Exhibit 4.10




 




FOURTH AMENDMENT TO LOAN AGREEMENT




 




THIS

FOURTH AMENDMENT TO LOAN AGREEMENT (the “Fourth Amendment”) is entered into as of the 20th day of December,

2002, by and between  PIONEER DRILLING SERVICES, LTD., a Texas limited

partnership, formerly known as Pioneer

Drilling Co., Ltd., (Borrower”), and THE FROST

NATIONAL BANK, a national banking association (“Lender”) and

joined in by PIONEER DRILLING COMPANY, a Texas corporation, formerly known

as South Texas Drilling & Exploration, Inc. (“Pioneer”).




 




R E C I T A L S




 




A.            On March 30, 2001, Borrower and Lender entered into that

certain Loan Agreement (the “Loan Agreement”) concerning the terms,

conditions and covenants of certain Credit Facilities.  On October 9, 2001, Borrower

and Lender amended the Loan Agreement by execution of that certain First

Amendment to Loan Agreement.  On July 3,

2002, Borrower and Lender amended the Loan Agreement by execution of that

certain Second Amendment to Loan Agreement. 

On September 29, 2002, Borrower and Lender amended the Loan Agreement by

execution of that certain Third Amendment to Loan Agreement.




 




B.            Borrower and Lender have agreed to make certain

modifications to the Loan Agreement as hereinafter more fully set forth.




 




C.            All capitalized terms not otherwise defined in this

Fourth Amendment shall have the same meanings as are set forth in the Loan

Agreement.




 




NOW, THEREFORE, for and

in consideration of the mutual covenants and promises herein contained, Lender

and Borrower agree as follows:




 




AGREEMENTS




 




1.             Section

1 is deleted in its entirety and the following is substituted in its place:




 




1.             Credit Facilities.  Subject to the terms and conditions set

forth in this Loan Agreement and the other agreements, instruments and

documents evidencing, securing, governing, guaranteeing and/or pertaining to

the Loans, as hereinafter defined (collectively, together with the Loan

Agreement, referred to hereinafter as the “Loan Documents”), Lender

hereby agrees to provide to Borrower the credit facility or facilities

hereinbelow (whether one or more, the “Credit Facilities”):




 




Advance Facility.  Subject to the terms and conditions set

forth herein, Lender agrees to lend to Borrower, on a non-revolving 




 





























 




basis from time to time during the period commencing on the date hereof

and continuing through the maturity date of the promissory note evidencing this

Credit Facility from time to time, an aggregate amount not to exceed

$6,000,000.00 in multiple advances, as may be requested by Borrower from time

to time (the “Advance Facility”). 

Borrower shall not be allowed to reborrow under the Advance

Facility after a repayment.  All sums

advanced under the Advance Facility shall be used for such purposes as approved

by Lender in Lender’s sole and absolute discretion.




 




All advances under the Credit Facilities shall be collectively called

the “Loans”.  Lender reserves the

right to require Borrower to give Lender not less than one (1) business

day prior notice of each requested advance under the Credit Facilities,

specifying (i) the aggregate amount of such requested advance,

(ii) the requested date of such advance, and (iii) the purpose for

such advance, with such advances to be requested in a form satisfactory to

Lender.




 




2.             Section

8, subsection (e) is deleted in its entirety and the following is substituted

in its place:




 




(e)           Indebtedness.  Create,

incur or assume any indebtedness for borrowed money or issue or assume any

other note, debenture, bond or other evidences of indebtedness, or guarantee

any such indebtedness or such evidences of indebtedness of others, other than

(i) borrowings from Lender, (ii) borrowings from lenders other than

Lender, except that during the term of the Loan, Borrower shall be permitted to

incur or have outstanding indebtedness to other lenders provided that the aggregate

principal balance of all such debt outstanding at any time shall not exceed

$17,500,000.00 (exclusive of the subordinated debt in the total amount of

$28,000,000.00 described in that certain Subordination Agreement dated as of

July 3, 2002 (the “Convertible Subordinated Debentures”) and (iii) the

Convertible Subordinated Debentures.




 




3.            

The last sentence contained in the definition of Leverage Ratio in Section 9,

subsection (a) is hereby deleted and the following is substituted in its place:




 




Beginning

with the fiscal quarter ending on March 31, 2003, Borrower shall be in

compliance with the foregoing covenant as of the end of each fiscal quarter of

Borrower calculated on a rolling four quarters basis.




 




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4.             The

definition of Cash Flow Coverage Ratio in Section 9, subsection (b) and the two

sentences immediately following such definition are deleted and the following

is substituted in its place:




 




Net Income +

Interest + Taxes + Depreciation
 + Amortization – Distributions or

Dividends


 – Maintenance Capital Expenditures

(each for the preceding four fiscal quarters)


Consolidated Interest Expense +

scheduled maturities of principal indebtedness + 


cash taxes paid (each for the preceding four fiscal quarters)




 




As

used herein, “scheduled maturities of principal indebtedness” shall

exclude amounts due on the Advance Facility at its maturity on June 30, 2003.




 




As

used herein, “Maintenance Capital Expenditures” shall mean:  amounts actually paid for the routine

maintenance of equipment, to the extent such maintenance is required to keep

that equipment in operating condition.




 




Beginning

with the fiscal quarter ending on March 31, 2003, Borrower shall be in

compliance with the foregoing covenant as of the end of each fiscal quarter of

Borrower calculated on a rolling four quarters basis.




 




5.             Subsection (e) of Section 11 is deleted in its

entirety and the following is substituted in its place:




 




(e)           The occurrence of any event which

permits the acceleration of the maturity of any indebtedness in excess of

$100,000.00 owing by Borrower to any third party under any agreement or

understanding, or any default in the terms, conditions or covenants of that

certain Term Loan and Security Agreement dated on or about December 20, 2002

between Borrower and Merrill Lynch Capital or any documents executed in

connection therewith and any renewals thereof.




 




6.             Except

as specifically modified or amended herein, all terms, provisions and

requirements of the Loan Agreement shall remain as written, and as amended from

time to time.  Borrower hereby reaffirms

all covenants, conditions, representations and warranties contained in the Loan

Agreement, as amended by this Fourth Amendment.




 




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IN

WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be

duly executed as of the date first above written.




 




	

  BORROWER:


  	

   


  	

  LENDER:


  
	

   


  	

   


  	

   


  
	

  PIONEER DRILLING SERVICES, LTD., a Texas

  limited partnership formerly known as Pioneer

  Drilling Co., Ltd., a Texas limited

  partnership


  	

   


  	

  THE FROST NATIONAL BANK


  a national banking

  association


  
	

   


  	

   


  	

   


  
	

   


  	

   


  	

  By:


  	

   


  
	

  By:


  	

  PDC Mgmt. Co., a Texas

  corporation, General Partner


  	

   


  	

  Printed

  Name:


  	

   


  
	

   


  	

   


  	

   


  	

  Title:


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

   


  	

  By:


  	

   


  	

   


  	

   


  
	

   


  	

  Printed

  Name:


  	

   


  	

   


  	

   


  
	

   


  	

  Title:


  	

   


  	

   


  	

   


  
	

   


  	

   


  	

   


  	

   


  
	

  AGREED

  TO:


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  PIONEER DRILLING COMPANY, a Texas corporation, formerly known as South

  Texas Drilling & Exploration, Inc., a Texas corporation (executing for

  purposes of joining in certain specific provisions, as noted above)


  	

   


  	

   


  
	

   


  	

   


  	

   


  
	

  By:


  	

   


  	

   


  	

   


  
	

  Printed

  Name:


  	

   


  	

   


  	

   


  
	

  Title:


  	

   


  	

   


  	

   


  
												





 




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