Exhibit 10.3
THE SECURITIES
REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF
EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT
UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH
LAWS.
WARRANT No. W-1
to purchase
Shares of Common
Stock
BRONCO DRILLING COMPANY,
INC.
a Delaware
Corporation
Issue Date: September 18,
2009
1. Definitions
. Unless the context otherwise requires, when used herein the
following terms shall have the meanings indicated.
“ Affiliate ” means, with
respect to any specified Person, any other Person directly or
indirectly controlling, controlled by or under direct or indirect
common control with, such specified Person; as used in this
definition, “control” shall mean, with respect to any
specified Person, the possession, directly or indirectly, of the
power to direct or cause the direction of the management and
policies of such specified Person, whether through ownership of
voting securities, by contract or otherwise.
“ Appraisal Procedure ” means
a procedure whereby two independent appraisers, one chosen by the
Corporation and one by the Warrantholder (or if there is more than
one Warrantholder involved in an Appraisal Procedure, a majority in
interest of Warrantholders based on the number of Shares issuable
on the exercise of the Warrants held by all such Warrantholders),
shall mutually agree upon the determinations then the subject of
appraisal. Each party shall deliver a notice to the
other appointing its appraiser within fifteen (15) days after the
Appraisal Procedure is invoked. If within thirty (30)
days after appointment of the two appraisers they are unable to
agree upon the amount in question, a third independent appraiser
shall be chosen within ten (10) days thereafter by the mutual
consent of such first two appraisers or, if such two first
appraisers fail to agree upon the appointment of a third appraiser,
such appointment shall be made by the American Arbitration
Association, or any organization successor thereto, from a panel of
arbitrators having experience in appraisal of the subject matter to
be appraised. The decision of the third appraiser so
appointed and chosen shall be given within thirty (30) days after
the selection of such third appraiser. If three
appraisers shall be appointed and the determination of one
appraiser is disparate from the middle determination by more than
twice the amount by which the other determination is disparate from
the middle determination, then the determination of such appraiser
shall be excluded, the remaining two determinations shall be
averaged and such average shall be binding and conclusive upon the
Corporation and the Warrantholder; otherwise, the average of all
three determinations shall be binding upon the Corporation and the
Warrantholder. One-half of the costs of conducting any
Appraisal Procedure shall be borne by the
Corporation, and the other half shall be borne by the Warrantholder
(of, if more than one Warrantholder invokes an Appraisal Procedure,
by such Warrantholders in the same relative proportion as the
number of Shares issuable on the exercise of the Warrants held by
each such Warrantholder bear to the number of Shares issuable on
the exercise of the Warrants owned by all such
Warrantholders).
“ Board of Directors ” means
the board of directors of the Corporation, including any duly
authorized committee thereof.
“ Business Day ” means a day
other than a Saturday, a Sunday or a day on which banks in Mexico
City, Mexico or in the state in which the office maintained by the
Corporation pursuant to Section 3 is located are required or
permitted by law to be closed (other than a general banking
moratorium or holiday for a period exceeding four (4) consecutive
days).
“ Business Combination ”
means a merger, consolidation, statutory share exchange, sale of
all or substantially all of the Corporation’s assets or
similar form of transaction that requires the approval of the
Corporation’s stockholders, or any tender offer, exchange
offer or similar offer that is commenced by any Person for shares
of Common Stock.
“ Business Combination Payment
Amount ” means, with respect to any Business Combination,
the positive excess, if any, of (i) the sum of (A) the per share
cash consideration payable in such Business Combination in respect
of each share of Common Stock, and (B) the per share Fair Market
Value of any shares of stock or other securities, property or any
other non-cash consideration payable in such Business Combination
in respect of each share of Common Stock, over (ii) the Exercise
Price in effect on the date of the execution by the Corporation
(or, if applicable, a subsidiary thereof) of the definitive
agreement in respect of such Business Combination (or, in the case
of a tender offer, exchange offer or similar offer in which no such
definitive agreement is executed by the Corporation, the date of
the commencement thereof, determined in accordance with the
applicable rules and regulations set forth in the Exchange
Act).
“ Common Stock ” means the
Corporation’s common stock, par value of $0.01 per
share.
“ Corporation ” means Bronco
Drilling Company, Inc., a Delaware corporation.
“ Exchange Act ” means the
Securities Exchange Act of 1934, as amended, or any successor
federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect from time to
time. Reference to a particular section of the Exchange
Act shall include a reference to the comparable section, if any, of
any such successor federal statute.
“ Exercise Price ” means, (i)
from the Issue Date through the first anniversary of the Issue
Date, $6.50 per share; (ii) following the first anniversary of the
Issue Date through the second anniversary of the Issue Date, $7.00
per share; and (iii) following the second anniversary of the Issue
Date through the third anniversary of the Issue Date, $7.50 per
share.
“ Expiration Time ” has the
meaning set forth in Section 3.
“ Fair Market Value ” means,
with respect to any security or other property, the fair market
value of such security or other property as determined by the Board
of Directors, acting in good faith. If the Warrantholder
objects in writing to the Board of Directors’ calculation of
fair market value within ten (10) days of receipt of written notice
thereof and the Warrantholder and the Corporation are unable to
agree on fair market value during the 10-day period following the
delivery of the Warrantholder’s objection, the Appraisal
Procedure may be invoked by either party to determine Fair Market
Value by delivering written notification thereof to the other party
not later than the 30th day after delivery of the
Warrantholder’s objection.
“ Investor ” has the meaning
set forth in the Warrant Agreement.
“ Investor Group ” means the
Investor, any Affiliate thereof, and any other Person whose
beneficial ownership of Common Stock would be aggregated with the
Investor’s for purposes of Section 13(d) of the Exchange
Act.
“ Issue Date ” means
September 18, 2009.
“ Market Price ” means, with
respect to the Common Stock, on any given day, the last sale price,
regular way, or, in case no such sale takes place on such day, the
average of the closing bid and asked prices, regular way, of the
shares of Common Stock on NASDAQ on such day. If the
Common Stock is not traded on NASDAQ on any date of determination,
the Market Price of the Common Stock on such date of determination
means the closing sale price on such date as reported in the
composite transactions for the principal U.S. national or regional
securities exchange on which the Common Stock is so listed or
quoted, or, if no closing sale price is reported, the last reported
sale price on the principal U.S. national or regional securities
exchange on which the Common Stock is so listed or quoted, or if
the Common Stock is not so listed or quoted on a U.S. national or
regional securities exchange, the last quoted bid price for the
Common Stock in the over-the-counter market on such date as
reported by Pink Sheets LLC or similar organization, or, if such
bid price is not available, the Market Price of the Common Stock on
that date shall mean the Fair Market Value per share as determined
by the Board of Directors in reliance on an opinion of a nationally
recognized independent investment banking firm retained by the
Corporation for this purpose and certified in a resolution sent to
the Warrantholder. For the purposes of determining the
Market Price of the Common Stock on the “trading day”
preceding, on or following the occurrence of an event, (i) that
trading day shall be deemed to commence immediately after the
regular scheduled closing time of trading on NASDAQ or, if trading
is closed at an earlier time, such earlier time and (ii) that
trading day shall end at the next regular scheduled closing time,
or if trading is closed at an earlier time, such earlier time (for
the avoidance of doubt, and as an example, if the Market Price is
to be determined as of the last trading day preceding a specified
event and the closing time of trading on a particular day is 4:00
p.m. and the specified event occurs at 5:00 p.m. on that same day,
the Market Price would be determined by reference to such 4:00 p.m.
closing price).
“ NASDAQ ” means The NASDAQ
Global Select Market.
“ Net Per Share Consideration
” shall mean, with respect to any Transfer of all or a
portion of this Warrant by the Investor or any other member of the
Investor Group, the quotient obtained by dividing (i) the amount
obtained by subtracting (A) the aggregate amount of fees and
expenses (including, without limitation, brokerage commissions or
similar fees or expenses) paid by the Investor or such other member
of the Investor Group in connection with such Transfer (other than
legal fees and disbursements in an amount not to exceed $25,000
with respect to any such Transfer) from (B) the aggregate
consideration paid to the Investor or such other member of the
Investor Group in connection with such Transfer, by (ii) the
aggregate number of shares of Common Stock issuable upon exercise
of the portion of the Warrant subject to such Transfer.
“ Person ” has the meaning
given to it in Section 3(a)(9) of the Exchange Act and as used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act.
“ Regulatory Approvals ” with
respect to the Warrantholder, means, to the extent applicable and
required to permit the Warrantholder to exercise this Warrant for
shares of Common Stock and to own such Common Stock without the
Warrantholder being in violation of applicable law, rule or
regulation, the receipt of any necessary approvals and
authorizations of, filings and registrations with, notifications
to, or expiration or termination of any applicable waiting period
under, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the rules and regulations thereunder.
“ SEC ” means the United
States Securities and Exchange Commission or any successor agency
thereto.
“ Securities Act ” means the
Securities Act of 1933, as amended, or any successor federal
statute, and the rules and regulations of the SEC thereunder, all
as the same shall be in effect from time to
time. Reference to a particular section of the
Securities Act shall include a reference to the comparable section,
if any, of any such successor federal statute.
“ Shares ” has the meaning
set forth in Section 2.
“ Spread Value ” means, with
respect to any Transfer of the Warrant (or any portion thereof),
the positive excess, if any, of (i) the Market Price per share of
the Common Stock on the date of the execution of the definitive
agreement in respect of such Transfer over (ii) the Exercise Price
in effect as of such date.
“ Transaction Documents ” has
the meaning set forth in the Warrant Agreement.
“ Transfer ” or “
Transferred ” means, with respect to this Warrant, the
sale, assignment, transfer, exchange or other disposition of such
Warrant, in whole or in part, in any case whether pursuant to a
sale, merger, combination, consolidation, reclassification or
otherwise, and whether voluntarily or by operation of
law.
“ Warrantholder ” has the
meaning set forth in Section 2.
“ Warrant ” means the warrant
to purchase shares of Common Stock issued pursuant to the Warrant
Agreement.
“ Warrant Agreement ” means
the Warrant Agreement, dated as of September 18, 2009, as may be
amended from time to time, among the Corporation and Banco Inbursa
S.A., Institucion de Banca Multiple, Grupo Financiero Inbursa,
including all schedules and exhibits thereto.
2. Number of
Shares; Exercise Price . This certifies that, for value
received, BANCO INBURSA S.A., INSTITUCIÓN DE BANCA
MÚLTIPLE, GRUPO FINANCIERO INBURSA or its permitted
transferees, successors and assigns (the “
Warrantholder ”) is entitled, upon the terms and
subject to the conditions hereinafter set forth, including, without
limitation, the exercise limitations set forth in Section 13(H)
hereof, to acquire from the Corporation, in whole or in part, after
the receipt of all applicable Regulatory Approvals, up to an
aggregate of 5,440,770 (FIVE MILLION FOUR HUNDRED FORTY THOUSAND
SEVEN HUNDRED AND SEVENTY) fully paid and nonassessable shares of
Common Stock, at a purchase price per share of Common Stock equal
to the Exercise Price. The number of shares of Common
Stock (the “ Shares ”) and the Exercise Price
are subject to adjustment as provided herein, and all references to
“Common Stock,” “Shares” and
“Exercise Price” herein shall be deemed to include any
such adjustment or series of adjustments.
3. Exercise of
Warrant; Term . Subject to Section 2 and Section
13(H), the right to purchase the Shares represented by this Warrant
is exercisable, in whole or in part, by the Warrantholder, at any
time or from time to time after the Issue Date but in no event
later than 5:00 p.m., New York City time, September 18, 2012 (the
“ Expiration Time ”), by (A) the surrender of
this Warrant and Notice of Exercise annexed hereto, duly completed
and executed on behalf of the Warrantholder, at the principal
executive office of the Corporation located at 16217 North May
Avenue, Edmond, Oklahoma 73013 (or such other office or agency of
the Corporation in the United States as it may designate by notice
in writing to the Warrantholder at the address of the Warrantholder
appearing on the books of the Corporation), and (B) payment of the
Exercise Price for the Shares thereby purchased at the election of
the Warrantholder in one of the following manners: (i) by tendering
in cash or, with the consent of the Corporation, a certified or
cashier’s check payable to the order of the Corporation, or
by wire transfer of immediately available funds to an account
designated by the Corporation, or (ii) by electing to make a
cashless exercise of this Warrant (or a portion thereof), in which
case the Corporation shall issue to the Warrantholder a number of
Shares computed using the following formula:
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For purposes of
the foregoing formula:
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the number of
Shares to be issued to the Warrantholder;
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the number of
Shares purchasable under this Warrant subject to the exercise
election;
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the Market
Price of one Share as of the date of the exercise of this Warrant
(or portion thereof); and
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the Exercise
Price in effect immediately prior to the exercise of this Warrant
(or portion thereof).
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If the Warrantholder does not exercise this
Warrant in its entirety, the Warrantholder will be entitled to
receive from the Corporation within a reasonable time, and in any
event not exceeding three (3) Business Days, a new warrant in
substantially identical form for the purchase of that number of
Shares equal to the difference between the number of Shares subject
to this Warrant and the number of Shares as to which this Warrant
is so exercised.
4. Issuance of
Shares; Authorization; Listing . Subject to Section
8, certificates for Shares issued upon exercise of this Warrant
will be issued in such name or names as the Warrantholder may
designate and will be delivered to such named Person or Persons
within a reasonable time, not to exceed three (3) Business Days
after the date on which this Warrant has been duly exercised in
accordance with the terms of this Warrant. The Corporation hereby
represents and warrants that any Shares issued upon the exercise of
this Warrant in accordance with the provisions of Section 3 will be
duly and validly authorized and issued, fully paid and
nonassessable and free from all taxes, liens and charges (other
than liens or charges created by the Warrantholder, income and
franchise taxes incurred by the Warrantholder in connection with
the exercise of the Warrant, or any transfer taxes that become
payable by the Warrantholder as a result of the issuance of shares
of Common Stock upon exercise of this Warrant to a Person other
than the Warrantholder). The Corporation agrees that the
Shares so issued will be deemed to have been issued to the
Warrantholder as of the close of business on the date on which this
Warrant and payment of the Exercise Price are delivered to the
Corporation in accordance with the terms of this Warrant,
notwithstanding that the stock transfer books of the Corporation
may then be closed or certificates representing such Shares may not
be actually delivered on such date. The Corporation will at all
times reserve and keep available, out of its authorized but
unissued Common Stock, solely for the purpose of providing for the
exercise of this Warrant, and irrespective of the exercise
limitations set forth in Section 13(H) hereof, the aggregate number
of shares of Common Stock issuable upon exercise of this
Warrant. The Corporation (A) will procure, at its sole
expense, the listing of the Shares issuable upon exercise of this
Warrant, subject to issuance or notice of issuance, on all
principal stock exchanges on which the Common Stock is then listed
or traded and (B) will use commercially reasonable efforts to
maintain the listing of such Shares after the issuance
thereof. The Corporation will use commercially
reasonable efforts to ensure that the Shares may be issued without
violation of any law or regulation applicable to the Corporation or
of any requirement of any securities exchange on which the Shares
are listed or traded. The Corporation will cooperate
with the reasonable requests of the Warrantholder in taking such
other actions as are necessary to obtain (i) any Regulatory
Approvals applicable to Warrantholder’s exercise of its
rights hereunder, including with respect to the issuance of the
Shares and (ii) any regulatory approvals applicable to the
Corporation solely as a result of the issuance of the
Shares. Before taking any action which would cause an
adjustment pursuant to Section 13 to reduce the Exercise Price
below the then par value of the Common Stock, the Corporation shall
take any and all corporate action which may, in the opinion of its
counsel, be necessary in order that the Corporation may validly and
legally issue fully paid and non-assessable shares of Common Stock
at the Exercise Price as so adjusted.
5. No Fractional
Shares or Scrip . No fractional Shares or scrip
representing fractional Shares shall be issued upon any exercise of
this Warrant. In lieu of any fractional Share to which
the Warrantholder would otherwise be entitled, the Warrantholder
shall be entitled to receive a cash payment equal to the Market
Price of the Common Stock on the last trading day preceding the
date of exercise less the Exercise Price for such fractional
share.
6. No Rights as
Stockholders; Transfer Books . This Warrant does not
entitle the Warrantholder to any voting rights or other rights as a
stockholder of the Corporation prior to the date of exercise
hereof, provided that any voting rights that the Warrantholder may
have in respect of any shares of Common Stock or other capital
stock of the Corporation owned thereby shall not be limited in any
respect. The Corporation will at no time close its
transfer books against exercise or transfer of this Warrant in any
manner which interferes with the timely exercise or transfer of
this Warrant.
7. Charges, Taxes
and Expenses . Issuance of certificates for Shares
to the Warrantholder upon the exercise of this Warrant shall be
made without charge to the Warrantholder for any issue or transfer
tax or other incidental expense in respect of the issuance of such
certificates imposed under any law, rule or regulation applicable
to the Corporation, all of which taxes and expenses shall be paid
by the Corporation; provided , however , that any
transfer taxes that become payable by the Warrantholder as a result
of the issuance of shares of Common Stock upon exercise of this
Warrant to a Person other than the Warrantholder shall be paid by
the Warrantholder or the Person to whom such shares are so
issued.
(A) Subject to
compliance with clauses (B) and (C) of this Section 8, this Warrant
and all rights hereunder are transferable, in whole or in part,
upon the books of the Corporation by the registered holder hereof
in person or by duly authorized attorney, and a new warrant shall
be made and delivered by the Corporation, of the same tenor and
date as this Warrant but registered in the name of one or more
transferees, upon surrender of this Warrant, duly endorsed, to the
office or agency of the Corporation described in Section
3. If this Warrant is Transferred in part, such that the
Warrantholder retains the right to acquire Shares upon the exercise
hereof, the Corporation shall, without limitation of its
obligations set forth in this clause (A), make and deliver a new
warrant to the Warrantholder of the same tenor and date as this
Warrant but the number of Shares issuable upon the exercise thereof
shall be reduced to give effect to such Transfer. All
expenses (other than stock transfer taxes) and other charges
payable in connection with the preparation, execution and delivery
of the new warrants pursuant to this Section 8 shall be paid by the
Corporation.
(B) The Warrantholder
may not Transfer this Warrant or any Shares issued upon exercise of
this Warrant other than pursuant to an effective registration with
the SEC, in a sale exempt from registration under Rule 144 under
the Securities Act, or, in reliance upon an opinion of counsel
reasonably acceptable to the Corporation, in any other transaction
exempt from registration under the Securities Act.
(C) This Warrant and
any new warrant certificate issued pursuant to the terms hereof
shall contain a legend as set forth below:
“THE SECURITIES REPRESENTED BY THIS
INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT
BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A
REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT
AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT T
