Document:

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EXHIBIT 4.11

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT. THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR
ASSIGNED TO ANY OTHER PERSON OR ENTITY, EXCEPT AS SET FORTH HEREIN.

                                     WARRANT

                  TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF
                           ALLIS-CHALMERS CORPORATION

              VOID AFTER 5:00 P.M., CENTRAL TIME, ON MAY 19, 2009,
           OR IF NOT A BUSINESS DAY, AS DEFINED HEREIN, AT 5:00 P.M.,
             CENTRAL TIME ON THE IMMEDIATELY FOLLOWING BUSINESS DAY

Date of Issuance:  May 19, 2004

         THIS CERTIFIES that, pursuant to the terms of a consulting agreement
dated May 19, 2004 (the "CONSULTING AGREEMENT"), Jeffrey Freedman (the
"CONSULTANT"), or registered assigns, is entitled to subscribe for and purchase
from Allis-Chalmers Corporation, a Delaware corporation (the "COMPANY"), at the
price of $0.93 per share (such price, as from time to time to be adjusted as
hereinafter provided, being hereinafter called the "WARRANT PRICE"), at any time
and from time to time after the date hereof but not later than the Expiration
Date (as defined below), up to such number of fully paid, nonassessable shares
of Common Stock, par value $0.15 per share ("COMMON STOCK"), of the Company as
is specified in the following sentence, subject, however, to the provisions and
upon the terms and conditions hereinafter set forth, including without
limitation the provisions of SECTION 3 hereof. This Warrant shall be exercisable
for up to 100,000 shares of Common Stock upon issuance, subject to the terms and
conditions set forth herein. "EXPIRATION DATE" shall mean 5:00 P.M., Central
time, on May 19, 2009, PROVIDED, that if such day is not a Business Day, as
defined herein, at 5:00 P.M., Central time, on the immediately following
Business Day. "BUSINESS DAY" shall mean a day other than a Saturday, Sunday or
other day on which banks in the State of Texas are authorized by law to remain
closed.

SECTION 1.     EXERCISE OF WARRANT

         (a)   CASH OR CASHLESS EXERCISE

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         This Warrant shall vest and become exercisable in three installments,
the first of which, in the amount of 333,334 shares, shall vest on the date
hereof, and the second and third of which, each in the amount of 333,3333
shares, which shall vest on the 45th and 90th day following the date hereof.
Notwithstanding the foregoing, each installment shall vest only if, on the
vesting date, (a) Consultant continues to act as a consultant for the Company
pursuant to the Consulting Agreement on such vesting date, (b) Consultant, prior
to the vesting date, shall have terminated the Consulting Agreement as a result
of a breach of the Consulting Agreement by the Company, or (c) prior to the
vesting date, the Company shall have terminated the Consulting Agreement other
than as a result of a breach of the Consulting Agreement by Consultant. This
Warrant may be exercised with respect to any vested installment at any time and
from time to time but not later than the Expiration Date, by the holder hereof
(hereinafter referred to as the "WARRANTHOLDER"), in whole or in part (but not
as to a fractional share of Common Stock), by the completion of the subscription
form attached hereto and by the surrender of this Warrant (properly endorsed) at
the Company's offices at 7660 Woodway, Suite 200, Houston, Texas 77063 (or at
such other location in the United States as the Company may designate by notice
in writing to the Warrantholder at the address of the Warrantholder appearing on
the books of the Company), and by payment to the Company of the Warrant Price
for each share being purchased, (i) in cash or by certified or official bank
check or (ii) by delivering notice to the Company that the Warrantholder is
exercising this Warrant by authorizing the Company to reduce the number of
shares of Common Stock subject to this Warrant by the number of shares having an
aggregate Fair Market Value equal to the applicable Warrant Price. For purposes
of this Warrant, the term "Fair Market Value" shall mean on any date specified
herein, with respect to Common Stock, the amount per share equal to (a) the
average of the closing prices thereof on the ten (10) trading days prior to such
date, in each case as officially reported on the principal national securities
exchange on which the same are then listed or admitted to trading, or (b) if no
shares of Common Stock are then listed or admitted to trading on any national
securities exchange, the average of the reported closing bid and asked prices
thereof on the ten (10) trading days prior to such date as quoted in the Nasdaq
National Market or, if no shares of Common Stock are then quoted in the Nasdaq
National Market, as published by the National Quotation Bureau, Incorporated or
any similar successor organization, and in either case as reported by any member
firm of the New York Stock Exchange selected by the Company; PROVIDED that with
respect to (b) above, if the average daily trading volume for the subject shares
for the thirty (30) days prior to the date of determination shall be less than
1,000 shares per day, then the subject Market Price shall be the average of the
closing bid price of such shares on the ten (10) trading days prior to the date
of determination, or (c) if not so reported, the fair market value of the Common
Stock, as determined in good faith by the Board of Directors of the Company.

         (b)   PROCEDURE FOR EXERCISE

         In the event of any exercise of the rights represented by this Warrant,
a certificate or certificates for the total number of whole shares of Common
Stock so purchased, registered in the name of the Warrantholder, shall be
delivered to the Warrantholder within a reasonable time, not exceeding five (5)
Business Days, after the rights represented by this Warrant shall have been so
exercised; and, unless this Warrant has expired, a new Warrant representing the

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number of shares (except a remaining fractional share), if any, with respect to
the unexercised portion of this Warrant shall also be issued to the
Warrantholder within such time. With respect to any such exercise, the
Warrantholder shall for all purposes be deemed to have become the holder of
record of the number of shares of Common Stock evidenced by such certificate or
certificates, from the date on which this Warrant was surrendered and, if
exercise is pursuant to SECTION 1(a), payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date on which the stock transfer books
of the Company are closed, such person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date on which the
stock transfer books are open. No fractional shares shall be issued upon
exercise of this Warrant and no payment or adjustment shall be made upon any
exercise on account of any cash dividends on the Common Stock issued upon such
exercise. If any fractional interest in a share of Common Stock would, except
for the provisions of this SECTION 1, be delivered upon any such exercise, the
Company, in lieu of delivering the fractional share thereof, shall pay to the
Warrantholder an amount in cash equal to the current Fair Market Value of such
fractional interest, as determined above.

SECTION 2.     ADJUSTMENT OF NUMBER OF SHARES

         Upon each adjustment of the Warrant Price for any stock dividend or
distribution or any subdivision or combination of the outstanding shares of the
Common Stock as provided in SECTION 3, the Warrantholder shall thereafter be
entitled to purchase, at the Warrant Price resulting from such adjustment (each
an "ADJUSTED WARRANT PRICE"), the number of shares (calculated to the nearest
hundredth of a share) obtained by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Adjusted Warrant Price resulting from such adjustment

SECTION 3.     ADJUSTMENT OF WARRANT PRICE AND OTHER MATTERS

         The Warrant Price and the number and kind of shares issuable hereunder
shall be subject to adjustment from time to time upon the happening of certain
events as provided in this SECTION 3.

         (a)   ADJUSTMENTS FOR ISSUE OR SALE OF COMMON STOCK AT LESS THAN
               CONVERSION RATE

         If the Company shall issue or sell shares of its Common Stock (other
than pursuant to this Warrant) for a consideration per share less than the
Warrant Price (as the same shall be adjusted from time to time, as provided
herein), then in each such case, the Warrant Price shall be reduced to an amount
equal to the price per share received by the Company in such sale.

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         (b)   ADJUSTMENT PROVISIONS; OTHER MATTERS

               (1) If at any time prior to the exercise of this Warrant in full,
the Company shall (A) declare a dividend or make a distribution on the Common
Stock payable in shares of its capital stock (whether shares of Common Stock or
of capital stock of any other class); (B) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (C) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares; or (D) issue any shares of its capital stock by reclassification of its
Common Stock (excluding any such reclassification in connection with a
consolidation or a merger that is subject to SECTION 3(b)(4)), the Warrant Price
in effect at the time of the record date of such dividend, distribution,
subdivision, combination, reclassification or recapitalization shall be adjusted
so that the Warrantholder shall be entitled to receive the aggregate number and
kind of shares which, if this Warrant had been exercised in full immediately
prior to such event, it would have owned upon such exercise and been entitled to
receive by virtue of such dividend, distribution, subdivision, combination,
reclassification or recapitalization. Any adjustment required by this SECTION
3(b) shall be made immediately after the record date, in the case of a dividend
or distribution, or the effective date, in the case of a subdivision,
combination, reclassification or recapitalization, to allow the purchase of such
aggregate number and kind of shares.

               (2) If at any time prior to the exercise of this Warrant in full,
the Company shall make a distribution to all holders of the Common Stock of (i)
stock of a subsidiary or securities convertible into or exercisable for such
stock, or (ii) evidence of indebtedness of the Company or its subsidiaries or
assets of the Company or its subsidiaries (excluding cash dividends or
distributions out of earned surplus), then in lieu of an adjustment in the
Warrant Price or the number of shares of Common Stock purchasable upon the
exercise of this Warrant (and in addition to the Common Stock or other
securities to be received upon exercise of this Warrant as provided herein),
each Warrantholder, upon the exercise hereof at any time after such
distribution, shall be entitled to receive from the Company, such subsidiary or
both, as the Company shall determine, the stock or other securities to which
such Warrantholder would have been entitled if such Warrantholder had exercised
this Warrant immediately prior thereto, all subject to further adjustment as
provided in this SECTION 3, and the Company shall reserve, for the life of the
Warrant, such securities of such subsidiary or other corporation; PROVIDED,
HOWEVER, that no adjustment in respect of dividends or interest on such stock or
other securities shall be made during the term of this Warrant or upon its
exercise.

               (3) If at any time prior to the expiration of this Warrant in
full, the Company shall issue rights or warrants entitling persons to subscribe
for or purchase Common Stock in either case at a price per share or exercise
price per share less than the current Warrant Price, then, in each such case the
Warrant Price shall be reduced to the subject issue or exercise price, as
appropriate.

               (4) In the event of any capital reorganization of the Company
(other than an event referred to in SECTION 3(b)(1)), or in case of the
consolidation of the Company with, the merger of the Company with or into or the
sale of all or substantially all of the properties and assets of the Company to
any other person, if in connection therewith consideration is payable to holders
of Common Stock (or other securities or property purchasable upon exercise of
this Warrant) in exchange therefor, this Warrant shall remain subject to the

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terms and conditions set forth in this Warrant and this Warrant shall, after
such capital reorganization, consolidation, merger or sale be exercisable for
the number of shares of stock or other securities or assets to which a holder of
the number of shares of Common Stock purchasable (at the time of such capital
reorganization, reclassification of such Common Stock, consolidation, merger or
sale) upon exercise of this Warrant would have been entitled if this Warrant had
been exercised immediately prior to such capital reorganization,
reclassification of such Common Stock, consolidation, merger or sale; and in any
such case, if necessary, the provisions set forth in this Warrant with respect
to the rights and interests thereafter of the Warrantholder shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities or assets thereafter deliverable on
the exercise of this Warrant. The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets or the appropriate corporation or entity shall assume, by written
instrument, the obligation to deliver to the Warrantholder the shares of stock,
securities or assets to which the Warrantholder may be entitled pursuant to this
SECTION 3(b)(4).

               (5) Notwithstanding SECTION 3(b)(4), (i) if the Company merges or
consolidates with, or sells all or substantially all of its property and assets
to, any other person and consideration is payable to holders of Common Stock in
exchange for their Common Stock in connection with such merger, consolidation or
sale which consists solely of cash, or (ii) in the event of the dissolution,
liquidation or winding up of the Company, then the Warrantholder shall be
entitled to receive distributions on the date of such event on an equal basis
with holders of Common Stock (or other securities issuable upon exercise of this
Warrant) as if this Warrant had been exercised immediately prior to such event,
less the Warrant Price. Upon receipt of such payment if any, the rights of the
Warrantholder shall terminate and cease and this Warrant shall expire. In case
of any such merger, consolidation or sale of assets, the surviving or acquiring
person and, in the event of any dissolution, liquidation or winding up of the
Company, the Company shall promptly, after receipt of this surrendered Warrant,
make payment by delivering a check in such amount as is appropriate (or, in the
case of consideration other than cash, such other consideration as is
appropriate) to such person as it may be directed in writing by the
Warrantholder surrendering this Warrant.

               (6) No adjustment in the Warrant Price shall be required unless
such adjustment would require an increase or decrease of at least one cent
($0.0l) in such price; provided, however, that any adjustments which by reason
of this SECTION 3(b)(6) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
Section 3 shall be made to the nearest cent or to the nearest hundredth of a
share, as the case may be. Notwithstanding anything in this Section 3 to the
contrary, the Warrant Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.

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               (7) In the event that at any time, as the result of any
adjustment made pursuant to this SECTION 3(b), the Warrantholder thereafter
shall become entitled to receive any securities other than Common Stock,
thereafter the number of such other securities so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in SECTION 3(b).

         (c)   NO ADJUSTMENT FOR CASH DIVIDENDS

         Except as provided in SECTION 3(b) of this Agreement, no adjustment in
respect of any cash dividends shall be made during the term of this Warrant or
upon the exercise of this Warrant.

         (d)   FORM OF WARRANT AFTER ADJUSTMENTS

         The form of this Warrant need not be changed because of any adjustments
in the Warrant Price or the number or kind of the shares purchasable pursuant to
this Warrant, and Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in this
Warrant, as initially issued, provided, however, that the Company may, at any
time in its sole discretion (which shall be conclusive), make any change in the
form of Warrant certificate that it may deem appropriate and that does not
affect the substance thereof. Any Warrant certificate thereafter issued, whether
upon registration of transfer or, or in exchange or substitution for, an
outstanding Warrant certificate may be in the form so changed.

         (e)   TREATMENT OF WARRANTHOLDER

         Prior to due presentment for registration of transfer of this Warrant,
the Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
all purposes and shall not be affected by any notice to the contrary.

         (f)   NOTICE OF ADJUSTMENT

         Upon any adjustment of the Warrant Price, then and in each such case
the Company shall give written notice thereof, by first-class mail, postage
prepaid, addressed to each Warrantholder at the address of such holder as shown
on the books of the Company, which notice shall state the Warrant Price
resulting from such adjustments setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.

         (g)   STOCK TO BE RESERVED

         The Company will at all times reserve and keep available out of its
authorized Common Stock, solely for the purpose of issuance upon the exercise of
this Warrant as herein provided, such number of shares of Common Stock as shall
then be issuable upon the exercise of this Warrant. The Company covenants that
all shares of Common Stock which shall be so issued, upon full payment of the
Warrant Price therefor or as otherwise set forth herein, shall be duly and
validly issued and fully paid and nonassessable and free from all taxes, liens

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and charges with respect to the issue thereof, and, without limiting the
generality of the foregoing, the Company covenants that it will from time to
time take all such action as may be required to ensure that the par value per
share, if any, of the Common Stock is at all times equal to or less than the
effective Warrant Price. The Company will take all such action as may be
necessary to ensure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange or automated quotation system upon which the
Common Stock of the Company may be listed or quoted. The Company will not take
any action which results in any adjustment of the Warrant Price if the total
number of shares of Common Stock issued and issuable after such action upon
exercise of this Warrant would exceed the total number of shares of Common Stock
then authorized by the Company's Certificate of Incorporation. The Company has
not granted and will not grant any right of first refusal with respect to shares
issuable upon exercise of this Warrant, and there are no preemptive rights
associated with such shares.

         (h)   ISSUE TAX

         The issuance of certificates for shares of Common Stock upon exercise
of any Warrant shall be made without a charge to the Warrantholder for any
issuance tax in respect thereto provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
Warrantholder.

         (i)   CLOSING OF BOOKS

         The Company will at no time close its transfer books against the
transfer of the shares of Common Stock issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant.

         (j)   OUTSTANDING WARRANTS; EMPLOYEE OPTIONS

         Notwithstanding the provisions of this SECTION 3, no adjustment in the
exercise price or the number of shares of Common Stock issuable hereunder shall
be made as a result of the issuance of shares of Common Stock upon the exercise
of (1) the Warrants dated February 1, 2002 and February 19, 2003, issued to
Energy Spectrum Partners LP, providing for the issuance of 1,325,000 shares of
Common Stock at an exercise price of $0.15 per share, (2) the Warrants dated
February 1, 2002, issued to Wells Fargo Energy Capital, providing for issuance
of 1,165,000 shares of Common Stock at an exercise price of $0.15, or (3)
options issued pursuant to the Company's 2003 Stock Incentive Plan so long as
such options have an exercise price of at least $0.15 per share (adjusted for
stock splits or similar events).

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         (k)   DEFINITION OF COMMON STOCK

         The shares purchasable pursuant to this Warrant shall include only
securities designated as Common Stock of the Company. As used herein the term
"COMMON STOCK" shall mean and include the Common Stock, par value $0.15 per
share, of the Company as authorized on the date hereof, or shares of any class
or classes resulting from any recapitalization or reclassification thereof which
are not limited to any fixed sum or percentage and are not subject to redemption
by the Company and in case at any time there shall be more than one such
resulting class, the shares of each class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassification bears to the total number of shares of
all such classes resulting from all such reclassification.

SECTION 4.     NOTICES OF RECORD DATES

         In the event of:

         (a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution (other than cash
dividends out of earned surplus), or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any right to sell shares of stock of any class or any
other right; or

         (b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or into any other corporation or entity; or

         (c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company; or

         (d) any public offering or any issuance by the Company of additional
shares of capital stock;

then and in each such event the Company will give notice to the Warrantholder
specifying;

                  (i) the date on which any such record is to be taken for the
         purpose of such dividend, distribution or right and stating the amount
         and character of such dividend, distribution or right, and

                  (ii) the date on which any such reorganization,
         reclassification, recapitalization, transfer, consolidation, merger,
         dissolution, liquidation or winding-up is to take place, and the time,
         if any is to be fixed, as of which the holders of record of Common
         Stock will be entitled to exchange their shares of Common Stock for
         securities or other property deliverable upon such reorganization,
         reclassification, recapitalization, transfer, consolidation, merger,
         dissolution, liquidation or winding-up. Such notice shall be given at

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         least 20 days and not more than 90 days prior to the date therein
         specified, and such notice shall state that the action in question or
         the record date is subject to the effectiveness of a registration
         statement under the Securities Act of 1933, as amended (the "Securities
         Act"), or to a favorable vote of stockholders, if either is required.

SECTION 5.     STOCKHOLDERS RIGHTS AND LIABILITIES

         No provision hereof, in the absence of affirmative action by the
Warrantholder to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the Warrantholder shall give rise to any
liability of such Warrantholder for the Warrant Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.

SECTION 6.     LOST, STOLEN, MUTILATED OR DESTROYED WARRANT

         Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number of
shares of Common Stock as provided for in such lost, stolen, destroyed or
mutilated Warrant.

SECTION 7.     NOTICES

         All notices, requests and other communications required or permitted to
be given or delivered hereunder shall be in writing, and shall be delivered, or
shall be sent by certified or registered mail or overnight courier, postage
prepaid and addressed, or by facsimile, and if to the Warrantholder to such
Warrantholder at the address or facsimile number set forth on the signature page
hereto or at such other address or facsimile number as shall have been furnished
to the Company by written notice from such Warrantholder and if to the Company,
at 7660 Woodway, Suite 200, Houston, Texas 77063, facsimile (713) 369-0555 or at
such other address or facsimile number as shall have been furnished to the
Warrantholder by written notice from the Company.

SECTION 8.     RESTRICTIONS ON TRANSFER

         This Warrant may not be sold, transferred, hypothecated or assigned to
any other person or entity other than an affiliate of Consultant. Consultant
agrees not to make any sale or other disposition of either the Warrant or the
underlying Common Stock except pursuant to a registration statement which has
become effective under the Securities Act, setting forth the terms of such
offering, the underwriting discount and the commissions and any other pertinent
data with respect thereto, or in a transaction exempt from registration under
the Securities Act, in which case Consultant shall, at the Company's request,
provide the Company with an opinion of counsel reasonably acceptable to the
Company that such registration is not required. This Warrant shall bear a legend
setting forth the foregoing restriction.

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SECTION 9.     AMENDMENTS AND WAIVERS

         This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by each of (i) a majority in
interest of the holders of this Warrant and (ii) an authorized representative of
the Company.

SECTION 10.    SEVERABILITY

         If one or more provisions of this Warrant are held to be unenforceable
under applicable law, such provisions shall be excluded from this Warrant, and
the balance of this Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

SECTION 11.    GOVERNING LAW

         THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

SECTION 12.    HEADINGS

         The headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect any of the terms hereof.

SECTION 13.    COUNTERPARTS

         This Warrant may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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         IN WITNESS WHEREOF, the Company and Consultant have executed this
warrant on and as of the day and year first above written.

                                    COMPANY:

                                    ALLIS-CHALMERS CORPORATION

                                    By:     /s/ Munawar H. Hidayatallah_
                                            ----------------------------
                                            Munawar H. Hidayatallah
                                    Its:    Chief Executive Officer

                                    CONSULTANT:

                                    /s/ Jeffrey Freedman
                                    ----------------------------------
                                    Jeffrey Freedman
                                    123 Via Verde Way
                                    Palm Beach Gardens, Florida  33418
                                    Facsimile: _______________________

                                       11<PAGE>

EXHIBIT 10.26

February 13, 2004

Allis-Chalmers Corporation
7660 Woodway
Suite 200
Houston, TX  77063

Attention: Munawar H. Hidayatallah

Gentlemen:

         This is to confirm the engagement of Morgan Joseph & Co. Inc. ("MJ") on
an exclusive basis to render financial advisory and investment banking services
to Allis-Chalmers Corporation (the "Company"), including but not limited to debt
and equity financings, acquisitions, and divestitures (collectively, a
"Transaction"), as may be agreed upon by the Company and MJ. In that connection,
MJ will:

         (i) familiarize itself to the extent it deems appropriate and feasible
with the business, operations, properties, financial condition, management and
prospects of the Company;

         (ii) advise the Company on an appropriate capital structure;

         (iii) seek to extend the Company's current credit agreements;

         (iv) consider the potential for interim or bridge financing, whether
debt or equity, including but not limited to recent proposals submitted by
Freebird Partners LP, Energy Spectrum Capital LP and certain officers and/or
directors of the Company, to fund potential acquisitions or other Transactions
by the Company prior to the execution of a public offering of common stock;

         (v) work with the Company to achieve a listing for its common shares on
the American Stock Exchange;

         (vi) assist the Company in developing a presentation to potential
underwriters and in selecting a managing underwriting group and forming a
syndicate to effect a public offering of common stock;

         (vii) participate with the Company, its counsel, and the other managing
underwriters in preparing a registration statement, for distribution to
potential investors, describing the Company and its business, operations,
properties, financial condition and prospects, it being specifically agreed that
(a) such registration statement shall be based entirely upon information
supplied by the Company, which information the Company shall warrant to be
complete and accurate in all material respects, and not misleading, and (b) the
Company shall be solely responsible for the accuracy and completeness of such
memorandum;

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         (viii) assist the Company in developing a presentation to be made to
potential investors;

         (ix) advise the Company on pricing and allocation of shares to be
offered to investors;

         (x) develop appropriate acquisition criteria and work with the Company
to identify target companies;

         (xi) provide advisory services, including company screening and general
business and financial analysis, transaction feasibility analysis, and pricing
of prospective acquisitions;

         (xii) develop, update and review with the Company on an ongoing basis a
list of suitable acquisition candidates;

         (xiii) assist in negotiations and related strategy;

         (xiv) act as dealer/manager in a tender offer, if appropriate and
subject to entering into a dealer/manager agreement in customary form;

         (xv) assist in corporate capital planning, including the arranging of
available financing;

         (xvi) provide brokerage services on customary terms to the Company in
connection with its accumulation, if any, of the stock of an acquisition
candidate; and

         (xvii) provide such other investment banking services, including but
not limited to merger and acquisition advice, fairness opinions, divestitures
and capital-raising, as shall be determined in the future by mutual consent of
the Company and MJ.

         An "acquisition" shall mean any transaction or series or combination of
transactions, other than in the ordinary course of trade or business, whereby,
directly or indirectly, control of a material interest in a company or any of
its businesses or assets is transferred for consideration, including, without
limitation, a sale or exchange of capital stock or assets, a lease of assets
with or without a purchase option, a merger or consolidation, a tender or
exchange offer, a leveraged buy-out or recapitalization, the formation of a
joint venture, minority investment or partnership, or any similar transaction.

         If during the term of this engagement one or more acquisitions occur,
regardless of whether the party or parties to an acquisition were identified by
MJ or whether MJ rendered advice concerning the acquisition, or if within 12
months after the termination of MJ engagement hereunder one or more acquisitions
shall occur involving any seller that, prior to the termination of MJ's
engagement hereunder, conducted discussions with the Company regarding an
acquisition, then MJ shall be paid a cash fee at the closing of each such
acquisition equal to the percentages set forth below of the Aggregate
Consideration (as defined below) payable in connection with each such
acquisition:

                                       2

<PAGE>

         Aggregate Consideration                                 Percentage
         -----------------------                                 ----------

         On the first $15 million                                    3 %
         Plus on the next $20 million                                2 %
         Plus on the next $15 million                               1 1/2%
         Plus on the amount over $50 million                         1 %

         In the event of a public offering of common stock by the Company, MJ
shall receive a share of the total underwriting fees net of underwriting
expenses associated with such offering that is no less than 30% of the amount
payable to the lead manager. In the event of another type of Transaction, MJ
shall receive fees related to such other investment banking services that may be
performed by MJ as shall be mutually agreed by the Company and MJ and which
shall be the subject of separate engagement letters.

         In addition, MJ will be paid a $25,000 non-refundable retainer upon the
execution of this engagement letter, and $25,000 on the one-month anniversary of
the execution of this engagement letter, which retainers shall be credited
toward any fee owed to MJ upon the closing of the first such acquisition.

         MJ shall also receive warrants for 1,700,000 shares of the Company's
common stock, exercisable at $0.50 per share and expiring at March 1, 2009, as
part of the consideration for providing investment banking services hereunder.

         At the request of the Company, MJ will undertake a study to enable it
to render its opinion with respect to the fairness from a financial point of
view of the consideration proposed to be paid by the Company in connection with
an acquisition, subject to the execution of a separate engagement letter.

         For purposes of this engagement, the term Aggregate Consideration with
respect to a particular acquisition means the aggregate amount of cash and the
fair market value (on the date of payment) of securities (whether debt or
equity) or assets receivable by the target company, its employees, its
securityholders or others in connection with such acquisition (including,
without limitation, amounts paid to the target company or its securityholders,
its employees or others in a transaction such as a leveraged recapitalization or
pursuant to covenants not to compete, employment contracts, employee benefit
plans or other similar arrangements). Aggregate Consideration shall also include
(i) the amount of any indebtedness of the target company at the time of closing
of the acquisition (including capital leases) assumed, continued, defeased,
refinanced or otherwise paid in connection with the acquisition, and (ii) if the
acquisition involves the acquisition of all or a substantial part of the
operating assets of the target company, the excess, if any, of (x) the value of
any current assets not sold, over (y) the value of any current liabilities not
assumed by the Company.

                                       3

<PAGE>

         The fair market value of publicly-traded equity securities included in
the Aggregate Consideration shall be the average of the last sales prices for
such securities during the period of five trading days ending five days prior to
the consummation of the acquisition. The fair market value of debt securities
shall be equal to the aggregate principal amount thereof, and the fair market
value of any other securities issued for which there is no existing public
trading market during such period, or any other non-cash consideration delivered
or retained in connection with a Transaction, will be the value mutually
determined in good faith by the Company and MJ

         In the event that an acquisition is closed, but the consideration is
payable in installments (it being understood that the full principal amount of
debt securities shall be deemed received at closing) or subject to
contingencies, MJ's fee shall be subject to the same payment schedule or
contingencies and MJ will be paid a portion of its fee at the closing and upon
the payment of each such installment on a pro rata basis. Fees on amounts paid
into escrow shall be payable upon the establishment of such escrow, except where
the escrow is established pending determination of the purchase price as, for
example, in the case of a closing audit.

         If a proposed acquisition is not consummated, but the Company, directly
or indirectly, receives "compensation" from an acquisition candidate, then the
Company shall pay to MJ, upon receipt of such compensation, a fee equal to 15%
of such compensation after deduction of the Company's unreimbursed expenses in
connection with the proposed acquisition. "Compensation" means (i) a break-up
fee or a topping or other fee in connection with the termination or cancellation
of an acquisition agreement or of the Company's efforts to effect an acquisition
during the term of this engagement or the 12 month period thereafter, or (ii) a
lock-up fee in connection with a standstill agreement made during such time.

         In addition to any fees payable hereunder, MJ shall be reimbursed by
the Company on a monthly basis for its reasonable out-of-pocket expenses
(including reasonable legal fees and disbursements) in connection with this
engagement without regard to whether any acquisition is consummated.

         If MJ so requests, the Company will retain MJ as co-managing
underwriter or sole placement agent, as the case may be, in connection with any
public offering or private placement of any debt or equity securities of the
Company or any of its affiliates (including the target company following an
acquisition) for the purpose of financing an acquisition and will pay MJ in
connection therewith (i) in the case of an underwriting, customary underwriting
fees or commissions or (ii) in the case of a private placement, 1% of any senior
debt raised, 3% of any subordinated debt or mezzanine financing raised and 5% of
any equity raised. MJ's role in such financing transactions will be the subject
of an appropriate underwriting or placement agreement containing terms and
conditions mutually agreeable to MJ and the Company.

                                       4

<PAGE>

         MJ and the Company have entered into a separate indemnification
agreement, dated the date hereof and attached hereto as Schedule A, providing
for the indemnification of MJ by the Company in connection with MJ's engagement
hereunder, the terms of which are incorporated by reference herein. The Company
acknowledges that the Company's execution and delivery of the indemnification
agreement was a condition to MJ's execution and delivery of this letter
agreement.

         This engagement shall continue in effect until March 31, 2005 or upon
such date as mutually agreed upon by the Company and MJ, except that the
indemnification agreement referred to above and the provisions of the paragraphs
hereof regarding compensation and reimbursement shall survive the term of this
engagement.

         This letter agreement contains the entire agreement between the Company
and MJ concerning the engagement of MJ by the Company, and no modifications of
this agreement or waiver of the terms and conditions hereof will be binding upon
either party, unless approved in writing by both parties. This letter agreement
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to principles of conflicts of laws.

         Please confirm that the foregoing is in accordance with your
understandings and agreements with MJ by signing and returning to us the
duplicate of this letter enclosed herewith.

                                                   Very truly yours,

                                                   MORGAN JOSEPH & CO. INC.

                                                   By:   /s/ Andrew J. Silver
                                                         --------------------
                                                         ANDREW J. SILVER
                                                         MANAGING DIRECTOR

CONFIRMED AND AGREED:

ALLIS-CHALMERS CORPORATION

By:      /s/ Munawar H. Hidayatallah
         ------------------------------------
         MUNAWAR H. HIDAYATALLAH
         CHAIRMAN AND CHIEF EXECUTIVE OFFICER

                                       5

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