2005 Stock Incentive Plan




 Exhibit 10.6 
  
 BRONCO DRILLING COMPANY, INC. 
  
 2005 STOCK INCENTIVE PLAN 
  
 1. Purpose; Eligibility. 
  
 1.1. General Purpose. The name of this plan is the Bronco Drilling Company, Inc. 2005 Stock Incentive Plan (the
“Plan”). The purpose of the Plan is to enable Bronco Drilling Company, Inc., a Delaware corporation (the “Company”), and any Affiliate to obtain and retain the services of the types of Employees,
Consultants and Directors who will contribute to the Company’s long range success and to provide incentives that are linked directly to increases in share value which will inure to the benefit of all stockholders of the Company. 
  
 1.2. Eligible Award Recipients. The persons eligible
to receive Awards are the Employees, Consultants and Directors of the Company and its Affiliates. 
  
 1.3. Available Awards. The purpose of the Plan is to provide a means by which eligible recipients of Awards may be given an
opportunity to benefit from increases in value of the Common Stock through the granting of one or more of the following Awards: (a) Incentive Stock Options and (b) Nonstatutory Stock Options. 
  
 2. Definitions. 
  
 2.1. “409A Award” means an Award
that is considered “nonqualified deferred compensation” within the meaning of Section 409A of the Code and Section 7 of this Plan. 
  
 2.2. “Administrator” means the Board or the Committee appointed by the Board in accordance with Section
3.5. 
  
 2.3.
“Affiliate” means any parent corporation or subsidiary corporation of the Company, whether now or hereafter existing, as those terms are defined in Sections 424(e) and (f), respectively, of the Code. 
  
 2.4. “Award” means any right granted
under the Plan, including an Incentive Stock Option, a Nonstatutory Stock Option and a 409A Award. 
  
 (a) “Beneficial Owner” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act,
except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” shall be deemed to have beneficial ownership of all securities that such
“person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially
Owned” have a corresponding meaning. 
  
 2.5. “Board” means the Board of Directors of the Company. 
  
 2.6. “Cashless Exercise” has the meaning set forth in Section 6.4. 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 1










 2.7. “Cause” means, (a) with respect to any Participant who is a
party to an employment or service agreement or employment policy manual with the Company or its Affiliates and such agreement or policy manual provides for a definition of Cause, as defined therein and (b) with respect to all other Participants, (i)
the commission of, or plea of guilty or no contest to, a felony or a crime involving moral turpitude or the commission of any other act involving willful malfeasance or material fiduciary breach with respect to the Company or an Affiliate, (ii)
conduct tending to bring the Company into substantial public disgrace, or disrepute, or (iii) gross negligence or willful misconduct with respect to the Company or an Affiliate. The Administrator, in its absolute discretion, shall determine the
effect of all matters and questions relating to whether a Participant has been discharged for Cause. 
  
 2.8. “Change in Control” shall mean 
  
 (a) The direct or indirect sale, transfer, conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company to any “person” (as that term is used in Section 13(d)(3) of the Exchange Act) other than the Permitted
Holders; 
  
 (b) The Incumbent Directors cease
for any reason to constitute at least a majority of the Board; 
  
 (c) The adoption of a plan relating to the liquidation or dissolution of the Company; or 
  
 (d) The consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any
“person” or “group” (as such terms are used in Section 13(d) of the Exchange Act) other than Permitted Holders, becomes the Beneficial Owner of more than 50% of the voting power of the Company. 
  
 The foregoing notwithstanding, a transaction shall not constitute a Change in Control if (i)
its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such
transaction; (ii) it constitutes an initial public offering or a secondary public offering that results in any security of the Company being listed (or approved for listing) on any securities exchange or designated (or approved for designation) as a
national market security on an interdealer quotation system; or (iii) it constitutes a change in Beneficial Ownership that results from a change in ownership in a Permitted Holder. 
  
 2.9. “Code” means the Internal Revenue Code of 1986, as amended. 
  
 2.10. “Committee” means a committee
of one or more members of the Board appointed by the Board to administer the Plan in accordance with Section 3.5. 
  
 2.11. “Common Stock” means the common stock, $0.01 par value per share, of the Company. 
  
 2.12. “Company” means Bronco
Drilling Company, Inc., a Delaware corporation. 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 2










 2.13. “Consultant” means any person, including an advisor, (a)
engaged by the Company or an Affiliate to render consulting or advisory services and who is compensated for such services or who provides bona fide services to the Company or an Affiliate pursuant to a written agreement or (b) who is a member
of the Board of Directors of an Affiliate; provided that, except as otherwise permitted in Section 5.4(b) hereof, such person is a natural person and such services are not in connection with the offer or sale of securities in a capital
raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities. 
  
 2.14. “Continuous Service” means that the Participant’s service with the Company or an Affiliate, whether as
an Employee, Consultant or Director, is not interrupted or terminated. The Participant’s Continuous Service shall not be deemed to have terminated merely because of a change in the capacity in which the Participant renders service to the
Company or an Affiliate as an Employee, Consultant or Director or a change in the entity for which the Participant renders such service, provided that there is no interruption or termination of the Participant’s Continuous Service. For example,
a change in status from an Employee of the Company to a Consultant of an Affiliate or a Director will not constitute an interruption of Continuous Service. The Administrator or the chief executive officer of the Company, in that party’s sole
discretion, may determine whether Continuous Service shall be considered interrupted in the case of any leave of absence approved by that party, including sick leave, military leave or any other personal leave. 
  
 2.15. “Covered Employee” means the
chief executive officer and the four (4) other highest compensated officers of the Company for whom total compensation is required to be reported to stockholders under the Exchange Act, as determined for purposes of Section 162(m) of the Code.

  
 2.16. “Date of Grant”
means the date on which the Administrator adopts a resolution expressly granting an Award to a Participant or, if a different date is set forth in such resolution as the Date of Grant, then such date as is set forth in such resolution. 

 
 2.17. “Detrimental Activity”
means: (i) violation of the terms of any agreement with the Company concerning non-disclosure, confidentiality, intellectual property, privacy or exclusivity; (ii) disclosure of the Company’s confidential information to anyone outside the
Company, without prior written authorization from the Company, or in conflict with the interests of the Company, whether the confidential information was acquired or disclosed by the Participant during or after employment by the Company; (iii)
failure or refusal to disclose promptly or assign to the Company all right, title and interest in any invention, work product or idea, patentable or not, made or conceived by the Participant during employment by the Company, relating in any manner
to the interests of the Company or, the failure or refusal to do anything reasonably necessary to enable the Company to secure a patent where appropriate in the United States and in other countries; (iv) activity that is discovered to be grounds for
or results in termination of the Participant’s employment for Cause; (v) any breach of a restrictive covenant contained in any employment agreement, Option Agreement or other agreement between the Participant and the Company, during any period
for which a restrictive covenant prohibiting Detrimental Activity, or other similar conduct or act, is applicable to the Participant during or after employment by the Company; (vi) any attempt directly or indirectly to induce any 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 3










 
Employee of the Company to be employed or perform services or acts in conflict with the interests of the Company; (vii) any attempt, in conflict with the
interests of the Company, directly or indirectly, to solicit the trade or business of any current or prospective customer, client, supplier or partner of the Company; or (viii) the conviction of, or guilty plea entered by, the Participant for any
crime whether or not connected with the Company. 
  
 2.18. “Director” means a member of the Board. 
  
 2.19. “Disability” means that the Optionholder is unable to engage in any substantial gainful activity by reason
of any medically determinable physical or mental impairment; provided, however, for purposes of determining the term of an Incentive Stock Option pursuant to Section 6.10 hereof, the term Disability shall have the meaning ascribed to it under
Code Section 22(e)(3). The determination of whether an individual has a Disability shall be determined under procedures established by the Administrator. Except in situations where the Administrator is determining Disability for purposes of the term
of an Incentive Stock Option pursuant to Section 6.10 hereof within the meaning of Code Section 22(e)(3), the Plan Administrator may rely on any determination that a Participant is disabled for purposes of benefits under any long-term
disability plan maintained by the Company or any Affiliate in which a Participant participates. 
  
 2.20. “Effective Date” shall mean June     , 2005. 
  
 2.21. “Employee” means any person
employed by the Company or an Affiliate. Mere service as a Director or payment of a director’s fee by the Company or an Affiliate shall not be sufficient to constitute “employment” by the Company or an Affiliate. 
  
 2.22. “Exchange Act” means the
Securities Exchange Act of 1934, as amended. 
  
 2.23. “Fair Market Value” means, as of any date, the value of the Common Stock as determined in good faith by the Administrator; provided, however, that the Fair Market Value on the date of the Company’s
initial public offering of its Common Stock shall be the initial price to the public of the Common Stock, and thereafter: (i) if the Common Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System
(“Nasdaq”), the Fair Market Value on any given date shall not be less than the average of the highest bid and lowest asked prices of the Common Stock reported for such date or, if no bid and asked prices were reported for
such date, for the last day preceding such date for which such prices were reported; (ii) if the Common Stock is admitted to trading on a national securities exchange or the Nasdaq National Market or Nasdaq Small Cap Market, the Fair Market Value on
any date shall not be less than the closing price reported for the Common Stock on such exchange or system for such date or, if no sales were reported for such date, for the last date preceding the date for such a sale was reported; or (iii) in the
absence of an established market for the Common Stock, the Fair Market Value determined in good faith by the Administrator and such determination shall be conclusive and binding on all persons. 
  
 2.24. “Form S-8” has the meaning set
forth in Section 5.4(b). 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 4










 2.25. “Incentive Stock Option” means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. 
  
 2.26. “Incumbent Directors” means individuals who, on the Effective Date, constitute the Board, provided that any
individual becoming a Director subsequent to the Effective Date whose election or nomination for election to the Board was approved by a vote of at least two-thirds of the Incumbent Directors then on the Board (either by a specific vote or by
approval of the proxy statement of the Company in which such person is named as a nominee for Director without objection to such nomination) shall be an Incumbent Director. No individual initially elected or nominated as a director of the Company as
a result of an actual or threatened election contest with respect to Directors or as a result of any other actual or threatened solicitation of proxies by or on behalf of any person other than the Board shall be an Incumbent Director. 
  
 2.27. “Listing Date” means the first
date upon which any security of the Company is listed (or approved for listing) upon notice of issuance on any securities exchange or designated (or approved for designation) upon notice of issuance as a national market security on an interdealer
quotation system. 
  
 2.28.
“Non-Employee Director” means a Director who is a “non-employee director” within the meaning of Rule 16b-3. 
  
 2.29. “Nonstatutory Stock Option” means an Option not intended to qualify as an Incentive Stock Option.

  
 2.30. “Officer” means
(a) before the Listing Date, any person designated by the Company as an officer and (b) on and after the Listing Date, a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder. 
  
 2.31.
“Option” means an Incentive Stock Option or a Nonstatutory Stock Option granted pursuant to the Plan. 
  
 2.32. “Option Agreement” means a written agreement between the Company and an Optionholder evidencing the terms
and conditions of an individual Option grant. Each Option Agreement shall be subject to the terms and conditions of the Plan and need not be identical. 
  
 2.33. “Optionholder” means a person to whom an Option is granted pursuant to the Plan or, if applicable, such
other person who holds an outstanding Option. 
  
 2.34. “Outside Director” means a Director who is an “outside director” within the meaning of Section 162(m) of the Code and Treasury Regulations § 1.162-27(e)(3). 
  
 2.35. “Participant” means a person
to whom an Award is granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award. 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 5










 2.36. “Permitted Holders” means Wexford Capital LLC, a Delaware
limited liability company, and any individual, partnership, corporation, limited liability company, association, joint stock company, trust, joint venture or unincorporated organization that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with Wexford Capital LLC. For this purpose “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and
policies of another, whether through ownership of voting securities, by contract or otherwise. 
  
 2.37. “Plan” means this Bronco Drilling Company, Inc. 2005 Stock Incentive Plan. 
  
 2.38. “Rule 16b-3” means Rule 16b-3
promulgated under the Exchange Act or any successor to Rule 16b-3, as in effect from time to time. 
  
 2.39. “Rule 701” has the meaning set forth in Section 5.4(a). 
  
 2.40. “SEC” means the Securities and
Exchange Commission. 
  
 2.41.
“Securities Act” means the Securities Act of 1933, as amended. 
  
 2.42. “Stock for Stock Exchange” has the meaning set forth in Section 6.4. 
  
 2.43. “Surviving Entity” means the
Company if immediately following any merger, consolidation or similar transaction, the holders of outstanding voting securities of the Company immediately prior to the merger or consolidation own equity securities possessing more than 50% of the
voting power of the entity existing following the merger, consolidation or similar transaction. In all other cases, the other entity to the transaction and not the Company shall be the Surviving Entity. In making the determination of ownership by
the stockholders of an entity immediately after the merger, consolidation or similar transaction, equity securities which the stockholders owned immediately before the merger, consolidation or similar transaction as stockholders of another party to
the transaction shall be disregarded. Further, outstanding voting securities of an entity shall be calculated by assuming the conversion of all equity securities convertible (immediately or at some future time) into shares entitled to vote.

  
 2.44. “Ten Percent
Stockholder” means a person who owns (or is deemed to own pursuant to Section 424(d) of the Code) stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any of its
Affiliates. 
  
 3. Administration. 
  
 3.1. Administration by Board. The Plan shall be
administered by the Board unless and until the Board delegates administration to a Committee, as provided in Section 3.5 (the group that administers the Plan is referred to as the “Administrator”). 
  
 3.2. Powers of Administrator. The Administrator shall
have the power and authority to select and grant to Participants, Awards pursuant to the terms of the Plan. 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 6










 3.3. Specific Powers. In particular, the Administrator shall have the authority:
(i) to construe and interpret the Plan and apply its provisions; (ii) to promulgate, amend and rescind rules and regulations relating to the administration of the Plan; (iii) to authorize any person to execute, on behalf of the Company, any
instrument required to carry out the purposes of the Plan; (iv) to determine when Awards are to be granted under the Plan; (v) from time to time to select, subject to the limitations set forth in this Plan, those Participants to whom Awards shall be
granted; (vi) to determine the number of shares of Common Stock to be made subject to each Award; (vii) to determine whether each Stock Option is to be an Incentive Stock Option or a Nonstatutory Stock Option; (viii) to prescribe the terms and
conditions of each Award, including, without limitation, the exercise price and medium of payment, vesting provisions and other provisions, and to specify the provisions of the Option Agreement relating to such grant or sale; (ix) to amend any
outstanding Awards for the purpose of modifying the time or manner of vesting, the exercise price, or the term of any outstanding Award; provided, however, that if any such amendment impairs a Participant’s rights or increases a
Participant’s obligations under his or her Award or creates or increases a Participant’s federal income tax liability with respect to an outstanding Award, such amendment shall also be subject to the Participant’s consent (provided,
however, a cancellation of an Award where the Participant receives a payment equal in value to the difference between the Fair Market Value of the Common Stock subject to a Stock Option and the exercise price, shall not be an impairment of the
Participant’s rights that requires consent); (x) to determine the duration and purpose of leaves of absences which may be granted to a Participant without constituting termination of their employment for purposes of the Plan, which periods
shall be no shorter than the periods generally applicable to Employees under the Company’s employment policies; (xi) to make decisions with respect to outstanding Stock Options that may become necessary upon a change in corporate control or an
event that triggers anti-dilution adjustments; and (xii) to exercise discretion to make any and all other determinations which it determines to be necessary or advisable for administration of the Plan. 
  
 3.4. Decisions Final. All decisions made by the
Administrator pursuant to the provisions of the Plan shall be final and binding on the Company and the Participants, unless such decisions are determined to be arbitrary and capricious. 
  
 3.5. The Committee. 
  
 (a) General. The Board may delegate administration of the Plan to a Committee or Committees of one
(1) or more members of the Board. The term “Committee” shall apply to any person or persons to whom authority for administration of the Plan has been delegated. If administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Board, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references
in this Plan to the Board or the Administrator shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the administration of the Plan. The members of the Committee shall be appointed by and to serve at the pleasure of the Board. From time to time, the Board may increase or decrease
the size of the Committee, add additional members to, remove members (with or without cause) from, appoint new members in substitution therefor, and fill vacancies, however caused, in the Committee. 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 7










 
The Committee shall act pursuant to a vote of the majority of its members or, in the case of a committee comprised of only two members, the unanimous consent
of its members, whether present or not, or by the written consent of the majority of its members and minutes shall be kept of all of its meetings and copies thereof shall be provided to the Board. Subject to the limitations prescribed by the Plan
and the Board, the Committee may establish and follow such rules and regulations for the conduct of its business as it may determine to be advisable. 
  
 (b) Committee Composition when Common Stock is Publicly Traded. At such time as the Common Stock is publicly traded, in the
discretion of the Board, a Committee may consist solely of two or more Non-Employee Directors who are also Outside Directors. The Board shall have discretion to determine whether or not it intends to comply with the exemption requirements of Rule
16b-3 and/or Section 162(m) of the Code. However, if the Board intends to satisfy such exemption requirements, with respect to Awards to any Covered Employee and with respect to any insider subject to Section 16 of the Exchange Act, the Committee
shall be a compensation committee of the Board that at all times consists solely of two or more Non-Employee Directors who are also Outside Directors. Within the scope of such authority, the Board or the Committee may (i) delegate to a committee of
one or more members of the Board who are not Outside Directors the authority to grant Stock Awards to eligible persons who are either (A) not then Covered Employees and are not expected to be Covered Employees at the time of recognition of income
resulting from such Stock Award or (B) not persons with respect to whom the Company wishes to comply with Section 162(m) of the Code or (ii) delegate to a committee of one or more members of the Board who are not Non-Employee Directors the authority
to grant Stock Awards to eligible persons who are not then subject to Section 16 of the Exchange Act. 
  
 3.6. Indemnification. In addition to such other rights of indemnification as they may have as Directors or members of the
Committee, and to the extent allowed by applicable law, the Administrator shall be indemnified by the Company against the reasonable expenses, including attorney’s fees, actually incurred in connection with any action, suit or proceeding or in
connection with any appeal therein, to which the Administrator may be party by reason of any action taken or failure to act under or in connection with the Plan or any option granted under the Plan, and against all amounts paid by the Administrator
in settlement thereof (provided that the settlement has been approved by the Company, which approval shall not be unreasonably withheld) or paid by the Administrator in satisfaction of a judgment in any such action, suit or proceeding, except
in relation to matters as to which it shall be adjudged in such action, suit or proceeding that such Administrator did not act in good faith and in a manner which such person reasonably believed to be in the best interests of the Company, and in the
case of a criminal proceeding, had no reason to believe that the conduct complained of was unlawful; provided, however, that within 60 days after institution of any such action, suit or proceeding, such Administrator shall, in writing,
offer the Company the opportunity at its own expense to handle and defend such action, suit or proceeding. 
  
 4. Shares Subject to the Plan. 
  
 4.1 Share Reserve. Subject to the provisions of Section 11.1 relating to adjustments upon changes in Common Stock, the
shares that may be issued pursuant to Awards shall consist of the Company’s authorized but unissued Common Stock, and the maximum 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 8










 
aggregate amount of such Common Stock which may be issued upon exercise of all Awards under the Plan, including Incentive Stock Options, shall not exceed
Five Hundred Thousand (500,000) shares. Awards for fractional shares of Common Stock may not be issued under the terms of the Plan. 
  
 4.2 Reversion of Shares to the Share Reserve. If any Award shall for any reason expire or otherwise terminate, in whole or in part,
without having been exercised in full, the shares of Common Stock not acquired under such Award shall revert to and again become available for issuance under the Plan. If shares issued under the Plan are reacquired by the Company pursuant to the
terms of any forfeiture provision, such shares shall again be available for purposes of the Plan. 
  
 4.3 Source of Shares. The shares of Common Stock subject to the Plan may be authorized but unissued Common Stock or reacquired
Common Stock, bought on the market, obtained pursuant to any forfeiture provision or otherwise. 
  
 5. Eligibility. 
  
 5.1 Eligibility for Specific Awards. Incentive Stock Options may be granted only to Employees. Awards other than Incentive Stock
Options may be granted to Employees, Consultants and Directors. 
  
 5.2 Ten Percent Stockholders. A Ten Percent Stockholder shall not be granted an Incentive Stock Option unless the exercise price of such Option is at least one hundred ten percent (110%) of the Fair Market
Value of the Common Stock at the Date of Grant and the Option is not exercisable after the expiration of five (5) years from the Date of Grant. 
  
 5.3 Section 162(m) Limitation. Subject to the provisions of Section 11.1 relating to adjustments upon changes in the shares
of Common Stock, no Employee shall be eligible to be granted Options covering more than Two Hundred Twenty Thousand (220,000) shares of Common Stock during any calendar year. This Section 5.3 shall not apply prior to the Listing Date and,
following the Listing Date, this Section 5.3 shall not apply until (a) the earliest of: (i) the first material modification of the Plan (including any increase in the number of shares of Common Stock reserved for issuance under the Plan in
accordance with Section 4.1); (ii) the issuance of all of the shares of Common Stock reserved for issuance under the Plan; (iii) the expiration of the Plan; or (iv) the first meeting of stockholders at which Directors are to be elected that
occurs after the close of the third calendar year following the calendar year in which occurred the first registration of an equity security under Section 12 of the Exchange Act; or (b) such other date required by Section 162(m) of the Code and the
rules and regulations promulgated thereunder. 
  
 5.4 Consultants. 
  
 (a) Prior to
the Listing Date, a Consultant shall not be eligible for the grant of an Award if, at the time of grant, either the offer or the sale of the Company’s securities to such Consultant is not exempt under Rule 701 of the Securities Act
(“Rule 701”) because of the nature of the services that the Consultant is providing to the Company, or because the 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 9










 
Consultant is not a natural person, or as otherwise provided by Rule 701, unless the Company determines that such grant need not comply with the requirements
of Rule 701 and will satisfy another exemption under the Securities Act as well as comply with the securities laws of all other relevant jurisdictions. 
  
 (b) From and after the Listing Date, a Consultant shall not be eligible for the grant of an Award if, at the time of grant, a Form S-8
Registration Statement under the Securities Act (“Form S-8”) is not available to register either the offer or the sale of the Company’s securities to such Consultant because of the nature of the services that the
Consultant is providing to the Company, or because the Consultant is not a natural person, or as otherwise provided by the rules governing the use of Form S-8, unless the Company determines both (i) that such grant (1) shall be registered in another
manner under the Securities Act (e.g., on a Form S-3 Registration Statement) or (2) does not require registration under the Securities Act in order to comply with the requirements of the Securities Act, if applicable, and (ii) that such grant
complies with the securities laws of all other relevant jurisdictions. 
  
 5.5 Directors. Each Director of the Company shall be eligible to receive discretionary grants of Awards under the Plan. 
  

6. Option Provisions. Each Option shall be in such form and shall contain such terms and conditions as the Administrator shall deem appropriate.
All Options shall be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on
exercise of each type of Option. Notwithstanding the foregoing, the Company shall have no liability to any Participant or any other person if an Option designated as an Incentive Stock Option fails to qualify as such at any time or if an Option is
determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the terms of such Option do not satisfy the additional conditions applicable to nonqualified deferred compensation under
Section 409A of the Code and Section 7 of the Plan. The provisions of separate Options need not be identical, but each Option shall include (through incorporation of provisions hereof by reference in the Option or otherwise) the substance of
each of the following provisions: 
  
 6.1
Term. Subject to the provisions of Section 5.2 regarding Ten Percent Stockholders, no Incentive Stock Option shall be exercisable after the expiration of ten (10) years from the date it was granted. 
  
 6.2 Exercise Price of an Incentive Stock Option.
Subject to the provisions of Section 5.2 regarding Ten Percent Stockholders, the exercise price of each Incentive Stock Option shall be not less than one hundred percent (100%) of the Fair Market Value of the Common Stock subject to the
Option on the date the Option is granted. Notwithstanding the foregoing, an Incentive Stock Option may be granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code. 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 10










 6.3 Exercise Price of a Nonstatutory Stock Option. The exercise price of each
Nonstatutory Stock Option shall be not less than thirty-five percent (35%) of the Fair Market Value of the Common Stock subject to the Option on the date the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock Option may be
granted with an exercise price lower than that set forth in the preceding sentence if such Option is granted pursuant to an assumption or substitution for another option in a manner satisfying the provisions of Section 424(a) of the Code.

  
 6.4 Consideration. The exercise price
of Common Stock acquired pursuant to an Option shall be paid, to the extent permitted by applicable statutes and regulations, either (i) in cash or by certified or bank check at the time the Option is exercised or (ii) in the discretion of the
Administrator, upon such terms as the Administrator shall approve, the exercise price may be paid: (1) by delivery to the Company of other Common Stock, duly endorsed for transfer to the Company, with a Fair Market Value on the date of delivery
equal to the exercise price (or portion thereof) due for the number of shares being acquired, or by means of attestation whereby the Participant identifies for delivery specific shares of Common Stock that have been held for more than six (6) months
(or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes) that have a Fair Market Value on the date of attestation equal to the exercise price (or portion thereof) and receives a number of
shares of Common Stock equal to the difference between the number of shares thereby purchased and the number of identified attestation shares of Common Stock (a “Stock for Stock Exchange”); (2) during any period for which the
Common Stock is publicly traded (i.e., the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market, or if the Common Stock is quoted on the Nasdaq System (but not
on the Nasdaq National Market) or any similar system whereby the Common Stock is regularly quoted by a recognized securities dealer but closing sale prices are not reported), by a copy of instructions to a broker directing such broker to sell the
Common Stock for which such Option is exercised, and to remit to the Company the aggregate Exercise Price of such Options (a “Cashless Exercise”); (3) in any other form of legal consideration that may be acceptable to the
Administrator, including without limitation with a full-recourse promissory note; provided, however, if applicable law requires, the par value of the Common Stock, if newly issued, shall be paid in cash or cash equivalents. The Common Stock
acquired upon exercise with a promissory note shall be pledged as security for payment of the principal amount of the promissory note and interest thereon. The interest rate payable under the terms of the promissory note shall not be less than the
minimum rate (if any) required to avoid the imputation of additional interest under the Code. Subject to the foregoing, the Administrator (in its sole discretion) shall specify the term, interest rate, amortization requirements (if any) and other
provisions of such note. Unless the Administrator determines otherwise, shares of Common Stock having a Fair Market Value at least equal to the principal amount of any such loan shall be pledged by the holder to the Company as security for payment
of the unpaid balance of the loan and such pledge shall be evidenced by a pledge agreement, the terms of which shall be determined by the Administrator, in its discretion; provided, however, that each loan shall comply with all applicable laws,
regulations and rules of the Board of Governors of the Federal Reserve System and any other governmental agency having jurisdiction. Unless otherwise specifically provided in the Option, the purchase price of Common Stock acquired pursuant to an
Option that is paid by delivery (or attestation) to the Company of other Common Stock acquired, directly or indirectly from the Company, shall be paid only by shares of the Common Stock of the Company that have been 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 11










 
held for more than six (6) months (or such longer or shorter period of time required to avoid a charge to earnings for financial accounting purposes).
Notwithstanding the forgoing, a Cashless Exercise, exercise with a promissory note or other transaction by a Director or executive officer that involves or may involve a direct or indirect extension of credit or arrangement of an extension of credit
by the Company, or an Affiliate in violation of Section 402(a) of the Sarbanes-Oxley Act (codified as Section 13(k) of the Exchange Act) shall be prohibited with respect to any Award under this Plan. Unless otherwise provided in the terms of an
Option Agreement, payment of the exercise price by a Participant who is an officer, director or other “insider” subject to Section 16(b) of the Exchange Act in the form of a Stock for Stock Exchange is subject to pre-approval by the
Administrator, in its sole discretion. Any such pre-approval shall be documented in a manner that complies with the specificity requirements of Rule 16b-3 under the Exchange Act, including the name of the Participant involved in the transaction, the
nature of the transaction, the number of shares to be acquired or disposed of by the Participant and the material terms of the Options involved in the transaction. 
  
 6.5 Transferability of an Incentive Stock Option. An Incentive Stock Option shall not be transferable
except by will or by the laws of descent and distribution and shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in
a form satisfactory to the Company, designate a third party who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 
  
 6.6 Transferability of a Nonstatutory Stock Option. A Nonstatutory Stock Option may, in the sole
discretion of the Administrator, be transferable to a permitted transferee upon written approval by the Administrator to the extent provided in the Option Agreement. A permitted transferee includes: (1) a transfer by gift or domestic relations order
to a member of the Optionholder’s immediate family (child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the Optionholder’s household (other than a tenant or employee), a trust in which these persons have more than 50% of the beneficial interest, a foundation in which these
persons (or the Optionholder) control the management of assets, and any other entity in which these persons (or the Optionholder) own more than 50% of the voting interests; (2) third parties designated by the Administrator in connection with a
program established and approved by the Administrator pursuant to which Participants may receive a cash payment or other consideration in consideration for the transfer of such Nonstatutory Stock Option; and (3) such other transferees as may be
permitted by the Administrator in its sole discretion. If the Nonstatutory Stock Option does not provide for transferability, then the Nonstatutory Stock Option shall not be transferable except by will or by the laws of descent and distribution and
shall be exercisable during the lifetime of the Optionholder only by the Optionholder. Notwithstanding the foregoing, the Optionholder may, by delivering written notice to the Company, in a form satisfactory to the Company, designate a third party
who, in the event of the death of the Optionholder, shall thereafter be entitled to exercise the Option. 
  
 6.7 Vesting Generally. The Option may, but need not, vest and therefore become exercisable in periodic installments that may, but
need not, be equal. The Option may be subject to such other terms and conditions on the time or times when it may be exercised 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 12










 
(which may be based on performance or other criteria) as the Administrator may deem appropriate. The vesting provisions of individual Options may vary. No
Option may be exercised for a fraction of a share of Common Stock. The Administrator in its discretion may, but shall not be required to, provide for an acceleration of vesting and exercisability in the terms of any Option Agreement upon the
occurrence of a specified event, such as a Change in Control. 
  
 6.8 Termination of Continuous Service. Unless otherwise provided in an Option Agreement or in an employment agreement the terms of which have been approved by the Administrator, in the event an
Optionholder’s Continuous Service terminates (other than upon the Optionholder’s death or Disability or termination by the Company for Cause), the Optionholder may exercise his or her Option (to the extent that the Optionholder was
entitled to exercise such Option as of the date of termination) but only within such period of time ending on the earlier of (a) the date three (3) months following the termination of the Optionholder’s Continuous Service, or (b) the expiration
of the term of the Option as set forth in the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified in the Option Agreement, the Option shall terminate. Unless otherwise provided in
an Option Agreement or in an employment agreement the terms of which have been approved by the Administrator, or as otherwise provided in Sections 6.10 or 6.11 of this Plan, outstanding Options that are not exercisable at the time an
Optionholder’s Continuous Service terminates for any reason other than for Cause (including upon the Optionholder’s death or Disability) shall be forfeited and expire at the close of business on the date of such termination. If the
Optionholder’s Continuous Service is terminated for Cause, all outstanding Options shall be forfeited (whether or not vested) and expire as of the beginning of business on the date of such termination for Cause. 
  
 6.9 Extension of Termination Date. An
Optionholder’s Option Agreement may also provide that if the exercise of the Option following the termination of the Optionholder’s Continuous Service for any reason other than Cause (other than upon the Optionholder’s death or
Disability) would be prohibited at any time because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act or any other state or federal securities law or the rules of any securities exchange or
interdealer quotation system, then the Option shall terminate on the earlier of (a) the expiration of the term of the Option in accordance with Section 6.1 or (b) the expiration of a period after the termination of the Participant’s
Continuous Service that is three (3) months after the end of the period during which the exercise of the Option would be in violation of such registration or other securities law requirements. 
  
 6.10 Disability of Optionholder. Unless otherwise
provided in an Option Agreement, in the event that an Optionholder’s Continuous Service terminates as a result of the Optionholder’s Disability, the Optionholder may exercise his or her Option (to the extent that the Optionholder was
entitled to exercise such Option as of the date of termination), but only within such period of time ending on the earlier of (a) the date twelve (12) months following such termination or (b) the expiration of the term of the Option as set forth in
the Option Agreement. If, after termination, the Optionholder does not exercise his or her Option within the time specified herein, the Option shall terminate. 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 13










 6.11 Death of Optionholder. Unless otherwise provided in an Option Agreement, in
the event an Optionholder’s Continuous Service terminates as a result of the Optionholder’s death, then the Option may be exercised (to the extent the Optionholder was entitled to exercise such Option as of the date of death) by the
Optionholder’s estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by a person designated to exercise the Option upon the Optionholder’s death, but only within the period ending on the earlier of
(a) the date twelve (12) months following the date of death or (b) the expiration of the term of such Option as set forth in the Option Agreement. If, after death, the Option is not exercised within the time specified herein, the Option shall
terminate. 
  
 6.12 Incentive Stock Option
$100,000 Limitation. To the extent that the aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar
year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Nonstatutory
Stock Options. 
  
 6.13 Early Exercise.
The Option may, but need not, include a provision whereby the Optionholder may elect at any time before the Optionholder’s Continuous Service terminates to exercise the Option as to any part or all of the shares of Common Stock subject to the
Option prior to the full vesting of the Option. In such case, the shares of Common Stock acquired on exercise shall be subject to the vesting schedule that otherwise would apply to determine the exercisability of the Option. Any unvested shares of
Common Stock so purchased may be subject to any other restriction the Administrator determines to be appropriate. 
  
 6.14 Reload Options. At the discretion of the Administrator, the Option may include a “reload” feature pursuant to which
an Optionholder exercising an option by the delivery of a number of shares of Common Stock in accordance with Section 6.4 hereof would automatically be granted an additional Option (with an exercise price equal to the Fair Market Value of the
Common Stock on the date the additional Option is granted and with the same expiration date as the original Option being exercised, and with such other terms as the Administrator may provide) to purchase that number of shares of Common Stock equal
to the number delivered in a Stock for Stock Exchange of the original Option. 
  
 6.15 Additional Requirements Under Section 409A. Each Option shall include a provision whereby, notwithstanding any provision of the Plan or the Option Agreement to the contrary, the Option shall satisfy the
additional conditions applicable to nonqualified deferred compensation under Section 409A of the Code, in accordance with Section 7 hereof. The requirements herein shall apply in the event any Award under this Plan is granted with an exercise
price less than Fair Market Value of the Common Stock subject to the Option on the date the Option is granted (regardless of whether or not such exercise price is intentionally or unintentionally priced at less than Fair Market Value, or is
materially modified at a time when the Fair Market Value exceeds the exercise price), or is otherwise determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code. 
  
 7. Additional Conditions Applicable to Nonqualified Deferred Compensation
Under Section 409A of the Code. In the event any Award under this Plan is granted with an 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 14










 
exercise price less than Fair Market Value of the Common Stock subject to the Option on the Date of Grant (regardless of whether or not such exercise price
is intentionally or unintentionally priced at less than Fair Market Value, or is materially modified and deemed a new grant at a time when the Fair Market Value exceeds the exercise price), or is otherwise determined to constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code (a “409A Award”), the following additional conditions shall apply and shall supersede any contrary provisions of this Plan or the terms of any Option
Agreement. 
  
 7.1 Exercise. No 409A Award
shall be exercisable or distributable earlier than upon one of the following: 
  
 (a) Specified Time. A specified time or a fixed schedule set forth in the Option Agreement, but not later than after the expiration of ten (10) years from the Date of Grant. If the Option Agreement does not
specify a fixed time or schedule, such time shall be the date that is the fifth anniversary of the Date of Grant. 
  
 (b) Separation from Service. Separation from service (within the meaning of Section 409A of the Code) by the 409A Award recipient;
provided however, if the Optionholder is a “key employee” (as defined in Section 416(i) of the Code without regard to paragraph (5) thereof) and any of the Company’s stock is publicly traded on an established securities market or
otherwise, exercise under this Section 7.1(b) may not be made before the date which is six months after the date of separation from service. 
  
 (c) Death. The date of death of the Optionholder. 
  
 (d) Disability. The date the Optionholder becomes disabled (within the meaning of Section
7.4(b) hereof). 
  
 (e) Unforeseeable
Emergency. The occurrence of an unforeseeable emergency (within the meaning of Section 7.4(c) hereof), but only if the net value (after payment of the exercise price) of the number of shares of Common Stock that become exercisable do not
exceed the amounts necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the exercise, after taking into account the extent to which the emergency is or may be relieved through reimbursement or
compensation by insurance or otherwise or by liquidation of the Participant’s other assets (to the extent such liquidation would not itself cause severe financial hardship). 
  
 (f) Change in Control Event. The occurrence of a Change in Control Event (within the meaning of
Section 7.4(a) hereof), including the Company’s discretionary exercise of the right to accelerate vesting such Option upon a Change in Control Event or to terminate the Plan or any 409A Award granted hereunder within 12 months of the
Change in Control Event. 
  
 7.2 Term.
Notwithstanding anything to the contrary in this Plan or the terms of any Option Agreement, the term of any 409A Award shall expire and no longer be exercisable on the date that is the later of: (a) 2-1/2 months after the end of the Company’s
taxable year in which the Option first becomes exercisable pursuant to Section 7.1 hereof and is not subject to a substantial risk of forfeiture; or (b) 2-1/2 months after the end of the Optionholder’s taxable year 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 15










 
in which the Option first becomes exercisable pursuant to Section 7.1 hereof and is not subject to a substantial risk of forfeiture, but not later
than the earlier of (i) the expiration of ten (10) years from the date the Option was granted, or (ii) the term specified in the Option Agreement. 
  
 7.3 No Acceleration. A 409A Award may not be accelerated or exercised prior to the time specified in Section 7.1 hereof,
except in the case of one of the following events: 
  
 (a) Domestic Relations Order. The Option may permit the acceleration of the exercise time or schedule to an individual other than the Plan Participant as may be necessary to comply with the terms of a domestic relations order (as
defined in Section 414(p)(1)(B) of the Code). 
  
 (b) Conflicts of Interest. The Option may permit the acceleration of the exercise time or schedule as may be necessary to comply with the terms of a certificate of divestiture (as defined in Section 1043(b)(2) of the Code).

  
 (c) Change in Control Event. The
Administrator may exercise the discretionary right to accelerate such Option upon a Change in Control Event or to terminate the Plan or any 409A Award granted hereunder within 12 months of the Change in Control Event and cancel the 409A Award for
compensation. In addition, the Administrator may exercise the discretionary right to accelerate the vesting of such 409A Award provided that such acceleration does not change the time or schedule of payment of such Award and otherwise satisfies the
requirements of this Section 7 and the requirements of Section 409A of the Code. 
  
 7.4 Definitions. Solely for purposes of this Section 7 and not for other purposes of the Plan, the following terms shall be
defined as set forth below: 
  
 (a)
“Change in Control Event” means the occurrence of a change in the ownership of the Company, a change in effective control of the Company, or a change in the ownership of a substantial portion of the assets of the Company (as
defined in IRS Notice 2005-1, Q&A-11, Q&A-12, Q&A-13 and Q&A-14). 
  
 (b) “Disabled” means a Participant (i) is unable to engage in any substantial gainful activity by reason of any
medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental
impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan
covering Employees. 
  
 (c)
“Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse or a dependent (as defined in Section 152(a) of the Code)
of the Participant, loss of the Participant’s property due to casualty or similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 16










 8. Covenants of the Company. 
  
 8.1 Availability of Shares. During the terms of the Awards, the Company shall keep available at all
times the number of shares of Common Stock required to satisfy such Awards. 
  
 8.2 Securities Law Compliance. Each Option Agreement shall provide that no shares of Common Stock shall be purchased or sold thereunder unless and until (i) any then applicable requirements of state or federal
laws and regulatory agencies shall have been fully complied with to the satisfaction of the Company and its counsel and (ii) if required to do so by the Company, the Participant shall have executed and delivered to the Company a letter of investment
intent in such form and containing such provisions as the Administrator may require. The Company shall use reasonable efforts to seek to obtain from each regulatory commission or agency having jurisdiction over the Plan such authority as may be
required to grant Awards and to issue and sell shares of Common Stock upon exercise of the Awards; provided, however, that this undertaking shall not require the Company to register under the Securities Act the Plan, any Award or any
Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts, the Company is unable to obtain from any such regulatory commission or agency the authority which counsel for the Company deems necessary for the lawful
issuance and sale of Common Stock under the Plan, the Company shall be relieved from any liability for failure to issue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained. 
  
 9. Use of Proceeds from Stock. Proceeds from the sale of Common Stock
pursuant to Awards shall constitute general funds of the Company. 
  
 10. Miscellaneous. 
  
 10.1
Acceleration of Exercisability and Vesting. The Administrator shall have the power to accelerate the time at which an Award may first be exercised or the time during which an Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Award stating the time at which it may first be exercised or the time during which it will vest. 
  
 10.2 Stockholder Rights. No Participant shall be deemed to be the holder of, or to have any of the rights of a holder with respect
to, any shares of Common Stock subject to such Award unless and until such Participant has satisfied all requirements for exercise of the Award pursuant to its terms and no adjustment shall be made for dividends (ordinary or extraordinary, whether
in cash, securities or other property) or distributions of other rights for which the record date is prior to the date such Common Stock certificate is issued, except as provided in Section 11.1, hereof. 
  
 10.3 No Employment or other Service Rights. Nothing
in the Plan or any instrument executed or Award granted pursuant thereto shall confer upon any Participant any right to continue to serve the Company or an Affiliate in the capacity in effect at the time the Award was granted or shall affect the
right of the Company or an Affiliate to terminate (a) the employment of an Employee with or without notice and with or without Cause, (b) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or an
Affiliate or (c) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 17










 
and any applicable provisions of the corporate law of the state in which the Company or the Affiliate is incorporated, as the case may be. 
  
 10.4 Transfer, Approved Leave of Absence. For
purposes of the Plan, no termination of employment by an Employee shall be deemed to result from either (a) a transfer to the employment of the Company from an Affiliate or from the Company to an Affiliate, or from one Affiliate to another; or (b)
an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the Employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the
leave of absence was granted or if the Administrator otherwise so provides in writing. 
  
 10.5 Investment Assurances. The Company may require a Participant, as a condition of exercising or acquiring Common Stock under any
Award, (a) to give written assurances satisfactory to the Company as to the Participant’s knowledge and experience in financial and business matters and/or to employ a purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or she is capable of evaluating, alone or together with the purchaser representative, the merits and risks of exercising the Award; and (b) to give written assurances
satisfactory to the Company stating that the Participant is acquiring Common Stock subject to the Award for the Participant’s own account and not with any present intention of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be inoperative if (i) the issuance of the shares of Common Stock upon the exercise or acquisition of Common Stock under the Award has been registered under a then currently
effective registration statement under the Securities Act or (ii) as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities
laws. The Company may, upon advice of counsel to the Company, place legends on stock certificates issued under the Plan as such counsel deems necessary or appropriate in order to comply with applicable securities laws, including, but not limited to,
legends restricting the transfer of the Common Stock. 
  
 10.6 Withholding Obligations. To the extent provided by the terms of an Option Agreement and subject to the discretion of the Administrator, the Participant may satisfy any federal, state or local tax withholding obligation relating
to the exercise or acquisition of Common Stock under an Award by any of the following means (in addition to the Company’s right to withhold from any compensation paid to the Participant by the Company) or by a combination of such means: (a)
tendering a cash payment; (b) authorizing the Company to withhold shares of Common Stock from the shares of Common Stock otherwise issuable to the Participant as a result of the exercise or acquisition of Common Stock under the Award,
provided, however, that no shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; (c) delivering to the Company previously owned and unencumbered shares of Common Stock of
the Company or (d) by execution of a recourse promissory note by a Participant that is not a Director or executive officer. Unless otherwise provided in the terms of an Option Agreement, payment of the tax withholding by a Participant who is an
officer, director or other “insider” subject to Section 16(b) of the Exchange Act by delivering previously owned and unencumbered shares of Common Stock of the Company or in the form of share withholding is subject to pre-approval by the


  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 18










 
Administrator, in its sole discretion. Any such pre-approval shall be documented in a manner that complies with the specificity requirements of Rule 16b-3
under the Exchange Act, including the name of the Participant involved in the transaction, the nature of the transaction, the number of shares to be acquired or disposed of by the Participant and the material terms of the Options involved in the
transaction. 
  
 11. Adjustments Upon Changes in Stock.

  
 11.1 Capitalization Adjustments. If
any change is made in the Common Stock subject to the Plan, or subject to any Award, without the receipt of consideration by the Company (through merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of shares, exchange of shares, change in corporate structure or other transaction not involving the receipt of consideration by the Company), then (i) the aggregate number of
shares of Common Stock or class of shares which may be purchased pursuant to Awards granted hereunder; (ii) the aggregate number of shares of Common Stock or class of shares which may be purchased pursuant to Incentive Stock Options granted
hereunder; (iii) the number and/or class of shares of Common Stock covered by outstanding Options and Awards; (iv) the maximum number of shares of Common Stock with respect to which Options may be granted to any single Optionholder during any
calendar year; and (v) the exercise price of any Option in effect prior to such change shall be proportionately adjusted by the Administrator to reflect any increase or decrease in the number of issued shares of Common Stock or change in the Fair
Market Value of such Common Stock resulting from such transaction; provided, however, that any fractional shares resulting from the adjustment shall be eliminated. The Administrator shall make such adjustments, and its determination shall be final,
binding and conclusive. The conversion of any securities of the Company that are by their terms convertible shall not be treated as a transaction “without receipt of consideration” by the Company. 
  
 11.2 Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, then all outstanding Awards shall terminate immediately prior to such event. 
  
 11.3 Change in Control – Asset Sale, Merger, Consolidation or Reverse Merger. In the event of a Change in Control, a
dissolution or liquidation of the Company, or any corporate separation or division, including, but not limited to, a split-up, a split-off or a spin-off, or a sale, in one or a series of related transactions, of all or substantially all of the
assets of the Company; a merger or consolidation in which the Company is not the Surviving Entity; or a reverse merger in which the Company is the surviving entity, but the shares of Common Stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, then, the Company, to the extent permitted by applicable law, but otherwise in the sole discretion of the Administrator may provide for: (i)
the continuation of outstanding Awards by the Company (if the Company is the Surviving Entity); (ii) the assumption of the Plan and such outstanding Awards by the Surviving Entity or its parent; (iii) the substitution by the Surviving Entity or its
parent of Awards with substantially the same terms (including an award to acquire the same consideration paid to the stockholders in the transaction described in this Section 11.3) for such outstanding Awards and, if appropriate, subject to
the equitable adjustment provisions of Section 11.1 hereof; (iv) the cancellation of such outstanding Awards in consideration for a payment equal in value to the Fair 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 19










 
Market Value of vested Awards, or in the case of an Option, the difference between the Fair Market Value and the exercise price for all shares of Common
Stock subject to exercise (i.e., to the extent vested) under any outstanding Option; or (v) the cancellation of such outstanding Awards without payment of any consideration. If such Awards would be canceled without consideration for vested Awards,
the Participant shall have the right, exercisable during the later of the ten-day period ending on the fifth day prior to such merger or consolidation or ten days after the Administrator provides the Award holder a notice of cancellation, to
exercise such Awards in whole or in part without regard to any installment exercise provisions in the Option Agreement. 
  
 12. Amendment of the Plan and Awards. 
  
 12.1 Amendment of Plan. The Board at any time, and from time to time, may amend or terminate the Plan. However, except as provided
in Section 11 relating to adjustments upon changes in Common Stock, no amendment shall be effective unless approved by the stockholders of the Company to the extent stockholder approval is necessary to satisfy any applicable law or any Nasdaq
or securities exchange listing requirements. At the time of such amendment, the Board shall determine, upon advice from counsel, whether such amendment will be contingent on stockholder approval. 
  
 12.2 Stockholder Approval. The Board may, in its sole
discretion, submit any other amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate deductibility of compensation paid to certain executive officers. 
  
 12.3 Contemplated Amendments. It is expressly contemplated that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the maximum benefits provided or to be provided under the provisions of the Code and the regulations promulgated thereunder relating to Incentive Stock Options or to the nonqualified deferred
compensation provisions of Section 409A of the Code and/or to bring the Plan and/or Awards granted under it into compliance therewith. 
  
 12.4 No Impairment of Rights. Rights under any Award granted before amendment of the Plan shall not be impaired by any amendment of
the Plan unless (a) the Company requests the consent of the Participant and (b) the Participant consents in writing. However, a cancellation of an Award where the Participant receives a payment equal in value to the Fair Market Value of the vested
Award or, in the case of vested Options, the difference between the Fair Market Value and the exercise price, shall not be an impairment of the Participant’s rights that requires consent. 
  
 12.5 Amendment of Awards. The Administrator at any
time, and from time to time, may amend the terms of any one or more Awards; provided, however, that the Administrator may not effect any amendment which would otherwise constitute an impairment of the rights under any Award unless (a) the
Company requests the consent of the Participant and (b) the Participant consents in writing. For the avoidance of doubt, the cancellation of vested Options where the Participant receives a payment equal in value to the difference between the 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 20










 
Fair Market Value of the Common Stock underlying the Option and the aggregate exercise price, shall not be an impairment of the Participant’s rights
that requires consent. 
  
 13. General Provisions.

  
 13.1 Other Compensation Arrangements.
Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, subject to stockholder approval if such approval is required; and such arrangements may be either generally applicable or applicable
only in specific cases. 
  
 13.2
Recapitalizations. Each Option Agreement shall contain provisions required to reflect the provisions of Section 11.1. 
  
 13.3 Delivery. Upon exercise of an Option granted under this Plan, the Company shall issue Common Stock or pay any amounts due
within a reasonable period of time thereafter. Subject to any statutory or regulatory obligations the Company may otherwise have, for purposes of this Plan, thirty days shall be considered a reasonable period of time. 
  
 13.4 Other Provisions. The Option Agreements
authorized under the Plan may contain such other provisions not inconsistent with this Plan, including, without limitation, restrictions upon the exercise of the Awards, as the Administrator may deem advisable. 
  
 13.5 Cancellation and Rescission of Awards for
Detrimental Activity. 
  
 (a) Upon exercise,
payment or delivery pursuant to an Award, the Participant shall certify in a manner acceptable to the Company that the Participant has not engaged in any Detrimental Activity described in Section 2.17. 
  
 (b) Unless the Option Agreement specifies otherwise, the
Administrator may cancel, rescind, suspend, withhold or otherwise limit or restrict any unexpired, unpaid, or deferred Awards at any time if the Participant engages in any Detrimental Activity described in Section 2.17. 
  
 (c) In the event a Participant engages in Detrimental
Activity described in Section 2.17 after any exercise, payment or delivery pursuant to an Award, during any period for which any restrictive covenant prohibiting such activity is applicable to the Participant, such exercise, payment or
delivery may be rescinded within one year thereafter. In the event of any such rescission, the Participant shall pay to the Company the amount of any gain realized or payment received as a result of the exercise, payment or delivery, in such manner
and on such terms and conditions as may be required by the Company. The Company shall be entitled to set-off against the amount of any such gain any amount owed to the Participant by the Company. 
  
 13.6 Disqualifying Dispositions. Any Participant who
shall make a “disposition” (as defined in Section 424 of the Code) of all or any portion of shares of Common Stock acquired upon exercise of an Incentive Stock Option within two (2) years from the Date of Grant of such Incentive Stock
Option or within one (1) year after the issuance of the shares of Common Stock acquired upon exercise of such Incentive Stock Option shall be required to 

  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 21










 
immediately advise the Company in writing as to the occurrence of the sale and the price realized upon the sale of such shares of Common Stock. 

 
 14. Effective Date of Plan. The Plan shall become effective as of
the Effective Date, but no Incentive Stock Option granted to any Employee or any Award granted to a Covered Employee may be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval shall be within
twelve (12) months before or after the date the Plan is adopted by the Board. 
  
 15. Termination or Suspension of the Plan. The Plan shall terminate automatically on the day before the 10th anniversary of the Effective Date. No Award shall be granted pursuant to the Plan after such date,
but Awards theretofore granted may extend beyond that date. The Board may suspend or terminate the Plan at any earlier date pursuant to Section 12.1 hereof. No Awards may be granted under the Plan while the Plan is suspended or after it is
terminated. 
  
 16. Choice of Law. The law of the State of
Delaware shall govern all questions concerning the construction, validity and interpretation of this Plan, without regard to such state’s conflict of law rules. 
  
 17. Execution. To record the adoption of the Plan by the Board, the Company has caused its authorized officer to
execute the Plan as of the date specified below. 
  
 [SIGNATURE
PAGE FOLLOWS] 
  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 22










  
 IN WITNESS WHEREOF,
upon authorization of the Board of Directors, the undersigned has caused the Bronco Drilling Company, Inc. 2005 Stock Incentive Plan to be executed effective as of the 25th day of July, 2005. 
  

			
	Bronco Drilling Company, Inc.
		
	By:	 	 /s/ D. Frank Harrison

	 Name: 
	 	 D. Frank Harrison

	 Title:
	 	 Chief Executive Officer



  


			
	Bronco Drilling Company, Inc. 2005 Stock Incentive Plan     Page 23