Document:

<PAGE>

EXHIBIT 10.35

                                                                   MORGAN KEEGAN
--------------------------------------------------------------------------------
MORGAN KEEGAN & COMPANY, INC.
5 POST OAK PARK
44400 POST OAK PARKWAY, SUITE 2670
HOUSTON, TEXAS  77027
713/840-3600  FAX  713/840-3654
WATS 800/840-2606

June 8, 2004

Mr. Munawar Hidayatallah
Chairman and Chief Executive Officer
Allis-Chalmers Corporation
7660 Woodway, Suite 200
Houston, TX  77063

Dear Micki:

         Allis-Chalmers Corporation (the "Company") wishes to offer and sell
(the "Placement") common stock (the "Securities") on the terms and conditions
set forth below. The Company desires to retain Morgan Keegan & Company, Inc.
("Morgan Keegan") to act as exclusive placement agent in connection with the
Placement on the terms and conditions set forth below.

The Company hereby appoints Morgan Keegan to act as its exclusive placement
agent in connection with the Placement of Securities and authorizes Morgan
Keegan, on behalf of the Company as its placement agent and not as principal, to
offer the Securities to investors meeting qualifications agreed upon by the
Company and Morgan Keegan. Subject to Morgan Keegan's satisfactory completion of
its due diligence review of the Company and the approval of Morgan Keegan's
Commitment Committee, Morgan Keegan hereby accepts such appointment to act as
exclusive placement agent. The Company and Morgan Keegan agree that Securities
will be offered and sold only at prices and on terms that are acceptable to the
Company and that Morgan Keegan makes no representation as to what, if any, price
or on what terms investors will be willing to purchase Securities of the
Company. Morgan Keegan undertakes this engagement on a "best efforts" basis
only, and shall not be obligated to purchase any unsold allotment of Securities
offered by the Company. The Placement of the Securities is to be made directly
by the Company to purchasers of Securities pursuant to a definitive common stock
purchase or other agreement entered into by the purchasers and the Company. The
Company agrees that any definitive purchase agreement shall, among other things
(a) contain customary representations, warranties and covenants on behalf of the
Company, and (b) provide for the delivery by the Company's counsel of customary
opinions.

1.       The Company agrees to pay a $50,000 retainer fee upon execution of this
         agreement. As compensation for Morgan Keegan's services hereunder, the
         Company agrees to pay to Morgan Keegan, contingent upon the successful
         closing of a sale of Securities (the "Contingent Placement Fee"), a
         placement fee in cash at each closing equal to 7% of the gross proceeds
         delivered to the Company at such closing from the sale of Securities in
         the Placement, net of the retainer fee (other than the securities
         described in Section 7, thereof).

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 2

If more than one closing is required in connection with the sale of such
Securities, only that portion of the Contingent Placement Fee applicable to each
closing shall be payable at such closing. In addition, if the Placement is
cancelled by the Company for any reason prior to its completion, the Company
will reimburse Morgan Keegan for its reasonable out-of-pocket expenses
(including fees and expenses of counsel) incurred in connection with its acting
as placement agent hereunder, upon delivery to the Company of reasonable
documentation evidencing such expenses. Such out-of-pocket expenses shall not
exceed $30,000 without the prior written consent of the Company, which shall not
be unreasonably withheld.

2.       The Company represents and warrants to Morgan Keegan that, except as
         disclosed in the Company's filings with the Securities and Exchange
         Commission or as set forth in Exhibit A, it has not, directly or
         indirectly, made any offers or sales of the Securities or securities of
         the same or a similar class as the Securities during the four month
         period ending on the date of this letter, and has no current intention
         of making an offer or sale of the Securities or securities of the same
         or a similar class as the Securities for a period of six months after
         completion of this private placement, except for the offering of the
         Securities through Morgan Keegan pursuant hereto. As used herein, the
         terms "offer" and "sale" have the meanings specified in Section 2(3) of
         the Securities Act of 1933, as amended (the "Act").

3.       The Company and Morgan Keegan agree that:

         (a)  The Company will not, directly or indirectly, make any offer or
              sale of any of the Securities or any securities of the same or
              similar class as the Securities, the result of which would cause
              the offer and sale of the Securities to fail to be entitled to the
              exemption from registration afforded by Section 4(2) of the Act.

         (b)  The Company will furnish Morgan Keegan with such information (the
              "Information"), including financial statements, with respect to
              the business, operations, assets and liabilities of the Company as
              Morgan Keegan may reasonably request in order to permit Morgan
              Keegan to conduct its due diligence review of the Company and
              assist the Company in preparing a private placement memorandum
              (the "Private Placement Memorandum") for use in connection with
              the offering of the Securities. Morgan Keegan may rely upon the
              accuracy and completeness of the Information without independent
              verification.

         (c)  The Company will be solely responsible for the contents of the
              Private Placement Memorandum and any and all other written or oral
              communications provided to any actual or prospective purchaser of
              the Securities with the approval of the Company. The Company
              represents and warrants that the Private Placement Memorandum and

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 3

              such other communications will not, as of the date of the offer or
              sale of the Securities, contain any untrue statement of a material
              fact or omit to state a material fact required to be stated
              therein or necessary in order to make the statements therein, in
              light of the circumstances under which they were made, not
              misleading. The Company authorizes Morgan Keegan to provide the
              Private Placement Memorandum and such other communications to
              prospective purchasers of the Securities, provided that such
              prospective purchasers execute and deliver to the Company a
              Confidentiality and Non-Disclosure Agreement meeting the
              requirements of Regulation FD and otherwise on terms reasonably
              acceptable to Morgan Keegan and the Company.

         (d)  The Company will comply with all requirements of Regulation D
              promulgated under the Act. Without limitation, the Company will:

              (1)  not offer or sell the Securities by means of any form of
                   general solicitation or general advertising;

              (2)  not offer or sell the Securities to any person who it does
                   not have a reasonable basis to believe is an "accredited
                   investor" (as defined in Rule 501 under the Act);

              (3)  exercise reasonable care to assure that the purchasers of the
                   Securities are not underwriters within the meaning of Section
                   2(11) of the Act and, without limiting the foregoing, that
                   such purchases will comply with Rule 502(d) under the Act;
                   and

              (4)  file a Form D with the Securities and Exchange Commission as
                   contemplated by Rule 503 under the Act.

         (e)  Morgan Keegan will comply with all applicable requirements of
              Regulation D promulgated under the Act. Without limitation, Morgan
              Keegan will:

              (1)  not offer the Securities by means of any form of general
                   solicitation or general advertising;

              (2)  not offer the Securities to any person who it does not have a
                   reasonable basis to believe is an "accredited investor" (as
                   defined in Rule 501 under the Act); and

              (3)  exercise reasonable care to assure that the purchasers of the
                   Securities are not underwriters within the meaning of Section
                   2(11) of the Act and, without limiting the foregoing, that
                   such purchases will comply with Rule 502(d) under the Act.

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 4

         (f)  The Company agrees to cause a registration statement to be filed
              with the United States Securities Exchange Commission to qualify
              the Securities for offer and sale within 60 days after completion
              of the offering and use its reasonable efforts to cause the
              registration statement to become effective within 120 days after
              completion of the offering.

         (g)  The Company agrees to take such action (if any) as Morgan Keegan
              may reasonably request to qualify the Securities for offer and
              sale under registration or qualification exemptions of the
              securities laws of such states as Morgan Keegan may specify. The
              Company agrees that it will make any filings or take other actions
              required under applicable state securities laws to permit the sale
              of the Securities pursuant to registration or qualification
              exemptions.

         (h)  In order to allow proper coordination of the proposed Placement,
              during the term of this engagement, the Company will promptly
              notify Morgan Keegan of any potential purchasers known to the
              Company to be interested in purchasing any Securities. In
              addition, the Company will keep Morgan Keegan fully and promptly
              informed of the status of any discussions or negotiations between
              the Company and any potential purchaser of Securities.

         (i)  The Company agrees to use its reasonable efforts to list its
              common stock on the American Stock Exchange within 120 days after
              completion of the offering.

4.       Morgan Keegan will not have any obligations in connection with the
         private placement of the Securities contemplated by this Agreement
         except as expressly provided in this Agreement. Morgan Keegan will use
         its reasonable "best efforts" in connection with the engagement
         hereunder; provided, however, that this Agreement does not imply any
         obligation on the part of Morgan Keegan to provide such equity capital
         to the Company, and in no event shall Morgan Keegan be obligated to
         purchase the Securities for its own account.

5.       The Company shall indemnify Morgan Keegan in the manner and to the
         extent provided in Appendix A attached hereto, which Appendix A is
         incorporated herein by reference.

6.       The term of Morgan Keegan's appointment and authorization hereunder
         shall extend from the date hereof through the earlier of December 31,
         2004, and the date upon which a Placement is completed, or such other
         date as may be mutually agreed by the Company and Morgan Keegan. The
         provisions of Sections 2, 4, 5, 7, 8, 9, 11, 12 and this Section 6
         shall survive any termination of this Agreement.

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 5

7.       Subject to the provisions of Sections 3(a) and 3(d), the Company has
         informed Morgan Keegan that up to 20% of the securities offered may be
         directly sold by the Company. Potential purchasers will be disclosed to
         Morgan Keegan prior to the commencement of the placement and investor
         representation letters will be provided prior to closing. Morgan Keegan
         will not earn any fee for the placement of the Company directed sales.

8.       All opinions and advice provided to the Company in connection with this
         engagement are intended solely for the benefit and use of the Company
         in connection with the matters described in this Agreement, and
         accordingly such advice shall not be relied upon by any person or
         entity other than the Company. The Company will not make any other use
         of any such opinions or advice. In addition, none of (i) the name of
         Morgan Keegan, (ii) any advice rendered by Morgan Keegan to the
         Company, or (iii) any communication from Morgan Keegan pursuant to this
         Agreement will be quoted or referred to in any report, document,
         release or other communication prepared, issued or transmitted by the
         Company, or any person controlled by the Company, without Morgan
         Keegan's prior written consent, which consent will not be unreasonably
         withheld. Notwithstanding the foregoing, the Company shall be entitled
         to disclose the terms of this Agreement in an Information Statement to
         be filed with the Securities and Exchange Commission and distributed to
         stockholders of the Company in connection with the approval by the
         stockholders of the Company of the Offering, as required by Regulation
         14C of the Securities and Exchange Commission.

9.       The Company will, at the closing, furnish Morgan Keegan with the same
         favorable opinion of the Company's counsel as is furnished to the
         investors, together with a letter from such counsel that Morgan Keegan
         may rely on such opinion as if directed to Morgan Keegan, and Morgan
         Keegan shall be deemed to be a third party beneficiary of such opinion.
         Such opinion will include, among other things, legal assurances
         regarding compliance with applicable corporate and securities laws and
         the availability of exemption from registration for the offer and sale
         of the Securities in the Placement. Such counsel also shall furnish
         Morgan Keegan a letter stating that on the basis of information
         developed during the course of such counsel's representation of the
         Company, nothing has come to such counsel's attention giving such
         counsel reason to believe that the Private Placement Memorandum, or any
         amendment or supplement thereto made prior to the closing, as of its
         date and as of the closing, contained or contains any untrue statement
         of a material fact or omitted or omits to state a material fact
         necessary in order to make the statements therein, in light of the
         circumstances under which they were made, not misleading (provided that
         such counsel need express no belief regarding the financial statements
         and related schedules and other financial or statistical data contained
         in the Private Placement Memorandum, or any amendment or supplement
         thereto). In addition, at closing, the Company will provide Morgan
         Keegan with a certificate which provides that Morgan Keegan may rely on

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 6

         the representations and warranties of the Company provided to the
         purchasers and the same certificates of the officers of the Company as
         are furnished to such purchasers and such other certification, opinions
         and documents as we or our counsel may deem reasonably appropriate, in
         form and substance reasonably satisfactory to us and our counsel.

10.      In the event of consummation of any transaction, Morgan Keegan shall
         have the right to place advertisements in financial and other
         newspapers and journals at its own expense describing its services to
         the Company hereunder, provided that Morgan Keegan will submit a copy
         of any such advertisements to the Company for its approval, which
         approval shall not be unreasonably withheld.

11.      The invalidity or unenforceability of any provision of this Agreement
         shall not affect the validity or enforceability of any other provisions
         of this Agreement, which shall remain in full force and effect.

12.      This Agreement may not be amended or modified except in writing signed
         by each of the parties hereto and shall be governed by and construed in
         accordance with the laws of the State of Tennessee. Each of the parties
         hereto expressly waives all right to trial by jury in any action or
         proceeding arising out of this Agreement. This Agreement incorporates
         the entire understanding of the parties with respect to the subject
         matter hereof and supersedes all previous agreements should they exist
         with respect thereto and shall be binding upon and inure to the benefit
         of the Company, Morgan Keegan, and the other Indemnified Persons and
         their respective successors, assigns, heirs and personal
         representatives.

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 7

         If the foregoing correctly sets forth the understanding and agreement
between Morgan Keegan and the Company, please so indicate in the space provided
below, whereupon this letter shall constitute a binding agreement as of the date
first above written.

Very truly yours,

MORGAN KEEGAN & COMPANY, INC.

By:             /s/ R. Kevin Adrews
                ---------------------------------------
Name:               R. Kevin Andrews
                ---------------------------------------
Title:              First Vice President
                ---------------------------------------

Agreed and Accepted:

ALLIS-CHALMERS CORPORATION

By:             /s/ Munawar H. Hidayatallah
                ---------------------------------------
Name:               Munawar H. Hidayatallah
                ---------------------------------------
Title:              Chairman and CEO
                ---------------------------------------

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 8

                                   APPENDIX A
                                 INDEMNIFICATION
                                 ---------------

1.       If, in connection with or arising out of the services or matters that
         are the subject of this letter agreement ("Agreement"), Morgan Keegan
         or any controlling person, affiliate, director, officer, employee or
         agent of Morgan Keegan (Morgan Keegan and each such other person
         referred to as an "Indemnified Person") becomes involved in any
         capacity in any lawsuit, claim or other proceeding for which indemnity
         may be sought pursuant to Section 5 of this Agreement, the Company
         shall immediately reimburse such Indemnified Person for any and all
         legal or other expenses reasonably incurred by such Indemnified Person
         in connection with investigating, preparing to defend or defending such
         lawsuit, claim or other proceeding. The Company also agrees to
         indemnify each Indemnified Person from, and hold it harmless against,
         any and all losses, claims, damages, liabilities or expenses to which
         such Indemnified Person may become subject (i) arising out of or based
         upon any untrue statement or alleged untrue statement of a material
         fact contained in, or incorporated by reference in, the Private
         Placement Memorandum or any other written or oral communication
         provided to any actual or prospective purchaser of the Securities or
         arising out of or based upon the omission or alleged omission to state
         therein a material fact required to be stated therein or necessary in
         order to make the statements therein, in light of the circumstances
         under which they were made, not misleading or (ii) arising in any
         manner out of or in connection with the services or matters which are
         the subject of this Agreement, including, without limitation, the offer
         and sale of the Securities; provided, however, that the Company shall
         not be liable in respect of any loss, claim, damage, liability or
         expense to the extent that it is finally judicially determined by a
         court of competent jurisdiction that such loss, claim, damage or
         liability resulted from the gross negligence or willful misconduct of
         Morgan Keegan in the performance of its services hereunder or Morgan
         Keegan's breach of this Agreement.

2.       Promptly after receipt by an Indemnified Person of notice of its
         involvement in any claim, action, suit, proceeding or investigation (a
         "Claim"), such Indemnified Person shall, if a Claim in respect thereof
         is to be made against the Company for indemnification, notify the
         Company in writing of such involvement. Failure by such Indemnified
         Person to so notify the Company shall not relieve the Company from its
         obligation to indemnify any Indemnified Parties under this Agreement,
         except to the extent that such failure to notify results in the
         forfeiture by the Company of substantive rights or defenses. If an
         Indemnified Person seeks indemnification hereunder with respect to any
         Claim brought by a third party, the Company shall be entitled to assume
         the defense of any such Claim with counsel reasonably satisfactory to
         such Indemnified Person. Upon assumption by the Company of the defense
         of any such Claim, such Indemnified Person shall have the right to
         participate in the defense of such Claim and to retain its own counsel
         but the Company shall not be liable for any legal fees or expenses
         subsequently incurred by such Indemnified Person in connection with the
         defense thereof, unless (i) the Company has agreed in writing to pay
         such fees and expenses, (ii) the Company shall have failed to employ
         counsel reasonably satisfactory to such Indemnified Person in a timely
         manner or (iii) such Indemnified Person shall have determined and can

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 9

         reasonably demonstrate to the Company that representation of such
         Indemnified Party by counsel provided by the Company pursuant to the
         foregoing would be inappropriate due to actual or potential conflicting
         interests between the Company and such Indemnified Person, including,
         without limitation, situations in which there are one or more legal
         defenses available to such Indemnified Person that are different from
         or additional to those available to the Company. The Company shall not
         be liable for any settlement of any Claim effected without its written
         consent (which consent shall not be unreasonably withheld or delayed).
         In no event shall the Company be responsible for the payment of the
         fees and expenses of more than one counsel on behalf of all Indemnified
         Persons other than local counsel.

3.       The Company agrees that the indemnification and reimbursement
         commitments set forth in this Section 5: (i) shall apply whether or not
         any Indemnified Person is a formal party to any such lawsuit, claim or
         other proceeding and (ii) are in addition to any liability that the
         Company may otherwise have to any Indemnified Person. The Company
         agrees that, unless a final judicial determination is made to the
         effect specified in the preceding paragraph, any settlement of a
         lawsuit, claim or other proceeding against the Company arising out of
         the transactions contemplated by this Agreement which is entered into
         by the Company shall include a release from the party bringing such
         lawsuit, claim or other proceeding of each Indemnified Person, which
         release shall be reasonably satisfactory to Morgan Keegan. The Company
         further agrees that no Indemnified Person shall have any liability
         (whether direct or indirect, in contract, tort or otherwise) to the
         Company in connection with Morgan Keegan's engagement hereunder, except
         for such losses, claims, damages or liabilities incurred by the Company
         that are finally judicially determined by a court of competent
         jurisdiction to have resulted from the gross negligence or willful
         misconduct of such Indemnified Person or Morgan Keegan's breach of this
         Agreement.

4.       The Company and Morgan Keegan agree that if indemnification or
         reimbursement sought pursuant to this Appendix A is finally judicially
         determined by a court of competent jurisdiction to be unavailable for
         reasons other than those set forth in the proviso in the last sentence
         of Paragraph 1 of this Appendix A, then, whether or not Morgan Keegan
         is the Indemnified Person, the Company and Morgan Keegan shall
         contribute to the losses, claims, damages, liabilities and expenses of
         Morgan Keegan for which such indemnification or reimbursement is sought
         but held unavailable (i) in such proportion as is appropriate to
         reflect the relative benefits to the Company, on one hand, and Morgan
         Keegan on the other, in connection with the transactions to which such
         indemnification or reimbursement relates, or (ii) if the allocation
         provided by clause (i) above is not permitted by applicable law, in
         such proportion as appropriate to reflect not only the relative
         benefits referred to in clause (i) but also the relative faults of the
         Company, on the one hand, and Morgan Keegan on the other, as well as
         any other equitable considerations; provided, however, that in no event
         shall the aggregate amount of loss, damage, expense and damage suffered
         by Morgan Keegan exceed the amount of the cash portion of the
         Contingent Placement Fee actually received by Morgan Keegan hereunder.

                                                                   Initial  ____

<PAGE>

Allis-Chalmers Corporation
June 8, 2004
Page 10

                                    EXHIBIT A

                         OFFERS AND SALES OF SECURITIES

The Company has outstanding certain options and warrants issued prior to the
date hereof, which are described in the Company's filings and which may be
deemed to be outstanding offers to sell securities. During June 2004, a warrant
to exercise 15,000 shares of Common Stock was exercised.<PAGE>

EXHIBIT 10.36

                         EXECUTIVE EMPLOYMENT AGREEMENT

         This Executive Employment Agreement dated as of July 26, 2004, is
between Allis-Chalmers Corporation and Victor M. Perez. Certain capitalized
terms used herein are defined in Section 1 below.

                                R E C I T A L S:

         A. Company wishes to employ Executive, and Executive desires to accept
employment with Company, by entering into a written agreement to specify the
terms and conditions of Executive's continued employment with Company;

         B. Executive is to be employed as Chief Financial Officer as of July
30, 2004 of Company, and shall be an integral member of its management team;

         C. Company considers the maintenance of a sound management team,
including Executive, essential to protecting and enhancing its best interests
and those of its stockholders;

         D. Company recognizes that the possibility of a change in control of
Company may result in the departure or distraction of management to the
detriment of Company and its stockholders; and

         E. Company has determined that appropriate steps should be taken to
obtain and retain the continued attention and dedication of selected members of
Company's management team to their assigned duties without the distraction
arising from the possibility of a change in control of Company.

         NOW, THEREFORE, in consideration of Executive's past and future
employment with Company and other good and valuable consideration, the parties
agree as follows:

         SECTION 1. DEFINITIONS. As used in this Agreement, the following terms
will have the following meanings:

              (a) AGREEMENT refers to the Executive Employment Agreement
         represented by this document.

              (b) CAUSE has the meaning ascribed to it in Section 7(a)(ii).

              (c) CHANGE IN CONTROL means:

<PAGE>

                   (i) The acquisition after the date hereof by any individual,
              entity or group, or a Person (within the meaning of Section
              13(d)(3) or 14(d)(2) of the Exchange Act) other than an Excluded
              Person, of ownership of more than 50% of either: (i) the then
              outstanding shares of Common Stock ("Outstanding Common Stock");
              or (ii) the combined voting power of the then outstanding voting
              securities of the Company entitled to vote generally in the
              election of directors ("Outstanding Voting Securities");

                   (ii) Individuals who, as of the date hereof, constitute the
              Board of Directors of the Company ("Incumbent Board") cease for
              any reason to constitute at least a majority of the Board;
              provided, however, that any individual becoming a director
              subsequent to the date hereof whose election, or nomination for
              election by the Company's stockholders, was approved by a vote of
              at least a majority of the directors then comprising the Incumbent
              Board shall be considered as though such individual were a member
              of the Incumbent Board, but excluding, as a member of the
              Incumbent Board, any such individual whose initial assumption of
              office occurs as a result of either an actual or threatened
              election contest (as such terms are used in Rule 14a-11 of
              Regulation 14A promulgated under the Securities Exchange Act of
              1934) or other actual or threatened solicitation of proxies or
              consents by or on behalf of a Person other than the Board;

                   (iii) Approval by the stockholders of the Company of a
              reorganization, merger or consolidation, in each case, unless,
              following such reorganization, merger or consolidation, (i) more
              than 50% of, respectively, the then outstanding shares of common
              stock of the corporation resulting from such reorganization,
              merger or consolidation and the combined voting power of the then
              outstanding voting securities of such corporation entitled to vote
              generally in the election of directors is then beneficially owned,
              directly or indirectly, by all or substantially all of the
              individuals and entities who were the beneficial owners,
              respectively, of the Outstanding Common Stock and Outstanding
              Voting Securities immediately prior to such reorganization, merger
              or consolidation, in substantially the same proportions as their
              ownership, immediately prior to such reorganization, merger or
              consolidation of the Outstanding Common Stock and Outstanding
              Voting Securities, as the case may be, or at least a majority of
              the members of the board of directors of the corporation resulting
              from such reorganization, merger or consolidation were members of
              the Incumbent Board at the time of the execution of the initial
              agreement providing for such reorganization, merger or
              consolidation; or

                   (iv) Approval by the stockholders of the Company of (i) a
              complete liquidation or dissolution of the Company or (ii) the
              sale or other disposition of all or substantially all of the
              assets of the Company, other than to a corporation, with respect
              to which following such sale or other disposition, (1) more than
              50% of, respectively, the then outstanding shares of common stock
              of such corporation and the combined voting power of the then
              outstanding voting securities of such corporation entitled to vote
              generally in the election for directors is then beneficially
              owned, directly or indirectly, by all or substantially all of the

                                       2

<PAGE>

              individuals and entities who were the beneficial owners,
              respectively, of the Outstanding Common Stock and Outstanding
              Voting Securities immediately prior to such sale or other
              disposition in substantially the same proportion as their
              ownership, immediately prior to such sale or other disposition, of
              the Outstanding Common Stock and Outstanding Voting Securities, as
              the case may be; or (2) at least a majority of the members of the
              board of directors of such corporation were members of the
              Incumbent Board at the time of the execution of the initial
              agreement or action of the Board providing for such sale or other
              disposition of assets of the Company.

              (d) CODE means the Internal Revenue Code of 1986, as amended.

              (e) COMMENCEMENT DATE has the meaning ascribed to it in Section 4.

              (f) COMPANY means Allis-Chalmers Corporation.

              (g) CONFIDENTIAL INFORMATION has the meaning ascribed to it in
         Section 9(b).

              (h) CONSTRUCTIVELY TERMINATED with respect to an Executive's
         employment with Company will be deemed to have occurred if Executive
         terminates his employment within six months following the date on which
         Company:

                   (i) demotes Executive to a lesser position, either in title
              or responsibility, than the highest position held by Executive
              with Company at any time during Executive's employment with
              Company after the date hereof unless the Company reverses such
              demotion within 30 days after receiving written notice of such
              demotion from Executive;

                   (ii) decreases Executive's salary below the highest level in
              effect at any time during Executive's employment with Company or
              reduces Executive's benefits and perquisites below the highest
              levels in effect at any time during Executive's employment with
              Company (other than as a result of any amendment or termination of
              any Executive or group or other executive benefit plan, which
              amendment or termination is applicable to all executives of
              Company or any reduction in benefits that Company cures within 30
              days after receiving written notice of such reduction from
              Executive);

                   (iii) requires Executive to relocate to a principal place of
              business more than 50 miles from the principal place of business
              occupied by Company on the date hereof, unless the Company
              reverses such relocation within 30 days after receiving written
              notice of Executive's intention to terminate his employment in
              reliance on this Section;

                   (iv) is subject to a Change In Control, unless Executive
              accepts employment with a successor to Company; or

                                       3

<PAGE>

                   (v) breaches any other material term of this Agreement which
              is not cured by Company within 30 days after receiving notice of
              such breach from Executive.

              (i) DESIGNATED INDUSTRY has the meaning ascribed to it in Section
         10(a)(i)(1).

              (j) DETERMINATION has the meaning ascribed to such term in Section
         1313(a) of the Code.

              (k) DISABILITY with respect to Executive shall be deemed to exist
         if he meets the definition of disability under the terms of the
         Company's current long-term disability policy (or any replacement
         long-term disability policy). Any refusal by Executive to submit to a
         reasonable medical examination to determine whether Executive is so
         disabled shall be deemed conclusively to constitute evidence of
         Executive's disability.

              (l) EXECUTIVE refers to Victor M. Perez.

              (m) EXCLUDED PERSON means any Person who beneficially owns more
         than 10% of the outstanding shares of the Company's Common Stock at any
         time prior to the date hereof and any person who acquires from Energy
         Spectrum Partners LP shares constituting more than 10% of the
         outstanding shares of the Company's Common Stock on the date of
         acquisition.

              (n) COMPANY refers collectively to the Company and its
         subsidiaries and other affiliates.

              (o) INCENTIVE PLAN means the Allis-Chalmers Corporation 2003
         Incentive Stock Plan, as amended from time to time.

              (p) INVENTIONS has the meaning ascribed to it in Section 8(a).

              (q) SALARY has the meaning ascribed to it in Section 5(a).

              (r) SEPARATION PAYMENT PERIOD has the meaning ascribed to it in
         Section 7(b)(ii).

              (s) SEPARATION PAYMENTS has the meaning ascribed to it in Section
         7(b)(ii).

         SECTION 2. EMPLOYMENT. Company hereby employs Executive, and Executive
hereby accepts employment by Company, upon the terms and subject to the
conditions hereinafter set forth.

         SECTION 3. DUTIES. Executive shall be employed as the Chief Financial
Officer of the Company. Executive agrees to devote substantially all of his
business time as is necessary to perform his duties attendant to his executive
position with Company. Executive shall be allowed to engage in other activities
as an investor as well as participate in activities of charitable organizations
of his choice so long as they do not materially interfere with his duties for
Company.

                                       4

<PAGE>

         SECTION 4. TERM. The term of employment of Executive hereunder shall
commence on the date of this Agreement and terminate three years hence.

         SECTION 5. COMPENSATION AND BENEFITS. In consideration for the services
of Executive hereunder, Company shall compensate Executive as follows (except as
set forth herein, Executive acknowledges payment in full of all amounts due to
him for services rendered prior to the date hereof):

              (a) SALARY. Company shall pay Executive, semi-monthly in arrears
         with its normal payroll procedures, a salary which is equivalent to an
         annual rate of $240,000 (the "Salary"). The Salary may not be decreased
         at any time during the term of Executive's employment hereunder and
         shall be reviewed no less than annually by Company. Any increase in the
         Salary shall be in the sole discretion of the Compensation Committee of
         the Board of Directors of the Company.

              (b) MANAGEMENT INCENTIVE BONUS. Executive shall be entitled to
         receive a bonus equal to a maximum of 50% of his Salary based upon the
         achievement of goals set forth in Schedule A attached hereto (which
         shall be amended each year in the discretion of the Company). Such
         bonus shall be paid annually within 30 days after the completion of the
         Company's audited financial statements for each year. Executive shall
         also be eligible to receive from Company such annual management
         incentive bonuses as may be provided in management incentive bonus
         plans adopted from time to time by Company.

              (c) STOCK OPTIONS In addition, the Compensation Committee of the
         Company has approved and recommended that the Board of Directors
         approve the grant to Executive of options to purchase 50,000 shares of
         the Company's Common Stock pursuant to the Incentive Plan. The exercise
         price for the options shall be equal to the fair market value of the
         Company's Common Stock on the date the options are approved by the
         Board of Directors, and the options shall vest and become exercisable
         as follows: one-third (16,666 2/3) shall vest on the date of grant and
         one-third (16,666 2/3) shall vest on each of August 1, 2005 and August
         1, 2006 (provided Executive is employed by the Company on such dates).

              (d) VACATION. Executive shall be entitled to three (3) weeks paid
         vacation per year. Unless otherwise approved by the Compensation
         Committee of the Board of Directors of the Company, a maximum of ten
         days accrued vacation not taken in any calendar year shall be carried
         forward and may be used in the next subsequent calendar year. Executive
         shall schedule his paid vacation to be taken at times which are
         reasonably and mutually convenient to both Company and Executive.

              (e) INSURANCE BENEFITS. Company shall provide accident, health,
         dental, disability and life insurance for Executive under the group
         accident, health, dental, disability and life insurance plans as may be
         maintained by Company for its full-time, salaried Executives from time
         to time.

                                       5

<PAGE>

              (f) OFFICE SPACE AND EXPENSES. Company shall provide and pay the
         expenses of maintaining an office for Executive during the term of this
         Agreement.

              (g) ASSISTANT EXPENSES. Company shall assume and pay all salary
         and benefits of an Assistant to Executive.

         SECTION 6. EXPENSES. The parties anticipate that in connection with the
services to be performed by Executive pursuant to the terms of this Agreement,
Executive will be required to make payments for travel, entertainment of
business associates and similar expenses. Company shall reimburse Executive for
all reasonable expenses of types authorized by Company and incurred by Executive
in the performance of his duties hereunder, consistent with past practices.
Executive shall comply with such reporting requirements with respect to expenses
as Company may establish from time to time.

         SECTION 7. TERMINATION.

              (a) GENERAL. Executive's employment hereunder shall commence on
         the Commencement Date and continue until the end of the term specified
         in Section 4, except that the employment of Executive hereunder shall
         terminate prior to such time in accordance with the following:

                   (i) DEATH OR DISABILITY. Upon the death of Executive during
              the term of his employment hereunder or, at the option of Company,
              in the event of Executive's Disability, upon 30 days' notice to
              Executive.

                   (ii) FOR CAUSE. For "Cause" immediately upon written notice
              by Company to Executive. A termination shall be for Cause if:

                        (1) Executive commits a criminal act involving
                   dishonesty or moral turpitude; or

                        (2) Executive commits a material breach of any of the
                   covenants, terms and provisions hereof or fails to obey
                   written directions delivered to Executive by the Company's
                   President or Chief Executive Officer which are not
                   inconsistent with Executive's rights under this Agreement.

                   (iii) WITHOUT CAUSE. Without Cause upon notice by the Board
              of Directors to Executive or upon notice by Executive to the Board
              if Executive has been Constructively Terminated.

              (b) SEVERANCE PAY.

                                       6

<PAGE>

                   (i) TERMINATION UPON DEATH OR DISABILITY OR FOR CAUSE.
              Executive shall not be entitled to any severance pay or other
              compensation upon termination of his employment pursuant to
              Section 7(a)(i) or (ii) except for his Salary earned but unpaid as
              of the date of termination, unpaid expense reimbursements under
              Section 6 for expenses incurred in accordance with the terms
              hereof prior to termination, and compensation for accrued, unused
              vacation as of the date of termination.

                   (ii) TERMINATION WITHOUT CAUSE. In the event Executive's
              employment hereunder is terminated pursuant to Section 7(a)(iii),
              Company shall pay Executive Separation Payments as Executive's
              sole remedy in connection with such termination. "Separation
              Payments" are payments made at the semi-monthly rate of
              Executive's then current salary in effect immediately preceding
              the date of termination. Separation Payments shall be made for the
              lesser of one year following termination of employment or the
              remaining term of this Agreement (the "Separation Payment
              Period"), and shall be paid by Company in equal semi-monthly
              payments in arrears or in accordance with its then-current normal
              payroll procedure, provided that Company's obligation to make
              Separation Payments shall be reduced by any amounts earned by
              Executive for services during the Separation Payment Period.
              Company shall also pay Executive his Salary earned but unpaid as
              of the date of termination, unpaid expense reimbursements under
              Section 6 for expenses incurred in accordance with the terms
              hereof prior to termination, and compensation for accrued, unused
              vacation as of the date of termination.

         SECTION 8. INVENTIONS; ASSIGNMENT.

              (a) INVENTIONS DEFINED. All rights to discoveries, inventions,
         improvements, designs and innovations (including all data and records
         pertaining thereto) that relate to the business of Company, whether or
         not patentable, copyrightable or reduced to writing, that Executive may
         discover, invent or originate during the term of his employment
         hereunder, and for a period of six months thereafter, either alone or
         with others and whether or not during working hours or by the use of
         the facilities of Company ("Inventions"), shall be the exclusive
         property of Company. Executive shall promptly disclose all Inventions
         to Company, shall execute at the request of Company any assignments or
         other documents Company may deem necessary to protect or perfect its
         rights therein, and shall assist Company, at Company's expense, in
         obtaining, defending and enforcing Company's rights therein. Executive
         hereby appoints Company as his attorney-in-fact to execute on his
         behalf any assignments or other documents deemed necessary by Company
         to protect or perfect its rights to any Inventions.

              (b) COVENANT TO ASSIGN AND COOPERATE. Without limiting the
         generality of the foregoing, Executive hereby assigns and transfers to
         Company the world-wide right, title and interest of Executive in the
         Inventions. Executive agrees that Company may apply for and receive
         patent rights (including Letters Patent in the United States) for the
         Inventions in Company's name in such countries as may be determined
         solely by Company. Executive shall communicate to Company all facts
         known to Executive relating to the Inventions and shall cooperate with
         Company's reasonable requests in connection with vesting title to the
         Inventions and related patents exclusively in Company and in connection
         with obtaining, maintaining and protecting Company's exclusive patent
         rights in the Inventions.

                                       7

<PAGE>

              (c) SUCCESSORS AND ASSIGNS. Executive's obligations under this
         Section 8 shall inure to the benefit of Company and its successors and
         assigns and shall survive the expiration of the term of this Agreement
         for such time as may be necessary to protect the proprietary rights of
         Company in the Inventions.

         SECTION 9. CONFIDENTIAL INFORMATION.

              (a) ACKNOWLEDGMENT OF PROPRIETARY INTEREST. Executive acknowledges
         the proprietary interest of Company in all Confidential Information.
         Executive agrees that all Confidential Information learned by Executive
         during his employment with Company or otherwise, whether developed by
         Executive alone or in conjunction with others or otherwise, is and
         shall remain the exclusive property of Company. Executive further
         acknowledges and agrees that his disclosure of any Confidential
         Information will result in irreparable injury and damage to Company.

              (b) CONFIDENTIAL INFORMATION DEFINED. "Confidential Information"
         means all confidential and proprietary information of Company,
         including without limitation (i) information derived from reports,
         investigations, experiments, research and work in progress, (ii)
         methods of operation, (iii) market data, (iv) proprietary computer
         programs and codes, (v) drawings, designs, plans and proposals, (vi)
         marketing and sales programs, (vii) client lists, (viii) historical
         financial information and financial projections, (ix) pricing formulae
         and policies, (x) all other concepts, ideas, materials and information
         prepared or performed for or by Company and (xi) all information
         related to the business, products, purchases or sales of Company or any
         of its suppliers and customers, other than information that is publicly
         available.

              (c) COVENANT NOT TO DIVULGE CONFIDENTIAL INFORMATION. Company is
         entitled to prevent the disclosure of Confidential Information. As a
         portion of the consideration for the employment of Executive and for
         the compensation being paid to Executive by Company, Executive agrees
         at all times during the term of his employment hereunder and thereafter
         to hold in strict confidence and not to disclose or allow to be
         disclosed to any person, firm or corporation, other than to his
         professional advisors (who have the obligation to maintain the
         confidentiality of such information) and to persons engaged by Company
         to further the business of Company, and not to use except in the
         pursuit of the business of Company, the Confidential Information,
         without the prior written consent of Company.

              (d) RETURN OF MATERIALS AT TERMINATION. In the event of any
         termination or cessation of his employment with Company for any reason,
         Executive shall promptly deliver to Company all documents, data and
         other information derived from or otherwise pertaining to Confidential
         Information. Executive shall not take or retain any documents or other
         information, or any reproduction or excerpt thereof, containing or
         pertaining to any Confidential Information.

                                       8

<PAGE>

         SECTION 10. NONCOMPETITION.

              (a) Until termination of Executive's employment hereunder,
         Executive shall not do any of the following:

                   (i) engage directly or indirectly, alone or as a shareholder,
              partner, director, officer, Executive of or consultant to any
              other business organization, in any business activities that:

                        (1) relate to the oil and gas drilling services industry
                   (the "Designated Industry"); or

                        (2) were either conducted by Company prior to the
                   termination of Executive's employment hereunder or proposed
                   to be conducted by Company at the time of such termination;

                   (ii) approach any customer or supplier of Company in an
              attempt to divert it to any competitor of Company in the
              Designated Industry; or

                   (iii) solicit or encourage any employee or Executive of
              Company to end his relationship with Company or commence any such
              relationship with any competitor of Company.

              (b) Executive's noncompetition obligations hereunder shall not
         preclude Executive from owning less than five percent of the common
         stock of any publicly traded corporation conducting business activities
         in the Designated Industry. If at any time the provisions of this
         Section 10 are determined to be invalid or unenforceable by reason of
         being vague or unreasonable as to area, duration or scope of activity,
         this Section 10 shall be considered divisible and shall be immediately
         amended to only such area, duration and scope of activity as shall be
         determined to be reasonable and enforceable by the court or other body
         having jurisdiction over the matter, and Executive agrees that this
         Section 10 as so amended shall be valid and binding as though any
         invalid or unenforceable provision had not been included herein.

         SECTION 11. GENERAL.

              (a) NOTICES. All notices and other communications hereunder shall
         be in writing or by written telecommunication, and shall be deemed to
         have been duly given upon delivery if delivered personally or via
         written telecommunication, or five days after mailing if mailed by
         certified mail, return receipt requested or by written
         telecommunication, to the relevant address set forth below, or to such
         other address as the recipient of such notice or communication shall
         have specified to the other party in accordance with this Section
         11(a):

                                       9

<PAGE>

         If to Company, to:                with a copy to:

         Allis-Chalmers Corporation        Joseph P. Bartlett
         7660 Woodway, Suite 200           Spolin Silverman Cohen & Bartlett LLP
         Houston, Texas  77063             1620 26th Street, Suite 2000 North
                                           Santa Monica, CA  90404

         If to Executive, to the last address for Executive appearing on the
         Company's records

              (b) WITHHOLDING. All payments required to be made to Executive by
         Company under this Agreement shall be subject to the withholding of
         such amounts, if any, relating to federal, state and local taxes as may
         be required by law.

              (c) EQUITABLE REMEDIES. Each of the parties hereto acknowledges
         and agrees that upon any breach by Executive or Company of his or its
         obligations hereunder, Company and Executive shall have no adequate
         remedy at law and accordingly shall be entitled to specific performance
         and other appropriate injunctive and equitable relief.

              (d) SEVERABILITY. If any provision of this Agreement is held to be
         illegal, invalid or unenforceable, such provision shall be fully
         severable, and this Agreement shall be construed and enforced as if
         such illegal, invalid or unenforceable provision never comprised a part
         hereof, and the remaining provisions hereof shall remain in full force
         and effect and shall not be affected by the illegal, invalid or
         unenforceable provision or by its severance herefrom. Furthermore, in
         lieu of such illegal, invalid or unenforceable provision, there shall
         be added automatically as part of this Agreement a provision as similar
         in its terms to such illegal, invalid or unenforceable provision as may
         be possible and be legal, valid and enforceable.

              (e) WAIVERS. No delay or omission by either party in exercising
         any right, power or privilege hereunder shall impair such right, power
         or privilege, nor shall any single or partial exercise of any such
         right, power or privilege preclude any further exercise thereof or the
         exercise of any other right, power or privilege.

              (f) COUNTERPARTS. This Agreement may be executed in multiple
         counterparts, each of which shall be deemed an original, and all of
         which together shall constitute one and the same instrument.

              (g) CAPTIONS. The captions in this Agreement are for convenience
         of reference only and shall not limit or otherwise affect any of the
         terms or provisions hereof.

              (h) REFERENCE TO AGREEMENT. Use of the words "herein," "hereof,"
         "hereto," "hereunder" and the like in this Agreement refer to this
         Agreement only as a whole and not to any particular section or
         subsection of this Agreement, unless otherwise noted.

                                       10

<PAGE>

              (i) BINDING AGREEMENT. This Agreement shall be binding upon and
         inure to the benefit of the parties and shall be enforceable by the
         personal representatives and heirs of Executive and the successors and
         assigns of Company. This Agreement may be assigned by the Company or
         any Company to any Company or, subject to Section 7(b)(iii), to any
         successor to all or substantially all of the Company's business as a
         result of a merger, consolidation, sale of stock or assets, or similar
         transaction; provided that in the event of any such assignment, the
         Company shall remain liable for all of its obligations hereunder and
         shall be liable for all obligations of all such assignees hereunder. If
         Executive dies while any amounts would still be payable to him
         hereunder, such amounts shall be paid to Executive's estate. This
         Agreement is not otherwise assignable by Executive.

              (j) ENTIRE AGREEMENT. This Agreement contains the entire
         understanding of the parties, supersedes all prior agreements and
         understandings relating to the subject matter hereof and may not be
         amended except by a written instrument hereafter signed by each of the
         parties hereto.

              (k) GOVERNING LAW. This Agreement and the performance hereof shall
         be construed and governed in accordance with the laws of the State of
         Texas, without regard to its choice of law principles.

              (l) GENDER AND NUMBER. The masculine gender shall be deemed to
         denote the feminine or neuter genders, the singular to denote the
         plural, and the plural to denote the singular, where the context so
         permits.

         EXECUTED as of the date and year first above written.

                             Allis-Chalmers Corporation

                             By /s/ Munawar H. Hidayatallah
                                ------------------------------------------------
                                Munawar H. Hidayatallah, Chief Executive Officer

                             EXECUTIVE

                             /s/ Victor M. Perez
                             -------------------
                             Victor M. Perez

                                       11

<PAGE>

                                   SCHEDULE A

                                BONUS CALCULATION

Executive's bonus shall be based upon the performance of his duties as Chief
Financial Officer and in particular his leadership ability to enable the Company
to meet the following goals:

1. Maintain covenant compliance on bank lines of credit

2. Implement Sarbanes-Oxley including implementation of internal controls by
   June 30, 2005

3. Install internal controls verifying performance by JV partner's contractual
   obligations in Mexico

4. Meeting EBITDA and income targets

5. Maintain target debt to equity ratios

6. Obtain debt and equity financing for acquisitions

7. Increase operating margins

                                       12

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]