Side Letter Agreement Regarding Private Placement of Common Stock between Allis-Chalmers Corporation and Emerson Investments (August 5, 2004)

Summary

Allis-Chalmers Corporation and Emerson Investments, represented by Steve Emerson, entered into this letter agreement to clarify terms related to Emerson's investment in Allis-Chalmers' common stock. The agreement confirms that Emerson will not be required to suspend sales of shares due to secondary offerings, preserves certain registration rights, and restricts Allis-Chalmers from issuing additional stock or rights to acquire stock for six months unless specific conditions are met or both parties agree. This ensures Emerson's investment value is protected compared to future investors during that period.

EX-10.39 10 allis_s1ex10-39.txt EXHIBIT 10.39 ALLIS-CHALMERS CORPORATION 5075 Westheimer Suite 890 Houston, Texas 77056 August 5, 2004 VIA FAX AND E-MAIL ***@*** - ----------------------------------------- Steve Emerson Emerson Investments RE: PRIVATE PLACEMENT OF COMMON STOCK BY ALLIS-CHALMERS CORPORATION --------------------------------------------------------------- Dear Mr. Emerson: The purpose of this letter is to confirm that, in connection with your investment in the Common Stock of Allis-Chalmers Corporation pursuant to the Stock Purchase Agreement dated August 10, 2004 (the "Stock Purchase Agreement"): (1) you will not be required to suspend sales of shares pursuant to the Registration Statement (as defined in the Stock Purchase Agreement) as a result of any secondary offering of shares by the Allis-Chalmers Corporation; (2) Section 6.4 of the Stock Purchase Agreement shall not be deemed to reduce Allis-Chalmers Corporation's obligations under the last sentence of Section 6.2 of the Stock Purchase Agreement (except with respect to a person eligible to sell all Shares in a single transaction pursuant to Rule 144); and (3) With respect to Section 1 of the Amendment to Stock Purchase Agreement dated August 10, 2004: during the referenced six month period the Company will not issue any rights to acquire, or enter into any agreement involving the issuance of, its Common Stock, unless (a) the transaction is one contemplated by said Section 1, i.e., the issuance of Common Stock or convertible securities for cash (and not the issuance of other types of securities or a bundle of two or more types of securities), or (b) the Company and you mutually agree upon the number of additional shares of Common Stock to be issued to August 5, 2004 Page 2 you in order to achieve the objectives of said Section 1, i.e., that you obtain the same value for your investment as any subsequent investor during the six month period. Sincerely, /S/ TODD C. SEWARD ------------------------ Todd Seward, Chief Accounting Officer