Document:

Exhibit 4.10

PROMISSORY NOTE

(Floating Rate)

 

	
  $5,677,888.84

  	
  March 18, 2003

  

 

For
value received, PIONEER DRILLING SERVICES, LTD., a Texas limited partnership
(formerly known as Pioneer Drilling Co., Ltd.), as principal (“Borrower”),
promises to pay to the order of THE FROST NATIONAL BANK, a national banking
association (“Lender”) at P.O. Box 1600, San Antonio, Texas 78296,
or at such other address as Lender shall from time to time specify in
writing, the principal sum of FIVE MILLION SIX HUNDRED SEVENTY-SEVEN THOUSAND
EIGHT HUNDRED EIGHTY-EIGHT AND 84/100 DOLLARS ($5,677,888.84), in legal and lawful money of the United States
of America, with interest on the outstanding principal from the date advanced
until paid at the rate set out below.  Interest shall be computed on a per annum
basis of a year of 360 days and for the actual number of days elapsed,
unless such calculation would result in a rate greater than the highest rate
permitted by applicable law, in which case interest shall be computed on a per
annum basis of a year of 365 days or 366 days in a leap year, as the
case may be.

 

1.                                       Payment Terms.  Principal shall be due and
payable in monthly payments of $107,142.86 each, payable on the 11th day of
each calendar month, beginning April 11, 2003, and continuing regularly
thereafter until August 11, 2004, when the entire amount hereof, principal and
interest then remaining unpaid, shall be then due and payable.  Interest, computed upon the unpaid principal
balance hereof, shall be due and payable monthly as it accrues, on the same
dates as, but in addition to, said payments of principal; interest being
calculated on the unpaid principal each day principal is outstanding and all
payments made credited to any collection costs and late charges, to the discharge
of the interest accrued and to the reduction of the principal, in such order as
Lender shall determine.

 

2.                                       Late Charge.  If a payment is made 10 days or more late,
Borrower will be charged, in addition to interest, a delinquency charge of (i)
5% of the unpaid portion of the regularly scheduled payment, or (ii) $250.00,
whichever is less.  Additionally, upon
maturity of this Note, if the outstanding principal balance (plus all accrued
but unpaid interest) is not paid within 10 days of the maturity date, Borrower
will be charged a delinquency charge of (i) 5% of the sum of the outstanding
principal balance (plus all accrued but unpaid interest), or (ii) $250.00,
whichever is less. Borrower agrees with Lender that the charges set forth
herein are reasonable compensation to Lender for the handling of such late
payments.

 

3.                                       Interest Rate.  Interest on the outstanding
and unpaid principal balance hereof shall be computed at a per annum rate equal
to the lesser of (a) a rate equal to the Prime Rate of Lender, plus one
percent (1%) per annum, with said rate to be

 

1

 

adjusted
to reflect any change in said Prime Rate at the time of any such change or
(b) the highest rate permitted by applicable law, but in no event shall
interest contracted for, charged or received hereunder plus any other charges
in connection herewith which constitute interest exceed the maximum interest
permitted by applicable law, said rate to be effective prior to maturity
(however such maturity is brought about). 
The “Prime Rate” shall mean the prime rate of interest charged by
Lender as established from time to time. 
The Prime Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer.

 

4.                                       Default Rate.  Matured unpaid principal and interest shall
bear interest from date of maturity until paid at (a) the highest rate
permitted by applicable law, or (b) if no such maximum rate is established
by applicable law, at the rate stated above plus five percent (5%) per annum.

 

5.                                       Prepayment.  Borrower reserves the right to prepay, prior
to maturity, all or any part of the principal of this Note without
penalty.  Any prepayments shall be
applied first to accrued interest and then to principal.  Borrower will provide written notice to the
holder of this Note of any such prepayment of all or any part of the principal
at the time thereof.  All payments and
prepayments of principal or interest on this Note shall be made in lawful money
of the United States of America in immediately available funds, at the address
of Lender indicated above, or such other place as the holder of this Note shall
designate in writing to Borrower.  All
partial prepayments of principal shall be applied to the last installments
payable in their inverse order of maturity.

 

6.                                       Default.  It is expressly provided that upon default
in the punctual payment of this Note or any part hereof, principal or interest,
as the same shall become due and payable, or upon the occurrence of an event of default specified in
any of the other Loan Documents (as defined below), and such default continues after the giving of
written notice to Borrower and the passage of the applicable cure period as
provided in the Loan Agreement the
holder of this Note may, at its option, without further notice or demand,
(i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) refuse to advance any
additional amounts under this Note, (iii) foreclose all liens securing
payment hereof, (iv) pursue any and all other rights, remedies and
recourses available to the holder hereof, including but not limited to any such
rights, remedies or recourses under the Loan Documents, at law or in equity, or
(v) pursue any combination of the foregoing; and in the event default is made in the prompt payment of this Note
when due or declared due, and the same is placed in the hands of an attorney
for collection, or suit is brought on same, or the same is collected through probate,
bankruptcy or other judicial proceedings, then the Borrower agrees and promises
to pay all costs of collection, including reasonable attorney’s fees.

 

2

 

7.                                       Joint and Several Liability; Waiver.  Each
maker, signer, surety and endorser hereof, as well as all heirs, successors and
legal representatives of said parties, shall be directly and primarily, jointly
and severally, liable for the payment of all indebtedness hereunder.  Lender may release or modify the obligations
of any of the foregoing persons or entities, or guarantors hereof, in
connection with this loan without affecting the obligations of the others.  All such persons or entities expressly waive
presentment and demand for payment, notice of default, notice of intent to
accelerate maturity, notice of acceleration of maturity, protest, notice of
protest, notice of dishonor, and all other notices and demands for which waiver
is not prohibited by law, and diligence in the collection hereof; and agree to
all renewals, extensions, indulgences, partial payments, releases or exchanges
of collateral, or taking of additional collateral, with or without notice,
before or after maturity.  No delay or
omission of Lender in exercising any right hereunder shall be a waiver of such
right or any other right under this Note.

 

8.                                       No Usury Intended; Usury Savings Clause.  In no
event shall interest contracted for, charged or received hereunder, plus any
other charges in connection herewith which constitute interest, exceed the
maximum interest permitted by applicable law. 
The amounts of such interest or other charges previously paid to the
holder of the Note in excess of the amounts permitted by applicable law shall
be applied by the holder of the Note to reduce the principal of the
indebtedness evidenced by the Note, or, at the option of the holder of the
Note, be refunded.  To the extent
permitted by applicable law, determination of the legal maximum amount of
interest shall at all times be made by amortizing, prorating, allocating and
spreading in equal parts during the period of the full stated term of the loan
and indebtedness, all interest at any time contracted for, charged or received
from the Borrower hereof in connection with the loan and indebtedness evidenced
hereby, so that the actual rate of interest on account of such indebtedness is
uniform throughout the term hereof.

 

9.                                       Security.  This Note has been executed and delivered
pursuant to that certain Loan Agreement  of even date herewith by and between Borrower
and Lender (“Loan Agreement”), and is secured by, interalia, a
Security Agreement  of even date herewith, by and between
Borrower and Lender, covering certain collateral as more particularly described
therein.  This Note, the Loan Agreement
and all other documents evidencing, securing, governing, guaranteeing and/or
pertaining to this Note, including but not limited to those documents described
above, are hereinafter collectively referred to as the “Loan Documents.”  The holder of this Note is entitled to the
benefits and security provided in the Loan Documents.

 

10.                                 Texas Finance Code.  In no event shall
Chapter 346 of the Texas Finance Code (which regulates certain revolving
loan accounts and revolving tri-party accounts) apply to this Note.  To the extent that Chapter 303 of the
Texas Finance Code is applicable to this Note, the “weekly ceiling” specified
in such article

 

3

 

is
the applicable ceiling; provided that, if any applicable law permits greater
interest, the law permitting the greatest interest shall apply.

 

11.                                 Governing Law, Venue. This Note is being executed and delivered, and is intended to be
performed in the State of Texas.  Except
to the extent that the laws of the United States may apply
to the terms hereof, the substantive laws of the State of Texas shall govern
the validity, construction, enforcement and interpretation of this Note.  In the event of a dispute involving this
Note or any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Bexar County, Texas.

 

12.                                 Purpose of Loan.  Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall
be used solely for business, commercial, investment, or other similar purposes.

 

13.                                 Captions.  The captions in this Note are inserted for
convenience only and are not to be used to limit the terms herein.

 

14.                                 Financial Information.  Borrower agrees to promptly
furnish such financial information and statements, including financial
statements in a format acceptable to Lender, lists of assets and liabilities,
agings of receivables and payables, inventory schedules, budgets, forecasts,
tax returns, and other reports with respect to Borrower’s financial condition
and business operations as Lender may request from time to time.  This provision shall not alter the obligation
of Borrower to deliver to Lender any other financial statements or reports
pursuant to the terms of any other loan documents executed in connection with
this Note.

 

15.                                 Renewal and Extension.  This Note is given in renewal
and extension, but not extinguishment, of all amounts left owing and unpaid
on that certain Promissory Note dated August 11, 2000 executed and delivered by
South Texas Drilling & Exploration, Inc., now known as Pioneer Drilling
Company, a Texas corporation (“Pioneer Company”) and payable to the
order of  Lender
in the original principal face amount of $9,000,000.00, as modified and
extended pursuant to the terms of that certain Third Amendment to Loan
Agreement and Note Modification Agreement dated as of October 31, 2002,
executed by and between Pioneer Drilling Company and Lender, the principal face
amount of this Note being the outstanding balance of said note as of the
effective date hereof.

 

[Balance of Page Intentionally Left Blank]

 

[Signature Appears on Next Page]

 

4

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	 

	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
								

 

SAT1 #62633 v2

 

5Exhibit
4.11

REVOLVING
PROMISSORY NOTE

 

	
  $1,000,000.00

  	
  March 18, 2003

  

 

For
value received, PIONEER DRILLING SERVICES, LTD., a Texas
limited partnership (formerly known as Pioneer Drilling Co., Ltd.), as principal (“Borrower”), promises to
pay to the order of THE FROST NATIONAL BANK, a national banking
association (“Lender”) at P.O. Box 1600, San Antonio, Texas 78296,
or at such other address as Lender shall from time to time specify in writing,
the principal sum of ONE MILLION AND 00/100 DOLLARS ($1,000,000.00), or so much thereof as may be disbursed by Lender to Borrower
pursuant to the terms of that certain 2003 Consolidated Loan Agreement (the “Loan
Agreement”) of even date herewith, and be outstanding, together with
interest from the date hereof on the principal balance outstanding from time to
time as hereinafter provided.  Interest
shall be computed on a per annum basis of a year of 360 days and for the
actual number of days elapsed, unless such calculation would result in a rate
greater than the highest rate permitted by applicable law, in which case
interest shall be computed on a per annum basis of a year of 365 days or
366 days in a leap year, as the case may be.

 

1.                                       Payment Terms.  Interest only shall be due
and payable monthly as it accrues on the 18th day of each and every calendar
month, beginning April 18, 2003 and continuing regularly and monthly thereafter
until March 17, 2004, when the entire amount hereof, principal and interest
then remaining unpaid, shall be then due and payable; interest being calculated
on the unpaid principal each day principal is outstanding and all payments made
credited to any collection costs and late charges, to the discharge of the
interest accrued and to the reduction of the principal, in such order as Lender
shall determine.

 

2.                                       Late Charge.  If a payment is made 10 days or more late,
Borrower will be charged, in addition to interest, a delinquency charge of (i)
5% of the unpaid portion of the regularly scheduled payment, or (ii) $250.00,
whichever is less.  Additionally, upon
maturity of this Note, if the outstanding principal balance (plus all accrued
but unpaid interest) is not paid within 10 days of the maturity date, Borrower
will be charged a delinquency charge of (i) 5% of the sum of the outstanding
principal balance (plus all accrued but unpaid interest), or (ii) $250.00,
whichever is less. Borrower agrees with Lender that the charges set forth
herein are reasonable compensation to Lender for the handling of such late
payments.

 

3.                                       Interest Rate.  Interest on the outstanding
and unpaid principal balance hereof shall be computed at a per annum rate equal
to the lesser of (a) a rate equal to the Prime Rate of Lender, plus one
percent (1%) per annum, with said rate to be adjusted to reflect any change in
said Prime Rate at the time of any such change or

 

1

 

(b) the
highest rate permitted by applicable law, but in no event shall interest
contracted for, charged or received hereunder plus any other charges in connection
herewith which constitute interest exceed the maximum interest permitted by
applicable law.  The “Prime Rate” shall
mean the prime rate of interest charged by Lender as established from time to
time.  The Prime Rate is a reference
rate and does not necessarily represent the lowest or best rate actually
charged to any customer.

 

4.                                       Default Rate.  Matured unpaid principal and interest shall
bear interest from date of maturity until paid at (a) the highest rate
permitted by applicable law, or (b) if no such maximum rate is established
by applicable law, at the rate stated above plus five percent (5%) per annum.

 

5.                                       Revolving Line of Credit.  Under the Loan Agreement, Borrower may request
advances and make payments hereunder from time to time, provided that
it is understood and agreed that the aggregate principal amount outstanding
from time to time hereunder shall not at any time exceed (a) $1,000,000.00 or
(b) the maximum amount set forth in the Loan Agreement.  The unpaid balance of this Note shall increase
and decrease with each new advance or payment hereunder, as the case may
be.  This Note shall not be deemed
terminated or canceled prior to the date of its maturity, although the entire
principal balance hereof may from time to time be paid in full.  Borrower may borrow, repay and re-borrow
hereunder.  All payments and prepayments
of principal of or interest on this Note shall be made in lawful money of the
United States of America in immediately available funds, at the address of
Lender indicated above, or such other place as the holder of this Note shall
designate in writing to Borrower.  If
any payment of principal of or interest on this Note shall become due on a day
which is not a Business Day (as hereinafter defined), such payment shall be
made on the next succeeding Business Day and any such extension of time shall
be included in computing interest in connection with such payment.  As used herein, the term “Business Day”
shall mean any day other than a Saturday, Sunday or any other day on which national
banking associations are authorized to be closed.  The books and records of Lender shall be prima facie evidence of
all outstanding principal of and accrued and unpaid interest on this Note.

 

6.                                       Prepayment.  Borrower reserves the right to prepay, prior
to maturity, all or any part of the principal of this Note without
penalty.  Any prepayments shall be
applied first to accrued interest and then to principal.  Borrower will provide written notice to the
holder of this Note of any such prepayment of all or any part of the principal
at the time thereof.  All payments and
prepayments of principal or interest on this Note shall be made in lawful money
of the United States of America in immediately available funds, at the address
of Lender indicated above, or such other place as the holder of this Note shall
designate in writing to Borrower.  All
partial

 

2

 

prepayments
of principal shall be applied to the last installments payable in their inverse
order of maturity.

 

7.                                       Default.  It is expressly provided that upon default
in the punctual payment of this Note or any part hereof, principal or interest,
as the same shall become due and payable, or upon the occurrence of an event of default specified in
any of the other Loan Documents (as defined below) and such default continues
after the giving of written notice to Borrower and the passage of the
applicable cure period as provided in the Loan Agreement, the
holder of this Note may, at its option, without further notice or demand,
(i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) refuse to advance any
additional amounts under this Note, (iii) foreclose all liens securing
payment hereof, (iv) pursue any and all other rights, remedies and
recourses available to the holder hereof, including but not limited to any such
rights, remedies or recourses under the Loan Documents, at law or in equity, or
(v) pursue any combination of the foregoing; and in the event default is made in the prompt payment of this Note
when due or declared due, and the same is placed in the hands of an attorney
for collection, or suit is brought on same, or the same is collected through
probate, bankruptcy or other judicial proceedings, then the Borrower agrees and
promises to pay all costs of collection, including reasonable attorney’s fees.

 

8.                                       Joint and Several Liability; Waiver.  Each
maker, signer, surety and endorser hereof, as well as all heirs, successors and
legal representatives of said parties, shall be directly and primarily, jointly
and severally, liable for the payment of all indebtedness hereunder.  Lender may release or modify the obligations
of any of the foregoing persons or entities, or guarantors hereof, in connection
with this loan without affecting the obligations of  the others.  All such
persons or entities expressly waive presentment and demand for payment, notice
of default, notice of intent to accelerate maturity, notice of acceleration of
maturity, protest, notice of protest, notice of dishonor, and all other notices
and demands for which waiver is not prohibited by law, and diligence in the
collection hereof; and agree to all renewals, extensions, indulgences, partial
payments, releases or exchanges of collateral, or taking of additional
collateral, with or without notice, before or after maturity.  No delay or omission of Lender in exercising
any right hereunder shall be a waiver of such right or any other right under
this Note.

 

9.                                       No Usury Intended; Usury Savings Clause.  In no
event shall interest contracted for, charged or received hereunder, plus any
other charges in connection herewith which constitute interest, exceed the
maximum interest permitted by applicable law. 
The amounts of such interest or other charges previously paid to the
holder of the Note in excess of the amounts permitted by applicable law shall
be applied by the holder of the Note to reduce the principal of the
indebtedness evidenced

 

3

 

by
the Note, or, at the option of the holder of the Note, be refunded.  To the extent permitted by applicable law,
determination of the legal maximum amount of interest shall at all times be
made by amortizing, prorating, allocating and spreading in equal parts during
the period of the full stated term of the loan and indebtedness, all interest
at any time contracted for, charged or received from the Borrower hereof in
connection with the loan and indebtedness evidenced hereby, so that the actual
rate of interest on account of such indebtedness is uniform throughout the term
hereof.

 

10.                                 Security.  This Note  has been executed and
delivered pursuant to the Loan Agreement, and is secured by, inter  alia,
that certain Security Agreement of even date herewith executed by and between Borrower and
Lender, covering certain collateral as more particularly described
therein.  This Note, the Loan Agreement
and all other documents evidencing, securing, governing, guaranteeing and/or
pertaining to this Note, including but not limited to those documents described
above, are hereinafter collectively referred to as the “Loan Documents.”  The holder of this Note is entitled to the
benefits and security provided in the Loan Documents.

 

11.                                 Texas Finance Code.  In no event shall
Chapter 346 of the Texas Finance Code (which regulates certain revolving
loan accounts and revolving tri-party accounts) apply to this Note.  To the extent that Chapter 303 of the
Texas Finance Code is applicable to this Note, the “weekly ceiling” specified
in such article is the applicable ceiling; provided that, if any applicable law
permits greater interest, the law permitting the greatest interest shall apply.

 

12.                                 Governing Law, Venue. This Note is being executed and delivered, and is intended to be
performed in the State of Texas.  Except
to the extent that the laws of the United States may apply to the terms hereof,
the substantive laws of the State of Texas shall govern the validity,
construction, enforcement and interpretation of this Note.  In the event of a dispute involving this Note
or any other instruments executed in connection herewith, the undersigned
irrevocably agrees that venue for such dispute shall lie in any court of
competent jurisdiction in Bexar County, Texas.

 

13.                                 Purpose of Loan.  Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall
be used solely for business, commercial, investment, or other similar purposes.

 

14.                                 Captions.  The captions in this Note are inserted for
convenience only and are not to be used to limit the terms herein.

 

15.                                 Financial Information.  Borrower agrees to promptly
furnish such financial information and statements, including financial
statements in a format

 

4

 

acceptable
to Lender, lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrower’s financial condition and business operations as Lender may
request from time to time.  This
provision shall not alter the obligation of Borrower to deliver to Lender any
other financial statements or reports pursuant to the terms of any other loan
documents executed in connection with this Note.

 

16.                                 Renewal and Extension.  This Note is given in renewal
and extension, but not extinguishment, of all amounts left owing and unpaid on
that certain Revolving Promissory Note dated March 19, 2002 executed and
delivered by Borrower and payable to the order of  Lender in the original
principal face amount of $1,000,000.00.

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

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

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

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

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Printed Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
						

 

SAT1 #61837 v4

 

5

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