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Exhibit 10.2
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement
dated as of December 18 2006 (this " Agreement ") is
entered into by and among Allis-Chalmers Energy Inc., a Delaware
corporation (the " Company "), and Oil & Gas Rental
Services, Inc., a Louisiana corporation (the " Investor
").
WHEREAS, the Company and the
Investor have entered into an Asset Purchase Agreement dated as of
October 25, 2006 (the " Asset Purchase Agreement ")
pursuant to which the Investor shall receive a number of shares of
the common stock, par value $0.01 per share, of the Company (the "
Common Stock "), as set forth therein;
WHEREAS, in order to induce the
Investor to enter into the Asset Purchase Agreement, the Company
has agreed to grant certain registration rights to the Investor
with respect to such shares and certain Board designation rights,
in each case, subject to the terms and conditions set forth
herein;
NOW, THEREFORE, in consideration
of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
Section 1. Definitions
. As used herein, the following terms have the indicated meanings,
unless the context otherwise requires:
" Agreement " has the
meaning given to such term in the preamble hereto.
" Asset Purchase Agreement
" has the meaning given to such term in the recitals hereto.
" Beneficially Own ," "
Beneficially Owned ," " Beneficial Ownership " and "
Beneficial Owner " with respect to any securities means a
Holder’s having such ownership, control or power to direct
the voting with respect to, or which otherwise enables a Holder to
legally act with respect to, such securities as contemplated
hereby, including without limitation pursuant to any agreement,
arrangement or understanding, regardless of whether in writing.
Securities " Beneficially Owned " shall include securities
Beneficially Owned by all other persons with whom a Holder would
constitute a "group" as within the meaning of Section 13(d) of the
Exchange Act.
" Blackout Period " means,
with respect to a Registration Statement, a period in each case
commencing on the day immediately after the Company notifies the
Holders that they are required, pursuant to Section 4(c)(vi),
to suspend offers and sales of Registrable Securities during which
the Company, in the good faith judgment of the Board, determines
(because of the existence of, or in anticipation of, any
acquisition, financing activity, or other transaction involving the
Company, or the unavailability for reasons beyond the
Company’s control of any required financial statements,
disclosure of information which is in its best interest not to
publicly disclose, or any other event or condition of similar
significance to the Company) that the registration and distribution
of (and/or the registration of the offer and sale of) the
Registrable Securities covered or to be covered by such
Registration Statement would be seriously detrimental to the
Company and its stockholders and ending on the earlier of
(a) the date upon
which the material non-public information commencing the
Blackout Period is disclosed to the public or ceases to be material
and (b) such time as the Company notifies the selling Holders
that the Company will no longer delay such filing of such
Registration Statement, recommence taking steps to make such
Registration Statement effective, or allow sales pursuant to such
Registration Statement to resume; provided that no Blackout
Period may last for more than 60 consecutive days; provided,
further , that during any period of 365 consecutive days,
Blackout Periods may not, in the aggregate, last for more than the
greater of (a) zero days and (b) the result of
90 days minus the number of days that Holders are
required pursuant to Section 4(d) to discontinue and suspend
disposition of Registrable Securities because of the happening of
any event described in Section 4(c)(vi).
" Board " means the board
of directors of the Company.
" Business Day " means any
day of the year, other than a Saturday, Sunday, or other day on
which the SEC is required or authorized to close.
" Closing Date " has the
meaning given to such term in the Asset Purchase Agreement.
" Common Stock " has the
meaning given to such term in the recitals hereto.
" Company " has the meaning
given to such term in the preamble hereto.
" Designation Rights
Termination Date " has the meaning given to such term in
Section 2(b) hereto.
" Effectiveness Period "
has the meaning given to such term in Section 4(c)(i).
" Equity Securities
Offering " means any underwritten registered offering of
Relevant Securities, and any offering or placement of any Relevant
Securities pursuant to Rule 144A under the Securities Act.
" Exchange Act " means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations of the SEC promulgated thereunder.
"Family Member" means
(a) with respect to any individual, such individual’s
spouse, any descendants (whether natural or adopted), any trust all
of the beneficial interests of which are owned by any of such
individuals or by any of such individuals together with any
organization described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, the estate of any such
individual, and any corporation, association, partnership, limited
liability company or other entity all of the equity interests of
which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of
the beneficial interests of such trust.
" Form S-1 " means
such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the
Securities Act subsequently adopted by the SEC.
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" Form S-3 " means
such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the
Securities Act subsequently adopted by the SEC.
" Form S-4 " means
such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the
Securities Act subsequently adopted by the SEC.
" Form S-8 " means
such form under the Securities Act as in effect on the date of this
Agreement or any successor registration form thereto under the
Securities Act subsequently adopted by the SEC.
" Holder " means the
Investor or any of such Investor’s successors and Permitted
Assignees who acquire rights in accordance with this Agreement with
respect to the Registrable Securities directly or indirectly from
the Investor or another Holder (including from any Permitted
Assignee) and "Holders" means all of the foregoing individuals or
entities.
" Inspector " means any
attorney, accountant or other agent retained by a Holder for the
purposes provided in Section 4(c)(x).
" Investor " has the
meaning given to such term in the preamble hereto.
" Investor Director " means
any member of the Board that was nominated for election to the
Board by the Holders pursuant to and in accordance with
Section 2(a).
" Market Standoff Period "
means, with respect to each Equity Securities Offering, the period
beginning on the date of first sale of securities pursuant to such
Equity Securities Offering and ending on the date that shall be
requested by the Company or the underwriters or initial purchasers
retained by the Company to facilitate such Equity Securities
Offering; provided , however , that each such period
shall not be more than 90 days; provided further that
(i) such period shall be no longer than the shortest period
imposed by the Company or the underwriters upon any other person or
entity and (ii) if any other person or entity receives a
waiver with respect to any such matters, the Holders shall be given
a waiver with respect to their Shares as well.
" NASD " means the National
Association of Securities Dealers.
"Permitted Assignee" means
(a) with respect to a partnership or limited partnership, its
partners or former partners in accordance with their partnership
interests, (b) with respect to a corporation, its stockholders
or former stockholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company,
its members or former members in accordance with their interest in
the limited liability company, (d) with respect to an
individual, any Family Member or (e) an entity that is
controlled by, controls, or is under common control with a
transferor.
" Piggyback Registration "
has the meaning given to such term in Section 4(b)(i).
" Piggyback Registration
Statement " has the meaning given to such term in
Section 4(b)(i).
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" register ," "
registered ," and " registration " refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration
statement.
" Registrable Securities "
means the Shares, excluding any such Shares (a) that have been
publicly sold or may be sold immediately without registration or
the requirement to make filings with the SEC under the Securities
Act either pursuant to Rule 144 of the Securities Act or
otherwise, (b) sold by a person in a transaction pursuant to a
registration statement filed under the Securities Act or
(c) that are at the time subject to an effective registration
statement under the Securities Act (other than the Registration
Statements contemplated hereby).
" Registration Expenses "
has the meaning given to such term in Section 4(e).
" Registration Statement "
means either of the Piggyback Registration Statements or the Shelf
Registration Statement; and " Registration Statements "
means, collectively, the Piggyback Registration Statements and the
Shelf Registration Statement.
" Relevant Security " means
the Shares, any other equity security of the Company or any of its
subsidiaries and any security convertible into, or exercisable or
exchangeable for, any Shares or other such equity security.
" SEC " means the
Securities and Exchange Commission or any other federal agency at
the time administering the Securities Act.
" SEC Effective Date "
means, with respect to a Registration Statement, the date as of
which such Registration Statement is originally declared effective
by the SEC.
" Securities Act " means
the Securities Act of 1933, as amended, or any similar federal
statute promulgated in replacement thereof, and the rules and
regulations of the SEC thereunder, all as the same shall be in
effect from time to time.
" Selling Expenses " has
the meaning given to such term in Section 4(e).
" Shares " means the shares
of Common Stock issued to the Investor pursuant to the Asset
Purchase Agreement and (a) any and all shares of capital stock
or other equity securities of the Company which are added to or
exchanged or substituted for such shares of Common Stock by reason
of the declaration of any stock dividend or stock split, the
issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital
structure of the Company; and (b) any and all shares of
capital stock or other equity securities of any other corporation
(now or hereafter organized under the laws of any state or other
governmental authority) with which the Company is merged, which
results from any consolidation or reorganization to which the
Company is a party, or to which is sold all or substantially all of
the shares or assets of the Company, for which such shares of
Common Stock are exchanged or substituted in connection with such
merger, consolidation, reorganization or sale, if immediately after
such merger, consolidation, reorganization or sale, the Company or
the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other
corporation.
" Shelf Registration
Statement " has the meaning given to such term in
Section 4(a).
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" Transfer " has the
meaning given to such term in Section 3(a).
Section 2. Board Designation
Rights.
(a) Designation .
Until the Designation Rights Termination Date, the Holders of a
majority of the Shares shall have the right to designate one
nominee for election to the Board.
(b) Termination of
Designation Rights . The Holders of a majority of the Shares
shall not be entitled to designate any nominees for election to the
Board pursuant to this Agreement from and after the date (the "
Designation Rights Termination Date ") that is the first
date on which the Shares Beneficially Owned by the Holders
collectively represent less than thirty-one and one-quarter percent
(31.25%) of the Shares initially acquired by the Investor pursuant
to the Asset Purchase Agreement.
(c) Company Support .
At all times prior to the Designation Rights Termination Date, the
Company shall support the nominations of the persons designated by
the Holders of a majority of the Shares pursuant to
Section 2(a), and the Company shall use its best efforts to
cause the Board (and the Company’s nominating committee, if
any) to recommend the inclusion of such persons in the slate of
nominees recommended to stockholders for election as directors at
each annual meeting of stockholders of the Company.
(d) Vacancies . If at
any time prior to the Designation Rights Termination Date, a
vacancy is created on the Board by reason of the incapacity, death,
removal or resignation of any Investor Director, then the Company
shall use its best efforts to cause the Board to appoint an
individual designated by the Holders of a majority of the Shares to
fill such vacancy until the next meeting of the Company’s
stockholders at which directors are elected.
Section 3. Market
Standoff . Notwithstanding anything to the contrary set forth
in this Agreement, with respect to each Equity Securities Offering
conducted after the Closing Date, the following provisions of this
Section 3 shall apply, if and only if (x) the
underwriters or initial purchasers retained by the Company to
facilitate such offering request, in connection with such offering,
that the officers or directors or significant stockholders of the
Company refrain from selling any Relevant Security during any
period, and (y) either (1) any nominee designated by the
Holders pursuant to Section 2(a) is a member of the Board, or
(2) the Holders Beneficially Own shares of Common Stock
representing at least 10% of the fully diluted equity interests in
the Company (calculated giving effect to the exercise of all
outstanding options, warrants and other rights to purchase to
acquire any Common Stock of the Company):
(a) Without the prior written
consent of the Company, during the Market Standoff Period
applicable to such Equity Securities Offering, each Holder will not
(i), directly or indirectly, offer, sell, agree to offer or sell,
solicit offers to purchase, grant any call option or purchase any
put option with respect to, pledge, borrow or otherwise dispose of
any Relevant Security, or (ii) establish or increase any "put
equivalent position" or liquidate or decrease any "call equivalent
position" (in each case within the meaning of Section 16 of
the Exchange Act) with respect to any Relevant Security, or
otherwise enter into any swap, derivative or other transaction or
arrangement that transfers to another, in whole or in part, any
economic consequence of ownership of a Relevant Security (each of
the transactions described in the immediately preceding clauses
(i) and (ii), being referred to as a " Transfer "),
regardless of
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whether such transaction is to be settled by delivery of
Relevant Securities, other securities, cash or other consideration;
provided , however , that a Transfer to a Permitted
Assignee will not be subject to this Section 3 as long as
(x) such Transfer is effected in accordance with applicable
securities laws; (y) such transferee agrees in writing to
become subject to the terms of this Agreement as a Holder; and
(z) the Company is given written notice by such Holder of such
Transfer, stating the name and address of the transferee and
identifying the Shares being Transferred.
(b) Furthermore, each Holder
hereby authorizes the Company during the Market Standoff Period to
cause any transfer agent for the Relevant Securities to decline to
transfer, and to note stop transfer restrictions on the stock
register and other records relating to, any Relevant Securities for
which such Holder is the record holder and, in the case of Relevant
Securities for which such Holder is the Beneficial Owner but not
the record holder, agrees during the Market Standoff Period to
cause the record holder thereof to cause the relevant transfer
agent to decline to transfer, and to note stop transfer
restrictions on the stock register and other records relating to,
such Relevant Securities.
(c) Subject to the provisions
of Section 4(b), without the prior written consent of the
Company, during the Market Standoff Period such Holder
(x) will not participate in the filing with the SEC of any
registration statement, or circulate or participate in the
circulation of any preliminary or final prospectus or other
disclosure document with respect to any proposed offering or sale
of a Relevant Security and (y) will not exercise any rights
the undersigned may have to require registration with the SEC of
any proposed offering or sale of a Relevant Security (including
without limitation pursuant to this Agreement).
Section 4. Registration
Rights .
(a) Shelf Registration
Statement . The Company shall (i) file with the SEC a
shelf registration statement on Form S-1 (or, if the Company is
eligible to use such form, Form S-3) relating to the registration
of the offer and resale by the Holders of all of the Registrable
Securities (the " Shelf Registration Statement ") and
(ii) use its commercially reasonable efforts to cause the
Shelf Registration Statement to be declared effective by the SEC no
later than the date that is one (1) year after the Closing
Date; provided , however , that the Company shall not
be obligated to effect any such registration pursuant to this
Section 4(a), or keep such registration or the Shelf
Registration Statement effective pursuant to Section 4(c)(i),
during any Blackout Period.
(b) Piggyback
Registration Rights .
(i) Piggyback Registration
. If after the date that is one (1) year after the Closing
Date, the Company shall determine to register the offer and sale
for cash of any of its Common Stock for its own account, other than
(i) a registration relating solely to employee benefit plans
or securities issued or issuable to employees, consultants (to the
extent the securities owned or to be owned by such consultants
could be registered on Form S-8) or any of their Family Members
(including a registration on Form S-8), (ii) a registration on
Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, exchange offer or similar event, or (iii) a
registration in which the only Common Stock being registered is
Common Stock issuable upon conversion of debt
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securities that are also being registered, then (subject to
Section 4(b)(iii)) the Company shall promptly give to the
Holders written notice thereof, and in no event shall such notice
be given less than 20 calendar days prior to the filing of a
registration statement (each a " Piggyback Registration
Statement " and collectively the " Piggyback Registration
Statements ") with respect to such registration (each a "
Piggyback Registration "), and shall, subject to
Section 4(b)(ii) and Section 4(b)(iii), include in such
Piggyback Registration, all of the Registrable Securities specified
in a written request or requests, made within 10 calendar days
after receipt of such written notice from the Company, by any
Holder or Holders. However, the Company may, without the consent of
the Holders, withdraw such Piggyback Registration Statement prior
to its becoming effective if the Company has elected to abandon the
proposal to register the securities proposed to be registered
thereby.
(ii) Underwriting . If a
Piggyback Registration is for a registered public offering
involving an underwriting, the Company shall so advise the Holders
in writing or as a part of the written notice given pursuant to
Section 4(b)(i). In such event the right of any Holder to
registration pursuant to Section 4(b)(i) shall be conditioned
upon such Holder’s participation in such underwriting and the
inclusion of such Holder’s Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing
to distribute their securities through such underwriting shall
(together with the Company) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for
such underwriting by the Company. Notwithstanding any other
provision of this Section 4(b)(ii), if the underwriter or the
Company determines that marketing factors require a limitation of
the number of shares to be underwritten, the underwriter may
exclude some or all Registrable Securities from such registration
and underwriting. The Company shall so advise all Holders (except
those Holders who failed to timely elect to distribute their
Registrable Securities through such underwriting or have indicated
to the Company their decision not to do so), and the number of
shares that may be included in the registration and underwriting
shall be allocated:
(A) first to the Company; and
(B) then, subject to written
obligations and commitments existing as of October 25, 2006, to all
selling stockholders, including the Holders, who have requested to
sell in the registration on a pro rata basis according to the
number of shares requested to be included.
No Registrable Securities excluded from the underwriting by
reason of the underwriter̵
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