Exhibit 10.5
PIONEER DRILLING COMPANY
AMENDED AND RESTATED
2007 INCENTIVE PLAN
(Adopted May 16, 2008)
     1. Plan. This 2007 Incentive Plan of Pioneer Drilling Company (this “Plan”)
was adopted by Pioneer Drilling Company, a Texas corporation (the “Company”), to
reward certain corporate officers, key employees, consultants and directors of
the Company or its Subsidiaries by enabling them to acquire shares of common
stock of the Company and/or through the provision of cash payments.
     2. Objectives. This Plan is designed to attract and retain officers, key
employees and consultants of the Company and its Subsidiaries, to attract and
retain qualified directors of the Company, to encourage the sense of
proprietorship of such officers, employees, consultants and directors and to
stimulate the active interest of such persons in the development and financial
success of the Company and its Subsidiaries. These objectives are to be
accomplished by making Awards under this Plan and thereby providing Participants
with a proprietary interest in the growth and performance of the Company and its
Subsidiaries.
     3. Definitions. As used herein, the terms set forth below shall have the
following respective meanings:
     “Authorized Officer” means the Chairman of the Board or the Chief Executive
Officer of the Company (or any other senior officer of the Company to whom
either of them shall delegate the authority to execute any Award Agreement).
     “Award” means the grant of any Option, SAR, Stock Award, Performance Award
or Cash Award, whether granted singly, in combination or in tandem, to a
Participant pursuant to such applicable terms, conditions and limitations as the
Committee may establish in accordance with the objectives of the Plan.
     “Award Agreement” means any written agreement between the Company and a
Participant setting forth the terms, conditions and limitations applicable to an
Award.
     “Board” means the Board of Directors of the Company.
     “Cash Award” means an award denominated in cash.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Committee” means the Compensation Committee of the Board or such other
committee of the Board as may be designated by the Board to administer the Plan.
     “Common Stock” means the Common Stock, par value $0.10 per share, of the
Company.

 

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     “Director” means an individual serving as a member of the Board.
     “Dividend Equivalents” means, with respect to shares of Restricted Stock or
Restricted Stock Units, with respect to which shares are to be issued at the end
of the Restriction Period, an amount equal to all dividends and other
distributions (or the economic equivalent thereof) that are payable to
shareholders of record during the Restriction Period on a like number of shares
of Common Stock.
     “Employee” means an employee of the Company or any of its Subsidiaries and
an individual who has agreed to become an employee of the Company or any of its
Subsidiaries and actually becomes such an employee within the following six
months.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Fair Market Value” of a share of Common Stock means, as of a particular
date, (i) if shares of Common Stock are listed on a national securities
exchange, the closing sales price per share of Common Stock on the consolidated
transaction reporting system for the principal national securities exchange on
which shares of Common Stock are listed on that date, or, if there shall have
been no such sales reported on that date, on the last preceding date on which
such a sale was so reported, (ii) if the Common Stock is not so listed, the mean
between the closing bid and asked price on that date, or, if there are no such
prices available for such date, on the last preceding date on which such prices
shall be available, as reported by the National Quotation Bureau Incorporated,
or (iii) if shares of Common Stock are not publicly traded, the most recent
value determined by an independent appraiser appointed by the Company for such
purpose.
     “Incentive Option” means an Option that is intended to comply with the
requirements set forth in Section 422 of the Code.
     “Option” means a right to purchase a specified number of shares of Common
Stock at a specified price.
     “Nonqualified Option” means an Option that is not intended to comply with
the requirements set forth in Section 422 of the Code.
     “Participant” means an Employee, consultant or Director to whom an Award
has been made under this Plan.
     “Performance Award” means an award made pursuant to this Plan to a
Participant who is an Employee, which Award is subject to the attainment of one
or more Performance Goals. Performance Awards may be Stock Awards or Cash
Awards.
     “Performance Goal” means a standard established by the Committee, to
determine in whole or in part whether a Performance Award shall be earned.
     “Restricted Stock” means any Common Stock that is restricted or subject to
forfeiture provisions.

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     “Restricted Stock Unit” means a unit evidencing the right to receive one
share of Common Stock or equivalent value (as determined by the Committee) that
is restricted or subject to forfeiture provisions.
     “Restriction Period” means a period of time beginning as of the date upon
which an Award of Restricted Stock or Restricted Stock Units is made pursuant to
this Plan and ending as of the date upon which the Common Stock subject to such
Award is issued (if not previously issued), no longer restricted or subject to
forfeiture provisions.
     “SAR” means a right to receive a payment, in cash or Common Stock, equal to
the excess of the Fair Market Value or other specified valuation of a specified
number of shares of Common Stock on the date the right is exercised over a
specified strike price, in each case, as determined by the Committee.
     “Stock Award” means an award in the form of shares of Common Stock or units
denominated in shares of Common Stock.
     “Subsidiary” means (i) in the case of a corporation, any corporation of
which the Company directly or indirectly owns shares representing 50% or more of
the combined voting power of the shares of all classes or series of capital
stock of such corporation which have the right to vote generally on matters
submitted to a vote of the shareholders of such corporation and (ii) in the case
of a partnership or other business entity not organized as a corporation, any
such business entity of which the Company directly or indirectly owns 50% or
more of the voting, capital or profits interests (whether in the form of
partnership interests, membership interests or otherwise).
     4. Eligibility.
     (a) Employees. Employees eligible for Awards under this Plan are: (i) the
officers of the Company; and (ii) those other employees who hold positions of
responsibility and whose performance, in the judgment of the Committee, can have
a significant effect on the success of the Company and its Subsidiaries.
     (b) Consultants. Consultants eligible for Awards under this Plan are those
consultants to the Company or Subsidiaries whose performance, in the judgment of
the Committee, can have or have had a significant effect on the success of the
Company and its Subsidiaries.
     (c) Directors. Directors eligible for Awards under this Plan, in their
capacities as Directors, are those who are not employees of the Company or any
of its Subsidiaries (“Nonemployee Directors”).
     5. Common Stock Available for Awards. Subject to the provisions of
paragraph 15 hereof, there shall be available for Awards under this Plan granted
wholly or partly in Common Stock (including rights or options that may be
exercised for or settled in Common Stock) an aggregate of 3,000,000 shares of
Common Stock. In the discretion of the Committee, all 3,000,000 shares of Common
Stock may be granted as Incentive Options. No more than 1,000,000 shares of
Common Stock shall be available under this Plan for Awards other than

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Options or SARs. Additionally, the number of shares of Common Stock that are the
subject of Awards under this Plan, that are cancelled, forfeited, terminated or
expire unexercised, shall again immediately become available for Awards
hereunder. The number of shares reserved for issuance under the Plan shall be
reduced only to the extent that shares of Common Stock are actually issued in
connection with the exercise or settlement of an Award; provided, however, that
the number of shares reserved for issuance shall be reduced by the total number
of Options or SARs exercised. The number of shares reserved for issuance under
the Plan shall not be increased by (i) any shares tendered or Award surrendered
in connection with the purchase of shares upon the exercise of an Option as
described in paragraph 11 or (ii) any shares deducted from an Award payment in
connection with the Company’s tax withholding obligations as described in
paragraph 12. The Committee may from time to time adopt and observe such
procedures concerning the counting of shares against the Plan maximum as it may
deem appropriate. The Committee and the appropriate officers of the Company
shall be authorized to, from time to time, take all such actions as any of them
may determine are necessary or appropriate to file any documents with
governmental authorities, stock exchanges and transaction reporting systems as
may be required to ensure that shares of Common Stock are available for issuance
pursuant to Awards.
     6. Administration.
     (a) Authority of the Committee. This Plan shall be administered by the
Committee. Subject to the provisions hereof, the Committee shall have full and
exclusive power and authority to administer this Plan and to take all actions
that are specifically contemplated hereby or are necessary or appropriate in
connection with the administration hereof. The Committee shall also have full
and exclusive power to interpret this Plan and to adopt such rules, regulations
and guidelines for carrying out this Plan as it may deem necessary or proper,
all of which powers shall be exercised in the best interests of the Company and
in keeping with the objectives of this Plan. Subject to paragraph 6(c) hereof,
the Committee may, in its discretion, provide for the extension of the
exercisability of an Award, accelerate the vesting or exercisability of an
Award, eliminate or make less restrictive any restrictions contained in an
Award, waive any restriction or other provision of this Plan or an Award or
otherwise amend or modify an Award in any manner that is (i) not adverse to the
Participant to whom such Award was granted, (ii) consented to by such
Participant or (iii) authorized by paragraph 15(c) hereof; provided, however,
that no such action shall permit the term of any Option to be greater than ten
years from the applicable grant date. The Committee may make an Award to an
individual who it expects to become an employee of the Company or any of its
Subsidiaries within the next six months, with such Award being subject to the
individual’s actually becoming an employee within such time period, and subject
to such other terms and conditions as may be established by the Committee. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to further the Plan purposes. Any
decision of the Committee in the interpretation and administration of this Plan
shall lie within its sole and absolute discretion and shall be final, conclusive
and binding on all parties concerned.

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     (b) Limitation of Liability. No member of the Committee or officer of the
Company to whom the Committee has delegated authority in accordance with the
provisions of paragraph 7 of this Plan shall be liable for anything done or
omitted to be done by him or her, by any member of the Committee or by any
officer of the Company in connection with the performance of any duties under
this Plan, except for his or her own willful misconduct or as expressly provided
by statute.
     (c) Repricing and Other Limitations. No Award may be repriced, replaced,
regranted through cancellation or modified without shareholder approval (except
in connection with a change in the Company’s capitalization), if the effect
would be to reduce the exercise price for the shares underlying such Award. No
Award may be modified or extended in a manner that would cause the Award to be
subject to, or result in a violation of, Section 409A of the Code.
     7. Delegation of Authority. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish.
     8. Awards. (a) The Committee shall determine the type or types of Awards to
be made under this Plan and shall designate from time to time the Participants
who are to be the recipients of such Awards. Each Award shall be embodied in an
Award Agreement, which shall contain such terms, conditions and limitations as
shall be determined by the Committee in its sole discretion and shall be signed
by the Participant to whom the Award is made and by an Authorized Officer for
and on behalf of the Company. Awards may consist of those listed in this
paragraph 8(a) and may be granted singly, in combination or in tandem. Awards
may also be made in combination or in tandem with, in replacement of, or as
alternatives to, grants or rights under this Plan or any other plan of the
Company or any of its Subsidiaries, including the plan of any acquired entity;
provided that, except as contemplated in paragraph 15 hereof, no Option may be
issued in exchange for the cancellation of an Option with a higher exercise
price nor may the exercise price of any Option be reduced. All or part of an
Award may be subject to conditions established by the Committee, which may
include, but are not limited to, continuous service with the Company and its
Subsidiaries, achievement of specific business objectives, increases in
specified indices, attainment of specified growth rates and other comparable
measurements of performance. Upon the termination of employment by a Participant
who is an Employee, any unexercised, deferred, unvested or unpaid Awards shall
be treated as set forth in the applicable Award Agreement.
     (i) Option. An Award may be in the form of an Option. An Option awarded
pursuant to this Plan may consist of an Incentive Option or a Nonqualified
Option. Incentive Options may not be awarded to Nonemployee Directors. The price
at which shares of Common Stock may be purchased upon the exercise of an Option
shall be not less than the Fair Market Value of the Common Stock on the date of
grant. The term of an Option shall not exceed ten years from the date of grant.
Subject to the foregoing provisions, the terms, conditions and limitations
applicable to any Options awarded pursuant to this Plan, including the term of
any Options and the date or dates upon which they become exercisable, shall be
determined by the Committee.

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     (ii) Stock Appreciation Right. An Award may be in the form of an SAR. The
strike price for an SAR shall not be less than the Fair Market Value of the
Common Stock on the date on which the SAR is granted. The term of an SAR shall
not exceed ten years from the date of grant. Subject to the foregoing
limitations, the terms, conditions and limitations applicable to any SARs
awarded pursuant to this Plan, including the term of any SARs and the date or
dates upon which they become exercisable, shall be determined by the Committee.
     (iii) Stock Award. An Award may be in the form of a Stock Award. Subject to
the Plan, the vesting and other terms, conditions and limitations applicable to
any Stock Awards granted pursuant to this Plan shall be determined by the
Committee, acting in its discretion.
     (iv) Cash Award. An Award may be in the form of a Cash Award. The terms,
conditions and limitations applicable to any Cash Awards granted pursuant to
this Plan shall be determined by the Committee.
     (v) Performance Award. Without limiting the type or number of Awards that
may be made under the other provisions of this Plan, an Award may be in the form
of a Performance Award. Subject to the Plan, the terms, conditions and
limitations applicable to any Performance Awards granted to Participants
pursuant to this Plan shall be determined by the Committee, acting in its
discretion. The Committee shall set Performance Goals in its discretion which,
depending on the extent to which they are met, will determine the value and/or
amount of Performance Awards that will be paid out to the Participant and/or the
portion of an Award that may be exercised.
          (A) Nonqualified Performance Awards. Performance Awards granted to
Employees or Nonemployee Directors that are not intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code shall be based
on achievement of such Performance Goals and be subject to such terms,
conditions and restrictions as the Committee or its delegate shall determine.
          (B) Qualified Performance Awards. Performance Awards granted to
Employees under the Plan that are intended to qualify as qualified
performance-based compensation under Section 162(m) of the Code shall be paid,
vested or otherwise deliverable solely on account of the attainment of one or
more pre-established, objective Performance Goals established by the Committee
in accordance with Section 162(m) of the Code prior to the earlier to occur of
(x) 90 days after the commencement of the period of service to which the
Performance Goal relates and (y) the lapse of 25% of the period of service (as
scheduled in good faith at the time the goal is established), and in any event
while the outcome is substantially uncertain. A Performance Goal is objective if
a third party having knowledge of the relevant facts could determine whether the
goal is met. Such a Performance Goal may be based on one or more business
criteria that apply to the Employee, one or more business units, divisions or
sectors of the Company, or the Company as a whole, and if so desired by the
Committee, by comparison with a peer group of companies. A Performance Goal may
include one or more of the following:

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  •   increased revenue;     •   net income measures (including but not limited
to income after capital costs and income before or after taxes);     •   stock
price measures (including but not limited to growth measures and total
shareholder return);     •   price per share of Common Stock;     •   market
share;     •   net earnings;     •   earnings per share (actual or targeted
growth);     •   earnings before interest, taxes, depreciation, and amortization
(“EBITDA”);     •   earnings before interest, taxes and amortization (“EBITA”);
    •   economic value added (or an equivalent metric);     •   market value
added;     •   debt to equity ratio;     •   cash flow measures (including but
not limited to cash flow per share, cash flow return on capital, cash flow
return on tangible capital, net cash flow, net cash flow before financing
activities and improvement in or attainment of working capital levels);     •  
return measures (including but not limited to return on equity, return on
average assets, return on capital, risk-adjusted return on capital, return on
investors’ capital and return on average equity);     •   operating measures
(including operating income, funds from operations, cash from operations,
after-tax operating income; net operating profit after tax, revenue volumes,
operating efficiency, rig fleet day rates and rig fleet utilization);     •  
expense measures (including but not limited to overhead cost, general and
administrative expense and improvement in or attainment of expense levels);    
•   margins;     •   shareholder value;

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  •   proceeds from dispositions;     •   total market value;     •  
reliability;     •   productivity;     •   corporate values measures (including
ethics compliance, environmental, and safety) and     •   debt reduction.

Unless otherwise stated, such a Performance Goal need not be based upon an
increase or positive result under a particular business criterion and could
include, for example, maintaining the status quo, performance relative to a peer
group determined by the Committee or limiting economic losses (measured, in each
case, by reference to specific business criteria). In interpreting Plan
provisions applicable to Performance Goals and Qualified Performance Awards, it
is the intent of the Plan to conform with the standards of Section 162(m) of the
Code and Treasury Regulation §1.162-27(e)(2)(i), as to grants to those Employees
whose compensation is, or is likely to be, subject to Section 162(m) of the
Code, and the Committee in establishing such goals and interpreting the Plan
shall be guided by such provisions. Prior to the payment of any compensation
based on the achievement of Performance Goals applicable to Qualified
Performance Awards, the Committee must certify in writing that applicable
Performance Goals and any of the material terms thereof were, in fact,
satisfied. Subject to the foregoing provisions, the terms, conditions and
limitations applicable to any Qualified Performance Awards made pursuant to this
Plan shall be determined by the Committee.
     (b) Notwithstanding anything to the contrary contained in this Plan, the
following limitations shall apply to any Awards made hereunder:
     (i) no Participant may be granted, during any one-year period, Awards
consisting of Options or SARs that are exercisable for more than 400,000 shares
of Common Stock;
     (ii) no Participant may be granted, during any one-year period, Stock
Awards covering or relating to more than 200,000 shares of Common Stock (the
limitation set forth in this clause (ii), together with the limitation set forth
in clause (i) above, being hereinafter collectively referred to as the
“Stock-based Awards Limitations”); and
     (iii) no Participant may be granted Awards consisting of cash or in any
other form permitted under this Plan (other than Awards consisting of Options or

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SARs or otherwise consisting of shares of Common Stock or units denominated in
such shares) in respect of any one-year period having a value determined on the
date of grant in excess of $3,000,000.
     9. (Intentionally left blank.)
     10. Award Payment; Dividends; Substitution.
     (a) General. Payment of Awards may be made in the form of cash or Common
Stock, or a combination thereof, and may include such restrictions as the
Committee shall determine, including, in the case of Common Stock, restrictions
on transfer and forfeiture provisions. If payment of an Award is made in the
form of Restricted Stock, the applicable Award Agreement relating to such shares
shall specify whether they are to be issued at the beginning or end of the
Restriction Period. In the event that shares of Restricted Stock are to be
issued at the beginning of the Restriction Period, the certificates evidencing
such shares (to the extent that such shares are so evidenced) shall contain
appropriate legends and restrictions that describe the terms and conditions of
the restrictions applicable thereto. In the event that shares of Restricted
Stock are to be issued at the end of the Restricted Period, the right to receive
such shares shall be evidenced by book entry registration or in such other
manner as the Committee may determine.
     (b) Deferral. With the approval of the Committee, amounts payable in
respect of Awards may be deferred and paid either in the form of installments or
as a lump-sum payment; provided, however, that if deferral is permitted, each
provision of the Award shall be interpreted to permit the deferral only as
allowed in compliance with the requirements of Section 409A of the Code and any
provision that would conflict with such requirements shall not be valid or
enforceable. The Committee intends that any Awards under the Plan satisfy the
applicable requirements of Section 409A of the Code to avoid imposition of
applicable taxes thereunder. The Committee may permit selected Participants to
elect to defer payments of some or all types of Awards in accordance with
procedures established by the Committee. Any deferred payment of an Award,
whether elected by the Participant or specified by the Award Agreement or by the
Committee, may be forfeited if and to the extent that the Award Agreement so
provides.
     (c) Dividends and Interest. Rights to dividends or Dividend Equivalents may
be extended to and made part of any Award consisting of shares of Common Stock
or units denominated in shares of Common Stock, subject to such terms,
conditions and restrictions as the Committee may establish. The Committee may
also establish rules and procedures for the crediting of interest on deferred
cash payments and Dividend Equivalents for Awards consisting of shares of Common
Stock or units denominated in shares of Common Stock.
     11. Stock Option Exercise. The price at which shares of Common Stock may be
purchased under an Option shall be paid in full at the time of exercise in cash
or, if permitted by the Committee, the Participant may purchase such shares by
means of tendering Common Stock valued at Fair Market Value on the date of
exercise, or any combination thereof. The Committee

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shall determine acceptable methods for Participants to tender Common Stock;
provided that any Common Stock that was the subject of an Award may be so
tendered only if it has been held by the Participant for at least six months.
The Committee may provide for procedures to permit the exercise or purchase of
such Awards by use of the proceeds to be received from the sale of Common Stock
issuable pursuant to an Award.
     12. Taxes. The Company shall have the right to deduct applicable taxes from
any Award payment and withhold, at the time of delivery or vesting of cash or
shares of Common Stock under this Plan, an appropriate amount of cash or number
of shares of Common Stock or a combination thereof for payment of taxes required
by law or to take, or cause the Participant to take, such other action as may be
necessary in the opinion of the Company to satisfy all obligations for
withholding of such taxes. The Committee may also permit withholding to be
satisfied by the transfer to the Company of shares of Common Stock theretofore
owned by the holder of the Award with respect to which withholding is required.
If shares of Common Stock are used to satisfy tax withholding, such shares shall
be valued based on the Fair Market Value when the tax withholding is required to
be made.
     13. Amendment, Modification, Suspension or Termination. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law, except that (i) no amendment or alteration that would adversely affect
the rights of any Participant under any Award previously granted to such
Participant shall be made without the consent of such Participant and (ii) no
amendment or alteration shall be effective prior to its approval by the
shareholders of the Company to the extent shareholder approval is otherwise
required by applicable legal requirements.
     14. Assignability. Unless otherwise determined by the Committee in the
Award Agreement, no Award or any other benefit under this Plan shall be
assignable or otherwise transferable, except upon the Participant’s death to a
beneficiary designated by the Participant in a manner acceptable to the
Committee, or, if no beneficiary has been duly designated or no duly designated
beneficiary shall survive the Participant, pursuant to the Participant’s Will or
the laws of descent and distribution. Any attempted assignment of an Award or
any other benefit under this Plan in violation of this paragraph 14 shall be
null and void.
     15. Adjustments.
     (a) The existence of outstanding Awards shall not affect in any manner the
right or power of the Company or its shareholders to make or authorize any or
all adjustments, recapitalizations, reorganizations or other changes in the
capital stock of the Company or its business or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or prior preference
stock (whether or not such issue is prior to, on a parity with or junior to the
Common Stock) or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceeding of any kind, whether or not of a character similar to that of
the acts or proceedings enumerated above.

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     (b) In the event of any subdivision, consolidation of outstanding shares of
Common Stock, declaration of a dividend payable in shares of Common Stock or
other stock split, any other recapitalization or capital reorganization of the
Company, any consolidation or merger of the Company with another corporation or
entity, the adoption by the Company of any plan of exchange affecting the Common
Stock or any distribution to holders of Common Stock of securities or property
(other than normal cash dividends or dividends payable in Common Stock), then
(i) the number of shares of Common Stock reserved under this Plan, (ii) the
number of shares of Common Stock covered by outstanding Awards in the form of
Common Stock or units denominated in Common Stock, (iii) the exercise or other
price in respect of such Awards, and (iv) the Stock-based Award Limitations
described in paragraph 8(b) hereof shall each be proportionately adjusted to the
extent and in the manner the Board, in its discretion, deems appropriate or
necessary to reflect such transaction; provided that such adjustments shall only
be such as are necessary to maintain the proportionate interest of the holders
of the Awards and preserve, without exceeding, the value of such Awards.
     (c) In the event of a corporate merger, consolidation, sale or other
disposition of stock or assets, acquisition of property or stock, separation,
reorganization or liquidation, the Board may make such adjustments to Awards or
other provisions for the disposition of Awards as it deems equitable, and shall
be authorized, in its discretion, (i) to provide for the substitution of a new
Award or other arrangement (which, if applicable, may be exercisable for such
property or stock as the Board determines) for an Award or the assumption of the
Award, regardless of whether in a transaction to which Section 424(a) of the
Code applies, (ii) to provide, prior to the transaction, for the acceleration of
the vesting and exercisability of, or lapse of restrictions with respect to, the
Award and, if the transaction is a cash merger, provide for the termination of
any portion of the Award that remains unexercised at the time of such
transaction or (iii) to provide for the acceleration of the vesting and
exercisability of an Award and the cancellation thereof in exchange for such
payment as shall be mutually agreeable to the Participant and the Board.
     16. Restrictions. No Common Stock or other form of payment shall be issued
with respect to any Award unless the Company shall be satisfied based on the
advice of its counsel that such issuance will be in compliance with applicable
federal and state securities laws. Certificates evidencing shares of Common
Stock delivered under this Plan (to the extent that such shares are so
evidenced) may be subject to such stop transfer orders and other restrictions as
the Committee may deem advisable under the rules, regulations and other
requirements of the Securities and Exchange Commission, any securities exchange
or transaction reporting system upon which the Common Stock is then listed or to
which it is admitted for quotation and any applicable federal or state
securities law. The Committee may cause a legend or legends to be placed upon
such certificates (if any) to make appropriate reference to such restrictions.
     17. Unfunded Plan. Insofar as it provides for Awards of cash, Common Stock
or rights thereto, this Plan shall be unfunded. Although bookkeeping accounts
may be established with respect to Participants who are entitled to cash, Common
Stock or rights thereto under this Plan, any such accounts shall be used merely
as a bookkeeping convenience. The Company shall not be required to segregate any
assets that may at any time be represented by cash,

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Common Stock or rights thereto, nor shall this Plan be construed as providing
for such segregation, nor shall the Company, the Board or the Committee be
deemed to be a trustee of any cash, Common Stock or rights thereto to be granted
under this Plan. Any liability or obligation of the Company to any Participant
with respect to an Award of cash, Common Stock or rights thereto under this Plan
shall be based solely upon any contractual obligations that may be created by
this Plan and any Award Agreement, and no such liability or obligation of the
Company shall be deemed to be secured by any pledge or other encumbrance on any
property of the Company. Neither the Company nor the Board nor the Committee
shall be required to give any security or bond for the performance of any
obligation that may be created by this Plan.
     18. Section 409A of the Code. Notwithstanding anything in this Plan to the
contrary, if any Plan provision or Award under the Plan would result in the
imposition of an applicable tax under Section 409A of the Code and related
regulations and Treasury pronouncements, that Plan provision or Award will be
reformed to avoid imposition of the applicable tax and no such action shall be
deemed to adversely affect the Participant’s rights to an Award.
     19. Governing Law. This Plan and all determinations made and actions taken
pursuant hereto, to the extent not otherwise governed by mandatory provisions of
the Code or the securities laws of the United States, shall be governed by and
construed in accordance with the laws of the State of Texas.
     20. No Right to Employment or Directorship. Nothing in the Plan or an Award
Agreement shall interfere with or limit in any way the right of the Company or a
Subsidiary to terminate any Participant’s employment or other service
relationship at any time, nor confer upon any Participant any right to continue
in the capacity in which he or she is employed or otherwise serves the Company
or any Subsidiary. Further, nothing in the Plan or an Award Agreement
constitutes any assurance or obligation of the Board to nominate any Director
for re-election by the Company’s shareholders.
     21. Successors. All obligations of the Company under the Plan with respect
to Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise, of all or substantially all of
the business and/or assets of the Company.
     22. Effectiveness. This Plan shall be effective upon the approval by the
holders of a majority of shares of votes entitled to vote on the approval of
this Plan and who vote for or against or expressly abstain from voting with
respect to the approval of this Plan at the 2007 annual meeting of the Company’s
shareholders to be held on August 3, 2007 or any adjournment or postponement
thereof. If the shareholders of the Company should fail to so approve this Plan
prior to such date, this Plan shall terminate and cease to be of any further
force or effect, and all grants of Awards hereunder shall be null and void.
Notwithstanding the foregoing, the Plan shall continue in effect for a term of
ten years after the date on which the shareholders of the Company approve the
Plan, unless sooner terminated by action of the Board.

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     IN WITNESS WHEREOF, Pioneer Drilling Company has caused this Plan to be
executed by its duly authorized officer, effective as provided herein.

            PIONEER DRILLING COMPANY
      By:           Joyce M. Schuldt        Corporate Secretary     

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