Document:

Exhibit 10.3

 

CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350,

 

AS
ADOPTED PURSUANT TO

 

SECTION
906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the annual report on Form
20-F of Triple P N.V. (the “Company”) for the period ended December 31, 2002 as
filed with the Securities and Exchange Commission on the date hereof (the
“Report”), the undersigned Peter van den Oord, Chief Financial Officer of the
Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, that:

 

(1)          the Report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and

 

(2)          the information contained in the Report
fairly presents, in all material respects, the financial condition and results
of operation of the Company.

 

 

	
  Dated:   May 28, 2003

  	
  /s/ M.P.J. van den Oord

  	
   

  
	
   

  	
  M.P.J. van den Oord

  
	
   

  	
  Chief Financial OfficerExhibit
4.9

 

2003 CONSOLIDATED LOAN AGREEMENT

 

Between

 

	
  PIONEER DRILLING SERVICES, LTD.

  	
  and

  	
  THE FROST NATIONAL BANK

  
	
  9310 Broadway, Building 1

  	
   

  	
   

  	
   

  	
  100 W. Houston Street

  
	
  San Antonio, Texas 78217

  	
   

  	
   

  	
   

  	
  San Antonio, Texas 
  78205

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  PIONEER
  DRILLING COMPANY

  	
   

  	
   

  	
   

  	
   

  
	
  9310 Broadway, Building 1

  	
   

  	
   

  	
   

  	
   

  
	
  San Antonio, Texas 78217

  	
   

  	
   

  	
   

  	
   

  

 

March 18, 2003

 

THIS 2003 CONSOLIDATED LOAN AGREEMENT (the “Loan Agreement”)
will serve to set forth the terms of the financing transactions by and between  PIONEER DRILLING SERVICES, LTD., a Texas limited partnership (formerly known
as Pioneer Drilling Co., Ltd.) (“Pioneer
Services”), PIONEER DRILLING COMPANY, a Texas corporation (formerly known
as South Texas Drilling & Exploration, Inc.) (“Pioneer Company”), (Pioneer Services and Pioneer Company
being collectively referred to herein as “Pioneer”)
and THE
FROST NATIONAL BANK, a national banking association (“Lender”).  This Loan Agreement hereby amends and
restates (i) that certain Loan Agreement dated August 11, 2000, executed by and
between Pioneer Company and Lender, as amended; (ii) that certain Loan
Agreement dated March 30, 2001, executed by and between Pioneer Services and
Lender, as amended; and (iii) that certain First Amended and Restated Loan
Agreement dated March 19, 2002, executed by and between Pioneer Services and
Lender, as amended.

 

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 Pioneer Services the credit facility or facilities
hereinbelow described (whether one or more, the “Credit Facilities”):

 

(a)                                  Letters of Credit Facility.  Subject to the terms and conditions set forth
herein, Lender may from time to time up to and including March 17, 2004,
issue letters of credit for the account of Pioneer Services (each, a “Letter
of Credit” and collectively, “Letters of Credit”) up to a cumulative
maximum face amount (whether or not advanced) of the lesser of an amount equal to the Borrowing Base (as
such term is defined hereinbelow) less any amounts outstanding under the
Borrowing Base Line of Credit (as such term is

 

 

defined hereinbelow), or (ii) $2,000,000.00 (the “Letters of Credit Facility”); provided, that the
form and substance of each Letter of Credit shall be subject to approval by
Lender in its sole discretion.  Each
Letter of Credit shall be issued for a term not to exceed 360 days, as
designated by Pioneer Services, provided, that no Letter of Credit shall have
an expiration date subsequent to March 17, 2005.  For each Letter of Credit issued hereunder, Pioneer Services
shall pay to Lender, at the time of issuance, a cash letter of credit fee of
one and one- half percent (1.50%) per annum of the face amount of such Letter
of Credit

 

(b)                                 Borrowing Base Line of
Credit.  Subject to the terms and conditions set
forth herein, Lender agrees to lend to Pioneer Services, on a 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, such amounts as Pioneer Services may request
hereunder; provided, however, the total principal amount
outstanding at any time shall not exceed the lesser of (i) an amount equal
to the Borrowing Base (as such term is defined hereinbelow) less  any amounts outstanding under the Letters of
Credit Facility, or (ii) $1,000,000.00 (the “Borrowing Base Line of
Credit”).  If at any time the
aggregate principal amount outstanding under the Borrowing Base Line of Credit
shall exceed an amount equal to the Borrowing Base, Pioneer Services agrees to
immediately repay to Lender such excess amount, plus all accrued but unpaid
interest thereon.  The sums advanced
under the Borrowing Base Line of Credit shall be used for support of short term
operating cash needs.

 

(i)                                     Letters of Credit Subfeature.  As
a subfeature under the Borrowing Base Line of Credit, Lender may from time to
time up to and including March 17, 2004, issue letters of credit for the
account of Pioneer Services (each, a “Letter of Credit” and collectively,
“Letters of Credit”); provided, that the form and substance of each
Letter of Credit shall be subject to approval by Lender in its sole discretion;
and provided further that the aggregate undrawn amount of all outstanding
Letters of Credit under this subfeature shall not at any time exceed the lesser of (i) an amount equal to the
Borrowing Base (as such term is defined hereinbelow), or
(ii) $1,000,000.00.  Each
Letter of Credit shall be issued for a term not to exceed 360 days, as
designated by Pioneer Services, provided, that no Letter of Credit shall have
an expiration date subsequent to March 17, 2005.  The undrawn amount of all Letters of Credit plus any and all
amounts paid by Lender in connection with drawings under any Letter of Credit
for which the Lender has not been reimbursed shall be reserved under the
Borrowing Base Line of Credit and shall not be available for advances
thereunder.  Each draft or other demand
for payment paid by Lender

 

2

 

under
a Letter of Credit shall be deemed an advance under the Borrowing Base Line of
Credit and shall be repaid in accordance with the terms of the Note
establishing the Borrowing Base Line of Credit; provided, that if the Borrowing
Base Line of Credit is not available for any reason whatsoever, at the time any
draft or demand is paid by Lender, or if advances are not available under the
Borrowing Base Line of Credit in such amount due to any limitation of borrowing
set forth herein, then the full amount of such drafts or demand shall be
immediately due and payable, together with interest thereon, from the date such
amount is paid by Lender to the date such amount is fully repaid by Pioneer
Services, at that rate of interest applicable to advances under the Borrowing
Base Line of Credit.  In such event,
Pioneer Services agrees that Lender, at Lender’s sole discretion may debit
Pioneer Services’ deposit account with Lender for the amount of such draft.  For each Letter of Credit issued hereunder,
Pioneer Services shall pay to Lender, at the time of issuance, a cash letter of
credit fee of one and one-half percent (1.50%) per annum of the face amount of
such Letter of Credit.

 

(ii)                                  Borrowing Base.  As used in this Loan Agreement, the term “Borrowing
Base” shall have the following meaning: 
an amount equal to seventy-five percent 75% of the Pioneer Services’
Eligible Accounts.  As used herein, the
term “Eligible Accounts” shall mean at any time, an amount equal to the
aggregate net invoice or ledger amount owing on all trade accounts receivable
of Pioneer Services for goods sold or leased or services rendered in the
ordinary course of business, in which the Lender has a perfected, first
priority lien, after deducting (without duplication): (i) each such account
that is unpaid sixty (60) days or more after the original invoice date thereof,
(ii) the amount of all discounts, allowances, rebates, credits and
adjustments to such accounts, (iii) the amount of all contra accounts,
setoffs, defenses or counterclaims asserted by or available to the account
debtors, (iv) all accounts with respect to which goods are placed on
consignment or subject to a guaranteed sale or other terms by reason of which
payment by the account debtor may be conditional, (v) all accounts with
respect to which Pioneer Services has furnished a payment and/or performance
bond and that portion of any account for or representing retainage, if any,
until all prerequisites to the immediate payment of retainage have been
satisfied, (vi) all accounts owing by account debtors for which there has
been instituted a proceeding in bankruptcy or reorganization under the United
States Bankruptcy Code or other law, whether state or federal, now or hereafter
existing for relief of debtors, (vii) all accounts owing by any affiliates
of Pioneer Services, (viii) all accounts in which the account debtor is
the United States or any department, agency or

 

3

 

instrumentality of the United States, except to the
extent an acknowledgment of assignment to Lender of such account in compliance
with the Federal Assignment of Claims Act and other applicable laws has been
received by Lender, (ix) all accounts due Pioneer Services by any account
debtor whose principal place of business is located outside the United States
of America and its territories, (x) all accounts subject to any provision
prohibiting assignment or requiring notice of or consent to such assignment,
(xi) any other accounts deemed unacceptable by Lender in its sole and
absolute discretion; provided, however, if more than twenty percent (20%) of
the then balance owing by any single account debtor does not qualify as an
Eligible Account under the foregoing provisions, then the aggregate amount of
all accounts owing by such account debtor shall be excluded from Eligible
Accounts.

 

(c)                                  Term Loan.  Subject to the terms and conditions set
forth herein, Lender agrees to lend to Pioneer Services, and Pioneer Services
agrees to borrow from Lender, the amount of $5,677,888.84 (the “Term Loan”)
in a single advance on the date hereof. 
The sums advanced under the Term Loan shall be for the purpose of
refinancing that certain loan from Lender to Pioneer Company in the original
principal face amount of $9,000,000.00 dated August 11, 2000 which was used by
Pioneer Company to finance the purchase of the stock of Pioneer Drilling Co.
(Pioneer Drilling Co. having since merged into Pioneer Services).

 

All advances under the Credit Facilities shall be
collectively called the “Loans”. 
Lender reserves the right to require Pioneer Services 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.  On or
before the issuance date for each Letter of Credit requested hereunder, Pioneer
Services must also complete and deliver to Lender an application for each
requested Letter of Credit in form and substance acceptable to Lender.

 

2.                                       Promissory Notes.

 

(a)                                  The Borrowing Base Line
of Credit shall be evidenced by a Revolving Promissory Note of even date
herewith in the original principal face amount of $1,000,000.00 duly executed
by Pioneer Services and payable to the order of Lender, in form and substance
acceptable to Lender (whether one or more, together with any renewals,
extensions and increases thereof, the “ Revolving Note”).

 

4

 

(b)                                 The Term Loan shall be
evidenced by a Promissory Note of even date herewith in the original principal
face amount of $5,677,888.84 duly executed by Pioneer Services and payable to
the order of Lender (together with any renewals, extensions and increases
thereof, the “Term Note”).

 

Such Revolving Note and Term Note, together with any
renewals, extensions and increases thereof, shall hereinafter be referred to as
the “Notes.”  Interest on the
Notes shall accrue at the rate set forth therein.  The principal of and interest on the Notes shall be due and
payable in accordance with the terms and conditions set forth in the Notes and
in this Loan Agreement.

 

3.                                       Collateral.

 

(a)                                  As collateral and
security for the indebtedness evidenced by the Term Note and any and all other
indebtedness or obligations from time to time owing by Pioneer Services to
Lender, Pioneer Services shall grant, and hereby grants to Lender, its
successors and assigns,  a first and
prior lien and security interest in and to the following described property:

 

equipment, fixtures and inventory (if any) consisting of
the Drilling Rigs and related equipment designated by Pioneer Services as Rigs
3 (formerly known as No. 17) (National 110-UE), 5 (Gardner-Denver 500), 6
(Skytop Brewster DH-14610), 9 (Wiess W-45), 10 (formerly known as No. 4)
(Skytop Brewster N-46), 11 (Skytop Brewster N-46), 12 (formerly known as No. 1)
(Cabot 900), 14 (Skytop Brewster N-46), 15 (formerly known as No. 2) (Cabot 750),
17 (Ideco H-725), 18
(Brewster N-75), 19 (Brewster N-75), 20 (BDW 800), 7 (IRI 1700 E) and 8 (IRI
1700 E), (the “Drilling Rig Collateral”).

 

(b)                                 As collateral and
security for the indebtedness evidenced by the Letters of Credit Facility and
Revolving Note and any and all other indebtedness or obligations from time to
time owing by Pioneer Services to Lender, Pioneer Services shall grant, and
hereby grants to Lender, its successors and assigns,  a first and prior lien and security interest in and to the
following described property:

 

present and future “accounts”, as defined in the Texas Business and
Commerce Code in effect in the State of Texas on the date hereof or as it may
hereafter be amended from time to time, (including
health-care-insurance receivables), together
with any and all books of account, customer lists and other records relating in
any way to the foregoing (including, without limitation, computer software,
whether on tape, disk, card, strip, cartridge or any other form), and in any
case where an

 

5

 

account arises from the sale of goods, the interest of
Pioneer Services in such goods (the “Accounts Collateral”).

 

The term Drilling Rig Collateral and Accounts Collateral
being referred to herein as the “Collateral” which shall also include
all records and data relating to any of the foregoing (including, without
limitation, any computer software on which such records and data may be
located).  Pioneer Services agrees to
execute such security agreements, assignments, deeds of trust and other
agreements and documents as Lender shall deem appropriate and otherwise require
from time to time to more fully create and perfect Lender’s lien and security
interests in the Collateral.

 

4.                                       Guarantors.  As a condition precedent to the Lender’s
obligation to make the Loans to Pioneer Services, Pioneer Company agrees to
execute and deliver to Lender contemporaneously herewith a guaranty agreement,
in form and substance satisfactory to Lender guaranteeing Pioneer Services’
obligations and liabilities under the Loans.

 

5.                                       Representations and Warranties.  Pioneer hereby represents and warrants, and
upon each request for an advance under the Credit Facilities further represents
and warrants, to Lender as follows:

 

(a)                                  Existence.  Pioneer Services is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Texas and all other states where it is doing business, and has all
requisite power and authority to execute and deliver the Loan Documents and
Pioneer Company is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas and all other states where it is
doing business, and has all requisite power and authority to execute and
deliver the Loan Documents.

 

(b)                                 Binding Obligations.  The execution, delivery, and performance of
this Loan Agreement and all of the other Loan Documents by Pioneer have been
duly authorized by all necessary action by Pioneer, and constitute legal, valid
and binding obligations of Pioneer, enforceable in accordance with their
respective terms, except as limited by Bankruptcy, insolvency or similar laws
of general application relating to the enforcement of creditors’ rights and
except to the extent specific remedies may generally be limited by equitable
principles.

 

(c)                                  No Consent.  The execution, delivery and performance of
this Loan Agreement and the other Loan Documents, and the consummation of the
transactions contemplated hereby and thereby, do not (i) conflict with,
result in a violation of, or constitute a default under (A) any provision
of its articles or certificate of incorporation or bylaws, if Pioneer is a
corporation, or its

 

6

 

partnership agreement, if Pioneer is a partnership, or
any agreement or other instrument binding upon Pioneer, or (B) any law,
governmental regulation, court decree or order applicable to Pioneer, or
(ii) require the consent, approval or authorization of any third party.

 

(d)                                 Financial Condition.  Each financial statement of Pioneer supplied
to the Lender truly discloses and fairly presents Pioneer’s financial condition
as of the date of each such statement. 
There has been no material adverse change in such financial condition or
results of operations of Pioneer subsequent to the date of the most recent
financial statement supplied to Lender.

 

(e)                                  Litigation.  Except
as set forth in the Securities and Exchange Commission filings of Pioneer
Company, copies of which have been made available to the Lender, there are no actions, suits or proceedings,
pending or, to the knowledge of Pioneer, threatened against or affecting
Pioneer or the properties of Pioneer, before any court or governmental
department, commission or board, which, if determined adversely to Pioneer,
would have a material adverse effect on the financial condition, properties, or
operations of Pioneer.

 

(f)                                    Taxes; Governmental Charges.  Pioneer has filed all federal, state and
local tax reports and returns required by any law or regulation to be filed by
it and has either duly paid all taxes, duties and charges indicated due on the
basis of such returns and reports, or made adequate provision for the payment
thereof, and the assessment of any material amount of additional taxes in
excess of those paid and reported is not reasonably expected.

 

6.                                       Conditions Precedent to Advances.  Lender’s obligation to make any advance
under this Loan Agreement and the other Loan Documents shall be subject to the
conditions precedent that, as of the date of such advance and after giving
effect thereto (i) all representations and warranties made to Lender in
this Loan Agreement and the other Loan Documents shall be true and correct, as
of and as if made on such date, (ii) no material adverse change in the
financial condition of Pioneer since the effective date of the most recent
financial statements furnished to Lender by Pioneer shall have occurred and be
continuing, (iii) no event has occurred and is continuing, or would result
from the requested advance, which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined), and (iv) Lender’s
receipt of all Loan Documents appropriately executed by Pioneer and all other
proper parties.

 

7.                                       Affirmative Covenants.  Until (i) the Notes and all other
obligations and liabilities of Pioneer under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no
further commitment to lend

 

7

 

hereunder, Pioneer agrees and covenants that it will,
unless Lender shall otherwise consent in writing:

 

(a)                                  Accounts and Records.  Maintain its books and records in accordance
with generally accepted accounting principles.

 

(b)                                 Right of Inspection.  Permit Lender to visit its properties and
installations and to examine, audit and make and take away copies or
reproductions of Pioneer’s books and records, at all reasonable times.

 

(c)                                  Right to Additional
Information.  Furnish Lender with such
additional information and statements, lists of assets and liabilities, tax
returns, and other reports with respect to Pioneer’s financial condition and
business operations as Lender may request from time to time.

 

(d)                                 Compliance with Laws.  Conduct its business in an orderly and
efficient manner consistent with good business practices, and perform and
comply in all material respects with all statutes, rules, regulations and/or
ordinances imposed by any governmental unit upon Pioneer and its businesses,
operations and properties (including without limitation, all applicable
environmental statutes, rules, regulations and ordinances).

 

(e)                                  Taxes.  Pay and discharge when due all of its
indebtedness and obligations, including without limitation, all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Pioneer or its properties, income, or profits, prior to the date
on which penalties would attach, and all lawful claims that, if unpaid, might
become a lien or charge upon any of Pioneer’s properties, income, or profits;
provided, however, Pioneer will not be required to pay and discharge any such
assessment, tax, charge, levy, lien or claim so long as (i) the legality
of the same shall be contested in good faith by appropriate judicial,
administrative or other legal proceedings, and (ii) Pioneer shall have
established on its books adequate reserves with  respect to such contested assessment, tax, charge, levy, lien or
claim in accordance with generally accepted accounting principles, consistently
applied.

 

(f)                                    Insurance.  Maintain insurance, including but not
limited to, fire insurance, comprehensive property damage, public liability,
worker’s compensation and other insurance deemed necessary or otherwise required
by Lender.

 

(g)                                 Notice of Indebtedness.  Promptly inform Lender of the creation,
incurrence or assumption by Pioneer of any actual or contingent liabilities not
permitted under this Loan Agreement.

 

8

 

(h)                                 Notice of Litigation.  Promptly after the commencement thereof,
notify Lender of all actions, suits and proceedings before any court or any
governmental department, commission or board affecting Pioneer or any of its
properties which, if determined adversely to Pioneer, would have a material
adverse effect on the financial condition, properties, or operations of
Pioneer.

 

(i)                                     Notice of Material
Adverse Change.  Promptly inform Lender of
(i) any and all material adverse changes in Pioneer’s financial condition,
and (ii) all claims made against Pioneer which could materially affect the
financial condition of Pioneer.

 

(j)                                     Additional Documentation.  Execute and deliver, or cause to be executed
and delivered, any and all other agreements, instruments or documents which
Lender may reasonably request in order to give effect to the transactions
contemplated under this Loan Agreement and the other Loan Documents.

 

8.                                       Negative Covenants.  Until (i) the Notes and all other
obligations and liabilities of Pioneer under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no
further commitment to lend hereunder, Pioneer will not, without the prior
written consent of Lender:

 

(a)                                  Nature of Business.  Make any material change in the nature of
its business as carried on as of the date hereof.

 

(b)                                 Liquidations, Mergers,
Consolidations. Liquidate, merge or consolidate with or into any other entity.

 

(c)                                  Sale of Assets.  Sell, transfer or otherwise dispose of (1)
any of the Collateral, or (2) any of its assets or property, other than any
asset of property valued not more than $500,000.00 and disposed of in the
ordinary course of business.

 

(d)                                 Liens.  Create or incur any lien or encumbrance on
any of its assets, other than (i) liens and security interests securing
indebtedness owing to Lender, (ii) liens for taxes, assessments or similar
charges that are (1) not yet due or (2) being contested in good faith
by appropriate proceedings and for which such entity has established adequate
reserves, (iii) liens and security interests existing as of the date
hereof which have been disclosed to and approved by Lender in writing, and (iv)
liens or encumbrances securing indebtedness which would not otherwise violate
the terms of this Loan Agreement.

 

9

 

(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, Pioneer 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.

 

(f)                                    Transfer of Ownership.  Permit the sale, pledge or other transfer of
any of the ownership interests in Pioneer.

 

(g)                                 Change in Management.  Permit a change in the senior management of
Pioneer Company (as used herein, “a change in senior management”
shall mean that Michael E. Little shall have ceased to hold the titles of
Chairman and Chief Executive Officer or Wm. Stacy Locke shall have ceased to
hold the titles of  Chief Financial
Officer and President); provided, however, should Michael E. Little or Wm.
Stacy Locke die, become disabled or be terminated for cause (an “Involuntary
Change of Management”), Pioneer shall not be in default hereunder if and
only if Pioneer Company shall  (i)
immediately, but in no event more than thirty days following such Involuntary
Change of Management, name a replacement reasonably acceptable to Lender to
exercise the duties and hold the office(s) and positions held by Michael E.
Little and Wm. Stacy Locke on an interim basis; and (ii) as soon as practical,
but in no event more than (270) days following such Involuntary Change of
Management, name a replacement acceptable to Lender in it reasonable discretion
to exercise the duties and hold the office(s) and positions held by Michael E.
Little and Wm. Stacy Locke.

 

(h)                                 Loans.  Make any loans to any person or entity,
other than, in the  loans made in the
ordinary course of business to entities affiliated with Pioneer and not
exceeding $250,000.00 principal outstanding to all Pioneers in the aggregate at
any time.

 

(i)                                     Transactions with
Affiliates.  Enter into any transaction,
including, without limitation, the purchase, sale or exchange of property or
the rendering of any service, with any Affiliate (as hereinafter defined) of
Pioneer, except in the ordinary course of and pursuant to the reasonable
requirements of the business of either of them and upon fair and reasonable
terms no less favorable to Pioneer as the case may be than would be obtained in
a

 

10

 

comparable arm’s-length transaction with a person or
entity not an Affiliate of Pioneer.  As
used herein, the term “Affiliate” means any individual or entity directly
or indirectly controlling, controlled by, or under common control with, another
individual or entity.

 

(j)                                     Distributions.  Pioneer Services agrees not to declare or
pay any distributions on any of Pioneer Services’ partnership interests, make
any other distributions with respect to any payment on account of the purchase,
redemption, or other acquisition or retirement of any of Pioneer Services’
partnership interests, or make any other distribution, sale, transfer or lease
of any of Pioneer Services’ assets other than in the ordinary course of
business, unless any such amounts are directly utilized for the payment of
principal or interest on indebtedness and obligations owing from time to time
by Pioneer Services to Lender.  The above notwithstanding, the Pioneer
Services may make distributions with respect to Pioneer Services’ partnership
interests, for the purposes of (i) providing funds to pay taxes (including
federal income taxes and franchise taxes) of the partners of Pioneer Services
attributable to ownership of an interest in Pioneer Services, (ii) providing
operating capital to Pioneer Company in an amount not exceeding $250,000.00
distributed in any one fiscal year, (iii) providing sufficient funds for the
retirement of term bank debt owed by Pioneer Company to Merrill Lynch Capital; and (iv) providing sufficient funds for
payment of interest on debt owed by Pioneer Company to Wedge Energy Services,
L.L.C.

 

(k)                                  Dividends.  Pioneer Company agrees not to declare or pay
any dividends on any shares of its capital stock, make any other distributions with respect to any payment on account of the purchase, redemption, or
other acquisition or retirement of any shares of it  capital stock, or make any other distribution, sale, transfer or
lease of any of it assets other than in the ordinary course of business, unless
any such amounts are directly utilized for the payment of principal or interest
on indebtedness and obligations owing from time to time by it to Lender and
other than Preferred Dividends which Pioneer Company is contractually obligated
to pay pursuant to agreements in existence on the date hereof.

 

9.                                       Financial Covenants.  Until (i) the Notes and all other
obligations and liabilities of Pioneer under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no
further commitment to lend hereunder, Pioneer will maintain the following
financial covenants (on a consolidated basis):

 

(a)                                  Leverage Ratio.  Commencing June 30, 2003, Pioneer will
maintain, at all times, to be tested quarterly on the last day of each fiscal
quarter of Pioneer, a Leverage Ratio not to exceed 3.00 to 1.00.  Defined as:

 

	
   

  	
  Funded Bank Debt

  	
   

  
	
  Net Income + Interest + Taxes + Depreciation +

  Amortization (each for the preceding four fiscal

  quarters)

  

 

11

 

(b)                                 Fixed Charge Coverage Ratio.  Pioneer will maintain, at all times, to be tested
quarterly on the last day of each fiscal quarter of Pioneer a fixed charge
coverage ratio of not less than 1.00 to 1.00-defined as:

 

	
   

  	
  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 - cash tax refunds
  received (each for the
  preceding four fiscal

  quarters)

  

 

(c)                                  Senior Cash Flow Coverage Ratio.  Pioneer will maintain, at all times, to be
tested quarterly on the last day of each fiscal quarter of Pioneer, a senior
cash flow coverage ratio of not less than 1.50 to 1.00—defined as:

 

	
   

  	
  Net Income + Interest + Taxes + Depreciation  + Amortization -Distributions or

  Dividends - Maintenance Capital Expenditures (each for the preceding four
  fiscal

  quarters)

  	
   

  
	
  Interest Expense (excluding
  interest on Subordinated Debt) + scheduled

  maturities of principal indebtedness 
  + cash taxes paid – cash tax refunds

  received (each for the
  preceding four fiscal quarters)

  

 

(d)                                 Debt to Worth Ratio.  Pioneer will maintain, at all times, to be
tested quarterly on the last day of each fiscal quarter of Pioneer, a ratio of
(a) total liabilities (excluding any Subordinated Debt), to
(b) Tangible Net Worth plus Subordinated Debt of not greater
than 1.00 to 1.00.

 

As used herein, the following terms shall have the
following meanings:

 

“Funded
Bank Debt” means all outstanding principal on loans and capital leases
excluding any insurance premium notes with an original maturity date of one
year or less, and shall exclude the outstanding balance on all Subordinated
Debt.

 

“Maintenance
Capital Expenditures” means
amounts actually paid for the routine maintenance of equipment, to the extent
such maintenance is required to keep that equipment in operating  condition.

 

12

 

“Tangible Net Worth” means, as of any date,
Pioneer’s total assets excluding all intangible assets, less total
liabilities excluding any Subordinated Debt.

 

“Scheduled maturities of principal indebtedness” shall exclude amounts due on the Frost Bank
Loan # 3469095-9002 at its maturity on June 30, 2003 and payments made on loans
and capital leases with an original maturity date of one year or less and any
payments made in excess of regularly scheduled payments.

 

“Subordinated Debt” means any indebtedness owing
by Pioneer which has been subordinated by written agreement to all indebtedness
now or hereafter owing by Pioneer to Lender, such agreement to be in form and
substance acceptable to Lender.

 

10.                                 Reporting Requirements.  Until
(i) the Notes and all other obligations and liabilities of Pioneer under
this Loan Agreement and the other Loan Documents are fully paid and satisfied,
and (ii) the Lender has no further commitment to lend hereunder, Pioneer
will, unless Lender shall otherwise consent in writing, furnish to Lender (all
on a consolidated basis):

 

(a)                                  Interim Financial Statements.  As soon as available, and in any event
within forty-five (45) days after the end of each month of each fiscal year of
Pioneer, (i) a balance sheet, income statement and statement of cash flows of
Pioneer as of the end of such fiscal month; (ii) an accounts receivable aging
report; (iii) a Borrowing Base Certificate; and (iv) a Rig Schedule/Utilization
Report; each in form and substance and in reasonable detail satisfactory to
Lender and duly certified (as to item (i), subject to year-end review
adjustments) by the President and/or Chief Financial Officer of Pioneer Company
and the President and/or Chief Financial Officer of the general partner of
Pioneer Services and/or Chief Accounting Officer (A) as being true and
correct in all material aspects to the best of his or her knowledge and
(B) (as to item (i) only), as having been prepared in accordance with
generally accepted accounting principles, consistently applied.

 

(b)                                 Quarterly Statements.  Within sixty (60) days after the end of each
quarter of each fiscal year of Pioneer, a copy of the 10-Q Report of Pioneer
Company, as filed with the Securities Exchange Commission.

 

(c)                                  Annual Reporting.  As soon as available and in any event within
one hundred twenty days (120) days after the end of each fiscal year of
Pioneer, (i) a copy of the 10-K Report of Pioneer Company, as filed with the
Securities Exchange Commission, together with (ii) a certificate signed by
the President and/or Chief Financial Officer of Pioneer Company and the
President and/or Chief Financial Officer of the general partner of Pioneer

 

13

 

and/or Chief Accounting Officer, stating that Pioneer is
in full compliance with all of its obligations under this Loan Agreement and
all other Loan Documents and is not in default of any term or provisions hereof
or thereof, and demonstrating compliance with all financial ratios and covenants
set forth in this Loan Agreement.

 

11.                                 Events of Default.  Each of
the following shall constitute an “Event of Default” under this Loan
Agreement:

 

(a)                                  The failure, refusal or
neglect of Pioneer Services to pay when due any part of the principal of, or interest
on, the Notes or any other indebtedness or obligations owing to Lender by
Pioneer Services from time to time, from time to time, which default remains
uncured for a period of ten (10) days after notice to Pioneer Services from
Lender, given in accordance with the terms hereof.

 

(b)                                 The failure of Pioneer
Services or any Obligated Party (as defined below) to timely and properly
observe, keep or perform any covenant, agreement, warranty or condition
required herein or in any of the other Loan Documents and the failure of
Pioneer Services or any Obligated Party to cure such default within
30 days after written notice from Lender specifying such default, provided that if such
default or violation is susceptible of being remedied, but such remedy can not
reasonably be accomplished within the initial 30-day cure period, no Event of
Default shall be deemed to have occurred so long as Pioneer Services or the
appropriate Obligated Party is diligently pursuing such remedy and is
successful in curing the default or violation to the reasonable satisfaction of
Lender within such additional period of time as may be necessary to effect the
remedy, not to exceed in any event an additional 60 days following the end
of the initial cure period.

 

(c)                                  The occurrence of an event
of default under any of the other Loan Documents or under any other agreement
now existing or hereafter arising between Lender and Pioneer Services after the
giving of any required notice and expiration of any applicable cure period.

 

(d)                                 Any representation
contained herein or in any of the other Loan Documents made by Pioneer Services
or any Obligated Party is false or misleading in any material respect.

 

(e)                                  The occurrence of any
event which permits the acceleration of the maturity of any indebtedness in
excess of $100,000.00 owing by Pioneer 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 Pioneer Services and

 

14

 

Merrill Lynch Capital or any documents executed in
connection therewith and any renewals thereof.

 

(f)                                    If Pioneer Services or
any Obligated Party: (i) becomes insolvent, or makes a transfer in fraud
of creditors, or makes an assignment for the benefit of creditors, or admits in writing
its inability to pay its debts as they become due; (ii) generally is not
paying its debts as such debts become due; (iii) has a receiver, trustee
or custodian appointed for, or take possession of, all or substantially all of
the assets of such party, either in a proceeding brought by such party or in a
proceeding brought against such party and such appointment is not discharged or
such possession is not terminated within sixty (60) days after the effective
date thereof or such party consents to or acquiesces in such appointment or
possession; (iv) files a petition for relief under the United States
Bankruptcy Code or any other present or future federal or state insolvency,
bankruptcy or similar laws (all of the foregoing hereinafter collectively
called “Applicable Bankruptcy Law”) or an involuntary petition for
relief is filed against such party under any Applicable Bankruptcy Law and such
involuntary petition is not dismissed within sixty (60) days after the filing
thereof, or an order for relief naming such party is entered under any
Applicable Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged within a
period of thirty (30) days any attachment, sequestration or similar writ levied
upon any property of such party; or (vi) fails to pay within thirty (30)
days any final money judgment against such party.

 

(g)                                 If Pioneer Services or
any Obligated Party is an entity, the liquidation, dissolution, merger or
consolidation of any such entity or, if Pioneer Services or any Obligated Party
is an individual, the death or legal incapacity of any such individual.

 

(h)                                 The entry of any
judgment against Pioneer or the issuance or entry of any attachment or other
lien against any of the property of Pioneer for an amount in excess of
$500,000.00, if undischarged, unbonded or undismissed within thirty (30) days
after such entry.

 

Nothing contained in this Loan Agreement shall be
construed to limit the events of default enumerated in any of the other Loan
Documents and all such events of default shall be cumulative.  The term “Obligated Party”, as used
herein, shall mean Pioneer Company and any party other than Pioneer Services
who secures, guarantees and/or is otherwise obligated to pay all or any portion
of the indebtedness evidenced by the Notes.

 

15

 

12.                                 Remedies.  Upon the
occurrence of any one or more of the foregoing Events of Default, (a) the
entire unpaid balance of principal of the Notes, together with all accrued but
unpaid interest thereon, and all other indebtedness owing to Lender by
Pioneer Services at such time shall, at the option of Lender, become
immediately due and payable without further notice, demand, presentation,
notice of dishonor, notice of intent to accelerate, notice of acceleration,
protest or notice of protest of any kind, all of which are expressly waived by
Pioneer Services, and (b) Lender may, at its option, cease further
advances under any of the Notes.  All
rights and remedies of Lender set forth in this Loan Agreement and in any of
the other Loan Documents may also be exercised by Lender, at its option to be
exercised in its sole discretion, upon the occurrence of an Event of Default.

 

13.                                 Rights Cumulative.  All
rights of Lender under the terms of this Loan Agreement shall be cumulative of,
and in addition to, the rights of Lender under any and all other agreements
between Pioneer Services and Lender (including, but not limited to, the other
Loan Documents), and not in substitution or diminution of any rights now or
hereafter held by Lender under the terms of any other agreement.

 

14.                                 Waiver and Agreement.  Neither
the failure nor any delay on the part of Lender to exercise any right, power or
privilege herein or under any of the other Loan Documents shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power
or privilege preclude any other or further exercise thereof or the exercise of
any other right, power or privilege.  No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Pioneer Services therefrom shall be effective
unless the same shall be in writing and signed by Lender, and then shall be
effective only in the specific instance and for the purpose for which given and
to the extent specified in such writing. 
No modification or amendment to this Loan Agreement or to any of the
other Loan Documents shall be valid or effective unless the same is signed by
the party against whom it is sought to be enforced.

 

15.                                 Benefits.  This Loan
Agreement shall be binding upon and inure to the benefit of Lender and Pioneer
Services, and their respective successors and assigns, provided, however, that
Pioneer Services may not, without the prior written consent of Lender, assign
any rights, powers, duties or obligations under this Loan Agreement or any of
the other Loan Documents.

 

16.                                 Notices.  All notices,
requests, demands or other communications required or permitted to be given
pursuant to this Agreement shall be in writing and given by (i) personal
delivery, (ii) expedited delivery service with proof of delivery, or
(iii) United States mail, postage prepaid, registered or certified mail,
return receipt requested, sent to the intended addressee at the address set
forth on the first page hereof and shall be deemed to have been received
either, in the case of personal delivery, as of the time of personal delivery,
in the case of expedited delivery service,

 

16

 

as of the date of first attempted delivery at the address
and in the manner provided herein, or in the case of mail, upon deposit in a
depository receptacle under the care and custody of the United States Postal
Service.  Either party shall have the
right to change its address for notice hereunder to any other location within the
continental United States by notice to the other party of such new address at
least thirty (30) days prior to the effective date of such new address.

 

17.                                 Construction.  This
Loan Agreement and the other Loan Documents have been executed and delivered in
the State of Texas, shall be governed by and construed in accordance with the
laws of the State of Texas, and shall be performable by the parties hereto in
the county in Texas where the Lender’s address set forth on the first page
hereof is located.

 

18.                                 Invalid Provisions.  If any
provision of this Loan Agreement or any of the other Loan Documents is held to
be illegal, invalid or unenforceable under present or future laws, such
provision shall be fully severable and the remaining provisions of this Loan
Agreement or any of the other Loan Documents shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance.

 

19.                                 Expenses.  Pioneer
Services shall pay all costs and expenses (including, without limitation,
reasonable attorneys’ fees) in connection with (i) any action required in
the course of administration of the indebtedness and obligations evidenced by
the Loan Documents, and (ii) any action in the enforcement of Lender’s
rights upon the occurrence of Event of Default.

 

20.                                 Participation of the Loans.  Pioneer Services agrees that Lender may, at
its option, sell interests in the Loans and its rights under this Loan
Agreement to a financial institution or institutions and, in connection with
each such sale, Lender may disclose any financial and other information
available to Lender concerning Pioneer Services to each prospective purchaser.

 

21.                                 Conflicts.  In the
event any term or provision hereof is inconsistent with or conflicts with any
provision of the other Loan Documents, the terms and provisions contained in
this Loan Agreement shall be controlling.

 

22.                                 Counterparts.  This
Loan Agreement may be separately executed in any number of counterparts, each
of which shall be an original, but all of which, taken together, shall be
deemed to constitute one and the same instrument.

 

23.                                 Facsimile Documents and Signatures.  For purposes of negotiating and finalizing
this Loan Agreement, if this document or any document executed in connection
with it is transmitted by facsimile machine (“fax”), it shall be treated
for all purposes as an original document. 
Additionally, the signature of any party on this

 

17

 

document transmitted by way of a facsimile machine shall
be considered for all purposes as an original signature.  Any such faxed document shall be considered
to have the same binding legal effect as an original document.  At the request of any party, any faxed
document shall be re-executed by each signatory party in an original form.

 

If the foregoing correctly sets forth our mutual
agreement, please so acknowledge by signing and returning this Loan Agreement
to the undersigned.

 

NOTICE
TO COMPLY WITH STATE LAW

 

For the purpose of this Notice, the term “WRITTEN AGREEMENT” shall
include the document set forth above, together with each and every other
document relating to and/or securing the same loan transaction, regardless of
the date of execution.

 

THIS
WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

 

 

[Balance of Page Intentionally Left
Blank]

 

[Signature
Appears on Next Page]

 

18

 

 

	
  PIONEER SERVICES:

  	
   

  	
  LENDER:

  
	
   

  	
   

  	
   

  
	
  PIONEER DRILLING SERVICES, LTD., a Texas limited partnership (formerly
  known as Pioneer Drilling Co., Ltd.)

  	
   

  	
  THE FROST
  NATIONAL BANK

  a
  national banking association

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
  By:

  	
  PDC
  Mgmt. Co., a Texas corporation, General Partner

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PIONEER
  COMPANY:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  PIONEER DRILLING COMPANY, a Texas corporation (executing for
  purposes of joining in certain specific provisions, as noted above)

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
   

  
													

 

SAT1 #62113 v4

 

S-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00052-of-00352.parquet"}]]