EMPLOYMENT AGREEMENT


    Exhibit
      10.2

     

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EMPLOYMENT AGREEMENT (this “Agreement”)
      is
      made effective as of August 3, 2007 (the “Effective
      Date”)
      by and
      between Bronco Drilling Company, Inc., a Delaware corporation (the “Company”),
      and
      Steven Starke, an individual (the “Employee”).

     

    WHEREAS,
      the Company and the Employee desire to set forth the terms of their agreements
      relating to the employment of the Employee by the Company.

     

    NOW,
      THEREFORE, in consideration of the mutual promises herein contained, the Company
      and the Employee agree as follows:

     

    1.  Employment.
      The
      Company hereby employs the Employee and the Employee hereby accepts such
      employment subject to the terms and conditions contained in this Agreement.
      The
      Employee is engaged as an employee of the Company and the Employee and the
      Company do not intend to create a joint venture, partnership or other
      relationship that might impose a fiduciary obligation on the Employee or the
      Company in the performance of this Agreement, other than as an officer of the
      Company.

     

    2.  Employee’s
      Duties.
      The
      Employee is employed on a full-time basis. Throughout the term of this
      Agreement, the Employee will use the Employee’s best efforts and due diligence
      to assist the Company in the objective of achieving the most profitable
      operation of the Company and the Company’s affiliated entities consistent with
      developing and maintaining a quality business operation.

     

    2.1  Specific
      Duties.
      During
      the term of this Agreement, the Employee will serve as Chief Accounting
      Officer for the Company. The Employee agrees to use the Employee’s best efforts
      to perform all of the services required to fully and faithfully execute the
      offices and positions to which the Employee is appointed and accepts and such
      other services as may be reasonably directed by the Board of Directors of the
      Company (the “Board”)
      in
      accordance with this Agreement.

     

    2.2  Modifications.
      The
      precise duties to be performed by the Employee may be extended or curtailed
      in
      the discretion of the Board. However, the occurrence of any one or more of
      the
      following events (such events, individually and collectively, “Good
      Reason”)
      shall
      constitute termination without Cause (as hereinafter defined): (a) a
      reduction in the Employee’s then current Base Salary (as hereinafter defined) or
      a significant reduction in the Employee’s then current benefits as provided in
      Section 4 hereof; (b) a demotion by means of a reduction in authority,
      responsibilities, duties or titles to a position of less stature or importance
      with the Company or an assignment of duties materially inconsistent with the
      Employee’s position, authority, duties or responsibility; (c) the Company’s
      principal executive officers are moved to a location more than 25 miles from
      its
      current location or the Employee is required to be based anywhere other than
      the
      Company’s principal executive offices; (d) a failure by the Company to
      require any successor to the Company or to all or substantially all of the
      business or assets of the Company to expressly assume the obligations of the
      Company under this Agreement; or (e) a breach by the Company of a material
      provision of this Agreement or any other material plan or program covering
      the
      Employee.

     

    2.3  Rules
      and Regulations.
      From
      time to time, the Company may issue policies and procedures applicable to
      employees and the Employee including an Employment Policies Manual. The Employee
      agrees to comply with such policies and procedures, except to the extent such
      policies are inconsistent with this Agreement. Such policies and procedures
      may
      be supplemented, modified, changed or adopted without notice in the sole
      discretion of the Company at any time. In the event of a conflict between such
      policies and procedures and this Agreement, this Agreement will control unless
      compliance with this Agreement will violate any law or regulation applicable
      to
      the Company or its affiliated entities.

     

    3.  Other
      Activities.
      During
      the term of this Agreement, the Employee will devote substantially all of his
      business time, efforts, skills and abilities and attention to the business
      of
      the Company; provided, however, that the Employee (a) may serve on one
      board of directors of a publicly traded corporation, (b) with the consent
      of the Board (which will not be unreasonably withheld), may serve on other
      boards of directors of business entities, (c) may engage in charitable,
      educational or community affairs, including serving on the board of directors
      of
      any charitable, educational or community organization, and (d) may manage
      his personal investments, provided that such activities do not materially
      interfere with the performance of his duties hereunder.

     

    4.  Employee’s
      Compensation.
      The
      Company agrees to compensate the Employee as follows:

     

    4.1  Base
      Salary.
      During
      the term of this Agreement, a base salary (the “Base
      Salary”),
      in an
      initial annual rate of not less than One Hundred Twenty-five Thousand Dollars
      ($125,000.00), will be paid to the Employee in installments consistent with
      the
      Company’s customary payroll practices.

     

    4.2  Bonus.
      During
      the term of this Agreement, the Employee will be eligible to receive an annual
      bonus established by the Company or the Board (or a Compensation Committee
      thereof), in its discretion.

     

    4.3  Equity
      Compensation.
      In
      addition to the compensation set forth in Sections 4.1 and 4.2 of this
      Agreement, the Employee may periodically receive grants of stock options,
      restricted stock or other equity related awards from the Company’s stock
      compensation plans in effect from time to time, subject to the terms and
      conditions of such plans.

     

    4.4  Benefits.
      The
      Company agrees to extend to the Employee retirement benefits, deferred
      compensation, reimbursement of reasonable expenditures for dues, travel and
      entertainment and any other benefits the Company provides to other executives
      or
      officers from time to time on the same terms as such benefits are provided
      to
      such individuals. Such benefits will include comprehensive healthcare, dental
      care, life insurance, disability and other welfare benefits that are not less
      favorable than the plans in force on the Effective Date. The following specific
      benefits will also be provided to the Employee at the expense of the
      Company.

     

    (a)  Vacation.
      The
      Employee will be entitled to take up to two (2) weeks of paid vacation each
      calendar year during the term of this Agreement, subject to proration for any
      portion of a calendar year under this Agreement. Except as otherwise provided
      in
      this Agreement, no additional compensation will be paid for failure to take
      vacation and no vacation may be carried forward from one calendar year to
      another.

     

    (b)  Reimbursement
      of Expenses.
      The
      Company will reimburse the Employee for such reasonable and necessary
      out-of-pocket business expenses as may be incurred by him in the performance
      of
      the Employee’s duties hereunder. 

     

    (c)  Supplemental
      Retirement Plan. The
      Employee will be eligible to participate in the Company’s supplemental
      retirement plan, if any, on terms no less favorable than those available to
      other senior executives.

     

    (d)  Tax
      Withholding.
      The
      Company has the right to deduct from any compensation payable to the Employee
      under this Agreement social security (FICA) taxes and all Federal, state and
      local income taxes and charges as are required by applicable law and
      regulations.

    
      
        
        

      

      
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    4.5  Gross-Up
      Payment.
      In the
      event it is determined that any payment or distribution by the Company or the
      Company’s subsidiaries or affiliates to or for the benefit of the Employee
      (whether paid or payable or distributed or distributable pursuant to the terms
      of this Agreement or otherwise, but determined without regard to any additional
      payments required under this Section 4.5) (a “Payment”)
      is
      subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
      (the “Code”)
      or any
      interest or penalties related to such excise tax (collectively, the
“Excise
      Tax”),
      the
      Employee will be entitled to receive an additional payment (a “Gross-Up
      Payment”)
      from
      the Company. The Gross-Up Payment will be equal to the amount such that after
      payment by the Employee of all taxes (including the Excise Tax, income taxes,
      interest and penalties imposed with respect to such taxes) on the Gross-Up
      Payment, the Employee will retain an amount of the Gross-Up Payment equal to
      the
      Excise Tax imposed on the Payment.

     

    (a)  Determination.
      Subject
      to the provisions of Section 4.5(b), all determinations required to be made
      under this Section 4.5 (including whether and when a Gross-Up Payment is
      required, the amount of such Gross-Up Payment and the assumptions to be
      utilized) will be made by a nationally recognized certified public accounting
      firm designated by the Employee (the “Accounting
      Firm”).
      The
      Employee will request that the Accounting Firm provide detailed supporting
      calculations both to the Company and the Employee within fifteen (15) business
      days of the receipt of notice from the Employee that there has been a Payment,
      or such earlier time as is reasonably requested by the parties. In the event
      that the Accounting Firm is serving as accountant or auditor for the individual,
      entity or group effecting a Change of Control (as hereinafter defined), the
      Employee will be entitled to appoint another nationally recognized accounting
      firm to make the determinations required under this Section 4.5(a) (which
      accounting firm will then be referred to as the Accounting Firm hereunder).
      All
      fees and expenses of the Accounting Firm will be paid by the Company. Any
      Gross-Up Payment required to be paid under this Section 4.5 will be paid by
      the
      Company to the Employee within five (5) days of the receipt of the Accounting
      Firm’s determination. Any determination by the Accounting Firm will be binding
      on the Company and the Employee. As a result of the uncertainty in the
      application of Section 4999 of the Code at the time of the initial determination
      by the Accounting Firm, the Gross-Up Payment made by the Company may be less
      than actually required (an “Underpayment”)
      consistent with the calculations required to be made hereunder. In the event
      that the Company exhausts its remedies pursuant to Section 4.5(b) below and
      the
      Employee thereafter is required to make a payment of any Excise Tax, the
      Accounting Firm will determine the amount of the Underpayment that has occurred
      and any such Underpayment will be promptly paid by the Company to or for the
      benefit of the Employee.

     

    (b)  Contest
      of Claims.
      The
      Employee will notify the Company in writing of any claim by the Internal Revenue
      Service that, if successful, would require the payment by the Company of a
      Gross-Up Payment. Such notification will be given as soon as practicable but
      no
      later than ten (10) business days after the Employee is informed in writing
      of
      such claim and will apprise the Company of the nature of such claim and the
      date
      on which such claim is requested to be paid. The Employee will not pay such
      claim prior to the expiration of the thirty (30) day period following the date
      on which the Employee notifies the Company (or such shorter period ending on
      the
      date that any payment of taxes with respect to such claim is due). If the
      Company notifies the Employee in writing prior to the expiration of such thirty
      (30) day period that the Company desires to contest such claim, the Employee
      will: (i) provide to the Company any information reasonably requested by the
      Company relating to such claim; (ii) take such action in connection with
      contesting such claim as the Company reasonably requests in writing including,
      without limitation, accepting legal representation with respect to such claim
      by
      an attorney reasonably selected by the Company; (iii) cooperate with the Company
      in good faith as necessary to effectively contest such claim; and (iv) permit
      the Company to participate in any proceedings relating to such claim. The
      Company will bear and pay directly all costs and expenses (including additional
      interest and penalties) incurred in connection with the contest of the claim
      and
      agrees to indemnify and hold the Employee harmless, on an after-tax basis,
      for
      any Excise Tax or income tax (including interest and penalties with respect
      thereto) imposed as a result of such contest (including payment of costs and
      expenses as provided hereunder). Without limitation on the foregoing provisions,
      the Company will control all proceedings related to such contested claim, may
      at
      its sole option pursue or forego any and all administrative appeals,
      proceedings, hearings and conferences with the taxing authority in respect
      of
      such claim and may at its sole option either direct the Employee to pay the
      tax
      claimed and sue for a refund, or contest the claim in any permissible manner.
      The Employee agrees to prosecute such contest to a determination before any
      administrative tribunal, in a court of initial jurisdiction and in one or more
      appellate courts, as the Company reasonably determines. If the Company directs
      the Employee to pay a claim and sue for a refund, the Company will be required
      to advance the amount of such payment to the Employee on an interest-free basis
      and agrees to indemnify and hold the Employee harmless, on an after-tax basis,
      from any Excise Tax or income tax (including interest or penalties with respect
      thereto) imposed with respect to such advance or with respect to any imputed
      income with respect to such advance, provided that any extension of the statute
      of limitations relating to payment of taxes for the taxable year of the Employee
      with respect to which such contested amount is claimed to be due is limited
      solely to such contested amount. Furthermore, the Company’s control of the
      contested claim will be limited to issues with respect to which a Gross-Up
      Payment would be payable hereunder and the Employee will be entitled to settle
      or contest, as the case may be, any other issue raised by the Internal Revenue
      Service or any other taxing authority.

     

    (c)  Refunds.
      If,
      after the receipt by the Employee of an amount advanced by the Company pursuant
      to Section 4.5(b), the Employee becomes entitled to receive any refund with
      respect to such claim, the Employee will (subject to the Company’s complying
      with the requirements of Section 4.5(b)) promptly pay to the Company the amount
      of such refund (together with any interest paid or credited thereon after taxes
      applicable thereto). If, after the receipt by the Employee of an amount advanced
      by the Company pursuant to Section 4.5(b), a determination is made that the
      Employee will not be entitled to any refund with respect to such claim and
      the
      Company does not notify the Employee in writing of its intent to contest such
      denial of refund prior to the expiration of thirty (30) days after such
      determination, then the advance will be forgiven and will not be required to
      be
      repaid and the amount of such advance will offset, to the extent thereof, the
      amount of Gross-Up Payment required to be paid.

     

    4.6  Compensation
      Review.
      The
      compensation of the Employee will be reviewed not less frequently than annually
      by the Company or the Board (or a Compensation Committee thereof) and shall
      be
      reviewed semi-annually (or other applicable time) if the compensation of other
      executive officers of the Company is reviewed at such frequency (or other
      applicable time). The compensation of the Employee prescribed in Section 4
      of
      this Agreement (including benefits) may be increased at the discretion of the
      Company or the Board (or a Compensation Committee thereof), but may not be
      reduced without the prior written consent of the Employee except as expressly
      provided herein.

     

    5.  Term.
      In the
      absence of termination as set forth in Section 6 below, this Agreement will
      extend for a term commencing on the Effective Date, and ending on July 14,
      2010
      (the “Expiration
      Date”)
      as
      extended from time to time. Unless the Company provides thirty (30) days’ prior
      written notice of non-extension to the Employee on or before each July 14 during
      the term of this Agreement, the term and the Expiration Date will be
      automatically extended for one (1) additional year so that the remaining term
      of
      this Agreement will be not less than two (2) and not more than three (3)
      years.

     

    6.  Termination.
      The
      Employee’s employment will continue in effect until the expiration of the term
      set forth in Section 5 of this Agreement unless earlier terminated pursuant
      to
      this Section 6.

     

    6.1  Termination
      by the Company.
      The
      Company will have the following rights to terminate the Employee’s
      employment:

     

    (a)  Termination
      without Cause.
      The
      Company may terminate the Employee’s employment without Cause at any time by the
      service of written notice of termination to the Employee specifying an effective
      date of such termination not sooner than ten (10) days after the date of such
      notice (the “Termination
      Date”).
      In
      the event the Employee is terminated without Cause (other than in connection
      with a Change of Control under Section 6.3 of this Agreement), the Employee
      will
      receive the following as termination compensation: (i) an amount equal to his
      Base Salary (as in effect on the Termination Date) and any target Base Salary
      during the remaining term of this Agreement, but in any event through the
      Expiration Date; provided, however, such amount shall not be less than two
      (2)
      times the then current Base Salary; plus (ii) the greater of any target bonus
      for the year of termination or the average of the immediately preceding two
      years’ annual incentive bonuses received by the Employee; plus (iii) any
      vacation pay accrued through the Termination Date. In addition, during the
      greater of (i) the twenty-four month period following the Termination Date
      and (ii) the number of months, including fractional months, remaining in
      the term of this Agreement, the Company will continue to provide the Employee
      (and, as applicable, his family) with the benefits, including but not limited
      to
      healthcare, dental, life insurance and other benefits set forth in Section
      4.4.
      The payment of such amounts shall be made, at the Employee’s option,
      either in
      a lump
      sum within ten (10) days of the Termination Date or during the remaining term
      of
      this Agreement in installments consistent with the Company’s normal payroll
      practices, but, if on the Termination Date, the Employee is a “specified
      employee” as defined in regulations under Section 409A of the Code, such
      payments will commence on the first payroll payment date which is more than
      six
      months following the Termination Date, and the first payment shall include
      any
      amounts that would have otherwise been payable during the six-month
      period.

    
      
        
        

      

      
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    (b)  Termination
      for Cause.
      The
      Company may terminate the Employee’s employment for Cause. For purposes of this
      Agreement, “Cause”
means
      any of the following: (i) the willful and continued failure of the Employee
      to
      perform substantially the Employee’s duties with the Company or its subsidiaries
      or affiliates (other than a failure resulting from incapacity due to physical
      or
      mental illness), after a written demand for substantial performance is delivered
      to the Employee by the Board which specifically identifies the manner in which
      the Board believes that the Employee has not substantially performed the
      Employee’s duties; or (ii) the willful engaging by the Employee in illegal
      conduct, gross misconduct or a clearly established violation of the Company’s
      written policies and procedures, in each case which is materially and
      demonstrably injurious to the Company. For purposes of this provision, an act
      or
      failure to act, on the part of the Employee, will not be considered “willful”
unless it is done, or omitted to be done, by the Employee in bad faith or
      without reasonable belief that the Employee’s action or omission was in the best
      interests of the Company. Any act, or failure to act, based on authority given
      pursuant to a resolution duly adopted by the Board or based on the advice of
      counsel for the Company will be conclusively presumed to be done, or omitted
      to
      be done, by the Employee in good faith and in the best interests of the Company.
      In the event the Employee’s employment is terminated for Cause, the Company will
      not have any obligation to provide any further payments or benefits to the
      Employee after the effective date of such termination. The Employee’s employment
      will not be deemed to have been terminated for Cause unless a written
      determination specifying the reasons for such termination is made, approved
      by a
      majority of the independent and disinterested members of the Board and delivered
      to the Employee. Thereafter, the Employee will have the right for a period
      of
      thirty (30) days to request a Board meeting to be held at a mutually agreeable
      time and location to be attended by the members of the Board in person within
      the following thirty (30) days, at which meeting the Employee and his designated
      representatives will have an opportunity to be heard. Failing such determination
      and opportunity for hearing, any termination of the Employee’s employment will
      be deemed to have occurred without Cause.

     

    6.2  Termination
      by the Employee.
      The
      Employee may voluntarily terminate his employment with or without Cause by
      the
      service of written notice of such termination to the Company specifying an
      effective date of such termination ninety (90) days after the date of such
      notice, during which time the Employee may use remaining accrued vacation days,
      or at the Company’s option, be paid for such days. Subject to Sections 2.2 and
      6.1, in the event his employment is terminated by the Employee, neither the
      Company nor the Employee will have any further obligations hereunder, except
      for
      any obligations which expressly survive termination of employment including,
      without limitation, any obligation of the Company to provide any further
      payments or benefits to the Employee after the effective date of such
      termination. Notwithstanding anything in this Agreement to the contrary, in
      the
      event the Employee provides written notice to the Company that he is terminating
      his employment for Good Reason, other than in connection with a termination
      upon
      a Change of Control (as hereinafter defined), the Employee shall receive the
      termination compensation provided in Section 6.1(a) hereof within ten (10)
      days
      of receipt by the Company of written notice of such termination.

     

    6.3  Termination
      in Connection with a Change of Control.
      The
      Employee will be entitled to terminate this Agreement with or without Cause
      or
      Good Reason at anytime within two (2) years following a Change of Control by
      providing written notice to the Company (or any successor to the Company or
      any
      parent corporation of the Company). Within ten (10) days of the Company’s (or
      any successor to the Company or any parent corporation of the Company) receipt
      of such notice, the Employee shall receive a severance payment (in addition
      to
      any other rights and other amounts payable to the Employee under Section 6.7
      or
      under Company plans in which the Employee is a participant) payable in a lump
      sum in cash an amount equal to the sum of the following: (i) three (3) times
      the
      sum of the Employee’s highest paid annual Base Salary plus the greater of any
      target bonus for the year of termination or the highest bonus paid to the
      Employee during the Employee’s employment with the Company; plus (ii) any
      applicable Gross-Up Payment. If the foregoing amount is not paid within ten
      (10)
      days after the notice of such termination is received by the Company, the unpaid
      amount will bear interest at the per annum rate of 12% per annum.
      Notwithstanding the foregoing, if at the time of such termination the Employee
      is a “specified employee” as defined in regulations under Section 409A of the
      Code, such payment will be made on the first day which is more than six (6)
      months following the date of such termination. In connection with any Change
      of
      Control, the Company shall obtain the assumption of this Agreement, without
      limitation or reduction, by any successor to the Company or any parent
      corporation of the Company. In the event the Company (or any successor to the
      Company or any parent corporation of the Company) terminates this Agreement,
      with or without Cause, within two (2) years following a Change of Control,
      the
      Employee shall be entitled to the severance payment set forth in this Section
      6.3 on the same terms as if the Employee elected to terminate this Agreement
      under this Section 6.3.

     

    For
      the
      purpose of this Agreement, a “Change
      of Control”
means
      the occurrence of any of the following events:

     

    (a)  The
      acquisition by any individual, entity or group (within the meaning of Section
      13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the
      “Exchange
      Act”))
      (a
“Person”),
      of
      beneficial ownership (within the meaning of Rule 13d-3 promulgated under
      the Exchange Act) of 40% or more of either (i) the then outstanding shares
      of
      common stock of the Company (the “Outstanding
      Company Common Stock”)
      or
      (ii) the combined voting power of the then outstanding voting securities of
      the
      Company entitled to vote generally in the election of directors (the
“Outstanding
      Company Voting Securities”).
      For
      purposes of this Section 6.3(a), any acquisition by any employee benefit plan
      (or related trust) sponsored or maintained by the Company or any corporation
      controlled by the Company will not constitute a Change in Control.

     

    (b)  The
      individuals who, as of the date hereof, constitute the Board (the “Incumbent
      Board”)
      cease
      for any reason to constitute at least a majority of the Board. Any individual
      becoming a director subsequent to the date hereof whose election, or nomination
      for election by the Company’s stockholders, is approved by a vote of at least a
      majority of the directors then comprising the Incumbent Board will be considered
      a member of the Incumbent Board as of the date hereof, but any such individual
      whose initial assumption of office occurs as a result of an actual or threatened
      election contest with respect to the election or removal of directors or other
      actual or threatened solicitation of proxies or consents by or on behalf of
      a
      Person other than the Incumbent Board will not be deemed a member of the
      Incumbent Board as of the date hereof.

     

    (c)  The
      consummation of a reorganization, merger, consolidation or sale or other
      disposition of all or substantially all of the assets of the Company (a
“Business
      Combination”),
      unless following such Business Combination: (i) the individuals and entities
      who
      were the beneficial owners, respectively, of the Outstanding Company Common
      Stock and Outstanding Company Voting Securities immediately prior to such
      Business Combination beneficially own, directly or indirectly, more than 60%
      of,
      respectively, the then outstanding shares of common stock and the combined
      voting power of the then outstanding voting securities entitled to vote
      generally in the election of directors, as the case may be, of the corporation
      resulting from such Business Combination (including, without limitation, a
      corporation which, as a result of such transaction, owns the Company or all
      or
      substantially all of the Company’s assets either directly or through one ore
      more subsidiaries) in substantially the same proportions as their ownership,
      immediately prior to such Business Combination of the Outstanding Company Common
      Stock and Outstanding Company Voting Securities, as the case may be; (ii) no
      Person (excluding any corporation resulting from such Business Combination
      or
      any employee benefit plan (or related trust) of the Company or such corporation
      resulting from such Business Combination) beneficially owns, directly or
      indirectly, 40% or more of, respectively, the then outstanding shares of common
      stock of the corporation resulting from such Business Combination or the
      combined voting power of the then outstanding voting securities of such
      corporation except to the extent that such ownership existed prior to the
      Business Combination; and (iii) at least a majority of the members of the board
      of directors of the corporation resulting from such Business Combination were
      members of the Incumbent Board at the time of the execution of the initial
      agreement, or of the action of the Board, providing for such Business
      Combination.

     

    (d)  The
      approval by the stockholders of the Company of a complete liquidation or
      dissolution of the Company.

     

    6.4  Disability
      of the Employee.
      

     

                (a)  The
      employment of the Employee will terminate upon the Disability of the Employee.
      For purposes of this Agreement, “Disability”
means
      the Employee’s inability to perform his duties and responsibilities as
      contemplated under this Agreement for a period of more than 120 consecutive
      days
      due to physical, mental or emotional incapacity or impairment. A determination
      of Disability will be made by a physician acceptable to both the Employee and
      the Company; provided, that if the Employee and the Company cannot agree as
      to a
      physician, each will select a physician and the two physicians will select
      a
      third physician, whose determination as to Disability will be binding on the
      Employee and the Company. The Employee, his legal representative or any adult
      member of his immediate family will have the right to present to the Company
      and
      such physician such information and arguments on his behalf as the Employee
      or
      they deem appropriate, including the opinion of his personal physician. The
      Employee’s employment will not be terminated due to Disability until the
      physician has delivered a written opinion certifying such disability and a
      written notice of termination for Disability has been delivered by the Company
      or the Employee, as the case may be, to the other party. 

    
      
        
        

      

      
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    (b)  In
      the
      event the Employee’s employment is terminated for Disability, the Company will
      pay the Employee his Base Salary in effect on the date of termination and any
      target Base Salary through the remaining term of this Agreement, but in any
      event through the Expiration Date. The payment of such amounts shall be made
      during the remaining term of the Agreement in installments consistent with
      the
      Company’s normal payroll practices, but, if on the termination date, the
      Employee is a “specified employee” as defined in regulations under Section 409A
      of the Code, such payments will commence on the first payroll payment date
      which
      is more than six months following the termination date and the first payment
      shall include any amounts that would have otherwise been payable during the
      six-month period. Notwithstanding the foregoing, the amount payable hereunder
      will be reduced by any benefits payable under any disability plans provided
      by
      the Company under Section 4.4 of this Agreement.

     

    6.5  Death
      of the Employee.
      If the
      Employee dies during the term of this Agreement, the Employee’s employment will
      terminate without compensation to the Employee’s estate, except: (a) the
      obligation to continue the Base Salary payments under Section 4.1 of this
      Agreement and any target Base Salary payments for twelve (12) months after
      the
      effective date of such termination; and (b) the benefits described in Section
      4.4 of this Agreement accrued through the effective date of such
      termination.

     

    6.6  Effect
      of Termination.
      The
      termination of the Employee’s employment will terminate all obligations of the
      Employee to render services on behalf of the Company. The Employee will maintain
      the confidentiality of all information acquired by the Employee during the
      term
      of his employment in accordance with Section 7 of this Agreement. In the event
      of the Employee’s termination of employment, and in addition to any other
      payments or benefits owed to the Employee under this Section 6, the Company
      will pay the Employee, his estate or his representative, as the case may be,
      any
      accrued but unpaid salary, bonuses, expenses or benefits as of the date of
      termination. Except as provided in the previous sentence, no accrued bonus,
      severance pay or other form of compensation will be payable by the Company
      to
      the Employee by reason of the termination of his employment. In the event that
      payments are required to be made by the Company under this Section 6, the
      Employee will not be required to seek other employment as a means of mitigating
      the Company’s obligations hereunder resulting from termination of the Employee’s
      employment and the Company’s obligations hereunder (including payment of
      severance benefits) will not be terminated, reduced or modified as a result
      of
      the Employee’s earnings from other employment or self-employment. All keys,
      entry cards, credit cards, files, records, financial information, furniture,
      furnishings, equipment, supplies and other items relating to the Company will
      remain the property of the Company. All such personal items will be removed
      from
      such offices no later than ten (10) days after the effective date of
      termination, and the Company is hereby authorized to discard any items remaining
      and to reassign the Employee’s office space after such date. Prior to the
      effective date of termination, the Employee will cooperate with the Company
      to
      provide for the orderly termination of the Employee’s employment.

     

    6.7  Equity
      Compensation Provisions.
      Notwithstanding any provision to the contrary in any option agreement,
      restricted stock agreement, plan or other agreement relating to equity based
      compensation, in the event of a termination by the Employee for Good Reason
      under Section 6.2, termination by the Company under Section 6.1(a) (which
      includes any constructive termination by the Company for Good Reason), or upon
      a
      Change of Control: (a) all units, stock options, incentive stock options,
      performance shares, stock appreciation rights and restricted stock held by
      the
      Employee immediately prior to such termination will immediately become 100%
      vested; and (b) the Employee’s right to exercise any previously unexercised
      options will not terminate until the latest date on which such option would
      expire but for the Employee’s termination of employment. To the extent the
      Company is unable to provide for one or both of the foregoing rights, the
      Company will provide, in lieu thereof, a lump-sum cash payment equal to the
      difference between the total value of such units, stock options, incentive
      stock
      options, performance shares, stock appreciation rights and shares of restricted
      stock (the “Equity
      Compensation Rights”)
      with
      the foregoing rights as of the date of the Employee’s termination of employment
      or Change of Control (as applicable) and the total value of the Equity
      Compensation Rights without the foregoing rights as of the date of the
      Employee’s termination of employment or Change of Control. The foregoing amounts
      will be determined by the Board in good faith based on a valuation performed
      by
      an independent consultant selected by the Board and the cash payment, if any,
      will be paid in a lump sum in the case of a termination under Section 6.1(a),
      at
      the same time as the first severance payment is otherwise due under such
      Section, in the case of a termination by the Employee for Good Reason under
      Section 6.2, at the same time as the first severance payment is otherwise due
      under such Section, and in the case of a Change of Control, within ten (10)
      days
      of such Change of Control.

     

    6.8  Payment
      in Lieu of Benefits.
      In the
      event that the Employee and/or his family is entitled to benefits, such as
      healthcare, under this Section 6, to the extent that the Company’s plans,
      programs and arrangements do not permit a continuation of the Employee’s and/or
      his family’s participation in a benefit plan, program or arrangement following
      his termination of employment, the Company will pay the Employee (and/or his
      family), no less frequently than quarterly in advance an amount which, after
      all
      taxes on such amount, is sufficient for him and/or his family to purchase
      equivalent benefits.

     

    6.9  Release.
      As a
      condition of receiving any amounts pursuant to Section 6, or of accelerated
      vesting of any equity-based or cash-based award in connection with the
      termination of the Employee’s employment, the Employee agrees to execute a
      release of claims that he has or may have against the Company relating to,
      or
      arising out of his employment (including the termination of such employment)
      with the Company; provided, however, the Employee will not release:

     

    (a)  claims
      that the Employee may have against the Company for reimbursement of ordinary
      and
      necessary business expenses incurred by him during the course of his
      employment;

     

    (b)  claims
      that arise after the effective date of such release;

     

    (c)  any
      rights the Employee may have to enforce this Agreement;

     

    (d)  any
      rights or entitlements that the Employee has under any applicable plan, policy,
      program, or arrangement of, or other agreement with, the Company;
      and

     

    (e)  claims
      for which the Employee is entitled to be indemnified under the Company’s
      Certificate of Incorporation or Bylaws or under applicable law or pursuant
      to
      the Company’s directors’ and officers’ liability or other insurance
      policies.

     

    7.  Confidentiality.
      The
      Employee recognizes that the nature of the Employee’s services are such that the
      Employee will have access to information that constitutes trade secrets, is
      of a
      confidential nature, is of great value to the Company or is the foundation
      on
      which the business of the Company is predicated (“Confidential
      Information”).
      The
      Employee agrees not to disclose to any person other than the Company’s employees
      or the Company’s legal counsel or other parties authorized by the Company to
      receive confidential information nor use for any purpose, other than the
      performance of this Agreement, any Confidential Information. Confidential
      Information includes data or material (regardless of form) which is: (a) a
      trade
      secret; (b) provided, disclosed or delivered to the Employee by the Company,
      any
      officer, director, employee, agent, attorney, accountant, consultant or other
      person or entity employee by the Company in any capacity, any customer, borrower
      or business associate of the Company or any public authority having jurisdiction
      over the Company of any business activity conducted by the Company; or (c)
      produced, developed, obtained or prepared by or on behalf of the Employee or
      the
      Company (whether or not such information was developed in the performance of
      this Agreement) with respect to the Company or any assets, business activities,
      officers, directors, employees, borrowers or customers of the foregoing.
      However, Confidential Information will not include any information, data or
      material which at the time of disclosure or use was generally available to
      the
      public other than by a breach of this Agreement, was available to the party
      to
      whom disclosed on a non-confidential basis by disclosure or access provided
      by
      the Company or a third party, or was otherwise developed or obtained
      independently by the person to whom disclosed without a breach of this
      Agreement. On request by the Company, the Company will be entitled to a copy
      of
      any Confidential Information in the possession of the Employee. The provisions
      of this Section 7 will survive the termination, expiration or cancellation
      of
      the Employee’s employment for a period of one (1) year after the date of
      termination. The Employee will deliver to the Company all originals and copies
      of the documents or materials containing Confidential Information. For purposes
      of Sections 7, 8 and 9 of this Agreement, the Company expressly includes any
      of
      the Company’s subsidiaries or affiliates.

     

    8.  Non-competition.
      During
      the period of the Employee’s employment and for a period ending six (6) months
      after the Employee’s termination of employment for any reason other than
      pursuant to Section 6.1(a) or 6.3, (a) the Employee will not solicit, induce,
      entice or attempt to entice any employee, contractor, customer, vendor or
      subcontractor to terminate or breach any relationship with the Company or the
      Company’s subsidiaries or affiliates for the Employee’s own account or for the
      benefit of another party; and (b) the Employee will not circumvent or attempt
      to
      circumvent the foregoing agreements in clause (a) by any future arrangement
      or
      through the actions of a third party. The foregoing will not prohibit the
      activities which are expressly permitted by Section 3 of this
      Agreement.

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    9.  Proprietary
      Matters.
      The
      Employee expressly understands and agrees that any and all improvements,
      inventions, discoveries, processes or know-how that are generated or conceived
      by the Employee during the term of this Agreement, whether generated or
      conceived during the Employee’s regular working hours or otherwise, will be the
      sole and exclusive property of the Company. Whenever requested by the Company
      (either during the term of this Agreement or thereafter), the Employee will
      assign or execute any and all applications, assignments and/or other instruments
      and do all things which the Company deems necessary or appropriate in order
      to
      permit the Company to: (a) assign and convey or otherwise make available to
      the
      Company the sole and exclusive right, title and interest in and to said
      improvements, inventions, discoveries, processes, know-how, applications,
      patents, copyrights, trade names or trademarks; or (b) apply for, obtain,
      maintain, enforce and defend patents, copyrights, trade names or trademarks
      of
      the United States or of foreign countries for said improvements, inventions,
      discoveries, processes or know-how. However, the improvements, inventions,
      discoveries, processes or know-how generated or conceived by the Employee and
      referred to above (except as they may be included in the patents, copyrights
      or
      registered trade names or trademarks of the Company, or corporations,
      partnerships or other entities which may be affiliated with the Company) will
      not be exclusive property of the Company at any time after having been disclosed
      or revealed or have otherwise become available to the public or to a third
      party
      on a non-confidential basis other than by a breach of this Agreement, or after
      they have been independently developed or discussed without a breach of this
      Agreement by a third party who has no obligation to the Company.

     

    10.  Arbitration.
      The
      parties will attempt to promptly resolve any dispute or controversy arising
      out
      of our relating to this Agreement or termination of the Employee by the Company.
      Any negotiations pursuant to this Section 10 are confidential and will be
      treated as compromise and settlement negotiations for all purposes. If the
      parties are unable to reach a settlement amicably, the dispute will be submitted
      to binding arbitration before a single arbitrator in accordance with the
      Employment Dispute Resolution Rules of the American Arbitration Association.
      The
      arbitrator will be instructed and empowered to take reasonable steps to expedite
      the arbitration and the arbitrator’s judgment will be final and binding upon the
      parties subject solely to challenge on the grounds of fraud or gross misconduct.
      Except for damages arising out of a breach of Sections 6, 7, 8 or 9 of this
      Agreement, the arbitrator is not empowered to award total damages (including
      compensatory damages) that exceed 300% of compensatory damages and each party
      hereby irrevocably waives any damages in excess of that amount. The arbitration
      will be held in Oklahoma County, Oklahoma. Judgment upon any verdict in
      arbitration may be entered in any court of competent jurisdiction and the
      parties hereby consent to the jurisdiction of, and proper venue in, the federal
      and state courts located in Oklahoma County, Oklahoma. The Company will pay
      the
      costs and expenses of the arbitration including, without implied limitation,
      the
      fees for the arbitrators. Unless otherwise expressly set forth in this
      Agreement, the procedures specified in this Section 10 will be the sole and
      exclusive procedures for the resolution of disputes and controversies between
      the parties arising out of or relating to this Agreement. Notwithstanding the
      foregoing, a party may seek a preliminary injunction or other provisional
      judicial relief if in such party’s judgment such action is necessary to avoid
      irreparable damage or to preserve the status quo.

     

    11.  Miscellaneous.
      The
      parties further agree as follows:

     

    11.1  Time.
      Time is
      of the essence of each provision of this Agreement.

     

    11.2  Notices.
      Any
      notice, payments, demand or communication required or permitted to be given
      by
      any provision of this Agreement will be in writing and will be deemed to have
      been given when received by personal delivery, by facsimile, by overnight
      courier, or be certified mail, postage and charges prepaid, directed to the
      following address or to such other additional addresses as any party might
      designate by written notice to the other party:

     

    To
      the
      Company: 

                  
      

                     Bronco
      Drilling
      Company, Inc.        

              16217
      N.
      May Avenue           

              
      Edmond, OK 73013

                    
Attn:
      Chief
      Executive Officer

     

    To
      the
      Employee:

     

    The
      Employee’s home address most recently on file with the Company. 

     

    11.3  Assignment.
      Neither
      this Agreement nor any of the parties’ rights or obligations hereunder can be
      transferred or assigned without the prior written consent of the other parties
      to this Agreement.

     

    11.4  Construction.
      If any
      provision of this Agreement or the application thereof to any person or
      circumstances is determined, to any extent, to be invalid or unenforceable,
      the
      remainder of this Agreement, or the application of such provision to persons
      or
      circumstances other than those as to which the same is held invalid or
      unenforceable, will not be affected thereby, and each term and provision of
      this
      Agreement will be valid and enforceable to the fullest extent permitted by
      law.
      This Agreement is intended to be interpreted, construed and enforced in
      accordance with the laws of the State of Oklahoma.

     

    11.5  Entire
      Agreement.
      Except
      as provided in Section 2.3 of this Agreement, this Agreement constitutes the
      entire agreement between the parties hereto with respect to the subject matter
      herein contained, and no modification hereof will be effective unless made
      by a
      supplemental written agreement executed by all of the parties
      hereto.

     

    11.6  Binding
      Effect.
      This
      Agreement will be binding on the parties and their respective successors, legal
      representatives and permitted assigns. In the event of a merger, consolidation,
      combination, dissolution or liquidation of the Company, the performance of
      this
      Agreement will be assumed by any entity which succeeds to or is transferred
      the
      business of the Company as a result thereof.

     

    11.7  Attorneys’
      Fees.
      If any
      party institutes an action, proceeding or arbitration against any other party
      relating to the provisions of this Agreement or any default hereunder, the
      Company will be responsible for paying the Company’s legal fees and expenses and
      the Company will be required to reimburse the Employee for reasonable expenses
      and legal fees incurred by the Employee in connection with the resolution of
      such action or proceeding, including any costs of appeal.

     

    11.8  Superseding
      Agreement.
      This
      Agreement is the final, complete and exclusive expression of the agreement
      between the Company and the Employee and supersedes and replaces in all respects
      any prior oral or written employment agreements. On execution of this Agreement
      by the Company and the Employee, the relationship between the Company and the
      Employee after the effective date of this Agreement will be governed by the
      terms of this Agreement and not by any other agreements, oral or
      otherwise.

     

    11.9  Non-Contravention.
      The
      Employee represents and warrants to the Company that the execution and
      performance of this Agreement will not violate, constitute a default under,
      or
      otherwise give rights to any third party, pursuant to the terms of any agreement
      to which the Employee is a party.

     

    11.10  Compliance
      with Section 409A of the Code.
      This
      Agreement is intended to comply with Section 409A of the Code and shall be
      construed and interpreted in accordance with such intent. To the extent any
      benefit paid under this Agreement shall be subject to Section 409A of the Code,
      such benefit shall be paid in a manner that will comply with Section 409A,
      including any IRS 409A Guidance. Any provision of this Agreement that would
      cause the payment of any benefit to fail to satisfy Section 409A of the Code
      shall have no force and effect until amended to comply with Section 409A (which
      amendment may be retroactive to the extent permitted by the IRS 409A
      Guidance.

     

    [SIGNATURES
      ON FOLLOWING PAGE]

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the undersigned have executed this Agreement effective the
      date
      first above written.

     

                                                THE
      COMPANY:

    


                                                BRONCO
      DRILLING
      COMPANY, INC.

    


    


                                                By:/s/
      MARK DUBBERSTEIN   

                                                Mark
      Dubberstein

                                                President

    


    


    


                                                THE
      EMPLOYEE:

    


    


                                                 /s/
      STEVEN STARKE    

                                                 Steven
      Starke

    
      
        
        

      

      
        -6-