Unassociated Document


    EXECUTION

     

    SEVENTH
AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

    


    THIS
SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”)
is entered into as of November 12, 2010, among ALLIS-CHALMERS ENERGY INC., a
Delaware corporation, as borrower (the “Borrower”),
the undersigned Guarantors (collectively, the “Guarantors”),
ROYAL BANK OF CANADA, as Administrative Agent and Collateral Agent for the
Lenders parties to the hereinafter defined Credit Agreement (in such capacities,
the “Administrative
Agent” and “Collateral
Agent,” respectively) and the undersigned Lenders.

     

    Reference
is made to the Second Amended and Restated Credit Agreement dated as of April
26, 2007 among Borrower, the Administrative Agent, the Collateral Agent and the
Lenders parties thereto, as amended by a First Amendment to Second Amended and
Restated Credit Agreement dated as of December 3, 2007, a Second Amendment to
Second Amended and Restated Credit Agreement dated as of December 30, 2008, a
Third Amendment to Second Amended and Restated Credit Agreement dated as of
April 9, 2009, a Fourth Amendment to Second Amended and Restated Credit
Agreement dated as of May 20, 2009, a Fifth Amendment to Second Amended and
Restated Credit Agreement dated as of October 13, 2009, and a Sixth Amendment to
Second Amended and Restated Credit Agreement dated as of February 25, 2010 (as
amended, the “Credit
Agreement”).  Unless otherwise defined in this Amendment,
capitalized terms used herein shall have the meanings set forth in the Credit
Agreement; all section, exhibit and schedule references herein are to sections,
exhibits and schedules in the Credit Agreement; and all paragraph references
herein are to paragraphs in this Amendment.

     

    RECITALS

     

    A.           In
connection with the proposed sale the Rigs and repayment of the CFSC Rig
Financing, Borrower has requested certain amendments to the Credit Agreement and
the Lenders are willing, on the terms and conditions set forth herein, to amend
the Credit Agreement as hereinafter set forth.

     

    Accordingly,
for adequate and sufficient consideration, the parties hereto agree, as
follows:

     

    Paragraph
1.       Amendments.
Effective as of the Seventh Amendment Effective Date, the Credit Agreement is
amended as follows:

     

    1.1         Definitions. Section
1.01 of the Credit Agreement is amended as follows:

     

    (a)          The
following definitions are amended in their entirety to read as
follows:

     

    “Agreement
means this Second Amended and Restated Credit Agreement as amended by the First
Amendment to Second Amended and Restated Credit Agreement, Second Amendment to
Second Amended and Restated Credit Agreement, Third Amendment to Second Amended
and Restated Credit Agreement, Fourth Amendment to Second Amended and Restated
Credit Agreement, Fifth Amendment to Second Amended and Restated Credit
Agreement, Sixth Amendment to Second Amended and Restated Credit Agreement, and
Seventh Amendment to Second Amended and Restated Credit Agreement.”

     

    Seventh
Amendment to Allis-Chalmers

    Energy
Second Amended and

    Restated
Credit Agreement


    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    (b)         The
following definitions are inserted alphabetically into Section 1.01
of the Credit Agreement:

     

    “Seventh Amendment
Effective Date means the date the Seventh Amendment to Second Amended and
Restated Credit Agreement by its terms becomes effective among the parties
thereto.”

     

    “Seventh Amendment
to Second Amended and Restated Credit Agreement means that certain
Seventh Amendment to Second Amended and Restated Credit Agreement dated as of
November 12, 2010, among the Borrower, the Guarantors, Royal Bank of Canada, as
Administrative Agent and Collateral Agent, and
the  Lenders.”

     

    1.2         Section
612.  Section
6.12 of the
Credit Agreement is amended in its entirety as follows:

     

    “6.12      Use of
Proceeds.  Use
proceeds of the Revolver Facility to (i) refinance the Indebtedness outstanding
under the First Amended and Restated Credit Agreement, (ii) finance working
capital requirements and other general corporate purposes of the Borrower and
its Domestic Subsidiaries, including Permitted Acquisitions; provided no
proceeds of the Revolver Facility may by used to repurchase any Senior Unsecured
Notes or to pay any dividends owing in connection with the Preferred Stock,
(iii) issue Letters of Credit, (iv) repay the CFSC Rig Financing pursuant to
Section
7.15(f), including prepayment penalties, if any, and (v) pay transaction
fees and expenses associated with this Agreement; provided, however, that at no
time may more than $25,000,000 of proceeds of the Revolver Facility (or Letters
of Credit) be advanced or invested, directly or indirectly, in or to DLS or any
of its Subsidiaries.”

    


    1.3         Section
7.07.  Section
7.07 of the Credit Agreement is amended by deleting the word “or” at the
end of Section
7.07(e) and deleting the period at the end of Section 7.07(f)
and inserting in lieu thereof a semicolon and adding a new Section
7.07(g) to read in its entirety as follows:

     

    “(g)         Disposition
of the Rigs to Stewart & Stevenson LLC for an aggregate consideration of $25
million is cash, with $10 million to be paid upon closing of such Disposition
and the balance to be paid in two installments of $7.5 million each due on
November 30, 2010 and December 31, 2010.”

     

    1.4        Section
7.15.  Section
7.15 of the Credit Agreement is amended by deleting the word “and” at the
end of clause (d), replacing the period at the end of clause (e) with a “; and”
and adding a new clause (f) to read in its entirety as follows:

     

    “(f)          prepayment
of the CFSC Rig Financing together with prepayment penalties, if any; provided no more than
$11,000,000 of such prepayment may be funded using proceeds of any Credit
Extension hereunder.”

     

    Paragraph
2.       Effective
Date. This Amendment shall not become effective until the date (such
date, the “Seventh Amendment
Effective Date”) the Administrative Agent receives all of the agreements,
documents, certificates, instruments, and other items described
below:

     

    (a)         this
Amendment, executed by the Borrower, the Guarantors, and the
Lenders;

     

    
      Seventh
Amendment to Allis-Chalmers

      Energy
Second Amended and

      Restated
Credit Agreement

    

      

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    (b)         an
executed copy of the Equipment Sales Agreement between Stewart & Stevenson
LLC and Borrower dated on or before the Seventh Amendment Effective
Date;

     

    (c)         fees
and expenses required to be paid pursuant to Paragraph
5 of this Amendment, to the extent invoiced prior to the Seventh
Amendment Effective Date;  and

     

    (d)         such
other assurances, certificates, documents and consents as the Administrative
Agent may require.

     

    Paragraph
3.       Acknowledgment
and Ratification. As a material inducement to the Administrative Agent
and the Lenders to execute and deliver this Amendment, each of the Borrower and
the Guarantors (i) consents to the agreements in this Amendment, (ii) agrees and
acknowledges that the execution, delivery, and performance of this Amendment
shall in no way release, diminish, impair, reduce, or otherwise affect the
respective obligations of the Borrower or any Guarantor under the Loan Documents
to which it is a party, which Loan Documents shall remain in full force and
effect, and all rights thereunder are hereby ratified and
confirmed.

     

    Paragraph
4.       Representations.
As a material inducement to the Administrative Agent and the Lenders to execute
and deliver this Amendment, each of the Borrower and the Guarantors represents
and warrants to the Administrative Agent and the Lenders that as of the Seventh
Amendment Effective Date and as of the date of execution of this Amendment, (a)
all representations and warranties in the Loan Documents are true and correct in
all material respects as though made on the date hereof, except to the extent
that any of them speak to a different specific date, (b) no Default or Event of
Default exists and no Borrowing Base Deficiency exists.

     

    Paragraph
5.       Expenses,
Funding Losses.  The Borrower shall pay on demand all
reasonable costs, fees, and expenses paid or incurred by the Administrative
Agent incident to this Amendment, including, without limitation, Attorney Costs
in connection with the negotiation, preparation, delivery, and execution of this
Amendment and any related documents, filing and recording costs, and the costs
of title insurance endorsements, if any.

     

    Paragraph
6.       Miscellaneous.  This
Amendment is a “Loan Document” referred to in the Credit
Agreement.  The provisions relating to Loan Documents in Article X
of the Credit Agreement are incorporated in this Amendment by
reference.  Unless stated otherwise (a) the singular number includes
the plural and vice versa and words of any gender include each other gender, in
each case, as appropriate, (b) headings and captions may not be construed in
interpreting provisions, (c) this Amendment must be construed, and its
performance enforced, under Texas law and applicable federal law, (d) if any
part of this Amendment is for any reason found to be unenforceable, all other
portions of it nevertheless remain enforceable.

     

    Paragraph
7.       Entire
Agreement. This
amendment represents the final agreement between the parties about the subject
matter of this amendment and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties. There are no
unwritten oral agreements between the parties.

     

    Paragraph
8.       Parties.
This Amendment binds and inures to the benefit of the Borrower, the Guarantors,
the Administrative Agent, the Collateral Agent, the other Lenders, and their
respective successors and assigns.

     

    
      Seventh
Amendment to Allis-Chalmers

      Energy
Second Amended and

      Restated
Credit Agreement

       

    

    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    Paragraph
9.       Further
Assurances. The parties hereto each agree to execute from time to time
such further documents as may be necessary to implement the terms of this
Amendment.

     

    Paragraph
10.     Release.  As
additional consideration for the execution, delivery and performance of this
Amendment by the parties hereto and to induce the Administrative Agent, the
Collateral Agent and the Lenders to enter into this Amendment, the Borrower
warrants and represents to the Administrative Agent, the Collateral Agent and
the Lenders that to the best of its knowledge no facts, events, statuses or
conditions exist or have existed which, either now or with the passage of time
or giving of notice, or both, constitute or will constitute a basis for any
claim or cause of action against the Administrative Agent, the Collateral Agent
or any Lender or any defense to (i) the payment of Obligations under the
Revolver Notes and/or the Loan Documents, or (ii) the performance of any of its
obligations with respect to the Revolver Notes and/or the Loan
Documents.  In the event any such facts, events, statuses or
conditions exist or have existed, Borrower unconditionally and irrevocably
hereby RELEASES, RELINQUISHES and forever DISCHARGES Administrative Agent, the
Collateral Agent and the Lenders, as well as their predecessors, successors,
assigns, agents, officers, directors, shareholders, employees and
representatives, of and from any and all claims, demands, actions and causes of
action of any and every kind or character, past or present, which Borrower may
have against any of them or their predecessors, successors, assigns, agents,
officers, directors, shareholders, employees and representatives arising out of
or with respect to (a) any right or power to bring any claim for usury or to
pursue any cause of action based on any claim of usury, and (b) any and all
transactions relating to the Loan Documents occurring prior to the date hereof,
including any loss, cost or damage, of any kind or character, arising out of or
in any way connected with or in any way resulting from the acts, actions or
omissions of any of them, and their predecessors, successors, assigns, agents,
officers, directors, shareholders, employees and representatives, including any
breach of fiduciary duty, breach of any duty of fair dealing, breach of
confidence, breach of funding commitment, undue influence, duress, economic
coercion, conflict of interest, negligence, bad faith, malpractice, intentional
or negligent infliction of mental distress, tortious interference with
contractual relations, tortious interference with corporate governance or
prospective business advantage, breach of contract, deceptive trade practices,
libel, slander or conspiracy, but in each case only to the extent permitted by
applicable Law.

     

    Paragraph
11.     Execution in
Counterparts. This Amendment may be executed in any number of
counterparts (and by different parties hereto in different counterparts), each
of which when so executed shall be deemed to be an original and all of which
when taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page of this Amendment by telecopier or
other electronic means shall be effective as delivery of a manually executed
counterpart of this Amendment.

     

    The
parties hereto have executed this Amendment in multiple counterparts to be
effective as of the Seventh Amendment Effective Date.

     

    Remainder
of Page Intentionally Blank

    Signature
Pages to Follow.

     

    
      Seventh
Amendment to Allis-Chalmers

      Energy
Second Amended and

      Restated
Credit Agreement

    
 

    
      
         


      

      
        4

        
          

        

      

      
         


      

    


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

     

    
      
        
          	 
      	
                  BORROWER:

                
	 
      	 
      
	 
      	
                  ALLIS-CHALMERS
      ENERGY INC.,

                
	 
      	
                  a
      Delaware corporation, as Borrower

                
	 
      	 
      
	 
      	
                  By:

                	
                  /s/
      Victor M. Perez

                
	 
      	 
      	
                  Victor
      M. Perez

                
	 
      	 
      	
                  Chief
      Financial Officer

                


        

      

    

    


    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 1

        
          

        

      

      
         


      

    


    GUARANTORS:

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              	
                                      AirComp
      LLC

                                    	 
      	
                                      Allis-Chalmers
      Drilling LLC

                                    
	 
      	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    	 
      	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    
	 
      	
                                      Victor
      M. Perez

                                    	 
      	 
      	
                                      Victor
      M. Perez

                                    
	 
      	
                                      Chief
      Financial Officer

                                    	 
      	 
      	
                                      Chief
      Financial Officer

                                    
	 
      	 
      	 
      
	
                                      Allis-Chalmers
      Holdings Inc.

                                    	 
      	
                                      Allis-Chalmers
      Management LLC

                                    
	 
      	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    	 
      	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    
	 
      	
                                      Victor
      M. Perez

                                    	 
      	 
      	
                                      Victor
      M. Perez

                                    
	 
      	
                                      Chief
      Financial Officer

                                    	 
      	 
      	
                                      Chief
      Financial Officer

                                    
	 
      	 
      	 
      
	
                                      Allis-Chalmers
      Production Services LLC

                                    	 
      	
                                      Allis-Chalmers
      Rental Services LLC

                                    
	 
      	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    	 
      	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    
	 
      	
                                      Victor
      M. Perez

                                    	 
      	 
      	
                                      Victor
      M. Perez

                                    
	 
      	
                                      Chief
      Financial Officer

                                    	 
      	 
      	
                                      Chief
      Financial Officer

                                    
	 
      	 
      	 
      
	
                                      Allis-Chalmers
      Tubular Services LLC

                                    	 
      	
                                      Rebel
      Rentals LLC

                                    
	 
      	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    	 
      	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    
	 
      	
                                      Victor
      M. Perez

                                    	 
      	 
      	
                                      Victor
      M. Perez

                                    
	 
      	
                                      Chief
      Financial Officer

                                    	 
      	 
      	
                                      Chief
      Financial Officer

                                    
	 
      	 
      	 
      
	
                                      Petro-Rentals
      LLC

                                    	 
      	
                                      Strata
      Directional Technology LLC

                                    
	 
      	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    	 
      	 
      
	 
      	
                                      Victor
      M. Perez

                                    	 
      	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    
	 
      	
                                      Chief
      Financial Officer

                                    	 
      	 
      	
                                      Victor
      M. Perez

                                    
	 
      	 
      	 
      	
                                      Chief
      Financial Officer

                                    
	
                                      American
      Well Control, Inc.

                                    	 
      	 
      
	 
      	 
      	 
      
	
                                      By:

                                    	
                                      /s/
      Victor M. Perez

                                    	 
      	 
      
	 
      	
                                      Victor
      M. Perez

                                    	 
      	 
      
	 
      	
                                      Chief
      Financial Officer

                                    	 
      	 
      


                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 2

        
          

        

      

      
         


      

    

    
 

    
      
        
          
            
              
                
                  
                    	 
      	
                            ADMINISTRATIVE
      AGENT:

                          
	 
      	 
      
	 
      	
                            ROYAL
      BANK OF CANADA,

                          
	 
      	
                            as
      Administrative Agent and Collateral Agent

                          
	 
      	 
      
	 
      	
                            By:

                          	/s/
      Ann Hurley
	 	
                            Name:

                          	Ann
      Hurley
	 	
                            Title:

                          	Manager,
      Agency


                  

                

              

            

          

        

      

    

    


    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 3

        
          

        

      

      
         


      

    

     

    
      	 
      	
              
                L/C
      ISSUER AND LENDER:

              

            
	 
      	 
      
	 
      	
              
                ROYAL BANK OF CANADA,
      as a
  Lender

              

            
	 
      	
              
                and
      L/C Issuer

              

            
	 
      	 
      
	 
      	
              By:

            	/s/
      Jason S. York
	 	
              Name:

            	Jason
      S. York
	 	
              Title:

            	Authorized
      Signatory


    

     

    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 4

        
          

        

      

      
         


      

    

    


    
      
        
          
            
              
                
                  
                    
                      	 
      	
                              LENDER:

                            
	 
      	 
      
	 
      	
                              CATERPILLAR
      FINANCIAL

                            
	 
      	
                              SERVICES CORPORATION, as
      Lender

                            
	 
      	 
      
	 
      	
                              By:

                            	/s/
      Roger Scott Freistat
	 	
                              Name:

                            	Roger
      Scott Freistat
	 	
                              Title:

                            	Credit
      Manager


                    

                  

                

              

            

          

        

      

    

    


    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 5

        
          

        

      

      
         


      

    

    


    
      
        
          
            
              
                
                  
                    	 
      	
                            LENDER:

                          
	 
      	 
      
	 
      	
                            JPMORGAN
      CHASE BANK, N.A.

                          
	 
      	
                            as
      a Lender

                          
	 
      	 
      
	 
      	
                            By:

                          	/s/
      Geraldine King
	 	
                            Name:

                          	Geraldine
      King
	 	
                            Title:

                          	Vice
      President


                  

                

              

            

          

        

      

    

    


    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 6

        
          

        

      

      
         


      

    

     

    
      	 
      	
              LENDER:

            
	 
      	 
      
	 
      	
              
                WELLS
      FARGO BANK, N.A.

              

            
	 
      	
              as
      a Lender

            
	 
      	 
      
	 
      	
              By:

            	/s/
      Donald W. Herrick, Jr.
	 	
              Name:

            	Donald
      W. Herrick, Jr.
	 	
              Title:

            	Director


    

    
      
         

      

    

    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 7

        
          

        

      

      
         


      

    

    


    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    	 
      	
                                            LENDER:

                                          
	 
      	 
      
	 
      	
                                            NATIXIS,

                                          
	 
      	
                                            as
      a Lender

                                          
	 
      	 
      
	 
      	
                                            By:

                                          	/s/
      Louis P. Laville, III
	 	
                                            Name:

                                          	Louis
      P. Laville, III
	 	
                                            Title:

                                          	Managing
      Director
	 
      	 
      
	 
      	
                                            By:

                                          	/s/
      Carlos Quinteros
	 	
                                            Name:

                                          	Carlos
      Quinteros
	 	
                                            Title:

                                          	Managing
      Director


                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    


    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 8

        
          

        

      

      
         


      

    

     

    
      	 
      	
              LENDER:

            
	 
      	 
      
	 
      	
              
                WHITNEY
      NATIONAL BANK,

              

            
	 
      	
              as
      a Lender

            
	 
      	 
      
	 
      	
              By:

            	/s/
      Mark S. McCullough
	 	
              Name:      
      

            	Mark
      S. McCullough
	 	
              Title:

            	Vice
      President


    

    


    Seventh
Amendment to Allis-Chalmers

    Energy
Credit Agreement


    
      
         


      

      
        Signature
Page– Page 9