Exhibit 10.1

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “Agreement”) is entered into as of                              , 2007, by and between Pioneer Drilling Company, a Texas corporation (the “Company”), and the undersigned individual (“Indemnitee”).

RECITALS

The Company and Indemnitee recognize the continued difficulty in obtaining liability insurance for directors and officers, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance.

The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors and officers to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited.

The Company desires that Indemnitee resist and defend against what Indemnitee may consider to be unjustified investigations, claims, actions, suits and proceedings which have arisen or may arise in the future as a result of Indemnitee’s service to the Company and its subsidiaries and affiliates.

The Company desires to attract and retain the involvement of highly qualified persons, such as Indemnitee, to serve and be associated with the Company, and accordingly wishes to provide for the indemnification and advancement of expenses to Indemnitee to the maximum extent permitted by law.

AGREEMENT

In consideration of the premises and the covenants contained herein, the Company and Indemnitee agree as follows:

A. DEFINITIONS

The following terms shall have the meanings defined below in this Agreement:

1. “Board” means the Board of Directors of the Company.

2. “Change in Control” means a change in control of the Company occurring after the date of this Agreement of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, a Change in Control shall be deemed to have occurred if at any time after the date of this Agreement (1) any “person” (as Sections 13(d) and 14(d) under the Exchange Act use that term) is or becomes the

“beneficial owner” (as Rule 13d-3 under the Exchange Act defines that term), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s then outstanding Voting Stock without the prior approval of at least two-thirds of the members of the Board in office immediately prior to that person’s attaining that percentage interest; (2) the Company is a party to a merger, consolidation, share exchange, sale of assets or other reorganization, or a proxy contest, as a consequence of which members of the Board in office immediately prior to that transaction or event constitute less than a majority of the Board thereafter, or (3) during any 15-month period, individuals who at the beginning of that period constituted the Board (including for this purpose any new director whose election or nomination for election by the shareholders of the Company was approved by a vote of at least a majority of the directors then still in office who were directors at the beginning of that period) cease for any reason to constitute at least a majority of the Board.

3. “Corporate Status” means the status of a person who is or was a director, officer, partner, employee, agent or fiduciary of the Company or of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise which such person is or was serving at the written request of the Company.

4. “Disinterested Director” means a director of the Company who is not a named defendant or respondent to the Proceeding in respect of which indemnification is sought by Indemnitee.

5. “Independent Counsel” means, with respect to any determination involving Indemnitee’s rights to indemnification under this Agreement, a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither contemporaneously is, nor in the five years theretofore has been, retained to represent: (a) the Company or Indemnitee in any matter material to either such party, (b) any other party to the Proceeding giving rise to a claim for indemnification hereunder or (c) the beneficial owner, directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s then outstanding Voting Stock. Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights to indemnification under this Agreement.

6. “other enterprise” shall include, but shall not be limited to, an “other entity” as Section 1.01 of the TBCA defines that term.

7. “Proceeding” means any threatened, pending or completed action, suit, proceeding or claim, or any inquiry, hearing or investigation, whether civil, criminal, administrative, investigative or other, in which Indemnitee may be or may have been involved as a party or otherwise by reason of an indemnifiable event.

8. “TBCA” means the Texas Business Corporation Act, as from time to time amended.

9. “Voting Stock” means all outstanding shares of all classes and series of capital stock of the Company entitled to vote generally in the election of directors, considered as one class; and, if the Company shall have shares of Voting Stock entitled to more or less than one vote for any such share, any reference in this Agreement to a percentage in voting power of Voting Stock shall be calculated by reference to the percentage of votes the holders of those shares are entitled to cast generally in the election of directors.

B. AGREEMENT TO INDEMNIFY

1. General Agreement . The Company shall indemnify Indemnitee as and to the fullest extent Article 2.02-1 of the TBCA permits, as in effect on the date hereof and to such greater extent as such provision (or any successor provision) may thereafter from time to time permit, without regard to when the event, circumstance, action or claim giving rise to a right of indemnification hereunder arose, whether before or after the date of this Agreement. The foregoing right of indemnification shall not be deemed exclusive of any other rights to which Indemnitee may be entitled as a matter of law or under the Company’s Articles of Incorporation or Bylaws, any other agreement, vote of shareholders or directors, or other arrangement. The provisions set forth in this Agreement are provided in addition to and as a means of furtherance and implementation of, and not in limitation of, the obligations expressed in this Section B.1.

2. Advancement or Reimbursement of Expenses . The rights of Indemnitee provided under Section B.1 shall include, but not be limited to, the right to be indemnified and to have expenses advanced by the Company in all Proceedings to the fullest extent Article 2.02-1 of the TBCA permits, as in effect on the date hereof and to such greater extent as such provision (or any successor provision) may thereafter from time to time permit. In addition, to the extent Indemnitee is, by reason of his Corporate Status, a witness or otherwise participates in any Proceeding at a time when he is not named a defendant or respondent in the Proceeding, the Company shall indemnify him against all expenses actually and reasonably incurred by him or on his behalf in connection therewith. The Company shall pay all reasonable expenses incurred by or on behalf of Indemnitee in connection with any Proceeding, whether brought by the Company or otherwise, in advance of any determination respecting entitlement to indemnification pursuant to this Agreement within 10 days after the receipt by the Company of a written request from Indemnitee accompanied by documentation reasonably evidencing such expenses and requesting such payment or payments from time to time, whether prior to or after final disposition of such Proceeding; provided that Indemnitee undertakes and agrees in writing that he will reimburse and repay the Company for any expenses so advanced to the extent that it shall ultimately be determined, in accordance with the provisions of Article 2.02-1 of the TBCA, that he is not entitled to be indemnified against such expenses. For purposes of this Agreement, “expenses” of Indemnitee shall be deemed to include, without limitation, damages, judgments, fines, penalties, including ERISA excise taxes and penalties, settlements and costs, attorneys’ fees and disbursements and costs of attachment or similar bond, investigations and any expenses actually paid or reasonably incurred by Indemnitee in

connection with investigating, defending, being a witness in, participating in (including on appeal), or preparing for any of the foregoing in, any Proceeding relating to an indemnifiable event, and any federal, state, local or foreign taxes (increased by any taxes imposed by such payments) actually and reasonably incurred or suffered by Indemnitee as result of the actual or deemed receipt of any payments under this Agreement.

3. Indemnification of Expenses of Successful Party . Notwithstanding any other provision of this Agreement, to the extent that Indemnitee has been successful on the merits in defense of any Proceeding or in defense of any claim, issue or matter in such Proceeding, Indemnitee shall be indemnified against all expenses incurred in connection with such Proceeding or such claim, issue or matter, as the case may be.

4. Partial Indemnification . If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for a portion of its expenses, but not for the total amount of its expenses, the Company shall indemnify Indemnitee for the portion of such expenses to which Indemnitee is entitled.

5. No Employment Rights . Nothing in this Agreement is intended to create in Indemnitee any right to continued service as a director and/or officer with the Company.

6. Effect of Certain Proceedings . The termination of any Proceeding against Indemnitee in a proceeding by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, shall not (except as this Agreement otherwise expressly provides) by itself adversely affect the right of Indemnitee to indemnification or create a presumption that he did not conduct himself in good faith and in a manner that he reasonably believed, in the case of conduct in his official capacity, that was in the best interests of the Company or, in all other cases, that was not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that he had reasonable cause to believe that his conduct was unlawful, and that Indemnitee shall be deemed to have been found liable in respect of any claim only after he shall have been so adjudged by a court of competent jurisdiction after exhaustion of all appeals therefrom.

7. Expenses of Enforcement of this Agreement . In the event that Indemnitee, pursuant to this Agreement, seeks a judicial adjudication to enforce his rights under, or to recover damages for breach of, any rights created under or pursuant to this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company against, any and all expenses he actually and reasonably incurs in that judicial adjudication but only if he prevails therein. If it shall be determined in that judicial adjudication that Indemnitee is entitled to receive part but not all of the indemnification or advancement of expenses sought, the expenses Indemnitee incurs in connection with that judicial adjudication shall be reasonably prorated in good faith by counsel for Indemnitee.

C. INDEMNIFICATION PROCESS

1. Notice and Cooperation By Indemnitee. Indemnitee shall give the Company notice in writing as soon as practicable of any Proceeding involving Indemnitee for which indemnification will or could be sought under this Agreement. Notice to the Company shall be given in accordance with Section E.8 below; but the omission to so notify the Company will not relieve it from any liability that it may have to Indemnitee, unless the delay in notification prejudiced the Company in the underlying Proceeding. In addition, Indemnitee shall give the Company such information and cooperation regarding the Proceeding as the Company may reasonably request.

2. Determination of Request . Upon written request to the Company by Indemnitee for indemnification pursuant to this Agreement, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall be made in accordance with Article 2.02-1 of the TBCA; provided, however, that, notwithstanding the foregoing, if a Change in Control shall have occurred, such determination shall be made by Independent Counsel selected by the Board from a list of three reasonably acceptable choices proposed by Indemnitee, unless Indemnitee shall request that such determination be made in accordance with Article 2.02-1F (1) or (2) of the TBCA. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred in connection with any such determination. If a Change in Control shall have occurred, Indemnitee shall be presumed (except as otherwise expressly provided in this Agreement) to be entitled to indemnification under this Agreement upon submission of a request to the Company for indemnification, and thereafter the Company shall have the burden of proof in overcoming that presumption in reaching a determination contrary to that presumption. The presumption shall be used by Independent Counsel, or such other person or persons determining entitlement to indemnification, as a basis for a determination of entitlement to indemnification unless the Company provides information sufficient to overcome that presumption by clear and convincing evidence or the investigation, review and analysis of Independent Counsel or such other person or persons convinces him or them by clear and convincing evidence that the presumption should not apply.

3. Assumption of Defense . In the event the Company advances any expenses for any Proceeding against Indemnitee, the Company shall be entitled to assume the defense of such Proceeding, with counsel approved by Indemnitee (such approval not to be unreasonably withheld), upon delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding unless (i) the employment of counsel by Indemnitee has been previously authorized by the Company, (ii) Indemnitee shall have reasonably concluded, based on written advice of counsel, that there may be a conflict of interest with such counsel retained by the Company or (iii) the Company ceases or terminates the employment of such counsel with respect to the defense of such Proceeding, in any of which events the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. At all times, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee’s expense.

4. No Settlement Without Consent . The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee’s written consent, such consent not to be unreasonably withheld, conditioned or delayed.

5. Limitation of Actions and Release of Claims. Following a Change in Control, no Proceeding shall be brought and no cause of action shall be asserted by or on behalf of the Company against Indemnitee, or Indemnitee’s spouse, heirs, estate, executors or administrators, after the expiration of one year from the alleged act or omission of Indemnitee giving rise to the Proceeding or cause of action, unless Indemnitee fraudulently conceals the facts underlying such Proceeding or cause of action.

D. DIRECTOR AND OFFICER LIABILITY INSURANCE

1. Good Faith Determination . The Company shall from time to time make a good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors and officers of the Company or its subsidiaries or affiliates, with coverage for losses incurred in connection with their services to the Company or its subsidiaries or affiliates or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage.

2. Coverage of Indemnitee . To the extent the Company maintains an insurance policy or policies providing directors’ and/or officers’ liability insurance, Indemnitee shall be covered by such policy or policies, in accordance with its or their terms, to the maximum extent of the coverage available for any of the Company’s directors and/or officers. The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any bylaws, insurance policy, contract, agreement or otherwise.

E. MISCELLANEOUS

1. Amendment of this Agreement. No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by the parties hereto. No waiver of any of the provisions of this Agreement shall operate as a waiver of any other provisions (whether or not similar), nor shall such waiver constitute a continuing waiver. Except as specifically provided in this Agreement, no failure to exercise or any delay in exercising any right or remedy shall constitute a waiver.

2. Subrogation . In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee,

who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company to bring suit to enforce such rights.

3. Binding Effect. This Agreement shall be binding upon and insure to the benefit of and be enforceable by the parties hereto and the Company’s successors (including any direct or indirect successor by purchase, merger, consolidation, or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, as well as Indemnitee’s spouses, heirs, and personal and legal representatives.

4. Severability and Construction . Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to a court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. In addition, if any portion of this Agreement shall be held by a court of competent jurisdiction to be invalid, void or otherwise unenforceable, the remaining provisions shall remain enforceable to the fullest extent permitted by applicable law. The parties hereto acknowledge that they each have had opportunities to have their respective counsels review this Agreement. Accordingly, this Agreement shall be deemed to be the product of both of the parties hereto, and no ambiguity shall be construed in favor of or against either of the parties hereto.

5. Duration of Agreement . This Agreement shall continue for so long as Indemnitee serves at the request of the Company as a director, officer, employee, agent or fiduciary of the Company or as a director, officer, partner, employee, agent or fiduciary of any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in which the Company has an interest, and thereafter shall survive until and terminate upon the last to occur of: (a) the final termination of all pending Proceedings in respect of which Indemnitee is granted rights of indemnification or advancement of expenses hereunder and of any proceeding commenced by Indemnitee pursuant to this Agreement relating thereto; or (b) the expiration of all statutes of limitation applicable to possible Proceedings arising out of Indemnitee’s Corporate Status.

6. Counterparts . This agreement may be executed in two counterparts, both of which taken together shall constitute one instrument.

7. Governing Law . This agreement and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the State of Texas, without giving effect to conflicts of law provisions thereof.

8. Notices . All notices, demands and other communications required or permitted under this Agreement shall be made in writing and shall be deemed to have been duly given if delivered by hand, against receipt, or mailed, postage prepaid, certified or registered mail, return receipt requested, and addressed to the Company at:

Pioneer Drilling Company

1250 N.E. Loop 410 Ste 1000

San Antonio, Texas 78209

Attn: Chief Financial Officer

And to Indemnitee at the address set forth on the signature page attached hereto.

In WITNESS WHEREOF, the parties hereto execute this Agreement as of the date first written above.

Exhibit 10.2

PIONEER DRILLING SERVICES, LTD.

KEY EXECUTIVE SEVERANCE PLAN

(As Established Effective August 3, 2007)

I. Purposes of Plan and Definitions

1.1 Purposes . This Pioneer Drilling Services, Ltd. Key Executive Severance Plan (the “Plan”), for selected key executive employees of Pioneer Drilling Services, Ltd., a Texas limited partnership, and any successor thereto (the “Partnership”) and its Affiliates, is intended to assist the Partnership in attracting and retaining competent and capable executives to perform services for Pioneer Drilling Company, a Texas corporation (the “Company”) and its subsidiaries (including the Partnership), to provide greater incentives to such key executives to attain and maintain high levels of performance, to support the retention of an intact management team during any consideration of potential transactions involving the Company, and to provide some protection for loss of salary and benefits in the event of certain involuntary terminations or changes in control of the Company.

1.2 Definitions .

“Affiliate” means, with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries, controls, is controlled by or is under common control with the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“AIP” means the Pioneer Drilling Services, Ltd. Annual Incentive Compensation Plan, as from time to time in effect, including any successor plan.

“Associate” means, with reference to any Person (as defined below), (i) any corporation, firm, partnership, association, unincorporated organization or other entity (other than the Company or any of its Affiliates (including the Partnership)) of which that Person is an officer or general partner (or officer or general partner of a general partner) or is, directly or indirectly, the Beneficial Owner (as defined below) of 10% or more of any class of its equity securities, (ii) any trust or other estate in which that Person has a substantial beneficial interest or for or of which that Person serves as trustee or in a similar fiduciary capacity and (iii) any relative or spouse of that Person, or any relative of that spouse, who has the same home as that Person.

“Base Salary” means the annual base salary of a Participant, as established by the Committee (as defined below) for a fiscal year.

“Beneficial Owner.” A Person is deemed the “Beneficial Owner” of, and is deemed to “beneficially own,” any securities:

(i) of which that Person or any of its Affiliates or Associates, directly or indirectly, is the “beneficial owner” (as determined pursuant to Rule 13d-3 under the Exchange Act (as defined below)) or otherwise has the right to vote or dispose of, including pursuant to any agreement, arrangement or understanding (whether or not in writing); provided, however , that a Person will not be deemed the “Beneficial Owner” of, or to “beneficially own,” any security under this subparagraph (i) as a result of an agreement, arrangement or understanding to vote that security if that agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given in response to a public (that is, not including a solicitation exempted by Exchange Act Rule 14a-2(b)(2)) proxy or consent solicitation made pursuant to, and in accordance with, the applicable provisions of the Exchange Act; and (B) is not then reportable by that Person on Exchange Act Schedule 13D (or any comparable or successor report);

(ii) which that Person or any of its Affiliates or Associates, directly or indirectly, has the right or obligation to acquire (whether that right or obligation is exercisable or effective immediately or only after the passage of time or the occurrence of an event) pursuant to any agreement, arrangement or understanding (whether or not in writing) or on the exercise of conversion rights, exchange rights, other rights, warrants or options, or otherwise; provided, however , that a Person will not be deemed the “Beneficial Owner” of, or to “beneficially own,” securities tendered pursuant to a tender or exchange offer made by that Person or any of its Affiliates or Associates until those tendered securities are accepted for purchase or exchange; or

(iii) which are beneficially owned, directly or indirectly, by (A) any other Person (or any Affiliate or Associate thereof) with which the specified Person or any of its Affiliates or Associates has any agreement, arrangement or understanding (whether or not in writing) for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy or consent as described in the proviso to subparagraph (i) of this definition) or disposing of any voting securities of the Company or (B) any group (as Exchange Act Rule 13d-5(b) uses that term) of which that specified Person is a member;

provided, however , that nothing in this definition will cause a Person engaged in business as an underwriter of securities to be the “Beneficial Owner” of, or to “beneficially own,” any securities that Person acquires through its participation in good faith in a firm commitment underwriting (including securities acquired pursuant to stabilizing transactions to facilitate a public offering in accordance with Exchange Act Regulation M or to cover overallotments created in connection with a public offering) until the expiration of 40 days after the date of that acquisition. For purposes of this definition, “voting” a security includes voting, granting a proxy, acting by consent, making a request or demand relating to corporate action (including calling a stockholder meeting) or otherwise giving an authorization (within the meaning of Exchange Act Section 14(a)) in respect of that security.

“Board” means the board of directors of the Company.

“Cause” means, (x) with respect to any Level I or Level II Participant (as defined below), that Participant’s (i) commission of any act or omission constituting fraud under

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any law of the State of Texas, (ii) conviction of, or a plea of nolo contendere to, a felony, (iii) embezzlement or theft of property or funds of the Partnership or any Affiliate or (iv) refusal to perform the his or her duties, as specified in any written agreement between the Participant and the Company or in any specific directive adopted by a majority of the Board members at a meeting of the Board that is consistent with the Participant’s status as an executive officer of the Company; and (y) with respect to any Level III or other Participant, that Participant’s (i) commission of any act or omission constituting fraud under any law of the State of Texas, (ii) conviction of, or a plea of nolo contendere to, a felony, (iii) embezzlement or theft of property or funds of the Partnership or any Affiliate, (iv) failure to follow the instructions of the Board or the board of directors of the General Partner (in either case, as approved by a majority of the members of such board at a meeting of such board) or any supervising or executive officer of the Partnership or any Affiliate or (v) unacceptable performance, gross negligence or willful misconduct with respect to his or her duties to the Partnership or any Affiliate.

“Change in Control” has the meaning set forth in Section 5.5.

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended from time to time.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board or such other committee of the Board or of the board of directors of the General Partner as is designated by either the Board or the board of directors of the General Partner to administer the Plan.

“Common Stock” means the common stock of the Company.

“Company” has the meaning set forth in Section 1.1.

“Disability” means the absence of a Participant from the Participant’s duties with the Partnership or any of its Affiliates on a full-time basis for at least 180 consecutive days as a result of incapacity due to mental or physical illness or injury which is determined by the Committee in its sole discretion to be permanent.

“Effective Date of a Change in Control” has the meaning set forth in Section 5.6.

“Employee” means any employee of the Partnership or any of its Affiliate (whether or not he is also a director thereof) who is compensated for employment of the Partnership or any Affiliate by a regular salary and who is considered by the Committee to be a senior management employee.

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

“Exempt Person” means: (i) the Partnership; (ii) any Affiliate of the Partnership (including the Company); (iii) any employee benefit plan of the Partnership or of any Affiliate and any Person organized, appointed or established by the Partnership for or

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pursuant to the terms of any such plan or for the purpose of funding any such plan or funding other employee benefits for employees of the Partnership or any Affiliate of the Partnership; or (iv) any corporation or other entity owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of capital stock of the Company.

“General Partner” means PDC Mgmt. Co., a Texas corporation and the general partner of the Partnership.

“Good Reason” for the Participant to terminate his or her employment means, prior to the Effective Date of a Change in Control, the occurrence (without the Participant’s written consent) of any of the following:

(i) a reduction in the Participant’s Base Salary or total compensation except for an across-the-board reduction similarly affecting all senior executives of the Partnership and all senior executives of any Person in control of the Partnership;

(ii) failure by the Partnership to pay any portion of the Participant’s compensation within fourteen days of the date it is due or any other material breach of a contract with the Participant by the Partnership which is not remedied by the Partnership within 5 business days after the Participant's written notice to the Partnership of such breach; or

(iii) the Partnership’s failure to maintain a Participant’s employment without material diminution in the Participant’s duties and responsibilities, and such failure is not cured by the Partnership within 5 business days after the Participant’s written notice to the Partnership of such failure.

After the Effective Date of a Change in Control, “Good Reason” shall also include any of (iv)-(ix) below unless, in the case of any of (v), (vii), (viii), or (ix), such act or failure is corrected within five business days following the giving of written notice of Good Reason by the Participant, and in the case of (vi) below, such act is not objected to in writing by the Participant within fourteen days after notification thereof:

(iv) after a Change in Control, the determination by the Participant, in his or her sole and absolute discretion, that the business philosophy or policies of the Partnership or the Company or its successor or the implementation thereof is not compatible with those of the Participant;

(v) the assignment to the Participant of duties inconsistent with his or her status as an executive officer of the Company or a meaningful alteration, adverse to the Participant, in the nature or status of his or her responsibilities (other than reporting responsibilities) from those in effect immediately prior to a Change in Control, including, without limitation, a material reduction in the budget for which the Participant is responsible;

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(vi) failure by the Partnership or the Company to continue in effect any compensation plan in which the Participant participates immediately prior to a Change in Control that is material to the Participant’s compensation, unless an equitable arrangement has been made with the Participant with respect to such plan;

(vii) failure by the Partnership or the Company to continue the Participant’s participation in a plan described in (vi) above or a substitute or alternative plan on a basis not materially less favorable to the Participant than as existed at the time of a Change in Control;

(viii) failure by the Partnership to continue to provide the Participant with benefits substantially similar to those enjoyed by the Participant prior to a Change in Control; or

(ix) a requirement by the Partnership or the Company that the Participant relocate his or her residence outside the metropolitan area in which the Participant was based immediately prior to a Change in Control, or a move of the Participant’s principal business location more than 45 miles from the Participant’s previous principal business location.

The Participant’s continued employment shall not of itself constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder.

“Gross-Up Payment” has the meaning set forth in Section 5.4.

“Involuntary Termination” means the termination of a Participant’s employment with the Partnership or any Affiliate (i) by the Partnership or any Affiliate for any reason other than Cause, death, or Disability or (ii) by the Participant for Good Reason.

“Level I Participant” means the Participant is designated as a Level I participant under the AIP and the Partnership’s and Company’s long-term incentive plan as of the execution date of the Participation Certificate.

“Level II Participant” means the Participant is designated as a Level II participant under the AIP and the Partnership’s and the Company’s long-term incentive plan as of the execution date of the Participation Certificate.

“Level III Participant” means the Participant is designated as a Level III participant under the AIP and the Partnership’s and the Company’s long-term incentive plan as of the execution date of the Participation Certificate.

“Participant” means an Employee who has been selected by the Committee to participate in the Plan.

“Participation Certificate” means a certificate substantially similar to the form attached hereto as Exhibit A .

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“Partnership” has the meaning set forth in Section 1.1.

“Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.

“Plan” has the meaning set forth in Section 1.1.

“Voting Stock” means the Common Stock and any other securities issued by the Company which entitle the holder thereof to vote generally in the election of members of the Board.

“Waiver and Release” means a legal document, in a form substantially similar to the form attached hereto as Exhibit B , in which a Participant, in exchange for severance benefits under the Plan, releases, among other parties, the Partnership and all of its Affiliates and their directors, officers, employees and agents, their employee benefit plans, and the fiduciaries and agents of said plans from liability and damages in any way related to the Participant’s employment with or separation from employment with the Partnership or any of its Affiliates.

“Waiver Effective Date” means the eighth day following the date on which the Participant executes the Waiver and Release.

II. Administration of the Plan

2.1 Interpretations . The Committee shall have full power and authority to interpret, construe and administer the Plan.

2.2 Committee Determinations Conclusive . All determinations by the Committee as to which Employees shall be offered the opportunity to participate herein, and any interpretation adopted by the Committee with respect to any provision of the Plan and the effect thereof, shall be final, binding and conclusive upon the Partnership, all Affiliates and all persons who may claim any rights or benefits hereunder; provided, however , that a Change in Control shall occur only pursuant to the provisions of Section 5.5.

III. Eligibility of Employees

3.1 Eligibility Requirements . The Committee shall in its sole discretion from time to time designate the Employees who are to be Participants.

3.2 Notification of Participation . Each Employee who is designated a Participant by the Committee shall be provided a Participation Certificate, in the form attached hereto as Exhibit A , specifying that the Employee is a Participant, together with a copy of the Plan.

3.3 Termination of Participation. An Employee’s status as a Participant shall terminate at such time as may be determined by the Committee, provided such Participant shall be given notice of such termination of status as a Participant by the Committee at least one year

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prior to the effectiveness of such termination; provided, however, that in the case of an Employee who is a Participant immediately prior to the Effective Date of a Change in Control, such Employee’s status as a Participant may not be terminated without his or her written consent at any time within two years following the Effective Date of such Change in Control.

IV. Involuntary Termination Not Incident to Change in Control

4.1 Cash Severance Payment . In the event of an Involuntary Termination of a Participant that does not occur within two years following the Effective Date of a Change in Control, the Participant, in addition to all obligations otherwise owing to the Participant, shall be entitled to the following cash severance benefit following his or her execution, without revocation, of the Waiver and Release:

(a) If the Participant is a Level I Participant or a Level II Participant, a lump-sum cash payment, payable not later than five days following the Waiver Effective Date, in an amount equal to two times the sum of the Participant's Base Salary, as in effect on the date of such Involuntary Termination, and the Participant’s annual target bonus amount for the AIP in effect on the date of such Involuntary Termination; or

(b) If the Participant is a Level III Participant, a lump-sum cash payment, payable not later than five days following the Waiver Effective Date, in an amount equal to one times the Participant's Base Salary, as in effect on the date of such Involuntary Termination; or

(c) If the Participant is designated as other than a Level I, Level II or Level III Participant, a lump-sum cash payment, payable not later than five days following the Waiver Effective Date, in an amount equal to one-half (1/2) times the Participant's Base Salary, as in effect on the date of such Involuntary Termination.

(d) In the event a Participant is a “specified employee” for purposes of Section 409A of the Code (as determined as of the Participant’s termination of employment pursuant to policies adopted by the Board of Directors), the lump sum payment specified in this Section 4.1 shall be delayed until the date six months and two days following the date of the Participant’s termination of employment.

4.2 Vesting of All Equity Awards .

(a) Subject to the Participant’s execution of the Waiver and Release, if the Participant is a Level I Participant or a Level II Participant and is entitled to a cash severance benefit under Section 4.1, then notwithstanding any provision to the contrary in any applicable plan or agreement, the Participant shall be entitled to immediate and full vesting of all stock options and other equity-based awards held by the Participant on the date of his or her termination of employment to the extent such stock options or other equity-based awards would have otherwise vested during the twelve-month period immediately following the Participant’s Involuntary Termination.

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(b) Subject to the Participant’s execution of the Waiver and Release, if the Participant is a Level III Participant and is entitled to a cash severance benefit under Section 4.1, then notwithstanding any provision to the contrary in any applicable plan or agreement, the Participant shall be entitled to immediate and full vesting of all stock options and other equity-based awards held by the Participant on the date of his or her termination of employment to the extent such stock options or other equity-based awards would have otherwise vested during the twelve-month period immediately following the Participant’s Involuntary Termination.

(c) Subject to the Participant’s execution of the Waiver and Release, if the Participant is designated as other than a Level I, Level II or Level III Participant and is entitled to a cash severance benefit under Section 4.1, the Participant shall be entitled to immediate and full vesting of all stock options and other equity-based awards held by the Participant on the date of his or her termination of employment to the extent such stock options or other equity-based awards would have otherwise vested during the six-month period immediately following the Participant’s Involuntary Termination.

4.3 Life Insurance and Medical Benefits Continuation .

(a) Subject to the Participant’s execution of the Waiver and Release, any Level I Participant or Level II Participant who is entitled to a severance benefit under Section 4.1 shall be entitled to receive for himself or herself and, where applicable, his or her eligible dependents, for twelve months following his or her Involuntary Termination, continued life insurance coverage and coverage under the Partnership’s medical benefits plan in which the Participant is participating as of the date of his or her Involuntary Termination (or any successor medical plan maintained by the Partnership or an Affiliate, as applicable, under which the active employees of the Partnership participate) at the same rate and under the same terms and conditions as may then be in effect for active employee participants. The period of coverage provided under this section shall not constitute continuation coverage required by COBRA. Following the benefits continuation period provided herein, the Participant shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA. In the event of a Participant’s death during the benefits continuation period, the Participant’s beneficiaries shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA.

(b) Subject to the Participant’s execution of the Waiver and Release, any Level III Participant who is entitled to a severance benefit under Section 4.1 shall be entitled to receive for himself or herself and, where applicable, his or her eligible dependents, for twelve months following his or her Involuntary Termination, continued life insurance coverage and coverage under the Partnership’s medical benefits plan in which the Participant is participating as of the date of his or her Involuntary Termination (or any successor medical plan maintained by the Partnership or an Affiliate, as applicable, under which the active employees of the Partnership participate) at the same rate and under the same terms and conditions as may then be in effect for active employee participants. The period of coverage provided under this section shall not constitute continuation coverage required by COBRA. Following the benefits

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continuation period provided herein, the Participant shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA. In the event of a Participant’s death during the benefits continuation period, the Participant’s beneficiaries shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA.

(c) Subject to the Participant’s execution of the Waiver and Release, any Participant who is other than a Level I, Level II or Level III Participant who is entitled to a severance benefit under Section 4.1 shall be entitled to receive for himself or herself and, where applicable, his or her eligible dependents, for six months following his or her Involuntary Termination, continued life insurance coverage and coverage under the Partnership’s medical benefits plan in which the Participant is participating as of the date of his or her Involuntary Termination (or any successor medical plan maintained by the Partnership or an Affiliate, as applicable, under which the active employees of the Partnership participate) at the same rate and under the same terms and conditions as may then be in effect for active employee participants. The period of coverage provided under this section shall not constitute continuation coverage required by COBRA. Following the benefits continuation period provided herein, the Participant shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA. In the event of a Participant’s death during the benefits continuation period, the Participant’s beneficiaries shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA.

(d) In the event a Participant is a “specified employee” for purposes of Section 409A of the Code (as determined as of the Participant’s termination of employment pursuant to policies adopted by the Board), payment of the Partnership’s portion of any life insurance premiums shall be delayed until the date six months and two days following the date of the Participant’s termination of employment. During the six months following termination of employment, the Participant shall be responsible for payment of the entire amount of life insurance premiums.

(e) Notwithstanding the foregoing, the continuation of life insurance coverage and medical benefits for any Participant shall immediately end upon the Participant’s eligibility for similar life insurance and medical coverage by reason of employment with any entity other than the Partnership or any Affiliate.

V. Involuntary Termination Upon Change in Control

5.1 Cash Severance Payment . In the event of an Involuntary Termination of a Participant within two years following the Effective Date of a Change in Control, then in lieu of the cash severance benefit provided in Section 4.1, the Participant shall be entitled to the following cash severance benefit:

(a) If the Participant is a Level I Participant or a Level II Participant, a lump-sum cash payment, payable not later than 30 days following the date of the Participant’s termination of employment, in an amount equal to three times the sum of (i) the

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Participant's Base Salary (which shall, for this purpose, be the higher of (x) the Base Salary in effect on the date immediately prior to such Effective Date of a Change in Control or (y) the Base Salary in effect on the date of termination of employment), and (ii) the amount equal to the annual amount of the Participant's maximum award opportunity under the AIP (which shall, for this purpose, be the higher of (x) the annual amount of the Participant’s maximum award opportunity in effect immediately prior to such Effective Date of a Change in Control or (y) the annual amount of the Participant’s maximum award in effect on the date of such Involuntary Termination), and (iii) an amount equal to the annual amount of the Participant’s car allowance or car lease payments and annual club membership fees allowance, if any, (which shall, for this purpose, be the higher of (x) the annual amount of the Participant’s maximum car allowance or car lease payments and annual club membership fees allowance, if any, in effect immediately prior to such Effective Date of a Change in Control or (y) the annual amount of the Participant’s maximum car allowance or car lease payments and annual club membership fees allowance, if any, in effect on the date of such Involuntary Termination); or

(b) If the Participant is a Level III Participant, a lump-sum cash payment, payable not later than 30 days following the date of the Participant’s termination of employment, in an amount equal to two times the sum of (i) the Participant's Base Salary (which shall, for this purpose, be the higher of (x) the Base Salary in effect on the date immediately prior to such Effective Date of a Change in Control or (y) the Base Salary in effect on the date of termination of employment), and (ii) the amount equal to the annual amount of the Participant's maximum award opportunity under the AIP (which shall, for this purpose, be the higher of (x) the annual amount of the Participant’s maximum award opportunity in effect immediately prior to such Effective Date of a Change in Control or (y) the annual amount of the Participant’s maximum award in effect on the date of such Involuntary Termination), and (iii) an amount equal to the annual amount of the Participant’s car allowance or car lease payments and annual club membership fees allowance, if any, (which shall, for this purpose, be the higher of (x) the annual amount of the Participant’s maximum car allowance or car lease payments and annual club membership fees allowance, if any, in effect immediately prior to such Effective Date of a Change in Control or (y) the annual amount of the Participant’s maximum car allowance or car lease payments and annual club membership fees allowance, if any, in effect on the date of such Involuntary Termination); or

(c) If the Participant is other than a Level I, Level II or Level III Participant, a lump-sum cash payment, payable not later than 30 days following the date of the Participant’s termination of employment, in an amount equal to one and one-half (1  ¹ / 2 ) times the sum of (i) the Participant's Base Salary (which shall, for this purpose, be the higher of (x) the Base Salary in effect on the date immediately prior to such Effective Date of a Change in Control or (y) the Base Salary in effect on the date of termination of employment), (ii) the amount equal to the annual amount of the Participant's maximum award opportunity under the AIP (which shall, for this purpose, be the higher of (x) the annual amount of the Participant’s maximum award opportunity in effect immediately prior to such Effective Date of a Change in Control or (y) the annual amount of the Participant’s maximum award in effect on the date of such Involuntary Termination), and

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(iii) an amount equal to the annual amount of the Participant’s car allowance or car lease payments and annual club membership fees allowance, if any, (which shall, for this purpose, be the higher of (x) the annual amount of the Participant’s maximum car allowance or car lease payments and annual club membership fees allowance, if any, in effect immediately prior to such Effective Date of a Change in Control or (y) the annual amount of the Participant’s maximum car allowance or car lease payments and annual club membership fees allowance, if any, in effect on the date of such Involuntary Termination).

(d) In the event a Participant is a “specified employee” for purposes of Section 409A of the Code (as determined as of the Participant’s termination of employment pursuant to policies adopted by the Board), the lump sum payment specified in this Section 5.1 shall be delayed until the date six months and two days following the date of the Participant’s termination of employment.

5.2 Vesting of All Equity Awards. Upon the Effective Date of a Change in Control, each Participant shall be entitled to immediate and full vesting of all stock options and other equity-based awards held by the Participant as of such date.

Following the Effective Date of a Change in Control, to the extent permitted by law and by any agreement to which the Company or the surviving entity in such Change in Control (the “Surviving Entity”), and to the extent the Surviving Entity has adequate legal capital, a Participant who has been subject of an Involuntary Termination within two years following the Effective Date of a Change in Control shall have the right to put any and all such vested awards, or, if already exercised, the underlying equity securities, to the Surviving Entity, and the Surviving Entity shall have the obligation to purchase such vested awards or underlying equity securities, as the case may be, if the Participant would violate the securities laws by selling the underlying equity securities directly into the market or privately to a third party. Such right shall be exercisable by such Participant at any time prior to the date which is twelve months following the date of his or her Involuntary Termination following the applicable Change in Control. The Participant may exercise such right by providing to the Surviving Entity five business days prior written notice. Within five business days after the effectiveness of such notice and upon receipt by the Surviving Entity of the awards or underlying equity securities that are subject to the put right, the Surviving Entity shall pay the purchase price, which shall be determined as follows:

(a) the purchase price for an award shall be the difference between the aggregate fair market value of the underlying equity securities and the aggregate exercise price set forth in the award; and

(b) the purchase price for the underlying equity securities shall be the aggregate fair market value of the underlying equity securities.

Fair market value of a share or other trading unit of equity securities shall be equal to (1) with respect to publicly traded equity securities (each a “Public Security”), the average of the high and low market prices at which a share or other trading unit of the Public Security shall have been sold on such date (or the immediately preceding trading day if such date was not a trading day) on the AMEX or such other exchange or quotation

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system on which the Public Security is traded, and (2) with respect to equity securities that are not publicly traded, the value of a share or trading unit as determined by a nationally-recognized accounting firm selected by the Participant, with such valuation to be paid for by the Participant.

5.3 Life Insurance and Medical Benefits Continuation .

(a) Any Level I Participant or Level II Participant entitled to a severance benefit under Section 5.1 shall be entitled to receive for himself or herself and, where applicable, his or her eligible dependents, for eighteen months following his or her Involuntary Termination, continued life insurance coverage and coverage under the Partnership’s medical benefits plan in which the Participant is participating as of the date of the Effective Date of a Change in Control giving rise to the benefit payment under Section 5.1, at the same rate as may then be in effect for active Participants. The period of coverage provided under this section shall not constitute continuation coverage required by COBRA. Following the benefits continuation period provided herein, the Participant shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA. In the event of the Participant’s death during the benefits continuation period, the Participant’s beneficiaries shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA.

(b) Any Participant who is a Level III Participant entitled to a severance benefit under Section 5.1 shall be entitled to receive for himself or herself and, where applicable, his or her eligible dependents, for twelve months following his or her Involuntary Termination, continued life insurance coverage and coverage under the Partnership’s medical benefits plan in which the Participant is participating as of the date of the Effective Date of a Change in Control giving rise to the benefit payment under Section 5.1, at the same rate as may then be in effect for active Participants. The period of coverage provided under this section shall not constitute continuation coverage required by COBRA. Following the benefits continuation period provided herein, the Participant shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA. In the event of the Participant’s death during the benefits continuation period, the Participant’s beneficiaries shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA.

(c) Any Participant who is a other than a Level I, Level II or Level III Participant entitled to a severance benefit under Section 5.1 shall be entitled to receive for himself or herself and, where applicable, his or her eligible dependents, for twelve months following his or her Involuntary Termination, continued life insurance coverage and coverage under the Partnership’s medical benefits plan in which the Participant is participating as of the date of the Effective Date of a Change in Control giving rise to the benefit payment under Section 5.1, at the same rate as may then be in effect for active Participants. The period of coverage provided under this section shall not constitute continuation coverage required by COBRA. Following the benefits continuation period provided herein, the Participant shall be eligible to commence continued medical

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coverage in accordance with, and for the applicable period required by, COBRA. In the event of the Participant’s death during the benefits continuation period, the Participant’s beneficiaries shall be eligible to commence continued medical coverage in accordance with, and for the applicable period required by, COBRA.

(d) In the event a Participant is a “specified employee” for purposes of Section 409A of the Code (as determined as of the Participant’s termination of employment pursuant to policies adopted by the Board of Directors), payment of the Partnership’s portion of any life insurance premiums shall be delayed until the date six months and two days following the Participant’s termination of employment. During the six months following termination of employment, the Participant shall be responsible for payment of the entire amount of life insurance premiums.

(e) Notwithstanding the foregoing, the continuation of life insurance coverage and medical benefits for any Participant shall immediately end upon the Participant’s eligibility for similar life insurance and medical coverage by reason of employment with an entity other than the Partnership or any Affiliate.

5.4 Certain Additional Payments. Anything in this Plan to the contrary notwithstanding and except as set forth below, in the event it shall be determined that any payment or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Participant, whether paid or payable or distributed or distributable pursuant to the terms of this Plan or otherwise, but determined without regard to any additional payments required under this Section 5.4 (the “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax (“Excise Tax”), then the Participant shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an amount such that, after payment (whether through withholding at the source or otherwise) by the Participant of all taxes (including any interest or penalties imposed with respect to such taxes), including, without limitation, any income taxes (and any interest and penalties imposed with respect thereto), employment taxes and Excise Tax imposed upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Payment (or such amount is paid on the Participant’s behalf with respect to such Excise Tax).

Subject to the provisions of this Section 5.4, all determinations required to be made under this Section 5.4, including whether and when a Gross Up Payment is required and the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by a nationally recognized certified public accounting firm that is selected by the Partnership (the “Accounting Firm”) which shall provide detailed supporting calculations both to the Partnership and the Participant within five business days after the receipt of notice from the Partnership or the Participant that a Payment is expected to be made under this Agreement, or such earlier time as is requested by the Partnership. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control or the Accounting Firm declines or is unable to serve, the Participant shall appoint another nationally recognized certified public accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Partnership.

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Any Gross-Up Payment, as determined pursuant to this Section 5.4, shall be paid by the Partnership to the Participant before the later of (i) the date the Payment is made and (ii) five days after the receipt of the Accounting Firm’s determination (but in no event later than the December 31st of the year following the year in which the Participant remits the related taxes). If the Accounting Firm determines that no Excise Tax is payable by the Participant, it shall furnish the Participant with a written opinion that failure to report the Excise Tax on the Participant’s applicable federal income tax return would not result in the imposition of negligence or similar penalty. Any determination by the Accounting Firm shall be binding upon the Partnership and the Participant. As a result of the uncertainty in the application of Section 4999 of the Code at the time of the initial determination by the Accounting Firm hereunder, it is possible that Gross Up Payments which will not have been made by the Partnership should have been made (“Underpayment”), consistent with the calculations required to be made hereunder. In the event that the Partnership exhausts its remedies pursuant to the following provisions of this Section 5.4 and the Participant thereafter is required to make a payment of any Excise Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any such Underpayment shall be promptly paid by the Partnership to or for the benefit of the Participant.

The Participant shall notify the Partnership in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Partnership of the Gross Up Payment. Such notification shall be given as soon as practicable but no later than 10 business days after the Participant is informed in writing of such claim and shall apprise the Partnership of the nature of such claim and the date on which such claim is requested to be paid. The Participant shall not pay such claim prior to the expiration of the 30 day period following the date on which it gives such notice to the Partnership (or such shorter period ending on the date that any payment of taxes with respect to such claim is due). If the Partnership notifies the Participant in writing prior to the expiration of such period that it desires to contest such claim, the Participant shall:

(a) give the Partnership any information reasonably requested by the Partnership relating to such claim;

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

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

(d) permit the Partnership to participate in any proceedings relating to such claim;

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provided, however, that the Partnership shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Participant harmless, on an after tax basis, for any Excise Tax, employment tax or income tax (including interest and penalties with respect thereto) imposed as a result of such representation and payment of costs and expenses. Without limitation of the foregoing provisions of this Section 5.4, the Partnership shall control all proceedings taken in connection with such contest and, at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may, at its sole option, either direct the Participant to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Participant agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts, as the Partnership shall determine; provided, however, that any extension of the statute of limitations relating to payment of taxes for the taxable year of the Participant with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Partnership’s control of the contest shall be limited to issues with respect to which a Gross Up Payment would be payable hereunder and the Participant shall be entitled to settle or contest, as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority.

If, after the receipt by the Participant of an amount provided by the Partnership pursuant to the foregoing provisions of this Section 5.4, the Participant becomes entitled to receive any refund with respect to such claim, the Participant shall (subject to the Partnership complying with the requirements of this Section 5.4) promptly pay to the Partnership the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto).

In the event a Participant is a “specified employee” for purposes of Section 409A of the Code (as determined as of the Participant’s termination of employment pursuant to policies adopted by the Board), any Gross-Up Payment shall be delayed until the date six months and two days following the date of Participant’s termination of employment.

5.5 Change in Control of the Company . For purposes of the Plan, a “Change in Control” of the Company shall conclusively be deemed to have occurred if an event set forth in any one of the following paragraphs shall have occurred:

(a) any Person (other than an Exempt Person) is or becomes the Beneficial Owner of Voting Stock (not including in the securities beneficially owned by such Person any securities acquired directly from the Company after the date the Plan first became effective) representing 40% or more of the combined voting power of the Voting Stock then outstanding; provided, however , that a Change of Control will not be deemed to occur under this clause (a) if a Person becomes the Beneficial Owner of Voting Stock representing 40% or more of the combined voting power of the Voting Stock then outstanding solely as a result of a reduction in the number of shares of Voting Stock outstanding which results from the Company’s repurchase of Voting Stock, unless and until such time as that Person or any Affiliate or Associate of that Person purchases or otherwise becomes the Beneficial Owner of additional shares of Voting Stock constituting 1% or more of the combined voting power of the Voting Stock then outstanding, or any other Person (or Persons) who is (or collectively are) the Beneficial

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Owner of shares of Voting Stock constituting 1% or more of the combined voting power of the Voting Stock then outstanding becomes an Affiliate or Associate of that Person, unless, in either such case, that Person, together with all its Affiliates and Associates, is not then the Beneficial Owner of Voting Stock representing 40% or more of the Voting Stock then outstanding; or

(b) the following individuals cease for any reason to constitute a majority of the number of directors then serving: individuals who, on the date the Plan first became effective, constitute the Board; and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest relating to the election of directors of the Company) whose appointment or election by the Board of the Company or nomination for election by the Company's stockholders was approved or recommended by a majority vote of the directors then still in office who either were directors on the date the Plan first became effective or whose appointment, election or nomination for election was previously so approved or recommended; or

(c) there is consummated a merger or consolidation of the Company or any parent or direct or indirect subsidiary of the Company with or into any other corporation, other than: (i) a merger or consolidation which results in the Voting Stock outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities which entitle the holder thereof to vote generally in the election of members of the board of directors or similar governing body of the Company or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation; or (ii) a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Exempt Person) is or becomes the Beneficial Owner of Voting Stock (not including, for purposes of this determination, any Voting Stock acquired directly from the Company or its subsidiaries after the date the Plan first became effective other than in connection with the acquisition by the Company or one of its subsidiaries of a business) representing 40% or more of the combined voting power of the Voting Stock then outstanding; or

(d) the stockholders of the Company approve a plan of complete liquidation or dissolution of the Company, or there is consummated an agreement for the sale or disposition of all or substantially all of the Company’s assets unless (i) the sale is to an entity, of which at least 50% of the combined voting power of the securities which entitle the holder thereof to vote generally in the election of members of the board of directors or similar governing body of such entity (“New Entity Securities”) are owned by stockholders of the Company in substantially the same proportions as their ownership of the Voting Stock immediately prior to such sale; (ii) no Person other than the Company and any employee benefit plan or related trust of the Company or of such corporation then beneficially owns 40% or more of the New Entity Voting Securities; and (iii) at least a majority of the directors of such corporation were members of the Incumbent Board at the time of the execution of the initial agreement or action providing for such disposition.

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5.6 Effective Date of a Change in Control . The "Effective Date of a Change in Control" shall be:

(a) the first date that the direct or indirect ownership of 40% or more combined voting power of the Company's outstanding securities results in a Change in Control as described in Section 4.2(a);

(b) the date of the election of directors that results in a Change in Control as described in Section 4.2(b);

(c) the effective date of the merger or consideration that results in a Change in Control as described in Section 4.2(c); or

(d) the date of stockholder approval that results in a Change in Control as described in Section 4.2(d).

VI. Rights of Participants

6.1 Limitation of Rights . Nothing in the Plan shall be construed to:

(a) give any Employee any right to participate in the Plan in the absence of a specific designation by the Committee of that Employee as a Participant in accordance with Sections 3.1 and 3.2;

(b) limit in any way the right of the Partnership or any Affiliate to terminate a Participant's employment with the Partnership or any Affiliate at any time;

(c) give a Participant or any spouse of a deceased Participant any interest in any fund or any specific asset or assets of the Partnership or any Affiliate; or

(d) be evidence of any agreement or understanding, express or implied, that the Partnership or any Affiliate will employ a Participant in any particular position or at any particular rate of remuneration.

6.2 Non-alienation of Benefits . No right or benefit under the Plan shall be subject to anticipation, alienation, sale, assignment, pledge, encumbrance or charge, and any attempt to anticipate, alienate, sell, assign, pledge, encumber or charge the same will be void. No right or benefit hereunder shall in any manner be liable for or subject to any debts, contracts, liabilities or torts of the person entitled to such benefits.

6.3 Prerequisites to Benefits . No Participant, or any person claiming through a Participant, shall have any right or interest in the Plan, or in any benefits hereunder, unless and until all of the terms, conditions and provisions of the Plan which affect such Participant or such other person shall have been complied with as specified herein.

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VII. Miscellaneous

7.1 Release and Full Settlement. Anything to the contrary herein notwithstanding, as a condition to the receipt of any severance payments or benefits under the Plan prior to a Change in Control, a Participant whose employment has been subject to an Involuntary Termination shall first execute a Waiver and Release, in substantially the form attached hereto as Exhibit B , no later than 60 days following the Participant’s termination of employment.

7.2 Amendment or Termination of the Plan . Upon authorization by the Board, the Partnership may amend or terminate the Plan at any time; provided, however , that no amendment or termination that would adversely affect the rights of any Participant under the Plan shall be made without the consent of such Participant, except as expressly provided in Section 3.3.

7.3 Cash Severance Payment in Lieu of Other Compensation . Notwithstanding anything in the Plan to the contrary, the amount of any cash severance benefit calculated pursuant to Section 4.1 or Section 5.1 of the Plan, as applicable, shall supersede, and be awarded in lieu of, any cash compensation payable to the Participant by the Partnership or any Affiliate on account of the termination of the Participant’s employment, pursuant to (a) a written employment agreement with the Partnership or any Affiliate, (b) another severance plan or program of the Partnership or any Affiliate, or (c) any other obligation, whether by contract, applicable law or otherwise, of the Partnership, or any other individual or entity to provide a payment to such Participant in the event of an involuntary termination of such Participant’s employment with the Partnership or any Affiliate.

7.4 Reduction of Cash Severance Payment . Notwithstanding anything in the Plan to the contrary, the amount of any cash severance benefit otherwise payable to a Participant shall be reduced by any monies owed by the Participant to the Partnership or any Affiliate, including, but not limited to, any overpayments made to the Participant by the Partnership or any Affiliate, and the balance of any loan by the Partnership or any Affiliate to the Participant that is outstanding at the time that the cash severance payment is made.

7.5 Taxes. All payments provided for hereunder shall be made net of any applicable withholding requirements of federal, state, or local law.

7.6 Applicable Laws . The Plan shall be construed, administered and governed in all respects under the laws of the State of Texas.

7.7 Unfunded Plan . The benefits provided herein shall be unfunded and shall be provided from the Partnership’s general assets.

7.8 Superseding Effect . This Plan shall supersede any severance plan maintained by the Company or any severance agreement previously entered into or obligation otherwise agreed to between the Company and the Participant with respect to severance payments.

7.9 Successors; Binding Agreement .

(a) In addition to any obligations imposed by law upon any successor to the Partnership, the Partnership will require any successor (whether direct or indirect, by

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purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets (or a combination thereof) of the Partnership to expressly assume and agree to perform this Plan in the same manner and to the same extent that the Partnership would be required to perform if no such succession had taken place. Failure of the Partnership to obtain such assumption and agreement prior to the effectiveness of any such succession shall be a breach of this Plan and shall entitle the Participant to terminate employment and receive the payments described in Article V that would be payable upon termination by the Participant for Good Reason immediately after a Change in Control.

(b) This Plan shall inure to the benefit of and be enforceable by the Participant’s legal representatives and other successors in interest, provided that rights under this Plan may not be assigned by the Participant. If the Participant dies while any amount (other than an amount that by its terms is to terminate upon his or her death) would still be payable to him or her hereunder if he or she was still living, all such amounts shall be paid in accordance with this Plan to the executors, personal representatives, or administrators of the Participant’s estate.

7.10 Fees. In the event a Participant is the prevailing party in litigation with respect to payments or benefits under this Plan, the Partnership shall pay to such Participant all reasonable legal fees and expenses incurred by the Participant with respect to such litigation.

7.11 Entire Agreement. This Plan sets forth the entire agreement of the parties regarding its subject matter.

7.12 Invalidity or Unenforceability. The invalidity or unenforceability of any provision of this Plan will not be deemed to invalidate or make unenforceable any other provision of the Plan or the entirety of the Plan.

VIII. Section 409A Compliance

8.1 General . This Plan is intended to comply with Section 409A of the Code and any ambiguous provisions will be construed in a manner that is compliant with or exempt from the application of Section 409A. If a provision of the Plan would result in the imposition of an applicable tax under Section 409A of the Code, such provision may be reformed to avoid imposition of the applicable tax and no action taken to comply with Section 409A shall be deemed to adversely affect any Participant’s rights or benefits hereunder.

8.2 Reimbursements or Provision of In-Kind Benefits . All reimbursements or provision of in-kind benefits pursuant to this Plan shall be made in accordance with Treasury Regulations §1.409A-3(i)(iv) such that the reimbursement or provision will be deemed payable at a specified time or on a fixed schedule relative to a permissible payment event. Specifically, the amount reimbursed or provided under Sections 4.3, 5.3 or 7.10 hereof during the Participant’s taxable year may not affect the amounts reimbursed or provided in any other taxable year (except that total reimbursements may be limited by a lifetime maximum under a group health plan), the reimbursement of an eligible expense shall be made on or before the last day of the Participant’s taxable year following the taxable year in which the expense was incurred, and the right to reimbursement or provision of in-kind benefit is not subject to liquidation or exchange for another benefit.

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Exhibit 10.3

PIONEER DRILLING COMPANY

EMPLOYEE RELOCATION POLICY

EXECUTIVE OFFICERS - PACKAGE “A”

PIONEER DRILLING COMPANY

RELOCATION POLICY - PACKAGE “A”

INDEX

1.1 Administration . This policy is administered by the Human Resources Department. All questions and requests for information and services should be directed there. This policy is subject to revision or revocation by Pioneer Drilling Company (the “Company”), in it’s sole discretion, with or without advance notice, and is not to be construed as conferring any contractual right or constituting or becoming a part of any employment contract.

1.2 Application . The benefits of this program may be applied to (i) new or transferring employees participating in the bonus and long term incentive plans as a Level I or Level II employee, (ii) when the relocation is at the request of the Company, (iii) who are recommended for participation by an Executive Officer, and (iv) are approved by the Compensation Committee of the Company. This policy applies only to those relocations and transfers of more than 50 miles.

1.3 Authorization to Relocate . A corporate relocation will become effective upon the approval of the CFO or CEO following a request by the Human Resources Department to approve the application of this policy to an Executive Officer. This authorization shall entitle the employee to all the benefits of this policy.

1.4 Family Eligibility . This Relocation Policy will apply to all immediate family members, or parents, who permanently reside within the same household when the formal request to transfer is received by the employee.

1.5 Duration of Benefits . The relocation benefits related to a move, unless otherwise stated, continue for an employee and family for up to six months following the date of transfer.

1.6 Exceptions or Special Requests . Any exceptions to, or deviations from, this policy must be requested in writing to the Human Resources Department and shall be granted only upon recommendation of an Executive Officer and, if material, final approval by the Compensation Committee.

2.1 Househunting Trips . The Company will reimburse you for reasonable travel, lodging, and meal expenses incurred by you and your family during house hunting in the new location, up to a maximum of three trips not exceeding a total of twenty days in the aggregate.

2.2 Closing Costs . The Company shall pay directly for certain closing costs you incur on the sale of the home you owned at your former location and the purchase of your new home when the sale and purchase occur within one year from the effective date of transfer.

(a) Real Estate Commission fees

(b) Closing Costs

(c) Appraisal Fee

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(d) Credit Report

(e) Inspection costs

(g) Lender fees

(h) Loan Origination fee

(i) Title charges

(j) Recording and transfer fees

(k) Other lender/inspection fees

(l) Settlement fees

(m) Survey fees

(n) Escrow fees

2.3 Final Move . The Company will reimburse you for reasonable travel, lodging, and meal expenses, as further described in this section, which you and your family incur during your final move to the new location.

2.4 Temporary Living .

(a) In the event that you are required to be in the new location but are unable to move into your new home, the Company, at its expense, will place you and your family in fully equipped and furnished temporary living quarters. The Company will reimburse covered lodging and meal expenses for a period not to exceed 60 days. Furniture storage will be covered up to a 6 month period, or that period less than 6 months you reside in temporary living quarters and/or interim housing while searching for or waiting to move in your permanent residence.

(b) Covered expenses are those that result from maintaining two separate living arrangements or expenses resulting from short-term lodging expenses for the family. Expenses that you would have incurred regardless of the temporary living situation will not be reimbursed, for example, personal items, personal phone calls, commuting costs, etc. Also, normal household expenses such as family groceries and regular laundry expenses are not included if you and your family are in temporary quarters.

2.5 Reimbursable Expense Definitions .

(a) Travel :

1. If you drive to your new location or use your automobile during your house hunting trip(s), mileage will be reimbursed to you at the current mileage rate allowed for Company business. You must take the most direct route to receive reimbursement. The approved mileage amount is based on mileage charts utilized by rental firms.

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2. Air travel will be reimbursed with receipts based on the Company’s then-current airfare reimbursement policy for business travel.

3. Train, bus, and taxi actual costs will be reimbursed with receipts.

4. Automobile rental will be reimbursed during house hunting trips and during periods of employment prior to relocation of or purchase of your vehicle, with receipts.

5. The transportation costs for home visits will be reimbursed with proper documentation, up to a maximum of five trips during your temporary living period.

(b) Lodging and Meals :

Subject to the provisions of paragraph 2.4, the Company will reimburse you for reasonable lodging and meal expense for you and your family during house hunting, final move and temporary living periods (unless the temporary living quarters provide fully equipped cooking facilities). Actual costs need to be itemized and receipts provided.

2.6 Claiming Reimbursement .

(a) All personal relocation expenses must be submitted on an Expense Statement within 90 days of the date on which they are incurred. These statements must be signed by you, reviewed by the Human Resources Department and approved by the CFO, or if the relocating employee is the CFO, the CEO.

(b) Your full address, including zip code, of the location to which the check should be delivered to must be shown. Receipts or credit card slips must be attached for all expenses incurred.

(c) Any expense statement not submitted in accordance with these rules shall be returned for correction before they are paid.

(d) The intent of reimbursing living expenses is to help you avoid the expenses associated with maintaining two households, or the burden of expenses related to short-term accommodations for the family in the new location and while you sell your home. It is expected that you will exercise the same judgment in committing the Company’s funds as you would your own.

3.1 Moving Company . You must obtain bids from at least two moving companies. Such bids must include a description of the charges to be incurred, the timing of the move and the insurance carried by the moving company. The Company, after consulting with you, will designate the moving company and arrange for the shipment of your household goods.

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3.2 Covered Moving Costs . The Company will provide for the packing, unpacking, and shipment of your household goods, with the following exceptions (additional restrictions may be imposed by carrier):

(a) Recreational motor vehicles/boat/etc that can be driven or towed;

(b) Hazardous or flammable items;

(c) Livestock;

(d) Storage buildings;

(e) Utility trailers;

(f) Patio slate, cement, sod, railroad ties, lumber or other building materials;

(g) Firewood, fertilizer, shrubbery or household plants;

(h) Frozen food; and

(i) Art collections, jewelry, antiques and other such items requiring specialized packing or shipping.

3.3 Shipping or Driving . The Company will provide for the shipment of not more than two automobiles shipped by commercial carriers. If you elect to drive rather than ship your cars, the Company will reimburse you at the current mileage rate used for Company business.

3.4 Appliance Service . The cost for de-installation and installation of major appliances will be paid, provided these appliances existed at your old residence.

3.5 Transportation of Pets . Transportation of up to two household pets will be provided. Unusual fees related to the care and/or transportation of pets are not included.

3.6 Insurance . The Company provides replacement cost insurance on all shipments of household goods over the amount provided by the moving company. If you have property of high value (intrinsic or sentimental) such as antiques, paintings, sculptures, etc., you will incur the expenses related to making special arrangements for their transportation and insurance.

3.7 Inventories . When your furniture is loaded and unloaded by the mover, you must sign the inventory, bill of lading and packing and unpacking certificates which have been prepared by the moving company. You should be certain that the conditions or exceptions listed on the inventory represent the condition of your household goods.

3.8 Filing a Claim . If there is damage to your goods and you wish to file a claim, request a claim form from the moving company and return it to the address they give you. It is important that you file claims within the nine month deadline. If you have any questions or problems, contact the Human Resources Department.

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3.9 Truck or Trailer Rental . If you decide to move with a rented truck or trailer, the actual costs for rental and packing materials will be reimbursed. See 2.6 for claiming reimbursement.

3.10 Lease Breakage Fee . Should you rent your home rather than own, the Company will reimburse your for up to three months rent to cover any lease breakage fee you may incur.

3.11 Household Goods Transportation Expenses . The Company will pay the carrier for all costs related to the relocation of your household goods

3.12 Other Miscellaneous Expenses . Any other miscellaneous expenses will be covered by way of a moving allowance which will equal one times your new monthly base pay. This amount is intended to cover any other expenses you may incur but are not reimbursable by this policy.

4.1 Sale of Home Program . In order to be eligible for the Sale of Home Program, you must opt-in to this program in advance of the listing of your primary residence by informing the Human Resources Director in writing of your intent to participate in this option. Homes over $2 million require approval of both the CFO and the CEO to opt-in to this program. The Company will employ an appropriate relocation firm to administer this program. The requirements are as follows.

(a) You must list for sale and market your home with a qualified real estate professional employed with a reputable and well-known company in the location of your home in order to be eligible to receive reimbursement for costs incurred related to the purchase of your new home.

(b) The list price of the home must not be more than the lesser of 107.5% of the Appraised Value of the home, or $50,000 higher than the Appraised Value of the home. “Appraised Value” will be determined by calculating the following: the average of (1) the appraised value of the home as determined by a qualified and reputable appraisal firm chosen by the employee prior to listing of your home (“Appraisal One”) and (2) the appraised value of the home as determined by a qualified and reputable appraisal firm chosen by the Company prior to listing your home (“Appraisal Two”). Should the Appraisal One and Appraisal Two differ by more than five percent, the Company will obtain a third appraisal from a mutually agreeable appraiser and all three appraisals will be averaged for the determination of Appraised Value. The Company may, in its discretion, disregard an appraisal and obtain a replacement appraisal should there be a discrepancy amongst the three appraisals greater than 5% that appears unusual.

(c) Should you receive an offer of any amount, you must consult with the CFO (or CEO if the CFO is the employee to which this policy is being applied) and Human Resources Director to discuss whether such offer should be accepted. If the offer is for less than the Appraised Value, the Company, at its option, may require you to accept the offer, in which case the Company will pay you the difference between the offer and the Appraised Value. Should you receive an offer equal to or greater than Appraised Value, you must accept this offer

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or waive any rights to reimbursement or other compensation under this Section 4.0 unless you receive written approval by the CFO (or the CEO should the CFO be the employee to which this policy is being applied) to reject such offer. The reason for the rejection must be reasonable and documented.

(d) If, after a period of 180 days (and provided your home is reasonably priced as discussed in item 4.1(b) above and you have not rejected an offer without the approval described in item 4.1(c) above) your home fails to sell, the Company will purchase your home for the Appraised Value.

(e) If, within the 180 day period following the date you listed your home for sale (and provided your house is not under contract or has not yet sold), the Company requests you relocate for any reason or you suffer an Involuntary Termination as defined in the Executive Severance Plan under which you have been accepted as a Participant, the Company will, at the Employee’s request, waive any time remainder of the 180 day period and cause the relocation firm to purchase your home immediately as provided in item 4.1(d) above. If your contract is under contract and that contract fail to close, should there be any time remaining of the 180 day period, the Company will waive the remainder of the 180 day period and cause the relocation firm to purchase your home immediately as provided in item 4.1(d) above.

5.1 Tax Regulations .

(a) All items reimbursed under this policy will be reported as required under the applicable federal and state income tax statutes. Some items will be considered taxable and some non-taxable to you and some items may be deductible on your personal federal and state income tax returns. Any tax incurred for employment taxes or on your personal federal and state income tax returns related to any moving expenses provided in this policy will be grossed up by the Company and covered in full.

(b) The Company’s substantiation policy requires you to provide the Company with receipts and other third-party verification sufficient to determine the tax treatment with respect to the Company, and it’s impact on forms provided to you by the Company, including without limitation, your form W-2. This policy applies whether the Company pays the expense directly or reimburses you or you pay the expense from any allowance the Company may give you. You must submit this documentation by the 90th day after you incur the expense.

6.1 Repayment Requirement . Should you voluntarily terminate your employment for any reason other than Good Reason as defined in the Executive Severance Plan within twelve months of the date of your transfer, you will be required to reimburse the Company for all relocation expenses paid to you or on your behalf under this Policy. If the Company terminates you with or without cause, no reimbursement is required.

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