the Plan:

        (a)   Amendments to the Plan. Except as required by applicable law or the rules of the principal securities exchange or market on which the shares are traded and subject to Section 7(b) below, the Board or the Committee may amend, alter, suspend, discontinue, or terminate the Plan without the consent of any stockholder, Participant, other holder or beneficiary of an Award, or other Person.

        (b)   Amendments to Awards. Subject to (d) below, the Committee may waive any conditions or rights under, amend any terms of, or alter any Award theretofore granted, provided no change, other than pursuant to Section 7(c), in any Award shall reduce the benefit to Participant without the consent of such Participant. In no event shall the Committee, if not the Board, take action without the approval of the Board that constitutes a "repricing" of an Option for financial accounting purposes, and any Board-approved repricing shall be inoperative and ineffective unless and until approved by the stockholders.

11

        (c)   Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. Subject to (d) below, the Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in Section 4(c) of the Plan) affecting the Company, any Affiliate, or the financial statements of the Company or any Affiliate, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan; provided, that any such election would not (i) cause the application of Section 409A of the Code to the Award or (ii) create adverse tax consequences under Section 409A of the Code should Section 409A apply to the Award.

        (d)   Section 162(m). The Committee, in its sole discretion and without the consent of the Participant, may amend (i) any stock-based Award to reflect (1) a change in corporate capitalization, such as a stock split or dividend, (2) a corporate transaction, such as a corporate merger, a corporate consolidation, any corporate separation (including a spinoff or other distribution of stock or property by a corporation), any corporate reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code), (3) any partial or complete corporate liquidation, or (4) a change in accounting rules required by the Financial Accounting Standards Board and (ii) any Award that is not intended to meet the requirements of the performance based compensation exception to Section 162(m) of the Code, to reflect a significant event that the Committee, in its sole discretion, believes to be appropriate to reflect the original intent in the grant of the Award. With respect to an Award that is subject to Section 162(m) of the Code, subject to Section 8, the Committee (i) shall not take any action that would disqualify such Award as performance based compensation and (ii) must first certify that the Performance Objectives, if applicable, have been achieved before the Award may be paid.

SECTION 8. Change in Control.

        (a)   Awards Granted on or Prior to March 1, 2005. Notwithstanding any other provision of this Plan to the contrary, in the event of a Change in Control of the Company all outstanding Awards granted on or prior to March 1, 2005 shall automatically become fully vested immediately prior to such Change in Control (or such earlier time as set by the Committee), all restrictions, if any, with respect to such Awards shall lapse, and all performance criteria, if any, with respect to such Awards shall be deemed to have been met in full (at the highest level).

        (b)   Awards Granted After March 1, 2005. With respect to Awards granted after March 1, 2005, notwithstanding any other provision of this Plan to the contrary, in the event that a Participant's employment with the Company (or a successor) and all of its Affiliates terminates within 2 years after a Change in Control of the Company and (i) such termination of employment was initiated by the Company (or a successor) other than for a Termination for Cause or (ii) such termination of employment was initiated by a Participant after determining in the Participant's good faith reasonable judgment that the termination is a Termination for Good Reason, all such Awards of each affected Participant shall become fully vested immediately prior to such Change in Control (or such earlier time as set by the Committee in the Participant's Award), all restrictions, if any, with respect to such Awards shall lapse, and all performance criteria, if any, with respect to such Awards shall be deemed to have been met in full (at the highest level). Unless the Company survives as an independent publicly traded company, all Options outstanding at the time of the events that give rise to each affected Participant's right to Change in Control benefits hereunder shall terminate and the Optionee shall be paid, with respect to each Option, an amount in cash

12

equal to the excess of the Fair Market Value of a Share over the Option's exercise price (if the Option exercise price exceeds the Fair Market Value of a Share on such date, the Optionee shall be paid an amount in cash equal to the lesser of $1.00 or the Black-Scholes value of the cancelled Option as determined in good faith by the Board), unless and except to the extent provision is made in writing in connection with such Change in Control event or transaction for the continuation of the Plan and/or the assumption of the Options theretofore granted, or for the substitution for such Options of new options covering the stock of a successor entity, or the parent or subsidiary thereof, with appropriate adjustments as to the number and kinds of shares and exercise prices, in which event the Plan and Options theretofore granted shall continue as fully vested and immediately exercisable Options in the manner and under the terms so provided.

SECTION 9. General Provisions.

        (a)   No Rights to Awards. No Director, Employee, Consultant or other Person shall have any claim to be granted any Award. There is no obligation for uniformity of treatment of Participants or holders or beneficiaries of Awards, and the terms and conditions of Awards need not be the same with respect to each recipient.

        (b)   Withholding. The Company or any Affiliate is authorized to withhold from any Award, from any payment due or transfer made under any Award or under the Plan or from any compensation or other amount owing to a Participant the amount (in cash, Shares, other securities, Shares that would otherwise be issued pursuant to such Award, other Awards or other property) of any applicable taxes payable at the minimum statutory rate in respect of an Award, its exercise, the lapse of restrictions thereon, or any payment or transfer under an Award or under the Plan and to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for the payment of such taxes at the minimum statutory rate. In addition, the Committee may provide, in an Award Agreement, that the Participant shall have the right to direct the Company to satisfy the Company's tax withholding obligation through the "constructive" tender of already-owned Shares or the withholding of Shares otherwise to be acquired upon the exercise or payment of such Award.

        (c)   No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ of the Company or any Affiliate. Further, the Company or an Affiliate may at any time dismiss a Participant from employment or other service relationship at any time, free from any liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any Award Agreement.

        (d)   Governing Law. The validity, construction, and effect of the Plan and any rules and regulations relating to the Plan shall be governed by and construed in accordance with the laws of the State of Delaware and applicable federal law.

        (e)   Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, Person or Award and the remainder of the Plan and any such Award shall remain in full force and effect.

13

        (f)    Other Laws. The Committee may refuse to issue or transfer any Shares or other consideration under an Award if, acting in its sole discretion, it determines that the issuance of transfer or such Shares or such other consideration might violate any applicable law or regulation or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment tendered to the Company by a Participant, other holder or beneficiary in connection with the exercise of such Award shall be promptly refunded to the relevant Participant, holder or beneficiary.

        (g)   Unfunded Plan. Neither the Plan nor the Award shall create or be construed to create a trust or separate fund or funds. Neither the Plan nor any Award shall establish any kind of a fiduciary relationship between the Company or any Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or any Affiliate.

        (h)   No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the Committee shall determine whether cash, other securities, or other property shall be paid or transferred in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated.

        (i)    Substitute Awards. Awards may be granted from time to time in substitution for similar awards held by employees or directors of other corporations who become Employees or Directors of the Company or its Affiliates as the result of a merger or consolidation of such director or employee's employing corporation with the Company or any Affiliate, or the acquisition by the Company or any Affiliate of the assets of such director or employee's employing corporation, or the acquisition by the Company or any Affiliate of the stock of such director or employee's employing corporation. The terms and conditions of substitute Awards granted shall comport with the terms and conditions set forth in the Plan.

        (j)    Shareholder Agreements. The Committee may condition the grant, exercise or payment of any Award upon such person entering into a stockholders' agreement or repurchase agreement in such form as approved from time to time by the Board.

        (k)   Gender, Tense and Headings. Whenever the context requires, words of the masculine gender used herein shall include the feminine and neuter and words used in the singular shall include the plural. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof.

        (l)    No Guarantee of Tax Consequences. None of the Board, the Company nor the Committee makes any commitment or guarantee that any federal, state or local tax treatment will apply or be available to any person participating or eligible to participate hereunder.

        (m)  Section 162(m) Special Transition Rule. Should any class of Common Stock be registered under Section 12(g) of the Exchange Act, the Plan is intended to qualify for the transition relief provided under Treasury Regulation §1.162-27(f). Accordingly, all compensation realized by Participants in connection with Awards granted under the Plan within the reliance period described therein is intended to be exempt from the limitation on tax deductibility under Section 162(m) of the Code. For purposes of the Plan, the reliance period will expire on the earlier of (i) the expiration of the Plan, (ii) a "material modification" of the Plan (within the meaning of Treasury Regulation §1.162-27(h)(1)(iii)), (iii) the issuance of all Common Stock that has been allocated under the Plan, or (iv) the first meeting of stockholders of the Company at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the Common Stock is first registered under Section 12(g) of the Exchange Act.

14

SECTION 10. Effective Date of the Plan.

        The Plan, as hereby amended and restated, shall be effective on the date it is approved and adopted by the Board, including with respect to all Awards granted on or after March 1, 2005, except as otherwise provided in the Plan.

SECTION 11. Term of the Plan.

        No Award shall be granted under the Plan after the 10th anniversary of the earlier of the date this Plan is adopted by the Board or the date the Plan is approved by the stockholders of the Company. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award granted prior to such termination, and the authority of the Board or the Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive any conditions or rights under such Award, shall extend beyond such termination date.

15

QuickLinks

Second Amended and Restated Basic Energy Services, Inc. 2003 Incentive Plan

EX-23.1

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors
Basic Energy Services, Inc.:

        We consent to the use of our report dated June 13, 2005, with respect to the consolidated balance sheets of Basic Energy Services, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of operations and comprehensive income (loss), stockholders' equity, cash flows for each of the years in the three-year period ended December 31, 2004, included herein and to the reference to our firm under the heading "Experts" in the registration statement and related prospectus. Our report refers to a change in accounting for asset retirement obligations as of January 1, 2003 and a change in accounting for goodwill and other intangible assets as of January 1, 2002.

        We also consent to the use of our report dated August 5, 2005, with respect to the combined statements of operations, equity and cash flows of PWI, Inc., PWI Management, LLC, Parker Windham, Ltd., PWI Rentals, L.P., PWI Express Services, L.P. and PWI Disposal, L.P. (collectively referred to as "PWI") for the nine months ended September 30, 2003, and to the reference to our firm under the heading "Experts" in the registration statement and related prospectus. Our report refers to a change in accounting for asset retirement obligations as of January 1, 2003.

KPMG LLP
Dallas, Texas

August 12, 2005

QuickLinks

Consent of Independent Registered Public Accounting Firm

EX-23.2

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

        We hereby consent to the use in this Registration Statement on Form S-1 of our report dated March 7, 2003, except with respect to the matter discussed in Note 11, for which the date is August 28, 2003, relating to the financial statements of FESCO Holdings, Inc. and Subsidiaries, which appears in such Registration Statement. We also consent to the reference to us under the heading "Experts" in such Registration Statement.

PricewaterhouseCoopers LLP
Denver, Colorado
August 11, 2005

QuickLinks

CONSENT OF INDEPENDENT ACCOUNTANTS