Document:

exhibit10_4.htm

Exhibit 10.3

 

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT
TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.

 

WARRANT No. W-1

 

to purchase

 

Shares of Common Stock

 

BRONCO DRILLING COMPANY, INC.

 

a Delaware Corporation

 

Issue Date:  September 18, 2009

 

1. Definitions. Unless the context otherwise requires, when used herein the following terms shall have the meanings indicated.

 

“Affiliate” means, with respect to any specified Person, any other Person directly or indirectly controlling, controlled by or under direct or indirect common control with, such specified Person; as used in this definition, “control” shall mean, with
respect to any specified Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such specified Person, whether through ownership of voting securities, by contract or otherwise.

 

“Appraisal Procedure” means a procedure whereby two independent appraisers, one chosen by the Corporation and one by the Warrantholder (or if there is more than one Warrantholder involved in an Appraisal Procedure, a majority in interest of Warrantholders based on
the number of Shares issuable on the exercise of the Warrants held by all such Warrantholders), shall mutually agree upon the determinations then the subject of appraisal.  Each party shall deliver a notice to the other appointing its appraiser within fifteen (15) days after the Appraisal Procedure is invoked.  If within thirty (30) days after appointment of the two appraisers they are unable to agree upon the amount in question, a third independent appraiser shall be chosen within ten (10)
days thereafter by the mutual consent of such first two appraisers or, if such two first appraisers fail to agree upon the appointment of a third appraiser, such appointment shall be made by the American Arbitration Association, or any organization successor thereto, from a panel of arbitrators having experience in appraisal of the subject matter to be appraised.  The decision of the third appraiser so appointed and chosen shall be given within thirty (30) days after the selection of such third appraiser.  If
three appraisers shall be appointed and the determination of one appraiser is disparate from the middle determination by more than twice the amount by which the other determination is disparate from the middle determination, then the determination of such appraiser shall be excluded, the remaining two determinations shall be averaged and such average shall be binding and conclusive upon the Corporation and the Warrantholder; otherwise, the average of all three determinations shall be binding upon the Corporation
and the Warrantholder.  One-half of the costs of conducting any Appraisal Procedure shall be borne by the Corporation, and the other half shall be borne by the Warrantholder (of, if more than one Warrantholder invokes an Appraisal Procedure, by such Warrantholders in the same relative proportion as the number of Shares issuable on the exercise of the Warrants held by each such Warrantholder bear to the number of Shares issuable on the exercise
of the Warrants owned by all such Warrantholders).

 

“Board of Directors” means the board of directors of the Corporation, including any duly authorized committee thereof.

 

“Business Day” means a day other than a Saturday, a Sunday or a day on which banks in Mexico City, Mexico or in the state in which the office maintained by the Corporation pursuant to Section 3 is located are required or permitted by law to be closed (other than
a general banking moratorium or holiday for a period exceeding four (4) consecutive days).

 

“Business Combination” means a merger, consolidation, statutory share exchange, sale of all or substantially all of the Corporation’s assets or similar form of transaction that requires the approval of the Corporation’s stockholders, or any tender offer,
exchange offer or similar offer that is commenced by any Person for shares of Common Stock.

 

“Business Combination Payment Amount” means, with respect to any Business Combination, the positive excess, if any, of (i) the sum of (A) the per share cash consideration payable in such Business Combination in respect of each share of Common Stock, and (B) the per
share Fair Market Value of any shares of stock or other securities, property or any other non-cash consideration payable in such Business Combination in respect of each share of Common Stock, over (ii) the Exercise Price in effect on the date of the execution by the Corporation (or, if applicable, a subsidiary thereof) of the definitive agreement in respect of such Business Combination (or, in the case of a tender offer, exchange offer or similar offer in which no such definitive agreement is executed by the
Corporation, the date of the commencement thereof, determined in accordance with the applicable rules and regulations set forth in the Exchange Act).

 

“Common Stock” means the Corporation’s common stock, par value of $0.01 per share.

 

“Corporation” means Bronco Drilling Company, Inc., a Delaware corporation.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.  Reference to a particular section of the
Exchange Act shall include a reference to the comparable section, if any, of any such successor federal statute.

 

“Exercise Price” means, (i) from the Issue Date through the first anniversary of the Issue Date, $6.50 per share; (ii) following the first anniversary of the Issue Date through the second anniversary of the Issue Date, $7.00 per share; and (iii) following the second
anniversary of the Issue Date through the third anniversary of the Issue Date, $7.50 per share.

 

“Expiration Time” has the meaning set forth in Section 3.

 

“Fair Market Value” means, with respect to any security or other property, the fair market value of such security or other property as determined by the Board of Directors, acting in good faith.  If the Warrantholder objects in writing to the Board of Directors’
calculation of fair market value within ten (10) days of receipt of written notice thereof and the Warrantholder and the Corporation are unable to agree on fair market value during the 10-day period following the delivery of the Warrantholder’s objection, the Appraisal Procedure may be invoked by either party to determine Fair Market Value by delivering written notification thereof to the other party not later than the 30th day after delivery of the Warrantholder’s objection.

 

“Investor” has the meaning set forth in the Warrant Agreement.

 

“Investor Group” means the Investor, any Affiliate thereof, and any other Person whose beneficial ownership of Common Stock would be aggregated with the Investor’s for purposes of Section 13(d) of the Exchange Act.

 

“Issue Date” means September 18, 2009.

 

“Market Price” means, with respect to the Common Stock, on any given day, the last sale price, regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, regular way, of the shares of Common Stock on NASDAQ on
such day.  If the Common Stock is not traded on NASDAQ on any date of determination, the Market Price of the Common Stock on such date of determination means the closing sale price on such date as reported in the composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange on which the Common
Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a U.S. national or regional securities exchange, the last quoted bid price for the Common Stock in the over-the-counter market on such date as reported by Pink Sheets LLC or similar organization, or, if such bid price is not available, the Market Price of the Common Stock on that date shall mean the Fair Market Value per share as determined by the Board of Directors in reliance on an opinion of a nationally recognized independent
investment banking firm retained by the Corporation for this purpose and certified in a resolution sent to the Warrantholder.  For the purposes of determining the Market Price of the Common Stock on the “trading day” preceding, on or following the occurrence of an event, (i) that trading day shall be deemed to commence immediately after the regular scheduled closing time of trading on NASDAQ or, if trading is closed at an earlier time, such earlier time and (ii) that trading day shall end
at the next regular scheduled closing time, or if trading is closed at an earlier time, such earlier time (for the avoidance of doubt, and as an example, if the Market Price is to be determined as of the last trading day preceding a specified event and the closing time of trading on a particular day is 4:00 p.m. and the specified event occurs at 5:00 p.m. on that same day, the Market Price would be determined by reference to such 4:00 p.m. closing price).

 

 

 

 

“NASDAQ” means The NASDAQ Global Select Market.

 

“Net Per Share Consideration” shall mean, with respect to any Transfer of all or a portion of this Warrant by the Investor or any other member of the Investor Group, the quotient obtained by dividing (i) the amount obtained by subtracting (A) the aggregate amount
of fees and expenses (including, without limitation, brokerage commissions or similar fees or expenses) paid by the Investor or such other member of the Investor Group in connection with such Transfer (other than legal fees and disbursements in an amount not to exceed $25,000 with respect to any such Transfer) from (B) the aggregate consideration paid to the Investor or such other member of the Investor Group in connection with such Transfer, by (ii) the aggregate number of shares of Common Stock issuable upon
exercise of the portion of the Warrant subject to such Transfer.

 

“Person” has the meaning given to it in Section 3(a)(9) of the Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

 

“Regulatory Approvals” with respect to the Warrantholder, means, to the extent applicable and required to permit the Warrantholder to exercise this Warrant for shares of Common Stock and to own such Common Stock without the Warrantholder being in violation of applicable
law, rule or regulation, the receipt of any necessary approvals and authorizations of, filings and registrations with, notifications to, or expiration or termination of any applicable waiting period under, the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

 

“SEC” means the United States Securities and Exchange Commission or any successor agency thereto.

 

“Securities Act” means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect from time to time.  Reference to a particular section of the Securities
Act shall include a reference to the comparable section, if any, of any such successor federal statute.

 

“Shares” has the meaning set forth in Section 2.

 

“Spread Value” means, with respect to any Transfer of the Warrant (or any portion thereof), the positive excess, if any, of (i) the Market Price per share of the Common Stock on the date of the execution of the definitive agreement in respect of such Transfer over
(ii) the Exercise Price in effect as of such date.

 

“Transaction Documents” has the meaning set forth in the Warrant Agreement.

 

“Transfer” or “Transferred” means, with respect to this Warrant, the sale, assignment, transfer, exchange or other disposition of such Warrant, in whole or in part, in any case whether pursuant
to a sale, merger, combination, consolidation, reclassification or otherwise, and whether voluntarily or by operation of law.

 

“Warrantholder” has the meaning set forth in Section 2.

 

“Warrant” means the warrant to purchase shares of Common Stock issued pursuant to the Warrant Agreement.

 

“Warrant Agreement” means the Warrant Agreement, dated as of September 18, 2009, as may be amended from time to time, among the Corporation and Banco Inbursa S.A., Institucion de Banca Multiple, Grupo Financiero Inbursa, including all schedules and exhibits thereto.

 

2. Number of Shares; Exercise Price. This certifies that, for value received, BANCO INBURSA S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA or its
permitted transferees, successors and assigns (the “Warrantholder”) is entitled, upon the terms and subject to the conditions hereinafter set forth, including, without limitation, the exercise limitations set forth in Section 13(H) hereof, to acquire from the Corporation, in whole or in part, after the receipt of all applicable Regulatory Approvals, up to an aggregate of 5,440,770 (FIVE MILLION FOUR HUNDRED FORTY THOUSAND SEVEN HUNDRED
AND SEVENTY) fully paid and nonassessable shares of Common Stock, at a purchase price per share of Common Stock equal to the Exercise Price.  The number of shares of Common Stock (the “Shares”) and the Exercise Price are subject to adjustment as provided herein, and all references to “Common Stock,” “Shares” and “Exercise Price” herein shall be deemed to include any such adjustment or series
of adjustments.

 

3. Exercise of Warrant; Term.  Subject to Section 2 and Section 13(H), the right to purchase the Shares represented by this Warrant is exercisable, in whole or
in part, by the Warrantholder, at any time or from time to time after the Issue Date but in no event later than 5:00 p.m., New York City time, September 18, 2012 (the “Expiration Time”), by (A) the surrender of this Warrant and Notice of Exercise annexed hereto, duly completed and executed on behalf of the Warrantholder, at the principal executive office of the Corporation located at 16217 North May Avenue, Edmond, Oklahoma 73013 (or
such other office or agency of the Corporation in the United States as it may designate by notice in writing to the Warrantholder at the address of the Warrantholder appearing on the books of the Corporation), and (B) payment of the Exercise Price for the Shares thereby purchased at the election of the Warrantholder in one of the following manners: (i) by tendering in cash or, with the consent of the Corporation, a certified or cashier’s check payable to the order of the Corporation, or by wire transfer
of immediately available funds to an account designated by the Corporation, or (ii) by electing to make a cashless exercise of this Warrant (or a portion thereof), in which case the Corporation shall issue to the Warrantholder a number of Shares computed using the following formula:

 

                         X=Y(A-B)

                                    A

 

	
  
	
For purposes of the foregoing formula:

 

	
 
	
X =
	
the number of Shares to be issued to the Warrantholder;

 

	
Y =
	
the number of Shares purchasable under this Warrant subject to the exercise election;

 

	
A =
	
the Market Price of one Share as of the date of the exercise of this Warrant (or portion thereof); and

 

	
B =
	
the Exercise Price in effect immediately prior to the exercise of this Warrant (or portion thereof).

 

If the Warrantholder does not exercise this Warrant in its entirety, the Warrantholder will be entitled to receive from the Corporation within a reasonable time, and in any event not exceeding three (3) Business Days, a new warrant in substantially identical form for the purchase of that number of Shares equal to the difference between the
number of Shares subject to this Warrant and the number of Shares as to which this Warrant is so exercised.

 

4. Issuance of Shares; Authorization; Listing.  Subject to Section 8, certificates for Shares issued upon exercise of this Warrant will be issued in such name
or names as the Warrantholder may designate and will be delivered to such named Person or Persons within a reasonable time, not to exceed three (3) Business Days after the date on which this Warrant has been duly exercised in accordance with the terms of this Warrant. The Corporation hereby represents and warrants that any Shares issued upon the exercise of this Warrant in accordance with the provisions of Section 3 will be duly and validly authorized and issued, fully paid and nonassessable and free from all
taxes, liens and charges (other than liens or charges created by the Warrantholder, income and franchise taxes incurred by the Warrantholder in connection with the exercise of the Warrant, or any transfer taxes that become payable by the Warrantholder as a result of the issuance of shares of Common Stock upon exercise of this Warrant to a Person other than the Warrantholder).  The Corporation agrees that the Shares so issued will be deemed to have been issued to the Warrantholder as of the close of
business on the date on which this Warrant and payment of the Exercise Price are delivered to the Corporation in accordance with the terms of this Warrant, notwithstanding that the stock transfer books of the Corporation may then be closed or certificates representing such Shares may not be actually delivered on such date. The Corporation will at all times reserve and keep available, out of its authorized but unissued Common Stock, solely for the purpose of providing for the exercise of this Warrant, and irrespective
of the exercise limitations set forth in Section 13(H) hereof, the aggregate number of shares of Common Stock issuable upon exercise of this Warrant.  The Corporation (A) will procure, at its sole expense, the listing of the Shares issuable upon exercise of this Warrant, subject to issuance or notice of issuance, on all principal stock exchanges on which the Common Stock is then listed or traded and (B) will use commercially reasonable efforts to maintain the listing of such Shares after the issuance
thereof.  The Corporation will use commercially reasonable efforts to ensure that the Shares may be issued without violation of any law or regulation applicable to the Corporation or of any requirement of any securities exchange on which the Shares are listed or traded.  The Corporation will cooperate with the reasonable requests of the Warrantholder in taking such other actions as are necessary to obtain (i) any Regulatory Approvals applicable to Warrantholder’s exercise of its rights
hereunder, including with respect to the issuance of the Shares and (ii) any regulatory approvals applicable to the Corporation solely as a result of the issuance of the Shares.  Before taking any action which would cause an adjustment pursuant to Section 13 to reduce the Exercise Price below the then par value of the Common Stock, the Corporation shall take any and all corporate action which may, in the opinion of its counsel, be necessary in order that the Corporation may validly and legally issue
fully paid and non-assessable shares of Common Stock at the Exercise Price as so adjusted.

 

5. No Fractional Shares or Scrip.  No fractional Shares or scrip representing fractional Shares shall be issued upon any exercise of this Warrant.  In
lieu of any fractional Share to which the Warrantholder would otherwise be entitled, the Warrantholder shall be entitled to receive a cash payment equal to the Market Price of the Common Stock on the last trading day preceding the date of exercise less the Exercise Price for such fractional share.

 

 

 

 

6. No Rights as Stockholders; Transfer Books.  This Warrant does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Corporation
prior to the date of exercise hereof, provided that any voting rights that the Warrantholder may have in respect of any shares of Common Stock or other capital stock of the Corporation owned thereby shall not be limited in any respect.  The Corporation will at no time close its transfer books against exercise or transfer of this Warrant in any manner which interferes with the timely exercise or transfer of this Warrant.

 

7. Charges, Taxes and Expenses.  Issuance of certificates for Shares to the Warrantholder upon the exercise of this Warrant shall be made without charge to the
Warrantholder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificates imposed under any law, rule or regulation applicable to the Corporation, all of which taxes and expenses shall be paid by the Corporation; provided, however, that any transfer taxes that become payable by the Warrantholder as a result of the issuance of shares of
Common Stock upon exercise of this Warrant to a Person other than the Warrantholder shall be paid by the Warrantholder or the Person to whom such shares are so issued.

 

8. Transfer/Assignment.

 

(A) Subject to compliance with clauses (B) and (C) of this Section 8, this Warrant and all rights hereunder are transferable, in whole or in part, upon the books of the Corporation by the registered holder hereof in person or by duly
authorized attorney, and a new warrant shall be made and delivered by the Corporation, of the same tenor and date as this Warrant but registered in the name of one or more transferees, upon surrender of this Warrant, duly endorsed, to the office or agency of the Corporation described in Section 3.  If this Warrant is Transferred in part, such that the Warrantholder retains the right to acquire Shares upon the exercise hereof, the Corporation shall, without limitation of its obligations set forth in
this clause (A), make and deliver a new warrant to the Warrantholder of the same tenor and date as this Warrant but the number of Shares issuable upon the exercise thereof shall be reduced to give effect to such Transfer.  All expenses (other than stock transfer taxes) and other charges payable in connection with the preparation, execution and delivery of the new warrants pursuant to this Section 8 shall be paid by the Corporation.

 

(B) The Warrantholder may not Transfer this Warrant or any Shares issued upon exercise of this Warrant other than pursuant to an effective registration with the SEC, in a sale exempt from registration under Rule 144 under the Securities
Act, or, in reliance upon an opinion of counsel reasonably acceptable to the Corporation, in any other transaction exempt from registration under the Securities Act.

 

(C) This Warrant and any new warrant certificate issued pursuant to the terms hereof shall contain a legend as set forth below:

 

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.”

 

(D) If the Warrantholder shall determine to Transfer all or any portion of this Warrant, the Corporation shall provide, and shall cause its subsidiaries and their respective officers, employees, representatives and advisors to provide,
to the Warrantholder such reasonable cooperation as the Warrantholder may request in connection therewith, including, without limitation, participating in meetings and due diligence sessions with any prospective transferee and providing to such prospective transferee such information and documentation as such prospective transferee may reasonably request in connection with its consideration of the purchase of the Warrant (or any portion thereof) from the Warrantholder; provided, however,
that the Corporation shall not be required to take, or cause its subsidiaries or their respective officers, employees, representatives or advisors to take, any of the foregoing actions unless and until such prospective transferee shall have executed and delivered to the Corporation a confidentiality agreement in form and substance reasonably satisfactory to the Corporation; provided further, however,
that the Corporation shall not be obligated to provide any confidential information pursuant to this section if the Corporation determines, in its reasonable discretion, that any prospective transferee is a competitor of the Corporation.

 

9. Exchange and Registry of Warrant.  This Warrant is exchangeable, upon the surrender hereof by the Warrantholder to the Corporation, for a new warrant or warrants
of like tenor and representing the right to purchase the same aggregate number of Shares.  The Corporation shall maintain a registry showing the name and address of the Warrantholder as the registered holder of this Warrant.  This Warrant may be surrendered for exchange or exercise, in accordance with its terms, at the office of the Corporation, and the Corporation shall be entitled to rely in all respects, prior to written notice to the contrary, upon such registry.

 

10. Loss, Theft, Destruction or Mutilation of Warrant.  Upon receipt by the Corporation of evidence reasonably satisfactory to it of the loss, theft, destruction
or mutilation of this Warrant, and in the case of any such loss, theft or destruction, upon receipt of a bond, indemnity or security reasonably satisfactory to the Corporation, or, in the case of any such mutilation, upon surrender and cancellation of this Warrant, the Corporation shall make and deliver, in lieu of such lost, stolen, destroyed or mutilated Warrant, a new warrant of like tenor and representing the right to purchase the same aggregate number of Shares as provided for in such lost, stolen, destroyed
or mutilated Warrant.  Notwithstanding the foregoing, so long as this Warrant is held by the Investor or any other member of the Investor Group, in the event of the loss, theft or destruction of this Warrant, the Corporation shall accept from the Investor or any other member of the Investor Group that may hold all or any portion of this Warrant from time to time an unsecured indemnity, and shall not require a bond or other security.

 

11. Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall
not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding day that is a Business Day and, for the avoidance of doubt, if the Expiration Time is not a Business Day, the Expiration Time shall automatically be extended to the first Business Day immediately following the previously scheduled Expiration Date.

 

12. Rule 144 Information.  The Corporation covenants that it will use its commercially reasonable efforts to timely file all reports and other documents required
to be filed by it under the Exchange Act and the rules and regulations promulgated by the SEC thereunder (or, if the Corporation is not required to file such reports, it will, upon the request of the Warrantholder, make publicly available such information as necessary to permit sales pursuant to Rule 144 or Regulation S under the Securities Act), and it will use commercially reasonable efforts to take such further action as the Warrantholder may reasonably request, in each case to the extent required from time
to time to enable the Warrantholder to, subject to the terms set forth in this Warrant and the Warrant Agreement, sell this Warrant and the shares of Common Stock issuable upon exercise hereof without registration under the Securities Act within the limitation of the exemptions provided by (A) Rule 144 or Regulation S under the Securities Act, as such rules may be amended from time to time, or (B) any successor rule or regulation hereafter adopted by the SEC.  Upon the written request of the Warrantholder,
the Corporation will deliver to the Warrantholder a written statement that it has complied with such requirements.

 

13. Adjustments and Other Rights.  The Exercise Price and the number of Shares issuable upon exercise of this Warrant shall be subject to adjustment from time
to time as follows:

 

(A) Stock Splits, Subdivisions, Reclassifications or Combinations. If the Corporation shall (i) declare and pay a dividend or make a distribution on its Common Stock in
shares of Common Stock, (ii) subdivide or reclassify the outstanding shares of Common Stock into a greater number of shares, or (iii) combine or reclassify the outstanding shares of Common Stock into a smaller number of shares, the number of Shares issuable upon exercise of this Warrant at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the Warrantholder after such date shall be entitled
to purchase the number of shares of Common Stock which such holder would have owned or been entitled to receive in respect of the shares of Common Stock subject to this Warrant after such date had this Warrant been exercised immediately prior to such date.  In such event, the Exercise Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be adjusted to the number obtained by dividing (x) the product
of (1) the number of Shares issuable upon the exercise of this Warrant before such adjustment and (2) the Exercise Price in effect immediately prior to the record or effective date, as the case may be, for the dividend, distribution, subdivision, combination or reclassification giving rise to such adjustment by (y) the new number of Shares issuable upon exercise of the Warrant determined pursuant to the immediately preceding sentence.

 

(B) Business Combinations.  In case of any Business Combination, reclassification of Common Stock (other than a reclassification of Common Stock referred to in
Section 13(A)), capital reorganization of the Common Stock or any other transaction or event in which the shares of Common Stock are exchanged for or converted into the right to receive any stock or other securities or property (including cash), and subject to the right of the Warrantholder set forth in Section 15, the Warrantholder’s right to receive Shares upon exercise of this Warrant (with the number of Shares issuable upon exercise of this Warrant being determined, for purposes of this clause (B),
without giving effect to the limitation on exercise set forth in Section 13(H) hereof) shall be converted into the right to exercise this Warrant to acquire the number of shares of stock or other securities or property (including cash) which the Common Stock issuable upon exercise of this Warrant immediately prior to such Business Combination, reclassification, capital reorganization or other transaction or event would have been entitled to receive upon consummation of such Business Combination, reclassification,
capital reorganization or other transaction or event; and in any such case, if necessary, the provisions set forth herein with respect to the rights and interests thereafter of the Warrantholder shall be appropriately adjusted so as to be applicable to the Warrantholder’s right to exercise this Warrant in exchange for any shares of stock or other securities or property (including cash) pursuant to this paragraph.  In determining the kind and amount of stock, securities or the property (including
cash) receivable upon exercise of this Warrant following the consummation of such Business Combination, reclassification, capital reorganization or other transaction or event, if the holders of Common Stock have the right to elect the kind or amount of consideration receivable upon consummation of such Business Combination, reclassification, capital reorganization or other transaction or event, then the Warrantholder shall be deemed to have elected the types and amounts of consideration received by the majority
of all holders of the shares of Common Stock that affirmatively make such an election in connection therewith (or of all such holders if none make an election).

 

(C) Rounding of Calculations; Minimum Adjustments.  All calculations under this Section 13 shall be made to the nearest one-tenth (1/10th) of a cent or to the
nearest one-hundredth (1/100th) of a share, as the case may be.  Any provision of this Section 13 to the contrary notwithstanding, no adjustment in the Exercise Price or the number of Shares into which this Warrant is exercisable shall be made if the amount of such adjustment would be less than $0.01 or one-tenth (1/10th) of a share of Common Stock, but any such amount shall be carried forward and an adjustment with respect thereto shall be made at the time of and together with any subsequent adjustment
which, together with such amount and any other amount or amounts so carried forward, shall aggregate $0.01 or 1/10th of a share of Common Stock, or more.

 

 

 

 

(D) Timing of Issuance of Additional Common Stock Upon Certain Adjustments.  In any case in which the provisions of this Section 13 shall require that an adjustment
shall become effective immediately after a record date for an event, the Corporation may defer until the occurrence of such event (i) issuing to the Warrantholder to the extent it has exercised this Warrant after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such exercise by reason of the adjustment required by such event over and above the shares of Common Stock issuable upon such exercise before giving effect to such adjustment and (ii) paying to
such Warrantholder any amount of cash in lieu of a fractional share of Common Stock; provided, however, that the Corporation upon request shall deliver to such Warrantholder a due bill or other appropriate instrument evidencing such Warrantholder’ s right to receive such additional shares, and such cash, upon the occurrence of the event requiring such adjustment.

 

(E) Other Events.  For so long as the Warrantholder holds this Warrant or any portion thereof, if any event occurs as to which the provisions of this Section 13
are not strictly applicable or, if strictly applicable, would not, in the good faith judgment of the Board of Directors, fairly and adequately protect the purchase rights of the Warrantholder pursuant to this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors shall make such adjustments in the application of such provisions, in accordance with such essential intent and principles, as shall be reasonably necessary, in the good faith opinion of the Board
of Directors, to protect such purchase rights as aforesaid.  The Exercise Price and the number of Shares into which this Warrant is exercisable shall not be adjusted in the event of a change in the par value of the Common Stock.

 

(F) Statement Regarding Adjustments.  Whenever the Exercise Price or the number of Shares into which this Warrant is exercisable shall be adjusted as provided
in this Section 13, the Corporation shall forthwith file at the principal office of the Corporation a statement showing in reasonable detail the facts requiring such adjustment and the Exercise Price that shall be in effect and the number of Shares into which this Warrant shall be exercisable after such adjustment, and the Corporation shall also cause a copy of such statement to be sent by mail, first class postage prepaid, to the Warrantholder at the address appearing in the Corporation’s records.

 

(G) Notice of Adjustment Event.  In the event that the Corporation shall propose to take any action of the type described in this Section 13 or the Corporation
shall declare any cash dividend upon its Common Stock or make any special dividend or other distribution to the holders of its Common Stock, or the Corporation shall offer for subscription pro rata to the holders of its Common Stock any additional shares of stock of any class or other rights, or there shall be any capital reorganization or reclassification of the capital stock of the Corporation, or any Business Combination, the Corporation shall give written notice to the Warrantholder, which notice shall specify
the record date, if any, with respect to any such action and the approximate date on which such action is to take place.  Such notice shall also set forth the facts with respect thereto as shall be reasonably necessary to indicate the effect on the Exercise Price and the number, kind or class of shares or other securities or property which shall be deliverable upon exercise of this Warrant.  In the case of any action which would require the fixing of a record date, such notice shall be given
at least ten (10) days prior to the date so fixed, and in case of all other action, such notice shall be given at least fifteen (15) days prior to the taking of such proposed action.

 

(H) Limitations on Exercise.  Notwithstanding anything to the contrary contained herein, (i) the aggregate number of Shares that may be acquired by the Warrantholder
upon the exercise of this Warrant shall not exceed 19.99% of the number of shares of Common Stock that are issued and outstanding on the Issue Date, provided that the number of Shares referred to in this clause (i) shall be subject to proportional increase or decrease, as applicable, upon the occurrence of any event referred to in Section 13(A) hereof, and (ii) the number of Shares that may be acquired by the Warrantholder upon any exercise of the Warrant shall be limited to the extent necessary to ensure that,
immediately after giving effect to the exercise of this Warrant, the total number of shares of Common Stock owned by the Warrantholder and its Affiliates and any other Person whose ownership of Common Stock would be aggregated with the Warrantholder’s for purposes of Section 13(d) of the Exchange Act, does not exceed 19.99% of the total number of shares of Common Stock that are outstanding immediately after giving effect to such exercise of this Warrant.  Nothing contained in this clause (H) shall
limit the terms set forth in, or the amounts payable to any member of the Investor Group (or, in the case of Section 15, any Warrantholder) pursuant to the terms of, Sections 15 and 16 of this Warrant.

 

(I) Proceedings Prior to Any Action Requiring Adjustment. As a condition precedent to the taking of any action which would require an adjustment pursuant to this Section
13, the Corporation shall take any action which may be necessary, including obtaining regulatory approvals or exemptions, in order that the Corporation may thereafter validly and legally issue as fully paid and nonassessable all shares of Common Stock that the Warrantholder is entitled to receive upon exercise of this Warrant pursuant to this Section 13.

 

(J) Adjustment Rules.  Any adjustments pursuant to this Section 13 shall be made successively whenever an event referred to herein shall occur.  If an
adjustment in Exercise Price made hereunder would reduce the Exercise Price to an amount below the par value of the Common Stock, then such adjustment in the Exercise Price made hereunder shall reduce the Exercise Price to the par value of the Common Stock and then, upon the Corporation’s satisfaction of its obligations under Section 4, to such lower par value as may then be established.

 

(K) No Impairment.  The Corporation will not, by amendment of its certificate of incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but will at all times in good faith assist in the carrying out of all the provisions of this Warrant and in taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholder.

 

14. Certain Issuances of Common Stock or Convertible Securities.  Without the prior written consent of the Warrantholder, other than in Permitted Transactions
(as defined below), or as expressly referred to in Section 13(A), the Corporation shall not issue any shares of Common Stock (or rights or warrants or other securities exercisable or convertible into or exchangeable for shares of Common Stock) (A) without consideration, or (B) at a consideration per share (or having a conversion, exercise or exchange, as applicable, price per share) that is less than 95% of the Market Price on the trading day immediately preceding the date of the execution of the agreement in
respect of the pricing of such shares (or such rights, warrants or other securities) or, if no such pricing event shall occur, on the last trading day immediately preceding the date of the issuance or grant of such shares (or such rights, warrants or other securities); provided, however, that if the Corporation shall undertake a registered underwritten public offering of shares of
Common Stock (or rights or warrants or other securities exercisable or convertible into or exchangeable for shares of Common Stock), the price at which such shares of Common Stock (or rights or warrants or other securities exercisable or convertible into or exchangeable for shares of Common Stock) shall be deemed to have been issued for purposes of this Section 14 will be determined without giving effect to any underwriting discount or selling commission granted or paid, as applicable, to the underwriters in
connection therewith.  For purposes hereof, “Permitted Transactions” shall mean the issuance of shares of Common Stock (i) upon the exercise of stock options or similar equity awards granted by the Corporation pursuant to the terms of an employee benefit plan adopted in the ordinary course of business and consistent with past practice that is approved by the Board of Directors and, if required by applicable law or regulation,
the stockholders of the Corporation, provided that the exercise or similar price of any such stock option or equity award is at least equal to the Market Price on the date of grant of such stock option or equity award, or (ii) in connection with the exercise or conversion, in accordance with the terms set forth therein on the Issue Date, of any securities of the Corporation that are outstanding as of the Issue Date that are exercisable for or convertible into Common Stock and that are disclosed pursuant to the
applicable sections of the Warrant Agreement.

 

15. Business Combination Payment.  In the event of the occurrence of a Business Combination in which the consideration payable to the holders of Common Stock does
not consist exclusively of cash, in lieu of the treatment of this Warrant specified in Section 13(B) hereof, if so elected by the Warrantholder by written notice to the Corporation delivered at least five (5) Business Days prior to the closing of such Business Combination, the Warrantholder’s right to receive stock or other securities or property at or following the closing of such Business Combination upon exercise of this Warrant pursuant to Section 13(B) hereof shall be converted, effective upon the
closing of such Business Combination, into the right to receive a payment from the Corporation in cash equal to the amount obtained by multiplying (i) the number of Shares issuable upon exercise of this Warrant pursuant to Section 2 hereof immediately prior to the consummation of such Business Combination, by (ii) the Business Combination Payment Amount that is applicable to such Business Combination.  The amounts payable by the Corporation pursuant to this Section 15 shall be paid concurrently with
the closing of such Business Combination in U.S. dollars in immediately available funds to such account(s) designated by the Warrantholder in writing to the Corporation.

 

16. Make Whole Payment.  If (i) the Investor or any other member of the Investor Group that may hold all or any portion of the Warrant from time to time shall
Transfer the Warrant, in whole or in part, at any time or from time to time prior to the Expiration Time, to any Person that is not a member of the Investor Group as of the date of such Transfer, (ii) the consideration received by the Investor or such other member of the Investor Group in respect of each share of Common Stock that is issuable upon exercise of that portion of the Warrant that is being Transferred is less than the Spread Value, and (iii) the Investor (or, if applicable, such other member of the
Investor Group) shall have (A) solicited multiple parties in respect of the proposed Transfer of this Warrant (or portion thereof) in good faith, and (B) determined to Transfer this Warrant (or portion thereof) to the party that has proposed terms and conditions that are, in the good faith judgment of the Investor (or, if applicable, such other member of the Investor Group), the most favorable to the Investor (or, if applicable, such other member of the Investor Group) compared to the proposed terms and conditions
proposed by any other party or parties that are solicited (and make a definitive proposal) in connection with the proposed Transfer of this Warrant (or any portion thereof), in all cases taking into account all facts and circumstances that the Investor (or, if applicable, such other member of the Investor Group) determines in good faith to be relevant, including, without limitation, the proposed purchase price for this Warrant (or portion thereof) subject to such Transfer, the manner in which the purchase of
this Warrant (or any portion thereof) by any such party will be financed, the ability of such party to timely consummate the purchase of this Warrant (or portion thereof), and any other legal or regulatory matters that the Investor (or, if applicable, such other member of the Investor Group) may, in good faith, determine to be relevant in connection with the proposed Transfer of this Warrant (or any portion thereof), then the Warrantholder shall be entitled to receive a payment from the Corporation in cash equal
to the amount obtained by multiplying (A) the positive difference, if any, between (x) the Spread Value and (y) the Net Per Share Consideration paid to the Investor or such other member of the Investor Group in connection with such Transfer, by (B) the number of Shares issuable upon exercise of that portion of the Warrant subject to such Transfer (such cash payment is referred to as the “Make Whole Payment”).  The amounts payable
by the Corporation pursuant to this Section 16 shall be paid within five (5) Business Days of the occurrence of such Transfer in U.S. dollars in immediately available funds to such account(s) designated by the Investor (or, if applicable, such other member of the Investor Group) in writing to the Corporation.  It is understood and agreed that if the Transfer of the Warrant occurs in more than one transaction, the Investor (and, if applicable, the other members of the Investor Group) shall be entitled
to the Make Whole Payment with respect to each such transaction in which the Make-Whole Payment is a positive amount, with each such payment to be made within five (5) Business Days of the occurrence of each such Transfer and, if applicable, a new warrant evidencing the remaining shares of Common Stock covered by the portion of the Warrant, if any, not subject to such Transfer shall be issued in the name of the Investor (or, if applicable, the applicable member of the Investor Group) in accordance with the terms
set forth herein.  Notwithstanding anything in this Warrant to the contrary, the rights set forth in this Section 16 are solely for the benefit of the Investor and the other members of the Investor Group (it being agreed that such rights may be Transferred or assigned to any member of the Investor Group in connection with the Transfer of all or any portion of this Warrant to any such member of the Investor Group), and, except as expressly provided in the immediately preceding parenthetical, are not
transferable or assignable in whole or in part to any other Person.

 

 

 

 

17. Governing Law. THIS WARRANT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE
(WITHOUT REGARD TO ITS CONFLICTS OF LAWS PRINCIPLES).

 

18. Waiver of Jury Trial, Consent to Jurisdiction.

 

(A) Waiver of Jury Trial.  THE PARTIES HERETO VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT ANY OF THEM MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION OR OTHER CLAIM ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS WARRANT.

 

(B) Consent to Jurisdiction. Any suit, action or proceeding arising out of or relating to
this Warrant or otherwise to enforce any judgment in respect of any breach under this Warrant may be brought by any party hereto in any federal district court located in Delaware or any Delaware state court as such party may in its sole discretion elect, and by the execution and delivery of this Warrant, the parties hereto irrevocably and unconditionally submit to the non-exclusive in personam jurisdiction of each such court, and each of the parties hereto irrevocably waive and agree not to assert in any proceeding
before any tribunal, by way of motion, as a defense or otherwise, any claim that it is not subject to the in personam jurisdiction of any such court.  In addition, each of the parties hereto irrevocably waive, to the fullest extent permitted by law, any objection that it may now or hereafter have to the laying of venue in any suit, action or proceeding arising out of or relating to this Warrant brought in any such court, and hereby irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.

 

(C) Service of Process.  Each party hereto irrevocably agrees that process personally served or served by registered mail or served in the manner
provided for communications in this Warrant shall constitute, to the extent permitted by law, adequate service of process in any suit, action or proceeding arising out of or relating to this Warrant, or any action or proceeding to execute or otherwise enforce any judgment in respect of any breach hereunder.  Receipt of process so served shall be conclusively presumed as evidenced by a delivery receipt furnished by the postal service or any commercial delivery service.

 

(D) Other Forums.  Nothing herein shall in any way be deemed to limit the ability of any party hereto to serve any writs, process or summonses in any manner permitted
by applicable law or to obtain jurisdiction over any other party hereto in such other jurisdiction, and in such other manner, as may be permitted by applicable law.

 

(E) Credit Agreement Provisions.  Notwithstanding anything contained in this Warrant to the contrary, the terms set forth in this Section 18 and Section 17 shall
not affect or modify the related or similar terms contained in the Credit Agreement (as defined in the Warrant Agreement) or any other instrument or document executed in connection therewith, which shall remain in full force and effect and shall not be affected hereby, it being understood and agreed that in the event of any action, suit, proceeding, claim or similar matter arising under or out of or in connection with the Credit Agreement or such other instruments or documents, the terms set forth in the Credit
Agreement or such other instruments or documents shall control.

 

19. Binding Effect.  This Warrant shall be binding upon any successors or permitted assigns of the Corporation, and, without the prior written consent of the Warrantholder,
the Corporation shall not be permitted to assign any of its rights or obligations under this Warrant except in connection with a Business Combination, and if a Business Combination shall occur, the terms set forth in Section 13(B) hereof (and if, applicable, Section 15 hereof) shall apply with respect thereto and if the Corporation shall not be the continuing entity in such Business Combination, the successor thereto shall assume in a writing delivered to the Warrantholder prior to the consummation thereof (which
writing shall be reasonably satisfactory in form and substance to the Warrantholder) the obligations of the Corporation hereunder.

 

20. Amendments.  This Warrant may be amended and the observance of any term of this Warrant may be waived only with (i) in the case of an amendment, the written
consent of the Corporation and the Warrantholder, and (ii) in the case of a waiver, the Person waiving rights hereunder.

 

21. Prohibited Actions. The Corporation agrees that it will not take any action which would entitle the Warrantholder to an adjustment of the Exercise Price if the total
number of shares of Common Stock issuable after such action upon exercise of this Warrant, together with all shares of Common Stock then outstanding and all shares of Common Stock then issuable upon the exercise of all outstanding options, warrants, conversion and other rights, would exceed the total number of shares of Common Stock then authorized by its certificate of incorporation.

 

22. Notices. All communications hereunder, including any notice, request, instruction or other document to be given hereunder by any party to the other, shall be in writing,
shall be delivered by hand, registered or certified mail (postage prepaid), nationwide overnight courier, or facsimile or other electronic transmission (confirmed by delivery by nationwide overnight courier sent on the day of the sending of such facsimile or other electronic transmission), and (A) if to the Warrantholder, addressed to it at the addresses specified on Schedule I or at such other address as such Warrantholder shall have specified
to the Corporation in writing in accordance with the terms hereof, and (B) if to the Corporation, addressed to it at Bronco Drilling Company, Inc., 16217 North May Avenue, Edmond, Oklahoma 73013, Attention:  D. Frank Harrison (Fax:  (405) 285-9234), with a copy to Thompson & Knight LLP, 333 Clay Street, Suite 3300, Houston, TX  77002, Attention:  William T. Heller IV (Fax:  (832) 397-8071), or at such other address as the Corporation shall have specified to the
Warrantholder in writing in accordance with the terms hereof.  Any notice so addressed shall be deemed to be given:  if delivered by hand, by facsimile or other electronic communication, on the date of such delivery (subject to compliance with the term set forth above in respect of facsimile or other electronic communications); if mailed by national overnight courier, on the first Business Day following the date of such mailing; and if mailed by registered or certified mail, on the second
Business Day after the date of such mailing.

 

23. Multiple Warrantholders.  If, on any date of determination, there shall be more than one Warrantholder as a result of a Transfer of a portion of this Warrant,
then with respect to any consent or approval required of the Warrantholders under the Warrants, such consent or approval shall be binding on all Warrantholders if consented to or approved in writing by the Warrantholder or Warrantholders that own Warrants representing a majority of the Shares issuable upon exercise of all Warrants held by all such Warrantholders as of such date of determination.

 

24. Entire Agreement.  This Warrant (including the forms attached hereto), the Warrant Agreement and the Transaction Documents, contain the entire agreement between
the parties with respect to the subject matter hereof and supersede all prior and contemporaneous arrangements or undertakings with respect thereto, provided that for the avoidance of doubt, nothing contained herein shall affect the terms set forth in the Credit Agreement (as defined in the Warrant Agreement) or the other documents and instruments being executed in connection therewith, all of which shall remain in full force and effect.

 

[Remainder of page intentionally left blank]

 

  

  

  

IN WITNESS WHEREOF, the Corporation has caused this Warrant to be executed in its corporate name by one of its officers thereunto duly authorized all as of the day and year first above written.

 

 

BRONCO DRILLING COMPANY, INC.

 

 

BY: /S/ ZACHARY M. GRAVES

NAME: ZACHARY M. GRAVES

TITLE: CHIEF FINANCIAL OFFICER

ACKNOWLEDGED AND AGREED

AS OF THE DATE FIRST WRITTEN ABOVE

BANCO INBURSA S.A., INSTITUCIÓN DE

BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA

By:  /s/ LUIS R. FRIAS HUMPHREY                                                                

Name:  Luis R. Frias Humphrey

Title:  Attorney in Fact

  

  

  

[FORM OF NOTICE OF EXERCISE]

TO:           Bronco Drilling Company, Inc.

RE:           Election to Purchase Common Stock

The undersigned, pursuant to the provisions set forth in the attached Warrant, hereby agrees to subscribe for and purchase the number of shares of Common Stock set forth below covered by such Warrant.  The undersigned, in accordance with Section 3 of this Warrant, hereby agrees to
pay the aggregate Exercise Price for such shares of Common Stock.  A new warrant evidencing the remaining shares of Common Stock covered by such Warrant, but not yet subscribed for and purchased, if any, should be issued in the name of the holder set forth below.

Number of Shares of Common Stock: __________________

Method of Payment of Exercise Price (note if cash exercise pursuant to Section 3(i) or cashless exercise pursuant to Section 3(ii) of the Warrant): __________________

Aggregate Exercise Price: __________________

Holder: _________________________________

By: ____________________________________

Name: __________________________________

Title: ___________________________________

Date: ___________________________________

  

  

  

SCHEDULE I

 

SCHEDULE OF WARRANTHOLDERS

 

	
Warrantholder

 
	
Address

 
	
Initial Number of Shares Subject to Warrants

 

	
Banco Inbursa S.A., Institucion de Banca Multiple, Grupo Financiero Inbursa
	
Banco Inbursa S.A., Institucion de Banca Multiple, Grupo Financiero Inbursa

Avenida Insurgentes Sur #3500, PB

Colonia Pena Pobre

Delegacion Tlalpan, CP

14060 Mexico D.F.

Mexico

Attention:  Eduardo Valdes Acra

Facsimile:  (52) 55 5520 0525

Confirmation No.:  (52) 55 5325 0505

 

with a copy (which shall not constitute notice) to:

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Attention:  Russell L. Leaf

Facsimile:  (212) 728-8111

Confirmation No.:  (212) 728-8000

 
	
5,440,770exhibit10_5.htm

Exhibit 10.4

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is entered into as of September 18, 2009 by and between Bronco Drilling Company, Inc., a Delaware corporation (the “Company”), and the
person listed on Schedule I hereto (the “Investor”).

 

RECITALS:

 

WHEREAS, the Company has entered into that certain Credit Agreement, dated as of the date hereof, among the Company, as borrower, certain subsidiaries of the Company, as guarantors, and the Investor, as lender and as the issuing bank thereunder (as it may be amended from time to time,
the “Credit Agreement”);

 

WHEREAS, in connection with the Credit Agreement and the transactions contemplated thereby, the Company entered into an agreement with the Investor, dated as of the date hereof (as it may be amended from time to time, the “Warrant
Agreement”) in which the Company agreed to issue to the Investor a detachable warrant (the “Warrant,” which term shall include, for all purposes hereof, any other warrant issued in substitution or exchange therefor, including any such warrant issued in connection with a sale or transfer of the Warrant issued to the Investor on the date hereof) to acquire an aggregate of 5,440,770 shares of the Company’s common stock,
par value $0.01 per share (the “Common Stock”); and

 

WHEREAS, as a condition to the consummation of the transactions contemplated by the Credit Agreement, the parties are entering into this Agreement to provide the Holders (as defined below) with certain registration rights for the Registrable Securities, as further described herein.

 

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

	
1.  
	
REGISTRATION RIGHTS.

 

1.1 Definitions.  For purposes of this Agreement:

 

(a) Business Day.  The term “Business Day” shall have the meaning set forth in the
Warrant Agreement.

 

(b) Holders.  The term “Holders” means, collectively, the Investor and any other
person beneficially owning or owning of record Registrable Securities or any assignee of record of such Registrable Securities to whom rights set forth herein have been duly assigned in accordance with this Agreement (each of whom shall individually be referred to as a “Holder”).  Subject to Section 2.4 of this Agreement, if, on any date of determination, there shall be more than one Holder, then with respect to any consent
or approval required of the Holders under this Agreement, such consent or approval shall be binding on all Holders if consented to or approved in writing by the Holder or Holders that own Registrable Securities representing a majority of the Registrable Securities held by all such Holders as of such date of determination.

 

(c) Law.  The term “Law” means any federal, state, local statute, law (including
common law), ordinance, regulation, rule, code, injunction, judgment, decree, or order of any governmental authority.

 

(d) Registrable Securities.  The term “Registrable Securities” means, collectively:
(i) the Warrant; (ii) any shares of Common Stock issued or issuable upon exercise of the Warrant; (iii) any other shares of Common Stock now owned or hereafter acquired by a Holder; and (iv) any stock of the Company issued as a dividend or other distribution with respect to the securities referred to in clause (i), (ii) or (iii), in each case until the earlier of (a) such time as such securities have been sold pursuant to an effective registration or pursuant to Rule 144 under the Securities Act, or any successor
rule or regulation thereto, or any statute hereafter adopted to replace or to establish the exemption that is now covered by said Rule 144 (“Rule 144”); or (b) such time as (1) the Holder owns less than two percent (2%) of the issued and outstanding shares of Common Stock (after giving effect to the exercise in full of the Warrant and other securities, if any, owned by the Holder that are convertible into or exercisable or exchangeable for shares of Common Stock), and (2) all of the securities of
the Company owned by the Holder may be sold pursuant to the provisions of Rule 144 without limitation as to amount or compliance with the manner of sale requirements thereof.

 

(e) Registration.  The terms “register”, “registration”
and “registered” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the “Securities Act”), and the declaration or ordering of effectiveness of such registration statement.

 

(f) SEC.  The term “SEC” means the U.S. Securities and Exchange Commission or any
successor agency thereto.

 

1.2 Demand Registration.

 

(a) Request by the Holder.  If the Company shall receive at any time following the three (3) month anniversary of the date hereof a written request from any Holder
that the Company file a registration statement under the Securities Act covering the registration of all or any part of the Registrable Securities held by such Holder, provided that the estimated market value of the Registrable Securities to be so registered pursuant to this Section 1.2(a) (together with any other Registrable Securities to be included in such registration pursuant to Section
1.3) is at least $7,500,000 in the aggregate (such requested registration, a “Demand Registration”), then the Company shall, pursuant to Section 1.5, effect the registration under the Securities Act of all Registrable Securities that such Holder requests be registered.  Unless otherwise agreed to in writing by the Holder or Holders initiating any Demand
Registration, other than Registrable Securities held by Holders, no other securities may be included in any Demand Registration, and in no event shall any securities (other than Registrable Securities) be included in any registration if, as a result thereof, the number of Registrable Securities to be included therein will be limited or reduced in any respect.

 

(b) Underwriting.  If any Holder intends to distribute the Registrable Securities covered by its request by means of a registered public offering involving an
underwriting, then such Holder shall so advise the Company as a part of its demand made pursuant to Section 1.2(a).  In such event, such Holder shall select an underwriter that is reasonably acceptable to the Company, and the Company and such Holder shall enter into an underwriting agreement in customary form with such underwriter.

 

(c) Maximum Number of Demand Registrations.  The Holders have the right, in the aggregate, to three (3) Demand Registrations pursuant to this Section
1.2, provided, that the Company will not be obligated to effect more than one Demand Registration in any six (6) month period.

 

(d) Demand Withdrawal.  Any Holder may withdraw its Registrable Securities from a Demand Registration at any time.  The Company shall cease all efforts
to secure registration and such registration nonetheless shall be deemed a Demand Registration, unless the withdrawal is based on the reasonable determination of the Holder or Holders initiating such Demand Registration that there has been, since the date of such request, a material adverse change in the business or prospects of the Company.

 

1.3 Piggyback Registration.

 

(a) Right to Include Registrable Securities.  If the Company shall determine or be required, at any time following the date hereof, to register any of its shares
of Common Stock and file a registration statement with respect thereto under the Securities Act, whether for sale for its own account or for the account of any other person, including for the account of a Holder pursuant to Section 1.2 hereof (other than a registration statement on Form S-4, Form S-8 or any successor or similar form(s), or a registration on any registration form that does not permit the sale of the Registrable Securities), the Company
will:

 

(i) promptly (but in no event less than five (5) Business Days prior to the anticipated filing date) give to the Holders a written notice thereof (which shall include a list of the jurisdictions in which the Company intends to attempt
to qualify such securities under the applicable blue sky or other state securities laws); and

 

(ii) include in such registration (and any related qualification under blue sky laws or other compliance), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests delivered
to the Company by any Holder within five (5) Business Days after receipt of the written notice from the Company described in clause (i) above, except as set forth in Section 1.3(b) or Section 1.3(c) below.

 

(b) Underwriting.  If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise
the Holders as a part of the written notice given pursuant to Section 1.3(a)(i).  In such event, and in the event that any Holder requests to register Registrable Securities pursuant to Section 1.3(a)(ii), such Holder shall enter into an underwriting agreement in customary form with such underwriter; provided,
that such Holder shall only be required to indemnify the underwriters to the extent set forth in Section 1.7(b) hereof; provided, further, that if such Holder disapproves of the terms of the underwriting, such Holder may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

 

-1-

 

 

(c) Reduction in Offering.  If the managing underwriter or underwriters for a registration pursuant to this Section
1.3 advise the Company and the Holders in writing that the dollar amount or number of Registrable Securities which any Holder desires to sell taken together with all other shares of Common Stock or other securities which the Company desires to sell or otherwise include in such registration (including on behalf of third parties) exceeds the maximum dollar amount or maximum number of securities that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution
method or the probability of success of such offering (such maximum dollar amount or maximum number of securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such registration:  (i) first, the shares of Common Stock or other securities that the Company desires to sell for its own account that can be sold without exceeding the Maximum Number of Securities; and (ii) to the extent that
the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities that the Holders desire to sell up to the Maximum Number of Securities, with all Holders having the right to participate therein on a pro rata basis based on the number of Registrable Securities that each such Holder sought to have included therein.

 

(d) Postponement or Termination.  The Company may in its sole discretion postpone or terminate the registration subject to this Section
1.3.

 

1.4 Fees and Expenses.  The Company shall pay all fees and expenses incident to the performance of its obligations hereunder, including without limitation all
filing, registration and qualification fees, printers’ and accounting fees, and expenses and disbursements of counsel for the Company in connection with a registration pursuant hereto. Additionally, the Company shall reimburse the reasonable fees and expenses of one counsel to the Holders within twenty (20) days following the presentation of an invoice to the Company.  Notwithstanding anything herein to the contrary, the Company shall have no obligation to pay any underwriting discounts, selling
commissions or transfer taxes attributable to the Registrable Securities being sold by the Holders, which underwriting discounts, selling commissions and transfer taxes shall be borne solely by the Holders.

 

1.5 Obligations of the Company.  Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, subject to Section
1.3(d), as promptly as possible (or by such earlier deadline as may be specified below):

 

(a) prepare and file with the SEC a registration statement with respect to the Registrable Securities (which shall be, to the extent available, a “shelf ” registration statement (or any comparable or successor form)
providing for the registration and the sale on a continuous or delayed basis of the Registrable Securities pursuant to Rule 415) and use its reasonable best efforts to cause the registration statement to become effective as soon as reasonably practicable; provided, however, that the Company shall have the right to defer any request for registration pursuant to Section
1.2(a) for up to sixty (60) days, if the Company shall furnish to the Holders a certificate signed by the Chief Executive Officer of the Company stating that, in the good faith judgment of the Board of Directors of the Company after consultation with and advice of outside counsel to the Company, it would be materially detrimental to the Company and its stockholders for such a registration statement to be effected at such time; provided, further, however,
that the Company shall not have the right to exercise the right set forth in the immediately preceding proviso more than once in any 365 day period with respect to a request pursuant to Section 1.2(a);

 

(b) cause such registration statement to remain effective for the period of time necessary to permit the Holders to dispose of all of their Registrable Securities, with the timing of such sales to be determined by the Holders in their
sole discretion; provided, however, such period shall not exceed a sum of two (2) years plus any period during which any such disposition is interfered with by any stop order or injunction of the SEC or any governmental agency or court;

 

(c) prior to the filing described above in paragraph (a), furnish to the Holders, no less than five (5) Business Days prior to such filing, copies of the registration statement and any amendments or supplements thereto and any prospectus
forming a part thereof, which documents shall be subject to the review of counsel representing the Holders, and use all reasonable best efforts to reflect in each such document when so filed with the SEC such comments as counsel representing the Holders shall reasonably propose;

 

(d) file any “free writing prospectus” (as defined in Rule 405 under the Securities Act) that is required to be filed with the SEC in accordance with the Securities Act;

 

(e) notify the Holders, promptly after receiving notice thereof, of the time when the registration statement becomes effective or when any amendment or supplement or any prospectus forming a part of the registration statement has been
filed;

 

(f) notify the Holders promptly of any request by the SEC for the amending or supplementing of the registration statement or prospectus or for additional information;

 

(g)  (i) advise the Holders after the Company shall receive notice or otherwise obtain knowledge of the issuance of any order by the SEC preventing or suspending the effectiveness of the registration statement or any amendment thereto
or of the initiation or threatening of any proceeding for that purpose and (ii) promptly use all reasonable best efforts to prevent the issuance, or to obtain its withdrawal at the earliest possible moment, of any stop order with respect to the applicable registration statement or other order suspending the use of any preliminary or final prospectus;

 

(h)  (i) prepare and file with the SEC such amendments and supplements to the registration statement and the prospectus forming a part thereof as may be necessary to keep the registration statement effective for the period of time
necessary to permit the Holders to dispose of all of its Registrable Securities, with the timing of such sales to be determined by the Holders in their sole discretion and (ii) comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the registration statement during such period in accordance with the intended methods of disposition by the Holders set forth in the registration statement;

 

(i) furnish to each Holder such number of copies of the registration statement, each amendment and supplement thereto, the prospectus included in the registration statement (including such preliminary prospectus) and such other documents
as such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities;

 

(j) use its reasonable best efforts to register or qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions as determined by the Holders and the counsel thereto or by the underwriters after
consultation with the Company and the Holders, and do any and all other acts and things that may be reasonably necessary or advisable to enable the Holders to consummate the disposition in such jurisdictions of the Registrable Securities; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this Section 1.5(j) or subject itself to taxation in any such jurisdiction;

 

(k) notify the Holders at any time when a prospectus relating to the Registrable Securities is required to be delivered under the Securities Act, promptly upon the Company’s becoming aware of the happening of any event as a result
of which the applicable registration statement or prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing or, if for any other reason it shall be necessary to amend or supplement such registration statement or prospectus in order to comply with the Securities Act and, in either case as promptly as possible, prepare and
furnish to the Holders a reasonable number of copies of an amended or supplemental prospectus as may be necessary so that, as thereafter delivered to the buyers of the Registrable Securities, such registration statement or prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing or shall effect such compliance;

 

(l) cause senior representatives of the Company to participate in any “road show” or “road shows” reasonably requested by any underwriter of an underwritten or “best efforts” offering;

 

(m) enter into such customary agreements (including an underwriting agreement in customary form and lock-up agreements in customary form, and including provisions with respect to indemnification and contribution in customary form) and
take all such other action, if any, as any Holder or the underwriters shall reasonably request in order to expedite or facilitate the disposition of the Registrable Securities;

 

(n) (i) make available for inspection by each Holder, any underwriter participating in any distribution pursuant to the registration statement and any attorney, accountant or other agent retained by such Holder or any such underwriter
all relevant financial and other records, pertinent corporate documents and properties of the Company reasonably requested by any Holder or any such underwriter, attorney, accountant or agent in connection with the registration statement and (ii) cause the Company’s officers, directors and employees to supply all relevant information reasonably requested by any Holder or any such underwriter, attorney, accountant or agent in connection with the registration statement; and

 

(o) in the case of an underwritten offering, furnish to each Holder a signed counterpart, addressed to the underwriter, of (i) an opinion of counsel for the Company in customary form, dated the effective date of the registration statement
and (ii) a comfort letter from the Company’s independent public accountants in customary form and covering matters of the type customarily covered by an accountant’s comfort letter.

 

1.6 Obligations of the Holders.  Whenever the Company is required to effect the registration of any Registrable Securities under this Agreement, each Holder shall,
as promptly as possible:

 

(a) provide such information (including information regarding such Holder and the intended method of distribution of the Registrable Securities) as may be reasonably requested by the Company or the managing underwriter, if any, in connection
with the preparation of the registration statement, including any amendments or supplements thereto, in order to effect the registration of the Registrable Securities and in connection with the Company’s obligation to comply with federal and applicable state securities laws;

 

-2-

 

 

(b) complete, execute and deliver any and all questionnaires, powers of attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably required by or under the terms of any underwriting agreement or
as reasonably requested by the Company; provided, that the indemnity by any Holder shall cover only the matters set forth in Section 1.7(b) hereof; and

 

(c) upon receipt of any notice from the Company of an event of the kind described in Section 1.5(f) or Section
1.5(k), each Holder shall immediately discontinue disposition of the Registrable Securities pursuant to the registration statement covering such Registrable Securities until such Holder receives the supplemented or amended prospectus contemplated by Section 1.5(f) or Section 1.5(k), and if so directed by the Company, such Holder will deliver to the Company all copies, other
than permanent file copies in such Holder’s possession, of the most recent prospectus covering the Registrable Securities at the time of receipt of such notice.  In the event that the Company shall give any such notice in respect of a Demand Registration, the period during which the applicable registration statement is required to be maintained effective shall be extended by the number of days during the period from and including the date of the giving of such notice to and including the date
when each Holder either receives the copies of the supplemented or amended prospectus contemplated by Section 1.5(f) or Section 1.5(k) or is advised in writing by the Company that the use of the prospectus may be resumed.

 

1.7 Indemnification Relating to Registration.

 

(a) Indemnification by the Company.  The Company shall indemnify and hold harmless each Holder, the officers, directors, members, partners, agents and employees
of such Holder, each person who controls such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), and the officers, directors, members, shareholders, partners, agents and employees of each such controlling person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, actual attorneys’ fees and disbursements), and expenses (collectively, “Losses”), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or any free writing prospectus or any “issuer information”
filed or required to be filed pursuant to Rule 433(d) under the Securities Act or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto and any free writing prospectus or “issuer information,” in light of the circumstances under which they were made) not misleading, except insofar as such Losses arise out of or are based upon any untrue or alleged
untrue statement of a material fact contained in a registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or any free writing prospectus or any “issuer information” filed or required to be filed pursuant to Rule 433(d) under the Securities Act or arise out of or relate to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any
prospectus or supplement thereto and any free writing prospectus or “issuer information,” in light of the circumstances under which they were made) not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished to the Company, in writing, by such Holder expressly for use therein.

 

(b) Indemnification by Holder.  Each Holder shall severally indemnify and hold harmless the Company, its officers and directors and agents, and each other person,
if any, who controls the Company (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) against any and all Losses incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in a registration statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or any free writing prospectus or any “issuer information” filed or required to be filed pursuant
to Rule 433(d) under the Securities Act or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or supplement thereto and any free writing prospectus or “issuer information,” in light of the circumstances under which they were made) not misleading, if the statement or omission was made in reliance upon and in conformity with information furnished in writing to the Company
by such Holder expressly for use therein.

 

(c) Conduct of Indemnification Proceedings.  If any proceeding whatsoever shall be brought or asserted against any person entitled to indemnification under Section
1.7(a) or Section 1.7(b) (an “Indemnified Party”), such Indemnified Party shall promptly notify such other person (the “Indemnifying Party”) in writing, and the Indemnifying Party shall have the right, at its expense, to assume the defense thereof, including the employment of counsel reasonably
satisfactory to the Indemnified Party; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement.  An Indemnified Party shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless:  (i) the Indemnifying Party has agreed
in writing to pay such fees and expenses; (ii) the Indemnifying Party shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such proceeding; or (iii) the named parties to any such proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and counsel to the Indemnified Party shall reasonably believe that a conflict of interest is likely to exist if the same counsel were
to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of separate counsel shall be at the expense of the Indemnifying Party).  The Indemnifying Party shall not be liable for any settlement of any such proceeding
effected without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned.  The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, effect any settlement of any pending proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such proceeding.  Subject to the limitations
set forth above, all reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section 1.7) shall be paid to the Indemnified Party, as incurred, within ten (10) Business Days of written notice thereof to the Indemnifying Party.

 

(d) Contribution.  If the indemnification under Section 1.7(a) or Section
1.7(b) is unavailable to an Indemnified Party or insufficient to hold an Indemnified Party harmless for any Losses, then the Indemnifying Party shall contribute to the amount paid or payable by such Indemnified Party, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of
the Indemnifying Party and Indemnified Party shall be determined by reference to, among other matters, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, the Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission.  The
amount paid or payable by a party as a result of any Losses shall be deemed to include any attorneys’ or other fees or expenses incurred by such party in connection with any proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section 1.7 were available to such party in accordance with its terms.  The parties hereto agree that it would not be just or
equitable if contribution pursuant to this Section 1.7(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph.  The indemnity and contribution agreements contained in this Section 1.7 are in addition to any liability that the Indemnifying
Party may have to the Indemnified Party.

 

(e) Limitation on Holder Liability.  Notwithstanding anything contained in this Section 1.7 or
elsewhere in this Agreement to the contrary, in no event shall any Holder be liable, whether in respect of indemnification, contribution or otherwise, for an amount in excess of the net proceeds paid to such Holder in the registration which is the subject of an indemnification or contribution claim against such Holder pursuant to the terms hereof.

 

(f) Survival.  The obligations of the parties hereto under this Section 1.7 shall survive the
completion of any offering of Registrable Securities in a registration and shall remain in full force and effect, regardless of any termination or cancellation of this Agreement or any investigation made by or on behalf of an Indemnified Party.

 

1.8 Rule 144 Reporting.  With a view to making available the benefits of certain rules and regulations of the SEC which may at any time permit the sale of the
Registrable Securities to the public without registration, the Company agrees to:

 

(a) make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times;

 

(b) file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and

 

(c) so long as any Holder owns any Registrable Securities, furnish to such Holder promptly upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 and of the Securities Act
and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as such Holder may request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any such securities without registration.

 

	
2.  
	
GENERAL PROVISIONS.

 

2.1 Assignment.  This Agreement shall be binding upon the Company, each Holder and their respective successors and permitted assigns.  The Company shall
not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Holders holding at least a majority of the Registrable Securities held by all Holders as of the applicable date of determination.  Any Holder may assign any or all of its rights and obligations under this Agreement to any person to whom such Holder sells or transfers any Registrable Securities, and if any such sale or transfer is for less than all of such Holder’s Registrable Securities, such
Holder shall continue to have the rights set forth herein; provided that (a) the number of Demand Registrations shall not be increased as a result thereof, and (b) no transferee shall be entitled to have the Registrable Securities held by it included in a registration unless such transferee agrees in writing to be bound by this Agreement as if it were a party thereto.

 

-3-

 

 

2.2 Recapitalizations, Exchanges, Etc.  The provisions of this Agreement shall apply to the full extent as set forth herein with respect to (i) the shares of Common
Stock, (ii) any and all shares of Common Stock of the Company into which the shares of Common Stock are converted, exchanged or substituted in any recapitalization or other capital reorganization by the Company, and (iii) any and all equity securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in conversion of, in exchange for or in substitution of, the shares of Common Stock and shall be appropriately
adjusted for any stock dividends, splits, reserves splits, combinations, recapitalizations and the like occurring after the date hereof.  The Company shall cause any successor or assign (whether by merger, consolidation, sale of assets or otherwise) to assume this Agreement or enter into a new registration rights agreement with the Holders on terms substantially the same as this Agreement as a condition of any such transaction.

 

2.3 No Inconsistent Agreements.  The Company will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof.  The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s securities under any agreement in effect on the date hereof.

 

2.4 Amendment and Waiver of Rights.  This Agreement may not be amended, modified or supplemented in any manner, except by an instrument in writing signed on behalf
of the Company and the Holders holding at least a majority of the Registrable Securities held by all Holders as of the applicable date of determination, provided that no amendment hereto shall affect any Holder in a way that is materially adverse to and materially different from its affect on the other Holders generally unless such adversely affected Holder(s) consents thereto in writing.

 

2.5 Waiver.  No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise
of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power.  The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder.  Any agreement on the part of any party to any such waiver shall be valid only if set forth in a written instrument
executed and delivered by a duly authorized officer on behalf of such party.

 

2.6 Notices.  All communications hereunder shall be in writing, shall be delivered by registered or certified mail (postage prepaid), nationwide overnight courier,
or facsimile or other electronic transmission (confirmed by delivery by nationwide overnight courier sent on the day of the sending of such facsimile or other electronic transmission), and (a) if to a Holder that is a party hereto on the date hereof, addressed to it at the addresses specified on Schedule I or at such other address as such Holder shall have specified to the Company in writing in accordance with the terms hereof (provided that if
any other person shall become a Holder hereunder, the notice information shall be provided to the Company and the other parties hereto in connection with such person becoming a Holder), and (b) if to the Company, addressed to it at Bronco Drilling Company, Inc., 16217 North May Avenue, Edmond, Oklahoma 73013, Attention:  D. Frank Harrison (Fax: (405) 285-9234), with a copy to Thompson & Knight LLP, 333 Clay Street, Suite 3300, Houston, TX  77002, Attention:  William T. Heller IV (Fax:  (832)
397-8071), or at such other address as the Company shall have specified to the Holder in writing in accordance with the terms hereof.  Any notice so addressed shall be deemed to be given:  if delivered by hand, by facsimile or other electronic communication, on the date of such delivery (subject to compliance with the term set forth above in respect of facsimile or other electronic communications); if mailed by national overnight courier, on the first Business Day following the date of such
mailing; and if mailed by registered or certified mail, on the second Business Day after the date of such mailing.

 

2.7 Entire Agreement.  This Agreement constitutes the entire understanding and agreement between the parties with regard to the subject matter hereof, and supersedes
any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof; provided, however, that nothing in this Agreement shall be deemed to terminate or supersede the provisions of the Credit Agreement, the Warrant Agreement or the Warrant Certificates (as defined in the Warrant Agreement).

 

2.8 Governing Law.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO ITS
CONFLICTS OF LAWS PRINCIPLES). The terms set forth in Section 5.11 of the Warrant Agreement are incorporated herein by reference and made a party hereof as if set forth herein in their entirety.

 

2.9 Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

2.10 Third Parties.  Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto, each Indemnified Party,
and each of their respective successors and permitted assigns, any rights or remedies under or by reason of this Agreement.

 

2.11 Titles and Headings.  The titles, captions and headings of this Agreement are included for ease of reference only and shall be disregarded in interpreting
or construing this Agreement.  Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits,” respectively, to this Agreement.

 

2.12 Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute
one instrument.

 

2.13 Costs and Attorneys’ Fees.  In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any
transaction contemplated hereunder, the prevailing party shall be entitled to recover all of such party’s reasonable costs and attorneys’ fees and disbursements incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.

 

2.14 Further Assurances.  The parties agree to execute all such further documents and instruments and to take all such further actions as may be reasonably necessary
or appropriate to carry out the purposes and intent of this Agreement.

 

2.15 Signatures by Facsimile or Other Electronic Transmission.  This Agreement may be executed and delivered by facsimile or other electronic transmission and
upon such delivery such signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

 

2.16 Enforcement.  The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached.  Accordingly, each of the parties shall be entitled to specific performance of the terms hereof, including an injunction or injunctions to prevent breaches of this Agreement in addition to any other remedy to which each party is entitled at law or in equity.  Each of the parties further hereby waives (a) any defense in any action for specific performance that a remedy at law would be adequate and (b) any requirement under any law to post
security as a prerequisite to obtaining equitable relief.

 

[Signature page follows.]

 

  

-4-

  

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

 

	  	
BRONCO DRILLING COMPANY, INC.

	  	  
	  	
By: /s/ David C. Treadwell

	  	  
	  	
Name: David C. Treadwell

	  	  
	  	
Title: General Counsel

 

	  	
BANCO INBURSA S.A., INSTITUCIÓN DE BANCA MÚLTIPLE, GRUPO FINANCIERO INBURSA

	  	  
	  	
By: /s/ Luis R. Frias Humphrey

	  	  
	  	
Name:  Luis R. Frias Humphrey

	  	  
	  	
Title:  Attorney in Fact

 

  

-5-

  

SCHEDULE I

 

HOLDERS

 

	
Holders

 
	
Address

 

	
Banco Inbursa S.A., Institucion de Banca Multiple, Grupo Financiero Inbursa
	
Banco Inbursa S.A., Institucion de Banca Multiple, Grupo Financiero Inbursa

Avenida Insurgentes Sur #3500, PB

Colonia Pena Pobre

Delegacion Tlalpan, CP

14060 Mexico D.F.

Mexico

Attention:  Eduardo Valdes Acra

Facsimile:  (52) 55 5520 0525

Confirmation No.:  (52) 55 5325 0505

 

with a copy (which shall not constitute notice) to:

 

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Attention:  Russell L. Leaf

Facsimile:  (212) 728-8111

Confirmation No.:  (212) 728-8000

 

	  	  

 

  

-6-

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