Exhibit 10.1





Exhibit 10.1




EXECUTION




FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT




THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”) is
entered into as of May 20, 2009, 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 Required 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 and Third Amendment to Second Amended and Restated Credit Agreement dated as of
April 9, 2009 (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. The 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 Fourth 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 and Fourth Amendment to Second Amended and
Restated Credit Agreement.”




“Change of Control means an event or series of events by which:




(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan of
such person or its subsidiaries, and any person or entity acting in its capacity as
trustee,
agent or other fiduciary or administrator of any such plan) becomes the
“beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934, except that a person or group shall be deemed to have “beneficial ownership” of
all securities that such person or group has the right to acquire (such right, an
“option right”), whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of 25% or more of the Voting Stock of the
Borrower entitled to vote for members of the board of directors or equivalent
governing body of the Borrower on a fully-diluted basis (and taking into account all
such securities that such person or group has the right to acquire pursuant to any
option right);



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Energy Second Amended and

Restated Credit Agreement





 


 









 








(b) during any period of 12 consecutive months, a majority of the members of
the board of directors or other equivalent governing body of the Borrower cease to
be composed of individuals (i) who were members of that board or equivalent
governing body on the first day of such period, (ii) whose election or nomination to
that board or equivalent governing body was approved by individuals referred to in
clause (i) above constituting at the time of such election or nomination at least a
majority of that board or equivalent governing body or (iii) whose election or
nomination to that board or other equivalent governing body was approved by
individuals referred to in clauses (i) and (ii) above constituting at the time of
such election or nomination at least a majority of that board or equivalent
governing body (excluding, in the case of both clause (ii) and clause (iii), any
individual whose initial nomination for, or assumption of office as, a member of
that board or equivalent governing body occurs as a result of an actual or
threatened solicitation of proxies or consents for the election or removal of one or
more directors by any person or group other than a solicitation for the election of
one or more directors by or on behalf of the board of directors); or




(c) any Person or two or more Persons acting in concert shall have acquired by
contract or otherwise, or shall have entered into a contract or arrangement that,
upon consummation thereof, will result in its or their acquisition of the power to
exercise, directly or indirectly, a controlling influence over the management or
policies of the Borrower, or control over the Voting Stock of the Borrower entitled
to vote for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and taking into account all such securities that
such Person or group has the right to acquire pursuant to any option right)
representing 25% or more of the combined voting power of such securities; or




(d) the Borrower ceases to own 100% of the Equity Interests of each Subsidiary
which is a Loan Party;




provided, however, no Change of Control will occur as a result of Borrower entering
into any contract or arrangement in connection with the Rights Offering or the
issuance of Preferred Stock, nor if as a result of the Rights Offering or the
issuance or conversion of the Preferred Stock the Rights Offering Backstop Provider
or its permitted transferees or designees become the “beneficial owner” (as defined
in Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934), directly or
indirectly, of 25% or more of the Voting Stock of the Borrower; provided, further,
no Change of Control will occur if the
Borrower issues additional Voting Stock, thereby decreasing the percentage interest
of the Rights Offering Backstop Provider or its permitted transferees or designees,
and thereafter the Rights Offering Backstop Provider or its permitted transferees or
designees acquire beneficial ownership of additional shares of Voting Stock in order
to increase their percentage of Voting Stock beneficially owned up to, but not
exceeding, that existing prior to the issuance by the Company.



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Energy Second Amended and

Restated Credit Agreement




 


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




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




“Fourth Amendment to Second Amended and Restated Credit Agreement means that
certain Fourth Amendment to Second Amended and Restated Credit Agreement dated as of
May 20, 2009, among the Borrower, the Guarantors, Royal Bank of Canada, as
Administrative Agent and Collateral Agent, and the Required Lenders.”




“Preferred Stock means the Borrower’s issuance of up to 42,000 shares of its 7%
Convertible Perpetual Preferred Stock to the Rights Offering Backstop Provider which
will be convertible into up to 19.9% of the Borrower’s common stock (after giving
effect to the Rights Offering including the purchase of common stock by the Rights
Offering Backstop Provider) at a conversion price equal to 102.5% of the
subscription price.”




“Rights Offering means the Borrower’s offer to sell up to 45,000,000 shares of
its common stock to its stockholders at an agreed purchase price together with the
commitment of the Rights Offering Backstop Provider to purchase all shares not
purchased pursuant to the Rights Offering but not to exceed 34.055% of the
Borrower’s total issued and outstanding common shares (after giving effect to the
Rights Offering including the purchase of common stock by the Rights Offering
Backstop Provider).”




“Rights Offering Backstop Provider means Lime Rock Partners V, L.P., together
with any affiliates to whom it has assigned its rights to purchase the Preferred
Stock or commitment to purchase shares not purchased pursuant to the Rights
Offering.”




“Senior Unsecured Note Tender Offer means the offer by the Borrower to
repurchase up to $125,000,000 of its Senior Unsecured Notes.”



1.2
Section 6.12. 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, and (iv) 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.”



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Energy Second Amended and

Restated Credit Agreement




 


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1.3 Section 7.08. Section 7.08 to the Credit Agreement is hereby amended by deleting
the word “and” at the end of Section 7.08(b), adding the word “and” at the end of Section 7.08(c)
and adding a new Section 7.08(d) to read in its entirety as follows:




“(d) the Borrower may declare and pay dividends in cash on the Preferred Stock
provided such dividends accrue at an annual rate of 7% on up to $42,000,000 of
Liquidation Preference as defined in the certificate of designations governing such
Preferred Stock; provided further that at the time such declaration is made (i) no
Default or Event of Default exists or would result therefrom and (ii) if such
declaration and payment occur during the Borrowing Base Period, no Borrowing Base
Deficiency exists.”



1.4 Section 7.15. Section 7.15 of the Credit Agreement is amended in its entirety to
read as follows:




“7.15 Prepayments. Neither Borrower nor any Subsidiary shall prepay any
Indebtedness except:




	 	(a)	 	Indebtedness incurred pursuant to the Loan Documents
may be prepaid in accordance with the terms of the Loan Documents;

	 
	 	(b)	 	the Senior Unsecured Notes may be prepaid as required
under the terms of any indenture governing the Senior Unsecured Notes;

	 
	 	(c)	 	the Senior Unsecured Notes may be prepaid with proceeds
from the Rights Offering and issuance of Preferred Stock in connection
with the Senior Unsecured Note Tender Offer;

	 
	 	(d)	 	the Senior Unsecured Notes may be prepaid with cash
proceeds from the Rights Offering; and

	 
	 	(e)	 	the Senior Unsecured Notes may be prepaid with excess
cash proceeds after completion of the Senior Unsecured Note Tender
Offer from the sale of the Preferred Stock after such proceeds are
applied to reduce the Outstanding Amount of Revolving Loans to zero.”






Paragraph 2. Effective Date. This Amendment shall not become effective until the date
(such date, the “Fourth 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 Required Lenders;



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



(c) evidence satisfactory to the Administrative Agent that any necessary consents to the
transactions contemplated in this Amendment from the holders of the Senior Unsecured Notes has been
obtained and is in full force and effect; and



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



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Energy Second Amended and

Restated Credit Agreement



 


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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 Fourth 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.



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.



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Energy Second Amended and

Restated Credit Agreement





 


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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 Fourth Amendment Effective Date.



Remainder of Page Intentionally Blank

Signature Pages to Follow.




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Energy Second Amended and

Restated Credit Agreement





 


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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 	 



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Energy Credit Agreement




 


Signature Page-Page 1









 







GUARANTORS:




	 	 	 	 	 	 	 	 	 	 	 
	AirComp LLC	 	 	 	Allis-Chalmers Drilling LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Victor M. Perez
 

Victor M. Perez
	 	 	 	By:
	 	/s/ 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
 

Victor M. Perez
	 	 	 	By:
	 	/s/ 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
 

Victor M. Perez
	 	 	 	By:
	 	/s/ 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
 

Victor M. Perez
	 	 	 	By:
	 	/s/ 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
 

Victor M. Perez
	 	 
	 

	 	Chief Financial Officer
	 	 	 	 	 	Chief Financial Officer	 	 






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Energy Credit Agreement




 


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	 	ADMINISTRATIVE AGENT:



ROYAL BANK OF CANADA,

as Administrative Agent and Collateral Agent

 	 
	 	By:  	/s/ Ann Hurley
 	 
	 	 	Name:  	Ann Hurley 	 
	 	 	Title:  	Manager, Agency 	 



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Energy Credit Agreement




 


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	 	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 	 



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Energy Credit Agreement




 


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	 	LENDER:



CATERPILLAR FINANCIAL
SERVICES CORPORATION, as Lender

 	 
	 	By:  	/s/ JJ Flanagan
 	 
	 	 	Name:  	JJ Flanagan 	 
	 	 	Title:  	Manager Capital Markets 	 



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Energy Credit Agreement




 


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	 	LENDER:



JPMORGAN CHASE BANK, N.A.

as a Lender

 	 
	 	By:  	/s/ Thomas Okamoto
 	 
	 	 	Name:  	Thomas Okamoto 	 
	 	 	Title:  	Vice President 	 



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Energy Credit Agreement




 


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	 	LENDER:



WELLS FARGO BANK, N.A.

as a Lender

 	 
	 	By:  	/s/ Donald W. Herrick, Jr.
 	 
	 	 	Name:  	Donald W. Herrick, Jr. 	 
	 	 	Title:  	Vice President 	 



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Energy Credit Agreement




 


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	 	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:  	Director 	 



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Energy Credit Agreement




 


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	 	LENDER:



WHITNEY NATIONAL BANK,

as a Lender

 	 
	 	By:  	/s/ Mark McCullough
 	 
	 	 	Name:  	Mark McCullough 	 
	 	 	Title:  	Vice President 	 



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Signature Page-Page 9