EXHIBIT 10.3
 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into this 12th day
of February, 2013 (the “Effective Date”), by and between Aly Energy Services,
Inc., a Delaware corporation (the “Company”), and Alya Hidayatallah (the
“Employee”).
 
ARTICLE I
DEFINITIONS
 
In addition to the terms defined in the body of this Agreement, for purposes of
this Agreement, the following capitalized words shall have the meanings
indicated below.
 
1.1   “Board” shall mean the Board of Directors of the Company.
 
1.2   “Cause” shall mean that Employee (a) has engaged in gross negligence,
gross incompetence or willful misconduct in the performance of Employee’s duties
with respect to the Company or any of its affiliates, (b) has refused without
proper legal reason to perform Employee’s duties and responsibilities to the
Company or any of its affiliates, (c) has breached any provision of Article VIII
or any other provision of this Agreement, (d) has materially breached any
provision of any written agreement or corporate policy or code of conduct
established by the Company or any of its affiliates (and as amended from time to
time), (e) has engaged in conduct that is materially injurious to the Company or
any of its affiliates, (f) has disclosed without specific authorization from the
Company confidential information of the Company or any of its affiliates that is
injurious to any such entity, (g) has committed an act of theft, fraud,
embezzlement, misappropriation or breach of a fiduciary duty to the Company or
any of its affiliates or (h) has been convicted of (or pleaded no contest to) a
crime involving fraud, dishonesty or moral turpitude or any felony.
 
1.3   “CEO” shall mean the Chief Executive Officer of the Company.
 
1.4   “Code” shall mean the Internal Revenue Code of 1986, as amended.
 
1.5   “Date of Termination” shall mean the date specified in the Notice of
Termination relating to termination of Employee’s employment with the Company,
subject to adjustment as provided in Section 3.3.
 
1.6   “Good Reason” shall mean without the prior consent of Employee: (a) a
relocation of Employee or the Company principal executives to a location outside
the Houston, Texas metropolitan area, (b) there is a material reduction by the
Company in Employee’s responsibilities, duties, authority, title, or reporting
relationship or (c) the Company acts in any way that would reduce Employee’s
Base Salary (except where such reduction is applicable to the officers of the
Company generally) or the Company adversely affects Employee’s participation in
or materially reduces Employee’s benefit under any benefit plan of the Company
in which Employee is participating.
 
 
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1.7   “Notice of Termination” shall mean a written notice delivered by the
Company or Employee to the other party indicating the specific termination
provision in this Agreement relied upon for termination of Employee’s employment
and the Date of Termination that sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Employee’s
employment under the provision so indicated.
 
ARTICLE II
EMPLOYMENT AND DUTIES
 
2.1   Employment; Effective Date. The Company agrees to employ Employee, and
Employee agrees to be employed by the Company, pursuant to the terms of this
Agreement beginning as of the Effective Date and continuing for the period of
time set forth in Article III of this Agreement, subject to the terms and
conditions of this Agreement.
 
2.2   Position. From and after the Effective Date, Employee shall serve in the
position of Chief Financial Officer of the Company or in such other position or
positions as the parties mutually may agree and shall report to the CEO.
 
2.3   Duties and Services. Employee agrees to serve in the position referred to
in Section 2.2 hereof and to perform diligently and to the best of Employee’s
abilities the usual and customary duties and services appertaining to such
positions, as well as such additional duties and services appropriate to such
positions which the Company and Employee mutually may agree upon from time to
time. Employee’s employment shall also be subject to the policies maintained and
established by the Company that are of general applicability to the Company’s
employees, as such policies may be amended from time to time.
 
2.4   Other Interests. Employee agrees, during the Term, to devote his full time
and attention to the business and affairs of the Company and its affiliates.
Notwithstanding the foregoing, the parties acknowledge and agree that Employee
may (a) engage in and manage Employee’s passive personal investments, (b) engage
in charitable and civic activities, and (c) engage in such other activities that
the Company and Employee mutually agree to; provided, however, that such
activities shall be permitted so long as such activities do not conflict with
the business and affairs of the Company or materially interfere with the
performance of Employee’s duties hereunder.
 
2.5   Duty of Loyalty. Employee acknowledges and agrees that Employee owes a
fiduciary duty of loyalty, fidelity and allegiance to act in the best interests
of the Company and to do no act that would materially injure the business,
interests, or reputation of the Company or any of its affiliates. In keeping
with these duties, Employee shall make full disclosure to the Company of all
business opportunities pertaining to the Business (as defined below) and shall
not appropriate for Employee’s own benefit business opportunities concerning the
subject matter of the fiduciary relationship.
 
ARTICLE III
TERM AND TERMINATION OF EMPLOYMENT
 
3.1   Term. Subject to the remaining terms of this Article III, this Agreement
shall be for a term that begins on the Effective Date and continues in effect
through December 31, 2016 (the “Term”). Subject to Section 9.13, this Agreement
shall terminate at the end of the Term and Employee shall continue as an at-will
employee of the Company.
 
 
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3.2   Company’s Right to Terminate. Notwithstanding the provisions of Section
3.1, the Company may terminate Employee’s employment under this Agreement at any
time for any of the following reasons by providing Employee with a Notice of
Termination:
 
(a)   for Cause; or
 
(b)   for any other reason whatsoever or for no reason at all, in the sole
discretion of the Company.
 
3.3   Employee’s Right to Terminate. Notwithstanding the provisions of Section
3.1:
 
(a)   Employee shall have the right to terminate Employee’s employment under
this Agreement for Good Reason by providing the Company with a Notice of
Termination, provided, however, that termination for Good Reason by the Employee
shall not be permitted unless (x) Employee has given the Company at least thirty
(30) days’ prior written notice that he has a basis for a termination for Good
Reason, which notice shall specify the facts and circumstances constituting a
basis for termination for Good Reason, (y) the Company has not remedied such
facts and circumstances constituting a basis for termination for Good Reason
within such 30-day period (the “Cure Period”) and (z) Employee actually
terminates Employee’s employment within 30 days following the end of the Cure
Period.
 
(b)   Employee shall have the right to terminate Employee’s employment under
this Agreement for any reason other than Good Reason, in the sole discretion of
Employee, by providing the Company with a Notice of Termination. In the case of
a termination of employment by Employee pursuant to this Section 3.3(b), the
Date of Termination specified in the Notice of Termination shall not be less
than fifteen (15) nor more than sixty (60) days, from the date such Notice of
Termination is given, and the Company may require a Date of Termination earlier
than that specified in the Notice of Termination (and, if such earlier Date of
Termination is so required, it shall not change the basis for Employee’s
termination nor be construed or interpreted as a termination of employment
pursuant to Section 3.1 or Section 3.2).
 
3.4   Deemed Resignations. Unless otherwise agreed to in writing by the Company
and Employee prior to the termination of Employee’s employment, any termination
of Employee’s employment shall constitute an automatic resignation of Employee
as an officer of the Company and each affiliate of the Company, and an automatic
resignation of Employee from the Board and the board of directors of the Company
(if applicable), from the board of directors or similar governing body of any
affiliate of the Company and from the board of directors or similar governing
body of any corporation, limited liability entity or other entity in which the
Company or any affiliate holds an equity interest and with respect to which
board or similar governing body Employee serves as the Company’s or such
affiliate’s designee or other representative.
 
3.5   Meaning of Termination of Employment. For all purposes of this Agreement,
Employee shall be considered to have terminated employment with the Company when
Employee incurs a “separation from service” with the Company within the meaning
of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance
issued thereunder.
 
 
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ARTICLE IV
COMPENSATION AND BENEFITS
 
4.1   Base Salary. During the Term, Employee shall receive a minimum, annualized
base salary of $175,000.00 (the “Base Salary”). Employee’s Base Salary shall be
increased to $200,000 as of the earlier of (i) March 15, 2013 or (ii) the
closing date of the acquisition by the Company of all or substantially all of
the outstanding capital stock or assets of a company for a purchase price in
excess of $25 million other than Austin Chalk Petroleum Services Corp. following
the date of the execution of this Agreement. The Board may reduce Employee’s
Base Salary in its sole discretion, including due to economic or market
conditions, and such reduction shall not constitute a Good Reason condition if
such reduction is applicable to the officers of the Company generally.
Employee’s Base Salary shall be paid in equal installments in accordance with
the Company’s standard policy regarding payment of compensation to employees but
no less frequently than monthly.
 
4.2   Bonuses. For 2013 through 2016, Employee shall be entitled to an annual
bonus (the “Annual Bonus”) of 80% of Employee’s Base Salary if the Company’s
earnings before interest, taxes, depreciation and amortization (“EBITDA”) in
such year is at least 110% of the forecasted EBITDA approved by the Board at the
beginning of such year, 60% of Employee’s Base Salary if the Company’s EBITDA in
such year is at least 100% and less than 110% of the forecasted EBITDA approved
by the Board at the beginning of such year, 40% of Employee’s Base Salary if the
Company’s EBITDA in such year is at least 90% and less than 100% of the
forecasted EBITDA approved by the Board at the beginning of such year and no
Annual Bonus if the Company’s EBITDA in such year is less than 90% of the
forecasted EBITDA approved by the Board at the beginning of such year. Any
acquisitions by the Company following Board approval of forecasted EBITDA shall
be excluded from the calculation of EBITDA for such year. Any Annual Bonus
payable pursuant to this Section 4.2 will be paid to Employee no later than
March 15 of the calendar year following the calendar year to which the Annual
Bonus relates, provided Employee is employed by the Company on such date of
payment.
 
4.3   Equity. Employee shall be awarded [5% of stock allocated to the management
team] stock options at an exercise price of $4.00 per share under a Management
Incentive Plan (the “Plan”) that is currently being prepared. The stock options
shall be subject to the terms and conditions in the Plan and any applicable
award agreement related to such stock options.
 
4.4   Benefits. During the Term, Employee shall be entitled to participate in
such group life, health, accident, disability or hospitalization insurance plans
and retirement plans as the Company may make available to its other similarly
situated executive employees as a group, subject to the terms and conditions of
any such plans. Employee’s participation in all such plans shall be at a level,
and on terms and conditions, that are commensurate with his positions and
responsibilities at the Company. During calendar year 2013, the Company shall
reimburse Employee for costs actually incurred by Employee to obtain continued
medical coverage under Section 4980B of the Code (“COBRA”) under the medical
plan provided by Employee’s previous employer.
 
 
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4.5   Vacation and Leave. Employee shall be entitled to four (4) weeks paid
vacation but Employee will not take more than two (2) weeks consecutive
vacation. Unused vacation days in one calendar year shall not carry over to the
following calendar year. Employee shall also be entitled to all paid holidays
given by the Company to its employees generally.
 
4.6   Expenses. The Company shall promptly reimburse Employee for all reasonable
business expenses incurred by Employee in performing services hereunder,
including all expenses of travel and living expenses while away from home on
business or at the request of and in the service of the Company; provided, in
each case, that such expenses are incurred and accounted for in accordance with
the policies and procedures established by the Company. Any such reimbursement
of expenses shall be made by the Company upon or as soon as practicable
following receipt of supporting documentation reasonably satisfactory to the
Company (but in any event not later than the close of Employee’s taxable year
following the taxable year in which the expense is incurred by Employee). In no
event shall any reimbursement be made to Employee for such fees and expenses
incurred after the date that is one year after the date of Employee’s
termination of employment with the Company. The Company shall reimburse Employee
for Employee’s business use of Employee’s personal automobile at the
reimbursement rate per mile set by the Internal Revenue Service (currently 55.5
cents per mile).
 
ARTICLE V
PROTECTION OF INFORMATION
 
5.1   Disclosure to and Property of the Company. For purposes of this Article V,
the term “the Company” shall include the Company and any of its affiliates, and
any reference to “employment” or similar terms shall include a director, manager
and/or consulting relationship. All information, trade secrets, designs, ideas,
concepts, improvements, product developments, discoveries and inventions,
whether patentable or not, that are conceived, made, developed or acquired by
Employee, individually or in conjunction with others, during the period of
Employee’s employment by the Company (whether during business hours or otherwise
and whether on the Company’s premises or otherwise) that relate to the Company’s
business, trade secrets, products or services (including, without limitation,
all such information relating to corporate opportunities, product specification,
compositions, manufacturing and distribution methods and processes, research,
financial and sales data, pricing terms, evaluations, opinions, interpretations,
acquisition prospects, the identity of customers or their requirements, the
identity of key contacts within the customer’s organizations or within the
organization of acquisition prospects, or production, marketing and
merchandising techniques, prospective names and marks) and all writings or
materials of any type embodying any of such information, ideas, concepts,
improvements, discoveries, inventions and other similar forms of expression
(collectively, “Confidential Information”) shall be retained for and, to the
extent practicable, disclosed to the Company and are and shall be the sole and
exclusive property of the Company. Moreover, all documents, videotapes, written
presentations, brochures, drawings, memoranda, notes, records, files,
correspondence, manuals, models, specifications, computer programs, E-mail,
voice mail, electronic databases, maps, architectural renditions and all other
writings or materials of any type embodying any of such information, ideas,
concepts, improvements, discoveries, inventions and other similar forms of
expression that are conceived, made, developed or acquired by Employee
individually or in conjunction with others during the period of Employee’s
employment by the Company (whether during business hours or otherwise and
whether on the Company’s premises or otherwise) that relate to the Company’s
business, trade secrets, products or services (collectively, “Work Product”) are
and shall be the sole and exclusive property of the Company. Employee agrees to
perform all actions reasonably requested by the Company to establish and confirm
such exclusive ownership. Upon termination of Employee’s employment by the
Company, for any reason, Employee promptly shall deliver such Confidential
Information and Work Product, and all copies thereof, to the Company.
 
 
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5.2   Disclosure to Employee. The Company shall disclose to Employee, or place
Employee in a position to have access to or develop, Confidential Information
and Work Product of the Company; and shall entrust Employee with business
opportunities of the Company; and shall place Employee in a position to develop
business good will on behalf of the Company.
 
5.3   No Unauthorized Use or Disclosure. Employee agrees to use reasonable
efforts to preserve and protect the confidentiality of all Confidential
Information and of all Work Product containing Confidential Information of the
Company and its affiliates. Employee agrees that Employee will not, at any time
during or after Employee’s employment with the Company, make any unauthorized
disclosure of, and Employee shall not remove from the Company premises,
Confidential Information or Work Product of the Company or its affiliates, or
make any use thereof, except, in each case, in the carrying out of Employee’s
responsibilities hereunder. Employee shall use all reasonable efforts to
obligate all persons or entities to whom any Confidential Information shall be
disclosed by Employee hereunder to preserve and protect the confidentiality of
such Confidential Information. Employee shall have no obligation hereunder to
keep confidential any Confidential Information if and to the extent (a) such
Confidential Information has become publicly available other than as a result of
a breach of this Agreement by Employee or (b) disclosure thereof is specifically
required by law; provided, however, that in the event disclosure is required by
applicable law, Employee shall provide the Company with prompt notice of such
requirement prior to making any such disclosure, so that the Company may seek an
appropriate protective order. At the request of the Company at any time,
Employee agrees to deliver to the Company all Confidential Information that
Employee may possess or control. Employee agrees that all Confidential
Information of the Company (whether now or hereafter existing) conceived,
discovered or made by Employee during the period of Employee’s employment by the
Company exclusively belongs to the Company (and not to Employee), and upon
request by the Company for specified Confidential Information, Employee will
promptly disclose such Confidential Information to the Company and perform all
actions reasonably requested by the Company to establish and confirm such
exclusive ownership. Affiliates of the Company shall be third party
beneficiaries of Employee’s obligations under this Article V. As a result of
Employee’s employment by the Company, Employee may also from time to time have
access to, or knowledge of, confidential information or work product of third
parties, such as customers, suppliers, partners, joint venturers, and the like,
of the Company and its affiliates. Employee also agrees to use reasonable
efforts to preserve and protect the confidentiality of such third party
Confidential Information and Work Product.
 
5.4   Ownership by the Company. If, during Employee’s employment by the Company,
Employee creates any work of authorship fixed in any tangible medium of
expression that is the subject matter of copyright (such as videotapes, written
presentations, or acquisitions, computer programs, E-mail, voice mail,
electronic databases, drawings, maps, architectural renditions, models, manuals,
brochures, or the like) relating to the Company’s business, products, or
services, whether such work is created solely by Employee or jointly with others
(whether during business hours or otherwise and whether on the Company’s
premises or otherwise), including any Work Product, the Company shall be deemed
the author of such work if the work is prepared by Employee in the scope of
Employee’s employment; or, if the work relating to the Company’s business,
products, or services is not prepared by Employee within the scope of Employee’s
employment but is specially ordered by the Company as a contribution to a
collective work, as a part of a motion picture or other audiovisual work, as a
translation, as a supplementary work, as a compilation, or as an instructional
text, then the work shall be considered to be work made for hire and the Company
shall be the author of the work. If the work relating to the Company’s business,
products, or services is neither prepared by Employee within the scope of
Employee’s employment nor a work specially ordered that is deemed to be a work
made for hire during Employee’s employment by the Company, then Employee hereby
agrees to assign, and by these presents does assign, to the Company all of
Employee’s worldwide right, title, and interest in and to such work and all
rights of copyright therein.
 
5.5   Assistance by Employee. During the period of Employee’s employment by the
Company, Employee shall assist the Company and its nominee, at any time, in the
protection of the Company’s or its affiliates’ worldwide right, title and
interest in and to Confidential Information and Work Product and the execution
of all formal assignment documents requested by the Company or its nominee and
the execution of all lawful oaths and applications for patents and registration
of copyright in the United States and foreign countries. After Employee’s
employment with the Company terminates, at the request from time to time and
expense of the Company or its affiliates, Employee shall reasonably assist the
Company and its nominee, at reasonable times and for reasonable periods and for
reasonable compensation, in the protection of the Company’s or its affiliates’
worldwide right, title and interest in and to Confidential Information and Work
Product and the execution of all formal assignment documents requested by the
Company or its nominee and the execution of all lawful oaths and applications
for patents and registration of copyright in the United States and foreign
countries.
 
 
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5.6   Remedies. Employee acknowledges that money damages would not be a
sufficient remedy for any breach of this Article V by Employee, and the Company
shall be entitled to enforce the provisions of this Article V by specific
performance and injunctive relief as remedies for such breach or any threatened
breach. Such remedies shall not be deemed the exclusive remedies for a breach of
this Article V but shall be in addition to all remedies available at law or in
equity, including the recovery of damages from Employee and Employee’s agents.
 
ARTICLE VI
STATEMENTS CONCERNING THE COMPANY
 
6.1   Statements. Each of the Employer and Employee will refrain, both during
the period of Employee’s employment by the Company and after the termination
thereof, from publishing any oral or written statements about the other party,
any of its affiliates or any of the Company’s or such affiliates’ investors,
stockholders, partners, directors, managers, officers, employees, consultants,
agents or representatives that (a) are slanderous, libelous or defamatory, (b)
disclose Confidential Information (other than Confidential Information that has
become publicly available other than as a result of a breach of this Agreement
by Employee) of the Company, any of its affiliates or any of the Company’s or
any such affiliates’ business affairs, investors, stockholders, partners,
directors, managers, officers, employees, consultants, agents or
representatives, or (c) place the other party, any of the Company’s affiliates,
or any of the Company’s or any such affiliates’ directors, managers, officers,
employees, consultants, agents or representatives in a false light before the
public. A violation or threatened violation of this prohibition may be enjoined
by the courts. The rights afforded the parties hereby under this provision are
in addition to any and all rights and remedies otherwise afforded by law. The
foregoing notwithstanding, nothing shall prevent any party from testifying in
any legal proceeding pursuant to a subpoena or other legal process.
 
ARTICLE VII
EFFECT OF TERMINATION OF EMPLOYMENT ON COMPENSATION
 
7.1   Effect of Termination of Employment on Compensation.
 
(a)   Benefit Obligation and Accrued Obligation Defined. For purposes of this
Agreement, payment of the “Benefit Obligation” shall mean payment by the Company
to Employee (or his designated beneficiary or legal representative, as
applicable), in accordance with the terms of the applicable plan document, of
all vested benefits to which Employee is entitled under the terms of the
employee benefit plans and compensation arrangements in which Employee is a
participant as of the Date of Termination. “Accrued Obligation” means the sum of
(1) Employee’s Base Salary through the Date of Termination, (2) any accrued but
unused vacation pay earned by Employee, and (3) any incurred but unreimbursed
expenses for which Employee is entitled to reimbursement in accordance with
Section 4.6, in each case, to the extent not theretofore paid.
 
(b)   Termination of Employee for Any Reason other than by the Company Without
Cause. If during the Term Employee’s employment is terminated for any reason
whatsoever other than by the Company without Cause, the Company shall pay to
Employee the Accrued Obligation within thirty (30) days following the Date of
Termination. Following such payment, the Company shall have no further
obligations to Employee other than as may be required by law or the terms of an
employee benefit plan of the Company. The Company shall pay Employee the Benefit
Obligation at the times specified in and in accordance with the terms of the
applicable employee benefit plans and compensation arrangements.
 
 
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(c)   Termination of Employee by the Company Without Cause or by Employee with
Good Reason. If during the Term Employee’s employment is terminated by the
Company without Cause or by Employee with Good Reason, then Employee shall
receive the following benefits and compensation from the Company:
 
(i)         the Company shall pay Employee the Accrued Obligation within thirty
(30) days following the date of Employee’s Date of Termination;
 
(ii)        the Company shall pay to Employee an amount equal to Employee’s Base
Salary for twenty-four (24) months, with such amount payable in twenty-four (24)
equal monthly installments commencing on the 60th day following Employee’s Date
of Termination;
 
(iii)       for twenty-four (24) months following Employee’s Date of
Termination, provided that Employee elects and timely pays the premiums for
continuation of the Company’s group health insurance pursuant to COBRA, the
Company shall reimburse Employee for such premiums within 30 days of each
payment. If Employee ceases to be eligible for COBRA coverage prior to the
twenty-four (24) month anniversary of Employee’s Date of Termination, the
Company shall pay on a monthly basis to Employee a lump-sum amount equal to the
monthly COBRA premiums that would be charged to a similarly situated former
employee; and
 
(iv)      the Company shall pay Employee the Benefit Obligation at the times
specified in and in accordance with the terms of the applicable employee benefit
plans and compensation arrangements.
 
Notwithstanding the foregoing, neither Employee, nor his estate, shall be
permitted to specify the taxable year in which a payment described in this
Section 7.1(c) shall be paid.
 
(d)   General Release of Claims. Payments to Employee under this Article VII
(other than Accrued Obligations and Benefit Obligations) are contingent upon
Employee’s execution of a release, substantially in the form attached hereto as
Exhibit A, within fifty (50) days of Employee’s Date of Termination that is not
revoked by Employee during any applicable revocation period provided in such
release (which shall release and discharge the Company and its affiliates, and
their officers, directors, managers, employees and agents from any and all
claims or causes of action of any kind or character, including but not limited
to all claims or causes of action arising out of Employee’s employment with the
Company or its affiliates or the termination of such employment). Nothing in
this Section 7.1(d) shall be construed to require Employee to execute a release
in any form if Employee does not accept payments described in this Section 7.1
other than the Accrued Obligations and Benefit Obligations.
 
 
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ARTICLE VIII
COVENANTS AGAINST COMPETITION
 
8.1   Definitions. As used in this Article VIII, the following terms shall have
the following meanings:
 
(a)   “Business” means (i) the manufacture, lease or sale of any oilfield
services equipment or products, and (ii) the provision of products or services
provided by the Company or any of its affiliates during the three (3) year
period prior to the Date of Termination.
 
(b)   “Governmental Authority” means any governmental, quasi-governmental,
state, county, city or other political subdivision of the United States or any
other country, or any agency, court or instrumentality, foreign or domestic, or
statutory or regulatory body thereof.
 
(c)   “Legal Requirement” means any law, statute, code, ordinance, order, rule,
regulation, judgment, decree, injunction, franchise, permit, certificate,
license, authorization, or other directional requirement (including, without
limitation, any of the foregoing that relates to environmental standards or
controls, energy regulations and occupational, safety and health standards or
controls including those arising under environmental laws) of any Governmental
Authority.
 
(d)   “Prohibited Period” means the period during which Employee is employed by
the Company hereunder and a period of two years following Employee’s Date of
Termination.
 
(e)   “Restricted Area” means the United States of America and any other
jurisdiction in which the Company or its affiliates engages in the Business
during the Prohibited Period. With respect to the Business of an affiliate of
Company, the term “Restricted Area” means the trade area of the affiliate
existing on the date of termination of Employee’s employment with the Company.
 
8.2   Non-Competition and Non-Solicitation. Employee presently has specialized
knowledge of the market analyses, marketing practices, technology, clients and
prospective clients of the Company, and other confidential information, goodwill
and trade secrets that were among the assets of the Company prior to the
Effective Date. Employee acknowledges his expertise and specialized knowledge of
research and development, and other Confidential Information of the Company.
Employee will continue to obtain and develop specialized knowledge of
Confidential Information of the Company and its affiliates and the business of
the Company through his continued involvement in the business of the Company,
including his employment under this Agreement. The Company’s promise to provide
Employee with this Confidential Information is an essential part of the
Company’s agreement to employ Employee pursuant to this Agreement.
 
In consideration of the Company’s promises and undertakings in this Agreement,
including the promise to provide specialized training and knowledge, the promise
to provide Employee access to and control of Confidential Information that the
Company and its affiliates will continue to develop and/or receive and that
Employee will have access to through the Term, and to ensure the protection of
the Company’s and its affiliates’ Confidential Information during Employee’s
employment and thereafter, the Company and Employee agree and covenant that
during the Prohibited Period:
 
 
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(a)   Employee shall not, for whatever reason and with or without cause, either
individually or in partnership or jointly or in conjunction with any person or
persons as principal, agent, employee, stockholder, owner, investor, partner or
in any other manner whatsoever (other than a holding of shares listed on a
United States stock exchange or automated quotation system that does not exceed
one percent of the outstanding shares so listed), owner, investor, partner or in
any other manner whatsoever, directly or indirectly, (A) engage in the Business
or otherwise compete with the Company or any of its affiliates in the Business
in the Restricted Area, (B) solicit business from, or provide services to, any
of the customers or accounts of the Company or any of its affiliates in the
Business for the Restricted Area, or (C) become the employee of, or otherwise
render services to or on behalf of, any enterprise where the division or
department in which Employee works competes with such Business of the Company or
any of its affiliates; and
 
(b)   Employee shall not, directly or indirectly, either for himself or any
other person, (A) induce or attempt to induce any employee of the Company or any
of its affiliates to leave the employ of the Company or any of its affiliates,
(B) in any way interfere with the relationship between the Company or any of its
affiliates and any employee of the Company or any of its affiliates, (C) employ,
or otherwise engage as an employee, independent contractor or otherwise, any
employee of the Company or any of its affiliates, or (D) induce or attempt to
induce any customer, supplier, licensee or business relation of the Company or
any of its affiliates to cease doing business with the Company or any of its
affiliates or in any way interfere with the relationship between any customer,
supplier, licensee or business relation of the Company or any of its affiliates.
 
8.3   Relief. Employee and the Company agree and acknowledge that the
limitations as to time, geographical area and scope of activity to be restrained
as set forth in Section 8.2 hereof are reasonable and do not impose any greater
restraint than is necessary to protect the legitimate business interests of the
Company. Employee and the Company also acknowledge that money damages would not
be sufficient remedy for any breach of this Article VIII by Employee, and the
Company or its affiliates shall be entitled to enforce the provisions of this
Article VIII by terminating payments then owing to Employee under this Agreement
or otherwise and to seek in a court of competent jurisdiction specific
performance and injunctive relief as remedies for such breach or any threatened
breach; provided, however, that such termination of payments owing to Employee
under this Agreement or otherwise may not occur in the absence of a breach of
this Article VIII by Employee. Such remedies shall not be deemed the exclusive
remedies for a breach of this Article VIII but shall be in addition to all
remedies available at law or in equity, including the recovery of damages from
Employee and Employee’s agents.
 
8.4   Reasonableness; Enforcement. Employee hereby represents to the Company
that Employee has read and understands, and agrees to be bound by, the terms of
this Article VIII. Employee acknowledges that the duration of the covenants
contained in this Article VIII are the result of arm’s-length bargaining and are
fair and reasonable in light of (a) the nature of the operations of the
Company’s Business, (b) Employee’s level of control over and contact with the
Company’s Business in all jurisdictions in which it is conducted, and (c) the
amount of compensation, trade secrets and Confidential Information that Employee
is receiving in connection with the performance of Employee’s duties hereunder.
It is the desire and intent of the parties that the provisions of this Article
VIII be enforced to the fullest extent permitted under applicable Legal
Requirements, whether now or hereafter in effect and therefore, to the extent
permitted by applicable Legal Requirements, Employee and the Company hereby
waive any provision of applicable Legal Requirements that would render any
provision of this Article VIII invalid or unenforceable. It is specifically
agreed that the period specified in Section 8.2 shall be computed by excluding
from that computation any time during which Employee is in violation of any
provision of Section 8.2.
 
8.5   Reformation. The Company and Employee agree that the foregoing
restrictions are reasonable under the circumstances and that any breach of the
covenants contained in this Article VIII would cause irreparable injury to the
Company. Employee expressly represents that enforcement of the restrictive
covenants set forth in this Article VIII will not impose an undue hardship upon
Employee or any person or entity affiliated with Employee. Nevertheless, if any
of the aforesaid restrictions are found by a court of competent jurisdiction to
be unreasonable, or overly broad as to time, or otherwise unenforceable, the
parties intend for the restrictions herein set forth to be modified by the court
making such determination so as to be reasonable and enforceable and, as so
modified, to be fully enforced. By agreeing to this contractual modification
prospectively at this time, the Company and Employee intend to make this
provision enforceable under the law or laws of all applicable jurisdictions so
that the entire agreement not to compete and this Agreement as prospectively
modified shall remain in full force and effect and shall not be rendered void or
illegal. Such modification shall not affect the payments made to Employee under
this Agreement.
 
 
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ARTICLE IX
MISCELLANEOUS
 
9.1   Notices. For purposes of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given (a) when received if delivered personally or by courier,
(b) on the date receipt is acknowledged if delivered by certified mail, postage
prepaid, return receipt requested or (c) one day after transmission if sent by
facsimile transmission with confirmation of transmission, as follows:
 

  If to Employee, addressed to: 
Alya Hidayatallah
[Address]
[City, State Zip]
            If to the Company, addressed to:  
Aly Energy Services Inc.
1200 Post Oak Blvd, #1912
Houston, TX 77056
Phone: 832-454-7394
Fax: 310-459-8500
Attention: Micki Hidayatallah
 

 
or to such other address as either party may furnish to the other in writing in
accordance herewith, except that notices or changes of address shall be
effective only upon receipt.
 
9.2   Applicable Law; Submission to Jurisdiction.
 
(a)   This Agreement is entered into under, and shall be governed for all
purposes by, the laws of the State of Texas, without regard to conflicts of laws
principles thereof.
 
(b)   With respect to any claim or dispute related to or arising under this
Agreement, the parties hereto hereby consent to the exclusive jurisdiction,
forum and venue of the state and federal courts located in the State of Texas.
 
9.3   Litigation. Employee agrees to cooperate, in a reasonable and appropriate
manner, with the Company and its attorneys, both during and after the
termination of his employment, in connection with any litigation or other
proceeding arising out of or relating to matters in which Employee was involved
prior to the termination of his employment to the extent the Company pays all
expenses Employee incurs in connection with such cooperation and to the extent
such cooperation does not unduly interfere (as determined by Employee in good
faith) with Employee’s personal or professional schedule.
 
9.4   Dispute Resolution. Except as provided otherwise in Sections 5.6, 6.1 and
8.3, all claims, demands, causes of action, disputes, controversies or other
matters in question (“Claims”) arising out of this Agreement or Employee’s
service (or termination from service) with the Company, whether arising in
contract, tort or otherwise and whether provided by statute, equity or common
law, that the Company may have against Employee or that Employee may have
against the Company, or its parents or subsidiaries, or against each of the
foregoing entities’ respective officers, directors, employees or agents in their
capacity as such or otherwise, shall be settled in accordance with the
procedures described in Section 9.4(a) and (b). Claims covered by this Section
9.4 include, without limitation, claims by Employee for breach of this
Agreement, wrongful termination, discrimination (based on age, race, sex,
disability, national origin, sexual orientation, or any other factor),
harassment and retaliation.
 
 
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(a)   Agreement to Negotiate. First, the parties shall attempt in good faith to
resolve any Claims promptly by negotiations between Employee and executives or
directors of the Company or its affiliates who have authority to settle the
Claims. Either party may give the other disputing party written notice of any
Claim not resolved in the normal course of business. Within five days after the
effective date of that notice, Employee and such executives or directors of the
Company shall agree upon a mutually acceptable time and place to meet and shall
meet at that time and place, and thereafter as often as they reasonably deem
necessary, to exchange relevant information and to attempt to resolve the Claim.
The first of those meetings shall take place within 30 days of the date of the
disputing party’s notice. If the Claim has not been resolved within 60 days of
the date of the disputing party’s notice, or if the parties fail to agree on a
time and place for an initial meeting within five days of that notice, either
party may elect to undertake arbitration in accordance with Section 9.4(b).
 
(b)   Agreement to Arbitrate. If a Claim is not resolved by negotiation pursuant
to Section 9.4(a), such Claim must be resolved through arbitration regardless of
whether the Claim involves claims that the Agreement is unlawful, unenforceable,
void, or voidable or involves claims under statutory, civil or common law. Any
arbitration shall be conducted in accordance with the then-current Employment
Arbitration Rules of the American Arbitration Association (“AAA”). If a party
refuses to honor its obligations under this Section 9.4(b), the other party may
compel arbitration any federal or state court of competent jurisdiction. The
arbitrator shall apply the substantive law of Texas (excluding choice-of-law
principles that might call for the application of some other jurisdiction’s law)
or federal law, or both as applicable to the Claims asserted. The arbitrator
shall have exclusive authority to resolve any dispute relating to the
interpretation, applicability or enforceability or formation of this Agreement
(including this Section 9.4), including any claim that all or part of the
Agreement is void or voidable and any Claim that an issue is not subject to
arbitration. The results of arbitration will be binding and conclusive on the
parties hereto. Any arbitrator’s award or finding or any judgment or verdict
thereon will be final and unappealable. The seat of arbitration shall be in
Harris County in the State of Texas, and unless agreed otherwise by the parties,
all hearings shall take place at the seat. Any and all of the arbitrator’s
orders, decisions and awards may be enforceable in, and judgment upon any award
rendered by the arbitrator may be confirmed and entered by any federal or state
court having jurisdiction. All evidentiary privileges under applicable state and
federal law, including attorney-client, work product and party communication
privileges, shall be preserved and protected. The decision of the arbitrator
will be binding on all parties. Arbitrations will be conducted in such a manner
that the final decision of the arbitrator will be made and provided to Employee
and the Company no later than 120 days after a matter is submitted to
arbitration. All proceedings conducted pursuant to this agreement to arbitrate,
including any order, decision or award of the arbitrators, shall be kept
confidential by all parties. Each party shall pay its own attorneys fees and
disbursements and other costs of arbitration. The arbitrator’s fees shall be
borne by the nonprevailing party or by such party or parties as the arbitrator
shall determine. EMPLOYEE ACKNOWLEDGES THAT, BY SIGNING THIS AGREEMENT, EMPLOYEE
IS WAIVING ANY RIGHT THAT EMPLOYEE MAY HAVE TO A JURY TRIAL OR A COURT TRIAL OF
ANY SERVICE RELATED CLAIM ALLEGED BY EMPLOYEE.
 
9.5   No Waiver. No failure by either party hereto at any time to give notice of
any breach by the other party of, or to require compliance with, any condition
or provision of this Agreement shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.
 
9.6   Severability. If a court of competent jurisdiction determines that any
provision of this Agreement is invalid or unenforceable, then the invalidity or
unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement, and all other
provisions shall remain in full force and effect.
 
 
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9.7   Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original, but all of which together will
constitute one and the same Agreement.
 
9.8   Withholding of Taxes and Other Employee Deductions. The Company may
withhold from any benefits and payments made pursuant to this Agreement all
federal, state, city and other applicable taxes and withholdings as may be
required pursuant to any law or governmental regulation or ruling and all other
customary deductions made with respect to the Company’s employees generally.
 
9.9   Headings. The Section headings have been inserted for purposes of
convenience and shall not be used for interpretive purposes.
 
9.10         Gender and Plurals. Wherever the context so requires, the masculine
gender includes the feminine or neuter, and the singular number includes the
plural and conversely.
 
9.11         Affiliate. As used in this Agreement, the term “affiliate” as used
with respect to a particular person or entity shall mean any other person or
entity which owns or controls, is owned or controlled by, or is under common
ownership or control with, such particular person or entity.
 
9.12         Successors. This Agreement shall be binding upon and inure to the
benefit of the Company and any successor of the Company. Except as provided in
the preceding sentence, this Agreement, and the rights and obligations of the
parties hereunder, are personal and neither this Agreement, nor any right,
benefit or obligation of either party hereto, shall be subject to voluntary or
involuntary assignment, alienation or transfer, whether by operation of law or
otherwise, without the prior written consent of the other party. In addition,
any payment owed to Employee hereunder after the date of Employee’s death shall
be paid to Employee’s estate.
 
9.13         Term. Termination of this Agreement shall not affect any right or
obligation of any party which is accrued or vested prior to such termination.
Without limiting the scope of the preceding sentence, the provisions of Articles
V, VI, VII, VIII and IX shall survive any termination of the employment
relationship and/or of this Agreement.
 
9.14         Entire Agreement. Except as provided in any signed written
agreement contemporaneously or hereafter executed by the Company and Employee,
this Agreement constitutes the entire agreement of the parties with regard to
the subject matter hereof, and contains all the covenants, promises,
representations, warranties and agreements between the parties with respect to
employment of Employee by the Company. Without limiting the scope of the
preceding sentence, all understandings and agreements preceding the date of
execution of this Agreement and relating to the subject matter hereof are hereby
null and void and of no further force and effect.
 
 
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9.15         Modification; Waiver. Any modification to or waiver of this
Agreement shall be effective only if it is in writing and signed by the parties
to this Agreement; provided that the Company may, with prospective or
retroactive effect, amend this Agreement at any time (to the extent Employee is
not adversely affected by such amendment), if determined to be reasonably
necessary to comply with administrative guidance issued under Section 409A of
the Code or to comply with the provisions of Section 409A of the Code.
 
9.16         Compliance with Section 409A of the Code. Each payment under this
Agreement, including each payment in a series of installment payments, is
intended to be a separate payment for purposes of Treas. Reg. § 1.409A-2(b), and
is intended to be: (i) exempt from Section 409A of the Code, the regulations and
other binding guidance promulgated thereunder (“Section 409A”), including, but
not limited to, by compliance with the short-term deferral exemption as
specified in Treas. Reg. § 1.409A-1(b)(4) and the involuntary separation pay
exception within the meaning of Treas. Reg. § 1.409A-1(b)(9)(iii), or (ii) in
compliance with Section 409A, including, but not limited to, being paid pursuant
to a fixed schedule or specified date pursuant to Treas. Reg. § 1.409A-3(a) and
the provisions of this Agreement will be administered, interpreted and construed
accordingly. Notwithstanding the foregoing provisions of this Agreement, if the
payment of any severance compensation or severance benefits under Article VII
would be subject to additional taxes and interest under Section 409A because the
timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of
the Code, and Employee constitutes a specified employee within the meaning of
Section 409A(a)(2)(B)(i) of the Code, then any such payments that Employee would
otherwise be entitled to during the first six months following Employee’s
separation from service within the meaning of Section 409A(a)(2)(A)(i) of the
Code shall be accumulated and paid on the date that is six months after
Employee’s separation from service (or if such payment date does not fall on a
business day of the Company, the next following business day of the Company), or
such earlier date upon which such amount can be paid under Section 409A without
being subject to such additional taxes and interest.
 
 
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
first above written.
 

 
ALY ENERGY SERVICES, INC.
            By: /s/ Munawar H. Hidayatallah     Name: Munawar H. Hidayatallah  
  Title: Chairman and CEO                    
ALYA HIDAYATALLAH
              /s/ Alya Hidayatallah  

 
 
 
Signature Page to
Alya Hidayatallah Employment Agreement
 
 

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Exhibit A
 
Form of Waiver and Release Agreement
 
Aly Energy Services, Inc. has offered to pay me certain benefits (the
“Benefits”) pursuant to Section 7.1(c) of my employment agreement with Aly
Energy Services, Inc., dated as of _____________, 20___ (the “Employment
Agreement”), which were offered to me in exchange for my agreement, among other
things, to waive all of my claims against and release Aly Energy Services, Inc.
and its predecessors, successors and assigns (collectively referred to as the
“Company”), all of the affiliates (including parents and subsidiaries) of the
Company (collectively referred to as the “Affiliates”) and the Company’s and
Affiliates’ directors and officers, employees and agents, insurers, employee
benefit plans and the fiduciaries and agents of said plans (collectively, with
the Company and Affiliates, referred to as the “Corporate Group”) from any and
all claims, demands, actions, liabilities and damages arising out of or relating
in any way to my employment with or separation from the Company or the
Affiliates; provided, however, that this Waiver and Release shall not apply to
(1) any existing right I have to indemnification, contribution and a defense,
(2) any directors and officers and general liability insurance coverage, (3) any
rights I may have as a shareholder of the Company, (4) any rights I have to the
Benefits, and (5) any rights which cannot be waived or released as a matter of
law.
 
I understand that signing this Waiver and Release is an important legal act. I
acknowledge that the Company has advised me in writing to consult an attorney
before signing this Waiver and Release and has given me at least 21 days from
the day I received a copy of this Waiver and Release to sign it.
 
In exchange for the payment to me of Benefits, I, among other things, (1) agree
not to sue in any local, state and/or federal court regarding or relating in any
way to my employment with or separation from the Company or the Affiliates, (2)
knowingly and voluntarily waive all claims and release the Corporate Group from
any and all claims, demands, actions, liabilities, and damages, whether known or
unknown, arising out of or relating in any way to my employment with or
separation from the Company or the Affiliates and (3) waive any rights that I
may have under any of the Company’s involuntary severance benefit plans, except
to the extent that my rights are vested under the terms of employee benefit
plans sponsored by the Company or the Affiliates and except with respect to such
rights or claims as may arise after the date this Waiver and Release is
executed. This Waiver and Release includes, but is not limited to, claims and
causes of action under: Title VII of the Civil Rights Act of 1964, as amended
(“Title VII”); the Age Discrimination in Employment Act of 1967, as amended,
including the Older Workers Benefit Protection Act of 1990 (“ADEA”); the Civil
Rights Act of 1866, as amended; the Civil Rights Act of 1991; the Americans with
Disabilities Act of 1990 (“ADA”); the Energy Reorganization Act, as amended, 42
U.S.C. §§ 5851; the Workers Adjustment and Retraining Notification Act of 1988;
the Sarbanes-Oxley Act of 2002; the Employee Retirement Income Security Act of
1974, as amended; the Family and Medical Leave Act of 1993; the Fair Labor
Standards Act; the Occupational Safety and Health Act; claims in connection with
workers’ compensation or “whistle blower” statutes; and/or contract, tort,
defamation, slander, wrongful termination or any other state or federal
regulatory, statutory or common law. Further, I expressly represent that no
promise or agreement which is not expressed in the Employment Agreement has been
made to me in executing this Waiver and Release, and that I am relying on my own
judgment in executing this Waiver and Release, and that I am not relying on any
statement or representation of the Company, any of the Affiliates or any other
member of the Corporate Group or any of their agents. I agree that this Waiver
and Release is valid, fair, adequate and reasonable, is entered into with my
full knowledge and consent, was not procured through fraud, duress or mistake
and has not had the effect of misleading, misinforming or failing to inform me.
 
 
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Notwithstanding the foregoing, nothing contained in this Waiver and Release is
intended to prohibit or restrict me in any way from (1) bringing a lawsuit
against the Company to enforce the Company’s obligations under the Employment
Agreement; (2) making any disclosure of information required by law; (3)
providing information to, or testifying or otherwise assisting in any
investigation or proceeding brought by, any federal regulatory or law
enforcement agency or legislative body, any self-regulatory organization, or the
Company’s legal, compliance or human resources officers; (4) testifying or
participating in or otherwise assisting in a proceeding relating to an alleged
violation of any federal, state or municipal law relating to fraud or any rule
or regulation of the Securities and Exchange Commission or any self-regulatory
organization; or (5) filing any claims that are not permitted to be waived or
released under applicable law (although my ability to recover damages or other
relief is still waived and released to the extent permitted by law).
 
Should any of the provisions set forth in this Waiver and Release be determined
to be invalid by a court, agency or other tribunal of competent jurisdiction, it
is agreed that such determination shall not affect the enforceability of other
provisions of this Waiver and Release. I acknowledge that this Waiver and
Release and the Employment Agreement set forth the entire understanding and
agreement between me and the Company or any other member of the Corporate Group
concerning the subject matter of this Waiver and Release and supersede any prior
or contemporaneous oral and/or written agreements or representations, if any,
between me and the Company or any other member of the Corporate Group. I
understand that for a period of 7 calendar days following the date that I sign
this Waiver and Release, I may revoke my acceptance of the offer, provided that
my written statement of revocation is received on or before that seventh day by
[Name], Aly Energy Services, Inc., [Address], [City, State Zip], facsimile
number: _______________________, in which case the Waiver and Release will not
become effective. In the event I revoke my acceptance of this offer, the Company
shall have no obligation to provide me Benefits. I understand that failure to
revoke my acceptance of the offer within 7 calendar days from the date I sign
this Waiver and Release will result in this Waiver and Release being permanent
and irrevocable.
 
I acknowledge that I have read this Waiver and Release, have had an opportunity
to ask questions and have it explained to me and that I understand that this
Waiver and Release will have the effect of knowingly and voluntarily waiving any
action I might pursue, including breach of contract, personal injury,
retaliation, discrimination on the basis of race, age, sex, national origin, or
disability and any other claims arising prior to the date of this Waiver and
Release. By execution of this document, I do not waive or release or otherwise
relinquish any legal rights I may have which are attributable to or arise out of
acts, omissions, or events of the Company or any other member of the Corporate
Group which occur after the date of the execution of this Waiver and Release.
 
 

        Employee’s Printed Name   Company Representative                  
Employee’s Signature
 
Company’s Execution Date
 
 
 
 
 
 
 
 
  Employee’s Signature Date   Employee’s Social Security Number  

 
 
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