MUTUAL TERMINATION AND RELEASE
AGREEMENT
This Mutual Termination and Release Agreement,
dated as of August 8, 2008 (this “Release
Agreement”), is by and among ALLIS-CHALMERS ENERGY INC., a
Delaware corporation (“Parent”), ELWAY MERGER SUB LLC,
a Delaware limited liability company (formerly known as Elway
Merger Sub, Inc.) and a direct, wholly owned subsidiary of Parent
(“Merger Sub”), and BRONCO DRILLING COMPANY, INC., a
Delaware corporation (the “Company”).
WHEREAS, Parent, Merger Sub and the Company
(each, a “Party,” and collectively, the
“Parties”) entered into an Agreement and Plan of Merger
dated as of January 23, 2008, as amended by the First
Amendment to the Agreement and Plan of Merger dated as of
June 1, 2008 (the “Merger Agreement”), providing
for the merger of the Company with and into Merger Sub, with Merger
Sub surviving (the “Merger”);
WHEREAS, each Party has determined that
(i) it is unlikely that the Merger Agreement will be adopted
by the requisite vote of stockholders of the Company and
(ii) that it is advisable and in the best interests of each
Party to terminate the Merger Agreement and provide for the
compromise and settlement of any and all potential claims among the
Parties thereunder;
NOW, THEREFORE, for and in consideration of the
recitals and the mutual covenants and agreements set forth in this
Release Agreement, the Parties agree as follows:
Section 1.1 Defined Terms . As used
in this Release Agreement, capitalized terms shall have the
meanings set forth below or shall have the meanings set forth for
such terms in the sections of this Release Agreement referenced
below:
“Affiliate” means, with respect to
any Person, each other Person that directly or indirectly Controls,
is Controlled by, or is under common Control with such
Person.
“Claim” means any and all manner of
claims, rights, actions, losses, judgments, damages, causes of
action, suits, liens, obligations, accounts, debts, demands,
agreements, promises, liabilities, controversies, costs, expenses
and fees (including attorney’s, financial advisor’s,
lender’s or other fees) whatsoever, whether arising in law or
equity, whether based on any federal, state or foreign law or right
of action, mature or unmature, contingent or fixed, liquidated or
unliquidated, known or unknown, suspected or unsuspected, accrued
or unaccrued, that now exist, may exist or heretofore have
existed.
“Company” has the meaning given to
such term in the preamble.
“Confidentiality Agreement” means
the Amended and Restated Confidentiality Agreement, dated as of
December 24, 2007, between the Company and Parent.
“Control” (and related terms) means
the possession, directly or indirectly, of the power to direct or
cause the direction of the management policies of a Person, whether
through the ownership of stock, by contract, credit arrangement or
otherwise.
“Effective Date” has the meaning
given to such term in Section 2.4.
“Merger” has the meaning given to
such term in the Recitals.
“Merger
Sub” has the meaning given to such term in the
preamble.
“Parent” has the meaning given to
such term in the preamble.
“Parties” has the meaning given to
such term in the Recitals.
“Party” has the meaning given to
such term in the Recitals.
“Person” means any natural person,
corporation, company, limited or general partnership, joint stock
company, joint venture, association, limited liability company,
trust, bank, trust company, land trust, business trust or other
entity or organization, regardless of whether a Governmental
Authority.
“Release
Agreement” has the meaning given to such term in the
preamble.
“Release
Payment” has the meaning given to such term in
Section 2.1.
“Released
Parties” has the meaning given to such term in
Section 2.2(b).
“Releasing Parties” has the meaning
given to such term in Section 2.2(b).
“Subject Matter” means any
arrangement, contract, interest, right, matter, obligation, Claim
or thing whatsoever from the beginning of the world to the
Effective Date in connection with, arising as a result of or in any
way relating, directly or indirectly, to the Merger Agreement and
any other documents or transactions contemplated thereby or
referred to therein (including without limitation the Merger) or
any action taken, omitted to be taken, or attempted to be taken in
connection therewith; provided, however , that
“Subject Matter” shall not include the obligations of
any Person arising solely under the Confidentiality
Agreement.
Section 1.2 References, Construction and
Titles .
(a) All references in this Release
Agreement to Exhibits, Schedules, Articles, Sections, subsections
and other subdivisions refer to the corresponding Exhibits,
Schedules, Articles, Sections, subsections and other subdivisions
of or to this Release Agreement, unless expressly provided
otherwise. Titles appearing at the beginning of any Articles,
Sections, subsections or other subdivisions of this Release
Agreement are for convenience only, do not constitute any part of
this Release Agreement, and shall be disregarded in construing the
language hereof. The words “this Release Agreement,”
“herein,” “hereby,” “hereunder”
and “hereof,” and words of similar import, refer to
this Release Agreement as a whole and not to any particular
Article, Section, subsection or subdivision unless expressly so
limited. The words “this Article” and “this
Section,” and words of similar import, refer only to the
Article or Section hereof in which such words occur.
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(b) The word “or” is not
exclusive, and the word “including” (in its various
forms) means including without limitation. Pronouns in masculine,
feminine or neuter genders shall be construed to state and include
any other gender, and words, terms and titles (including terms
defined herein) in the singular form shall be construed to include
the plural and vice versa, unless the context otherwise
requires.
Article 2
Mutual Release and Indemnification
Section 2.1 Release Payment .
Promptly after (and in any event on or before the first business
day following) the execution and delivery of this Release
Agreement, the Company shall pay to Parent an amount of cash equal
to FOUR MILLION FIVE HUNDRED THOUSAND DOLLARS (US $4,500,000.00) in
the legal and lawful currency of the United States of America (the
“Release Payment”) by wire transfer of immediately
available funds in accordance with the wire transfer instructions
provided by Parent to the Company.
Section 2.2 Termination and Mutual
Release .
(a) As of the Effective Date, the Merger
Agreement and all agreements contemplated thereby (with the sole
exception of the Confidentiality Agreement) shall be terminated,
without any other action being required on the part of any Party,
including without limitation, provisions of the Merger Agreement
that by their terms would otherwise have survived the termination
of the Merger Agreement. Upon such termination, the Merger
Agreement shall be null and the provisions thereof shall be void
and shall have no force and effect whatsoever, and no Party shall
have any rights or obligations thereunder.
(b) Each of the Parties, on behalf of
itself and its present, future and former officers, directors,
employees, managers, advisors, stockholders, members, managers,
agents, representatives, trust beneficiaries, heirs, attorneys,
parents, subsidiaries, Affiliates and financing s
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