exv10w1



 






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.





 









 








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



 









 




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.



3









 





           (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



8









 



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



9









 




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



10









 




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.



11









 





     (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.



12









 





     (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



13









 




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.




14










 






     (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



15









 







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:



16









 






     (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.



17









 





         (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.



18









 





     (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



19









 







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



20









 







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



21









 







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



22









 







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.



23









 






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









 




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









 







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









 





     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 	 
	 




 









 








	 	 	 	 	 
	 	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 	 
	 



 









 








	 	 	 	 	 
	 	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 	 



 









 






	 	 	 	 	 




     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	 	 







 









 








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









 








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









 








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










 






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




 









 









	 	(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





 









 









	 	(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





 









 









	 	 	 	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





 









 









	 	 	 	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




 









 








     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




 









 







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




 









 







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








 





     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




 









 







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




 









 







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




 









 









	 	 	 	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





 









 









	 	(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




 









 








     (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





 









 







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




 









 








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




 









 








     (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




 









 








     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




 









 








     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




 









 







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




 









 








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