Filed by Bowne Pure Compliance





Exhibit 10.1




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”).



Recitals




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:



Article 1

Definitions




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 sources and all of their respective predecessors, successors, assigns, heirs,
executors and administrators (collectively, the “Releasing Parties”), does hereby release,
acquit and forever discharge and covenant not to sue each of the other Parties, and any of
their respective present, future and former officers, directors, employees, agents,
managers, advisors, representatives, stockholders, trust beneficiaries, members, attorneys,
parents, subsidiaries, Affiliates and financing sources and their respective predecessors,
successors, assigns, heirs, executors and administrators (collectively, the “Released
Parties”), from and with respect to the Subject Matter; provided, however, that nothing
herein shall be deemed to release any Party or any other Person from obligations under the
Confidentiality Agreement, and such Confidentiality Agreement shall remain in full force and
effect after the date hereof; provided, further, that no Party shall be released from any
breach, non-performance, action or failure to act under this Release Agreement.


 


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(c) The Release Payment provided for in Section 2.1 above shall constitute the entire,
maximum and only financial obligation of the Company, all of its direct and indirect
subsidiaries, and divisions, and each of their respective affiliates, predecessors,
successors, agents, representatives, officers, directors, employees, volunteers (including,
but not limited to, board and supervisory committee members), stockholders, insurers, heirs,
assigns, benefit plans, plan trustee and plan administrators, past and present, and their
attorneys, and all persons acting by, through, under or in concert with them or any of them,
to the other Releasing Parties (in their capacities as such) under this Release Agreement;
provided, however, that for the avoidance of doubt, the Parties acknowledge and agree that
the provisions of this paragraph shall not in any way limit the obligations of any Party
under Section 2.2.(d) or Section 2.3.




(d) Each Party represents and warrants that (i) there has not been and there will be no
assignment, subrogation or other transfer by or on behalf of such Party of any interest in
any Claim released hereby and shall indemnify and hold each Released Party harmless of and
from any such assignment, subrogation or transfer, and (ii) there are no outstanding civil
or criminal charges, complaints, claims, grievances, or actions of any nature whatsoever
previously filed or brought by such Party or on such Party’s behalf against the Released
Parties pending before any federal, state, local, international or administrative court or
agency as of the date of signing this Release Agreement.




(e) Each Party acknowledges, represents and warrants that it has had adequate
disclosure of all facts necessary to make a knowing release of all Claims released hereby
and further represents and warrants that it has executed this Release Agreement knowingly
and without duress. The Parties have participated jointly in negotiating and drafting this
Release Agreement. In the event an ambiguity or a question of intent or interpretation
arises, this Release Agreement shall be construed as if drafted jointly by the Parties, and
no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of
the authorship of any provision(s) of this Release Agreement.




(f) Each Party acknowledges and agrees that all disputes between it and any Released
Party with respect to the Subject Matter have been fully and finally settled to such Party’s
complete satisfaction, leaving no disputes, controversies, claims or grievances of any kind
of such Party with any Released Party; therefore, each Party covenants and agrees that it
will not raise, participate in, assist, or in any way pursue any Claims that are being
released and discharged in this Release Agreement in any forum of any kind, including,
without limitation, the federal, state or local courts, or federal, state or local agencies
or offices of any kind, be they administrative, regulatory, judicial, quasi-judicial, or
otherwise.




(g) Except as required by applicable law or the rules and regulations of any
governmental authority or by the order of any court of competent jurisdiction, each Party
agrees that such Party shall not, directly or indirectly, make, publish, or cause to be made
or published any statement or remark concerning the Subject Matter, the participation or
involvement of the Parties in the transactions contemplated by the Merger Agreement, or the
reasons or events or circumstances surrounding the termination of the Merger
Agreement that could reasonably be understood as disparaging the business or conduct of
the other Parties or as intended to harm the business or reputation of the other Parties.


 


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Section 2.3 Indemnification. Each of the undersigned Parties shall protect, indemnify
and hold harmless each of the other Released Parties from and against any and all Claims and
related expenses (including without limitation reasonable attorneys’ fees and disbursements), that
both (i) are incurred by such Released Party in any action or proceeding between any of the
Releasing Parties and such Released Party that relates or shall relate to any of the Subject Matter
and (ii) arise as a result of or in any way relating, directly or indirectly, to any action or
inaction taken or caused to be taken by any of the Releasing Parties. The indemnification
obligations set forth herein shall not apply to any Claims or related expenses incurred by any
Released Party as a result of any Claims between such Released Party and any Person other than a
Releasing Party.



Section 2.4 Effective Date. This Release Agreement and the agreements, releases,
settlements and waivers set forth herein shall be effective as of the date (the “Effective Date”)
when the Release Payment is received by Parent.



Article 3

Miscellaneous




Section 3.1 Counterparts. This Release Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and shall become
effective when one or more counterparts have been signed by each of the Parties and delivered to
the other Parties whether such delivery is by physical delivery or by means of a facsimile,
electronic mail or portable document format (PDF) transmission, it being understood that all
Parties need not sign the same counterpart.



Section 3.2 Severability. The provisions of this Release Agreement will be severable
and the invalidity or unenforceability of any provision will not affect the validity or
enforceability of the other provisions hereof so long as the economic and legal substance of the
transactions contemplated hereby are not affected in any manner materially adverse to any Party.
Subject to the preceding sentence, any term or provision of this Release Agreement that is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be deemed modified to the
minimum extent necessary to make such term or provision valid and enforceable, provided that if
such term or provision is incapable of being so modified, then such term or provision shall be
deemed ineffective to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Release Agreement or affecting the
validity or enforceability of any of the terms or provisions of this Release Agreement in any other
jurisdiction. If any provision of this Release Agreement is so broad as to be unenforceable, such
provision shall be interpreted to be only so broad as is enforceable.



Section 3.3 Entire Agreement; No Third Party Beneficiaries. This Release Agreement
(together with the Confidentiality Agreement and the documents and instruments delivered by the
Parties in connection with this Release Agreement): (a) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and oral, among the Parties
with respect to the subject matter hereof; (b) except as provided in Section 2.2 and Section 2.3
(each of which is intended to be for the benefit of the Persons covered thereby), is
solely for the benefit of the Parties and their respective successors, legal representatives
and assigns and does not confer on any Person other than the Parties any rights or remedies
hereunder, and (c) may not be amended, except by an instrument in writing signed by the Parties.


 


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Section 3.4 Applicable Law. This Release Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of Delaware (including the
laws of Delaware with respect to statutes of limitation and statutes of repose).



Section 3.5 Confidentiality Agreement. The Confidentiality Agreement shall remain in
full force and effect following the execution of this Release Agreement, is hereby incorporated
herein by reference, and shall constitute a part of this Release Agreement for all purposes. Any
and all information received by Parent and the Company pursuant to the terms and provisions of this
Release Agreement shall be governed by the applicable terms and provisions of the Confidentiality
Agreement.



Section 3.6 Specific Performance; Remedies. Each Party acknowledges and agrees that
the other Parties would be damaged irreparably if any provision of this Release Agreement were not
performed in accordance with its specific terms or were otherwise breached. Accordingly, the
Parties will be entitled to an injunction or injunctions to prevent breaches of the provisions of
this Release Agreement and to enforce specifically this Release Agreement and its provisions in any
action or proceeding instituted in any state or federal court having jurisdiction over the parties
and the matter, in addition to any other remedy to which they may be entitled, at law or in equity.
Except as expressly provided herein, the rights, obligations and remedies created by this Release
Agreement are cumulative and in addition to any other rights, obligations or remedies otherwise
available at law or in equity. Except as expressly provided herein, nothing herein will be
considered an election of remedies.



Section 3.7 Waiver of Jury Trial. Each of the Parties hereto hereby waives to the
fullest extent permitted by applicable law any right it may have to a trial by jury with respect to
any litigation directly or indirectly arising out of, under or in connection with this Release
Agreement or the transactions contemplated by this Release Agreement. Each of the Parties hereto
(a) certifies that no representative, agent or attorney of any other Party has represented,
expressly or otherwise, that such other Party would not, in the event of litigation, seek to
enforce that foregoing waiver and (b) acknowledges that it and the other hereto have been induced
to enter into this Release Agreement and the transactions contemplated by this Release Agreement,
as applicable, by, among other things, the mutual waivers and certifications in this Section 3.7.



(Signature Page Follows)




 


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IN WITNESS WHEREOF, the Parties have caused this Release Agreement to be executed by their
duly authorized representatives, on the date first written above.



	 	 	 	 	 
	 	Company:


BRONCO DRILLING COMPANY, INC., a Delaware corporation

 	 
	 	By:  	/s/ D. Frank Harrison
 	 
	 	 	Name:  	D. Frank Harrison 	 
	 	 	Title:  	Chairman and Chief Executive Officer 	 
	 
	 	Parent:


ALLIS-CHALMERS ENERGY INC., a Delaware corporation

 	 
	 	By:  	/s/ Victor M. Perez
 	 
	 	 	Name:  	Victor M. Perez 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	Merger Sub:


ELWAY MERGER SUB LLC, a Delaware limited liability company

 	 
	 	By:  	/s/ Victor M. Perez
 	 
	 	 	Name:  	Victor M. Perez 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 




 


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