EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made, entered into and is
effective as of February 9, 2007 (the “Effective Date”) by and between KAL
Energy, Inc., a Delaware corporation (“Company”), and Cameron Reynolds
(“Executive”).

RECITALS

A.

The Company desires to employ Executive pursuant to the terms and conditions set
forth in this Agreement and Executive desires to be employed by the Company
pursuant to the terms and conditions of this Agreement.

NOW THEREFORE, the parties agree as follows:

1.

Employment Period.  Subject to the terms and conditions of this Agreement, the
Company hereby agrees to employ Executive during the Employment Period (as
defined below) and Executive hereby agrees to remain in the employ of the
Company and to provide services during the Employment Period in accordance with
this Agreement.  The “Employment Period” shall be the period beginning on the
Effective Date and ending on the fifth anniversary thereof, unless sooner
terminated as provided herein.

2.

Duties.  Executive agrees that during the Employment Period while Executive is
employed by the Company, Executive will devote fifty percent (50%) of the
Executive’s full business time, energies and talents to serving as the Chief
Executive Officer of the Company.  Executive will provide services for the
Company at the direction of the board of directors of the general partner of the
Company (the “Board”), which services will be consistent with those of the Chief
Executive Officer of similarly situated companies of a similar size and whose
business is similar in nature to the Company.  Consistent with the above,
Executive shall have such duties and responsibilities as may be assigned to
Executive from time to time by the Board, shall perform all duties assigned to
Executive faithfully and efficiently, subject to the direction of the Board, and
shall have such authorities and powers as are inherent to the undertakings
applicable to Executive’s position and necessary to carry out the
responsibilities and duties required of Executive hereunder.  Executive will
perform the duties required by this Agreement at the Company’s corporate
headquarters unless the nature of such duties requires otherwise.  The duties
will require the Executive to spend significant time on travel and possibly
relocate to another office if it is necessary and reasonable for the duties
required by the Company.  Notwithstanding the foregoing, during the Employment
Period, Executive may devote reasonable time to activities other than those
required under this Agreement, including activities involving professional,
charitable, educational, religious and similar type activities to the extent

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such activities do not, in the reasonable judgment of the Board, inhibit,
prohibit, interfere with or conflict with Executive’s duties under this
Agreement or conflict in any material way with the business of the Company
and/or any of its Affiliates.

3.

Compensation and Benefits.  Subject to the terms and conditions of this
Agreement, during the Employment Period, the Company shall compensate Executive
for Executive’s services as follows:

(a)

Commencing on the Effective Date and continuing for the Employment Period,
Executive shall be compensated at an annual rate of $66,000 (the “Annual Base
Salary”), which shall be payable in accordance with the normal payroll practices
of the Company.  

(b)

Executive shall be entitled to receive performance based annual incentive
bonuses (“Incentive Bonus”) from the Company in accordance with an incentive
bonus plan, the terms and conditions of which shall be mutually agreed to by the
Board and Executive (the “Incentive Bonus Plan”).  Awards pursuant to the
Incentive Bonus Plan shall be tied to improvement in the Company’s return on
capital employed or other appropriate measurements mutually agreed to by the
Board and Executive.

Executive shall be entitled to take vacations pursuant to the standard policy of
the Company and its Affiliates, which is four weeks per year as long as they
completely perform their duties as provided herein; however, vacation time shall
not be accrued nor cumulative for any purpose, including, but not limited to,
any payout at termination and/or severance pay.  Executive will be paid his full
compensation during vacation periods.  Sick leave shall be treated as vacation
time. Sick leave shall not be accrued or cumulative for any reason, including
but not limited to, any payout at termination and/or severance pay.

(c)

Executive shall be reimbursed by the Company, on terms and conditions that are
substantially similar to those that apply to other similarly situated senior
management employees of the Company, for reasonable out-of-pocket expenses for
entertainment, travel, meals, lodging and similar items that are consistent with
the Company’s expense reimbursement policy and actually incurred by Executive in
the promotion of the Company’s business.

4.

Termination; Rights and Payments Upon Termination.  Executive’s right to
benefits and payments, if any, for periods after the date on which Executive’s
employment with the Company terminates (the “Termination Date”) as described in
this Section 4 shall be determined in accordance with this Section 4 and payable
in accordance with the normal payroll practices of the Company. During the time
that Severance Payments, as set forth in paragraphs 4 (c), (d) and (e), are
being paid, if Executive is not employed and receiving medical, dental, life
insurance and disability

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insurance benefits (“Benefits”), Executive shall be provided, at no expense to
him and with no reduction to his Severance Payment, with Benefits to the same
extent and on the same terms as Benefits are then provided by the Company to
executives employed by the Company or its affiliates.

(a)

Minimum Payments.  If the Termination Date occurs for any reason, Executive
shall be entitled to the following payments, in addition to any payments or
benefits to which Executive may be entitled under the following provisions of
this Section 4 (other than this Section 4(a)) or the express terms of any
employee benefit plan or as required by law:

(i)

Executive’s earned but unpaid Annual Base Salary for the period ending on
Executive’s Termination Date;

(ii)

Incentive Bonus for the prior fiscal year, if any, in the event that the
Termination Date occurs after the end of a fiscal year, but before the Incentive
Bonus is actually paid; and

(iii)

Executive’s unreimbursed business expenses and all other items earned and owed
to Executive through and including or benefits which have vested as of the
Termination Date.

Payments to be made to Executive pursuant to this Section 4(a) shall be made
within 30 days after the Termination Date.  Except as may be otherwise expressly
provided to the contrary in this Agreement or as otherwise provided by law,
nothing in this Agreement shall be construed as requiring Executive to be
treated as employed by the Company following the Termination Date for purposes
of any employee benefit plan or arrangement in which Executive may participate
at such time.

(b)

Termination By The Company for Cause.  If the Termination Date occurs as a
result of the Company’s termination of Executive’s employment on account of
Cause, then, except as described in Section 4(a) or as agreed in writing between
Executive and the Company, Executive shall be entitled to payment of the
Severance Salary (payable in accordance with Section 3(a)) for a period of three
months immediately following such Termination Date.

(c)

Termination for Death or Disability.  If the Termination Date occurs as a result
of Executive’s death or Disability, then, except as described in Section 4(a) or
as agreed in writing between Executive and the Company, Executive (or in the
event of Executive’s death, Executive’s estate) shall be entitled to payment of
the Severance Salary (as defined in Section 4(g) below and payable in accordance
with Section 3(a)) for the Severance Period immediately following such
Termination Date.  The Company’s obligations under this Section 4(c) shall be
reduced by any benefit that

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Executive or Executive’s estate, as applicable, may receive from insurance
provided by the Company for Executive.

(d)

Certain Terminations by The Company or the Executive.  If the Termination Date
occurs as a result of Executive’s termination of employment (A) by the Company
for any reason other than Cause (and is not on account of Executive’s death,
Disability, or voluntary resignation, the mutual agreement of the parties or
pursuant to Sections 4(e) or 4(f)), or (B) by Executive for Good Reason, then,
except as described in Section 4(a) or as agreed in writing between Executive
and the Company, Executive shall be entitled to payment of the Severance Salary
(payable in accordance with Section 3(a)) for the Severance Period immediately
following such Termination Date.

Should the termination occur pursuant to this Section 4(d) by the Executive for
Good Reason due to a Change in Control, Executive must exercise such right to
terminate prior to, or concurrently with, the closing of the transaction that is
the cause of such Change in Control.  Upon the Company’s receipt of an offer
relating to a Change in Control, which the Company is willing to accept, the
Company shall immediately give Executive notice in writing that the Company
intends to accept the offer and submit concurrently therewith a copy of all of
the documents embodying the offer and make a full disclosure of all details of
the offer. The Company shall also immediately submit a copy of all of the
documents embodying any changes thereafter made to the offer and make a full
disclosure of all details of such changes.

(e)

Termination Due to Performance.  If the Termination Date occurs as a result of
Executive’s failure to satisfactorily perform his substantive duties under this
Agreement, then, except as described in Section 4(a) or as agreed in writing
between Executive and the Company, Executive shall be entitled to payment of the
Severance Salary (payable in accordance with Section 3(a)) for a period of three
months immediately following such Termination Date. For a termination under this
provision, Executive shall have 30 days after receipt of written notification
from the Company of such unsatisfactory performance to cure the same. The
written notice shall specify the unsatisfactory performance and identify what
the Company considers to be the cure.

(f)

Termination for Voluntary Resignation, Mutual Agreement or Other Reasons.  If
the Termination Date occurs as a result of Executive’s voluntary resignation,
the mutual agreement of the parties, or any reason other than those specified in
paragraphs (b), (c), (d) or (e) above, then, except as described in Section 4(a)
or as agreed in writing between Executive and the Company, Executive shall have
no right to payments or benefits under this Agreement (and the Company shall
have no obligation

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to make any such payments or provide any such benefits) for periods after the
Termination Date.

(g)

Definitions.  For purposes of this Agreement:

(i)

the term “Affiliate” shall mean any Person (as defined in Section 4(g) below)
that directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person.  For purposes of
this definition, “control” of a Person shall mean the power, direct or indirect,
to (A) vote or direct the voting of 51% or more of the voting rights of such
Person, or (B) direct or cause the direction of the management or policies of
such Person, as applicable;

(ii)

the term “Cause” shall mean:

(A)

Executive’s dishonesty, fraud or misconduct regarding the Company, Executive’s
duties to the Company or with representatives of the Company;

(B)

Executive’s breach of a material provision of this Agreement. Executive shall
have 30 days after receipt of written notification from the Company of such
breach to cure the same. The written notice shall specify the alleged breach and
identify what the Company considers to be the cure;

(C)

Executive’s conviction of a felony crime; or

(D)

Executive’s chronic alcohol abuse or illegal drug abuse.

(iii)

the term “Change in Control” shall mean a change in the beneficial ownership of
the voting stock of the Company that occurs as follows:

(A)

any Person other than the Company or its Affiliates, any entity owned, directly
or indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company or
its subsidiaries or such proportionately owned Partnership) becomes through
acquisitions of securities of the Company the “beneficial owner” (as defined in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended),
directly or indirectly, of securities of the Company representing 51% or more of
the combined voting power of the then outstanding securities of the Company
having the right to vote for the election of directors;

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(B)

the stockholders of the Company approve a merger or consolidation of the Company
with any Partnership that is not an Affiliate of the Company, other than (I) a
merger or consolidation which would result in the voting securities of the
Company outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) 51% or more of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation, or (II) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
Person acquires 51% or more of the then outstanding securities of the Company
having the right to vote for the election of directors; or

(C)

the stockholders of the Company approve an agreement with any Partnership that
is not an Affiliate of the Company providing for the sale or disposition by the
Company of all or substantially all of the assets of the Company (or any
transaction having a similar effect).

(iv)

the term “Good Reason” means the occurrence of any of the following: (A) the
assignment to Executive of duties that are materially inconsistent with
Executive’s duties described in Section 2, including, without limitation, a
material diminution or reduction in Executive’s office or responsibilities or a
reduction in Executive’s rate of Annual Base Salary, bonus or other compensation
or a change in Executive’s reporting relationship (provided that the Company
shall have 30 days after receipt of written notification from Executive of any
such action to cure the same), (B) the occurrence of a Change in Control
pursuant to which the Executive is not employed by the surviving entity, (C) the
Company’s breach of a material provision of this Agreement (provided that the
Company shall have 30 days after receipt of written notification from Executive
of such breach to cure the same), or (D) the Company becomes insolvent or unable
to pay its debts as they become due or the stockholders of the Company approve a
plan of complete liquidation of the Company;

(v)

the term “Disability” shall mean the inability of Executive to continue to
perform Executive’s duties under this Agreement on a full-time basis as a result
of mental or physical illness, sickness or injury for a period of 90 calendar
days within any 12-month period, as determined in the sole discretion of the
Board;

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(vi)

the term “Person” shall mean an individual or a Partnership, association,
partnership, joint venture, organization, business, individual, trust, or any
other entity or organization, including a government or any subdivision or
agency thereof; and

(vii)

the term “Severance Salary” shall mean the Executive’s current Annual Base
Salary, as such amount may be prorated for the number of months such salary is
payable. Additionally, Executive shall receive an amount equal to the most
recent Incentive Bonus actually paid for the prior year, which will be paid to
Executive at the time such Incentive Bonus normally would have been paid.

(viii)

the term “Severance Period” shall mean [three months].

Notwithstanding any other provision of this Agreement, Executive shall
automatically cease to be an officer of the Company and its Affiliates as of
Executive’s Termination Date and, to the extent permitted by applicable law, any
and all monies that Executive owes to the Company shall be repaid to the extent
possible, through deduction of such amounts from any post-termination payments
owed to Executive pursuant to this Agreement.  Notwithstanding any other
provision of this Agreement, the Company may suspend Executive from performing
Executive’s duties under this Agreement; provided, however, that during the
period of suspension (which shall end no later than Executive’s Termination
Date), Executive shall continue to be treated as an employee of the Company for
other purposes, and Executive’s rights to compensation or benefits hereunder
shall be in effect.

5.

Solicitation Of Customers Or Suppliers: All records of the accounts of customers
and suppliers, and any other books and records relating in any manner whatsoever
to the Company’s customers, whether prepared by Executive or otherwise coming
into his possession, shall be the exclusive property of the Company. All such
books and records shall be immediately returned to the Company by Employee upon
any termination of his employment. Following Executive’s Termination Date and
throughout the time Executive receives payment of the Severance Salary (or, in
circumstances not requiring the payment of Severance Salary, for a period of one
year following Executive’s Termination Date), Executive shall not, either
directly or indirectly, participate in the following:

(a) Information. Make known to any person the names or addresses of any of the
customers or suppliers of the Company (and/or its Affiliates) or any other
information pertaining to them; or,

(b) Solicitation. Call on, solicit, or take away, or attempt to call on,
solicit, or take away any of the Company’s (and/or its Affiliate’s) customers or
suppliers on whom Executive called or with whom he became acquainted during his
employment with the Company, either for himself, or for any other person for the
purpose of selling them products or services sold to them by the Company.

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(c) Referral. Refer any person or entity to such customers or suppliers for the
purpose of selling them products or services sold to them by the Company (and/or
its Affiliates).

(d) Solicitation Of The Company’s Employees: Solicit, or in any way hire, with
or without solicitation, any of the Company’s (and/or its Affiliates) employees
or independent contractors in any capacity.

6.

Damages, Affiliates: The parties recognize and agree that, the extent of damages
to the Company in the event of a breach by Executive of Sections 5 or 6, it
would be impossible to ascertain and that there is, and will be, available to
the Company no adequate remedy at law to compensate the Company in the event of
any such breach. Consequently, Executive agrees that in the event of a breach or
threatened breach of such covenant, in addition to any other relief to which the
Company may be entitled, the Company shall be entitled to enforce such
provisions by injunctive or other equitable relief ordered by a court of
competent jurisdiction. Executive hereby waives any bond in excess of $1,000
that may be required in connection with said injunctive relief.

7.

Notices.  Any notices provided for in this Agreement shall be in writing and
shall be deemed to have been duly received when delivered in person or sent by
facsimile transmission, on the first business day after it is sent by air
express courier service or on the second business day following deposit in the
United States registered or certified mail, return receipt requested, postage
prepaid and addressed, in the case of the Executive to the most recent home
address reflected in the Company’s records and in the case of the Company to the
following address:

KAL Energy, Inc.

Suite 6, 79 Baker Street,

London, W1U 6RG, United Kingdom

or such other address as either party may have furnished to the other in writing
in accordance herewith, except that a notice of change of address shall be
effective only upon actual receipt.

8.

Withholding.  All compensation payable under this Agreement shall be subject to
customary withholding taxes and other employment taxes as required with respect
to compensation paid by a Partnership to an employee and the amount of
compensation payable hereunder shall be reduced appropriately to reflect the
amount of any required withholding.  Except as specifically required herein, the
Company shall have no obligation to make any payments to Executive or to make
Executive whole for the amount of any required taxes.

 

9.

Successors.  This Agreement shall be binding on, and inure to the benefit of,
the Company and its successors and assigns and any person acquiring, whether by

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merger, reorganization, consolidation, by purchase of assets or otherwise, all
or substantially all of the assets of the Company.

10.

Waiver of Breach.  The waiver by either the Company or Executive of a breach of
any provision of this Agreement shall not operate as or be deemed a waiver of
any subsequent breach by either the Company or Executive.  Continuation of
payments hereunder by the Company following a breach by Executive of any
provision of this Agreement shall not preclude the Company from thereafter
terminating said payments based upon the same violation.  

11.

Applicable Law; Venue.  This Agreement is executed and will be performed in the
State of California, and the laws of the state shall govern its interpretation
and effect.  The parties do hereby irrevocably submit themselves to the personal
jurisdiction of the United States Federal Court located in Orange County
California and do hereby irrevocably agree to service of such Court’s process on
them.

12.

Amendment.  This Agreement may be amended or cancelled by mutual Agreement of
the parties in writing without the consent of any other person.

13.

Counterparts.  This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute one and the same instrument.  Each
counterpart may consist of a copy hereof containing multiple signature pages,
each signed by one party hereto, but together signed by both of the parties
hereto.

14.

Other Agreements.  This Agreement constitutes the sole and complete agreement
between the Company and Executive and supersedes all other agreements, both oral
and written, between the Company and Executive with respect to the matters
contained herein including, without limitation any severance agreements or
arrangements between the parties. No verbal or other statements, inducements, or
representations have been made to or relied upon by Executive. The parties have
read and understand this Agreement.

15.

Attorney’s Fees.  In the event suit (or a similar proceeding in arbitration) is
brought to enforce or interpret any part of this Agreement, the prevailing party
shall be entitled to recover as an element of his costs of suit, not as damages,
all reasonable attorney’s fee to be fixed by the court. The “prevailing party”
shall be the party who is entitled to recover his costs of suit, whether or not
the suit proceeds to final judgment. A party not entitled to recover his costs
shall not recover attorney’s fees. No sum for attorney’s fees shall be counted
in calculating the amount of a judgment for purposes of determining whether a
party is entitled to recover his costs or attorney’s fees.

16.

Legal Representation.  Each party is represented by its own separate legal
counsel.  Each party declares that, prior to the execution of this Agreement,
they apprised themselves of sufficient relevant data, through counsel or through
other sources of its selection, in order that it might intelligently exercise
its own judgment in

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deciding whether to execute, and deciding on, the contents of this Agreement.
 They further declare that their decisions were not based on or influenced by
any declarations of representations of the other party hereto, or of the agents
or employees of such other party.

17.

Further Acts.  Each party agrees to perform any further acts and to execute and
deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement.

18.

Arbitration.  Any dispute or controversy arising out of or relating to this
Agreement, or any breach of this Agreement, shall be settled by arbitration to
be held in Orange County, California, in accordance with the Judicial
Arbitration and Mediation Services, Inc.  The arbitrator may grant injunctions
or other relief in such dispute or controversy.  The decision of the arbitrator
shall be final, conclusive, and binding on the parties to the arbitration.
Judgment may be entered on the arbitrator’s decision in any Court having
jurisdiction, and the parties irrevocably consent having jurisdiction of the
California Courts for this purpose.  The prevailing party shall be entitled to
recover from the other party all costs and expenses incurred by the prevailing
party in connection with such arbitration.

[Signatures On Next Page]

IN WITNESS THEREOF, Executive has hereunto set Executive’s hand, and the Company
has caused these presents to be executed in its name and on its behalf, all as
of the day and year first above written.

“Company”

Kal Energy, Inc.

By:

Name:  

Its:

“Executive”

Name:  

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