Document:

exv10w1

 

Exhibit 10.1

EXECUTIVE EMPLOYMENT AGREEMENT

     This Executive Employment Agreement dated effective as of July 1, 2007, is between Strata
Directional Technology, Inc. (“Company”) and David K. Bryan (“Executive”).

R E C I T A L S:

     A. Executive is currently employed by the Company pursuant to an employment agreement dated
February 1, 2004 (the “2004 Employment Agreement”) which terminates on January 31, 2008;

     B. The Company wishes to continue to employ Executive, and Executive desires to continue
employment with Company by entering into a written agreement to specify the terms and conditions of
Executive’s continued employment with the Company;

     C. Executive is to be employed as President and Chief Executive Officer of the Company;

     D. Allis-Chalmers Energy Inc. (“Allis-Chalmers”) considers the maintenance of a sound
management team for the Company, its wholly owned subsidiary, including Executive, essential to
protecting and enhancing its best interests and those of its stockholders;

     E. Allis-Chalmers recognizes that the possibility of a change in control of the Company may
result in the departure or distraction of management to the detriment of the Company and its
stockholders; and

     F. Allis-Chalmers has determined that appropriate steps should be taken to obtain and retain
the continued attention and dedication of selected members of the Company’s management team to
their assigned duties without the distraction arising from the possibility of a change in control
of Allis-Chalmers.

     NOW, THEREFORE, in consideration of Executive’s past and future employment with Company and
other good and valuable consideration, the parties agree as follows:

     Section 1. Definitions. As used in this Agreement, the following terms will have the
following meanings:

     (a) Agreement refers to the Executive Employment Agreement represented by this
document.

     (b) Allis-Chalmers means Allis-Chalmers Energy Inc.

     (c) Cause has the meaning ascribed to it in Section 7(a)(ii).

     (d) Change In Control means:

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     (i) The acquisition after the date hereof by any individual, entity or group,
or a Person (within the meaning of Section 13(d)(3) of the Exchange Act), in each
case, other than an Excluded Person, of ownership of a majority of either: (i) the
then outstanding shares of Common Stock (“Outstanding Common Stock”) of
Allis-Chalmers; or (ii) the combined voting power of the then outstanding voting
securities of Allis-Chalmers entitled to vote generally in the election of directors
(“Outstanding Voting Securities”);

     (ii) Approval by the stockholders of Allis-Chalmers of a reorganization, merger
or consolidation, in each case, unless, either (1) immediately following such
reorganization, merger or consolidation, a majority of the then outstanding shares
of common voting securities of the entity resulting from such reorganization, merger
or consolidation and a majority of the combined voting power of the then outstanding
voting securities of such entity entitled to vote generally in the election of
directors (or similar governing persons) are then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Common Stock and Outstanding Voting Securities,
respectively, immediately prior to such reorganization, merger or consolidation, or
(2) a majority of the members of the board of directors (or similar governing body)
of the entity resulting from such reorganization, merger or consolidation were
members of the board of directors of Allis-Chalmers at the time of the execution of
the initial agreement providing for such reorganization, merger or consolidation; or

     (iii) Approval by the stockholders of Allis-Chalmers of a complete liquidation
or dissolution of Allis-Chalmers;

     (iv) The sale or other disposition of all or substantially all of the assets of
Allis-Chalmers and its subsidiaries taken as a whole, other than by way of a merger
or consolidation and other than to a third party, with respect to which following
such sale or other disposition, a majority of the then outstanding shares of common
stock of such third party and a majority of the combined voting power of the then
outstanding voting securities of such third party entitled to vote generally in the
election for directors (or similar governing persons) are then beneficially owned,
directly or indirectly, by all or substantially all of the individuals and entities
who were the beneficial owners of the Outstanding Common Stock and Outstanding
Voting Securities, respectively, immediately prior to such sale or other
disposition.

     (e) Code means the Internal Revenue Code of 1986, as amended.

     (f) Common Stock means the common stock, $.01 par value of Allis-Chalmers.

     (g) Company means Strata Directional Technology, Inc.

     (h) Confidential Information has the meaning ascribed to it in Section 9(b).

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     (i) Constructively Terminated with respect to an Executive’s employment with Company
will be deemed to have occurred if Executive terminates his employment within six months
following the date on which:

     (i) the Company demotes Executive to a lesser position, either in title or
responsibility, than the highest position held by Executive with Company at any time
during Executive’s employment with Company after the date hereof;

     (ii) the Company decreases Executive’s salary below the highest level in effect at
any time during Executive’s employment with Company or reduces Executive’s benefits and
perquisites below the highest levels in effect at any time during Executive’s
employment with Company (other than as a result of any amendment or termination of any
Executive or group or other executive benefit plan, which amendment or termination is
applicable to all executives of Company or any inadvertent reduction in benefits that
Company cures within 30 days after receiving written notice of such reduction);

     (iii) the Company requires Executive to relocate to a principal place of business
more than 50 miles from the principal place of business occupied by Company on the
first day of an Applicable Period;

     (iv) Allis-Chalmers is subject to a Change In Control, unless Executive accepts
employment with a successor to the Company or Allis-Chalmers; or

     (v) the Company breaches any other material term of this Agreement which is not
cured by Company within 30 days after receiving notice of such breach.

     (j) Determination has the meaning ascribed to such term in Section 1313(a) of the Code.

     (k) Disability with respect to Executive shall be deemed to exist if he meets the
definition of disability under the terms of the Company’s current long-term disability
policy (or any replacement long-term disability policy). Any refusal by Executive to submit
to a reasonable medical examination to determine whether Executive is so disabled shall be
deemed conclusively to constitute evidence of Executive’s disability.

     (l) Executive refers to David K. Bryan.

     (m) Excluded Person means any Person who beneficially owns more than 10% of the
outstanding shares of Allis-Chalmers at any time prior to the date hereof.

     (n) Incentive Plan means the Allis-Chalmers Energy Inc. 2006 Incentive Stock Plan, as
amended from time to time.

     (o) Inventions has the meaning ascribed to it in Section 8(a).

     (p) Salary has the meaning ascribed to it in Section 5(a).

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     (q) Separation Payment Period has the meaning ascribed to it in Section 7(b)(ii).

     (r) Separation Payments has the meaning ascribed to it in Section 7(b)(ii).

     Section 2. Employment. Company hereby employs Executive, and Executive hereby accepts
employment by Company, upon the terms and subject to the conditions hereinafter set forth. The
2004nt Agreement is hereby terminated and superseded by this Agreement, effective as of the date
hereof.

     Section 3. Duties. Executive shall be employed as the President and Chief Executive Officer
and shall report directly to the Chief Executive Officer and Chief Operating Officer of
Allis-Chalmers and Board of Directors of the Company. Executive agrees to devote such time as is
necessary to perform his duties attendant to his executive position with Company, in a manner
consistent with Executive’s employment prior to the date hereof. Executive shall be allowed to
engage in other activities as an investor as well as participate in activities of charitable
organizations of his choice so long as they do not materially interfere with his duties for
Company.

     Section 4. Term. The term of employment of Executive hereunder shall commence on the date of
this Agreement and terminate July 1, 2010.

     Section 5. Compensation and Benefits. In consideration for the services of Executive
hereunder, Company shall compensate Executive as follows (except as set forth herein, Executive
acknowledges payment in full of all amounts due to him for services rendered prior to the date
hereof):

     (a) Salary. Company shall pay Executive, semi-monthly in arrears with its normal
payroll procedures, a salary which is equivalent to an annual rate of $250,000 per annum
less applicable statutory deductions and withholdings (the “Salary”) payable in accordance
with the Company’s regular payroll procedures currently in effect. Any increase in the
Salary shall be in the sole discretion of the Compensation Committee of the Board of
Directors of Allis-Chalmers.

     (b) Management Incentive Bonus; . Executive shall be entitled to receive a bonus equal
to a maximum of 100% of his salary if the Company achieves its budgeted EBITDA goals as
determined by the Chief Executive Officer of Allis-Chalmers and the Compensation Committee
of the Board of Directors. Such bonus shall be paid annually within 30 days following
Allis-Chalmer’s release of its audited financial statements for each fiscal year during the
term hereof. Executive shall also be eligible to receive from Company such other annual
management incentive bonuses as may be provided in management incentive bonus plans adopted
from time to time by Company.

     (c) Vacation. Executive shall be entitled to four (4) weeks paid vacation per year.
Unless otherwise approved by the Chief Executive Officer or Chief Operating Officer of
Allis-Chalmers, a maximum of ten days accrued vacation not taken in any calendar year shall
be carried forward and may be used in the next subsequent calendar year. Executive shall
schedule his paid vacation to be taken at times which are reasonably and mutually convenient
to both Company and Executive.

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     (d) Insurance Benefits. Company shall provide accident, health, dental, disability and
life insurance for Executive under the group accident, health, dental, disability and life
insurance plans as may be maintained by Company for its full-time, salaried Executives.

     (e) Car Allowance. The Executive will be paid a $1,000.00 per month car allowance
during the term of this Agreement.

     Section 6. Expenses. The parties anticipate that in connection with the services to be
performed by Executive pursuant to the terms of this Agreement, Executive will be required to make
payments for travel, entertainment of business associates and similar expenses. Company shall
reimburse Executive for all reasonable expenses of types authorized by Company and incurred by
Executive in the performance of his duties hereunder, consistent with past practices. Executive
shall comply with such reporting requirements with respect to expenses as Company may establish
from time to time.

     Section 7. Termination.

     (a) General. Executive’s employment hereunder shall commence on the Commencement Date
and continue until the end of the term specified in Section 4, except that the employment of
Executive hereunder shall terminate prior to such time in accordance with the following:

     (i) Death or Disability. Upon the death of Executive during the term of his
employment hereunder or, at the option of Company, in the event of Executive’s
Disability, upon 30 days’ notice to Executive.

     (ii) For Cause. For “Cause” immediately upon written notice by Company to
Executive. A termination for Cause shall mean: (i) the commission of any act of
dishonesty, fraud, misrepresentation, misappropriation, or embezzlement by Executive
involving the Company; (ii) Executive’s unauthorized use or disclosure of any
confidential information or trade secrets of the Company; (iii) any violation by
Executive of a law or regulation applicable to the Company’s business, which violation,
in the sole discretion of the Board of the Company or Allis-Chalmers, does or is
reasonably like to cause material injury to the Company; (iv) Executive’s conviction
of, or plea of nolo contendere or guilty to (a) a felony or (b) any other crime which
involves moral turpitude; (v) Executive’s continued failure, in the sole discretion of
the Board, to perform the principal duties, functions and responsibilities of his
position (other than any such failure resulting from Executive’s Disability (as defined
below)) or to follow the directives of the Board after written notice from the Company
identifying the deficiencies in performance and a reasonable cure period of not less
than thirty (30) days of any breach capable of cure; gross negligence or willful
misconduct in the performance of Executive’s duties; or (vi) a material and willful
breach of Executive’s fiduciary duties to the Company.

     (iii) Without Cause. Without Cause upon notice by the Board of Directors to
Executive or upon notice by Executive to the Board of Allis-Chalmers if Executive has
been Constructively Terminated.

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     (b) Separation Pay.

     (i) Termination Upon Death or Disability or For Cause. Executive shall not be
entitled to any separation pay or other compensation upon termination of his employment
pursuant to Section 7(a)(i) or (ii) except for his Salary earned but unpaid as of the
date of termination, unpaid expense reimbursements under Section 6 for expenses
incurred in accordance with the terms hereof prior to termination, and compensation for
accrued, unused vacation as of the date of termination.

     (ii) Termination Without Cause. In the event Executive’s employment hereunder is
terminated pursuant to Section 7(a)(iii), Company shall pay Executive Separation
Payments as Executive’s sole remedy in connection with such termination. “Separation
Payments” are payments made at the semi-monthly rate of Executive’s then current Salary
in effect immediately preceding the date of termination. Separation Payments shall be
made for the remaining term of this Agreement (the “Separation Payment Period”) and
shall be paid by Company in equal semi-monthly payments in arrears or in accordance
with its then-current normal payroll procedure. Company shall also pay Executive his
Salary earned but unpaid as of the date of termination, unpaid expense reimbursements
under Section 6 for expenses incurred in accordance with the terms hereof prior to
termination, and compensation for accrued, unused vacation as of the date of
termination.

     Section 8. Inventions; Assignment.

     (a) Inventions Defined. All rights to discoveries, inventions, improvements, designs
and innovations (including all data and records pertaining thereto) that relate to the
business of Company, whether or not patentable, copyrightable or reduced to writing, that
Executive may discover, invent or originate during the term of his employment hereunder, and
for a period of six months thereafter, either alone or with others and whether or not during
working hours or by the use of the facilities of Company (“Inventions”), shall be the
exclusive 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 deem
necessary to protect or perfect its rights therein, and shall assist Company, at Company’s
expense, in obtaining, defending and enforcing Company’s rights therein. Executive hereby
appoints Company as his attorney-in-fact to execute on his behalf any assignments or other
documents 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 interest of Executive in the Inventions. Executive agrees that Company may apply for
and receive patent rights (including Letters
Patent in the United States) for the Inventions in Company’s name in such countries as
may be determined solely by Company. Executive shall communicate to Company all facts known
to Executive relating to the Inventions and shall cooperate with Company’s reasonable
requests in connection with vesting title to the Inventions and related patents exclusively
in Company and in connection with obtaining, maintaining and protecting Company’s exclusive
patent rights in the Inventions.

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     (c) Successors and Assigns. Executive’s obligations under this Section 8 shall inure
to the benefit of Company and its successors and assigns and shall survive the expiration of
the term of this Agreement for such time as may be necessary to protect the proprietary
rights of Company in the Inventions.

     Section 9. Confidential Information.

     (a) Acknowledgment of Proprietary Interest. Executive acknowledges the proprietary
interest of Company in all Confidential Information. Executive agrees that all Confidential
Information learned by Executive during his employment with Company or otherwise, whether
developed by Executive alone or in conjunction with others or otherwise, is and shall remain
the exclusive property of Company. Executive further acknowledges and agrees that his
disclosure of any Confidential Information will result in irreparable injury and damage to
Company.

     (b) Confidential Information Defined. “Confidential Information” means all
confidential and proprietary information of Company, including without limitation (i)
information derived from reports, investigations, experiments, research and work in
progress, (ii) methods of operation, (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 and policies, (x) all other concepts, ideas, materials and information
prepared or performed for or by Company and (xi) all information related to the business,
products, purchases or sales of Company or any of its suppliers and customers, other than
information that is publicly available.

     (c) Covenant Not To Divulge Confidential Information. Company is entitled to prevent
the disclosure of Confidential Information. Company agrees to and has provided Confidential
Information to Executive since Executive’s employment with the Company and Executive
acknowledges and agrees that, during the course of his employment, Executive will be exposed
to, have access to, and gain knowledge of Confidential Information. As a portion of the
consideration for the employment 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 to hold in strict confidence and not to disclose or allow to be
disclosed to any person, firm or corporation, other than to his professional advisors (who
have the obligation to maintain the confidentiality of such information) and to persons
engaged by Company to further the business of Company, and not to use except in the pursuit
of the business of Company, the Confidential Information, without the prior written consent
of Company.

     (d) Return of Materials . In the event of any termination or cessation of his
employment with Company for any reason, or request by the Company at anytime, Executive
shall promptly deliver to Company all documents, data and other information derived from or
otherwise pertaining to Confidential Information. Executive shall not take or retain any
documents or other information, or any reproduction or excerpt thereof, containing or
pertaining to any Confidential Information.

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     Section 10. Noncompetition.

     (a) Executive understands that the Confidential Information and Executive’s work and
experience with Company has and will continue to enhance Executive’s value not only to
Company, but also to its competitors, and that the nature of the Confidential Information
to which Executive shall and will have access will make it difficult, if not impossible,
for Executive to work for a competitor or for any other company which competes with the
Company’s business, and for whom Executive, while employed by Company, has performed
services within twenty four months prior to the date of Executive’s termination without
disclosing or utilizing the Confidential Information to which he has had access during
the course of Executive’s employment. Executive further acknowledges and agrees that
Company’s agreement to impart to and to provide Executive with access to its Confidential
Information is ancillary to and contingent upon Executive’s agreement and that he will
not during Executive’s employment and for a period of two years immediately following
Executive’s last day of employment with Company or two years from the date of any court
order enforcing all or part of this Agreement, whichever is later (the “Non-Compete
Period”):

     (i) carry on, initiate or have any ownership interest (directly or indirectly) in
any business that services, or distributes services similar to those of Company or its
affiliates, successors or assigns or that otherwise competes with Company or its
affiliates, successors or assigns provided that this provision shall not apply to the
ownership by Executive of less than 5% of a class of publicly traded equity securities;

     (ii) become employed by, derive benefit from or otherwise provide services for
compensation (whether as an owner, partner, consultant, employee or otherwise) or
divert Company’s business to any person or entity that is a Major Competitor (as
defined below) of Company or its affiliates, successors or assigns, or any other
business in which Company maintains customers or engages in business and for whom
Executive, while employed by Company, has performed services within twenty four months
prior to the date of Executive’s separation; or

     (iii) contact, solicit, or divert (directly or indirectly), for the purpose of
attempting to enter into a business relationship related to the distribution or
services provided by Company or its subsidiaries, affiliates, successors or assigns any
customer with whom Company has had a contractual relationship during the two year
period prior to Executive’s last day of employment with Company.

     (b) Company’s business includes, without limitation, horizontal, directional and
measurement while drilling services to the oil and gas industry. This description of
the business, both actual and intended, is not intended to be limiting. The business
will continue to grow and evolve and the range of services and the ways of providing
services will continue to be enhanced and supplemented.

     (c) If any part of this provision is held unenforceable or invalid, the remaining
parts thereof shall continue to be enforceable.

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     (d) Executive acknowledges and agrees that Executive’s signing of and compliance is
a condition of Executive’s employment. Executive acknowledges and agrees that the scope
of this Agreement and promises herein are reasonable as to time, area and scope of
activity restrained and are necessary to protect Company’s legitimate business interests.
Specifically, Executive has considered this Agreement and the promises Executive has
made in light of the benefits that Executive has and will continue to obtain and has
concluded that the promises and agreements leave Executive with a reasonable number and
variety of permitted avenues for engaging in employment in a number of locations and a
number of occupations during the period of restriction. If the provisions of this
Section 10 pertaining to time, geographic area, and scope are deemed unenforceable by a
court of competent jurisdiction, then such provision shall include the maximum time,
geographic area, and scope which a court of competent jurisdiction determines to be
reasonable, valid, and enforceable. To the extent that the court permits bluepenciling
of the non-competition agreement, the parties intend that the court will take all action
necessary to revise it and those provisions necessary to it so as to create a binding and
enforceable provision.

     (e) Major Competitor shall include, without limitation, (i) all entities which are
in the same or a similar business to that of Company, its affiliates, successors or
assigns and/or which offer a service and/or product the same or similar to any service
and/or product offered or in the process of being developed or offered by Company, its
subsidiaries, affiliates, successors or assigns and (ii) all of the following entities
and their respective successors in interest:

Baker Hughes Inteq;

Schlumberger (Anadrill);

Pathfinder;

Scientific Drilling;

Weatherford International

     Section 11. General.

     (a) Notices. All notices and other communications hereunder shall be in writing or by
written telecommunication, and shall be deemed to have been duly given upon delivery if
delivered personally or via written telecommunication, or five days after mailing if mailed
by certified mail, return receipt requested or by written telecommunication, to the relevant
address set forth below, or to such other address as the
recipient of such notice or communication shall have specified to the other party in
accordance with this Section 11(a):

If to Company, to:

c/o Allis-Chalmers Energy Inc.

5075 Westheimer, Suite 890

Houston, Texas 77056

Attention: Chief Executive Officer

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If to Executive, to the last address for Executive appearing on the Company’s records

     (b) Withholding. All payments required to be made to Executive by Company under this
Agreement 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 upon
any breach by Executive or Company of his or its obligations hereunder, Company shall have
no adequate remedy at law and accordingly shall be entitled to specific performance and
other appropriate injunctive and equitable relief.

     (d) Severability. If any provision of this Agreement is held to be illegal, invalid
or unenforceable, such provision shall be fully severable, and this Agreement shall be
construed and enforced as if such illegal, invalid or unenforceable provision never
comprised a part hereof, and the remaining provisions hereof shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable provision or by
its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable
provision, there shall be added automatically as part of this Agreement a provision as
similar in its terms to such illegal, invalid or unenforceable provision as may be possible
and be legal, valid and enforceable.

     (e) Waivers. No delay or omission by either party in exercising any right, power or
privilege hereunder shall impair such right, power or privilege, nor shall any single or
partial exercise of any such right, power or privilege preclude any further exercise thereof
or the exercise of any other right, power or privilege.

     (f) Counterparts. This Agreement may be executed in multiple counterparts, each of
which shall be deemed an original, and all of which together shall constitute one and the
same instrument.

     (g) Captions. The captions in this Agreement are for convenience of reference only
and shall 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 any
particular section or subsection of this Agreement, unless otherwise noted.

     (i) Binding Agreement. This Agreement shall be binding upon and inure to the benefit
of the parties and shall be enforceable by the personal representatives and heirs of
Executive and the successors and assigns of Company. This Agreement may be assigned by the
Company or any Company to any Company or, subject to Section 7(b)(iii), to any successor to
all or substantially all of the Company’s business as a result of a merger, consolidation,
sale of stock or assets, or similar transaction; provided that in the event of any such
assignment, the Company shall remain liable for all of its obligations hereunder and shall
be liable for all obligations of all such assignees hereunder. If Executive dies while any
amounts would still be payable to him hereunder, such amounts shall be paid to Executive’s
estate. This Agreement is not otherwise assignable by Executive.

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     (j) Entire Agreement. This Agreement contains the entire understanding of the
parties, supersedes all prior agreements and understandings relating to the subject matter
hereof and may not be amended except by a written instrument hereafter signed by each of the
parties hereto.

     (k) Governing Law. This Agreement and the performance hereof shall be construed and
governed in accordance with the laws of the State of Texas, without regard to its choice of
law principles.

     (l) Gender and Number. The masculine gender shall be deemed to denote the feminine or
neuter genders, the singular to denote the plural, and the plural to denote the singular,
where the context so permits.

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     EXECUTED
July 9, 2007 and effective as of the date and year first above written.

	 	 	 	 	 
	 	STRATA DIRECTIONAL TECHNOLOGY, INC.

 	 
	 	By:  	/s/Theodore F. Pound III
 	 
	 	 	Theodore F. Pound III 	 
	 	 	Vice President & Secretary 	 
	 
	 	 	 
	 	By:  	                                           /s/ David K. Bryan
 	 
	 	 	David K. Bryan 	 
	 	 	 	 
	 

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Exhibit 4.20

First Amendment to

Alion Science and Technology Corporation

Employee Ownership, Savings and Investment Plan

     WHEREAS, Alion Science and Technology Corporation (the “Company”) maintains the Alion Science
and Technology Corporation Employee Ownership, Savings and Investment Plan (the “Plan”) for the
benefit of its employees and employees of other adopting employers, and was last amended and
restated as of October 1, 2006; and

     WHEREAS, the Board of Directors of the Company, pursuant to Plan Section 15.1 of the Plan, has
delegated authority to amend the Plan to the undersigned officer, provided he determines that the
amendment would not materially increase costs of the Plan to the Company or any Adopting Employer.

     NOW, THEREFORE, pursuant to the powers of amendment reserved under Section 15.1 of the Plan,
the Plan is hereby amended by the Company, effective October 1, 2006, unless otherwise provided, by
the adoption of the following provisions:

	 	1.	 	Subsection 1.1(b) is hereby amended in its entirety to read as follows:

	 	“(b)	 	The Non ESOP Component is intended to meet the applicable
requirements of Section 401(a) of the Internal Revenue Code of 1986 (the
“Code”), including a cash or deferred arrangement intended to qualify under
Section 401(k) of the Code. The ESOP Component is intended to meet the
applicable requirements of Sections 401(a), 409, and 4975(e)(7) of the Code and
Section 407(d)(6) of the Employee Retirement Income Security Act of 1974
(“ERISA”), which also includes a cash or deferred arrangement intended to
qualify under Section 401(k) of the Code. The ESOP Component of the Plan shall
be invested exclusively in stock of the Company, unless, using an abuse of
discretion standard, it is clearly determined by the ESOP Committee that the
financial collapse and bankruptcy of the Company are imminent. Notwithstanding
the foregoing, a small portion of the ESOP Component may be invested in cash or
cash equivalents solely to meet the ESOP Component’s liquidity needs for
distributions and pending investment in stock of the Company. The terms of the
Plan shall be interpreted consistent with the foregoing.”

	 	2.	 	Subsection 5.1(c) is hereby amended by deleting the following phrase therefrom:
	 
	 	 	 	“accumulated in a short term interest fund in the ESOP Component of the Plan”
	 
	 	 	 	and substituting the following phrase therefore:
	 
	 	3.	 	“accumulated in an investment selected by the ESOP Committee under the ESOP
Component of the Plan”

 

 

	 	4.	 	Subsection 5.1(d) is hereby amended in its entirety to read as follows:
	 
	 	 	 	“(d) Except as otherwise determined by the ESOP Committee and subject to the
provisions of the Plan, a new Employee’s or rehire Employee’s Rollover Contribution
may be allocated to the Participant’s ESOP Rollover Account and invested in Common
Stock on the terms and conditions set forth in this subsection 5.1(d) and in
accordance with rules and procedures established by the ESOP Committee. Amounts to
be invested in Common Stock will be initially accumulated in an investment selected
by the ESOP Committee under the ESOP Component of the Plan, and will be converted to
Common Stock on the Allocation Date coincident with or next following the date the
Rollover Contribution is accepted and received by the ESOP Committee or Trustee
based on the Current Market Value as of the Allocation Date coincident with such
conversion date or the immediately preceding Allocation Date, whichever is lower.
Amounts not invested in the ESOP Rollover Account may be allocated to the
Participant’s Non ESOP Rollover Account and invested in accordance with Section
5.1(a). Amounts held in the ESOP Rollover Account will be subject to the
diversification rules of Section 5.2. Notwithstanding the foregoing, with respect
to new Employees as a result of a merger, acquisition or consolidation of another
entity, where such new Employee’s Rollover Contribution is received by the Trustee
after the Allocation Date next occurring after such merger, acquisition or
consolidation, the ESOP Committee shall have discretion to decide that such new
Employee’s Rollover Contribution be initially accumulated in an investment selected
by the ESOP Committee under the ESOP Component of the Plan, and converted to Common
Stock at the Allocation Date coinciding with or next following the receipt of such
new Employee’s properly completed investment election form, based on the Current
Market Value as of the Allocation Date immediately preceding the date such
transferred funds were received or the Allocation Date immediately preceding the
receipt of such Employee’s properly completed investment election form, whichever is
less; provided, however, that the foregoing shall apply only if (i) such new
Employee’s properly completed investment election form is received on or before the
Allocation Date immediately preceding the date such transferred funds were received,
and (ii) the funds are received before the earlier of the date that the Trustee
releases the value of the Common Stock as of the prior Allocation Date or forty-five
(45) days following such Allocation Date.
	 
	 	5.	 	Subsections 5.1(a), (f) and (h) are hereby amended by deleting the following
phrase therefrom:
	 
	 	 	 	“Except as otherwise prescribed in subsections 5.1(b), (c), (d), and (e) and Section
5.2,”
	 
	 	 	 	and substituting the following phrase therefore:
	 
	 	 	 	“Except as otherwise prescribed in subsections 5.1(b), (c), (d), (e) (j) and (k) and
Section 5.2,”

2

 

	 	6.	 	Subsection 5.1(j) is hereby amended in its entirety to read as follows:
	 
	 	 	 	Except as otherwise determined by the ESOP Committee or provided herein, a
Participant’s Account attributable to a direct transfer in accordance with Section
4.6 may be invested in Common Stock only at or near the time the direct transfer is
accepted and received by the ESOP Committee or Trustee, and only if the Participant
is a new Employee. Amounts to be invested in Common Stock will be initially
accumulated in an investment selected by the ESOP Committee under the ESOP Component
of the Plan, and will be converted to Common Stock on the Allocation Date coincident
with or next following the date of receipt based on the Current Market Value as of
the Allocation Date coincident with or immediately preceding such investment date,
whichever is less. Amounts not invested in the ESOP Account may be invested in
accordance with Section 5.1(a). Amounts held in the ESOP Account will be subject to
the diversification rules of Section 5.2. Notwithstanding the foregoing, the ESOP
Committee may determine that some or all such transferred amounts are not eligible
to be invested in Common Stock. Also notwithstanding the foregoing, with respect to
new Employees as a result of a merger, acquisition or consolidation of another
entity, where such new Employee’s direct transfer is received by the Trustee after
the Allocation Date next occurring after such merger, acquisition or consolidation,
the ESOP Committee shall have discretion to decide that such new Employee’s direct
transfer be initially accumulated in an investment selected by the ESOP Committee
under the ESOP Component of the Plan, and converted to Common Stock at the
Allocation Date coinciding with or next following the receipt of such new Employee’s
properly completed investment election form, based on the Current Market Value as of
the Allocation Date immediately preceding the date such transferred funds were
received or the Allocation Date immediately preceding the receipt of such Employee’s
properly completed investment election form, whichever is less; provided, however,
that the foregoing shall apply only if (i) such new Employee’s properly completed
investment election form is received on or before the Allocation Date immediately
preceding the date such transferred funds were received, and (ii) the funds are
received before the earlier of the date that the Trustee releases the value of the
Common Stock as of the prior Allocation Date or forty-five (45) days following such
Allocation Date.
	 
	 	7.	 	A new subsection 5.1(k) is hereby added to read as follows:
	 
	 	 	 	“Effective September 30, 2007, and each Allocation Date thereafter or such other
interim Valuation Date determined by the ESOP Committee in its sole discretion, a
Participant may elect to transfer a portion of his or her Non ESOP Accounts (other
than After-Tax Contributions, ITSC Money Purchase Pension Plan Contributions, JJMA
QVEC Accounts and JJMA Money Purchase Pension Account and such other Accounts or
subaccounts as may be determined by the ESOP Committee in its sole discretion) to
the ESOP Component to be invested in Common Stock. Such election and transfer shall
be made in accordance with rules and procedures established by the ESOP Committee.
Unless otherwise determined by the ESOP Committee, the aggregate amount of such
transfers to be

3

 

	 	 	 	invested in the ESOP Component during any Plan Year shall not exceed five percent
(5%) of the total value of the ESOP Component as of the last day of the preceding
Plan Year. Amounts to be invested in Common Stock will be initially accumulated in
an investment selected by the ESOP Committee under the ESOP Component of the Plan,
and will be converted to Common Stock on the Allocation Date coincident with or next
following the Participant’s investment election based on the Current Market Value as
of the Allocation Date coincident with such conversion date. Amounts transferred
from the Non ESOP Component not invested in the Common Stock shall be returned to
the Participant’s Non ESOP Accounts to be invested in accordance with Section
5.1(a). Amounts transferred hereunder will be subject to the diversification rules
of Section 5.2. Notwithstanding the foregoing, the transferred amounts invested in
the ESOP Component as of September 30, 2007 shall be converted to Common Stock as of
that date using the Common Stock value as of the March 31, 2007 Valuation Date or
the September 30, 2007 Valuation Date, whichever is lower.”

	 	8.	 	The second sentence of subsection 5.6(a)(1) is hereby amended to read as
follows:
	 
	 	 	 	“Except as otherwise provided herein or as directed by the ESOP Committee, any
changes in the fair market value of the Trust Fund assets since the preceding
Valuation Date shall be charged or credited to each Account in the ratio that the
balance in each such Account as of the preceding Valuation Date bears to the
balances in all Accounts as of that Valuation Date with appropriate adjustments to
reflect any distributions, allocations or similar adjustments to such Account or
Accounts since that Valuation Date.”
	 
	 	9.	 	Subsection 9.2(b) is hereby amended in its entirety to read as follows:
	 
	 	 	 	“Except as otherwise provided in this Section 9.2, or in Sections 9.14 and 9.15,
payment of benefits to a Participant (or Beneficiary) shall commence as soon as
administratively feasible following the Participant’s Severance from Service,
Retirement, Disability, or death.”
	 
	 	10.	 	A new Section 16.8 “Participant Notices and Elections” is hereby added to read
as follows:
	 
	 	 	 	“Participant Notices and Elections. The Employer, Trustee and the ESOP
Committee may provide any notice or election required or provided for under the Plan
in electronic format, provided however, that the provision of such electronic notice
comports with regulations issued by the Department of Labor in effect at the time of
issuance such notice or election.”
	 
	 	11.	 	Section 1.10 of Supplement 1 — “Special Distribution Rules” — is hereby amended
to clarify the application of the joint and survivor annuity payment to former JJMA
ESOP participants with respect to their money purchase pension account balances
transferred to the Non ESOP Component by deleting the second sentence thereof and by
substituting the following sentences in lieu thereof:

4

 

	 	 	 	“A Former JJMA Participant whose Accounts under this Plan exceed Five Thousand
Dollars ($5,000) shall have the right to have their JJMA Money Purchase Pension
Account under the Non ESOP Component paid as follows:

	 	(a)	 	at retirement in the form of a qualified
joint and survivor (50%) annuity (if married) or a single life
annuity (if unmarried), unless he or she elects to receive a joint
and 100% survivor annuity (if married) or an optional form of payment
available under this Plan. The amount payable monthly under the
annuity forms described in the preceding sentence shall be the amount
that can be purchased from an insurance company selected by the ESOP
Committee, in its sole discretion, with the amount in the
Participant’s JJMA Money Purchase Pension Account under the Non ESOP
Component. The joint and 50% survivor annuity for a married
Participant shall be payable monthly to the Participant during the
Participant’s lifetime after retirement with fifty percent (50%) of
such benefit continued to the Participant’s spouse for the duration
of the spouse’s lifetime after the death of the Participant. Any
such election of the Participant must be made in writing not more
than one hundred and eighty (180) days (ninety (90) days for
distributions made on or before December 31, 2006) before benefit
payments begin, consented to by the Participant’s spouse and filed
with the ESOP Committee. The election must designate a form of
benefit payment, and a specific alternate Beneficiary (including any
class of Beneficiaries or any contingent Beneficiaries), which may
not be changed without spousal consent. The spouse’s consent must
acknowledge the effect of the election. Consent of a prior spouse
shall be invalid with respect to a current spouse. Before any
payment is made, the Participant must have received from the ESOP
Committee written notification that an election is available and a
general description of the terms of the methods of payment. The
Participant may request within sixty (60) days of the receipt of
notice of election an explanation in non-technical language of the
terms and conditions of the joint and 50% survivor annuity or other
ESOP forms of payment and the effect of its selection. The ESOP
Committee shall respond within thirty (30) days of the receipt of the
Participant’s request for additional information. The Participant
shall have at least one hundred and eighty (180) days (ninety (90)
days for distributions made on or before December 31, 2006) after
receiving the written explanation in which to make his or her
selection. The Participant may change their election at any time
before payments begin. However, if a married Participant elects the
joint and 50% survivor annuity and then changes the election, the
Participant may do so only with the written consent of the
Participant’s spouse. Consent of the Participant’s spouse must be
witnessed by a Plan representative or notary public.

5

 

	 	(b)	 	at death, if such a Participant is married
and dies before the benefit commencement date, in the form of a
single life annuity to the Participant’s surviving spouse. The
amount payable monthly under the annuity form described in the
preceding sentence shall be the amount that can be purchased from an
insurance company selected by the ESOP Committee, in its sole
discretion, with one hundred percent (100%) of the amount in the
Participant’s JJMA Money Purchase Pension Account under the Non ESOP
Component. The annuity shall be payable monthly to the surviving
spouse for the surviving spouse’s lifetime. A Participant’s spouse
may direct that payment under such annuity commence within a
reasonable period after the Participant’s death. If the spouse does
not so direct, payment under such annuity shall commence at the time
the Participant would have attained Normal Retirement Age. Such a
Participant shall have the right, during the election period, to
elect to have death benefits paid to another Beneficiary or under an
optional form of payment permitted under the Plan. Any such election
of a Participant must be made in writing, consented to by the
Participant’s spouse, and filed with the ESOP Committee. Consent of
the Participant’s spouse must be witnessed by a Plan representative
or notary public. The election must designate a specific alternate
beneficiary (including any contingent beneficiaries) that may not be
changed without spousal consent. The spouse’s consent must
acknowledge the effect of the election. Any consent by a spouse
shall be effective only with respect to such spouse. The election
period shall be the period which begins on the first day of the Plan
Year in which the Participant attains age thirty-five (35) and ends
on the date of the Participant’s death. If a Participant terminates
employment with the Employer prior to the first day of the Plan Year
in which he attains age thirty-five (35), with respect to the JJMA
Money Purchase Pension Account under the Non ESOP Component as of the
date of termination, the election period shall begin on the date of
separation. A Participant who will not yet attain age thirty-five
(35) as of the end of any current Plan Year may make a special
qualified election to designate another Beneficiary for the period
beginning on the date of such election and ending on the first day of
the Plan Year in which he will attain age thirty-five (35). Such
election shall not be valid unless the Participant receives a written
explanation comparable to the explanation to be provided during the
applicable period (as described below). The Participant’s spouse
will automatically be reinstated as the Beneficiary as of the first
day of the Plan Year in which he attains age thirty-five (35),
subject to the right to elect to designate another Beneficiary. The
ESOP Committee shall provide each Participant within the applicable
period a written explanation of: (i) the terms and

6

 

	 	 	 	conditions of the surviving spouse benefit; (ii) the Participant’s
right to make, and the effect of, an election to designate another
Beneficiary or an alternative form of distribution; (iii) the rights
of the Participant’s spouse; (iv) the right to make, and the effect
of a revocation of a previous election to designate another
Beneficiary or an alternative form of distribution; and (v) the
relative values of the various optional methods of payment under the
Plan. For this purpose, the applicable period shall mean the period
beginning with the first day of the Plan Year in which the
Participant attains age thirty-two (32) and ending with the close of
the Plan Year preceding the Plan Year in which the Participant
attains age thirty-five (35). Regardless, if a Participant enters
the Plan or first becomes subject to the requirements of this
paragraph after the first day of the Plan Year in which the
Participant attained age thirty-five (35), the applicable period
shall continue for the one (1) year period after the date on which
the Participant commenced participation in the Plan or first becomes
subject to the requirements of this paragraph, if later. If a
Participant separates from service before attaining age thirty-five
(35), the applicable period shall begin one (1) year before the date
the Participate separates from service and end one (1) year after the
Participant separated from service. The Participant and the
Participant’s spouse may change their election at any time before the
Participant’s death.”

	 	12.	 	A new Supplement 4 is hereby added, effective as stated therein, as attached
hereto.

     IN WITNESS WHEREOF, Alion Science and Technology Corporation has caused this First Amendment
to the Plan to be executed on its behalf by the Chief Executive Officer as of the 9th day of July,
2007.

	 	 	 	 	 
	 	Alion Science and Technology Corporation

 	 
	 	By:  	/s/ Bahman Atefi
 	 
	 	 	Its:  Chief Executive Officer 	 
	 	 	 	 

7

 

	 	 	 	 	 

Supplement No. 4

WCI 401(k) Plan

1.1 Purpose. The purpose of this Supplement No. 4 is to set forth provisions applicable to
individuals (“Former WCI Participants”) who were previously participants in the 401(k) plan
sponsored by Washington Consulting, Inc. (the “WCI Plan”) immediately before the acquisition of
Washington Consultants, Inc. by the Company and who became participants in the Plan on September
11, 2006 (“WCI Plan Transfer Date”). The provisions of the Plan shall apply to the account
balances of such Former WCI Participants which were transferred from the WCI Plan to the Non ESOP
Component of the Plan (the “WCI Transfer Account”).

1.2 Participation. A Former WCI Participant shall become a Participant in the Plan as of
such date with respect to his WCI Transfer Account.

1.3 Mapping of Investments. Except as provided in Section 5.1(j) of the Plan, a Former WCI
Participant’s WCI Transfer Account shall be invested in the Non ESOP Component Funds that the ESOP
Committee, or its delegate, determines most closely resemble the investment funds under the WCI
Plan in which such account was invested immediately before the transfer.

1.4 Vesting. A Former WCI Participant shall be fully vested in his or her WCI Transfer
Account.

1.5 In-Service Withdrawals. A Former WCI Participant may withdraw from the Non ESOP
Component any portion or all of his or her WCI Pre-Tax and WCI Matching Accounts on or after
attainment of age fifty-nine and one-half (591/2). In addition, a Former WCI Participant may
withdraw from the Non ESOP Component any portion or all of his or her WCI Rollover Account at any
time.

1.6 Hardship Withdrawals. A Former WCI Participant may withdraw from the Non ESOP
Component any portion of his or her WCI Pre-Tax Account (excluding earnings) pursuant to a
financial hardship. All such withdrawals must be in accordance with Section 8.1 and 8.3 of the
Plan.

8

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