Document:

exv10w4

 

Exhibit 10.4

Allis-Chalmers Energy Inc.

and

the Guarantors listed on Schedule B hereto

$95,000,000

9.0% Senior Notes due 2014

PURCHASE AGREEMENT

dated August 8, 2006

RBC Capital Markets Corporation

 

 

PURCHASE AGREEMENT

August 8, 2006

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 (the “Initial Purchaser”) $95,000,000 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”) dated January 18, 2006 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 Purchaser, 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 Preliminary Offering Memorandum and in the Offering Memorandum
(as each term is defined below), the Company has agreed to purchase all of the

 

 

outstanding capital stock of DLS Drilling, Logistics & Services Corporation (“DLS”),
pursuant to a stock purchase agreement dated April 27, 2006. The acquisition by the Company of all
of the outstanding capital stock in DLS, as described in the Preliminary Offering Memorandum and in
the Offering Memorandum, 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 DLS. In
connection with the Acquisition, the Company will (i) offer and sell the Securities contemplated by
this Agreement; (ii) offer and sell the Common Stock pursuant to an underwriting agreement dated
August 8, 2006 between the Company and the underwriters named therein; and (iii) enter into an
amendment of its $25.0 million senior secured credit facility (the “Bank Credit Facility”).
These transactions (but not including the offering of the Securities contemplated by this
Agreement and the Preliminary Offering Memorandum or the Offering Memorandum) are collectively
referred to herein as the “Transactions.”

     The Company understands that the Initial Purchaser proposes to make an offering of the
Securities on the terms and in the manner set forth herein and in the Preliminary Offering
Memorandum (as defined below) and agrees that the Initial Purchaser 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 Purchaser 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 the Initial Purchaser copies of a preliminary
offering memorandum, dated July 26, 2006 (the “Preliminary Offering Memorandum”) for use by
the Initial Purchaser in connection with its solicitation of offers to purchase the Securities.
Promptly after this Agreement is executed by the parties hereto (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 the Initial Purchaser a final Offering Memorandum (the “Offering
Memorandum”) which will consist of the Preliminary Offering Memorandum with only such changes
therein as are required to reflect pricing information of the Notes.

     The Company and the Guarantors hereby confirm their agreement with the Initial Purchaser as
follows:

     SECTION 1. Representations and Warranties. The Company and the Guarantors, jointly
and severally, hereby represent, warrant and covenant to the Initial Purchaser as follows:

     (a) No Registration Required. Subject to compliance by the Initial Purchaser 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 Purchaser and to each Subsequent Purchaser in the manner contemplated by
this Agreement, the Preliminary Offering Memorandum and the Offering Memorandum to

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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 Purchaser, 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 Purchaser, 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 Purchaser, 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
Preliminary Offering Memorandum and 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.

     (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 the 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 Purchaser’s 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.

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     (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 Purchaser 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 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

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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, executed and
delivered by the Company and each Guarantor, and, assuming due authorization, execution and
delivery thereof by the Trustee, constitutes 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) Authorization of the Transactions. The Company and each Guarantor, as applicable, have or
will have on or prior to the Closing Date all requisite power and authority to consummate the
Transactions to which they are a party and to enter into all agreements related to the Transactions
(collectively, the “Transaction Documents”) to which they are a party. Each of the Transaction
Documents has been or will have been on or prior to the Closing Date, duly authorized by the
Company and each Guarantor to the extent such persons are parties thereto, and, when executed and
delivered by the Company and each Guarantor, (assuming due authorization, execution and delivery by
the other parties thereto) constitute a legal, valid and binding agreement of the Company and each
Guarantor party thereto, enforceable against the Company and each Guarantor, as applicable, in
accordance with its terms, except as such enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights
and remedies of creditors generally or by general equitable principles.

     (k) 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 Preliminary Offering
Memorandum and the Offering Memorandum.

     (l) No Material Adverse Change. Except as otherwise disclosed in the Preliminary Offering
Memorandum and the Offering Memorandum, subsequent to the respective dates as of which information
is given in the Preliminary Offering Memorandum and 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,

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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 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.

     (m) 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 Preliminary
Offering Memorandum and in the Offering Memorandum are independent registered public accounting
firms, in the case of UHY Mann Frankfort Stein & Lipp CPAs, LLP, and Gordon, Hughes and Banks, LLP,
or an independent public accounting firm, in the case of Sibille (la firma argentina miembro
de KPMG International, una cooperativa suiza) , 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.

     (n) Preparation of the Financial Statements. The historical financial statements, together
with the related schedules and notes, included in the Preliminary Offering Memorandum and in the
Offering Memorandum present fairly the consolidated financial position of the Company and its
subsidiaries or of DLS, Specialty Rental Tools Inc., W. T. Enterprises, Inc., 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 Preliminary Offering Memorandum and 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 Preliminary Offering Memorandum and 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 Preliminary Offering Memorandum and 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.

     (o) 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

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to conduct its business as described in the Preliminary Offering Memorandum and 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 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 Preliminary Offering Memorandum and 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.

     (p) 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 Preliminary Offering
Memorandum and 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 Preliminary Offering Memorandum and the Offering Memorandum (including, but not limited to,
the

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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 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.

     (q) No Material Actions or Proceedings. Except as disclosed in the Preliminary Offering
Memorandum and 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
Preliminary Offering Memorandum and 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.

     (r) 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 Preliminary Offering Memorandum and 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.

     (s) All Necessary Permits, etc. Except as disclosed in the Preliminary Offering Memorandum
and 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.

     (t) Title to Properties. Except as disclosed in the Preliminary Offering Memorandum and 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

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referred to in Section 1(n) above (or elsewhere in the Preliminary Offering Memorandum and 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 proposed use of such real property,
improvements, equipment or personal property by the Company or such subsidiary.

     (u) 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(n) 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.

     (v) 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
Preliminary Offering Memorandum and 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.

     (w) Insurance. Except as disclosed in the Preliminary Offering Memorandum and 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
Preliminary Offering Memorandum and 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.

     (x) 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.

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     (y) 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 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 Preliminary Offering
Memorandum and the Offering Memorandum.

     (z) 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 Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein not misleading.

     (aa) Company’s Accounting System. Except as disclosed in the Preliminary Offering Memorandum
and 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.

     (bb) 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,

10

 

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 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.

     (cc) 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.

     (dd) Sarbanes-Oxley Act. The Company is in compliance in all material respects with
applicable provisions of the Sarbanes-Oxley Act of 2002 that are effective as of the date of this
Agreement.

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     (ee) Disclosure Controls and Procedures. Except as disclosed in the Preliminary Offering
Memorandum and 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
Preliminary Offering Memorandum and 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
Preliminary Offering Memorandum and 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 Purchaser or
to counsel for the Initial Purchaser shall be deemed to be a representation and warranty by the
Company to the 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 Initial Purchaser all of the
Notes upon the terms herein set forth. The Guarantors, jointly and severally, agree to issue to
the Initial Purchaser 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, the Initial Purchaser agrees to purchase from the
Company the aggregate principal amount of Notes set forth opposite its name in Schedule A, at a
purchase price of 97.75% of the principal amount thereof plus interest from July 15, 2006, 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 Purchaser at 9:30 AM, New York City time, on August 14, 2006 or at such time on
such later date as the Initial Purchaser and the Company shall designate, which date and time may
be postponed by agreement between the Initial Purchaser 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 Purchaser 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 Purchaser to recirculate to investors copies of an
amended or supplemented Offering Memorandum.

     (c) Delivery of and Payment for the Securities. The Company shall deliver, or cause to be
delivered, to or as directed by the Initial Purchaser for the accounts of the Initial Purchaser
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 Purchaser 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 Purchaser.

     (d) Initial Purchaser as Accredited Investors. The Initial Purchaser 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 the Initial Purchaser as
follows:

     (a) Initial Purchaser’s Review of Proposed Amendments and Supplements. Until the later of (x)
the completion of the placement of the Securities by the Initial Purchaser with the Subsequent
Purchasers and (y) the Closing Date, prior to amending or supplementing the Offering Memorandum,
the Company shall furnish to the Initial Purchaser 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 Purchaser reasonably objects.

     (b) Amendments and Supplements to the Offering Memorandum. If, prior to the completion of the
placement of the Securities by the Initial Purchaser 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 Purchaser or counsel for the Initial Purchaser it is otherwise necessary to amend or
supplement the Offering Memorandum to comply with applicable law, the Company agrees to prepare
promptly (subject to Section 3(a) hereof), and furnish at its own expense to the Initial Purchaser,
amendments or supplements to the Offering Memorandum so

13

 

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 Purchaser,
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
Purchaser and counsel for the Initial Purchaser 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 Purchaser, 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 Purchaser 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 Preliminary Offering
Memorandum and the Offering Memorandum.

     (f) The Depositary. The Company will cooperate with the Initial Purchaser 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 Purchaser,
(ii) the resale of the Securities by the Initial Purchaser 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 Preliminary Offering Memorandum and the Offering Memorandum for the
time period and upon the other terms stated in the Preliminary Offering Memorandum and the Offering
Memorandum.

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     (i) PORTALSM. The Company will use its commercially reasonable efforts to cause
the Notes to be eligible for The PORTALSM Market of the National Association of
Securities Dealers, Inc. (“The PORTALSM Market”).

     (j) Agreement Not to Offer or Sell Additional Securities. During the period of 90 days
following the date of the Offering Memorandum, none of the Company or any Guarantor will, without
the prior written consent of the Initial Purchaser (which consent may be withheld at the sole
discretion of the Initial Purchaser), 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.

     The Initial Purchaser, 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 Purchaser, (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 Purchaser 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 Purchaser,
preparing and printing a “Blue Sky Survey” or memorandum, and any supplements thereto, advising the
Initial Purchaser 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 Purchaser shall pay its own expenses, including the
fees and disbursements of its counsel.

     SECTION 5. Conditions of the Obligations of the Initial Purchaser. The obligations
of the Initial Purchaser 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 Purchaser 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 Purchaser, in form and substance satisfactory to the Initial
Purchaser, 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 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
Purchaser to be furnished to the Initial Purchaser:

     (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

16

 

     (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 Purchaser. The Initial Purchaser shall have received
from Shearman & Sterling LLP, counsel for the Initial Purchaser, such opinion or opinions, dated
the Closing Date and addressed to the Initial Purchaser, with respect to the issuance and sale of
the Securities, the Preliminary Offering Memorandum and the Offering Memorandum (as amended or
supplemented at the Closing Date) and other related matters as the Initial Purchaser 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 Purchaser 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 Purchaser 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 Purchaser, 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 Offering Memorandum not contained in the Preliminary Offering Memorandum.

     (g) PORTALSM 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 Purchaser shall have received
executed counterparts thereof.

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     (i) Consummation of the Acquisition. On the Closing Date, the Company shall have consummated
the Acquisition in the manner described in the Preliminary Offering Memorandum and the Offering
Memorandum.

     (j) Bank Credit Facility. On the Closing Date, the Company shall have entered into an
amendment of the Bank Credit Facility in the manner described in the Preliminary Offering
Memorandum and the Offering Memorandum.

     (k) Additional Documents. On or before the Closing Date, the Initial Purchaser and counsel
for the Initial Purchaser 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 Purchaser 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 Purchaser’s Expenses. If this Agreement is
terminated by the Initial Purchaser pursuant to Section 5, or if the sale to the Initial Purchaser
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 Purchaser upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Initial Purchaser 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. The Initial Purchaser, 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 Purchaser 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

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Rule 502 under the Securities Act) will be used in the United States in connection with the
offering of the Securities.

     (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 Preliminary Offering Memorandum and the Offering
Memorandum under the caption “Notice to Investors.”

     Following the sale of the Securities by the Initial Purchaser to Subsequent Purchasers
pursuant to the terms hereof, the Initial Purchaser 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 Purchaser. Each of the Company and the Guarantors, jointly
and severally, agree to indemnify and hold harmless the Initial Purchaser, its directors, officers
and employees, and each person, if any, who controls the 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 the 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 the Initial Purchaser
and each such controlling person for any and all expenses (including the fees and disbursements of
counsel chosen by the Initial Purchaser) as such expenses are reasonably incurred by the 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 Purchaser 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. The Initial Purchaser agrees to indemnify and hold harmless the Company, the Guarantors
and each of their respective directors, officers and employees and each person, if any,

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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 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 the 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 Purchaser 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 Purchaser has 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 name of the Initial Purchaser as set forth on the
front and back covers of the Preliminary Offering Memorandum and 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
fourth sentence of the tenth paragraph and the eleventh, twelfth and thirteenth paragraphs,
concerning stabilization by the Initial Purchaser, under the caption “Plan of Distribution” in the
Preliminary Offering Memorandum and the Offering Memorandum; and the Initial Purchaser confirms
that such statements are correct. The indemnity agreement set forth in this Section 8(b) shall be
in addition to any liabilities that the 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

20

 

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 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 Purchaser, 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 Purchaser,
on the other hand, in connection with the statements or omissions or inaccuracies in the
representations and warranties

21

 

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 Purchaser, on the other hand, in connection with the
offering of the Securities pursuant to this Agreement shall be deemed to be in the same 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 Purchaser, 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
Purchaser, 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 Purchaser,
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 Purchaser agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata allocation 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, the Initial Purchaser shall not be required
to contribute any amount in excess of the discount received by the 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. For purposes of this Section 9, each
director, officer and employee of the Initial Purchaser and each person, if any, who controls the
Initial Purchaser within the meaning of the Securities Act and the Exchange Act shall have the same
rights to contribution as the 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 Purchaser 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

22

 

any of such stock exchanges by the SEC or the NASD; (ii) a general banking moratorium shall
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 Purchaser is material and adverse and makes it impracticable to
market the Securities in the manner and on the terms described in the Preliminary Offering
Memorandum and the Offering Memorandum or to enforce contracts for the sale of securities; (v) in
the reasonable judgment of the Initial Purchaser 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
Purchaser 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 the Initial Purchaser, except that the Company and the Guarantors shall be obligated
to reimburse the expenses of the Initial Purchaser pursuant to Sections 4 and 6 hereof, (ii) the
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 Initial Purchaser 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 the 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 Purchaser:

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

23

 

Facsimile: (212) 848-7179

Attention: Bruce Czachor, Esq.

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 Purchaser or Initial Purchasers, 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 the Initial Purchaser 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

24

 

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.
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. The Initial Purchaser 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. No Fiduciary Duty. The Company and each Guarantor hereby acknowledges
that the Initial Purchaser is acting solely as an initial purchaser in connection with the purchase
and sale of the Securities. The Company further acknowledges that the Initial Purchaser is 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 Purchaser 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 Purchaser may undertake or has
undertaken in furtherance of the purchase and sale of the Securities, either before or after the
date hereof. The Initial Purchaser hereby expressly disclaims 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 such transactions, and the Company and each Guarantor hereby
confirms its understanding and agreement to that effect. The Company, each Guarantor and the
Initial Purchaser 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
Purchaser 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 Purchaser 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 19. 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.

25

 

     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/ David Wilde
	 

	 	 	 	 
	 

	 	 	 	Name: David Wilde

Title: President and Chief Operating Officer
	 
	 	 	 	 
	 	 	GUARANTORS:
	 
	 	 	 	 
	 	 	ALLIS-CHALMERS GP, LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	ALLIS-CHALMERS LP, LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ Jeffrey R. Freedman
	 

	 	 	 	 
	 

	 	 	 	Name: Jeffrey R. Freedman

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	ALLIS-CHALMERS MANAGEMENT, LP
	 
	 	 	 	 
	 	 	By: Allis-Chalmers GP, LLC
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary

 

 

	 	 	 	 	 
	 	 	ALLIS-CHALMERS PRODUCTION SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	ALLIS-CHALMERS RENTAL TOOLS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	ALLIS-CHALMERS TUBULAR SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	AIRCOMP L.L.C.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary

 

 

	 	 	 	 	 
	 	 	MOUNTAIN COMPRESSED AIR, INC.
	 
	 	 	 	 
	 

	 	By: 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	OILQUIP RENTALS, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	ROGERS OIL TOOL SERVICES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	STRATA DIRECTIONAL TECHNOLOGY, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary
	 
	 	 	 	 
	 	 	TARGET ENERGY INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ Theodore F. Pound III
	 

	 	 	 	 
	 

	 	 	 	Name: Theodore F. Pound III

Title: Vice President and Secretary

 

 

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

	 	 	 	 	 
	RBC CAPITAL MARKETS CORPORATION	 	 
	 
	 	 	 	 
	By:
	 	/s/ Nicholas Daifotis	 	 
	 

	 	 	 	 
	 

	 	Name: Nicholas Daifotis

Title: Managing Director	 	 

 

 

SCHEDULE A

	 	 	 	 	 
	 	 	Aggregate
	 	 	Principal
	 	 	Amount of
	 	 	Securities to be
	Initial Purchaser	 	Purchased
	RBC Capital Markets Corporation
	 	$	95,000,000	 
	 
	 	 	 	 
	Total
	 	$	95,000,000	 

Schedule A-1

 

SCHEDULE B

Allis-Chalmers GP, LLC

Allis-Chalmers LP, LLC

Allis-Chalmers Management, LP

Allis-Chalmers Production Services, Inc.

Allis-Chalmers Rental Tools, Inc.

Allis-Chalmers Tubular Services, Inc.

Aircomp L.L.C.

Mountain Compressed Air, Inc.

OilQuip Rentals, Inc.

Rogers Oil Tool Services, 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

	 	W. T. Enterprises, Inc.
	Wright, Moore, Dehart, Dupuis & Hutchinson, LLC

	 	Delta Rental Service, Inc.
	Curtis Blakely & Co., PC

	 	Capcoil Tubing Services, Inc.
	Sibille (la firma argentina miembro de KPMG
International, una cooperativa suiza.)

	 	DLS Drilling, Logistics & Services Corporation

Schedule C-1

 

EXHIBIT A-1

Opinion of Andrews Kurth LLP

Exhibit A-1-1

 

EXHIBIT A-2

Opinion of Liskow & Lewis

Exhibit A-2-1

 

ANNEX I

     Resale Pursuant to Regulation S. The Initial Purchaser understands that:

     The 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. The 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.

     The 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.”

     The Initial Purchaser agrees that (i) the 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 the 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 the 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-1exv10w1

 

EXHIBIT 10.1

INVESTORS RIGHTS AGREEMENT

     This Investors Rights Agreement dated as of August 14, 2006 (this “Agreement”) is entered into
by and among Allis-Chalmers Energy Inc., a Delaware corporation (the “Company”), and the parties
whose names appear on Exhibit A (collectively, the “Investors”).

     WHEREAS, the Company and the Investors have entered into a Stock Purchase Agreement dated as
of April 27, 2006 (the “Stock Purchase Agreement”) pursuant to which each of the Investors shall
receive a number of shares of the common stock, par value $0.01 per share, of the Company (the
"Common Stock”) to be determined as set forth therein;

     WHEREAS, in order to induce each of the Investors to enter into the Stock Purchase Agreement,
the Company has agreed to grant certain registration rights to the Investors with respect to such
shares and certain Board designation rights, in each case, subject to the terms and conditions set
forth herein;

     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:

     Section 1. Definitions. As used herein, the following terms have the indicated
meanings, unless the context otherwise requires:

     "Agreement” has the meaning given to such term in the preamble hereto.

     "Beneficially Own,” “Beneficially Owned,” “Beneficial Ownership” and “Beneficial Owner” with
respect to any securities means a Holder’s having such ownership, control or power to direct the
voting with respect to, or which otherwise enables a Holder to legally act with respect to, such
securities as contemplated hereby, including without limitation pursuant to any agreement,
arrangement or understanding, regardless of whether in writing. Securities “Beneficially Owned”
shall include securities Beneficially Owned by all other persons with whom a Holder would
constitute a “group” as within the meaning of Section 13(d) of the Exchange Act.

     "Blackout Period” means a period in each case commencing on the day immediately after the
Company notifies the Holders that they are required, pursuant to Section 4(b)(vi), to suspend
offers and sales of Registrable Securities during which the Company, in the good faith judgment of
the Board, determines (because of the existence of, or in anticipation of, any acquisition,
financing activity, or other transaction involving the Company, or the unavailability for reasons
beyond the Company’s control of any required financial statements, disclosure of information which
is in its best interest not to publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution of (and/or the registration of
the offer and sale of) the Registrable Securities covered or to be covered by the Registration
Statement would be seriously detrimental to the Company and its stockholders and ending on the
earlier of (a) the date upon which the material non-public information commencing the Blackout
Period is disclosed to the public or ceases to be material and (b) such time as the Company
notifies the selling Holders that the Company will no longer delay such filing of the Registration

 

 

Statement, recommence taking steps to make such Registration Statement effective, or allow sales
pursuant to such Registration Statement to resume; provided that no Blackout Period may last for
more than 60 consecutive days; provided, further, that during any period of 365 consecutive days,
Blackout Periods may not, in the aggregate, last for more than the greater of (a) zero days and (b)
the result of 90 days minus the number of days that holders are required pursuant to Section 4(c)
to discontinue and suspend disposition of Registrable Securities because of the happening of any
event described in Section 4(b)(vi).

     "Board” means the board of directors of the Company.

     "Business Day” means any day of the year, other than a Saturday, Sunday, or other day on which
the SEC is required or authorized to close.

     "Closing Date” has the meaning given to such term in the Stock Purchase Agreement.

     "Common Stock” has the meaning given to such term in the recitals hereto.

     "Company” has the meaning given to such term in the preamble hereto.

     "Designation Rights Termination Date” has the meaning given to such term in Section 2(b)
hereto.

     "Effectiveness Period” has the meaning given to such term in Section 4(b)(i) .

     "Equity Securities Offering” means any underwritten registered offering of Relevant
Securities, and any offering or placement of any Relevant Securities pursuant to Rule 144A under
the Securities Act.

     "Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.

     "Family Member” means (a) with respect to any individual, such individual’s spouse, any
descendants (whether natural or adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals together with any organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited liability company all of
the equity interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial interests of such
trust.

     "Form S-1” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.

     "Form S-3” means such form under the Securities Act as in effect on the date of this Agreement
or any successor registration form thereto under the Securities Act subsequently adopted by the
SEC.

2

 

     "Holder” means each Investor or any of such Investor’s successors and Permitted Assignees who
acquire rights in accordance with this Agreement with respect to the Registrable Securities
directly or indirectly from another Holder (including from any Permitted Assignee).

     "Inspector” means any attorney, accountant or other agent retained by a Holder for the
purposes provided in Section 4(b)(x).

     "Investor” has the meaning given to such term in the preamble hereto.

     "Investor Director” means any member of the Board that was nominated for election to the Board
by the Holders pursuant to and in accordance with Section 2(a).

     "Market Standoff Period” with respect to each Equity Securities Offering, the period beginning
on the date of first sale of securities pursuant to such Equity Securities Offering and ending on
the date that shall be requested by the Company or the underwriters or initial purchasers retained
by the Company to facilitate such Equity Securities Offering; provided, however, that each such
period shall not be more than 90 days; provided further that (i) such period shall be no longer
than the shortest period imposed by the Company or the underwriters upon any other person or entity
and (ii) if any other person or entity receives a waiver with respect to any such matters, the
Investors shall be given a waiver with respect to their Shares as well.

     "NASD” means the National Association of Securities Dealers.

     "Permitted Assignee” means (a) with respect to a partnership, its partners or former partners
in accordance with their partnership interests, (b) with respect to a corporation, its stockholders
in accordance with their interest in the corporation, (c) with respect to a limited liability
company, its members or former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such party, (e) an entity
that is controlled by, controls, or is under common control with a transferor, or (f) a party to
this Agreement.

     "register,” “registered,” and “registration” refer to a registration effected by preparing and
filing a registration statement in compliance with the Securities Act, and the declaration or
ordering of the effectiveness of such registration statement.

     "Registrable Securities” means the Shares, excluding any such Shares (a) that have been
publicly sold or may be sold immediately without registration or the requirement to make filings
with the SEC under the Securities Act either pursuant to Rule 144 of the Securities Act or
otherwise, (b) sold by a person in a transaction pursuant to a registration statement filed under
the Securities Act or (c) that are at the time subject to an effective registration statement under
the Securities Act (other than the Registration Statement contemplated hereby).

     "Registration Expenses” has the meaning given to such term in Section 4(d).

     "Registration Statement” has the meaning given to such term in Section 4(a).

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     "Relevant Security” means the Shares, any other equity security of the Company or any of its
subsidiaries and any security convertible into, or exercisable or exchangeable for, any Shares or
other such equity security.

     "SEC” means the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

     "SEC Effective Date” means the date the Registration Statement is originally declared
effective by the SEC.

     "Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the SEC thereunder, all as the
same shall be in effect from time to time.

     "Selling Expenses” has the meaning given to such term in Section 4(d).

     "Shares” means the shares of Common Stock issued to each Investor pursuant to the Stock
Purchase Agreement and (a) any and all shares of capital stock or other equity securities of the
Company which are added to or exchanged or substituted for such shares of Common Stock by reason of
the declaration of any stock dividend or stock split, the issuance of any distribution or the
reclassification, readjustment, recapitalization or other such modification of the capital
structure of the Company; and (b) any and all shares of capital stock or other equity securities of
any other corporation (now or hereafter organized under the laws of any state or other governmental
authority) with which the Company is merged, which results from any consolidation or reorganization
to which the Company is a party, or to which is sold all or substantially all of the shares or
assets of the Company, for which such shares of Common Stock are exchanged or substituted in
connection with such merger, consolidation, reorganization or sale, if immediately after such
merger, consolidation, reorganization or sale, the Company or the stockholders of the Company own
equity securities having in the aggregate more than 50% of the total voting power of such other
corporation.

     "Stock Purchase Agreement” has the meaning given to such term in the recitals hereto.

     "Transfer” has the meaning given to such term in Section 3(a).

     Section 2. Board Designation Rights.

     (a) Designation. Until the Designation Rights Termination Date, the Investors shall
have the right to designate two nominees for election to the Board.

     (b) Termination of Designation Rights. The Investors shall not be entitled to
designate any nominees for election to the Board pursuant to this Agreement from and after the date
(the “Designation Rights Termination Date”) that is the first date on which the Shares Beneficially
Owned by the Investors collectively represent less than twenty percent (20%) of the Shares
initially acquired by the Investors pursuant to the Stock Purchase Agreement.

     (c) Company Support. At all times prior to the Designation Rights Termination Date,
the Company shall support the nominations of the persons designated by the Holders pursuant to
Section 2(a), and the Company shall use its best efforts to cause the Board (and the Company’s

4

 

nominating committee, if any) to recommend the inclusion of such persons in the slate of nominees
recommended to stockholders for election as directors at each annual meeting of stockholders of the
Company.

     (d) Vacancies. If at any time prior to the Designation Rights Termination Date, a
vacancy is created on the Board by reason of the incapacity, death, removal or resignation of any
Investor Director, then the Company shall use its best efforts to cause the Board to appoint an
individual designated by the Holders to fill such vacancy until the next meeting of the Company’s
stockholders at which directors are elected.

     Section 3. Market Standoff. Notwithstanding anything to the contrary set forth in this
Agreement, with respect to each Equity Securities Offering conducted after the Closing Date, the
following provisions of this Section 3 shall apply, if and only if (x) the underwriters or initial
purchasers retained by the Company to facilitate such offering request, in connection with such
offering, that the officers or directors or significant stockholders of the Company refrain from
selling any Relevant Security during any period, and (y) either (1) any nominee designated by the
Investors pursuant to Section 2(a) is a member of the Board, or (2) the Holders Beneficially Own
shares of Common Stock representing at least 10% of the fully diluted equity interests in the
Company (calculated giving effect to the exercise of all outstanding options, warrants and other
rights to purchase to acquire any Common Stock of the Company):

     (a) Without the prior written consent of the Company, during the Market Standoff Period
applicable to such Equity Securities Offering, each Holder will not (i), directly or indirectly,
offer, sell, agree to offer or sell, solicit offers to purchase, grant any call option or purchase
any put option with respect to, pledge, borrow or otherwise dispose of any Relevant Security, or
(ii) establish or increase any “put equivalent position” or liquidate or decrease any “call
equivalent position” (in each case within the meaning of Section 16 of the Exchange Act) with
respect to any Relevant Security, or otherwise enter into any swap, derivative or other transaction
or arrangement that transfers to another, in whole or in part, any economic consequence of
ownership of a Relevant Security (each of the transactions described in the immediately preceding
clauses (i) and (ii), being referred to as a “Transfer”), regardless of whether such transaction is
to be settled by delivery of Relevant Securities, other securities, cash or other consideration;
provided, however, that a Transfer to a Permitted Assignee will not be subject to this Section 3 as
long as (x) such Transfer is effected in accordance with applicable securities laws; (y) such
transferee agrees in writing to become subject to the terms of this Agreement as a Holder; and (z)
the Company is given written notice by such Holder of such Transfer, stating the name and address
of the transferee and identifying the Shares being Transferred.

     (b) Furthermore, each Holder hereby authorizes the Company during the Market Standoff Period
to cause any transfer agent for the Relevant Securities to decline to transfer, and to note stop
transfer restrictions on the stock register and other records relating to, any Relevant Securities
for which such Holder is the record holder and, in the case of Relevant Securities for which such
Holder is the Beneficial Owner but not the record holder, agrees during the Market Standoff Period
to cause the record holder thereof to cause the relevant transfer agent to decline to transfer, and
to note stop transfer restrictions on the stock register and other records relating to, such
Relevant Securities.

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     (c) Without the prior written consent of the Company, during the Market Standoff Period such
Holder (x) will not participate in the filing with the SEC of any registration statement, or
circulate or participate in the circulation of any preliminary or final prospectus or other
disclosure document with respect to any proposed offering or sale of a Relevant Security and (y)
will not exercise any rights the undersigned may have to require registration with the SEC of any
proposed offering or sale of a Relevant Security (including without limitation pursuant to this
Agreement).

     Section 4. Registration Rights.

     (a) Shelf Registration Statement. As promptly as reasonably practicable after the
Closing Date (but no later than 30 after the Closing Date, unless a later date is agreed to in
writing by the Holders of a majority of the Registrable Securities), the Company shall file with
the SEC a shelf registration statement on Form S-1 (or, if the Company is eligible to use such
form, Form S-3) relating to the registration of the offer and resale by the Holders of all of the
Registrable Securities (the “Registration Statement”); provided, however, that the Company shall
not be obligated to effect any such registration pursuant to this Section 4(a), or keep such
registration or the Registration Statement effective pursuant to Section 4(b)(i), during any
Blackout Period.

     (b) Registration Procedures. In the case of each registration, qualification, or
compliance effected by the Company pursuant to Section 4(a), the Company will keep each Holder
including securities therein reasonably advised in writing (which may include e-mail) as to the
initiation of each registration, qualification, and compliance and as to the completion thereof.
In addition, the Company hereby agrees as follows with respect to the Registration Statement.

      (i) The Company will use its commercially reasonable efforts to cause the Registration
Statement to become and remain effective at least for a period ending with the first to
occur of (A) the sale by the Holders of all Registrable Securities covered by the
Registration Statement, (B) the availability under Rule 144 for the Holders to immediately,
freely resell without restriction or filing with the SEC all Registrable Securities covered
by the Registration Statement, or (C) the date that is two years after the SEC Effective
Date (provided, however, that if the Company files the Registration Statement on Form S-1
and subsequently becomes eligible to use Form S-3, it may file a post-effective amendment to
such Form S-1 on Form S-3 prior to the end of such period and use its commercially
reasonable efforts to cause the Registration Statement as amended to become effective until
the end of such period) (in any such case, the “Effectiveness Period”). At any time after
the end of the Effectiveness Period, if (a) the Holders Beneficially Own Registrable
Securities representing more than 10% of the fully diluted equity interests in the Company
(calculated giving effect to the exercise of all outstanding options, warrants and other
rights to purchase to acquire any Common Stock of the Company) or (b) any nominee designated
by the Investors pursuant to Section 2(a) is a member of the Board, then (x) as promptly as
reasonably practicable after the written request of Holders of greater than 50% of the
Registrable Securities, the Company shall file with the SEC another shelf registration
statement on Form S-1 (or, if the Company is eligible to use such form, Form S-3) relating
to the registration of the offer and resale by the Holders of all of the Registrable
Securities, (y) the provisions of this Agreement

6

 

(including without limitation the provisions of Section 4(a) and Section 4(b)) shall apply
to such registration statement and (z) such registration statement shall be deemed to be the
Registration Statement (as defined in Section 4(a)) for purposes of this Agreement.

      (ii) If the Registration Statement becomes subject to review by the SEC, the Company
will promptly respond to all comments and diligently pursue resolution of any comments to
the satisfaction of the SEC.

      (iii) The Company will prepare and file with the SEC such amendments and supplements to
the Registration Statement and any prospectus used in connection therewith as may be
reasonably necessary to keep the Registration Statement effective during the Effectiveness
Period, and will comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during such period in
accordance with the intended method(s) of disposition by the sellers thereof set forth in
such Registration Statement.

      (iv) The Company will furnish, without charge, to each Holder (A) a reasonable number
of copies of the Registration Statement (including any exhibits thereto other than exhibits
incorporated by reference), each amendment and supplement thereto as such Holder may
request, (B) such number of copies of the prospectus included in such Registration Statement
(including each preliminary prospectus and any other prospectus filed under Rule 424 under
the Securities Act) as such Holder may request, in conformity with the requirements of the
Securities Act, and (C) such other documents as such Holder may reasonably request in order
to facilitate the disposition of the Registrable Securities owned by such Holder, but only
during the Effectiveness Period.

      (v) The Company will use its commercially reasonable efforts to register or qualify the
Registrable Securities under such other applicable securities or blue sky laws of such
jurisdictions as any Holder reasonably requests as may be necessary for the marketability of
the Registrable Securities (such request to be made by the time the Registration Statement
is deemed effective by the SEC) and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder to consummate the disposition in
such jurisdictions of the Registrable Securities owned by such Holder; provided, however,
that the Company shall not be required to (A) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this paragraph (v),
(B) subject itself to taxation in any such jurisdiction, or (C) consent to general service
of process in any such jurisdiction.

      (vi) As promptly as practicable after becoming aware of such event, the Company will
notify each Holder of such Registrable Securities at any time when a prospectus relating
thereto is required to be delivered under the Securities Act of the happening of any event
which comes to the Company’s attention if as a result of such event the prospectus included
in the Registration Statement contains an untrue statement of a material fact or omits to
state any material fact required to be stated therein or necessary to make the statements
therein not misleading, and the Company shall promptly prepare and furnish to such Holder a
supplement or amendment to such prospectus (or prepare and file appropriate reports under
the Exchange Act) so that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus shall

7

 

not contain an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading,
unless suspension of the use of such prospectus otherwise is authorized herein or in the
event of a Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout Period.

      (vii) The Company will comply, and continue to comply during the period that the
Registration Statement is effective under the Securities Act, in all material respects with
the Securities Act and the Exchange Act and with all applicable rules and regulations of the
SEC with respect to the disposition of all securities covered by the Registration Statement.

      (viii) As promptly as practicable after becoming aware of such event, the Company will
notify each Holder of Registrable Securities being offered or sold pursuant to the
Registration Statement of the issuance by the SEC of any stop order or other suspension of
effectiveness of the Registration Statement.

      (ix) The Company will permit the Holders of Registrable Securities being included in
the Registration Statement and their legal counsel, at such Holders’ sole cost and expense
to review and have a reasonable opportunity to comment on the Registration Statement and all
amendments and supplements thereto at least two Business Days prior to their filing with the
SEC.

      (x) The Company will make available for inspection by any Holder and any Inspector
retained by such Holder, at such Holder’s sole expense, all records as shall be reasonably
necessary to enable such Holder to exercise its due diligence responsibility, and cause the
Company’s officers, directors, and employees to supply all information which such Holder or
any Inspector may reasonably request for purposes of such due diligence; provided, however,
that such Holder shall hold in confidence and shall not make any disclosure of any record or
other information which the Company determines in good faith to be confidential, and of
which determination such Holder is so notified at the time such Holder receives such
information, unless (w) such Holder had, or obtained, knowledge of such information without
violation of or protection under any agreements with the Company or, to its knowledge any
third party, (x) the disclosure of such record is reasonably necessary to avoid or correct a
misstatement or omission in the Registration Statement and a reasonable time prior to such
disclosure the Holder shall have informed the Company of the need to so correct such
misstatement or omission and the Company shall have failed to correct such misstatement of
omission, (y) the release of such record is ordered pursuant to a subpoena or other order
from a court or governmental body of competent jurisdiction or (z) the information in such
record has been made generally available to the public other than by disclosure in violation
of this Agreement or any other agreement. The Company shall not be required to disclose any
confidential information in such records to any Inspector until and unless such Inspector
shall have entered into a confidentiality agreement with the Company with respect thereto,
containing terms substantially similar to those set forth in this Section 4(b)(x), which
agreement shall permit such Inspector to disclose records to the Holder who has retained
such Inspector. Each Holder agrees that it shall, upon learning that disclosure of such

8

 

records is sought in or by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the Company, at the Company’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, the records deemed confidential. The Company shall hold in confidence and shall
not make any disclosure of information concerning a Holder provided to the Company pursuant
to this Agreement unless (A) disclosure of such information is reasonably necessary to
comply with federal or state securities laws, (B) disclosure of such information to the
SEC’s Staff of the Division of Corporation Finance is reasonably necessary to respond to
comments raised by such staff in its review of the Registration Statement, (C) disclosure of
such information is reasonably necessary to avoid or correct a misstatement or omission in
the Registration Statement, (D) release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of competent jurisdiction, or (E)
such information has been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall, upon learning
that disclosure of such information concerning a Holder is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt notice to
such Holder and allow such Holder, at such Holder’s expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, such information.

      (xi) The Company will use its commercially reasonable efforts to cause all the
Registrable Securities covered by the Registration Statement to be listed or quoted on the
principal securities market on which securities of the same class or series issued by the
Company are then listed or traded.

      (xii) The Company will provide a transfer agent and registrar, which may be a single
entity, for the Registrable Securities at all times.

      (xiii) The Company will cooperate with the Holders of Registrable Securities being
offered pursuant to the Registration Statement to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such certificates
to be in such denominations or amounts as the Holders may reasonably request and registered
in such names as the Holders may request.

      (xiv) The Company will take all other reasonable actions necessary to expedite and
facilitate disposition by the Holders of the Registrable Securities pursuant to the
Registration Statement, including without limitation making its chief executive officer,
president, chief financial officer and other appropriate officers and personnel available to
participate in marketing efforts with respect to any registered underwritten public
offering.

     (c) Suspension of Offers and Sales. Each Holder of Registrable Securities agrees
that, upon receipt of any notice from the Company of the happening of any event of the kind
described in Section 4(b)(vi) or of the commencement of an Blackout Period, such Holder shall
discontinue and suspend disposition of Registrable Securities pursuant to the Registration
Statement until such Holder’s receipt of the copies of the supplemented or amended prospectus
contemplated by Section 4(b)(vi) or notice of the end of the Blackout Period, and, if so directed

9

 

by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file copies, then in such
Holder’s possession, of the prospectus covering such Registrable Securities current at the time of
receipt of such notice.

     (d) Registration Expenses. All expenses incident to the Company’s performance of or
compliance with this Agreement, including without limitation all registration and filing fees,
messenger and delivery expenses, printing expenses, internal expenses (including without limitation
all salaries and expenses of its officers and employees performing legal or accounting duties), all
fees and expenses associated with filings required to be made with the NASD, as may be required by
the rules and regulations of the NASD, fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Registrable Securities), rating agency fees, the fees and expenses incurred
in connection with the listing of the securities to be registered on all securities exchanges on
which similar securities issued by the Company are then quoted or listed, fees and disbursements of
counsel for the Company and its independent certified public accountants, and the fees and expenses
of any other persons retained by the Company, in connection with the registration hereunder
(collectively, the “Registration Expenses”) will be borne by the Company, but not including any
roadshow expenses, fees and expenses of counsel for the Holders and any underwriting, broker or
dealer discounts or commissions attributable to the sale of Registrable Securities (which are
hereinafter referred to as “Selling Expenses”). All Selling Expenses shall be borne solely by the
Holders.

     (e) Information by Holder. The Holder or Holders of Registrable Securities included
in the Registration Statement shall furnish to the Company such information required under
Regulation S-K under the Securities Act regarding such Holder or Holders and the distribution
proposed by such Holder or Holders as the Company may request in writing. No Holder of Registrable
Securities will be entitled to have such Registrable Securities included in a Registration
Statement if such Holder does not furnish such information requested by the Company.

     (f) Indemnification.

      (i) In the event of the offer and sale of Registrable Securities held by Holders under
the Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the
fullest extent permitted by law, each Holder, its directors, officers, partners, each other
person who participates as an underwriter in the offering or sale of such securities, and
each other person, if any, who controls or is under common control with such Holder or any
such underwriter within the meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, and expenses to which the Holder or any
such director, officer, partner or underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities
or expenses (or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in (A) the Registration Statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or supplement thereto,
or (B) in any materials or information provided to investors by, or with the written
approval of, the

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Company in connection with the marketing of the offering of the Shares (“Marketing
Materials”), including any road show or investor presentations made to investors by the
Company (whether in person or electronically), or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading, and the
Company shall reimburse the Holder, and each such director, officer, partner, underwriter
and controlling person for any legal or any other expenses reasonably incurred by them in
connection with investigating, defending or settling any such loss, claim, damage,
liability, action or proceeding; provided that the foregoing shall not apply, and the
Company shall not be liable, in any such case (A) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises out of or
is based upon an untrue statement or alleged untrue statement in or omission or alleged
omission from such Registration Statement, any such preliminary prospectus, final
prospectus, summary prospectus, amendment or supplement in reliance upon and in conformity
with written information furnished to the Company through an instrument duly executed by or
on behalf of such Holder specifically stating that it is for use in the preparation thereof,
or (B) to the extent that the Holders failed to comply with the terms of the plan of
distribution mechanics described in the applicable prospectus. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of the
Holders, or any such director, officer, partner, underwriter or controlling person and shall
survive the transfer of such shares by the Holder.

      (ii) As a condition to including any Registrable Securities to be offered by a Holder
in the Registration Statement, each such Holder agrees to be bound by the terms of this
Section 4(f) and to indemnify and hold harmless, to the fullest extent permitted by law, the
Company, its directors and officers, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, legal counsel and accountants for
the Company, any underwriter, any other Holder selling securities in such Registration
Statement and any controlling person within the meaning of the Securities Act of any such
underwriter or other Holder, against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director or officer or controlling person may
become subject under the Securities Act or otherwise, (A) insofar as such losses, claims,
damages or liabilities (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from such Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or omission or
alleged omission was made in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf of such Holder
specifically stating that it is for use in the preparation thereof, or (B) to the extent
that the Holders failed to comply with the terms of the plan of distribution mechanics
described in the applicable prospectus. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Company, or any such director,
officer, partner, underwriter or controlling person and shall survive the transfer of such
shares by the Holder, and such Holder shall reimburse the Company, and each such director,
officer, legal counsel and accountants, underwriter, other Holder, and controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating, defending, or

11

 

settling and such loss, claim, damage, liability, action, or proceeding; provided, however,
that such indemnity agreement found in this Section 4(f)(ii) shall in no event exceed the
gross proceeds from the offering received by such Holder.

      (iii) Promptly after receipt by an indemnified party of notice of the commencement of
any action or proceeding involving a claim referred to in Section 4(f)(i) or Section
4(f)(ii) (including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice to the
indemnifying party of the commencement of such action; provided, however, that the failure
of any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations under Section 4(f)(i) or Section 4(f)(ii), except to
the extent that the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified party, unless in the
reasonable judgment of counsel to such indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist or the indemnified party may have defenses
not available to the indemnifying party in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party for any legal or other
expenses subsequently incurred by the latter in connection with the defense thereof, unless
in such indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties arises in respect of such claim after the assumption of
the defenses thereof or the indemnifying party fails to defend such claim in a diligent
manner, other than reasonable costs of investigation. Neither an indemnified nor an
indemnifying party shall be liable for any settlement of any action or proceeding effected
without its consent. No indemnifying party shall, without the consent of the indemnified
party, consent to entry of any judgment or enter into any settlement, which does not include
as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified
party of a release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting any of the
rights set forth above, in any event any party shall have the right to retain, at its own
expense, counsel with respect to the defense of a claim.

      (iv) In the event that an indemnifying party does or is not permitted to assume the
defense of an action pursuant to Section 4(f)(iii) or in the case of the expense
reimbursement obligation set forth in Section 4(f)(i) and Section 4(f)(ii), the
indemnification required by Section 4(f)(i) and Section 4(f)(ii) shall be made by periodic
payments of the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are incurred.

      (v) If the indemnification provided for in this Section 4(f) is held by a court of
competent jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall (A) contribute to the amount paid or
payable by such indemnified party as a result of such loss, liability, claim, damage or
expense as is appropriate to reflect the proportionate relative fault of the indemnifying
party on the one hand and the indemnified party on the other (determined by reference to,

12

 

among other things, whether the untrue or alleged untrue statement of a material fact or
omission relates to information supplied by the indemnifying party or the indemnified party
and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission), or (B) if the allocation provided by
clause (A) above is not permitted by applicable law or provides a lesser sum to the
indemnified party than the amount hereinafter calculated, not only the proportionate
relative fault of the indemnifying party and the indemnified party, but also the relative
benefits received by the indemnifying party on the one hand and the indemnified party on the
other, as well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any indemnifying party who was not guilty of such
fraudulent misrepresentation.

      (vi) Indemnification similar to that specified in the preceding subsections of this
Section 4(f) (with appropriate modifications) shall be given by the Company and each Holder
of Registrable Securities with respect to any required registration or other qualification
of securities under any federal or state law or regulation or governmental authority other
than the Securities Act.

     Section 5. Miscellaneous.

     (a) Assignment of Rights; Successors and Permitted Assignees. No Holder may assign
its rights under this Agreement to any party without the prior written consent of the Company;
provided, however, that a Holder may assign its rights under this Agreement without such
restrictions to a Permitted Assignee as long as (i) such transfer or assignment is effected in
accordance with applicable securities laws; (ii) such transferee or assignee agrees in writing to
become subject to the terms of this Agreement as a Holder; and (iii) the Company is given written
notice by such Holder of such transfer or assignment, stating the name and address of the
transferee or assignee and identifying the Shares with respect to which such rights are being
transferred or assigned. Except as otherwise provided herein, the provisions of this Agreement
shall inure to the benefit of, and be binding upon, the successors, Permitted Assignees, executors
and administrators of the parties hereto.

     (b) Notices. All notices or other communications which are required or permitted
under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at such other address as
may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:

	 	 	 	 	 
	

	 	If to the Company:
	 	Allis Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, Texas 77056

Attention: Theodore F. Pound, General Counsel

Facsimile: (713) 369-0555

13

 

	 	 	 	 	 
	

	 	with a copy (which shall

not constitute notice) to:
	 	Andrews Kurth LLP

600 Travis, Suite 4200

Houston, Texas 77002

Attention: Robert V. Jewell

Facsimile: (713) 238-7135
	 
	 	 	 	 
	 

	 	If to the Investors:
	 	To each Investor at its address

set forth on Exhibit A
	 
	 	 	 	 
	 

	 	with a copy (which shall

not constitute notice) to:
	 	Akin Gump Strauss Hauer & Feld LLP

1111 Louisiana Street, 44th Floor

Houston, Texas 77002

Attention: Jack Langlois

Facsimile: (713) 236-0822

or at such other address as any party shall have furnished to the other parties in writing.

     (c) Specific Performance. Each party to this Agreement agrees that any breach by it
of any provision of this Agreement would irreparably injure the other parties and that money
damages would be an inadequate remedy therefor. Accordingly, each party agrees that the other
parties shall be entitled to one or more injunctions enjoining any such breach and requiring
specific performance of this Agreement and consents to the entry thereof, in addition to any other
remedy to which such parties are entitled at law or in equity.

     (d) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.

     (e) Amendments. The provisions of this Agreement may be amended at any time and from
time to time, and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the holders of a majority of the
number of shares of Registrable Securities outstanding as of the date of such amendment or waiver.
The Investors acknowledge that by the operation of this Section 5(e), the holders of a majority of
the outstanding Registrable Securities may have the right and power to diminish or eliminate all
rights of the Holders under this Agreement.

     (f) Headings and Cross References. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in any way affect the
meaning or construction of any provision of this Agreement. Unless the context requires otherwise,
all cross references in this Agreement refer to sections and subsections of this Agreement.

     (g) Severability. In the case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

     (h) Entire Agreement. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subject matter of this Agreement.

14

 

     (i) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.

(SIGNATURE PAGES FOLLOW)

15

 

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

	 	 	 	 	 
	 	THE COMPANY:

ALLIS-CHALMERS ENERGY INC.

 	 
	 	By:  	/s/ Victor M. Perez
 	 
	 	 	Name:  	Victor M. Perez 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	INVESTORS:

BRIDAS INTERNATIONAL HOLDINGS LTD.

 	 
	 	By:  	/s/ Giovanni Dell’Orto	 
	 	 	Name:  	Giovanni Dell’Orto	 
	 	 	Title:  	Attorney-in-fact	 
	 
	 	BRIDAS CENTRAL COMPANY, LTD.

 	 
	 	By:  	/s/ Nestor H. Falivene	 
	 	 	Name:  	Nestor H. Falivene	 
	 	 	Title:  	Attorney-in-fact	 
	 
	 	ASSOCIATED PETROLEUM INVESTORS LIMITED

 	 
	 	By:  	/s/ Giovanni Dell’Orto	 
	 	 	Name:  	Giovanni Dell’Orto	 
	 	 	Title:  	Attorney-in-fact	 

16

 

	 	 	 	 	 

EXHIBIT A

Investor Information

	 	 	 
	Name	 	             Address
	 	 	 

	Bridas International Holdings Ltd.
	 	Beaufort House, Road Town

Tortola, British Virgin Island

Facsimile: 1-284-494-2704

Attention: Mr. Atilio Martín Palmeiro

	 	 	 

	 	 	With a concurrent copy (which shall not constitute notice) to:

	 	 	 

	 	 	Interservices Management Company Limited

Avda. Leandro N. Alem 1134, Piso 14

(C1001AAT) Buenos Aires, Argentina

Facsimile: 54 -11- 4310-4598

Attention: Mr. Silvestre Asurey

	 	 	 

	Bridas Central Company, Ltd.
	 	Beaufort House, Road Town

Tortola, British Virgin Island

Facsimile: 1-284-494-2704

Attention: Mr. Giovanni Dell’ Orto

	 	 	 

	 	 	With a concurrent copy (which shall not constitute notice) to:

	 	 	 

	 	 	Bridas Energy International SpA

Via Valtellina 17 — 7° piano

20159 Milano, Italy

Facsimile: 39-02- 69556617

Attention: Nestor Hugo Falivene

	 	 	 

	Associated Petroleum Investors Limited
	 	Beaufort House, Road Town

Tortola , British Virgin Island

Facsimile: 1-284-494-2704

Attention: Mr. Manuel Horacio Baña

	 	 	 

	 	 	With a concurrent copy (which shall not constitute notice) to:

	 	 	 

	 	 	Interservices Management Company Limited

Avda. Leandro N. Alem 1134, Piso 14

(C1001AAT) Buenos Aires, Argentina

Facsimile: 54 -11- 4312-9205

Attention: Mr. Alejandro Pedro Bulgheroni

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