**Exhibit 10.3****EXECUTIVE EMPLOYMENT AGREEMENT**     This Executive Employment Agreement dated as of April 1, 2007 (the “Effective Date”), isbetween Allis-Chalmers Energy Inc. and Munawar H. Hidayatallah. Certain capitalized terms usedherein are defined in Section 1 below.**R E C I T A L S:**     A. Executive is employed by Company pursuant to an Employment Agreement (the “2004 EmploymentAgreement”) dated April 1, 2004, which terminated March 31, 2007;     B. Company wishes to continue to employ Executive, and Executive desires to continueemployment with Company by entering into a written agreement to specify the terms and conditions ofExecutive’s continued employment with Company;     C. Executive is to be employed as Chairman and Chief Executive Officer of Company, and as anintegral member of its management team;     D. Company considers the maintenance of a sound management team, including Executive,essential to protecting and enhancing its best interests and those of its stockholders;     E. Company recognizes that the possibility of a change in control of Company may result in thedeparture or distraction of management to the detriment of Company and its stockholders; and     F. Company has determined that appropriate steps should be taken to obtain and retain thecontinued attention and dedication of selected members of Company’s management team to theirassigned duties without the distraction arising from the possibility of a change in control ofCompany.     NOW, THEREFORE, in consideration of Executive’s past and future employment with Company andother good and valuable consideration, the parties agree as follows:     **Section 1.***Definitions.*As used in this Agreement, the following terms will have the followingmeanings:     (a) *Agreement refers to the Executive Employment Agreement represented by thisdocument.     (b) *Cause has the meaning ascribed to it in Section 7(a)(ii).     (c) *Change In Control:     (i) The acquisition by any individual, entity or group, or a Person (within themeaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) other than an ExcludedPerson, of ownership of more than 50% of either; (A) the then outstandingshares of Common Stock (“Outstanding Common Stock”); or (B) the combined
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votingpower of the then outstanding voting securities of the Company entitled to votegenerally in the election of directors (“Outstanding Voting Securities”);     (ii) Individuals who, as of the date hereof, constitute the Board of Directorsof the Company (“Incumbent Board”) cease for any reason to constitute at least amajority of the Board; provided, however, that any individual becoming a directorsubsequent to the date hereof whose election, or nomination for election by theCompany’s stockholders, was approved by a vote of at least a majority of thedirectors then comprising the Incumbent Board shall be considered as though suchindividual were a member of the Incumbent Board, but excluding, as a member of theIncumbent Board, any such individual whose initial assumption of office occurs as aresult of either an actual or threatened election contest (as such terms are used inRule 14a-11 of Regulation 14A promulgated under the Securities Exchange Act of 1934)or other actual or threatened solicitation of proxies or consents by or on behalf ofa Person other than the Board; or     (iii) Approval by the stockholders of the company of a reorganization, mergeror consolidation, in each case, unless, following such reorganization, merger orconsolidation, more than 50% of, respectively, the then outstanding shares of commonstock of the corporation resulting from such reorganization, merger or consolidationand the combined voting power of the then outstanding voting securities of suchcorporation entitled to vote generally in the election of directors is thenbeneficially owned, directly or indirectly, by all or substantially all of theindividuals and entities who were the beneficial owners, respectively, of theOutstanding Common Stock and Outstanding Voting Securities immediately prior to suchreorganization, merger or consolidation, in substantially the same proportions astheir ownership, immediately prior to such reorganization, merger or consolidationof the Outstanding Common Stock and Outstanding Voting Securities, as the case maybe, or at least a majority of the members of the board of directors of thecorporation resulting from such reorganization, merger or consolidation were membersof the Incumbent Board at the time of the execution of the initial agreementproviding for such reorganization, merger or consolidation; or     (iv) Approval by the stockholders of the Company of (A) a complete liquidationor dissolution of the Company or (B) the sale or other disposition of all orsubstantially all of the assets of the Company, other than to a corporation, withrespect to which following such sale or other disposition, (1) more than 50% of,respectively, the then outstanding shares of common stock of such corporation andthe combined voting power of the then outstanding voting securities of suchcorporation entitled to vote generally in th election for directors is thenbeneficially owned, directly or indirectly, by all or substantially all of theindividuals and entities who were the beneficial owners, respectively, of theOutstanding Common Stock and Outstanding Voting Securities immediately prior to suchsale or other disposition in substantially the same proportion as their ownership,immediately prior to such sale or other disposition, of the Outstanding Common Stockand Outstanding Voting Securities, as the case may be; or (2) a least a majority ofthe members of the board ofdirectors of such corporation were members of the Incumbent Board at the timeof the execution of the initial agreement or action of the Board providing for suchsale
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or to the disposition of assets of the Company.     (d) *Code means the Internal Revenue Code of 1986, as amended.     (e) *Company means Allis-Chalmers Energy Inc.     (f) *Confidential Information has the meaning ascribed to it in Section 9(b).     (g) *Constructively Terminated with respect to an Executive’s employment with Companywill be deemed to have occurred if Executive terminates his employment within six monthsfollowing the date on which Company:     (i) demotes Executive to a materially lesser position, either in title orresponsibility, than the highest position held by Executive with Company at any timeduring Executive’s employment with Company after the date hereof;     (ii) decreases Executive’s salary materially below the highest level in effectat any time during Executive’s employment with Company or reduces Executive’sbenefits and perquisites materially below the highest levels in effect at any timeduring Executive’s employment with Company (other than as a result of any amendmentor termination of any Executive or group or other executive benefit plan, whichamendment or termination is applicable to all executives of Company or anyinadvertent reduction in benefits that Company cures within 30 days after receivingwritten notice of such reduction)     (iii) requires Executive to relocate to a principal place of business more than50 miles from the principal place of business occupied by Company on April 1, 2007;     (iv) is subject to a Change In Control, unless Executive accepts employmentwith a successor to Company on terms not materially less favorable than thoseprovided in this Agreement; or     (v) breaches any other material term of this Agreement which is not cured byCompany within 30 days after receiving notice of such breach.     For Executive to be considered to be “Constructively Terminated,” Executivemust provide notice to Company of the existence of one of the conditions listed inthis Section 1(g) within a period not to exceed 60 days following the initialexistence of the condition, following receipt of the notice the Company must beprovided a period of at least 30 days during which it may remedy the condition.     (h) *Designated Industry has the meaning ascribed to it in Section 10(a)(i)(1).     (i) *Disability with respect to Executive shall be deemed to exist if he meets thedefinition of disability under the terms of the Company’s current long-term disabilitypolicy (or any replacement long-term disability policy). Any refusal by Executive to submitto a
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reasonable medical examination to determine whether Executive is so disabled shall bedeemed conclusively to constitute evidence of Executive’s disability.     (j) *Executive refers to Munawar H. Hidayatallah.     (k) *Excluded Person means any Person who beneficially owns more that 10% of theoutstanding shares of the corporation at any time prior to the date hereof.     (l) *Company refers collectively to the Company and its subsidiaries and otheraffiliates. In Section 10, the term “Company” shall be deemed to refer to the Company, andfor purposes of Section 10, Executive shall be deemed to be employed by the Company and allcompensation and benefits paid or provided to Executive by any Company under this Agreementat any time shall be deemed to have been paid or provided to Executive by the Company.     (m) *Incentive Plan means the Allis-Chalmers Corporation 2006 Incentive Plan, as amendedfrom time to time.     (n) *Inventions has the meaning ascribed to it in Section 8(a).     (o) *Salary has the meaning ascribed to it in Section 5(a).     (p) *Separation Payments has the meaning ascribed to it in Section 7(b)(ii).     **Section 2.***Employment*. Company hereby employs Executive, and Executive hereby acceptsemployment by Company, upon the terms and subject to the conditions hereinafter set forth. The 2004Employment Agreement is hereby terminated and superceded by this Agreement, effective the datehereof.     **Section 3.***Duties*. Executive shall be employed as Chief Executive Officer of Company and shallserve as Chairman of the Board of Directors of Company. Executive agrees to devote such times as innecessary to perform his duties attendant to his executive position with Company, in a mannerconsistent with Executive’s employment prior to the date hereof. Company shall use its best efforts(including by nominating Executive to be a director at each meeting of the stockholders of thecompany at which directors are elected, and including in any proxy statement relating to such ameeting information comparable to that included with respect to other nominees) to cause Executiveto be maintained as a director of the Company and while a director Executive shall serve asChairman of the Board of Directors. Executive shall be allowed to engage in other activities as aninvestor as well as participate in activities of charitable organizations of his choice so long asthey do not materially interfere with his duties for Company. Company acknowledges and agrees thatExecutive shall have the right to maintain his current residence in Santa Monica, California andthat Company shall pay Executive’s travel and other expenses in a manner consistent with pastpractices pursuant to Section 6 hereof.     **Section 4.***Term*. The term of employment of Executive hereunder shall commence on the EffectiveDate and terminate three years thereafter, provided that if Executive at the end of such three yearperiod remains liable for any guarantees of obligations of the Company, then the term
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hereof shallextend for such period as Executive remains liable for such guarantees.     **Section 5.***Compensation and Benefits*. In consideration for the services of Executivehereunder, Company shall compensate Executive as follows (except as set forth herein, Executiveacknowledges payments in full of all amounts due to him for services rendered prior to the datehereof):     (a) *Salary. Company shall pay Executive, semi-monthly in arrears with its normalpayroll procedures, a salary which is equivalent to an annual rate of $500,000 (the“Salary”). The Salary shall increase annually, effective as of each anniversary of theEffective Date by the same percentage as the percentage of increase, if any, shown by theAll Items Consumer Price Index for Urban Wage Earners and Clerical Workers published by theU.S. Department of Labor, Bureau of Labor Statistics, for the Los Angeles-Long Beach-Anaheimarea for the month of March immediately preceding the previous anniversary of the EffectiveDate,, as compared with the most recently published Index at the applicable date. If theBureau of Labor Statistics ceases to use the 1967 average of 100 as the basis forcalculation for the Consumer Price Index or if a substantial change is made in the items ornumber of items contained in the Consumer Price Index, then the Consumer Price Index shallbe adjusted to that figure that would have been arrived at if the change in the manner ofcomputing the Consumer Price Index in effect at the applicable date had not been altered. Ifthe Consumer Price Index described above is no longer published at the time of such feecalculation, the Company shall select and use a similar reliable governmental or othernon-partisan publication evaluating the kind of information theretofore used in determiningsuch Consumer Price Index. Any additional increase in the Salary shall be in the solediscretion of the Compensation Committee of the Board of Directors of the Company.     (b) *Management Incentive Bonus; *Stock Options; Performance Awards*.     (i) Executive shall be eligible to receive an annual bonus equal to 100% ofExecutive’s salary if the Company’s Compensation Committee determines that theCompany has met the performance goals established by the Compensation Committee.Such performance goals shall be established no later than ninety days after thefirst day of the performance year (provided that the outcome is substantiallyuncertain at the time the criteria are established). The annual bonus (other than abonus for the final year of the term of this Agreement) shall be subject toExecutive’s continued employment on the date of payment (other than by reason ofdeath or Disability), and shall be paid as soon as practicable after theCompensation Committee determines that the performance goals were satisfied but inno event later than two-and-one-half months following the applicable performanceyear. Such bonus shall be paid in cash or, at the option of Executive, made bywritten election filed by Executive with the Company Secretary by the last day ofthe performance year in shares of the Company’s Common Stock (for such purpose theshares shall be valued at “Fair Market Value” (as defined in the Incentive Plan) atthe payment date).     (ii) In addition, Executive shall be entitled to receive such other incentivebonuses as may be provided in management incentive bonus plans adopted from time totime by Company.
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     (iii) In addition, Executive shall receive an option to acquire 200,000 sharesof Common Stock of the Company pursuant to the Incentive Plan, which option wasgranted on August 3, 2007 at the then current market value of the Common Stock;provided that such option shall vest no less rapidly than twenty percent (20%) oneyear after the date of grant; an additional twenty percent (20%) two years after thedate of grant; and the remaining sixty percent (60%) three years after the date ofgrant or, if sooner, one hundred percent (100%) upon the earlier of (A) a Change InControl, as defined in the Incentive Plan, or if not so defined therein, as definedin Section 1(c), or (B) termination of Executive’s employment without Cause, asdefined in Section 7(a)(iii). Such option shall be a nonqualified stock optiongranted pursuant to the Company’s form of the Employee NonQualified Stock OptionAgreement     (iv) In addition, Executive has been granted a Performance Award of 685,000shares of Common Stock in the form of restricted stock (the “Restricted Shares”),which Restricted Shares shall vest and be forfeitable and nontransferable inaccordance with the Company’s form of Employee Performance Award Agreement.     (c) *Vacation. Executive shall be entitled to four (4) weeks paid vacation per year. Anyaccrued but unused vacation may be used at any time during the term of this Agreement. Upontermination of Executive’s employment, Executive shall be paid for any accrued but unusedvacation based on his then-current Salary. Executive shall schedule his paid vacation to betaken at times which are reasonably and mutually convenient to both Company and Executive.     (d) *Insurance Benefits. Company shall provide accident, health, dental, disability andlife insurance for Executive under the group accident, health, dental, disability and lifeinsurance plans as may be maintained by Company for its full-time, salaried executives.     (e) *Office Space and Expenses. Company shall provide and pay the expenses ofmaintaining an office for Executive during the term of this Agreement comparable to hisoffice as of the Effective Date. Additional office space for the staff of Executive shall beobtained at the expense of the Company.     (f) *Assistant Expenses. Company shall assume and pay all salary and benefits of anassistant to Executive, which salary and benefits shall be no less than those provided toExecutive’s assistant as of the Effective Date.     (g) *Certain Additional Payments. Anything in this Agreement to the contrarynotwithstanding, in the event it shall be determined that any payment or distribution byCompany or its successor to or for the benefit of Executive, whether paid or payable ordistributed or distributable pursuant to the terms of this Agreement or otherwise (a“Payment”), would be subject to the excise tax imposed by Section 4999 of the Code(such excise tax, together with any interest thereon, any penalties, additions to tax, oradditional amounts with respect to such excise tax, and any interest in respect of suchpenalties, additions to tax or additional amounts, being collectively referred herein to asthe “Excise
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Tax”), then Company shall pay to Executive one or more additional payments (eacha “Gross-Up Payment”) in an amount such that after payment by Executive of all taxes,interest, penalties, additions to tax, or additional amounts with respect to such Gross-UpPayment, Executive retains an amount of the Gross-Up Payment equal to the Excise Tax imposedupon the Payment. The applicable Gross-Up Payment shall be made to Executive as soon aspracticable after written request for payment is submitted by Executive to Company or itssuccessor, but in no event later than the end of the calendar year next following the yearin which Executive remits the applicable Excise Tax.. All determinations made under thisSection 5(g), including whether a Gross-Up Payment is required and the amount of suchGross-Up Payment and the assumptions to be utilized in arriving at such determination, shallbe made by Company’s registered independent public accounting firm (the “Accounting Firm”).The Accounting Firm shall provide detailed supporting calculations both to Company andExecutive. All fees and expenses of the Accounting Firm shall be borne solely by Company.The Company shall indemnify and hold harmless Executive, on an after-tax basis, for anyExcise Tax or income or other tax (including interest, penalties, additions to tax, oradditional amounts with respect thereto) imposed on Executive as a result of such payment offees and expenses. In addition, the Company shall indemnify and hold harmless Executive, onan after-tax basis, for any fees or costs incurred in connection with any contest ofliability for Excise Taxes as well as any Excise Tax or income or other tax (includinginterest, penalties, additions to tax, or additional amounts with respect thereto) imposedon Executive as a result of such payments of fees and expenses.     (h) *Guarantee Fee. Company agrees to pay to Executive an annual guarantee fee equal to0.25% of the total of all loans guaranteed by Executive from time to time. The fee shall bepaid quarterly, in arrears, commencing March 31, 2007, based upon the average amount ofguaranteed debt outstanding during the prior quarter.     (i) *Life insurance. Company shall permit Executive to assume ownership of the currentterm life insurance policy on the life of Executive owned by Company.     (j) *Indemnification for Guarantees. In addition to all other indemnification rightsavailable to Executive under the Company’s charter documents, contractual obligations or bylaw, Company agrees to indemnify, defend and hold harmless the Executive, Executive’s spouseand their successors (the “Indemnified Parties”) from and against any and all claims,losses, liabilities, costs, penalties, fines and expenses (including reasonable expenses forattorneys, accountants, consultants and experts), damages, obligations to third parties,expenditures, proceedings, taxes, judgments, awards or demands, whether or not arising fromclaims of third parties (collectively, “Losses”), which any of them may suffer, incur orsustain arising out of, attributable to, or resulting from any guarantee executed byexecutive or his spouse with respect to obligations of Company or its subsidiaries.     (k) *Legal Fees. Within ten days after execution of this Agreement, Company shallreimburse Executive for all legal fees and costs incurred in connection withnegotiation of this Agreement (up to the sum of $50,000).     **Section 6.***Expenses.*The parties anticipate that in connection with the services to beperformed by Executive pursuant to the terms of this Agreement, Executive will be required to make
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payments for travel, entertainment of business associates and similar expenses. Company shallreimburse Executive for all reasonable and customary expenses of types authorized by Company andincurred by Executive in the performance of his duties hereunder , including travel fromExecutive’s residence to Company’s principal place of business consistent with past practices.Executive shall comply with such reporting requirements with respect to expenses as Company mayestablish from time to time. Executive must submit evidence of reimbursable expenses to Companywithin 90 days of incurring such expenses, and Company will pay the reimbursement within 30 days ofCompany’s receipt of such evidence.     **Section 7.***Termination*.     (a) *General. Executive’s employment hereunder shall continue until the end of the termspecified in Section 4, except that the employment of Executive hereunder shall terminateprior to such time in accordance with the following:     (i) *Death or Disability. Upon the death of Executive during the term of hisemployment hereunder or, at the option of Company, in the event of Executive’sDisability, upon 30 days’ notice to Executive.     (ii) *For Cause. For “Cause” immediately upon written notice by Company toExecutive. A termination shall be for Cause if: (1) Executive is convicted of acriminal act involving dishonesty or moral turpitude that has a material adverseeffect on the Company or its reputation’ or (2) Executive commits a material breachof any of the covenants, terms or provisions hereof or fails to obey writtendirections delivered to Executive by the Company’s Board of Directors which are notinconsistent with Executive’s rights under this Agreement.     (iii) *Without Cause. Without Cause upon notice by the Board of Directors toExecutive or upon notice by Executive to the Board if Executive has beenConstructively Terminated.     (b) *Severance Pay.     (i) *Termination Upon Death or Disability or For Cause. Executive shall not beentitled to any severance pay or other compensation upon termination of hisemployment pursuant to Section 7(a)(i) or 7(a)(ii), or upon voluntary terminationunless Executive has been Constructively Terminated, except for his Salary earnedbut unpaid as of the date of termination, unpaid expense reimbursements underSection 6 for expenses incurred in accordance with the terms hereof prior totermination, and compensation for accrued, unused vacation as of the date oftermination.     (ii) *Termination Without Cause. In the event Executive’s employment hereunderis terminated pursuant to Section 7(a)(iii), whether prior to or following a Changein Control, Company shall pay Executive a Separation Payment as Executive’s soleremedy in connection with such termination. A “Separation Payment” is a paymentequal to three (3) times Executive’s then current annual Salary in effectimmediately preceding the date of termination. Company shall also
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pay Executive hisSalary earned but unpaid as of the date of termination, unpaid expensereimbursements under Section 6 for expenses incurred in accordance with the termshereof prior to termination, and compensation for accrued, unused vacation as of thedate of termination as provided in Section 5(c).     **Section 8.***Inventions; Assignment*.     (a) *Inventions Defined. All rights to discoveries, inventions, improvements, designsand innovations (including all data and records pertaining thereto) that relate to thebusiness of Company, whether or not patentable, copyrightable or reduced to writing, thatExecutive may discover, invent or originate during the term of his employment hereunder, andfor a period of six months thereafter, either alone or with others and whether or not duringworking hours or by the use of the facilities of Company (“Inventions”), shall be theexclusive property of Company. Executive shall promptly disclose all Inventions to Company,shall execute at the request of Company any assignments or other documents Company may deemnecessary to protect or perfect its rights therein, and shall assist Company, at Company’sexpense, in obtaining, defending and enforcing Company’s rights therein. Executive herebyappoints Company as his attorney-in-fact to execute on his behalf any assignments or otherdocuments deemed necessary by Company to protect or perfect its rights to any Inventions.     (b) *Covenant to Assign and Cooperate. Without limiting the generality of the foregoing, Executive hereby assigns and transfers to Company the world-wide right, title and interestof Executive in the Inventions. Executive agrees that Company may apply for and receivepatent rights (including Letters Patent in the United States) for the Inventions inCompany’s name in such countries as may be determined solely by Company. Executive shallcommunicate to Company all facts known to Executive relating to the Inventions and shallcooperate with Company’s reasonable requests in connection with vesting title to theInventions and related patents exclusively in Company and in connection with obtaining,maintaining and protecting Company’s exclusive patent rights in the Inventions.     (c) *Successors and Assigns. Executive’s obligations under this Section 8 shall inure tothe benefit of Company and its successors and assigns and shall survive the expiration ofthe term of this Agreement for such time as may be necessary to protect the proprietaryright of Company in the Inventions.     **Section 9.***Confidential Information*.     (a) *Acknowledgment of Proprietary Interest. Executive acknowledges the proprietaryinterest of Company in all Confidential Information. Executive agrees that all ConfidentialInformation learned by Executive during his employment with Company orotherwise, whether developed by Executive alone or in conjunction with others orotherwise, is and shall remain the exclusive property of Company. Executive furtheracknowledges and agrees that his disclosure of any Confidential Information will result inirreparable injury and damage to Company.     (b) *Confidential Information Defined. “Confidential Information” means all Confidentialand proprietary information of company, including without limitation (i)
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information derivedfrom reports, investigations, experiments, research and work in progress, (ii) methods ofoperation, (iii) market data, (iv) proprietary computer programs and codes, (v) drawings,designs, plans and proposals, (vi) marketing and sales programs, (vii) client lists, (viii)historical financial information and financial projections, (ix) pricing formulae andpolicies, (x) all other concepts, ideas, materials and information prepared or performed foror by Company and (xi) all information related to the business, products, purchases or salesof Company or any of its suppliers and customers, other than information that is publiclyavailable.     (c) *Covenant Not to Divulge Confidential Information. Company is entitled to preventthe disclosure of Confidential Information. As a portion of the consideration for theemployment of Executive and for the compensation being paid to Executive by Company,Executive agrees at all times during the term of his employment hereunder and thereafter tohold in strict confidence and not to disclose or allow to be disclosed to any person, firmor corporation, other than to his professional advisors (who have the obligation to maintainthe confidentiality of such information) and to persons engaged by Company to further thebusiness of Company, and not to use except in the pursuit of the business of Company, theConfidential information ,without the prior written consent of Company.     (d) *Return of Materials at Termination. In the event of any termination or cessation ofhis employment with company for any reason, Executive shall promptly deliver to Company alldocuments, data and other information derived from or otherwise pertaining to ConfidentialInformation. Executive shall not take or retain any documents or other information, or anyreproduction or excerpt thereof, containing or pertaining to any Confidential Information.     **Section 10.***Noncompetition.*     (a) During Executive’s employment hereunder and for a period of two years followingtermination of employment for any reason, Executive shall not do any of the following:     (i) without the express consent of the Board of Directors of Company, engagedirectly or indirectly, alone or as a shareholder, partner, director, officer,Executive of or consultant to any other business organization, in any businessactivities that:     (1) relate to the oil and gas drilling services industry (the“Designated Industry”); or     (2) were either conducted by Company prior to the termination ofExecutive’s employment hereunder or proposed to be conducted by Company atthe time of such termination;     (ii) approach any customer or supplier of Company in an attempt to divert it toany competitor of Company in the Designated Industry; or     (iii) solicit or encourage any employee or Executive of Company to end
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hisrelationship with Company or commence any such relationship with any competitor ofCompany.     (b) Executive’s noncompetition obligations hereunder shall not preclude Executive fromowning less than five percent of the common stock of any publicly traded corporationconducting business activities in the Designated Industry. If at any time the provisions ofthis Section 10 are determined to be invalid or unenforceable by reason of being vague orunreasonable as to area, duration or scope of activity, this Section 10 shall be considereddivisible and shall be immediately amended to only such area, duration and scope of activityas shall be determined to be reasonable and enforceable by the court or other body havingjurisdiction over the matter, and Executive agrees that this Section 10 as so amended shallbe valid and binding as though any invalid or unenforceable provision had not been includedherein.     **Section 11.***General*.     (a) *Notices. All notices and other communications hereunder shall be in writing or bywritten telecommunication, and shall be deemed to have been duly given upon delivery ifdelivered personally or via written telecommunication, or five days after mailing if mailedby certified mail, return receipt requested or by written telecommunication, to the relevantaddress set forth below, or to such other address as the recipient of such notice orcommunication shall have specified to the other party in accordance with this Section 11(a):       If to Company, to: With a copy to:       Allis-Chalmers Energy Inc.    5075 Westheimer, Suite 890    Houston, Texas 77056    Attention: General Counsel         If to Executive, to:         Munawar H. Hidayatallah Robert C. Kopple, Esq.  338 Entrada Drive Kopple & Klinger, LLP  Santa Monica, CA 90402 10866 Wilshire Blvd., Suite 1500    Los Angeles, CA 90024     (b) *Withholding. All payments required to be made to Executive by Company under thisagreement shall be subject to the withholding of such amounts, if any, relating to federal,state and local taxes as may be required by law.     (c) *Equitable Remedies. Each of the parties hereto acknowledges and agrees that uponany breach by Executive or Company of his or its obligations hereunder, Company andExecutive shall have no adequate remedy at law and accordingly shall be entitled to specificperformance and other appropriate injunctive and equitable relief.
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     (d) *Severability. If any provision of this Agreement is held to be illegal, invalid orunenforceable, such provision shall be fully severable, and this Agreement shall beconstrued and enforced as if such illegal, invalid or unenforceable provision nevercomprised a part hereof, and the remaining provisions hereof shall remain in full force andeffect and shall not be affected by the illegal, invalid or unenforceable provision or byits severance here from. Furthermore, in lieu of such illegal, invalid or unenforceableprovision, there shall be added automatically as part of this Agreement a provision assimilar in its terms to such illegal, invalid or unenforceable provision as may be possibleand be legal, valid and enforceable.     (e) *Waivers. No delay or omission by either party in exercising any right, power orprivilege hereunder shall impair such right, power or privilege, nor shall any single orpartial exercise of any such right, power or privilege preclude any further exercise thereofor the exercise of any other right, power or privilege.     (f) *Counterparts. This Agreement may be executed in multiple counterparts, each ofwhich shall be deemed an original, and all of which together shall constitute one and thesame instrument.     (g) *Captions. The captions in this Agreement are for convenience of reference only andshall not limit or otherwise affect any of the terms or provisions hereof.     (h) *Reference to Agreement. Use of the words “herein,” “hereof,” “hereto,”“hereunder”and the like in this Agreement refer to this Agreement only as a whole and not to anyparticular section or subsection of this Agreement, unless otherwise noted.     (i) *Binding Agreement. This Agreement shall be binding upon and inure to the benefit ofthe parties and shall be enforceable by the personal representative and heirs of Executiveand the successors and assigns of Company. This Agreement may be assigned by the Company toany company or to any successor to all or substantially all of the Company’s business as aresult of a merger, consolidation, sale of stock or assets, or similar transaction; providedthat in the event of any such assignment, the Company shall remain liable for all of itsobligations hereunder and shall be liable for all obligations of all such assigneeshereunder. If Executive dies while any amounts would still be payable to him hereunder, suchamounts shall be paid to Executive’s estate. This Agreement is not otherwise assignable byExecutive.     (j) *Entire Agreement. This Agreement contains the entire understanding of the parties,supersedes all prior agreements and understandings relating to the subject matterhereof and may not be amended except by a written instrument hereafter signed by eachof the parties hereto.     (k) *Governing Law. This Agreement and the performance hereof shall be construed andgoverned in accordance with the laws of the State of Texas, without regard to its choice oflaw principles.     (l) *Gender and Number. The masculine gender shall be deemed to denote the feminine orneuter genders, the singular to denote the plural, and the plural to denote the singular,where the context so permits.
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     **Section 13.*****Section 409A.***     (a) *Section 409A Compliance.*Executive and Company agree that this Agreement isintended to comply with Section 409A of the Internal Revenue Code of 1986, as amended(“Section 409A”) and that any ambiguous provision will be construed in a manner that willresult in treatment of the relevant portions of this Agreement as a nonqualified deferredcompensation plan that complies with or is exempt from Section 409A.     (b) *Specified Employees.*If Executive is a “specified employee,” as such term isdefined in Section 409A and determined as described below in this Section 13(b), anypayments of amounts which are deferred compensation subject to the provisions of Section409A that are payable as a result of Executive’s termination (other than death) shall not bepayable before the earliest of (i) the date that is six months after Executive’stermination, (ii) the date of Executive’s death, or (iii) the earliest date that otherwisecomplies with the requirements of Section 409A. This Section 13(b) shall be applied byaccumulating all payments that otherwise would have been paid within six months ofExecutive’s termination and paying such accumulated amounts at the earliest date whichcomplies with or is exempt from the application of the requirements of Section 409A.Executive shall be a “specified employee” for the twelve-month period beginning on April 1of a year if Executive is a “key employee” as defined in Section 416(i) of the InternalRevenue Code (without regard to Section 416(i)(5)) as of December 31 of the preceding yearor using such specified employee identification dates as designated by the CompensationCommittee in accordance with Section 409A and in a manner that is consistent with respect toall of Company’s nonqualified deferred compensation plans. For purposes of determining theidentity of specified employees, the Compensation Committee may establish procedures as itdeems appropriate in accordance with Section 409A.     EXECUTED as of the date and year first above written.      ALLIS-CHALMERS ENERGY INC.*****************************************************