Exhibit 10.1
Allis-Chalmers Energy Inc.
and
the Guarantors listed on Schedule B hereto
$160,000,000
9.0% Senior Notes due 2014
PURCHASE AGREEMENT
dated January 12, 2006
RBC Capital Markets Corporation
Morgan Keegan & Company, Inc.

 

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PURCHASE AGREEMENT
January 12, 2006
RBC Capital Markets Corporation
Morgan Keegan & Company, Inc.
c/o RBC Capital Markets Corporation
1211 Avenue of the Americas, 32nd Floor
New York, NY 10036
Ladies and Gentlemen:
     Introductory. Allis-Chalmers Energy Inc., a Delaware corporation (the
“Company”), proposes, subject to the terms and conditions stated herein, to
issue and sell to RBC Capital Markets Corporation (“RBC”) and Morgan Keegan &
Company, Inc. (“Morgan Keegan” and collectively with RBC, the “Initial
Purchasers”) $160,000,000 aggregate principal amount of its 9.0% Senior Notes
due 2014 (the “Notes”). The Securities (as defined below) will be issued
pursuant to an indenture (the “Indenture”) to be dated as of the Closing Date
(as defined in Section 2) among the Company, the Guarantors (as defined below)
and Wells Fargo Bank, N.A., as trustee (the “Trustee”).
     Securities issued in book-entry form will be issued in the name of Cede &
Co., as nominee of The Depository Trust Company (“DTC” or the “Depositary”)
pursuant to a DTC Blanket Letter of Representations, to be dated as of or prior
to the Closing Date (as defined in Section 2) (the “DTC Agreement”), from the
Company to the Depositary.
     The Company’s obligations under the Notes, the Exchange Notes (as defined
below) and the Indenture will be, jointly and severally, unconditionally
guaranteed, on a senior unsecured basis, by (i) each of the Company’s domestic
subsidiaries as of the date hereof, which are listed on Schedule B hereto, and
(ii) any subsidiary of the Company formed or acquired on or after the Closing
Date that executes the Indenture or a supplemental indenture setting forth an
additional guarantee in accordance with the terms of the Indenture, and their
respective successors and assigns (collectively, the “Guarantors”), pursuant to
their guarantees included in the Indenture (the “Guarantees”). The Notes and the
Guarantees thereof are herein collectively referred to as the “Securities”; and
the Exchange Notes (as defined below) and the Guarantees thereof are herein
collectively referred to as the “Exchange Securities.”
     The holders of the Securities will be entitled to the benefits of a
registration rights agreement to be dated as of the Closing Date (the
“Registration Rights Agreement”) among the Company, the Guarantors and the
Initial Purchasers, pursuant to which the Company and each of the Guarantors
will agree to file with the Securities and Exchange Commission (the “SEC”),
under the circumstances set forth therein, (i) a registration statement under
the Securities Act of 1933, as amended, relating to an offer (the “Exchange
Offer”) to exchange another series of debt securities of the Company with terms
substantially identical to the Notes (the “Exchange Notes”) and (ii) to the
extent required by the Registration Rights Agreement, a shelf registration
statement pursuant to Rule 415 of the Securities Act relating to the resale by
certain holders of

 

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the Notes. The Securities Act of 1933, as amended, together with the rules and
regulations of the SEC promulgated thereunder, is referred to herein as the
“Securities Act.”
     As more fully described in the Offering Memorandum (as defined below), the
Company has agreed to purchase all the equity interests in Specialty Rental
Tools, Inc. (“Specialty”), pursuant to a stock purchase agreement dated
December 20, 2005. The acquisition by the Company of the equity interests in
Specialty is referred to herein as the “Acquisition.” With respect to the
representations, warranties and agreements made by the Company in this Agreement
concerning its subsidiaries, such representations, warranties and agreements
shall be deemed to include Specialty. In connection with the Acquisition, the
Company will (i) offer and sell the Securities contemplated by this Agreement;
and (ii) enter into a $25.0 million senior secured credit facility (the “New
Bank Credit Facility”) provided under a credit agreement among the Company,
Royal Bank of Canada, as Administrative Agent, and each of the lenders named
therein.
     The Company understands that the Initial Purchasers propose to make an
offering of the Securities on the terms and in the manner set forth herein and
in the Offering Memorandum (as defined below) and agrees that the Initial
Purchasers may resell, subject to the conditions set forth herein, all or a
portion of the Securities to purchasers (the “Subsequent Purchasers”) at any
time after the date of this Agreement. The Securities are to be offered and sold
to or through the Initial Purchasers without registration with the SEC under the
Securities Act, in reliance upon exemptions therefrom. The terms of the
Securities and the Indenture will require that investors that acquire Securities
expressly agree that Securities may only be resold or otherwise transferred,
after the date hereof, if such resale or transfer is registered under the
Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemptions afforded by Rule 144A
(“Rule 144A”) or Regulation S (“Regulation S”) thereunder).
     The Company has prepared and delivered to each Initial Purchaser copies of
a Preliminary Offering Memorandum, dated December 28, 2005 (the “Preliminary
Offering Memorandum”), and has prepared and delivered to each Initial Purchaser
copies of a Pricing Supplement dated January 12, 2006 describing the terms of
the Securities, each for use by such Initial Purchaser in connection with its
solicitation of offers to purchase the Securities. As used herein, the term
“Offering Memorandum” shall mean the Preliminary Offering Memorandum, as
supplemented by the Pricing Supplement, and any exhibits thereto, in the most
recent form that has been prepared and delivered by the Company to the Initial
Purchasers in connection with their solicitation of offers to purchase
Securities prior to the time this Agreement is executed by the parties hereto
(the “Time of Execution”). Promptly after the Time of Execution and in any event
no later than the second Business Day following the Time of Execution, the
Company will prepare and deliver to each Initial Purchaser a Final Offering
Memorandum (the “Final Offering Memorandum”) which will consist of the
Preliminary Offering Memorandum with only such changes therein as are required
to reflect the information contained in the Pricing Supplement, and from and
after the time such Final Offering Memorandum is delivered to each Initial
Purchaser, all references herein to the Offering Memorandum shall be deemed to
refer to both the Offering Memorandum and the Final Offering Memorandum.

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     The Company and the Guarantors hereby confirm their agreement with the
Initial Purchasers as follows:
     SECTION 1. Representations and Warranties. The Company and the Guarantors,
jointly and severally, hereby represent, warrant and covenant to each Initial
Purchaser as follows:
      (a) No Registration Required. Subject to compliance by the Initial
Purchasers with the representations and warranties set forth in Section 2 hereof
and with the procedures set forth in Section 7 hereof, it is not necessary in
connection with the offer, sale and delivery of the Securities to the Initial
Purchasers and to each Subsequent Purchaser in the manner contemplated by this
Agreement and the Offering Memorandum to register under the Securities Act the
offer and sale of the Securities hereunder or the initial resale of Securities
to Subsequent Purchasers or, until such time as the Exchange Securities are
issued pursuant to an effective registration statement, to qualify the Indenture
under the Trust Indenture Act of 1939 (the “Trust Indenture Act,” which term, as
used herein, includes the rules and regulations of the SEC promulgated
thereunder).
      (b) No Integration of Offerings or General Solicitation; Regulation S
Matters. Neither the Company nor any Guarantor has, directly or indirectly,
solicited any offer to buy or offered to sell, and will not, directly or
indirectly, solicit any offer to buy or offer to sell, in the United States or
to any United States citizen or resident, any security which is or would be
integrated with the sale of the Securities in a manner that would require the
offer and sale of the Securities hereunder or the initial resale to Subsequent
Purchasers to be registered under the Securities Act. None of the Company, the
Guarantors, their respective affiliates (as such term is defined in Rule 501
under the Securities Act) (each, an “Affiliate”), or any person acting on its or
their behalf (other than the Initial Purchasers, as to whom neither the Company
nor any Guarantor makes any representation or warranty) has engaged or will
engage, in connection with the offering of the Securities, in any form of
general solicitation or general advertising within the meaning of Rule 502 under
the Securities Act. With respect to those Securities sold in reliance upon
Regulation S, (i) none of the Company, the Guarantors, their respective
Affiliates or any person acting on its or their behalf (other than the Initial
Purchasers, as to whom the Company makes no representation or warranty) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S, (ii) each of the Company, the Guarantors and their respective
Affiliates and any person acting on its or their behalf (other than the Initial
Purchasers, as to whom neither the Company nor any Guarantor makes any
representation or warranty) has complied and will comply with the offering
restrictions set forth in Regulation S and, in connection therewith, the
Offering Memorandum will contain the disclosure required by Rule 902 of the
Securities Act, and (iii) the sale of the Securities pursuant to Regulation S is
not part of a plan or scheme to evade the registration requirements of the
Securities Act.
      (c) Eligibility for Resale under Rule 144A. The Securities are eligible
for resale pursuant to Rule 144A and will not be, at the Closing Date, of the
same class as securities listed on a national securities exchange registered
under Section 6 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or quoted in a U.S. automated interdealer quotation system.

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      (d) The Offering Memorandum. As of the Time of Execution, the Offering
Memorandum does not, and at the Closing Date will not, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that this representation, warranty and
agreement shall not apply to statements in or omissions from the Offering
Memorandum made in reliance upon and in conformity with information furnished to
the Company in writing by any Initial Purchaser expressly for use in the
Offering Memorandum. Neither the Company nor any Guarantor has distributed or
will distribute, prior to the later of the Closing Date and the completion of
the Initial Purchasers’ distribution of the Securities, any offering material in
connection with the offering and sale of the Securities other than the
Preliminary Offering Memorandum and the Offering Memorandum.
      (e) The Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company
and each Guarantor, enforceable against the Company and each Guarantor in
accordance with its terms, except as rights to indemnification hereunder may be
limited by applicable law and except as the enforcement hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
      (f) The Registration Rights Agreement. The Registration Rights Agreement
has been duly authorized by the Company and each Guarantor, and, when duly
executed and delivered by the Company and each Guarantor, the Registration
Rights Agreement will be a valid and binding agreement of the Company and each
Guarantor, enforceable against the Company and each Guarantor in accordance with
its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and except as rights to indemnification under the Registration Rights
Agreement may be limited by applicable law.
      (g) The DTC Agreement. At the Closing Date, the DTC Agreement will have
been duly authorized, executed and delivered by, and (assuming the due
authorization, execution and delivery thereof by the other parties thereto) will
be a valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general
equitable principles.
      (h) Authorization of the Securities and the Exchange Securities. The Notes
to be purchased by the Initial Purchasers from the Company will be in the form
contemplated by the Indenture, and have been duly authorized for issuance and
sale pursuant to this Agreement and the Indenture, and, when executed by the
Company and authenticated by the Trustee in accordance with the terms of the
Indenture and delivered against payment of the purchase price therefor, the
Notes will constitute valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors
or by general equitable principles and will be entitled to the benefits of the
Indenture. The Exchange Notes have been duly and validly

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authorized for issuance by the Company, and when issued and authenticated in
accordance with the terms of the Indenture, the Registration Rights Agreement
and the Exchange Offer, the Exchange Notes will constitute valid and binding
obligations of the Company, enforceable against the Company in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture. The Guarantees
of the Notes set forth in the Indenture have been duly authorized for issuance
and sale pursuant to this Agreement and the Indenture, and, when the Notes have
been executed, authenticated and issued in accordance with the terms of the
Indenture and delivered against payment of the purchase price therefor, the
Guarantees of the Notes will constitute valid and binding obligations of the
Guarantors, enforceable against the Guarantors in accordance with their terms,
except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles and will be
entitled to the benefits of the Indenture. The Guarantees of the Exchange Notes
set forth in the Indenture have been duly authorized for issuance and sale
pursuant to this Agreement and the Indenture, and, when the Exchange Notes have
been issued and authenticated in accordance with the terms of the Indenture and
delivered against payment of the purchase price therefor, the Guarantees of the
Exchange Notes will constitute valid and binding obligations of the Guarantors,
enforceable against the Guarantors in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles and will be entitled to
the benefits of the Indenture.
      (i) Authorization of the Indenture. The Indenture has been duly authorized
by the Company and each Guarantor, and, when duly executed and delivered by the
Company and each Guarantor, assuming due authorization, execution and delivery
thereof by the Trustee, the Indenture will constitute a valid and binding
agreement of the Company and each Guarantor, enforceable against the Company and
each Guarantor in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles.
      (j) Description of the Securities and the Indenture. The Notes, the
Exchange Notes, the Guarantees of the Notes and the Exchange Notes and the
Indenture will conform in all material respects to the respective statements
relating thereto contained in the Offering Memorandum.
      (k) No Material Adverse Change. Except as otherwise disclosed in the
Offering Memorandum, subsequent to the respective dates as of which information
is given in the Offering Memorandum: (i) there has been no material adverse
change, or any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in the
earnings, business or operations, whether or not arising from transactions in
the ordinary course of business, of the Company and its subsidiaries, considered
as one entity (any such change is called a “Material Adverse Change”); (ii) the
Company and its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or

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agreement not in the ordinary course of business; and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or,
except for dividends paid to the Company or other subsidiaries, any of its
subsidiaries on any class of capital stock or repurchase or redemption by the
Company or any of its subsidiaries of any class of capital stock.
      (l) Independent Accountants. Each of the accounting firms listed on
Schedule C hereto, who have expressed their opinion with respect to the
financial statements (which term as used in this Agreement includes the related
notes thereto) and supporting schedules included in the Offering Memorandum are
independent registered public accounting firms, in the case of UHY Mann
Frankfort Stein & Lipp CPAs, LLP, Gordon, Hughes and Banks, LLP and Johnson,
Miller & Co., or independent certified public accountants, in the case of the
other firms listed on Schedule C hereto, within the meaning of Regulation S-X
under the Securities Act and the Exchange Act.
      (m) Preparation of the Financial Statements. The historical financial
statements, together with the related schedules and notes, included in the
Offering Memorandum present fairly the consolidated financial position of the
Company and its subsidiaries or of Specialty Rental Tools Inc., Diamond Air
Drilling Services, Inc., Marquis Bit Co., LLC, W. T. Enterprises, Inc., Downhole
Injection Systems, LLC, Delta Rental Service, Inc. and Capcoil Tubing Services,
Inc., as the case may be, as of and at the dates indicated and the consolidated
results of their respective operations and cash flows for the periods specified.
Such financial statements have been prepared in conformity with generally
accepted accounting principles, as applied in the United States, applied on a
consistent basis throughout the periods involved, except as may be expressly
stated in the related notes thereto. The historical financial information set
forth in the Offering Memorandum under the captions “Offering Memorandum
Summary—Summary Historical and Pro Forma Consolidated Financial Information” and
“Selected Historical Consolidated Financial Information” fairly present the
information set forth therein on a basis consistent with that of the audited
financial statements contained in the Offering Memorandum. The pro forma
consolidated condensed financial statements of the Company and its subsidiaries
and the related notes thereto included under the caption “Offering Memorandum
Summary—Summary Historical and Pro Forma Consolidated Financial Information,”
“Unaudited Pro Forma As Adjusted Consolidated Financial Information” and
elsewhere in the Offering Memorandum present fairly the information contained
therein, have been prepared in accordance with the SEC’s rules and guidelines
with respect to pro forma financial statements and have been properly presented
on the bases described therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein.
      (n) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its subsidiaries has been duly incorporated, formed or
organized and is validly existing as a corporation or limited liability company
in good standing under the laws of the jurisdiction of its incorporation,
formation or organization and has corporate, limited liability company or other
organization power and authority to own, lease and operate its properties and to
conduct its business as described in the Offering Memorandum and, in the case of
the Company and the Guarantors, to enter into and perform their respective
obligations under each of this Agreement, the Registration Rights Agreement, the
DTC Agreement (in the case of the Company only), the Securities, the Exchange
Securities and the Indenture. Each of the Company

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and its subsidiaries is duly qualified as a foreign corporation, limited
liability company or other organization to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except for such jurisdictions where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material
Adverse Change. Except as disclosed in the Offering Memorandum, all of the
issued and outstanding capital stock or membership interests of each subsidiary
of the Company has been duly authorized and validly issued, is fully paid and
nonassessable and is owned by the Company, directly or through one or more
subsidiaries, free and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed in Schedule B hereto.
      (o) Non-Contravention of Existing Instruments; No Further Authorizations
or Approvals Required. Neither the Company nor any of its subsidiaries is in
violation of its charter, by-laws or equivalent organizational documents, or is
in default (or, with the giving of notice or lapse of time, would be in default)
(“Default”) under any indenture, mortgage, loan or credit agreement, note,
contract, franchise, lease or other instrument to which the Company or any of
its subsidiaries is a party or by which it or any of them may be bound, or to
which any of the property or assets of the Company or any of its subsidiaries is
subject (each, an “Existing Instrument”), except for such Defaults as would not,
individually or in the aggregate, result in a Material Adverse Change. The
Company’s and each Guarantor’s execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the DTC Agreement (in the case of
the Company only) and the Indenture, and the issuance and delivery of the
Securities or the Exchange Securities, and consummation of the transactions
contemplated hereby and thereby and by the Offering Memorandum (i) have been
duly authorized by all necessary corporate action and will not result in any
violation of the provisions of the charter, by-laws or equivalent organizational
documents of the Company or any subsidiary, (ii) will not conflict with or
constitute a breach of, or Default or a Debt Repayment Triggering Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any
Existing Instrument, except for such conflicts, breaches, Defaults, liens,
charges or encumbrances as would not, individually or in the aggregate, result
in a Material Adverse Change and (iii) will not result in any violation of any
law, administrative regulation or administrative or court decree applicable to
the Company or any subsidiary, except for such violations as would not,
individually or in the aggregate, result in a Material Adverse Change. No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for the Company’s or each Guarantor’s execution, delivery and
performance of this Agreement, the Registration Rights Agreement, the DTC
Agreement (in the case of the Company only) or the Indenture, or the issuance
and delivery of the Securities or the Exchange Securities, or consummation of
the transactions contemplated hereby and thereby and by the Offering Memorandum
(including, but not limited to, the Acquisition), except such as have been
obtained or made by the Company or the Guarantors and are in full force and
effect under the Securities Act, applicable state securities or blue sky laws
and except such as may be required by federal and state securities laws or blue
sky laws with respect to the Company’s or each Guarantor’s obligations under the
Registration Rights Agreement. As used herein, a “Debt Repayment Triggering
Event” means any event or condition which gives, or with the giving of notice or
lapse of time would give, the holder of any

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note, debenture or other evidence of indebtedness (or any person acting on such
holder’s behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any of its subsidiaries.
      (p) No Material Actions or Proceedings. Except as disclosed in the
Offering Memorandum, there are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company’s and each Guarantor’s
knowledge, threatened (i) against or affecting the Company or any of its
subsidiaries or (ii) which has as the subject thereof any property owned or
leased by, the Company or any of its subsidiaries, where in any such case (A) it
is reasonably expected that such action, suit or proceeding might be determined
adversely to the Company or such subsidiary and (B) any such action, suit or
proceeding, if so determined adversely, would reasonably be expected to result
in a Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement and by the Offering Memorandum in
the “Use of Proceeds” section. No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the best of the Company’s and
each of the Guarantor’s knowledge, is threatened or imminent which, if
determined adversely to the Company would reasonably be expected to result in a
Material Adverse Change.
      (q) Intellectual Property Rights. The Company and its subsidiaries own or
possess sufficient trademarks, trade names, patent rights, copyrights, licenses,
approvals, trade secrets and other similar rights (collectively, “Intellectual
Property Rights”) reasonably necessary to conduct their businesses as described
in the Offering Memorandum; and the expected expiration of any of such
Intellectual Property Rights if not renewed or replaced would not result in a
Material Adverse Change. Neither the Company nor any of its subsidiaries has
received any notice of infringement or conflict with asserted Intellectual
Property Rights of others, which infringement or conflict, if the subject of an
unfavorable decision, would result in a Material Adverse Change.
      (r) All Necessary Permits, etc. Except as disclosed in the Offering
Memorandum, the Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal
or foreign regulatory agencies or bodies necessary to conduct their respective
businesses as currently conducted, and neither the Company nor any subsidiary
has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, could result in a Material Adverse Change.
      (s) Title to Properties. Except as disclosed in the Offering Memorandum,
the Company and each of its subsidiaries have good and marketable title to all
the properties and assets reflected as owned in the financial statements
referred to in Section 1(n) above (or elsewhere in the Offering Memorandum), in
each case free and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except (i) such as do not
materially and adversely affect the value of such property and (ii) such as do
not materially interfere with the current or currently proposed use of such
property by the Company or such subsidiary. The real property, improvements,
equipment and personal property held under lease by the Company or any
subsidiary are held under valid and enforceable leases, with such exceptions as
are not material and do not materially interfere with the current or currently

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proposed use of such real property, improvements, equipment or personal property
by the Company or such subsidiary.
      (t) Tax Law Compliance. The Company and its consolidated subsidiaries have
filed all necessary federal, state and foreign income and franchise tax returns
and have paid all taxes required to be paid by any of them and, if due and
payable, any related or similar assessment, fine or penalty levied against any
of them, except, in all cases, for any such tax, assessment, fine or penalty
that the Company is contesting in good faith and except, in any case, in which
the failure to so file or pay would not in the aggregate result in a Material
Adverse Change. The Company has made adequate charges, accruals and reserves in
the applicable financial statements referred to in Section 1(m) above in respect
of all federal, state and foreign income and franchise taxes for all periods as
to which the tax liability of the Company or any of its consolidated
subsidiaries has not been finally determined, except where the failure to make
such charges, accruals and reserves would not result in a Material Adverse
Change.
      (u) Company and Guarantors Each Not an “Investment Company”. The Company
has been advised of the rules and requirements under the Investment Company Act
of 1940, as amended (the “Investment Company Act”). Neither the Company nor any
Guarantor is, nor after giving effect to the offering and sale of the Securities
and the application of the net proceeds therefrom, as described in the Offering
Memorandum, will be, an “investment company” within the meaning of the
Investment Company Act, and the Company and each Guarantor intends to conduct
its business in a manner so that it will not become subject to the Investment
Company Act.
      (v) Insurance. Except as disclosed in the Offering Memorandum, each of the
Company and its subsidiaries are insured by recognized, financially sound
institutions with policies in such amounts and with such deductibles and
covering such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and personal
property owned or leased by the Company and its subsidiaries against theft,
damage, destruction, acts of vandalism and earthquakes. Except as disclosed in
the Offering Memorandum, the Company has no reason to believe that it or any
subsidiary will not be able (i) to renew its existing insurance coverage as and
when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now
conducted and at a cost that would not result in a Material Adverse Change.
      (w) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might be
reasonably expected to cause or result in stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
      (x) Solvency. The Company and each Guarantor is, and immediately after the
Closing Date, will be, Solvent. As used herein, the term “Solvent” means, with
respect to the Company and each Guarantor on a particular date, that on such
date (i) the fair market value of its assets is greater than the total amount of
its liabilities (including contingent liabilities); (ii) the present fair
salable value of its assets is greater than the amount that will be required to
pay the probable liabilities on its debts as they become due and payable;
(iii) it is able to realize upon its

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assets and pay its debts and other liabilities, including contingent
obligations, as they become due and payable; and (iv) it does not have
unreasonably small capital to carry on its business as conducted and as proposed
to be conducted, as set forth in the Offering Memorandum.
     (y) No Unlawful Contributions or Other Payments. Neither the Company nor
any of its subsidiaries nor, to the best of the Company’s knowledge, any
employee or agent of the Company or any subsidiary, has made any contribution or
other payment to any official of, or candidate for, any federal, state or
foreign office in violation of any applicable law or of the character necessary
to be disclosed in the Offering Memorandum in order to make the statements
therein not misleading.
     (z) Company’s Accounting System. Except as disclosed in the Offering
Memorandum, the Company maintains a system of accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management’s general or specific authorization; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles as applied in the
United States and to maintain accountability for assets; (iii) access to assets
is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
     (aa) Compliance with Environmental Laws. Except as would not, individually
or in the aggregate, result in a Material Adverse Change: (i) neither the
Company nor any of its subsidiaries is in violation of any federal, state, local
or foreign law or regulation relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges, releases or
threatened releases of chemicals, pollutants, contaminants, wastes, toxic
substances, hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental Concern”), or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Materials of Environmental Concern (collectively,
“Environmental Laws”), which violation includes, but is not limited to,
noncompliance with any permits or other governmental authorizations required for
the operation of the business of the Company or its subsidiaries under
applicable Environmental Laws, or noncompliance with the terms and conditions
thereof, nor has the Company or any of its subsidiaries received any written
communication, whether from a governmental authority, citizens group, employee
or otherwise, that alleges that the Company or any of its subsidiaries is in
violation of any Environmental Law; (ii) there is no claim, action or cause of
action filed with a court or governmental authority, no investigation with
respect to which the Company has received written notice, and no written notice
by any person or entity alleging potential liability for investigatory costs,
cleanup costs, governmental responses costs, natural resources damages, property
damages, personal injuries, attorneys’ fees or penalties arising out of, based
on or resulting from the presence, or release into the environment, of any
Material of Environmental Concern at any location owned, leased or operated by
the Company or any of its subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the best of the Company’s or any
Guarantor’s knowledge, threatened against the Company or any of its subsidiaries
or any person or entity whose liability for any Environmental Claim the Company
or any of its subsidiaries has retained

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or assumed either contractually or by operation of law; and (iii) to the best of
the Company’s or any Guarantor’s knowledge, there are no past or present
actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company or
any of its subsidiaries has retained or assumed either contractually or by
operation of law.
     (bb) ERISA Compliance. The Company and its subsidiaries and any “employee
benefit plan” (as defined under the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereunder
(collectively, “ERISA”)) established or maintained by the Company, its
subsidiaries or their “ERISA Affiliates” (as defined below) are in compliance
with ERISA, except for any such noncompliance as would not, individually or in
the aggregate, reasonably be expected to result in a Material Adverse Change.
“ERISA Affiliate” means, with respect to the Company or a subsidiary, any member
of any group of organizations described in Section 414(b), (c), (m) or (o) of
the Internal Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the “Code”) of which the Company or such subsidiary
is a member. No “reportable event” (as defined under ERISA) has occurred or is
reasonably expected to occur with respect to any “employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates. No “employee benefit plan” (as defined in ERISA Section 3(3))
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates, if such “employee benefit plan” were terminated, would have any
“amount of unfunded benefit liabilities” (as defined under ERISA) that could
reasonably be expected to result in a Material Adverse Change. Neither the
Company, its subsidiaries nor any of their ERISA Affiliates has incurred or
reasonably expects to incur any liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any “employee benefit plan” or
(ii) Sections 412, 4971, 4975 or 4980B of the Code that could reasonably be
expected to result in a Material Adverse Change. Each “employee benefit plan”
established or maintained by the Company, its subsidiaries or any of their ERISA
Affiliates that is intended to be qualified under Section 401(a) of the Code is
so qualified and nothing has occurred, whether by action or failure to act,
which would cause the loss of such qualification, that has given or would give
rise to any tax, penalty or other liability that could reasonably be expected to
result in a Material Adverse Change.
     (cc) New Bank Credit Facility. The New Bank Credit Facility has been duly
and validly authorized by the Company and, when duly executed and delivered by
the Company, will be the valid and legally binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles
     (dd) Sarbanes-Oxley Act. The Company is in compliance in all material
respects with applicable provisions of the Sarbanes-Oxley Act of 2002 that are
effective as of the date of this Agreement.

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     (ee) Disclosure Controls and Procedures. Except as disclosed in the
Offering Memorandum, (i) the Company has established and maintains “disclosure
controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) of the
Exchange Act) and (ii) the Company’s “disclosure controls and procedures” are
reasonably designed to ensure that all information (both financial and
non-financial) required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and regulations
thereunder, and that all such information is accumulated and communicated to the
Company’s management as appropriate to allow timely decisions regarding required
disclosure and to make the certifications of the Chief Executive Officer and
Chief Financial Officer of the Company required under the Exchange Act with
respect to such reports. Without limiting the generality of the foregoing, as
disclosed in the Offering Memorandum, the Company’s disclosure controls and
procedures are not effective to enable it to record, process, summarize, and
report information required to be included in our SEC filings within the
required time period, and to ensure that such information is accumulated and
communicated to its management, including its Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
     (ff) Payment of Dividends by Subsidiaries. No subsidiary of the Company is
currently prohibited, directly or indirectly, from paying any dividends to the
Company or any other subsidiary, from making any other distribution on such
subsidiary’s capital stock, from repaying to the Company or any other subsidiary
any loans or advances to such subsidiary from the Company or any other
subsidiary or from transferring any of such subsidiary’s property or assets to
the Company or any other subsidiary of the Company, except as described in or
contemplated in the Offering Memorandum.
     (gg) Forward Looking Statements. No forward-looking statement (within the
meaning of Section 27A of the Act and Section 21E of the Exchange Act) or
presentation of market-related or statistical data contained in the Preliminary
Offering Memorandum or Offering Memorandum has been made or reaffirmed without a
reasonable basis or has been disclosed in other than good faith.
     Any certificate signed by an officer of the Company and delivered to the
Initial Purchasers or to counsel for the Initial Purchasers shall be deemed to
be a representation and warranty by the Company to each Initial Purchaser as to
the matters set forth therein.
     SECTION 2. Purchase, Sale and Delivery of the Securities.
     (a) The Securities. The Company agrees to issue and sell to the several
Initial Purchasers all of the Notes upon the terms herein set forth. The
Guarantors, jointly and severally, agree to issue to the several Initial
Purchasers all of the Guarantees of the Notes upon the terms herein set forth.
On the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, each of the
Initial Purchasers agrees, severally and not jointly, to purchase from the
Company the aggregate principal amount of Notes set forth opposite its name in
Schedule A, at a purchase price of 97.25% of the principal amount thereof,
payable on the Closing Date.

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     (b) The Closing Date. Delivery of and payment for the Securities shall be
made at the offices of Shearman & Sterling LLP in New York or such other place
as shall be agreed upon by the Company and the Initial Purchasers at 9:30 AM,
New York City time, on January 18, 2006 or at such time on such later date as
the Initial Purchasers and the Company shall designate, which date and time may
be postponed by agreement between the Initial Purchasers and the Company (such
date and time of delivery and payment for the Securities being herein called the
“Closing Date”). The Company hereby acknowledges that circumstances under which
the Initial Purchasers may provide notice to postpone the Closing Date as
originally scheduled include, but are in no way limited to, any determination by
the Company or the Initial Purchasers to recirculate to investors copies of an
amended or supplemented Offering Memorandum or a delay as contemplated by the
provisions of Section 18.
     (c) Delivery of and Payment for the Securities. The Company shall deliver,
or cause to be delivered, to or as directed by RBC for the accounts of the
several Initial Purchasers certificates for the Securities at the Closing Date
against the irrevocable release of a wire transfer of immediately available
funds for the amount of the purchase price therefor. The certificates for the
Securities shall be in such denominations and registered in the name of Cede &
Co., as nominee of the Depository, pursuant to the DTC Agreement, and shall be
made available for inspection on the business day preceding the Closing Date at
a location in New York City, as the Initial Purchasers may designate. Time shall
be of the essence, and delivery at the time and place specified in this
Agreement is a further condition to the obligations of the Initial Purchasers.
     (d) Initial Purchasers as Accredited Investors. Each Initial Purchaser
severally and not jointly represents and warrants to, and agrees with, the
Company that it is an “accredited investor” within the meaning of
Rule 501(a)(1), (2), (3) or (7) under the Securities Act with such knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Notes.
     SECTION 3. Additional Covenants. The Company and, as applicable, each of
the Guarantors, jointly and severally, further covenant and agree with each
Initial Purchaser as follows:
     (a) Initial Purchasers’ Review of Proposed Amendments and Supplements.
Until the later of (x) the completion of the placement of the Securities by the
Initial Purchasers with the Subsequent Purchasers and (y) the Closing Date,
prior to amending or supplementing the Offering Memorandum, the Company shall
furnish to the Initial Purchasers for review a copy of each such proposed
amendment or supplement, and the Company shall not use any such proposed
amendment or supplement to which the Initial Purchasers reasonably object.
     (b) Amendments and Supplements to the Offering Memorandum. If, prior to the
completion of the placement of the Securities by the Initial Purchasers with the
Subsequent Purchasers, any event shall occur or condition exist as a result of
which it is necessary to amend or supplement the Offering Memorandum in order to
make the statements therein, in the light of the circumstances when the Offering
Memorandum is delivered to a purchaser, not misleading, or if in the opinion of
the Initial Purchasers or counsel for the Initial Purchasers it is otherwise
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, the

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Company agrees to prepare promptly (subject to Section 3(a) hereof), and furnish
at its own expense to the Initial Purchasers, amendments or supplements to the
Offering Memorandum so that the statements in the Offering Memorandum as so
amended or supplemented will not, in the light of the circumstances when the
Offering Memorandum is delivered to a purchaser, be misleading or so that the
Offering Memorandum, as amended or supplemented, will comply with applicable
law.
     (c) Copies of the Offering Memorandum. The Company agrees to furnish the
Initial Purchasers, without charge, as many copies of the Offering Memorandum
and any amendments and supplements thereto as they shall have reasonably
requested.
     (d) Blue Sky Compliance. The Company and each Guarantor shall cooperate
with the Initial Purchasers and counsel for the Initial Purchasers to qualify or
register the Securities for sale under (or obtain exemptions from the
application of) the state securities, or blue sky, laws of those jurisdictions
designated by the Initial Purchasers, shall comply with such laws and shall
continue such qualifications, registrations and exemptions in effect so long as
required for the distribution of the Securities. Neither the Company nor any
Guarantor shall be required to qualify as a foreign corporation or to take any
action that would subject it to general service of process in any such
jurisdiction where it is not presently qualified or where it would be subject to
taxation as a foreign corporation, limited liability company or other entity.
The Company will advise the Initial Purchasers promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the
Securities for offering, sale or trading in any jurisdiction or any initiation
or threat of any proceeding for any such purpose, and in the event of the
issuance of any order suspending such qualification, registration or exemption,
the Company shall use its commercially reasonable efforts to obtain the
withdrawal thereof at the earliest possible moment.
     (e) Use of Proceeds. The Company shall apply the net proceeds from the sale
of the Securities sold by it in the manner described under the caption “Use of
Proceeds” in the Offering Memorandum.
     (f) The Depositary. The Company will cooperate with the Initial Purchasers
and use its commercially reasonable efforts to permit the Securities to be
eligible for clearance and settlement through the facilities of the Depositary.
     (g) No Integration. The Company agrees that it will not and will cause its
Affiliates not to make any offer or sale of securities of the Company of any
class if, as a result of the doctrine of “integration” referred to in Rule 502
under the Securities Act, such offer or sale would render invalid (for the
purpose of (i) the sale of the Securities by the Company to the Initial
Purchasers, (ii) the resale of the Securities by the Initial Purchasers to
Subsequent Purchasers or (iii) the resale of the Securities by such Subsequent
Purchasers to others) the exemption from the registration requirements of the
Securities Act provided by Section 4 thereof or by Rule 144A or by Regulation S
thereunder or otherwise.
     (h) Legended Securities. Each certificate for a Note will bear the legend
contained in “Transfer Restrictions” in the Offering Memorandum for the time
period and upon the other terms stated in the Offering Memorandum.

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     (i) PORTALSM. The Company will use its commercially reasonable efforts to
cause the Notes to be eligible for The PORTALSM Market of the National
Association of Securities Dealers, Inc. (“The PORTALSM Market”).
     (j) Agreement Not to Offer or Sell Additional Securities. During the period
of 90 days following the date of the Offering Memorandum, none of the Company or
any Guarantor will, without the prior written consent of RBC (which consent may
be withheld at the sole discretion of RBC), directly or indirectly, sell, offer,
contract or grant any option to sell, pledge, transfer or establish an open “put
equivalent position” within the meaning of Rule 16a-1 under the Exchange Act, or
otherwise dispose of or transfer, or announce the offering of, or file any
registration statement under the Securities Act in respect of, any debt
securities of the Company or any Guarantor substantially similar to the
Securities or securities exchangeable for or convertible into debt securities of
the Company or any Guarantor substantially similar to the Securities (other than
as contemplated by this Agreement and to register the Exchange Securities).
     (k) Rating of Securities. The Company and the Guarantors shall take all
commercially reasonable action necessary to enable Standard & Poor’s Rating
Services, a division of The McGraw-Hill, Inc. Companies, and Moody’s Investor
Services, Inc. to provide their respective credit ratings to the Securities at
or prior to the time of their initial issuance.
     RBC, on behalf of the several Initial Purchasers, may, in its sole
discretion, waive in writing the performance by the Company of any one or more
of the foregoing covenants or extend the time for their performance.
     SECTION 4. Payment of Expenses. The Company and the Guarantors, jointly and
severally, agree to pay all costs, fees and expenses incurred in connection with
the performance of their obligations hereunder and in connection with the
transactions contemplated hereby, including without limitation, (i) all expenses
incident to the issuance and delivery of the Securities, (ii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale
of the Securities to the Initial Purchasers, (iii) all fees and expenses of the
Company’s and the Guarantors’ counsel, independent registered public accounting
firms or independent certified public accountants and other advisors, (iv) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of each preliminary Offering Memorandum and
the Offering Memorandum (including financial statements and exhibits), and all
amendments and supplements thereto, this Agreement, the Registration Rights
Agreement, the Indenture, the DTC Agreement, and the Securities, (v) all filing
fees, attorneys’ fees and expenses incurred by the Company or the Initial
Purchasers in connection with qualifying or registering (or obtaining exemptions
from the qualification or registration of) all or any part of the Securities for
offer and sale under the state securities or blue sky laws and, if requested by
the Initial Purchasers, preparing and printing a “Blue Sky Survey” or
memorandum, and any supplements thereto, advising the Initial Purchasers of such
qualifications, registrations and exemptions, (vi) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture, the Securities and the Exchange Securities,
(vii) any fees payable in connection with the rating of the Securities or the
Exchange Securities with the ratings agencies and the listing of the Securities
with The PORTALSM Market, (viii) all fees and expenses (including reasonable
fees and expenses of counsel) of the

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Company and the Guarantors in connection with approval of the Securities by DTC
for “book-entry” transfer, (ix) the transportation and other expenses incurred
by or on behalf of the representatives of the Company in connection with
presentations to prospective purchasers of the Securities, including, but not
limited to, the cost of any chartered aircraft and (x) all other costs and
expenses incident to the performance by the Company and the Guarantors of their
respective other obligations under this Agreement. Except as provided in this
Section 4, Section 6, Section 8 and Section 9 hereof, the Initial Purchasers
shall pay their own expenses, including the fees and disbursements of their
counsel.
     SECTION 5. Conditions of the Obligations of the Initial Purchasers. The
obligations of the several Initial Purchasers to purchase and pay for the
Securities as provided herein on the Closing Date shall be subject to (A) the
accuracy in all material respects of the representations and warranties on the
part of the Company and the Guarantors set forth in Section 1 hereof that are
not qualified by materiality as of the date hereof and as of the Closing Date as
though then made, (B) to the accuracy of the representations and warranties on
the part of the Company and the Guarantors set forth in Section 1 hereof that
are qualified by materiality as of the date hereof and as of the Closing Date as
though then made, (C) the timely performance by the Company of its covenants and
other obligations hereunder and (D) each of the following additional conditions:
      (a) Accountants’ Comfort Letters. On the date hereof, the Initial
Purchasers shall have received from the accountants listed on Schedule C hereto,
in respect of each entity set forth opposite such accountant’s name on
Schedule C hereto, a letter from each such accountant, dated the date hereof
addressed to the Initial Purchasers, in form and substance satisfactory to the
Initial Purchasers, containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to initial purchasers with respect to
the financial statements and certain financial information contained in the
Preliminary Offering Memorandum and the Pricing Supplement, and the specified
date referred to therein for the carrying out of procedures shall be no more
than three days prior to the date hereof.
      (b) No Material Adverse Change or Ratings Agency Change. For the period
from and after the date of this Agreement and prior to the Closing Date:
     (i) there shall not have occurred any Material Adverse Change; and
     (ii) there shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any review for a
possible change that does not indicate the direction of the possible change, in
the rating accorded any securities of the Company or any of its subsidiaries by
any “nationally recognized statistical rating organization” as such term is
defined for purposes of Rule 436 under the Securities Act.
      (c) Opinion of Counsel for the Company and the Guarantors. The Company
shall have requested and caused the following legal opinions dated the Closing
Date and addressed to the Initial Purchasers to be furnished to the Initial
Purchasers:

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     (i) an opinion of Andrews Kurth LLP, special counsel for the Company and
the Guarantors, substantially to the effect set forth in Exhibit A-1; and
     (ii) an opinion of Liskow & Lewis, special Louisiana counsel for the
Company and the Guarantors, substantially to the effect set forth in Exhibit A-2
hereto.
      (d) Opinion of Counsel for the Initial Purchasers. The Initial Purchasers
shall have received from Shearman & Sterling LLP, counsel for the Initial
Purchasers, such opinion or opinions, dated the Closing Date and addressed to
the Initial Purchasers, with respect to the issuance and sale of the Securities,
the Offering Memorandum (as amended or supplemented at the Closing Date) and
other related matters as the Initial Purchasers may reasonably require, and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling it to pass upon such matters.
      (e) Officers’ Certificate. On the Closing Date, the Initial Purchasers
shall have received a written certificate executed by the Chairman of the Board,
Chief Executive Officer or President and the Chief Financial Officer or Chief
Accounting Officer of the Company dated as of the Closing Date, to the effect
set forth in subsection (b) of this Section 5, and further to the effect that:
     (i) the representations and warranties of the Company and the Guarantors
set forth in Section 1 of this Agreement that are not qualified by materiality
are true and correct in all material respects as of the Time of Execution and
are true and correct as of the Closing Date, and the representations and
warranties and of the Company and the Guarantors that are qualified by
materiality are true and correct as of the Time of Execution and are true and
correct as of the Closing Date, in each case, with the same force and effect as
though expressly made on and as of the Closing Date; and
     (ii) the Company and the Guarantors have complied with all the agreements
and satisfied all the conditions on its part to be performed or satisfied at or
prior to the Closing Date.
      (f) Bring-down Comfort Letter. On the Closing Date, the Initial Purchasers
shall have received from the accountants listed on Schedule C hereto, in respect
of each entity set forth opposite such accountant’s name on Schedule C hereto, a
letter dated such date, in form and substance satisfactory to the Initial
Purchasers, to the effect that they reaffirm the statements made in the letter
furnished by them pursuant to subsection (a) of this Section 5, except that the
specified date referred to therein for the carrying out of procedures shall be
no more than three business days prior to the Closing Date and that their
procedures shall extend to financial information in the Final Offering
Memorandum not contained in the Preliminary Offering Memorandum or the Pricing
Supplement.
      (g) PORTAL SM Eligibility . At the Closing Date, the Notes shall have been
designated for trading on The PORTALSM Market.
      (h) Registration Rights Agreement. The Company and each of the Guarantors
shall have executed and delivered the Registration Rights Agreement and the
Initial Purchasers shall have received executed counterparts thereof.

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      (i) Consummation of the Acquisition. On the Closing Date, the Company
shall have consummated the Acquisition in the manner described in the Offering
Memorandum.
      (j) New Bank Credit Facility. On the Closing Date, the Company shall have
executed and delivered the New Bank Credit Facility.
      (k) Additional Documents. On or before the Closing Date, the Initial
Purchasers and counsel for the Initial Purchasers shall have received such
information, documents and opinions as they may reasonably require for the
purposes of enabling them to pass upon the issuance and sale of the Securities
as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.
     If any condition specified in this Section 5 is not satisfied when and as
required to be satisfied, this Agreement may be terminated by the Initial
Purchasers by notice to the Company at any time on or prior to the Closing Date,
which termination shall be without liability on the part of any party to any
other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
     SECTION 6. Reimbursement of Initial Purchasers’ Expenses. If this Agreement
is terminated by the Initial Purchasers pursuant to Section 5, or if the sale to
the Initial Purchasers of the Securities on the Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company or any
Guarantor to perform any agreement herein or to comply with any provision
hereof, the Company and the Guarantors, jointly and severally, agree to
reimburse the Initial Purchasers upon demand for all out-of-pocket expenses that
shall have been reasonably incurred by the Initial Purchasers in connection with
the proposed purchase and the offering and sale of the Securities, including but
not limited to fees and disbursements of counsel, printing expenses, travel
expenses, postage, facsimile and telephone charges.
     SECTION 7. Offer, Sale and Resale Procedures. Each of the Initial
Purchasers, on the one hand, and the Company and each of the Guarantors, on the
other hand, hereby establish and agree to observe the following procedures in
connection with the offer and sale of the Securities:
     (a) Offers and sales of the Securities will be made only by the Initial
Purchasers or Affiliates thereof qualified to do so in the jurisdictions in
which such offers or sales are made. Each such offer or sale shall only be made
to (i) persons whom the offeror or seller reasonably believes to be qualified
institutional buyers (as defined in Rule 144A under the Securities Act) or
(ii) non-U.S. persons outside the United States to whom the offeror or seller
reasonably believes offers and sales of the Securities may be made in reliance
upon Regulation S under the Securities Act, upon the terms and conditions set
forth in Annex I hereto, which Annex I is hereby expressly made a part hereof.
     (b) The Securities will be offered by approaching prospective Subsequent
Purchasers on an individual basis. No general solicitation or general
advertising (within the meaning of Rule 502 under the Securities Act) will be
used in the United States in connection with the offering of the Securities.

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     (c) Upon original issuance by the Company, and until such time as the same
is no longer required under the applicable requirements of the Securities Act,
the Securities (and all securities issued in exchange therefor or in
substitution thereof, other than the Exchange Securities) shall bear the legend
set forth in the Offering Memorandum under the caption “Notice to Investors.”
     Following the sale of the Securities by the Initial Purchasers to
Subsequent Purchasers pursuant to the terms hereof, the Initial Purchasers shall
not be liable or responsible to the Company or any Guarantor for any losses,
damages or liabilities suffered or incurred by the Company or any Guarantor,
including any losses, damages or liabilities under the Securities Act, arising
from or relating to any resale or transfer of any Security.
     SECTION 8. Indemnification.
      (a) Indemnification of the Initial Purchasers. Each of the Company and the
Guarantors, jointly and severally, agree to indemnify and hold harmless each
Initial Purchaser, its directors, officers and employees, and each person, if
any, who controls any Initial Purchaser within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Initial Purchaser or
such controlling person may become subject, under the Securities Act, the
Exchange Act or other federal or state statutory law or regulation, or at common
law or otherwise (including in settlement of any litigation, if such settlement
is effected with the written consent of the Company and/or the Guarantors),
insofar as such loss, claim, damage, liability or expense (or actions in respect
thereof as contemplated below) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and to reimburse each
Initial Purchaser and each such controlling person for any and all expenses
(including the fees and disbursements of counsel chosen by RBC) as such expenses
are reasonably incurred by such Initial Purchaser or such controlling person in
connection with investigating, defending, settling, compromising or paying any
such loss, claim, damage, liability, expense or action; provided, however, that
the foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Initial Purchasers expressly for use
in the Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto). The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Company or the
Guarantors may otherwise have.
      (b) Indemnification of the Company, the Guarantors and their respective
Directors and Officers. Each Initial Purchaser agrees, severally and not
jointly, to indemnify and hold harmless the Company, the Guarantors and each of
their respective directors, officers and employees and each person, if any, who
controls the Company or any Guarantor within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, against any loss, claim,
damage, liability or expense, as incurred, to which the Company or the
Guarantors or any

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such director, officer, employee or controlling person may become subject, under
the Securities Act, the Exchange Act, or other federal or state statutory law or
regulation, or at common law or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of such
Initial Purchaser), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) (i) arises out of or is
based upon any untrue or alleged untrue statement of a material fact contained
in the Preliminary Offering Memorandum or the Offering Memorandum (or any
amendment or supplement thereto), or (ii) arises out of or is based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in the
Preliminary Offering Memorandum or the Offering Memorandum (or any amendment or
supplement thereto), in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchasers expressly for use therein;
and to reimburse the Company, the Guarantors or any such director, officer,
employee or controlling person for any legal and other expenses reasonably
incurred by the Company, the Guarantors or any such director, officer, employee
or controlling person in connection with investigating, defending, settling,
compromising or paying any such loss, claim, damage, liability, expense or
action. The Company and each Guarantor hereby acknowledges that the only
information that the Initial Purchasers have furnished to the Company expressly
for use in the Preliminary Offering Memorandum or the Offering Memorandum (or
any amendment or supplement thereto) are (i) the names of the Initial Purchasers
as set forth on the front and back covers of the Offering Memorandum and as
further set forth in the table in the first paragraph under the caption “Plan of
Distribution,” (ii) the statements set forth in the fourth and fifth sentences
of the paragraph under the caption “Risk Factors — If an active trading market
does not develop for these notes you may not be able to resell them,” and
(iii) the statements set forth in the first sentence of the third paragraph, the
third sentence of the tenth paragraph and the eleventh, twelfth and thirteenth
paragraphs, concerning stabilization by the Initial Purchasers, under the
caption “Plan of Distribution” in the Offering Memorandum; and the Initial
Purchasers confirm that such statements are correct. The indemnity agreement set
forth in this Section 8(b) shall be in addition to any liabilities that each
Initial Purchaser may otherwise have.
      (c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in

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conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnified party
or parties shall have the right to select separate counsel to assume such legal
defenses and to otherwise participate in the defense of such action on behalf of
such indemnified party or parties. Upon receipt of notice from the indemnifying
party to such indemnified party of such indemnifying party’s election so to
assume the defense of such action and approval by the indemnified party of
counsel, which such approval shall not be unreasonably withheld, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that the indemnifying party shall not be liable for the expenses of more than
one separate counsel (together with local counsel), approved by the indemnifying
party, representing the indemnified parties who are parties to such action) or
(ii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of commencement of the action, in each of which cases the
reasonable fees and expenses of counsel shall be at the expense of the
indemnifying party.
      (d) Settlements. The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
     SECTION 9. Contribution. If the indemnification provided for in Section 8
is for any reason held to be unavailable to or otherwise insufficient to hold
harmless an indemnified party in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount paid or payable by such indemnified party, as
incurred, as a result of any losses, claims, damages, liabilities or expenses
referred to therein (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other hand, from the offering of the
Securities pursuant to this Agreement or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and the Guarantors, on the
one hand, and the Initial Purchasers, on the other hand, in connection with the
statements or omissions or inaccuracies in the representations and warranties
herein which resulted in such losses, claims, damages, liabilities or expenses,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors, on the one hand, and the Initial
Purchasers, on the other hand, in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same

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respective proportions as the total net proceeds from the offering of the
Securities pursuant to this Agreement (before deducting expenses) received by
the Company or the Guarantors, and the total discount received by the Initial
Purchasers, bear to the aggregate initial offering price of the Securities. The
relative fault of the Company and the Guarantors, on the one hand, and the
Initial Purchasers, on the other hand, shall be determined by reference to,
among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company or the Guarantors, on the one hand, or the
Initial Purchasers, on the other hand, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
     The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in Section 8, any legal or other fees or
expenses reasonably incurred by such party in connection with investigating or
defending any action or claim. The provisions set forth in Section 8 with
respect to notice of commencement of any action shall apply if a claim for
contribution is to be made under this Section 9; provided, however, that no
additional notice shall be required with respect to any action for which notice
has been given under Section 8 for purposes of indemnification.
     The Company, the Guarantors and the Initial Purchasers agree that it would
not be just and equitable if contribution pursuant to this Section 9 were
determined by pro rata allocation (even if the Initial Purchasers were treated
as one entity for such purpose) or by any other method of allocation which does
not take account of the equitable considerations referred to in this Section 9.
     Notwithstanding the provisions of this Section 9, no Initial Purchaser
shall be required to contribute any amount in excess of the discount received by
such Initial Purchaser in connection with the Securities distributed by it. No
person guilty of fraudulent misrepresentation (within the meaning of Section 11
of the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Initial Purchasers’
obligations to contribute pursuant to this Section 9 are several, and not joint,
in proportion to their respective commitments as set forth opposite their names
in Schedule A. For purposes of this Section 9, each director, officer and
employee of an Initial Purchaser and each person, if any, who controls an
Initial Purchaser within the meaning of the Securities Act and the Exchange Act
shall have the same rights to contribution as such Initial Purchaser, and each
director, officer and employee of the Company or any Guarantor, and each person,
if any, who controls the Company or any Guarantor within the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution
as the Company or any Guarantor.
     SECTION 10. Termination of this Agreement. Prior to the Closing Date, this
Agreement may be terminated by the Initial Purchasers by notice given to the
Company if at any time: (i) trading or quotation in any of the Company’s
securities shall have been suspended or limited by the SEC or by the American
Stock Exchange, or trading in securities generally on the American Stock
Exchange, the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally
established on any of such stock exchanges by the SEC or the NASD; (ii) a
general banking moratorium shall

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have been declared by any of federal or New York authorities; (iii) there has
been a material disruption in commercial banking or securities settlement,
payment or clearance services in the United States; (iv) there shall have
occurred any outbreak or escalation of national or international hostilities or
any crisis or calamity, or any change in the United States or international
financial markets, or any substantial change or development involving a
prospective substantial change in United States’ or international political,
financial or economic conditions, as in the judgment of the Initial Purchasers
is material and adverse and makes it impracticable to market the Securities in
the manner and on the terms described in the Offering Memorandum or to enforce
contracts for the sale of securities; (v) in the reasonable judgment of the
Initial Purchasers there shall have occurred any Material Adverse Change; or
(vi) the Company or any Guarantor shall have sustained a loss by strike, fire,
flood, earthquake, accident or other calamity of such character as in the
judgment of the Initial Purchasers would reasonably be expected to result in a
Material Adverse Change. Any termination pursuant to this Section 10 shall be
without liability on the part of (i) the Company or any Guarantor to any Initial
Purchaser, except that the Company and the Guarantors shall be obligated to
reimburse the expenses of the Initial Purchasers pursuant to Sections 4 and 6
hereof, (ii) any Initial Purchaser to the Company or any Guarantor or (iii) any
party hereto to any other party except that the provisions of Section 8 and
Section 9 shall at all times be effective and shall survive such termination.
     SECTION 11. Representations and Indemnities to Survive Delivery. The
respective indemnities, agreements, representations, warranties and other
statements of the Company and the Guarantors, of its officers and of the several
Initial Purchasers set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of any Initial Purchaser or the Company or the Guarantors or any of its or their
respective partners, officers or directors or any controlling person, as the
case may be, and will survive delivery of and payment for the Securities sold
hereunder and any termination of this Agreement.
     SECTION 12. Notices. All communications hereunder shall be in writing and
shall be mailed, hand delivered or telecopied and confirmed to the parties
hereto as follows:
If to the Initial Purchasers:
RBC Capital Markets Corporation
1211 Avenue of the Americas, 32nd Floor
New York, NY 10036
Facsimile: (212) 703-2295
Attention: High Yield Capital Markets
with a copy (which shall not constitute notice) to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 848-7179
Attention: Bruce Czachor, Esq.

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If to the Company, the Guarantors or the Guarantors:
Allis-Chalmers Energy Inc.
5075 Westheimer, Suite 890
Houston, TX 77056
Facsimile: (713) 369-0555
Attention: Theodore F. Pound III, Esq.
with a copy (which shall not constitute notice) to:
Andrews Kurth LLP
600 Travis, Suite 400
Houston, TX 77002
Facsimile: (713) 238-7135
Attention: Robert V. Jewell, Esq.
     Any party hereto may change the address for receipt of communications by
giving written notice to the others in accordance with this Section 12.
     SECTION 13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto, including any substitute Initial Purchasers
pursuant to Section 18 hereof, and to the benefit of the employees, officers,
directors and controlling persons referred to in Section 8 and Section 9, and in
each case their respective successors, and no other person will have any right
or obligation hereunder. The term “successors” shall not include any purchaser
of the Securities as such from any of the Initial Purchasers merely by reason of
such purchase.
     SECTION 14. Partial Unenforceability. The invalidity or unenforceability of
any Section, paragraph or provision of this Agreement shall not affect the
validity or enforceability of any other Section, paragraph or provision hereof.
If any Section, paragraph or provision of this Agreement is for any reason
determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid
and enforceable.
     SECTION 15. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
     SECTION 16. Consent to Jurisdiction. Any legal suit, action or proceeding
arising out of or based upon this Agreement or the transactions contemplated
hereby (“Related Proceedings”) may be instituted in the federal courts of the
United States of America located in the City and County of New York or the
courts of the State of New York in each case located in the City and County of
New York (collectively, the “Specified Courts”), and each party irrevocably
submits to the non-exclusive jurisdiction (except for proceedings instituted in
regard to the enforcement of a judgment of any such court (a “Related
Judgment”), as to which such jurisdiction is non-exclusive) of such courts in
any such suit, action or proceeding. Service of any process, summons, notice or
document by mail to such party’s address set forth above shall be effective
service of process for any suit, action or other proceeding brought in any such
court.

24

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The parties irrevocably and unconditionally waive any objection to the laying of
venue of any suit, action or other proceeding in the Specified Courts and
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such suit, action or other proceeding brought in any such
court has been brought in an inconvenient forum.
     SECTION 17. New York Contacts. RBC hereby acknowledges and agrees that its
chief executive office or an office from which it has conducted a substantial
part of the negotiations relating to the transactions contemplated by this
Agreement is located in the State of New York.
     SECTION 18. Default of One or More of the Several Initial Purchasers. If
any one or more of the several Initial Purchasers shall fail or refuse to
purchase Securities that it or they have agreed to purchase hereunder on the
Closing Date, and the aggregate number of Securities which such defaulting
Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase
does not exceed 10% of the aggregate number of the Securities to be purchased on
such date, the other Initial Purchasers shall be obligated, severally, in the
proportions that the number of Securities set forth opposite their respective
names on Schedule A bears to the aggregate number of Securities set forth
opposite the names of all such non-defaulting Initial Purchasers, or in such
other proportions as may be specified by the Initial Purchasers with the consent
of the non-defaulting Initial Purchasers, to purchase the Securities which such
defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused
to purchase on such date. If any one or more of the Initial Purchasers shall
fail or refuse to purchase Securities and the aggregate number of Securities
with respect to which such default occurs exceeds 10% of the aggregate number of
Securities to be purchased on the Closing Date, and arrangements satisfactory to
the Initial Purchasers and the Company for the purchase of such Securities are
not made within 48 hours after such default, this Agreement shall terminate
without liability of any party to any other party except that the provisions of
Sections 4, 6, 8, 9, 12, 14, 15, 16, 17, 18 and 19 shall at all times be
effective and shall survive such termination. In any such case either the
Initial Purchasers or the Company shall have the right to postpone the Closing
Date, as the case may be, but in no event for longer than seven days in order
that the required changes, if any, to the Offering Memorandum or any other
documents or arrangements may be effected.
     As used in this Agreement, the term “Initial Purchaser” shall be deemed to
include any person substituted for a defaulting Initial Purchaser under this
Section 18. Any action taken under this Section 18 shall not relieve any
defaulting Initial Purchaser from liability in respect of any default of such
Initial Purchaser under this Agreement.
     SECTION 19. No Fiduciary Duty. The Company and each Guarantor hereby
acknowledges that the Initial Purchasers are each acting solely as an initial
purchaser in connection with the purchase and sale of the Securities. The
Company further acknowledges that the Initial Purchasers are acting pursuant to
a contractual relationship created solely by this Agreement entered into on an
arm’s length basis and in no event do the parties intend that the Initial
Purchasers act or be responsible as a fiduciary to the Company or any Guarantor,
their management, stockholders, creditors or any other person in connection with
any activity that the Initial Purchasers may undertake or has undertaken in
furtherance of the purchase and sale of the Securities, either before or after
the date hereof. The Initial Purchasers hereby expressly disclaim any fiduciary
or similar obligations to the Company or any Guarantor, either in connection
with the transactions contemplated by this Agreement or any matters leading up
to

25

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such transactions, and the Company and each Guarantor hereby confirms its
understanding and agreement to that effect. The Company, each Guarantor and the
Initial Purchasers agree that they are each responsible for making their own
independent judgments with respect to any such transactions, and that any
opinions or views expressed by the Initial Purchasers to the Company or any
Guarantor regarding such transactions, including but not limited to any opinions
or views with respect to the price or market for the Securities, do not
constitute advice or recommendations to the Company or any Guarantor. The
Company and each Guarantor hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company or any Guarantor may have against
the Initial Purchasers with respect to any breach or alleged breach of any
fiduciary or similar duty to the Company or any Guarantor in connection with the
transactions contemplated by this Agreement or any matters leading up to such
transactions.
     SECTION 20. General Provisions. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The section headings herein are for the convenience of the parties only and
shall not affect the construction or interpretation of this Agreement.

26

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     If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to the Company the enclosed copies hereof, whereupon this
instrument, along with all counterparts hereof, shall become a binding agreement
in accordance with its terms.

            Very truly yours,

COMPANY:

ALLIS-CHALMERS ENERGY INC.
      By:   /s/ Bruce Sauers         Name:   Bruce Sauers        Title:   Vice
President & Controller        GUARANTORS:

ALLIS-CHALMERS TUBULAR SERVICES, INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary        AIRCOMP L.L.C.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary        CAPCOIL TUBING SERVICES, INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary     

 

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            DELTA RENTAL SERVICE, INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary        DOWNHOLE INJECTION SYSTEMS, LLC
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary        MOUNTAIN COMPRESSED AIR, INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary        OILQUIP RENTALS, INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary        SAFCO-OIL FIELD PRODUCTS, INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary     

 

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            STRATA DIRECTIONAL TECHNOLOGY, INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary        TARGET ENERGY INC.
      By:   /s/ Theodore F. Pound III         Name:   Theodore F. Pound III     
  Title:   Vice President & Secretary   

 

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     The foregoing Purchase Agreement is hereby confirmed and accepted by the
Initial Purchasers as of the date first above written.

          RBC CAPITAL MARKETS CORPORATION     MORGAN KEEGAN & COMPANY, INC.    
 
       
By:
  RBC Capital Markets Corporation for itself and on behalf of the other Initial
Purchaser    

         
By:
  /s/ Nicholas Daifotis
 
   
 
  Name: Nicholas Daifotis    
 
  Title: Managing Director    

 

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SCHEDULE A

              Aggregate       Principal       Amount of       Securities to be  
Initial Purchasers   Purchased  
RBC Capital Markets Corporation
  $ 152,000,000  
Morgan Keegan & Company, Inc.
    8,000,000  
 
       
Total
  $ 160,000,000  

Schedule A-1

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SCHEDULE B
Allis-Chalmers Tubular Services, Inc.
Aircomp L.L.C.
Capcoil Tubing Services, Inc.
Delta Rental Service, Inc.
Downhole Injection Systems, LLC
Mountain Compressed Air, Inc.
OilQuip Rentals, Inc.
Safco-Oil Field Products, Inc.
Strata Directional Technology, Inc.
Target Energy Inc.

Schedule B-1

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SCHEDULE C

      Name of Accountants   Name of Entity  
UHY Mann Frankfort Stein & Lipp CPAs, LLP
  Allis-Chalmers Energy Inc.
 
  Specialty Rental Tools, Inc.
Gordon, Hughes and Banks, LLP
  Allis-Chalmers Energy Inc.
Accounting & Consulting Group, LLP
  Diamond Air Drilling Services, Inc.
 
  Marquis Bit Co., LLC
 
  W. T. Enterprises, Inc.
Johnson, Miller & Co.
  Downhole Injection Systems, LLC
Wright, Moore, Dehart, Dupuis & Hutchinson, LLC
  Delta Rental Service, Inc.
Curtis Blakely & Co., PC
  Capcoil Tubing Services, Inc.

Schedule C-1

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EXHIBIT A-1
Opinion of Andrews Kurth LLP
January [__], 2006
To each of the Initial Purchasers named in
the Purchase Agreement referenced herein
c/o RBC Capital Markets Corporation
1211 Avenue of the Americas, 32nd Floor
New York, NY 10036
     Re: [___]% Senior Notes due 2014 issued by Allis-Chalmers Energy Inc.
Ladies and Gentlemen:
     We have acted as special counsel to Allis-Chalmers Energy Inc., a Delaware
corporation (the “Issuer”), in connection with the Purchase Agreement dated
January [___], 2006 (the “Purchase Agreement”) among (i) the Issuer, (ii) the
subsidiaries of the Issuer named therein as parties thereto, and (iii) RBC
Capital Markets Corporation and Morgan Keegan & Company, Inc. (collectively, the
“Initial Purchasers”), relating to the sale by the Issuer to the Initial
Purchasers of $[160,000,000] aggregate principal amount of the Issuer’s [___]%
Senior Notes due 2014 (the “Initial Securities”). The Initial Securities are
being issued under an Indenture dated as of January [___], 2006 (the
“Indenture”) among the Issuer, the subsidiaries of the Issuer named therein as
parties thereto and as guarantors of the Initial Securities (collectively, the
“Guarantors”) and Wells Fargo Bank, N.A., as trustee (the “Trustee”). The Issuer
and the Guarantors are referred to collectively herein as the “Obligors.”
     The Obligors and the Initial Purchasers have entered into a Registration
Rights Agreement dated as of January [___], 2006 (the “Registration Rights
Agreement”), pursuant to which the Obligors have agreed to file, under certain
conditions, with the Securities and Exchange Commission (the “SEC”), a
registration statement under the Securities Act of 1933, as amended (the
“Securities Act”), with respect to an offer (the “Exchange Offer”) by the
Obligors to the holders of the Initial Securities to issue and deliver to such
holders, in exchange for their Initial Securities, a like principal amount of
new securities (the “Exchange Securities”) identical to the Initial Securities
in all material respects, except that the Exchange Securities will not (except
in specified circumstances) be subject to restrictions on transfer.
     We are furnishing this opinion letter to you pursuant to Section 5(c) of
the Purchase Agreement.
     In rendering the opinions set forth herein, we have examined and relied on
originals or copies, certified or otherwise identified to our satisfaction, of
the following:
Exhibit A-1-1

 

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  (a)   the Issuer’s Preliminary Offering Memorandum dated December 28, 2005
(the “Preliminary Offering Memorandum”) relating to the Securities;     (b)  
the Issuer’s Offering Memorandum dated January [___], 2006 (the “Offering
Memorandum”) relating to the Initial Securities;     (c)   the [___], (such
documents, together with the Preliminary Offering Memorandum, being referred to
herein as the “Disclosure Package”);     (d)   the Indenture;     (e)   the form
of the Initial Securities and the form of the Exchange Securities;     (f)  
[each of (i)] the global note executed by the Issuer pursuant to the Indenture,
in the aggregate principal amount of $[___], representing the Initial Securities
purchased and sold pursuant to the Purchase Agreement with a view toward resale
in reliance on Rule 144A under the Securities Act [and (ii) the global note
executed by the Issuer pursuant to the Indenture, in the aggregate principal
amount of $[___], representing the Initial Securities purchased and sold
pursuant to the Purchase Agreement with a view toward resale in reliance on
Regulation S under the Securities Act];     (g)   the Purchase Agreement;    
(h)   the Registration Rights Agreement;     (i)   the Stock Purchase Agreement
dated as of December 20, 2005 (the “Specialty Stock Purchase Agreement”) by and
between the Issuer and Joe Van Matre, an individual resident in Lafayette,
Louisiana, pursuant to which the Issuer agreed to purchase and Mr. Van Matre
agreed to sell, all the issued and outstanding shares of capital stock of
Specialty Rental Tools, Inc., a Louisiana corporation (“Specialty”), subject to
certain conditions specified in such agreement;     (j)   the Certificate of
Incorporation of the Issuer, certified by the Secretary of State of the State of
Delaware as in effect on January [___], 2006, and certified by the Secretary of
the Issuer as in effect on each of the dates of the adoption of the resolutions
specified in paragraph (l) below, the date of the Purchase Agreement and the
date hereof (the “Issuer Certificate of Incorporation”);     (k)   the Bylaws of
the Issuer, certified by the Secretary of the Issuer as in effect on each of the
dates of the adoption of the resolutions specified in paragraph (l) below, the
date of the Purchase Agreement and the date hereof (the “Issuer Bylaws”);    
(l)   resolutions of the Board of Directors of the Issuer dated [___] [___],
2005, and resolutions of the Pricing Committee of the Board of Directors of the
Issuer dated January [___], 2006, certified by the Secretary of the Issuer;

Exhibit A-2-1

 

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  (m)   the Articles of Incorporation of Allis-Chalmers Tubular Services, Inc.,
certified by the Secretary of State of the State of Texas as in effect on
January [___], 2006, and certified by the Secretary of Allis-Chalmers Tubular
Services, Inc., as in effect on each of the dates of the adoption of the
resolutions specified in paragraph (h) below, the date of the Purchase Agreement
and the date hereof;     (n)   the Bylaws of Allis-Chalmers Tubular Services,
Inc., certified by the Secretary of Allis-Chalmers Tubular Services, Inc. as in
effect on each of the dates of the adoption of the resolutions specified in
paragraph (h) below, the date of the Purchase Agreement and the date hereof;    
(o)   resolutions of the Board of Directors of Allis-Chalmers Tubular Services,
Inc. dated January [___], 2006, certified by the Secretary of Allis-Chalmers
Tubular Services, Inc.;     (p)   the Certificate of Formation of Aircomp
L.L.C., certified by the Secretary of State of the State of Delaware as in
effect on January [___], 2006, and certified by the [Secretary] of Aircomp
L.L.C., as in effect on each of the dates of the adoption of the resolutions
specified in paragraph (r) below, the date of the Purchase Agreement and the
date hereof;     (q)   the Limited Liability Company Agreement of Aircomp
L.L.C., certified by the [Secretary] of Aircomp L.L.C. as in effect on each of
the dates of the adoption of the resolutions specified in paragraph (r) below,
the date of the Purchase Agreement and the date hereof;     (r)   resolutions of
the [managers/members] of Aircomp L.L.C. dated January [___], 2006, certified by
the [Secretary] of Aircomp L.L.C.;     (s)   the Articles of Incorporation of
Capcoil Tubing Services, Inc., certified by the Secretary of State of the State
of Texas as in effect on January [___], 2006, and certified by the Secretary of
Capcoil Tubing Services, Inc., as in effect on each of the dates of the adoption
of the resolutions specified in paragraph (u) below, the date of the Purchase
Agreement and the date hereof;     (t)   the Bylaws of Capcoil Tubing Services,
Inc., certified by the Secretary of Capcoil Tubing Services, Inc. as in effect
on each of the dates of the adoption of the resolutions specified in paragraph
(u) below, the date of the Purchase Agreement and the date hereof;     (u)  
resolutions of the Board of Directors of Capcoil Tubing Services, Inc. dated
January [___], 2006, certified by the Secretary of Capcoil Tubing Services, Inc.
    (v)   the Articles of Organization of Downhole Injection Systems, LLC,
certified by the Secretary of State of the State of Texas as in effect on
January [___], 2006, and certified by the [Secretary] of Downhole Injection
Systems, LLC, as in effect on each of the dates of the adoption of the
resolutions specified in paragraph (x) below, the date of the Purchase Agreement
and the date hereof;     (w)   the Regulations of Downhole Injection Systems,
LLC, certified by the [Secretary] of Downhole Injection Systems, LLC as in
effect on each of the dates of the adoption of the

Exhibit A-3-1

 

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      resolutions specified in paragraph (x) below, the date of the Purchase
Agreement and the date hereof;     (x)   resolutions of the [managers/members]
of Downhole Injection Systems, LLC dated [___] [___], 2005, certified by the
[Secretary] of Downhole Injection Systems, LLC;     (y)   the Articles of
Incorporation of Mountain Compressed Air, Inc., certified by the Secretary of
State of the State of Texas as in effect on January [___], 2006, and certified
by the Secretary of Mountain Compressed Air, Inc., as in effect on each of the
dates of the adoption of the resolutions specified in paragraph (aa) below, the
date of the Purchase Agreement and the date hereof;     (z)   the Bylaws of
Mountain Compressed Air, Inc., certified by the Secretary of Mountain Compressed
Air, Inc. as in effect on each of the dates of the adoption of the resolutions
specified in paragraph (aa) below, the date of the Purchase Agreement and the
date hereof;     (aa)   resolutions of the Board of Directors of Mountain
Compressed Air, Inc. dated January [___], 2006, certified by the Secretary of
Mountain Compressed Air, Inc.;     (bb)   the Certificate of Incorporation of
OilQuip Rentals Inc., certified by the Secretary of State of the State of
Delaware as in effect on January [___], 2006, and certified by the Secretary of
OilQuip Rentals Inc., as in effect on each of the dates of the adoption of the
resolutions specified in paragraph (dd) below, the date of the Purchase
Agreement and the date hereof;     (cc)   the Bylaws of OilQuip Rentals Inc.,
certified by the Secretary of OilQuip Rentals Inc. as in effect on each of the
dates of the adoption of the resolutions specified in paragraph (dd) below, the
date of the Purchase Agreement and the date hereof;     (dd)   resolutions of
the Board of Directors of OilQuip Rentals Inc. dated January [___], 2006,
certified by the Secretary of OilQuip Rentals Inc.;     (ee)   the Articles of
Incorporation of Safco-Oil Field Products, Inc., certified by the Secretary of
State of the State of Texas as in effect on January [___], 2006, and certified
by the Secretary of Safco-Oil Field Products, Inc., as in effect on each of the
dates of the adoption of the resolutions specified in paragraph (gg) below, the
date of the Purchase Agreement and the date hereof;     (ff)   the Bylaws of
Safco-Oil Field Products, Inc., certified by the Secretary of Safco-Oil Field
Products, Inc. as in effect on each of the dates of the adoption of the
resolutions specified in paragraph (gg) below, the date of the Purchase
Agreement and the date hereof;     (gg)   resolutions of the Board of Directors
of Safco-Oil Field Products, Inc. dated January [___], 2006, certified by the
Secretary of Safco-Oil Field Products, Inc.;     (hh)   the Articles of
Incorporation of Strata Directional Technology, Inc., certified by the Secretary
of State of the State of Texas as in effect on January [___], 2006, and

Exhibit A-4-1

 

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      certified by the Secretary of Strata Directional Technology, Inc., as in
effect on each of the dates of the adoption of the resolutions specified in
paragraph (jj) below, the date of the Purchase Agreement and the date hereof;  
  (ii)   the Bylaws of Strata Directional Technology, Inc., certified by the
Secretary of Strata Directional Technology, Inc. as in effect on each of the
dates of the adoption of the resolutions specified in paragraph (jj) below, the
date of the Purchase Agreement and the date hereof;     (jj)   resolutions of
the Board of Directors of Strata Directional Technology, Inc. dated January
[___], 2006, certified by the Secretary of Strata Directional Technology, Inc.;
    (kk)   the Certificate of Incorporation of Target Energy Inc., certified by
the Secretary of State of the State of Delaware as in effect on January [___],
2006, and certified by the Secretary of Target Energy Inc., as in effect on each
of the dates of the adoption of the resolutions specified in paragraph
(mm) below, the date of the Purchase Agreement and the date hereof;     (ll)  
the Bylaws of Target Energy Inc., certified by the Secretary of Target Energy
Inc. as in effect on each of the dates of the adoption of the resolutions
specified in paragraph (mm) below, the date of the Purchase Agreement and the
date hereof;     (mm)   resolutions of the Board of Directors of Target Energy
Inc. dated January [___], 2006, certified by the Secretary of Target Energy
Inc.;     (nn)   a certificate from the Secretary of State of the State of
Delaware dated January [___], 2006 as to the good standing and legal existence
under the laws of the State of Delaware of the Issuer;     (oo)   certificates
from the Secretary of State of the State of Delaware dated January [___], 2006
as to the good standing and legal existence under the laws of the State of
Delaware of the Applicable Guarantors organized in the State of Delaware;    
(pp)   (i) certificates from the Secretary of State of the State of Texas dated
January [___], 2006 as to the legal existence under the laws of the State of
Texas of the Applicable Guarantors organized in the State of Texas, and
(ii) certificates from the Comptroller of Public Accounts of the State of Texas
dated January [___], 2006 as to the good standing under the laws of the State of
Texas of the Applicable Guarantors organized in the State of Texas;     (qq)   a
certificate dated the date hereof (the “Opinion Support Certificate”), executed
by the President and Chief Operating Officer and by the Chief Financial Officer
of the Issuer, a copy of which is attached hereto as Exhibit A;     (rr)   each
of the Applicable Orders (as defined below); and     (ss)   each of the
Applicable Agreements (as defined below).

Exhibit A-5-1

 

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     We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Obligors and such
agreements, certificates of public officials, certificates of officers or other
representatives of the Obligors and others, and such other documents,
certificates and records, as we have deemed necessary or appropriate as a basis
for the opinions set forth herein. In our examination, we have assumed the legal
capacity of all natural persons, the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, and the conformity
to authentic original documents of all documents submitted to us as certified or
photostatic copies. As to any facts material to the opinions and statements
expressed herein that we did not independently establish or verify, we have
relied, to the extent we deem appropriate, upon (i) oral or written statements
and representations of officers and other representatives of the Obligors
(including without limitation the facts certified in the Opinion Support
Certificate), (ii) representations made by the Obligors and representations made
by the Initial Purchasers in the Purchase Agreement and (iii) statements and
certifications of public officials and others.
     As used herein the following terms have the respective meanings set forth
below:
     “Applicable Agreements” means those agreements and other instruments
identified on Schedule 1 to the Opinion Support Certificate.
     “Applicable Guarantors” means the Guarantors listed in Exhibit B hereto.
     “Applicable Obligor Organizational Documents” means, collectively, the
following instruments, each in the form reviewed by us, as indicated above:
(i) the Issuer Certificate of Incorporation, (ii) the Issuer Bylaws, and
(iii) the Certificates of Incorporation, Articles of Incorporation, Certificates
of Formation, Articles of Organization, Bylaws, Limited Liability Company
Agreements and Regulations of the Applicable Guarantors.
     “Applicable Orders” means those orders or decrees of governmental
authorities identified on Schedule 2 to the Opinion Support Certificate.
[However, officers of the Issuer have certified in the Opinion Support
Certificate that there are no Applicable Orders.]
     “Person” means a natural person or a legal entity organized under the laws
of any jurisdiction.
     “Transaction Documents” means collectively, the Purchase Agreement, the
Registration Rights Agreement, the Indenture, the Initial Securities and the
Exchange Securities.
     1. Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that: The
Issuer is validly existing as a corporation and in good standing under the laws
of the State of Delaware. Each of the Applicable Guarantors listed in Exhibit B
hereto is validly existing as a corporation or limited liability company as
indicated in such Exhibit and in good standing under the laws of its
jurisdiction of formation or organization indicated in such Exhibit.
     2. The Issuer has the corporate power and corporate authority under the
laws of the State of Delaware to (i) execute and deliver, and incur and perform
all of its obligations under, the Transaction Documents and (ii) carry on its
business and own and lease its properties as
Exhibit A-6-1

 

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described in the Offering Memorandum. Each of the Applicable Guarantors has the
corporate, or limited liability company power and authority under the laws of
its jurisdiction of formation or organization indicated in Exhibit B hereto to
(i) execute and deliver, and to incur and perform all of its obligations under,
the Transaction Documents to which it is a party and (ii) carry on its business
and own and lease its properties as described in the Offering Memorandum.
     3. Each of the Purchase Agreement, the Registration Rights Agreement, the
Initial Securities and the Indenture has been duly authorized, executed and
delivered by the Issuer. The Exchange Securities have been duly authorized by
the Issuer. Each of the Purchase Agreement, the Registration Rights Agreement
and the Indenture has been duly authorized, executed and delivered by each of
the Applicable Guarantors that is a party thereto.
     4. None of (i) the execution and delivery of, or the incurrence or
performance by the Obligors of their respective obligations under, each of the
Transaction Documents to which it is a party, each in accordance with its terms,
(ii) the offering, issuance, sale and delivery of the Initial Securities
pursuant to the Purchase Agreement, (iii) the offering, issuance, exchange and
delivery of the Exchange Securities pursuant to the Exchange Offer contemplated
by the Registration Rights Agreement in the manner therein contemplated,
(iv) the issuance of the guaranties of the Initial Securities by the Guarantors,
as set forth in the Indenture, or (v) the issuance of the guaranties of the
Exchange Securities by the Guarantors, as set forth in the Indenture, at such
time as the Exchange Securities are issued pursuant to the Exchange Offer
contemplated by the Registration Rights Agreement in the manner therein
contemplated, (A) constituted, constitutes or will constitute a violation of the
Applicable Obligor Organizational Documents, (B) constituted, constitutes or
will constitute a breach or violation of, or a default (or an event which, with
notice or lapse of time or both, would constitute such a default), under any
Applicable Agreement, (C) resulted, results or will result in the creation of
any security interest in, or lien upon, any of the property or assets of any
Obligor pursuant to any Applicable Agreement, (D) resulted, results or will
result in any violation of (i) applicable laws of the State of New York, (ii)
applicable laws of the State of Texas, (iii) applicable laws of the United
States of America, (iv) the General Corporation Law of the State of Delaware,
(v) the Texas Business Corporation Act, (vi) the Delaware Limited Liability
Company Act, (vii) the Texas Limited Liability Company Act or (viii)
Regulation T, U or X of the Board of Governors of the Federal Reserve System, or
(E) resulted, results or will result in the contravention of any Applicable
Order.
     5. No Governmental Approval, which has not been obtained or taken and is
not in full force and effect, is required to authorize, or is required for
(i) the execution and delivery by each of the Obligors of, the Transaction
Documents to which it is a party or the incurrence or performance of its
obligations thereunder, or the enforceability of any of such Transaction
Documents against any of the Obligors that is a party thereto or (ii) the
consummation of the purchase by the Issuer of all the issued and outstanding
shares of capital stock of Specialty, as contemplated by the Specialty Stock
Purchase Agreement. As used in this paragraph, “Governmental Approval” means any
consent, approval, license, authorization or validation of, or filing, recording
or registration with, any executive, legislative, judicial, administrative or
regulatory body of the State of New York, the State of Texas, the State of
Delaware or the United States of America, pursuant to (i) applicable laws of the
State of New York, (ii) applicable laws of the State of Texas, (iii) applicable
laws of the United States of America, (iv)
Exhibit A-7-1

 

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the General Corporation Law of the State of Delaware, (v) the Delaware Limited
Liability Company Act, (vi) the Texas Business Corporation Act or (vii) the
Texas Limited Liability Company Act.
     6. The statements under the caption “Description of Notes” in the
Preliminary Offering Memorandum and the Offering Memorandum, insofar as such
statements purport to summarize certain provisions of documents referred to
therein and reviewed by us as described above, fairly summarize such provisions
in all material respects, subject to the qualifications and assumptions stated
therein.
     7. The statements in the Preliminary Offering Memorandum and the Offering
Memorandum under the caption “Material U.S. Federal Income Tax Considerations,”
insofar as they refer to statements of law or legal conclusions, fairly
summarize the matters referred to therein in all material respects, subject to
the qualifications and assumptions stated therein.
     8. The Indenture constitutes a valid and binding obligation of each of the
Obligors, enforceable against each of them in accordance with its terms, under
applicable laws of the State of New York.
     9. When authenticated by the Trustee in the manner provided in the
Indenture and delivered to and paid for by the Initial Purchasers in accordance
with the Purchase Agreement, the Initial Securities will constitute valid and
binding obligations of the Issuer, entitled to the benefits of the Indenture and
enforceable against the Issuer in accordance with their terms, under applicable
laws of the State of New York.
     10. When the Initial Securities have been authenticated by the Trustee in
the manner provided in the Indenture and delivered to and paid for by the
Initial Purchasers in accordance with the Purchase Agreement, the guarantee of
the Initial Securities included in the Indenture will constitute a valid and
binding obligation of the Guarantors, enforceable against the Guarantors in
accordance with the terms of the Indenture, under applicable laws of the State
of New York.
     11. When validly executed by the Issuer and authenticated by the Trustee in
the manner provided in the Indenture and delivered in exchange for Initial
Securities pursuant to the Exchange Offer contemplated by the Registration
Rights Agreement, the Exchange Securities will constitute valid and binding
obligations of the Issuer, entitled to the benefits of the Indenture and
enforceable against the Issuer in accordance with their terms, under applicable
laws of the State of New York.
     12. When the Exchange Securities have been validly executed by the Issuer
and authenticated by the Trustee in accordance with the provisions of the
Indenture and delivered in exchange for Initial Securities pursuant to the
Exchange Offer contemplated by the Registration Rights Agreement, the guarantee
included in the Indenture of the Exchange Securities will constitute a valid and
binding obligation of the Guarantors, enforceable against the Guarantors in
accordance with the terms of the Indenture, under applicable laws of the State
of New York.

Exhibit A-8-1

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     13. The Registration Rights Agreement constitutes a valid and binding
obligation of each of the Obligors, enforceable against each of them in
accordance with its terms, under applicable laws of the State of New York.
     14. Assuming (i) the accuracy of the representations and warranties of the
Obligors set forth in [___] of the Purchase Agreement, (ii) the due performance
by the Obligors and the Initial Purchasers of the covenants and agreements set
forth in the Purchase Agreement, (iii) the compliance by the Initial Purchasers
with the offering and transfer procedures and the restrictions described in the
Offering Memorandum, (iv) the accuracy of the representations and warranties of
the Initial Purchasers set forth in Section [___] of the Purchase Agreement,
(v) the accuracy of the representations and warranties made or deemed to be made
in accordance with the Purchase Agreement and the Offering Memorandum by
purchasers to whom the Initial Purchasers initially resell the Initial
Securities, and (vi) that purchasers to whom the Initial Purchasers initially
resell the Initial Securities have been made aware of the information set forth
in the Offering Memorandum under the caption “Notice to Investors,” (A) the
offer, issue, sale and delivery of the Initial Securities (and the guaranties
thereof by the Guarantors) to the Initial Purchasers and the initial resale of
the Initial Securities (and the guaranties thereof by the Guarantors) by the
Initial Purchasers, each in the manner contemplated by the Purchase Agreement
and the Offering Memorandum, do not require registration under the Securities
Act, and (B) prior to the consummation of the Exchange Offer or the
effectiveness of the Shelf Registration Statement (as defined in the
Registration Rights Agreement), such offer, issue, sale and delivery of the
Initial Securities (and the guaranties thereof by the Guarantors) and such
initial resale of the Initial Securities (and the guaranties thereof by the
Guarantors) do not require qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, provided, however, that we express no opinion
as to any subsequent resale of any Initial Security (and the guaranties thereof
by the Guarantors) or any Exchange Security (and the guaranties thereof by the
Guarantors).
     15. Each of the Obligors is not, and immediately after giving effect to the
issuance and sale of the Initial Securities occurring today and the application
of proceeds therefrom as described in the Offering Memorandum, will not be, an
“investment company” within the meaning of said term as used in the Investment
Company Act of 1940, as amended.
     In addition, we have participated in conferences with officers and other
representatives of the Obligors, the independent registered public accounting
firm for the Obligors, your counsel and your representatives at which the
contents of the Disclosure Package and the Offering Memorandum and related
matters were discussed and, although we have not independently verified and are
not passing upon, and do not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Disclosure Package
and the Offering Memorandum (except as and to the extent set forth in paragraphs
6 and 7 above), on the basis of the foregoing (relying with respect to factual
matters to the extent we deem appropriate upon statements by officers and other
representatives of the Obligors), no facts have come to our attention that have
led us to believe that (i) the Disclosure Package, as of [___:___] [a.m. / p.m]
on January [___], 2006(which you have informed us is a time prior to the time of
the first sale of the Securities by the Initial Purchasers), contained an untrue
statement of a material fact or omitted to state any material fact necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, or (ii) the Offering Memorandum, as of its date
Exhibit A-9-1

 

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and as of the date hereof, contained or contains an untrue statement of a
material fact or omitted or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, it being understood that we express no statement or belief
with respect to (i) the historical and pro forma financial statements and
related schedules, including the notes and schedules thereto and the auditor’s
report thereon[,] [and] (ii) any other financial or accounting data, included
Offering Memorandum or excluded therefrom [and (iii) the exclusion from the
Disclosure Package of any pricing information (and directly related disclosure)
included in the Offering Memorandum]. Without limiting the foregoing, we call to
your attention that (i) the Offering Memorandum has been prepared in the context
of a Rule 144A transaction and not as part of a registration statement under the
Securities Act, and (ii) the Offering Memorandum does not contain all
information that would be required in a registration statement under the
Securities Act.
     We express no opinion as to the laws of any jurisdiction other than
(i) applicable laws of the State of New York, (ii) applicable laws of the State
of Texas, (iii) applicable laws of the United States of America, (iv) certain
other specified laws of the United States of America to the extent referred to
specifically herein, (v) the General Corporation Law of the State of Delaware,
(vi) the Delaware Limited Liability Company Act, (vii) the Texas Business
Corporation Act and (viii) the Texas Limited Liability Company Act. References
herein to “applicable laws” mean those laws, rules and regulations that, in our
experience, are normally applicable to transactions of the type contemplated by
the Transaction Documents, without our having made any special investigation as
to the applicability of any specific law, rule or regulation, and that are not
the subject of a specific opinion herein referring expressly to a particular law
or laws; provided however, that such references (including without limitation
those appearing in paragraphs (m)4 and (m)5 above) do not include any municipal
or other local laws, rules or regulations, or any antifraud, environmental,
labor, securities, tax, insurance or antitrust, laws, rules or regulations.
     Our opinions expressed herein are subject to the following additional
assumptions and qualifications:
     (i) The opinions set forth in paragraph (m)1 above as to the valid
existence and good standing of the Issuer and the other entities mentioned in
such paragraph are based solely upon our review of certificates and other
communications from the appropriate public officials.
     (ii) In rendering the opinions set forth in paragraph (m)4 above regarding
Applicable Agreements, we do not express any opinion, however, as to whether the
execution or delivery by the Obligors of the Transaction Documents, or the
incurrence or performance by any of the Obligors of its obligations thereunder,
will constitute a violation of, or a default under or as a result of, any
covenant, restriction or provision with respect to any financial ratio or test
or any aspect of the financial condition or results of operation of any of the
Obligors.
     (iii) The opinion set forth in paragraph 7 above with respect to U.S.
federal income tax consequences is based upon our interpretations of current
U.S. federal income tax law, including court authority and existing final and
temporary U.S. Treasury regulations, which are subject to change both
prospectively and retroactively, and upon the assumptions and qualifications
Exhibit A-10-1

 

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discussed herein. We note that such opinion represents merely our best legal
judgment on the matters presented and that others may disagree with our
conclusion. Such opinion is not binding upon the Internal Revenue Service or
courts, and there is no guarantee that the Internal Revenue Service will not
successfully challenge our conclusions. No assurance can be given that future
legislative, judicial or administrative changes, on either a prospective or
retroactive basis, would not adversely affect the accuracy of our conclusions.
     (iv) Treasury Circular 230 Disclosure. This disclosure is provided to
comply with Treasury Circular 230. The opinion set forth in paragraph 7 of this
letter is not intended or written to be used, and cannot be used, by any person
for the purpose of avoiding tax penalties that may be imposed on the person.
Such opinion was written to support the promoting, marketing or recommending of
the transactions or matters addressed by this written advice, and the taxpayer
should seek advice based on the taxpayer’s particular circumstances from an
independent tax advisor. No limitation has been imposed by our firm on
disclosure of the tax treatment or tax structure of the transaction.
     (v) Our opinions in paragraphs 8, 9, 10, 11, 12 and 13 above may be:

  (1)   limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or transfer or other similar laws relating to
or affecting the rights of creditors generally; and     (2)   subject to the
application of general principles of equity (regardless of whether considered in
a proceeding in equity or at law), including, without limitation, the possible
unavailability of specific performance, injunctive relief or any other equitable
remedy and concepts of materiality, reasonableness, good faith and fair dealing.

     (vi) Our opinions in paragraphs 8, 9, 10, 11, 12 and 13 insofar as they
pertain to the choice of law provisions of the instruments referred to in such
paragraphs, are rendered solely in reliance upon New York General Obligations
Law Section 5-1401, and are expressly conditioned upon the assumption that the
legality, validity, binding effect and enforceability of said provisions will be
determined by a court of the State of New York or a United States federal court
sitting in New York and applying New York choice of law rules, including said
Section 5-1401. We express no opinion as to any such provision if such legality,
validity, binding effect or enforceability is determined by any other court, and
we call your attention to the decision of the United States District Court for
the Southern District of New York in Lehman Brothers Commercial Corp. v.
Minmetals Int’l Non-Ferrous Metals Trading Co., 179 F. Supp. 2d 119 (S.D.N.Y.
2000), which, among other things, contains dicta relating to possible
constitutional limitations upon said Section 5-1401. We express no opinion as to
any such constitutional limitations upon said Section 5-1401 or their effect, if
any, upon any opinion herein expressed.
     (vii) We express no opinion as to the validity, effect or enforceability of
any provisions:

  (1)   purporting to establish evidentiary standards or limitations periods for
suits or proceedings to enforce such documents or otherwise, to establish
certain

Exhibit A-11-1

 

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      determinations (including determinations of contracting parties and
judgments of courts) as conclusive or conclusive absent manifest error, to
commit the same to the discretion of any Person or permit any Person to act in
its sole judgment or to waive rights to notice;     (2)   providing that the
assertion or employment of any right or remedy shall not prevent the concurrent
assertion or employment of any other right or remedy, or that each and every
remedy shall be cumulative and in addition to every other remedy or that any
delay or omission to exercise any right or remedy shall not impair any other
right or remedy or constitute a waiver thereof;     (3)   relating to
severability or separability;     (4)   purporting to limit the liability of, or
to exculpate, any Person, including without limitation any provision that
purports to waive liability for violation of securities laws;     (5)  
[purporting to waive damages;]     (6)   that constitute an agreement to agree
in the future on any matter;     (7)   that relate to indemnification,
contribution or reimbursement obligations to the extent any such provisions
(i) would purport to require any Person to provide indemnification, contribution
or reimbursement in respect of the negligence, recklessness, willful misconduct
or unlawful or wrongful behavior of any Person, (ii) violate any law, rule or
regulation (including any federal or state securities law, rule or regulation)
or (iii) are determined to be contrary to public policy;     (8)   purporting to
establish any obligation of any party as absolute or unconditional regardless of
the occurrence or non-occurrence or existence or non-existence of any event or
other state of facts;     (9)   purporting to obligate any party to conform to a
standard that may not be objectively determinable or employing items that are
vague or have no commonly accepted meaning in the context in which used;    
(10)   purporting to require the payment of liquidated damages or additional
interest for failure timely to comply with obligations under the Registration
Rights Agreement;     (11)   purporting to require that all amendments, waivers
and terminations be in writing or the disregard of any course of dealing or
usage of trade;     (12)   relating to consent to jurisdiction insofar as such
provisions purport to confer subject matter jurisdiction upon any court that
does not have such jurisdiction, whether in respect of bringing suit,
enforcement of judgments or otherwise;

Exhibit A-12-1

 

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  (13)   [purporting to require disregard of mandatory choice of law principles
that could require application of a law other than the law expressly chosen to
govern the instrument in which such provisions appear;] or     (14)   purporting
to waive rights to trial by jury or rights to object to jurisdiction based on
inconvenient forum.

Exhibit A-13-1

 

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     (viii) In making our examination of executed documents, we have assumed
(except to the extent that we expressly opine above) (1) the valid existence and
good standing of each of the parties thereto, (2) that such parties had the
power and authority, corporate, partnership, limited liability company or other,
to enter into and to incur and perform all their obligations thereunder, (3) the
due authorization by all requisite action, corporate, partnership, limited
liability company or other, and the due execution and delivery by such parties
of such documents and (4) to the extent such documents purport to constitute
agreements, that each of such documents constitutes the legal, valid and binding
obligation of each party thereto, enforceable against such party in accordance
with its terms. In this paragraph (viii), all references to parties to documents
shall be deemed to mean and include each of such parties, and each other person
(if any) directly or indirectly acting on its behalf.
     (ix) Except to the extent that we expressly opine above, we have assumed
that the execution and delivery of the Transaction Documents, and the incurrence
and performance of the obligations thereunder of the parties thereto do not and
will not contravene, breach, violate or constitute a default under (with the
giving of notice, the passage of time or otherwise) (a) the certificate or
articles of incorporation, certificate of formation, articles of organization,
charter, bylaws, limited liability company agreement, regulations, limited
partnership agreement or similar organic document of any such party, (b) any
contract, indenture, mortgage, loan agreement, note, lease or other agreement or
instrument, (c) any statute, law, rule, or regulation, (d) any judicial or
administrative order or decree of any governmental authority, or (e) any
consent, approval, license, authorization or validation of, or filing, recording
or registration with, any governmental authority, in each case, to which any
party to the Transaction Documents or any of its subsidiaries or any of their
respective properties may be subject, or by which any of them may be bound or
affected. Further, we have assumed the compliance by each such party, other than
the Obligors, with all laws, rules and regulations applicable to it, as well as
the compliance by the each of the Obligors, and each other person (if any)
directly or indirectly acting on its behalf, with all laws, rules and
regulations that may be applicable to it by virtue of the particular nature of
the business conducted by it or any goods or services produced or rendered by it
or property owned, operated or leased by it, or any other facts pertaining
specifically to it. In this paragraph (ix), all references to parties to the
Transaction Documents, other than the first such reference, shall be deemed to
mean and include each of such parties, and each other person (if any) directly
or indirectly acting on its behalf.
     (x) Without limiting the generality of our qualification in clause (1) of
paragraph (v) above, we express no opinion as to the applicability or effect of
any preference, fraudulent transfer or conveyance, or similar law (including,
without limitation, Section 548 of Title 11 of the United States Code or
Article 10 of the New York Debtor Creditor Law) on the Transaction Documents or
any transactions contemplated thereby or any opinion expressed herein.
     (xi) We express no opinion as to the effect of the laws of any jurisdiction
in which any holder of any Initial Security or Exchange Security is located
(other than the State of New York) that limit the interest, fees or other
charges such holder may impose for the loan or use of money or other credit.
     (xii) Except to the extent that we expressly opine above, we have assumed
that no authorization, consent or other approval of, notice to or registration,
recording or filing with any
Exhibit A-14-1

 

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court, governmental authority or regulatory body (other than routine
informational filings, filings under the Securities Act and filings under the
Securities Exchange Act of 1934, as amended) is required to authorize, or is
required in connection with the transactions contemplated by the Transaction
Documents, the execution or delivery of thereof by or on behalf of any party
thereto or the incurrence or performance by any of the parties thereto of its
obligations thereunder.
     (xiii) [We point out that the submissions to jurisdiction and the waivers
of objection to venue contained in the Indenture and the Registration Rights
Agreement cannot supersede a federal court’s discretion in determining whether
to transfer an action to another court.]
     (xiv) [We point out that the agent for service of process appointed
pursuant to the Indenture and the Registration Rights Agreement, in its
discretion, may fail to agree, or terminate its agreement, to serve as agent for
service of process for the Obligors, in which event service of process upon such
party would not be valid and effective for the purposes described in the
Indenture and the Registration Rights Agreement.]
     (xv) [We express no opinion as to provisions of the Transaction Documents
to the effect that a guarantor is liable as a primary obligor, and not as a
surety. Furthermore, we advise you that certain of the guaranty and surety
waivers contained in the Indenture may be unenforceable in whole or in part.]
     This opinion is being furnished only to you in connection with the sale of
the Initial Securities under the Purchase Agreement occurring today and is
solely for your benefit and is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other Person, including
any purchaser of any Initial Security from you and any subsequent purchaser of
any Initial Security or Exchange Security, without our express written
permission. The opinions expressed herein are as of the date hereof only and are
based on laws, orders, contract terms and provisions, and facts as of such date,
and we disclaim any obligation to update this opinion letter after such date or
to advise you of changes of facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
Exhibit A-15-1

 

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EXHIBIT A-2
Opinion of Liskow & Lewis
January [ ], 2006

      To each of the Initial Purchasers named in   03509.003

the Purchase Agreement referenced herein
c/o RBC Capital Markets Corporation
1211 Avenue of the Americas, 32nd Floor
New York, NY 10036
     Re: [___]% Senior Notes due 2013 issued by Allis-Chalmers Energy Inc.
Ladies and Gentlemen:
     We have acted as special Louisiana counsel to Allis-Chalmers Energy Inc., a
Delaware corporation (the “Issuer”), in connection with the Purchase Agreement
dated January [___], 2006 (the “Purchase Agreement”) among (i) the Issuer,
(ii) the subsidiaries of the Issuer named therein as parties thereto, and
(iii) RBC Capital Markets Corporation and Lehman Brothers Inc. (collectively,
the “Initial Purchasers”), relating to the sale by the Issuer to the Initial
Purchasers of $[___] aggregate principal amount of the Issuer’s [___]% Senior
Notes due 2013 (the “Initial Securities”). The Initial Securities are being
issued under an Indenture dated as of January [___], 2006 (the “Indenture”)
among the Issuer, the subsidiaries of the Issuer named therein as parties
thereto and as guarantors of the Initial Securities (collectively, the
“Guarantors”) and Wells Fargo Bank, N.A., as trustee.
     The Issuer, the Guarantors and the Initial Purchasers have entered into a
Registration Rights Agreement dated as of January [___], 2006 (the “Registration
Rights Agreement”), pursuant to which the Issuer and the Guarantors have agreed
to file, under certain conditions, with the Securities and Exchange Commission,
a registration statement under the Securities Act of 1933, as amended, with
respect to an offer (the “Exchange Offer”) by the Issuer and the Guarantors to
the holders of the Initial Securities to issue and deliver to such holders, in
exchange for their Initial Securities, a like principal amount of new securities
(the “Exchange Securities”) identical to the Initial Securities in all material
respects, except that the Exchange Securities will not (except in specified
circumstances) be subject to restrictions on transfer.
     We are furnishing this opinion letter to you pursuant to Section [5(c)] of
the Purchase Agreement.
     In rendering the opinions set forth herein, we have examined and relied on
originals or copies, certified or otherwise identified to our satisfaction, of
the following:
Exhibit A-2-1

 

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     (a) the Issuer’s Offering Memorandum dated January [___], 2006 (the
“Offering Memorandum”) relating to the Initial Securities;
     (b) the Indenture;
     (c) the Purchase Agreement;
     (d) the Registration Rights Agreement;
     (e) the Stock Purchase Agreement dated as of December 20, 2005 (the
“Specialty Stock Purchase Agreement”) by and between the Issuer and Joe Van
Matre, an individual resident in Lafayette, Louisiana, pursuant to which the
Issuer agreed to purchase and Mr. Van Matre agreed to sell, all the issued and
outstanding shares of capital stock of Specialty Rental Tools, Inc., a Louisiana
corporation (“Specialty”), subject to certain conditions specified in such
agreement;
     (f) the Articles of Incorporation of Delta Rental Service, Inc., a
Louisiana corporation (“Delta Rental Service”), certified by the Secretary of
State of the State of Louisiana, as in effect on January 4, 2006, and certified
by the Secretary of Delta Rental Service, as in effect on each of the dates of
the adoption of the resolutions specified in paragraph (h) below, the date of
the Purchase Agreement and the date hereof;
     (g) the Bylaws of Delta Rental Service, certified by the Secretary of Delta
Rental Service as in effect on each of the dates of the adoption of the
resolutions specified in paragraph (h) below, the date of the Purchase Agreement
and the date hereof;
     (h) resolutions of the Board of Directors of Delta Rental Service dated
January [___], 2006, certified by the Secretary of Delta Rental Service;
     (i) a certificate from the Secretary of State of the State of Louisiana
dated January 4, 2006 as to the good standing under the laws of the State of
Louisiana of Delta Rental Service;
     (j) the Articles of Incorporation of Specialty Rental Tools Inc., a
Louisiana corporation (“Specialty Rental Tools”), certified by the Secretary of
State of the State of Louisiana, as in effect on January 4, 2006, and certified
by the Secretary of Specialty Rental Tools, as in effect on each of the dates of
the adoption of the resolutions specified in paragraph (l) below, the date of
the Purchase Agreement and the date hereof;
     (k) the Bylaws of Specialty Rental Tools, certified by the Secretary of
Specialty Rental Tools as in effect on each of the dates of the adoption of the
resolutions specified in paragraph (l) below, the date of the Purchase Agreement
and the date hereof;
     (l) resolutions of the Board of Directors of Specialty Rental Tools dated
January [___], 2006, certified by the Secretary of Specialty Rental Tools;
     (m) a certificate from the Secretary of State of the State of Louisiana
dated January 4, 2006 as to the good standing under the laws of the State of
Louisiana of Specialty Rental Tools;
Exhibit A-2-2

 

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     We have also examined originals or copies, certified or otherwise
identified to our satisfaction, of such records of the Louisiana Guarantors and
such agreements, certificates of public officials, certificates of officers or
other representatives of the Louisiana Guarantors and others, and such other
documents, certificates and records, as we have deemed necessary or appropriate
as a basis for the opinions set forth herein. In our examination, we have
assumed the legal capacity of all natural persons, the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity to authentic original documents of all documents submitted to us
as certified or photostatic copies. As to any facts material to the opinions and
statements expressed herein that we did not independently establish or verify,
we have relied, to the extent we deem appropriate, upon statements,
representations and certifications of officers and other representatives of the
Louisiana Guarantors, and statements and certifications of public officials and
others.
     As used herein the following terms have the respective meanings set forth
below:
     “Louisiana Guarantors” means Delta Rental Service and Specialty Rental
Tools, collectively.
     “Louisiana Guarantors Organizational Documents” means, collectively, the
Articles of Incorporation and Bylaws of the Louisiana Guarantors, each in the
form reviewed by us as specified above.
     “Person” means a natural person or a legal entity organized under the laws
of any jurisdiction.
     “Transaction Documents” means collectively, the Purchase Agreement, the
Registration Rights Agreement, the Indenture, the Initial Securities and the
Exchange Securities.
Exhibit A-2-3

 

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     Based upon the foregoing and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, we are of the opinion that:
     1. Each of the Louisiana Guarantors is validly existing as a corporation
and in good standing under the laws of the State of Louisiana. The opinion set
forth in this paragraph 1 is based solely upon our review of certificates and
other communications from the appropriate public officials.
     2. Each of the Louisiana Guarantors has the corporate power and authority
under the laws of the State of Louisiana to (i) execute and deliver, and to
incur and perform all of its obligations under, the Registration Rights
Agreement and the Indenture and (ii) carry on its business and own and lease its
properties as described in the Offering Memorandum. Delta Rental Service has the
corporate power and authority under the laws of the State of Louisiana to
execute and deliver, and to incur and perform all of its obligations under, the
Purchase Agreement.
     3. The Purchase Agreement has been duly authorized, executed and delivered
by Delta Rental Service. Each of the Registration Rights Agreement and the
Indenture has been duly authorized, executed and delivered by each of the
Louisiana Guarantors.
     4. None of (i) the execution and delivery of, or the incurrence or
performance by the Louisiana Guarantors of their respective obligations under,
each of the Registration Rights Agreement and the Indenture, each in accordance
with its terms, (ii) the execution and delivery of, or the incurrence or
performance by Delta Rental Service of its obligations under the Purchase
Agreement, in accordance with its terms, (iii) the issuance of the guaranties of
the Initial Securities by the Louisiana Guarantors, as set forth in the
Indenture or (iv) the issuance of the guaranties of the Exchange Securities by
the Louisiana Guarantors, as set forth in the Indenture, at such time as the
Exchange Securities are issued pursuant to the Exchange Offer contemplated by
the Registration Rights Agreement in the manner therein contemplated,
(A) constituted, constitutes or will constitute a violation of the Louisiana
Guarantor Organizational Documents or (B) resulted, results or will result in
any violation of applicable laws of the State of Louisiana.
     5. No Governmental Approval, which has not been obtained or taken and is
not in full force and effect, is required to authorize, or is required for
(i) the execution and delivery by each of the Louisiana Guarantors of the
Registration Rights Agreement and the Indenture or the incurrence or performance
of its obligations thereunder, or the enforceability of the Registration Rights
Agreement and the Indenture against any of the Louisiana Guarantors, (ii) the
execution and delivery by Delta Rental Service of the Purchase Agreement or the
incurrence or performance of its obligations thereunder, or the enforceability
of the Purchase Agreement against Delta Rental Service or (iii) the consummation
of the purchase by the Issuer of all the issued and outstanding shares of
capital stock of Specialty, as contemplated by the Specialty Stock Purchase
Agreement. However, we express no opinion as to the enforceability of the
Purchase Agreement, the Indenture or the Registration Rights Agreement. As used
in this paragraph, “Governmental Approval” means any consent, approval, license,
authorization or validation of, or filing, recording or registration with, any
executive, legislative, judicial,
Exhibit A-2-4

 

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administrative or regulatory body of the State of Louisiana, pursuant to
applicable laws of the State of Louisiana.
     We express no opinion as to the laws of any jurisdiction other than
applicable laws of the State of Louisiana. References herein to “applicable
laws” mean those laws, rules and regulations that, in our experience, are
normally applicable to transactions of the type contemplated by the Purchase
Agreement, the Indenture and the Registration Rights Agreement, without our
having made any special investigation as to the applicability of any specific
law, rule or regulation; provided however, that such references (including
without limitation those appearing in paragraphs 4 and 5 above) do not include
any municipal or other local laws, rules or regulations, or any antifraud,
environmental, labor, securities, tax, insurance or antitrust, laws, rules or
regulations.
     This opinion is being furnished only to you in connection with the sale of
the Initial Securities under the Purchase Agreement occurring today and is
solely for your benefit and is not to be used, circulated, quoted or otherwise
referred to for any other purpose or relied upon by any other Person, including
any purchaser of any Initial Security from you and any subsequent purchaser of
any Initial Security or Exchange Security, without our express written
permission. The opinions expressed herein are as of the date hereof only and are
based on laws, orders, contract terms and provisions, and facts as of such date,
and we disclaim any obligation to update this opinion letter after such date or
to advise you of changes of facts stated or assumed herein or any subsequent
changes in applicable law.
Very truly yours,
LISKOW & LEWIS
A Professional Law Corporation
Exhibit A-2-5

 

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ANNEX I
     Resale Pursuant to Regulation S. Each Initial Purchaser understands that:
     Such Initial Purchaser agrees that it has not offered or sold and will not
offer or sell the Securities in the United States or to, or for the benefit or
account of, a U.S. Person (other than a distributor), in each case, as defined
in Rule 902 under the Securities Act (i) as part of its distribution at any time
and (ii) otherwise until 40 days after the later of the commencement of the
offering of the Securities pursuant hereto and the Closing Date, other than in
accordance with Regulation S of the Securities Act or another exemption from the
registration requirements of the Securities Act. Such Initial Purchaser agrees
that, during such 40-day restricted period, it will not cause any advertisement
with respect to the Securities (including any “tombstone” advertisement) to be
published in any newspaper or periodical or posted in any public place and will
not issue any circular relating to the Securities, except such advertisements as
permitted by and include the statements required by Regulation S.
     Such Initial Purchaser agrees that, at or prior to confirmation of a sale
of Securities by it to any distributor, dealer or person receiving a selling
concession, fee or other remuneration during the 40-day restricted period
referred to in Rule 903 under the Securities Act, it will send to such
distributor, dealer or person receiving a selling concession, fee or other
remuneration a confirmation or notice to substantially the following effect:
“The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered and sold within the United States or to, or for the account or benefit
of, U.S. persons (i) as part of your distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the Offering and the
Closing Date, except in either case in accordance with Regulation S under the
Securities Act (or Rule 144A or to Accredited Institutions in transactions that
are exempt from the registration requirements of the Securities Act), and in
connection with any subsequent sale by you of the Notes covered hereby in
reliance on Regulation S during the period referred to above to any distributor,
dealer or person receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect. Terms used above
have the meanings assigned to them in Regulation S.”
     Such Initial Purchaser agrees that (i) such Initial Purchaser and its
affiliates or any person acting on its or their behalf have not engaged in any
directed selling efforts within the meaning of Regulation S with respect to the
Securities, (ii) the Securities offered and sold by such Initial Purchaser
pursuant hereto in reliance on Regulation S have been and will be offered and
sold only in offshore transactions and (iii) the sale of Securities offered and
sold by such Initial Purchaser pursuant hereto in reliance on Regulation S is
not part of a plan or scheme to evade the registration provisions of the
Securities Act.
Annex I-1