Document:

SECOND AMENDMENT TO THE LOAN AND SECURITY AGREEMENT

 Exhibit 10.3 
  
 SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT 
  
 THIS SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT is dated as of April 22, 2005 (this “Amendment”) by and among
BRONCO DRILLING COMPANY, L.L.C., an Oklahoma limited liability company (together with its successors and assigns, “Bronco”), ELK HILL DRILLING, INC., a Texas corporation (together with its successors and assigns, “Elk Hill”),
WRANGLER EQUIPMENT LLC, an Oklahoma limited liability company (together with its successors and assigns, “Wrangler”; Bronco, Elk Hill and Wrangler, each a “Borrower” and, together, “Borrowers”) and GENERAL ELECTRIC
CAPITAL CORPORATION, a Delaware corporation (together with its successors and assigns, “Lender”). All capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Loan and Security Agreement
dated as of December 26, 2003 (the “Loan Agreement”) among Borrowers and Lender. 
  
 RECITALS 
  
 WHEREAS, Borrowers
and Lender have entered into the Loan Agreement, providing for financing in an original principal amount not to exceed $12,000,000.00; and 
  
 WHEREAS, Borrowers and Lender amended certain provisions of the Loan Agreement in order to increase the maximum principal amount that may be advanced to
Borrowers under the Loan Agreement by an additional $6,000,000.00 pursuant to that certain First Amendment to Loan and Security Agreement dated as of September 24, 2004 (the “First Amendment”) among Borrowers and Lender; and 
  
 WHEREAS, Borrowers and Lender desire to amend certain provisions of the Loan
Agreement (as amended by the First Amendment) in order to increase the maximum principal amount that may be advanced to Borrowers under the Loan Agreement by an additional $7,500,000.00, subject to the terms of this Amendment; and 
  
 WHEREAS, Borrowers and Lender desire to clarify such other terms of the Loan
Documents as provided herein; 
  
 WHEREAS, Borrowers has requested
Lender to waive an Event of Default under the Loan Agreement (as amended by the First Amendment) as provided herein; 
  
 NOW, THEREFORE, for good and valuable considerations, receipt of which is hereby acknowledged and in consideration of the mutual covenants and agreements
hereinafter contained, the parties agree as follows: 
  
 Section 1. Amendments to Loan Agreement. Provided that the terms and conditions hereof are satisfied, Borrowers and Lender hereby amend the following provisions of the Loan Agreement (as amended by the First Amendment):

  
 (a) Exhibit C in the Index of Exhibits and
Schedules is amended from “Form of Term Note” to “Form of Original Term Note.” 
  
 (b) Exhibit I is added to the Index of Exhibits and Schedules as follows: 
  
 Exhibit I - Form of Second Amended and Restated Term Note 
  
 (c) The Transaction Summary is replaced in its entirety with the Transaction Summary attached hereto as
Exhibit A. 
  
 (d) Section 1.1(a) is amended and
restated, in its entirety, as follows: 
  
 (a) Term Loan
Advances. Subject to the terms and conditions of this Agreement, during the Funding Period, Lender agrees to make an advance (each, 

  

 
a “Term Loan Advance”) under the Term Loan to Borrowers on the Closing Date and each Funding Date in the original principal amount specified in the
related Notice of Term Loan Advance; provided, however, the aggregate original principal amount of all Term Loan Advances shall not exceed the Maximum Amount. Unless otherwise consented to by Lender, not more than one Term Loan Advance shall
be funded in any calendar month, and each Term Loan Advance shall be in an original principal amount of at least $2,500,000. Upon the Commitment Termination Date, the obligation of Lender to make Term Loan Advances shall immediately terminate. On or
prior to the Closing Date, Borrowers shall execute and deliver to Lender the Original Term Note, which shall evidence the Loan. On or prior to the Amendment Date, Borrowers shall execute and deliver to Lender the Amended Term Note, which shall amend
and restate, in its entirety, the Original Term Note and which shall evidence the Loan. On or prior to the Second Amendment Date, Borrowers shall execute and deliver to Lender the Term Note, which shall amend and restate, in its entirety, the
Amended Term Note and which shall evidence the Loan. The Loan shall be repayable in accordance with the terms of the Term Note and this Agreement. Borrowers’ obligation to repay the Loan shall commence on the Closing Date. 
  
 (e) Section 1.3 is amended and restated, in its entirety, as
follows: 
  
 1.3. Use of Proceeds.
Borrowers shall use the proceeds of the Loan (a) with respect to the first Term Loan Advances in the aggregate original principal amount of $12,000,000 of the Maximum Amount to refinance on the Closing Date certain outstanding Indebtedness, to
refurbish drilling rigs and for working capital and other general corporate purposes, (b) with respect to the next Term Loan Advances in the aggregate original principal amount of $6,000,000 of the Maximum Amount, to refurbish additional drilling
rigs and for working capital and other general corporate purposes relating to the drilling rigs and deployment thereof and (c) with respect to the remaining Term Loan Advances in the aggregate original principal amount of $7,500,000 of the Maximum
Amount, to refurbish additional drilling rigs and for working capital and other general corporate purposes relating to the drilling rigs and deployment thereof. 
  
 (f) The following definitions are added to Schedule A: 
  
 “Amended Term Note” means the promissory note of Borrowers dated
the Amendment Date, substantially in the form of Exhibit H. 
  
 “Second Amendment Date” means April 22, 2005, which date shall be the date of the Term Note and which date shall constitute a Funding Date hereunder. 
  
 (g) The definition of “Amendment Date” in Schedule A is amended and restated, in its entirety, as
follows: 
  
 “Amendment Date” means September 24, 2004,
which date shall be the date of the Amended Term Note and which date shall constitute a Funding Date hereunder. 
  

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 (h) The definition of “Loan Documents” in Schedule A is amended and restated,
in its entirety, as follows: 
  
 “Loan Documents” means
this Agreement, the Original Term Note, the Amended Term Note, the Term Note, the Financial Statements, each Power of Attorney, each Pay Proceeds Letter and the other documents and instruments listed in Schedule D, and all security agreements,
mortgages and all other documents, instruments, certificates, amendments, restatements, modifications and notices at any time delivered by any Person (other than Lender) in connection with any of the foregoing. 
  
 (i) The definition of “Maximum Amount” in Schedule
A is amended by replacing “$18,000,000.00” with “$25,500,000.00.” 
  
 (j) The definition of “Stated Expiry Date” in Schedule A is amended to replace “March 24, 2005” with “September
30, 2005.” 
  
 (k) The definition of
“Stated Maturity Date” in Schedule A is amended to replace “April 1, 2010” with “October 1, 2010.” 
  
 (l) The definition of “Term Note” in Schedule A is amended and restated, in its entirety, as follows: 
  
 “Term Note” means the promissory note of Borrowers dated the
Second Amendment Date, substantially in the form of Exhibit I, and any renewals, extensions, revisions, modifications or replacements therefor or thereof. 
  
 (m) Section 1 of Schedule C is amended and restated, in its entirety, as follows: 
  
 1. CLOSING FEE: A non-refundable closing fee of (a) 1.50% of
$12,000,000.00, payable and fully earned on the Closing Date, (b) 1.50% of $6,000,000.00, payable and fully earned on the Amendment Date and (c) 1.50% of $7,500,000.00, payable and fully earned on the Second Amendment Date (collectively, the
“Closing Fee”). 
  
 (n) Section 2 of
Schedule C is amended and restated, in its entirety, as follows: 
  
 2. PREPAYMENT FEE: “Prepayment Fee” means: 
  
 (a) with respect to any acceleration or prepayment of the first Term Loan Advances in the aggregate original principal amount of $12,000,000 of the Maximum Amount of the Loan, an amount equal to the sum (i) the
principal amount to be prepaid on the date of prepayment multiplied by (b)(i) 3.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the Second Amendment Date and on or before the first anniversary of
the Second Amendment Date, (ii) 2.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the first anniversary of the Second Amendment Date and on or before the second anniversary of the Second Amendment
Date, (iii) 1.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the second anniversary of the Second Amendment Date and on or before the third anniversary of the Second Amendment Date or (iv) 0.0%
if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the third anniversary of the Second Amendment Date; 
  

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 (b) with respect to any acceleration or prepayment of the next Term Loan Advances in the
aggregate original principal amount of $6,000,000 of the Maximum Amount of the Loan, an amount equal to the sum (i) the principal amount to be prepaid on the date of prepayment multiplied by (b)(i) 3.0% if prepayment shall occur (voluntarily by
Borrowers, upon an Event of Default or otherwise) after the Second Amendment Date and on or before the first anniversary of the Second Amendment Date, (ii) 2.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or
otherwise) after the first anniversary of the Second Amendment Date and on or before the second anniversary of the Second Amendment Date, (iii) 1.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after
the second anniversary of the Second Amendment Date and on or before the third anniversary of the Second Amendment Date or (iv) 0.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the third
anniversary of the Second Amendment Date; and 
  
 (c) with respect to any acceleration or prepayment of the remaining Term Loan Advances in the aggregate original principal amount of $7,500,000 of the Maximum Amount of the Loan, an amount equal to the sum (i) the principal amount to be
prepaid on the date of prepayment multiplied by (b)(i) 3.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the Second Amendment Date and on or before the first anniversary of the Second Amendment
Date, (ii) 2.0% if prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the first anniversary of the Second Amendment Date and on or before the second anniversary of the Second Amendment Date, (iii) 1.0% if
prepayment shall occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the second anniversary of the Second Amendment Date and on or before the third anniversary of the Second Amendment Date or (iv) 0.0% if prepayment shall
occur (voluntarily by Borrowers, upon an Event of Default or otherwise) after the third anniversary of the Second Amendment Date. 
  
 In the event of a prepayment of less than the entire outstanding principal balance of the Loan made in accordance with the terms of this Agreement, such
prepayment shall applied to the Term Loan Advances in the same order in which the Term Loan Advances have been made, and the Prepayment Fee thereon shall be calculated in accordance with such order of prepayment. 
  
 Each Borrower acknowledges and agrees that (i) it would be difficult or
impractical to calculate Lender’s actual damages from prepayment for any reason pursuant to Section 1.2(c) or Section 7.2, (ii) the Prepayment Fees provided above are intended to be fair and reasonable approximations of such damages and (iii)
the Prepayment Fees are not intended to be penalties. 
  
 (o) Exhibit G is replaced in its entirety with the Form of Notice of Term Loan Advance attached hereto as Exhibit B. 
  
 (p) The Form of Second Amended and Restated Term Note attached hereto as Exhibit C is added to the Loan Agreement as Exhibit I.

  
 Section 2. Waiver of Event of Default.
(a) Pursuant to Section 5(b) of the Loan Agreement (as amended by the First Amendment), Borrowers have covenanted not to create, incur, assume or permit to exist any Indebtedness, except (i) the Obligations and (ii) Indebtedness existing as of the
Closing Date set forth in Disclosure 

  

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Schedule 5(b) to the Loan Agreement. Bronco has incurred Indebtedness to Solitair LLC (“Solitair”) in a maximum amount of $5,000,000 (the
“Solitair Loan”) in violation of Section 5(b) of the Loan Agreement (as amended by the First Amendment), and such violation is an Event of Default under the Loan Agreement (as amended by the First Amendment) (herein, the “Indebtedness
Default”). 
  
 (b) Borrowers have requested
a waiver of the Indebtedness Default and have requested Lender to permit Bronco and Solitair to increase the Solitair Loan to a maximum amount of $15,000,000. 
  

(c) Subject to the satisfaction of the conditions precedent set forth in Section 3 of this Amendment, Lender agrees (i) to waive the
Indebtedness Default and (ii) to permit Bronco and Solitair to increase the Solitair Loan to a maximum amount of $15,000,000. 
  
 Section 3. Conditions Precedent. Lender’s agreement to increase the Maximum Amount, to enter into this Amendment, to waive the
Indebtedness Default and to permit Bronco and Solitair to increase the Solitair Loan to a maximum amount of $15,000,000 shall be subject to the condition precedent that Lender shall have received all of the following, each in form and substance
acceptable to Lender: 
  
 (a) This Amendment,
properly executed on behalf of Borrowers; 
  
 (b)
The Second Amended and Restated Term Note dated as of the date hereof (the “Second Amended Note”), property executed on behalf of Borrowers; 
  
 (c) The Notice of Term Loan Advance dated as of the date hereof (the “Advance”), properly completed and executed on behalf of
Borrowers; 
  
 (d) The Pay Proceeds Letter dated
as of the date hereof (the “Pay Proceeds Letter”), properly executed on behalf of Borrowers; 
  
 (e) A certificate of the Secretary or an Assistant Secretary of each Borrower, certifying as to: (i) the resolutions or consent of the
members of such Borrower authorizing the execution, delivery and performance of this Amendment, the Second Amended Note, the Advance, the Pay Proceeds Letter and any related documents; (ii) the currency and accuracy of the organizational documents
of such Borrower delivered on the Closing Date; and (iii) the signatures of the officers or agents of such Borrower authorized to execute and deliver this Amendment, the Second Amended Note, the Advance, the Pay Proceeds Letter and other
instruments, agreements and certificates on behalf of such Borrower; 
  
 (f) A Debt Subordination Agreement executed on behalf of Solitair LLC and acknowledged by Bronco. 
  
 (g) A Certificate of Good Standing issued as to each Borrower by the Secretary of the State of the state of such Borrower’s
organization not more than 10 days prior to the date hereof; 
  
 (h) An opinion of counsel to Borrowers, addressed to Lender; 
  
 (i) Current searches of appropriate filing offices showing that (i) no state or federal tax Liens or judgment Liens have been filed and
remain in effect against any Borrower and (ii) no financing statements have been filed and remain in effect against any Borrower relating to the Collateral except those financing statements filed by Lender and except those financing statements
evidencing Liens described on Disclosure Schedule 5(e). 
  
 (j) All Lien terminations, releases, amendments and certificates requested by Lender. 
  
 (k) Payment to Lender of the additional Closing Fee in the amount of $112,500.00; 
  

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 (l) Payment to Lender of all fees and expenses of its counsel; and 
  
 (m) Any other items required by Lender. 
  
 Section 4. Representations, Warranties and Covenants of
Borrowers. Each Borrower represents, warrants and covenants for the benefit of Lender that: 
  
 (a) Except as modified herein, the representations and warranties of each Borrower contained in the Loan Agreement are true and correct on
and as of the Second Amendment Date as though made on and as of the Second Amendment Date. 
  
 (b) The execution, delivery and performance by each Credit Party of this Amendment, the Second Amended Note, the Advance, the Pay Proceeds
Letter and the related documents to which it is a party: (a) are and will continue to be within such Credit Party’s power and authority; (b) have been and will continue to be duly authorized by all necessary or proper action; (c) are not and
will not be in violation of any Requirement of Law or Contractual Obligation of such Credit Party; (d) do not and will not result in the creation or imposition of any Lien (other than Permitted Encumbrances) upon any of the Collateral; and (e) do
not and will not require the consent or approval of any Governmental Authority or any other Person. 
  
 (c) As of the Second Amendment Date, each of this Amendment, the Second Amended Note, the Advance, the Pay Proceeds Letter and the related
documents shall have been duly executed and delivered on behalf of each Credit Party thereto, and each of this Amendment, the Second Amended Note, the Advance, the Pay Proceeds Letter and the related documents upon such execution and delivery shall
be and will continue to be a legal, valid and binding obligation of such Credit Party, enforceable against it in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency and other similar laws affecting
creditors’ rights generally. 
  
 (d) The
description of the Indebtedness Default in Section 2(a) above is true and accurate. 
  
 Section 5. Miscellaneous. 
  
 (a) This Amendment can be waived, modified, amended, terminated or discharged only explicitly in a writing signed by Lender. A waiver
signed by Lender shall be effective only in the specific instance and for the specific purpose given. Mere delay or failure to act shall not preclude the exercise or enforcement of any of Lender’s rights or remedies. 
  
 (b) The obligation of Borrowers to make the payments
required under the Loan Agreement, as amended by the First Amendment and as further amended by the terms hereof, and to make any payments due hereunder and thereunder and to perform and observe the covenants and agreements contained herein and
therein shall be absolute and unconditional in all events, without abatement, diminution, deduction, setoff or defense for any reason, including (without limitation) any accident, condemnation, destruction or unforeseen circumstances.
Notwithstanding any dispute between or among any Borrower and Lender, Borrowers shall make all payments when due and shall not withhold any payments pending final resolution of such dispute, nor shall any Borrower assert any right of set-off or
counterclaim against its obligation to make such payments required hereunder and under the Loan Agreement, as amended by the First Amendment and as further amended by the terms hereof. 
  
 (c) This Amendment shall be binding upon and inure to the benefit of Borrowers and Lender and their
respective heirs, representatives, successors and assigns and shall take effect when signed by Borrowers and Lender. 
  
 (d) This Amendment shall be governed by the substantive laws of the State of New York, without giving effect to the conflicts of laws
principles thereof. 
  

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 (e) The Loan Agreement (as amended by the First Amendment) and this Amendment together
constitute the “Loan Agreement” under the Loan Documents, and all references to the Loan Agreement in the Loan Documents shall be deemed to refer to both the Loan Agreement (as amended by the First Amendment) and this Amendment. Borrowers
hereby ratify and confirm that all terms and conditions of the Loan Agreement and all other Loan Documents are in full force and effect, subject to no defense, setoff or counterclaim. 
  
 (f) If any provision or application of this Amendment is held unlawful or unenforceable in any respect, such
illegality or unenforceability shall not affect other provisions or applications which can be given effect and this Amendment shall be construed as if the unlawful or unenforceable provision or application had never been contained herein or
prescribed hereby. 
  
 (g) This Amendment may be
executed in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart, provided that, with respect
to this Amendment, only the original marked “ORIGINAL: 1 OF 2” on the execution page thereof shall constitute chattel paper under the UCC. 
  
 (h) BORROWERS AND LENDER HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF, DIRECTLY OR INDIRECTLY, THIS AMENDMENT, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN BORROWER AND LENDER RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT OR ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP
THAT IS BEING ESTABLISHED BETWEEN BORROWER AND LENDER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AMENDMENT, ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY THIS AMENDMENT OR ANY RELATED TRANSACTIONS. IN THE EVENT OF LITIGATION, THIS AMENDMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT. 
  
 (i) Borrowers agree and
acknowledge as follows: 
  
 (i) The Obligations
of Bronco, Elk Hill and Wrangler (each, a “Co-Borrower”) under each Loan Document are joint and several. Each reference to the term “Borrowers” in each Loan Document shall be deemed to refer to each Co-Borrower; each
representation and warranty made by Borrowers in any Loan Document shall be deemed to have been made by each Co-Borrower; each covenant and undertaking on the part of Borrowers under each Loan Document shall be deemed individually applicable with
respect to each Co-Borrower; and each event constituting an Event of Default under this Amendment shall be determined with respect to each Co-Borrower. A separate action or actions may be brought and prosecuted against any Co-Borrower whether an
action is brought against any other Co-Borrower or whether any other Co-Borrower is joined in any such action or actions. Each Co-Borrower waives any right to require Lender to: (A) proceed against any other Co-Borrower; (B) proceed against or
exhaust any security held from any other Co-Borrower; or (C) pursue any other remedy in Lender’s power whatsoever. Notices under any Loan Document required to be provided to Borrowers shall be effective if provided to any Co-Borrower. Any
consent on the part of Borrowers under any Loan Document shall be effective when provided by any Co-Borrower, and Lender shall be entitled to rely upon 

  

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any notice or consent given by any Co-Borrower as being notice or consent given by Borrowers hereunder. 
  
 (ii) In the event any obligation of Borrowers under any Loan
Document is deemed to be an agreement by any Co-Borrower to answer for the debt or default of another Co-Borrower or as a hypothecation of property as security therefor, each Co-Borrower represents and warrants that: (A) no representation has been
made to it as to the creditworthiness of any other Co-Borrower and (B) it has established adequate means of obtaining from each other Co-Borrower on a continuing basis, financial or other information pertaining to each other Co-Borrower’s
financial condition. Except as otherwise provided in the Loan Documents, each Co-Borrower expressly waives diligence, demand, presentment, protest and notice of every kind and nature whatsoever, consents to the taking by Lender of any additional
security in which either Co-Borrower has an interest for the Obligations, or the alteration or release in any manner of any security now or hereafter held in connection with any obligations under any Loan Document, and consents that Lender and any
Co-Borrower may deal with each other in connection with said obligations or otherwise, or alter any contracts now or hereafter existing between them, in any manner whatsoever, including, without limitation, the renewal, extension, acceleration,
changes in time for payment, and increases or decreases in any rent, rate of interest or other amounts owing, all without in any way altering the liability of any Co-Borrower, or affecting any security for such obligations. Upon the occurrence of an
Event of Default, Lender is hereby expressly given the right, at its option, to proceed in the enforcement of such Obligations or Loan Document independently of any other remedy or security it may at any time hold in connection with such Obligations
and it shall not be necessary for Lender to proceed upon or against and/or exhaust any other security or remedy before proceeding to enforce its rights against any Co-Borrower. Each Co-Borrower further waives any right of subrogation, reimbursement,
exoneration, contribution, indemnification, setoff or other recourse in respect of sums paid to Lender by any Co-Borrower. 
  
 [REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS] 
  

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 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the above date.

  

			
	 BORROWERS:

	
	 BRONCO DRILLING COMPANY, L.L.C.

		
	By	 	 /s/ PAUL JACOBI

	 Name 
	 	 Paul Jacobi

	 Title 
	 	 Vice President

	
	 ELK HILL DRILLING, INC.

		
	By	 	 /s/ PAUL JACOBI

	 Name 
	 	 Paul Jacobi

	 Title 
	 	 Vice President

	
	 WRANGLER EQUIPMENT LLC

		
	By	 	 /s/ PAUL JACOBI

	 Name 
	 	 Paul Jacobi

	 Title 
	 	 Vice President

	
	 LENDER:

	
	 GENERAL ELECTRIC CAPITAL CORPORATION

		
	By	 	 /s/ ERIC A. SCHAFER

	 Name 
	 	 Eric A. Schafer

	 Title 
	 	 Duly Authorized Signatory

  
 ORIGINAL:
     OF 2 
  
 [EXECUTION PAGE OF
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT]BUSINESS LOAN AGREEMENT

 Exhibit 10.4 
  
 BUSINESS LOAN AGREEMENT 
  

													
	 Principal
 $3,000,000.00
	 	 Loan Date
 01-01-2005
	 	 Maturity
 11-01-2005
	 	 Loan No
 1600164021
	 	Call / Call	 	Account	 	 Officer /
Initial
 SPR

	 References in the shaded area are
for Lender’s use only and do not limit the applicability of this document to any particular loan or item.
 Any item above containing
“***” has been omitted due to text length limitations.

  

							
	Borrower:	  	 BRONCO DRILLING COMPANY, L.L.C. (TIN:
 73-1616152)
 14313 N. MAY AVENUE, SUITE 100
 OKLAHOMA
CITY, OK 73134
	  	Lender:	  	 International Bank of Commerce
 Energy Lending

3601 N.W. 63rd Street
 Oklahoma City, OK 73116
 (405) 841-2179

  
 THIS BUSINESS LOAN AGREEMENT dated January 1, 2005, is made and executed between BRONCO DRILLING COMPANY, L.L.C. (“Borrower”) and International Bank of Commerce (“Lender”) on the following terms
and conditions. Borrower has received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other financial accommodations, including those which may be described on any exhibit or schedule attached to this
Agreement (“Loan”). Borrower understands and agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s representations, warranties, and agreements as set forth in this Agreement; (B) the
granting, renewing, or extending of any Loan by Lender at all times shall be subject to Lender’s sole judgment and discretion; and (C) all such Loans shall be and remain subject to the terms and conditions of this Agreement. 
  
 TERM.  This Agreement shall be effective as of January 1, 2005, and shall
continue in full force and effect until such time as all of Borrower’s Loans in favor of Lender have been paid in full, including principal, interest, costs, expenses, attorneys’ fees, and other fees and charges, or until November 1, 2005.

  
 CONDITIONS PRECEDENT TO EACH ADVANCE.  Lender’s
obligation to make the initial Advance and each subsequent Advance under this Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in this Agreement and in the Related Documents. 

 
 Loan Documents.  Borrower shall provide to Lender the
following documents for the Loan: (1) the Note; (2) Security Agreements granting to Lender security interests in the Collateral; (3) financing statements and all other documents perfecting Lender’s Security Interests; (4) evidence of insurance
as required below; (5) guaranties; (6) together with all such Related Documents as Lender may require for the Loan; all in form and substance satisfactory to Lender and Lender’s counsel. 
  
 Borrower’s Authorization.  Borrower shall have
provided in form and substance satisfactory to Lender properly certified resolutions, duly authorizing the execution and delivery of this Agreement, the Note and the Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its counsel, may require. 
  
 Payment of Fees and Expenses.  Borrower shall have paid to Lender all fees, charges, and other expenses which are then due and payable as specified in this Agreement or any Related Document.

  
 Representations and Warranties.  The
representations and warranties set forth in this Agreement, in the Related Documents, and in any document or certificate delivered to Lender under this Agreement are true and correct. 
  
 No Event of Default.  There shall not exist at the time of any Advance a condition which would constitute
an Event of Default under this Agreement or under any Related Document. 
  
 REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to Lender, as of the date of this Agreement, as of the date of each disbursement of loan proceeds, as of the date of any renewal, extension or modification
of any Loan, and at all times any Indebtedness exists: 
  
 Organization.  Borrower is a limited liability company which is, and at all times shall be, duly organized, validly existing, and in good standing under and by virtue of the laws of the State of Oklahoma Borrower has the
full power and authority to own its properties and to transact the business in which it is presently engaged or presently proposes to engage. Borrower maintains an office at 14313 N. M. AVENUE, SUITE 100, OKLAHOMA CITY, OK 73134. Unless Borrower has
designated otherwise in writing, the principal office is the office at which Borrower keeps its books and records including its records concerning the Collateral. Borrower will notify Lender prior to any change in the location of Borrower’s
state of organization or any change in Borrower’s name. Borrower shall do all things necessary to preserve and to keep in full force and effect its existence, rights and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority or court applicable to Borrower and Borrower’s business activities. 
  
 Assumed Business Names.  Borrower has filed or recorded all documents or filings required by law relating to all assumed business names
used by Borrower. Excluding the name of Borrower, the following is a complete list of all assumed business names under which Borrower does business: None. 
  
 Authorization.  Borrower’s execution, delivery, and performance of this Agreement and all the Related Documents have been duly
authorized by all necessary action by Borrower and do not conflict with, result in a violation of, or constitute a default under (1) any provision of (a) Borrower’s articles of organization or membership agreements, or (b) any agreement or
other instrument binding upon Borrower or (2) any law, governmental regulation, court decree, or order applicable to Borrower or to Borrower’s properties. 
  

Financial Information.  Each of Borrower’s financial statements supplied to Lender truly and completely disclosed Borrower’s
financial condition as of the date of the statement, and there has been no material adverse change in Borrower’s financial condition subsequent to the date of the most recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements. 
  
 Legal Effect.  This Agreement constitutes, and any instrument or agreement Borrower is required to give under this Agreement when delivered will constitute legal, valid, and binding obligations of
Borrower enforceable against Borrower in accordance with their respective terms. 
  
 Properties.  Except as contemplated by this Agreement or as previously disclosed in Borrower’s financial statements or in writing to Lender and as accepted by Lender, and except for property tax
liens for taxes not presently due and payable, Borrower owns and has good title to all of Borrower’s properties free and clear of all Security Interests, and has not executed any security documents or financing statements relating to such
properties. All of Borrower’s properties are titled in Borrower’s legal name, and Borrowers has not used or filed a financing statement under any other name for at least the last five (5) years. 
  
 Hazardous Substances.  Except as disclosed to and
acknowledged by Lender in writing, Borrower represents and warrants that: (1) During the period of Borrower’s ownership of Borrower’s Collateral, there has been no use, generation, manufacture, storage, treatment, disposal, release or
threatened release of any Hazardous Substance by any person on, under, about or from any of the Collateral. (2) Borrower has no knowledge of, or reason to believe that there has been (a) any breach or violation of any Environmental Laws; (b) any
use, generation, manufacture, storage, treatment, disposal, release or threatened release of any Hazardous Substance on, under, about or from the Collateral by any prior owners or occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters. (3) Neither Borrower nor any tenant, contractor, agent or other authorized user of any of the Collateral shall use, generate, manufacture, store, treat, dispose of or release
any Hazardous Substance on, under, about or from any of the Collateral; and any such activity shall be conducted in compliance with all applicable federal, state, and local laws, regulations, and ordinances, including without limitation all
Environmental Laws. Borrower authorizes Lender and its agents to enter upon the Collateral to make such inspections and tests as Lender may deem appropriate to determine compliance of the Collateral with this section of the Agreement. Any
inspections or tests made by Lender shall be at Borrower’s expense and for Lender’s purposes only and shall not be construed to create any responsibility or liability on the part of Lender to Borrower or to any other person. The
representations and warranties contained herein are based on Borrower’s due diligence in investigating the Collateral for hazardous waste and Hazardous Substances. Borrower hereby (1) releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify and hold harmless Lender against any and all claims, losses, liabilities, damages, penalties, and expenses
which Lender may directly or indirectly sustain or suffer resulting from a breach of this section of the Agreement or as a consequence of any use, generation, manufacture, storage, disposal, release or threatened release of a hazardous waste or
substance on the Collateral. The provisions of this section of the Agreement, including the obligation to indemnify, shall survive the payment of the Indebtedness and the termination, expiration or satisfaction of this Agreement and shall not be
affected by Lender’s acquisition of any interest in any of the Collateral, whether by foreclosure or otherwise. 
  
 Litigation and Claims.  No litigation, claim, investigation, administrative proceeding or similar action (including those for unpaid
taxes) against Borrower is pending or threatened, and no other event has occurred which may materially adversely affect Borrower’s financial condition or properties, other than litigation, claims, or other events, if any, that have been
disclosed to and acknowledged by Lender in writing. 
  
 Taxes.  To the best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed, have been 

 BUSINESS LOAN AGREEMENT 

					
	Loan No: 1600164021	 	(Continued)	  	Page 2

  

  
 filed, and all taxes, assessments and other governmental charges have been paid in full, except those presently being or to
be contested by Borrower in good faith in the ordinary course of business and for which adequate reserves have been provided. 
  
 Lien Priority.  Unless otherwise previously disclosed to Lender in writing, Borrower has not entered into or granted any Security
Agreements, or permitted the filing or attachment of any Security Interests on or affecting any of the Collateral directly or indirectly securing repayment of Borrower’s Loan and Note, that would be prior or that may in any way be superior to
Lender’s Security Interests and rights in and to such Collateral. 
  
 Binding Effect.  This Agreement, the Note, all Security Agreements (if any), and all Related Documents are binding upon the signers thereof, as well as upon their successors, representatives and assigns, and are legally
enforceable in accordance with their respective terms. 
  
 AFFIRMATIVE
COVENANTS. Borrower covenants and agrees with Lender that, so long as this Agreement remains in effect, Borrower will: 
  
 Notices of Claims and Litigation.  Promptly inform Lender in writing of (1) all material adverse changes in Borrower’s financial
condition, and (2) all existing and all threatened litigation, claims, investigations, administrative proceedings or similar actions affecting Borrower or any Guarantor which could materially affect the financial condition of Borrower or the
financial condition of any Guarantor. 
  
 Financial
Records.  Maintain its books and records in accordance with GAAP, applied on a consistent basis, and permit Lender to examine and audit Borrower’s books and records at all reasonable times. 
  
 Financial Statements.  Furnish Lender with the following:

  
 Additional Requirements.  WITHIN 60 DAYS OF
EACH QUARTER-END, BORROWER SHALL PROVIDE LENDER WITH A FINANCIAL STATEMENT. FINANCIAL STATEMENTS SHALL BE PREPARED IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPAL (“GAAP”) CONSISTENTLY APPLIED. 
  
 WITHIN 60 DAYS OF EACH QUARTER-END, BORROWER SHALL REPORT ITS COMPLIANCE
WITH THE FINANCIAL COVENANTS AND RATIOS SET FORTH IN THE ATTACHED COVENANT COMPLIANCE CERTIFICATE. (EXHIBIT “A”). 
  
 WITHIN 90 DAYS OF EACH FISCAL YEAR-END, GUARANTORS, TAURUS INVESTORS, LLC AND WEXFORD PARTNERS VI, L.P., SHALL PROVIDE LENDER WITH A FINANCIAL STATEMENT
PREPARED IN ACCORDANCE WITH GAAP AND AUDITED BY AN INDEPENDENT FIRM OF CERTIFIED PUBLIC ACCOUNTS ACCEPTABLE TO LENDER. 
  
 WITHIN 30 DAYS OF EACH MONTH-END, BORROWER SHALL PROVIDE LENDER WITH A DETAILED AGING OF ACCOUNTS RECEIVABLE AND A BORROWING BASE CERTIFICATE (EXHIBIT
“B”) DEMONSTRATING COMPLIANCE HEREWITH. 
  
 All
financial reports required to be provided under this Agreement shall be prepared in accordance with GAAP, applied on a consistent basis, and certified by Borrower as being true and correct. 
  
 Additional Information.  Furnish such additional
information and statements, as Lender may request from time to time. 
  
 Financial Covenants and Ratios.  Comply with the following covenants and ratios: 
  
 Other Requirements.  BORROWER WILL PAY ALL LEGAL AND OTHER REASONABLE OUT-OF-POCKET EXPENDITURES INCURRED BY LENDER IN CONNECTION WITH
THE PROPOSED CREDIT FACILITY. 
  
 BORROWER WILL MAINTAIN ITS
DEPOSITORY ACCOUNTS WITH LENDER. 
  
 BORROWER SHALL MAINTAIN A
CURRENT RATIO OF NOT LESS THAN 1.0:1.0. CURRENT RATIO SHALL BE DEFINED AS CURRENT ASSETS (AS DEFINED BY GAAP) DIVIDED BY CURRENT LIABILITIES (AS DEFINED BY GAAP). 
  
 BORROWER SHALL MAINTAIN A “TANGIBLE NET WORTH” OF AT LEAST $12,500,000.00. “TANGIBLE NET WORTH” SHALL BE
CALCULATED AS MEMBER’S EQUITY (AS DEFINED BY GAAP) MINUS UNAMORTIZED INTANGIBLE ASSETS AND ADVANCES TO MEMBERS AND/OR AFFILIATES. 
  
 WEXFORD PARTNERS VI, L.P. SHALL AT ALL TIMES, MAINTAIN A “TANGIBLE NET WORTH” OF AT LEAST $50,000,000.00. “TANGIBLE NET WORTH” SHALL
BE CALCULATED AS PARTNER’S CAPITAL MINUS UNAMORTIZED INTANGIBLE ASSETS AND ADVANCES TO MEMBERS AND/OR AFFILIATES. 
  
 Except as provided above, all computations made to determine compliance with the requirements contained in this paragraph shall be made in accordance with
generally accepted accounting principles, applied on a consistent basis, and certified by Borrower as being true and correct. 
  
 Insurance.  Maintain fire and other risk insurance, public liability insurance, and such other insurance as Lender may require with
respect to Borrower’s properties and operations, in form, amounts, coverages and with insurance companies acceptable to Lender. Borrower, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance
in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least thirty (30) days prior written notice to Lender. Each insurance policy also shall include an endorsement providing that
coverage in favor of Lender will not be impaired in any way by any act, omission or default of Borrower or any other person. In connection with all policies covering assets in which Lender holds or is offered a security interest for the Loans,
Borrower will provide Lender with such lender’s loss payable or other endorsements as Lender may require. 
  
 Insurance Reports.  Furnish to Lender, upon request of Lender, reports on each existing insurance policy showing such information as
Lender may reasonably request, including without limitation the following: (1) the name of the insurer; (2) the risks insured; (3) the amount of the policy; (4) the properties insured; (5) the than current property values on the basis of which
insurance has been obtained, and the manner of determining those values; and (6) the expiration date of the policy. In addition, upon request of Lender (however not more often than annually), Borrower will have an independent appraiser satisfactory
to Lender determine, as applicable, the actual cash value or replacement cost of any Collateral. The cost of such appraisal shall be paid by Borrower. 
  
 Guaranties.  Prior to disbursement of any Loan proceeds, furnish executed guaranties of the Loans in favor of Lender, executed by the
guarantors named below, on Lender’s forms, and in the amounts and under the conditions set forth in those guaranties. 
  

			
	 Names of Guarantors

	  	Amounts

	 TAURUS INVESTORS LLC
	  	Unlimited
	 WEXFORD PARTNERS VI, L.P.
	  	Unlimited

  
 Other
Agreements.  Comply with all terms and conditions of all other agreements, whether now or hereafter existing, between Borrower and any other party and notify Lender immediately in writing of any default in connection with any other
such agreements. 
  
 Loan proceeds.  Use all
Loan proceeds solely for Borrower’s business operations, unless specifically consented to the contrary by Lender in writing. 
  
 Taxes, Charges and Liens.  Pay and discharge when due all of its indebtedness and obligations, including without limitation all
assessments, taxes, governmental charges, levies and liens, of every kind and nature, imposed upon Borrower or its properties, income, or profits, prior to the date on which penalties would attach, and all lawful claims that, if unpaid, might become
a lien or charge upon any of Borrower’s properties, income, or profits. 
  
 Performance.  Perform and comply, in a timely manner, with all terms, conditions, and provisions set forth in this Agreement, in the Related Documents, and in all other instruments and agreements
between Borrower and Lender. Borrower shall notify Lender immediately in writing of any default in connection with any agreement. 
  
 Operations.  Maintain executive and management personnel with substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of any change in executive and management personnel; conduct its business affairs in a reasonable and prudent manner. 
  
 Environmental Studies.  Promptly conduct and complete, at Borrower’s expense, all such investigations,
studies, samplings and testings as may be requested by Lender or any governmental authority relative to any substance, or any waste or by-product of any substance defined as toxic or a hazardous substance under applicable federal, state, or local
law, rule, regulation, order or directive, at or affecting any property or any facility owned, leased or used by Borrower. 
  
 Compliance with Governmental Requirements.  Comply with all laws, ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the conduct of Borrower’s properties, business and operations, and to the use or occupancy of the Collateral, including without limitation, the Americans With Disabilities Act. Borrower may contest in good
faith any such law, ordinance, or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Borrower has notified Lender in writing prior to doing so and so long as, in Lender’s sole opinion,
Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s interest. 

 BUSINESS LOAN AGREEMENT 

					
	Loan No: 1600164021	 	(Continued)	  	Page 3

  

  
 Inspection.  Permit employees or agents of Lender at any reasonable time to inspect any and all Collateral
for the Loan or Loans and Borrower’s other properties and to examine or audit Borrower’s books, accounts, and records and to make copies and memoranda of Borrower’s books, accounts, and records. If Borrower now or at any time
hereafter maintains any records (including without limitation computer generated records and computer software programs for the generation of such records) in the possession of a third party, Borrower, upon request of Lender, shall notify such party
to permit Lender free access to such records at all reasonable times and to provide Lender with copies of any records it may request, all at Borrower’s expense. 
  
 Environmental Compliance and Reports.  Borrower shall comply in all respects with any and all Environmental
Laws; not cause or permit to exist, as a result of an intentional or unintentional action or omission on Borrower’s part or on the part of any third party, on property owned and/or occupied by Borrower, any environmental activity where damage
may result to the environment, unless such environmental activity is pursuant to and in compliance with the conditions of a permit issued by the appropriate federal, state or local governmental authorities; shall furnish to Lender promptly and in
any event within thirty (30) days after receipt thereof a copy of any notice, summons, lien, citation, directive, letter or other communication from any governmental agency or instrumentality concerning any intentional or unintentional action or
omission on Borrower’s part in connection with any environmental activity whether or not there is damage to the environment and/or other natural resources. 
  
 Additional Assurances.  Make, execute and deliver to Lender such promissory notes, mortgages, deeds of
trust, security agreements, assignments, financing statements, instruments, documents and other agreements as Lender or its attorneys may reasonably request to evidence and secure the Loans and to perfect all Security interests. 
  
 LENDER’S EXPENDITURES.  If any action or proceeding is commenced that
would materially affect Lender’s interest in the Collateral or if Borrower fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Borrower’s failure to discharge or pay when due any
amounts Borrower is required to discharge or pay under this Agreement or any Related Documents, Lender on Borrower’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to
discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on any Collateral and paying all costs for insuring, maintaining and preserving any Collateral. All such expenditures incurred or
paid by Lender for such purposes will then bear interest at the rate charged under the Note or at the highest rate authorized by law, from the date incurred or paid by Lender to the date of repayment by Borrower. All such expenses will become a part
of the indebtedness and, at Lender’s option, will (A) be payable on demand; (B) be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either (1) the term of any applicable
insurance policy; or (2) the remaining term of the Note; or (C) be treated as a balloon payment which will be due and payable at the Note’s maturity. If Lender is required by law to give Borrower notice before or after Lender makes an
expenditure, Borrower agrees that notice sent by regular mail at least five (5) days before the expenditure is made or notice delivered two (2) days before the expenditure is made is sufficient, and that notice within sixty (60) days after the
expenditure is made is reasonable. 
  
 NEGATIVE
COVENANTS.  Borrower covenants and agrees with Lender that while this Agreement is in effect, Borrower shall not, without the prior written consent of Lender: 
  
 Additional Financial Restrictions.  FOR THE PURPOSES OF THE NEGATIVE COVENANTS DESCRIBED HEREIN
“MATERIAL” SHALL BE DEFINED AS AN AMOUNT NOT EXCEEDING $250,000.00 IN THE AGGREGATE. 
  
 BORROWER WILL NOT CREATE OR SUFFER TO EXISTING ANY OTHER MATERIAL MORTGAGES OR LIENS. 
  
 BORROWER WILL NOT SELL ANY MATERIAL PORTION OF ASSETS. 
  
 BORROWER WILL NOT MAKE MATERIAL LOANS OR ADVANCES TO OTHER ENTITIES OR PERSONS. 
  
 EXCEPT FOR SUCH DISTRIBUTIONS FROM BORROWER WHICH ARE MADE TO ITS MEMBERS
FOR THE PURPOSE OF MEETING MEMBERS’ INCOME TAX LIABILITIES ARISING FROM THEIR MEMBERSHIP INTEREST IN THE BORROWER, BORROWER WILL NOT DIVIDEND DISTRIBUTE, REPURCHASE STOCK OR OTHERWISE DILUTE ITS EQUITY. 
  
 BORROWER WILL NOT INCUR OTHER MATERIAL INDEBTEDNESS BEYOND PROPOSED CREDIT
FACILITY. 
  
 NON-USAGE FEE: A 25% PER ANNUM FEE SHALL BE
CALCULATED AND COLLECTED QUARTERLY IN ARREARS. THE FEE SHALL APPLY TO THE DIFFERENCE BETWEEN THE FACE AMOUNT OF THE NOTE AND THE AVERAGE OUTSTANDING BALANCE FUNDED UNDER THE NOTE DURING EACH QUARTER. 
  
 Continuity of Operations.  (1) Engage in any business
activities substantially different than those in which Borrower is presently engaged, (2) cease operations, liquidate, merge, transfer, acquire or consolidate with any other entity, change its name, dissolve or transfer or sell Collateral out of the
ordinary course of business, or (3) make any distribution with respect to any capital account, whether by reduction of capital or otherwise. 
  
 Agreements. Borrower will not enter into any agreement containing any provisions which would be violated or breached by the performance of
Borrower’s obligations under this Agreement or in connection herewith. 
  
 CESSATION OF ADVANCES.  If Lender has made any commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender shall have no obligation to make Loan Advances or to disburse Loan
proceeds if: (A) Borrower or any Guarantor is in default under the terms of this Agreement or any of the Related Documents or any other agreement that Borrower or any Guarantor has with Lender; (B) Borrower or any Guarantor dies, becomes incompetent
or becomes insolvent, files a petition in bankruptcy or similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s financial condition, in the financial condition of any Guarantor, or in the value
of any Collateral securing any Loan; or (D) any Guarantor seeks, claims or otherwise attempts to limit, modify or revoke such Guarantor’s guaranty of the Loan or any other loan with Lender; or (E) Lender in good faith deems itself insecure,
even though no Event of Default shall have occurred. 
  
 RIGHT OF
SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower’s accounts with Lender (whether checking, savings, or some other account). This includes all accounts Borrower holds jointly
with someone else and all accounts Borrower may open in the future. However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts. 
  
 DEFAULT.  Each of the following shall constitute an Event of Default under this Agreement: 
  
 Payment Default.  Borrower fails to make any payment when due under the Loan. 
  
 Other Defaults.  Borrower fails to comply with or to
perform any other term, obligation, covenant or condition contained in this Agreement or in any of the Related Documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and
Borrower. 
  
 False Statements.  Any warranty,
representation or statement made or furnished to Lender by Borrower or on Borrower’s behalf under this Agreement or the Related Documents is false or misleading in any material respect, either now or at the time made or furnished or becomes
false or misleading at any time thereafter. 
  
 Death or
Insolvency.  The dissolution of Borrower (regardless of whether election to continue is made), any member withdraws from Borrower, or any other termination of Borrower’s existence as a going business or the death of any member,
the insolvency of Borrower, the appointment of a receiver for any part of Borrower’s property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency
laws by or against Borrower. 
  
 Defective
Collateralization.  This Agreement or any of the Related Documents ceases to be in full force and effect (including failure of any collateral document to create a valid and perfected security interest or lien) at any time and for any
reason. 
  
 Creditor or Forfeiture
Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing
the Loan. This includes a garnishment of any of Borrower’s accounts, including deposit accounts, with Lender. However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of
the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in
an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute. 
  
 Events Affecting Guarantor.  Any of the preceding events occurs with respect to any Guarantor of any of the indebtedness or any Guarantor
dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any Guaranty of the Indebtedness. 
  
 Adverse Change.  A material adverse change occurs in Borrower’s financial condition, or Lender believes the prospect of payment or
performance of the Loan is impaired. 
  
 Insecurity.  Lender in good faith believes itself insecure. 

 BUSINESS LOAN AGREEMENT 

					
	Loan No: 1600164021	  	(Continued)        	  	Page 4

  

  
 EFFECT OF AN EVENT OF DEFAULT.  If any Event of Default shall occur, except where otherwise provided in this Agreement or
the Related Documents, all commitments and obligations of Lender under this Agreement or the Related Documents or any other agreement immediately will terminate (including any obligation to make further Loan Advances or disbursements), and, at
Lender’s option, all indebtedness immediately will become due and payable, all without notice of any kind to Borrower, except that in the case of an Event of Default of the type described in the “Insolvency” subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall have all the rights and remedies provided in the Related Documents or available at law, in equity, or otherwise. Except as may be prohibited by applicable law, all of
Lender’s rights and remedies shall be cumulative and may be exercised singularly or concurrently. Election by Lender to pursue any remedy shall not exclude pursuit of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender’s right to declare a default and to exercise its rights and remedies. 
  
 NOTICE OF NO ORAL AGREEMENT.  THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. 
  
 THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. 
  
 MISCELLANEOUS
PROVISIONS.  The following miscellaneous provisions are a part of this Agreement: 
  
 Amendments. This Agreement, together with any Related Documents, constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. All prior and contemporaneous representations and discussions concerning such matters either are included in this document or do not constitute an aspect of the agreement of the parties. Except as may be
specifically set forth in this Agreement, no conditions precedent or subsequent, of any kind whatsoever, exist with respect to Borrower’s obligations under this Agreement. No alteration of or amendment to this Agreement shall be effective
unless given in writing and signed by the party or parties sought to be charged or bound by the alteration or amendment. 
  
 Attorneys’ Fees; Expenses.  Borrower agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s
attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement. Lender may hire or pay someone else to help enforce this Agreement, and Borrower shall pay the costs and expenses of such
enforcement. Costs and expenses include Lender’s attorneys’ fees and legal expenses whether or not there is a lawsuit, including attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any
automatic stay or injunction), appeals, and any anticipated post-judgment collection services. Borrower also shall pay all court costs and such additional fees as may be directed by the court. 
  
 Caption Headings.  Caption headings in this Agreement are
for convenience purposes only and are not to be used to interpret or define the provisions of this Agreement. 
  
 Consent to Loan Participation.  Borrower agrees and consents to Lender’s sale or transfer, whether now or later, of one or more
participation interests in the Loan to one or more purchasers, whether related or unrelated to Lender. Lender may provide, without any limitation whatsoever, to any one or more purchasers, or potential purchasers, any information or knowledge Lender
may have about Borrower or about any other matter relating to the Loan, and Borrower hereby waives any rights to privacy Borrower may have with respect to such matters. Borrower additionally waives any and all notices of sale of participation
interests, as well as all notices of any repurchase of such participation interests. Borrower also agrees that the purchasers of any such participation interests will be considered as the absolute owners of such interests in the Loan and will have
all the rights granted under the participation agreement or agreements governing the sale of such participation interests. Borrower further waives all rights of offset or counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that either Lender or such purchaser may enforce Borrower’s obligation under the Loan irrespective of the failure or insolvency of any holder of any interest in the Loan.
Borrower further agrees that the purchaser of any such participation interests may enforce its interests irrespective of any personal claims or defenses that Borrower may have against Lender. 
  
 Governing Law.  This Agreement will be governed by, construed
and enforced in accordance with federal law and the laws of the State of Oklahoma. This Agreement has been accepted by Lender in the State of Oklahoma. 
  
 No Waiver by Lender.  Lender shall not be deemed to have waived any rights under this Agreement unless such waiver is given in writing
and signed by Lender. No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right. A waiver by Lender of a provision of this Agreement shall not prejudice or constitute a waiver of
Lender’s right otherwise to demand strict compliance with that provision or any other provision of this Agreement. No prior waiver by Lender, nor any course of dealing between Lender and Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender’s rights or of any of Borrower’s or any Grantor’s obligations as to any future transactions. Whenever the consent of Lender is required under this Agreement, the granting of such consent by Lender
in any instance shall not constitute continuing consent to subsequent instances where such consent is required and in all cases such consent may be granted or withheld in the sole discretion of Lender. 
  
 Notices.  To the extent permitted by applicable law, any
notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by telefacsimile (unless otherwise required by law), when deposited with a nationally recognized
overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the beginning of this Agreement. Any party may change its address for
notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice purposes, Borrower agrees to keep Lender informed at all times of
Borrower’s current address. To the extent permitted by applicable law, if there is more than one Borrower, any notice given by Lender to any Borrower is deemed to be notice given to all Borrowers. 
  
 Severability.  If a court of competent jurisdiction finds
any provision of this Agreement to be illegal, invalid, or unenforceable as to any circumstance, that finding shall not make the offending provision illegal, invalid, or unenforceable as to any other circumstance. If feasible, the offending
provision shall be considered modified so that it becomes legal, valid and enforceable. If the offending provision cannot be so modified, it shall be considered deleted from this Agreement. Unless otherwise required by law, the illegality,
invalidity, or unenforceability of any provision of this Agreement shall not affect the legality, validity or enforceability of any other provision of this Agreement. 
  
 Subsidiaries and Affiliates of Borrower.  To the extent the context of any provisions of this Agreement
makes it appropriate, including without limitation any representation, warranty or covenant, the word “Borrower” as used in this Agreement shall include all of Borrower’s subsidiaries and affiliates. Notwithstanding the foregoing
however, under no circumstances shall this Agreement be construed to require Lender to make any Loan or other financial accommodation to any of Borrower’s subsidiaries or affiliates. 
  
 Successors and Assigns.  All covenants and agreements by or
on behalf of Borrower contained in this Agreement or any Related Documents shall bind Borrower’s successors and assigns and shall inure to the benefit of Lender and its successors and assigns. Borrower shall not, however, have the right to
assign Borrower’s rights under this Agreement of any interest therein, without the prior written consent of Lender. 
  
 Survival of Representations and Warranties.  Borrower understands and agrees that in extending Loan Advances, Lender is relying on all
representations, warranties, and covenants made by Borrower in this Agreement or in any certificate or other instrument delivered by Borrower to Lender under this Agreement or the Related Documents. Borrower further agrees that regardless of any
investigation made by Lender, all such representations, warranties and covenants will survive the extension of Loan Advances and delivery to Lender of the Related Documents, shall be continuing in nature, shall be deemed made and redated by Borrower
at the time each Loan Advance is made, and shall remain in full force and effect until such time as Borrower’s Indebtedness shall be paid in full, or until this Agreement shall be terminated in the manner provided above, whichever is the last
to occur. 
  
 Time is of the Essence.  Time is
of the essence in the performance of this Agreement. 
  
 Waive
Jury.  All parties to this Agreement hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by any party against any other party. 
  
 DEFINITIONS.  The following capitalized words and terms shall have the following meanings when used in this Agreement.
Unless specifically stated to the contrary, all references to dollar amounts shall mean amounts in lawful money of the United States of America. Words and terms used in the singular shall include the plural, and the plural shall include the
singular, as the context may require. Words and terms not otherwise defined in this Agreement shall have the meanings attributed to such terms in the Uniform Commercial Code. Accounting words and terms not otherwise defined in this Agreement shall
have the meanings assigned to them in accordance with generally accepted accounting principles as in effect on the date of this Agreement: 
  
 Advance.  The word “Advance” means a disbursement of Loan funds made, or to be made, to Borrower or on Borrower’s behalf
on a line of credit or multiple advance basis under the terms and conditions of this Agreement. 
  
 Agreement.  The word “Agreement” means this Business Loan Agreement, as this Business Loan Agreement may be amended or modified
from time to time, together with all exhibits and schedules attached to this Business Loan Agreement from time to time. 
  
 Borrower.  The word “Borrower” means BRONCO DRILLING COMPANY, L.L.C. and includes all co-signers and co-makers signing the
Note. 
  
 Collateral.  The word
“Collateral” means all property and assets granted as collateral security for a Loan, whether real or personal property, 

 BUSINESS LOAN AGREEMENT 

					
	Loan No: 1600160421	  	(Continued)	  	Page 5

  

  
 whether granted directly or indirectly, whether granted now or in the future, and whether granted in the form of a security
interest, mortgage, collateral mortgage, deed of trust, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien, charge, lien or title
retention contract, lease or consignment intended as a security device, or any other security or lien interest whatsoever, whether created by law, contract, or otherwise. 
  
 Environmental Laws.  The words “Environmental Laws” mean any and all state, federal and local
statutes, regulations and ordinances relating to the protection of human health or the environment, including without limitation the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601,
et seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource Conservation and Recovery Act,
42 U.S.C. Section 6901, et seq., or other applicable state or federal laws, rules, or regulations adopted pursuant thereto. 
  
 Event of Default.  The words “Event of Default” mean any of the events of default set forth in this Agreement in the default
section of this Agreement. 
  
 GAAP.  The word
“GAAP” means generally accepted accounting principles. 
  
 Grantor.  The word “Grantor” means each and all of the persons or entities granting a Security Interest in any Collateral for the Loan, including without limitation all Borrowers granting such a Security Interest.

  
 Guarantor.  The word “Guarantor”
means any guarantor, surety, or accommodation party of any or all of the Loan. 
  
 Guaranty.  The word “Guaranty” means the guaranty from Guarantor to Lender, including without limitation a guaranty of all or part of the Note. 
  
 Hazardous Substances.  The words “Hazardous
Substances” mean materials that, because of their quantity, concentration or physical, chemical or infectious characteristics, may cause or pose a present or potential hazard to human health or the environment when improperly used, treated,
stored, disposed of, generated, manufactured, transported or otherwise handled. The words “Hazardous Substances” are used in their very broadest sense and include without limitation any and all hazardous or toxic substances, materials or
waste as defined by or listed under the Environmental Laws. The term “Hazardous Substances” also includes, without limitation, petroleum and petroleum by-products or any fraction thereof and asbestos. 
  
 Indebtedness.  The word “Indebtedness” means the
indebtedness evidenced by the Note or Related Documents, including all principal and interest together with all other indebtedness and costs and expenses for which Borrower is responsible under this Agreement or under any of the Related Documents.

  
 Lender.  The word “Lender” means
International Bank of Commerce, its successors and assigns. 
  
 Loan.  The word “Loan” means any and all loans and financial accommodations from Lender to Borrower whether now or hereafter existing, and however evidenced, including without limitation those loans and financial
accommodations described herein or described on any exhibit or schedule attached to this Agreement from time to time. 
  
 Note.  The word “Note” means the Note executed by BRONCO DRILLING COMPANY, L.L.C. in the principal amount of $3,000,000.00
dated January 1, 2005, together with all renewals of, extensions of, modifications of, refinancings of, consolidations of, and substitutions for the note or credit agreement. 
  
 Related Documents.  The words “Related Documents” mean all promissory notes, credit agreements,
loan agreements, environmental agreements, guaranties, security agreements, mortgages, deeds of trust, security deeds, collateral mortgages, and all other instruments, agreements and documents, whether now or hereafter existing, executed in
connection with the Loan. 
  
 Security
Agreement.  The words “Security Agreement” mean and include without limitation any agreements, promises, covenants, arrangements, understandings or other agreements, whether created by law, contract, or otherwise, evidencing,
governing, representing, or creating a Security Interest. 
  
 Security Interest.  The words “Security Interest” mean, without limitation, any and all types of collateral security, present and future, whether in the form of a lien, charge, encumbrance, mortgage, deed of
trust, security deed, assignment, pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien or title retention contract, lease or consignment
intended as a security device, or any other security or lien interest whatsoever whether created by law, contract, or otherwise. 
  
 BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT IS DATED JANUARY 1,
2005. 
  
 BORROWER: 
  
  
 BRONCO
DRILLING COMPANY, L.L.C. 
  

			
	By:	 	 /s/ PAUL JACOBI

	 	 	 PAUL JACOBI, Vice President of BRONCO
 DRILLING
COMPANY, L.L.C

  
 LENDER: 
  
  
 INTERNATIONAL
BANK OF COMMERCE 
  

			
	By:	 	 /s/ STEVE RAMSEY

	 	 	Authorized Signer

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