Document:

exv10w4

 

Exhibit 10.4

EMPLOYMENT AGREEMENT

This
Employment Agreement is made as of December 1, 2006 by and between ALSC Venture Management,
LLC, a California limited liability company, (the “Company”) and V.R. Ranganath (“Employee”).

RECITALS

     A. The Company is the sole general partner of each of Alliance Ventures I, L.P., Alliance
Ventures II, L.P., Alliance Ventures III, L.P., Alliance Ventures IV, L.P., and Alliance Ventures
V, L.P. (each a “Partnership” and collectively the “Partnerships”).

     B. The Company desires to retain the services of Employee in its business, thereby retaining
for the Company the benefit of Employee’s business knowledge and experience and also to make
provisions for the payment of reasonable and proper compensation to Employee for such services; and

     C. Employee is willing to remain employed by the Company and to perform the duties incident to
such employment upon the terms and conditions hereinafter set forth.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants and representations
herein contained, the Company and Employee agree as follows:

1. EMPLOYMENT AND DUTIES

     (a) Employee is hereby employed as an employee of the Company to perform such duties
within the Company as may be determined and assigned to him from time to time by the
Company’s Board of Managers, including performing the functions of administering the
Company’s portfolio securities, keeping records, and assisting in valuations and
preparing financial statements, reports and tax returns for the Partnerships. Employee
shall devote his best efforts to the performance and faithful discharge of his duties,
including the performance of any and all duties consistent with his position as delineated
above and in the Company’s Bylaws, and as such duties may be assigned to him by the
Company’s Board of Managers or President.

     (b) Employee shall be required to devote such portion of his business time, ability and
attention to the operations and affairs of the Company, as are reasonably required to
perform the functions listed in Section 1(a).

2. TERM

     The term of employment shall commence upon the date hereof, and shall continue for three years
or, if less, as long any Partnership remains in business except that it may be terminated six
months after a sale of the Partnerships to a party not Affiliated with Alliance Semiconductor
corporation, or renegotiated as provided in Section 4 of the Management Agreement
by and among the Company and the Partnerships dated the same date as this Agreement.
Without prejudice to any other remedy to which the Company may be entitled, the

 

 

Company may terminate the employment of Employee hereunder prior to the expiration of the term of
this Agreement for any reason specified in Section 4 of this Agreement.

3. COMPENSATION

     (a) In consideration for the services to be rendered by Employee hereunder, the Company
agrees to pay, or to cause to be paid to the Employee, and he agrees to accept as
compensation, an annual salary of three hundred thousand dollars ($300,000.00) (pro-rated
for any partial year) payable in equal monthly installments, effective commencing May 17,
2006.

     (b) Employee shall be reimbursed for ordinary and necessary business expenses incurred
in connection with his employment including, but not limited to, expenses of travel and
entertainment, meals, lodgings and other expenses of a business nature, upon presentation of
appropriate vouchers.

     (c) Employee shall be entitled to such fringe benefits, including accident and health
insurance, wage continuation insurance and contributions to retirement plans, if any, upon
the same terms and conditions as are offered at any time during the term of this Agreement
to other employees or managers of the Company.

     (d) Employee shall receive full compensation for any period of illness or incapacity
during the term of this Agreement, reduced by any payments to him under disability or
other insurance plans.

4. TERMINATION

     The Company shall be entitled at its option to terminate Employee’s employment hereunder at
any time, only for the following reasons, or as provided in Section 5:

     (a) because of his fraud, misappropriation, embezzlement, theft or the like; or

     (b) because of his conviction of a felony;

     (c) because he has engaged in activities which are substantially adverse to the
interests of the Company including a failure, after notice, to devote sufficient time to
the business of the Company and the Partnerships, or a failure or a refusal to provide
information about the Partnerships to the Company or the partners in any Partnership; or

     (d) because Employee has failed to perform duties under this Agreement by reason of
illness or disability for a period exceeding 60 days.

5. DEATH DURING EMPLOYMENT

     If Employee dies during the term of this Agreement, this Agreement shall terminate
immediately, and the Company shall pay to the estate of the Employee the basic annual salary and
expense reimbursement which would otherwise be payable to the Employee through the last day of the
month in which his death shall have occurred.

 

 

6. NO CONFLICT

     Employee hereby warrants that he is not now under any legal or contractual obligation that
would conflict in any manner whatsoever with the obligations and duties by him herein undertaken,
and that the execution of this Agreement will not breach any agreement to which the Employee is
presently a party. The Company agrees that nothing in this Agreement shall be deemed to prohibit
Employee from working with any other venture capital fund or investment management entity of any
kind whatsoever, including his engaging in the formation of a new fund to be managed or co-managed
by him during the term of this Agreement provided such activities do not materially interfere with
Employee’s performance of his duties under this Agreement.

7. ASSIGNMENT

     . Employee agrees that this Agreement may be assigned to Alliance Semiconductor Corporation if
the Partnerships are sold to a party not affiliated with Alliance Semiconductor Corporation.

8. CONSTRUCTION

     This Agreement shall be governed by, and be construed in accordance with, the laws of the
state of California and shall be binding upon, and shall inure to the benefit of the heirs,
executors, assigns, transferees, and successors in interest of the parties hereto, notwithstanding
the reorganization, merger, consolidation or change in personnel of the Company.

9. NOTICES

     All notices and other communications required or permitted hereunder shall be in writing and
shall be deemed effectively given upon personal delivery or on the day sent by facsimile
transmission if a true and correct copy is sent the same day by first class mail, postage prepaid,
or by dispatch by an internationally recognized express courier service, the address of the party
set forth below his signature hereto, or to such other address as the party may direct by giving
ten days’ notice in the manner set forth herein.

10. WAIVER OF BREACH

     The waiver by either party of a breach of any provision of this Agreement shall not operate or
be construed as a waiver of any other provision or of any subsequent breach of the same provision
thereof.

11. ENTIRE AGREEMENT

     This instrument contains the entire agreement of the parties regarding employment of Employee
by the Company. It may not be changed orally, but only by an agreement in writing signed by the
party against whom enforcement of any waiver, change, modification, extension or discharge is
sought.

 

 

12. SEVERABILITY

     If any portion of this Agreement is held by a court of competent jurisdiction to conflict with
any federal, state or local law, such portion or portions of this Agreement are hereby declared to
be of no force or effect in such jurisdiction, and this Agreement shall otherwise remain in full
force and effect and be construed as if such portion had not been included herein.

7. MISCELLANEOUS

     Time is of the essence of this Agreement. Whenever necessary or proper herein the singular
includes the plural, and the plural the singular, and masculine, feminine and neuter gender
expressions are interchangeable. The section headings used herein are provided for informational
purposes only and shall affect neither the meaning of the terms nor the intent of the parties.

 

 

     IN WITNESS WHEREOF, the parties have executed this Agreement on the date first above written.

	 	 	 	 	 
	 	 	COMPANY:
	 
	 	 	 	 
	 	 	ALSC VENTURE MANAGEMENT LLC.
	 

	 	By:	 	/s/ Melvin L. Keating 
	 

	 	 	 	 
	 

	 	Title:	 	Manager 
	 

	 	 	 	 
	 	 	EMPLOYEE:
	 	 	/s/ V. R. Ranganath
	 	 	 
	 	 	(Signature)
	 

	 	Address:	 	18916 Congress Junction
Ct. 
	 

	 	 	 	 
	 

	 	Saratoga, CA 95670 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 

	 	Facsimile:	 	408-873-9121FIFTH
AMENDMENT TO
REVOLVING CREDIT AND SECURITY AGREEMENT

THIS
FIFTH AMENDMENT TO REVOLVING CREDIT AND SECURITY AGREEMENT (this
‘‘Amendment’’) is made and
entered into effective as of the 5th day of December, 2006 (the
‘‘Effective Date’’), by and
among UNION DRILLING, INC., a corporation organized under the laws of
the State of Delaware (‘‘Union
Drilling’’), THORNTON DRILLING COMPANY, a
corporation originally organized under the laws of the Delaware, and
successor to Thornton Drilling Company, a corporation organized under
the laws of the State of Colorado
(‘‘Thornton’’), and UNION
DRILLING TEXAS, LP, a Texas limited partnership
(‘‘UDT’’) (Union Drilling,
Thornton and UDT, individually and collectively, jointly and severally,
‘‘Borrower’’ and/or
‘‘Borrowers’’), PNC BANK,
NATIONAL ASSOCIATION
(‘‘PNC’’), as agent for the
financial institutions (collectively
‘‘Lenders’’ and each a
‘‘Lender’’), which are now
or which hereafter become a party to the Credit Agreement (defined
below) (PNC, in such capacity,
‘‘Agent’’) and
Lenders.

PRELIMINARY STATEMENTS

A    Borrower, Lenders
and Agent are parties to that certain Revolving Credit and Security
Agreement dated March 31, 2005 (as amended, supplemented
or modified from time to time, the ‘‘Credit
Agreement’’); and

B    Borrower, Lenders
and Agent desire to amend the Credit Agreement and the Other Documents
(as defined in the Credit Agreement, as amended hereby), and Agent and
Lenders are willing to do so subject to the terms and conditions set
forth herein.

NOW, THEREFORE, in consideration of the
premises herein contained and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, agree as
follows:

ARTICLE
I
DEFINITIONS

1.01    Capitalized
terms used in this Amendment are defined in the Credit Agreement, as
amended hereby, unless otherwise stated.

ARTICLE
II
AMENDMENT

The Credit Agreement is,
effective as of the date hereof and subject to satisfaction of the
conditions precedent set forth in Section 3.01 of this Amendment,
hereby amended as follows:

2.01    Amendments to
Section 1.2.    Section 1.2 of the Credit Agreement
is hereby amended as follows:

(a)    The
definition of ‘‘Commitment
Percentage’’ is hereby amended and restated in its
entirety to read as follows:

‘‘‘Commitment
Percentage’ of any Lender shall mean the percentage set
forth below such Lender’s name on the signature page of the
Fifth Amendment as same may be adjusted upon any assignment by a Lender
pursuant to Section 16.3(c)
hereof.’’

(b)    The definition
of ‘‘Fee Letter’’ is hereby
amended and restated in its entirety to read as
follows:

‘‘‘Fee
Letter’ shall mean the fee letter dated as of the closing
date of the Second Amendment among Borrowers and PNC, and any other
letter agreement pertaining to fees payable to PNC among Borrowers and
PNC, each in form and substance satisfactory to
PNC.’’

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(c)    The definition
of ‘‘Maximum Revolving Advance
Amount’’ is hereby amended and restated in its
entirety to read as
follows:

‘‘‘Maximum
Revolving Advance Amount’ shall mean
$100,000,000.’’

(d)    Section
1.2 of the Credit Agreement is hereby further amended by inserting
the following defined term in appropriate alphabetical
order:

‘‘Fifth
Amendment’’ shall mean that certain Fifth
Amendment to Revolving Credit and Security Agreement dated as of
December  5,  2006 executed by and among Borrowers, PNC and
the Lenders.

2.02    Amendment to Article
IV.    Effective as of the date hereof, Article VI of the
Credit Agreement is hereby amended by inserting immediately below
Section 6.12 thereof the following text as new Section
6.13:

‘‘6.13    Delivery of Legal
Opinion.    By no later than 5:00 p.m. CST on December 14, 2006
legal counsel to Borrowers shall have delivered a legal opinion with
respect to the transactions contemplated by the Fifth Amendment in form
and substance satisfactory to
Agent.’’

2.03    Amendment to Section
7.6.    Effective as of the date hereof,
Section 7.6 of the Credit Agreement is hereby amended
and restated in its entirety as
follows:

‘‘7.6    Capital
Expenditures.    Contract for, purchase or make any expenditure
or commitments for Net Capital Expenditures in any fiscal year in an
aggregate amount for all Borrowers in excess of $125,000,000 for fiscal
year 2006 and $40,000,000 for each fiscal year thereafter,
provided, however, (i) the annual allowance for the
fiscal year 2007 and each fiscal year thereafter may be increased by
the amount of Permitted Equity Issuance Proceeds for such fiscal year,
to the extent not expended upon Permitted Acquisitions not constituting
Capital Expenditures and (ii) the annual allowance that is unused
during any applicable fiscal year may be carried over and used in the
immediately following fiscal
year.’’

2.04    Amendment to Section
16.6.    Effective as of the date hereof, Section
16.6 of the Credit Agreement is hereby amended and restated in its
entirety as follows:

‘‘16.6    Notice.    Any
notice or request hereunder may be given to Borrower or to Agent or any
Lender at their respective addresses set forth below or at such other
address as may hereafter be specified in a notice designated as a
notice of change of address under this Section. Any notice, request,
demand, direction or other communication (for purposes of this Section
16.6 only, a ‘‘Notice’’) to be given to or
made upon any party hereto under any provision of this Loan Agreement
shall be given or made by telephone or in writing (which includes by
means of electronic transmission (i.e.,
‘‘e-mail’’) or facsimile transmission or by
setting forth such Notice on a site on the World Wide Web (a
‘‘Website Posting’’) if Notice of such
Website Posting (including the information necessary to access such
site) has previously been delivered to the applicable parties hereto by
another means set forth in this Section 16.6) in accordance with this
Section  16.6. Any such Notice must be delivered to the
applicable parties hereto at the addresses and numbers set forth under
their respective names on Section 16.6 hereof or in accordance with any
subsequent unrevoked Notice from any such party that is given in
accordance with this Section 16.6. Any Notice shall be
effective:

			
		(a) 	In the case of
hand-delivery, when delivered;

			
		(b) 	If
given by mail, four days after such Notice is deposited with the United
States Postal Service, with first-class postage prepaid, return receipt
requested;

			
		(c) 	In the case of a
telephonic Notice, when a party is contacted by telephone, if delivery
of such telephonic Notice is confirmed no later than the next Business
Day by hand delivery, a facsimile or electronic transmission, a Website
Posting or an overnight courier delivery of a confirmatory Notice
(received at or before noon on such next Business
Day);

			
		(d) 	In the case of a facsimile
transmission, when sent to the applicable party’s facsimile
machine’s telephone number, if the party sending such Notice
receives confirmation of the delivery thereof from its own facsimile
machine;

2

			
		(e) 	In the case
of electronic transmission, when actually
received;

			
		(f) 	In the case of a
Website Posting, upon delivery of a Notice of such posting (including
the information necessary to access such site) by another means set
forth in this Section  16.6;
and

			
		(g) 	If given by any other means
(including by overnight courier), when actually received.

Any
Lender giving a Notice to Borrowing Agent or any Borrower shall
concurrently send a copy thereof to the Agent, and the Agent shall
promptly notify the other Lenders of its receipt of such
Notice.

							
	(A)			If
to Agent or PNC at:			PNC Bank, National Association
Two
Tower Center Boulevard
East Brunswick, New Jersey
08816
Attention: Josephine Griffin
Telephone: (732)
220-4388
Facsimile: (732) 220-4394
	 			with
a copy to:			PNC Bank, National Association
2100 Ross Avenue,
Suite 1850
Dallas, Texas 75201
Attention: Tim
Culver
Telephone: (214) 871-1215
Facsimile: (214)
871-2015
	 			with an additional copy
to:			PNC Bank, National Association
PNC Firstside
Center
500 First Avenue, 4th Floor
Pittsburgh, PA
15219
Attention: Lisa Pierce
Telephone: (412)
762-6442
Facsimile: (412) 762-8672
	 			with
an additional copy to:			Patton Boggs LLP
2001 Ross Avenue,
Suite 3000
Dallas, Texas 75201
Attention: Michelle Suarez,
Esq.
Telephone: (214) 758-1500
Facsimile: (214)
758-1550
	(B)			If to a Lender other
than Agent, as specified on the signature pages of the Fifth
Amendment.
	(C)			If to
Borrowers:			Union Drilling, Inc.
4055 International Plaza,
Suite 610
Fort Worth, Texas 76109
Attention: Chris
Strong
Telephone: (817) 735-8793
Facsimile: (817)
546-4638
	 			with a copy to:			Satterlee
Stephens Burke & Burke LLP
230 Park Avenue, 11th
Floor
New York, New York 10169
Attention: Ed Markham,
Esq.
Telephone: (212) 818-9200
Telecopier: (212)
818-9606’’
	

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ARTICLE III
CONDITIONS
PRECEDENT

3.01    Conditions to
Effectiveness.    The effectiveness of this Amendment is
subject to the satisfaction of the following conditions precedent,
unless specifically waived in writing by
Agent:

(a)    Agent shall have received the
following documents, each in form and substance satisfactory to Agent
and its legal counsel:

(i)    this Amendment
duly executed by Borrowers;

(ii)    each
second amended and restated Note duly executed by Borrowers in favor of
each existing Lender whose commitment amount is increasing;
and

(iii)    each new Note duly executed by
Borrowers in favor of each new
Lender.

(b)    The representations and
warranties contained herein and in the Credit Agreement and the Other
Documents, as each is amended hereby, shall be true and correct as of
the date hereof, as if made on the date
hereof;

(c)    No Default or Event of Default
shall have occurred and be continuing, unless such Default or Event of
Default has been specifically waived in writing by Agent and
Lenders;

(d)    All corporate proceedings
taken in connection with the transactions contemplated by this
Amendment and all documents, instruments and other legal matters
incident thereto shall be satisfactory to Agent and its legal counsel,
and Borrower shall deliver to Agent a Secretary’s Certificate in
form and substance satisfactory to Agent evidencing the
same;

(e)    National City Bank (successor by
merger to National City Bank of Pennsylvania) shall have assigned its
entire commitment amount to National City Business Credit, Inc. through
delivery of a duly executed Commitment Transfer Supplement to Agent,
such assignment to be effective at least one day prior to the
effectiveness of this Amendment; and

(f)    N
M Rothschild & Sons Limited shall assign its entire commitment
amount to Agent through delivery of a duly executed Commitment Transfer
Supplement to Agent, for immediate reallocation pursuant to Section
6.01 hereof, and such assignment to be effective simultaneously with
the effectiveness of this Amendment.

ARTICLE IV
NO
WAIVER

4.01    No Waiver.    Nothing
contained in this Amendment shall be construed as a waiver by Agent or
Lenders of any covenant or provision of the Credit Agreement, the Other
Documents, this Amendment, or of any other contract or instrument among
Borrowers, Agent and Lenders, and the failure of Agent and/or Lenders
at any time or times hereafter to require strict performance by
Borrower of any provision thereof shall not waive, affect or diminish
any right of Agent and Lenders to thereafter demand strict compliance
therewith. Agent and Lenders hereby reserve all rights granted under
the Credit Agreement, the Other Documents, this Amendment and any other
contract or instrument among Borrowers, Lenders and
Agent.

ARTICLE V
RATIFICATIONS, REPRESENTATIONS AND
WARRANTIES

5.01    Ratifications.    The
terms and provisions set forth in this Amendment shall modify and
supersede all inconsistent terms and provisions set forth in the Credit
Agreement and the Other Documents, and, except as expressly modified
and superseded by this Amendment, the terms and provisions of the
Credit Agreement and the Other Documents are ratified and confirmed and
shall continue in full force and effect. Each Borrower, Lenders and
Agent agree that the Credit Agreement and the Other Documents, as
amended hereby, shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.

4

5.02    Representations and
Warranties.    Each Borrower hereby represents and warrants
to Agent and Lenders that (a) the execution, delivery and performance
of this Amendment and any and all Other Documents executed and/or
delivered in connection herewith have been authorized by all requisite
corporate action on the part of such Borrower and will not violate the
Articles of Incorporation or Bylaws or other organization documents or
governing documents of such Borrower; (b) the representations and
warranties contained in the Credit Agreement, as amended hereby, and
the Other Documents are true and correct on and as of the date hereof
and on and as of the date of execution hereof as though made on and as
of each such date; (c) no Default or Event of Default under the Credit
Agreement, as amended hereby, has occurred and is continuing, unless
such Default or Event of Default has been specifically waived in
writing by Agent and Lenders; (d) each Borrower is in full compliance
with all covenants and agreements contained in the Credit Agreement and
the Other Documents, as amended hereby; and (e) each Borrower has not
amended its Articles of Incorporation or its Bylaws or other
organization or governing documents since the date of the Credit
Agreement.

ARTICLE VI
MISCELLANEOUS
PROVISIONS

6.01    Reallocation of Loans and
Commitments.    On the Effective Date, each Lender, if any,
whose Commitment Percentage is increasing over its Commitment
Percentage prior to the Effective Date shall, by assignments from the
Lenders which were parties to the Credit Agreement prior to the
Effective Date (the ‘‘Credit Agreement
Lenders’’) (which assignments shall be deemed to
occur hereunder automatically, and without any requirement for
additional documentation, on the Effective Date) acquire a portion of
the loans and commitments of the Credit Agreement Lenders so designated
in such amounts, and the Lenders shall, through the Agent, make such
other adjustments among themselves as shall be necessary so that after
giving effect to assignments and adjustments, the Lenders shall hold
all loans outstanding under this Credit Agreement ratably in accordance
with their respective Commitment Percentages as reflected under such
Lender’s name on the signature pages of this Fifth Amendment, as
modified from time to time pursuant to the terms hereof. On the
Effective Date, all Interest Periods under the Credit Agreement in
respect of any Eurodollar Rate Loans under the Credit Agreement shall
automatically be terminated (and the Borrower shall on the Effective
Date make payments to the Credit Agreement Lenders that held such
Eurodollar Rate Loans to compensate for such termination as if such
termination were a payment or prepayment referred to in Subsections
2.2(e) and (f) of the Credit Agreement), and subject to the other
restrictions contained herein, the Borrower shall be permitted to
continue such Eurodollar Rate Loans or to convert such Eurodollar Rate
Loans into Domestic Rate Loans
hereunder.

6.02    Survival of Representations and
Warranties.    All representations and warranties made in
the Loan Agreement or the Other Documents, including, without
limitation, any document furnished in connection with this Amendment,
shall survive the execution and delivery of this Amendment and the
Other Documents, and no investigation by Agent or any closing shall
affect the representations and warranties or the right of Agent and
Lenders to rely upon them.

6.03    Reference to Credit
Agreement.    Each of the Credit Agreement and the Other
Documents, and any and all other agreements, documents or instruments
now or hereafter executed and delivered pursuant to the terms hereof or
pursuant to the terms of the Credit Agreement, as amended hereby, are
hereby amended so that any reference in the Credit Agreement and such
Other Documents to the Credit Agreement shall mean a reference to the
Credit Agreement as amended hereby.

6.04    Expenses of
Agent.    Each Borrower agrees to pay on demand all
reasonable costs and expenses incurred by Agent and Lenders in
connection with any and all amendments, modifications, and supplements
to the Other Documents, including, without limitation, the costs and
fees of Agent’s legal counsel, and all costs and expenses
incurred by Agent in connection with the enforcement or preservation of
any rights under the Credit Agreement, as amended hereby, or any of the
Other Documents, including, without, limitation, the costs and fees of
Agent’s and Lenders’ legal counsel.

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6.05    Severability.    Any
provision of this Amendment held by a court of competent jurisdiction
to be invalid or unenforceable shall not impair or invalidate the
remainder of this Amendment and the effect thereof shall be confined to
the provision so held to be invalid or
unenforceable.

6.06    Successors and
Assigns.    This Amendment is binding upon and shall inure
to the benefit of Agent, Lenders and each Borrower and their respective
successors and assigns, except that no Borrower may assign or transfer
any of its rights or obligations hereunder without the prior written
consent of Agent and
Lenders.

6.07    Counterparts.    This
Amendment may be executed in one or more counterparts, each of which
when so executed shall be deemed to be an original, but all of which
when taken together shall constitute one and the same
instrument.

6.08    Effect of Waiver.    No
consent or waiver, express or implied, by Agent and/or Lenders to or
for any breach of or deviation from any covenant or condition by any
Borrower shall be deemed a consent to or waiver of any other breach of
the same or any other covenant, condition or
duty.

6.09    Headings.    The headings,
captions, and arrangements used in this Amendment are for convenience
only and shall not affect the interpretation of this
Amendment.

6.10    Applicable Law.    THIS
AMENDMENT AND ALL OTHER AGREEMENTS EXECUTED PURSUANT HERETO SHALL BE
DEEMED TO HAVE BEEN MADE AND TO BE PERFORMABLE IN AND SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.

6.11    Final Agreement.    THE CREDIT
AGREEMENT AND THE OTHER DOCUMENTS, EACH AS AMENDED HEREBY, REPRESENT
THE ENTIRE EXPRESSION OF THE PARTIES WITH RESPECT TO THE SUBJECT MATTER
HEREOF ON THE DATE THIS AMENDMENT IS EXECUTED. THE CREDIT AGREEMENT AND
THE OTHER DOCUMENTS, AS AMENDED HEREBY, MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. NO
MODIFICATION, RESCISSION, WAIVER, RELEASE OR AMENDMENT OF ANY PROVISION
OF THIS AMENDMENT SHALL BE MADE, EXCEPT BY A WRITTEN AGREEMENT SIGNED
BY BORROWER, LENDERS AND
AGENT.

6.12    Release.    EACH BORROWER
HEREBY ACKNOWLEDGES THAT IT HAS NO DEFENSE, COUNTERCLAIM, OFFSET,
CROSS-COMPLAINT, CLAIM OR DEMAND OF ANY KIND OR NATURE WHATSOEVER THAT
CAN BE ASSERTED TO REDUCE OR ELIMINATE ALL OR ANY PART OF ITS LIABILITY
TO REPAY ANY LOANS OR EXTENSIONS OF CREDIT FROM LENDERS TO BORROWERS
UNDER THE CREDIT AGREEMENT OR THE OTHER DOCUMENTS OR TO SEEK
AFFIRMATIVE RELIEF OR DAMAGES OF ANY KIND OR NATURE FROM AGENT OR
LENDERS WITH RESPECT TO MATTERS RELATING TO THE CREDIT AGREEMENT
OR THE OTHER DOCUMENTS. EACH BORROWER HEREBY VOLUNTARILY AND
KNOWINGLY RELEASES AND FOREVER DISCHARGES AGENT AND LENDERS, THEIR
PREDECESSORS, AGENTS, EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ALL
POSSIBLE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS,
EXPENSES, AND LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR
CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART ON OR
BEFORE THE DATE THIS AMENDMENT IS EXECUTED, WHICH BORROWERS MAY NOW OR
HEREAFTER HAVE AGAINST AGENT, LENDERS, THEIR PREDECESSORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER
ANY SUCH CLAIMS ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR
REGULATIONS, OR OTHERWISE, AND ARISING FROM ANY LOANS OR EXTENSIONS OF
CREDIT FROM LENDERS TO BORROWERS UNDER THE CREDIT AGREEMENT OR THE
OTHER DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY CONTRACTING FOR,

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CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE APPLICABLE, THE
EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE CREDIT AGREEMENT OR ANY
OF THE OTHER DOCUMENTS, AND NEGOTIATION FOR AND EXECUTION OF THIS
AMENDMENT.

[Remainder of Page Intentionally Blank;
Signature Pages Follow]

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IN WITNESS WHEREOF, each of the parties
hereto has executed this Amendment as of the date first
above-written.

Borrowers:

UNION
DRILLING, INC.

By:  /s/ Dan E.
Steigerwald                                        

Name:  Dan
E.
Steigerwald                                        

Title:  CFO                                                                    

THORNTON
DRILLING COMPANY

By:  /s/ Dan E.
Steigerwald                                        

Name:  Dan
E.
Steigerwald                                        

Title:  CFO                                                                    

UNION
DRILLING TEXAS, LP

			
		By: 	Union Drilling
Texas GP, LLC, its
general
partner

By:  /s/ Dan E.
Steigerwald                                        

Name:  Dan
E.
Steigerwald                                        

Title:  CFO                                                                    

Agent
and Lender:

PNC BANK, NATIONAL
ASSOCIATION

By:  /s/ Timothy S.
Culver                                        

Name:  Timothy
S.
Culver                                        

Title:  Vice
President                                                  

		Commitment
Amount:                           $27,500,000
Commitment
Percentage:                                  27.5%

8

		Lenders:

		M&I
BUSINESS CREDIT, INC.
(f/k/a DIVERSIFIED BUSINESS CREDIT,
INC.)

By:  /s/ Sandra M.
Crawford                                      

Name:  Sandra
M.
Crawford                                      

Title:  Vice
President                                                    

		Commitment
Amount:                           $13,750,000
Commitment
Percentage:                   
            13.75%

		Contact
Information for Notices:
M&I Business Credit, Inc.
651
Nicollet Mall, Suite 450
Minneapolis, Minnesota
55402-1637
Attention: Sandra M.  Crawford
Telephone:
(612) 677-8700
Facsimile: (612) 677-8798

9

NATIONAL CITY
BUSINESS CREDIT, INC.

By:  /s/ Stephen
W.
Boyd                                            

Name:  Stephen
W.
Boyd                                            

Title:  Vice
President                                                    

		Commitment
Amount:            
               $20,000,000
Commitment
Percentage:                    
                20%

		Contact
Information for Notices:

National City Business Credit,
Inc.
1965 E. 6th Street, Suite 400
Locator
#3049
Cleveland, Ohio 44114
Attention: Jason
Hanes
Telephone: (216) 222-9508
Facsimile: (216)
222-9555

10

NORTH FORK
BUSINESS CAPITAL

By:  /s/ Todd
Kemme                                                  

Name:  Todd
Kemme                                                  

Title:  Vice
President                                                    

		Commitment
Amount:           
                $18,750,000
Commitment
Percentage:           
                    18.75%

		Contact
Information for Notices:

North Fork Business Capital
5430
LBJ Freeway, Suite 1540
Dallas, Texas 75240
Attention: Todd
Kemme
Telephone: (972) 770-2672
Facsimile: (972)
770-2671

11

THE CIT
GROUP/BUSINESS CREDIT, INC.

By:  /s/
Richard D. Hatley,
Jr.                                    

Name:  Richard
D. Hatley,
Jr.                                    

Title:  SVP                                                                      

		Commitment
Amount:        
                  $20,000,000
Commitment
Percentage:                                     20%

		Contact
Information for Notices:

The CIT Group/Business Credit,
Inc.
5420 LBJ Freeway
Dallas, Texas 75240
Attention: Alan
Schnacke
Telephone: (972) 455-1602
Facsimile: (972)
455-1690

12

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