EMPLOYMENT
AGREEMENT





This Employment Agreement("Agreement") is made and entered into effective as of the 1stday
of  July, 2010, (the Effective date”) by and between SOLOMON R.C.
ALIhereinafter referred to as ("Employee") and UNIVERSAL BIOENERGY INC.,aNevada
corporation having offices at 19800 MacArthur Blvd., Suite 300, Irvine,
California, 92612 hereinafter referred to as the (“Employer”).





WHEREAS,
Employer and Employee desire to set forth the terms and conditions of Employee's
employment as Senior
Vice Presidentof Employer in an
employment agreement, and Employee is willing to perform such services for
Employer under the terms and conditions set forth below; and





WHEREAS,
Employer wishes to retain the services of Employee and encourage him to remain
employed with Employer and Employer wishes for Employee to remain with
Employer;





NOW,
THEREFORE, in consideration of the above recitals and the mutual covenants,
understandings and agreements contained herein and for other good and valuable
information, the receipt and adequacy of which is hereby acknowledged, Employee
and Employer agree as follows:





Section
1:     Employment Term.Employer agrees
to employ Employee and Employee agrees to accept employment with Employer,
subject to the terms and conditions of this Agreement. Employer’s employment
under this Agreement shall be effective as of the “Effective Date”
of  this Agreement and shall continue for a term of two (2) years
ending on  July 2, 2012 (the “Term”). On July 2, 2012,  and
each July 2 thereafter, the Employment Term shall automatically be extended for
one additional year, unless not later than 90 days prior to such date, the
Employer or Employee shall have given written notice of Employer’s or
Employee’s  intention not to extend the Employment Term.





Section
2:     Duties and Responsibilities.





(a) Position: Employee shall
devote his employment time, efforts, skills and attention exclusively to his
employment as Senior
Vice President;
provided, however, that to the extent the following activities do not materially
interfere or conflict with his duties and responsibilities hereunder, Employee
may (i) serve as a member of the boards of directors of other corporations
and/or companies (ii) engage in charitable, civic, educational and religious
affairs. Employee shall have such powers and authority with respect to the
management of  the Employer’s business, consistent with his position
hereunder as shall be determined by the Board and  the bylaws of the
Employer. Employee shall report to and shall be subject to the direction and
control of the Employer’s Board of Directors.


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Section
3:     Compensation, Benefits and Related
Matters.





(a)   Annual Base Salary. Employer
shall pay to Employee a base salary at an annual rate of One Hundred Seventy
Four Thousand  ($174,000) dollars ("Base Salary") per year during
the first year, and the same amount or more during each subsequent
year.  Such “Base Salary” to be payable in accordance with Employer’s
customary payroll practices as in effect from time to time  and be
payable in equal semi-monthly installments throughout the year. The annual Base
Salary will be reviewed at least annually and / or more often from time to time
as determined by the Board of Directors, (or the Compensation Committee of such
Board), for merit or other increases and any increase in Employee's annual “Base
Salary” rate shall thereafter constitute the current "Base Salary" for purposes
of this Agreement.  This review for merit or other increases shall
occur three months prior to the end of each year for the express purpose of
considering additional increments to Employee’s Base Salary.  In
addition to the merit or other increases, a minimum of eight (8%) percent annual
cost-of-living allowance increase to the annual Base Salary will be provided to
Employee.





(b) Salary Bonus.Employee shall
be entitled to receive an incentive salary equal to  five (5%) percent
of the Employer’s net profit generated during the term of this Agreement. Net
profit shall be calculated as gross revenues minus direct costs to third
parties,  inclusive of Employer’s overhead expenses, prior to any
income taxes. The “Salary Bonus” shall be paid to Employee on a monthly or
quarterly basis, based on Employers ability to pay. The payment of any “Salary
Bonus” will not alter Employee’s entitlement to, or the amount of any severance
or other payment Employee is entitled to under any other plans, policies or
arrangements of the Company.  For purposes of clarification and
without limiting the preceding sentence, the “Salary Bonus shall not be
considered in the computation of Employees other Bonuses,  or part of
Employees “Base Salary” and, more generally, in the determination of the
payments, if any, that Employee may be entitled to pursuant to the terms of an
Employees Severance Agreement.





(c) Equity Awards. Employee will
be eligible to participate in Employer’s current or future  equity
participation programs to acquire options or equity incentive compensation units
in the common stock of Employer, subject to and in accordance with the following
contingencies: (1) approval by Employer's Board of Directors (the
“Board”)  (2) Employee’s execution of documents requested by Employer
at the time of grant, and  (3)  in accordance with the
policies, procedures and practices from time to time of Employer for granting
such options or equity incentive compensation units.





(d) Bonus Incentive Plan. Employee
is eligible to receive a bonus based upon individual and company performance as
determined by the Employer in its sole discretion. The bonus may be paid on a
monthly or quarterly basis, using the following criteria, to arrive at their
decision; increase in revenue, earnings, cash flow, debt reduction; economic
value  added, return on net assets, return on stockholders’ equity,
return on assets, return on capital, stockholder returns, return on sales, gross
or net profit margin, productivity, expense, margins, operating efficiency,
objective measures of customer satisfaction, working capital, financing,
earnings per share,  market share, inventory turns, acquisitions or
strategic transactions, or other means of bringing additional value to the
Employer.


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(e) Expense Reimbursements. During
the term of this Agreement, the Employer shall pay or reimburse Employee for the
full cost of the use of an automobile that is mutually agreeable to the Employer
and Employee. The Employer shall also pay or reimburse Employee for all
reasonable travel, entertainment, subscriptions, professional dues and other
reasonable expenses incurred by Employee during the course of performing his
obligations under this Agreement, including, without limitation, fees for
memberships in such professional/ business clubs, organizations, civic
associations and societies as Employee and the Board shall mutually agree are
necessary and appropriate in connection with the performance of his duties under
this Agreement, upon presentation to the Employer of an itemized account of such
expenses in such form as the Employer may reasonably require.





(f)   Retirement and Benefit Plans.
During his employment, Employee shall be entitled to participate in and Employer
agrees to provide all retirement and benefit plans at no cost to Employee
including: retirement plans with immediate and full (100%) vesting;
Comprehensive health and major medical health insurance for Employee and his
family; Comprehensive dental insurance for Employee and his family;
Comprehensive vision insurance for Employee and his family; Comprehensive life
insurance; Travel accident insurance; Disability insurance; Liability insurance
and other similar employee welfare benefit arrangements; including equity-based
incentive plans as described in 3(c) above available as an executive Employee of
Employer.





(g) Paid Time Off. Employee shall
be entitled to paid time off in addition to holiday and sick time, of not less
than six (6) weeks of paid vacation per year and any unused portion will be
carry-forward to subsequent years but not to exceed eight (8) weeks in any given
year.





(h)   Indemnification
Liability/Insurance. Employee shall be entitled to indemnification and
defense by Employer to the fullest extent permitted by applicable law,
the  Articles of Incorporation,  and bylaws of Employer.
Employer shall indemnify, defend, and hold Employee harmless from and against
any liability, damages, costs, or expenses (including attorney’s fees), and
advance payments, in connection with any claim, cause of action, investigation,
litigation, or proceeding involving him by reason of his having been an officer,
director, employee, or agent of Employer. The foregoing provision shall not
include  liability for acts or omissions  which involve
intentional misconduct, fraud, or a knowing violation of the law. Employer also
agrees to maintain adequate directors and officer’s liability insurance for the
benefit of Employee and Employee shall be covered by such
insurance.


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(i) Life Insurance. During the
Term and while Employee is employed by Employer, and in addition to any group
term life insurance otherwise generally provided to executive employees of
Employer, Employer will purchase and maintain at its expense term life insurance
on the life of Employee in the face amount of Two Million Five Hundred Thousand
($2,500,000) dollars payable to the beneficiary or beneficiaries designated by
Employee; provided, however, that Employer's obligation to purchase and maintain
such insurance shall be contingent upon Employee's insurability at no more than
150% of standard risk costs from a high quality insurance  carrier
(excluding special risk carriers).





(j)   Taxes. All compensation
payable to Employee shall be subject to appropriate withholding for all
applicable federal, state and local income taxes, occupational taxes, Social
Security and similar mandatory withholdings.





Section
4:    Travel, Housing and Relocation. Employer will
reimburse Employee for all reasonable expenses incurred by Employee if Employee
is required by Employer to   relocate his principal residence,
family and goods to another city or state on behalf of the
Employer.  Employer will  reimburse Employee’s expenses to
temporarily relocate him while Employee is in the process of selling his primary
place of residence.  Employer will provide temporary housing expenses
for Employee and his family until his primary place of residence is
sold.  Employer will reimburse Employee's expenses to move his primary
residence provided that reimbursable expenses will be limited to house hunting
trips, actual moving expenses, temporary housing expenses and any real estate
expenses that Employee incurs in connection with the purchase or sale of any
real property.  Employer will provide all up-front expenses for a
moving company to move Employee and his family to include but not limited to,
all household and related items, automobiles, appliances, etc.  Until
such relocation of his primary residence is completed, Employee shall be
entitled to his Base Salary, benefits and reimbursement for travel and housing
expenses incurred by him in connection with his performance of services pursuant
to this Agreement.  If after Employee’s termination of employment,
Employee gives Employer written notice that he desires to relocate within the
continental United States, Employer will reimburse Employee for relocation
expenses in connection with such relocation.





Section
5:     Termination. Employer may, at any time in
its sole discretion, terminate Employee  of Employer; provided,
however, that Employer shall provide Employee with  a “Notice of
Termination”, and shall make the payments associated with such termination in
accordance with Section 6.





(a)   Termination by Employer for "Good
Cause." Employer may at any time, by written notice to Employee at least
Five (5) business days prior to the date of termination specified in such notice
and specifying the acts or omissions believed to constitute Good Cause (as
defined below), terminate Employee as an officer and employee for Good Cause.
Employer may relieve Employee of his duties and responsibilities pending a final
determination of whether Good Cause exists, and such action shall not constitute
Good Reason (as defined below) for purposes of this Agreement.


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Payment
to Employee upon a termination for Good Cause is set forth in Section 6(a).
"Good Cause" for termination shall mean the following:





(1)   Felony
criminal conviction under the laws of the United States or any state or other
political subdivision thereof which, in the good faith determination of all the
Board of Directors of Employer, renders Employee unsuitable as an officer or
employee of Employer;





(2)
Employee’s commission of willful fraud against, or willful theft of any assets
or property of, the Employer, or its respective subsidiaries, affiliates,
suppliers or customers;





(3)   Employee's
continued failure to substantially perform all duties reasonably requested by
the Board of Directors of Employer and commensurate with
Employee’s  position with Employer (other than any such failure
resulting from his incapacity due to his physical or mental condition) after a
written demand for substantial performance is delivered to him by the Board of
Directors of Employer, which demand specifically identifies the manner in which
the Board of Directors of Employer believes that he has not substantially
performed all of his duties, and which performance is not substantially
corrected by him within Fifteen (15) business days of receipt of such
demand.





(b)   Termination by Employer without Good
Cause. Employer may at any time, by written notice to Employee at least
Fifteen (15) business days prior to date of termination specified in such
notice, terminate Employee as an officer or employee with Employer. If such
termination is made by Employer other than by reason of Employee's death,
Disability (as defined in Section 5(e)) and Good Cause does not exist, such
termination shall be treated as a termination without Good Cause and Employee
shall be entitled to payment in accordance with Section 6(b).





(c)   Termination by
Employee for Good Reason. Employee may, at any time at his option within
Thirty (30) days following an event or condition that constitutes Good Reason
(as defined below), resign for Good Reason as an officer and employee and from
all other positions with Employer by written notice to Employer at least thirty
(30) days prior to the date of termination specified in such notice. Payment to
Employee upon a termination for Good Reason is set forth in Section
6(b).





(1)   "Good
Reason" shall mean the occurrence of any one of the following  events
or conditions:





a.   A
meaningful and detrimental reduction, without Employee’s written consent, in the
nature of his responsibilities or a meaningful and detrimental change in his
reporting responsibilities or titles;


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b.   Employee
is not elected, reelected, or otherwise continued in the office of Employer,
except for Board positions, or any of its subsidiaries which he held immediately
prior to the Change in Control Date, or Employee is removed from Employee’s
position as set forth in Section 2(a) (collectively “Duties and
Responsibilities”) of Employer or any of its subsidiaries;





c.   A
reduction of compensation as set forth in Sections 3(a) - 3(b) (collectively the
"Compensation"), a reduction of the benefits set forth in Sections 3(c) - 3(h)
(collectively, the "Benefits"), or failure by Employer to pay to Employee any
portion of the Compensation or Benefits within Fifteen (15) business days of the
date such compensation or other payments and benefits are due; or





d.   A
change in Employee’s principal work location to a place other than Employee’s
current principal location.  Notwithstanding any provision of this
Paragraph 5(c) to the contrary, the occurrence of a "Change in Control" (as
defined in Section 6 below) shall not, by itself, constitute Good Reason
hereunder.





(d)   Voluntary
Resignation. Employee may, at any time at his option with Thirty (30)
calendar days written notice to Employer, voluntarily resign without Good Reason
as an officer and employee and from all positions with Employer.





Payment
to Employee upon his voluntary resignation without Good Reason is set forth in
Section 6(a). Resignation from employment shall automatically constitute
resignation from all positions of any subsidiary or affiliated
corporation.





(e)   Death or
Disability. Employee’s employment under this Agreement shall terminate
automatically as of the date of Employee's death. Employer, at any time by
written notice to Employee at least Fifteen (15) business days prior to the date
of termination specified in such notice, terminate Employee as an officer and
employee and from all other positions with Employer by reason of his Disability.
"Disability" shall mean any physical or mental condition or illness that
prevents Employee from performing his duties hereunder in any material respect
for a period of 360 substantially consecutive calendar days, as determined by a
physician selected by Employer and acceptable to Employee or, if Employee is
incapacitated, reasonably acceptable to the Medical Director or equivalent
senior physician at a hospital of Employee's choice. Payment to Employee upon
his termination by reason of his death or Disability is set forth in Section
6(a).


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Section
6:   Payments Upon Termination.





(a)   Payment Upon Termination for Good
Cause, Resignation without Good Reason, Death or Disability. In the event
of termination of his employment pursuant to Sections 5(a), 5(d) or 5(e),
Employee, or his estate where applicable, shall be paid any earned but unpaid
Base Salary through the date of termination or cessation of employed services
and any accrued and unused paid time off through  said date. In
addition, in the case of a termination of employment pursuant to Sections 5(e),
Employee or his estate shall be paid any accrued and unpaid bonus(s) for any
prior fiscal year and a pro rata portion (based on the number of days of
employment in the fiscal year of termination divided by 365) of the bonus, if
any, for the fiscal year in which the termination occurs. Employee shall also
receive his vested benefits in accordance with the terms of Employer's
compensation and benefit plans, and his participation in such plans and all
other perquisites shall cease as of the date of termination, except to the
extent Employee may elect to continue coverage as under any welfare benefit
plans as required by Part 6, Title I of the Employee Retirement Income Security
Act of 1974, as amended.





(b)   Payment Upon Termination by Employer
without Good Cause or by Employee for Good Reason. In the event of
termination of employment pursuant to Sections 5(b) or 5(c), Employee shall be
paid a lump sum severance payment in an amount equal to, (i) all of the earned
and unpaid compensation due Employee pursuant to Section 3, (collectively the
“Compensation”), and (ii) an additional amount equal to Three  (3)
times  the Employee’s  Base Salary, (at the rate in effect
immediately  prior to termination), and (iii)  and Employer
shall grant and issue  to Employee (at no cost), ten million
(10,000,000) shares of Employer’s common stock.





Notwithstanding
the foregoing, Employee's right to receive the severance payment hereunder shall
be conditioned upon Employee’s execution of, (and not revoking), a severance
agreement or  standard release of claims, (“the Release”), which shall
not be inconsistent with the terms of this Agreement. All payments will be made
to Employee within Fifteen (15) business days of full execution of a
release.  Employee's participation in any other retirement and benefit
plans and perquisites shall cease as of the date of termination, except Employee
and his eligible dependents (as determined under Employer’s health plan) shall
be entitled to continuing coverage under Employer’s health plans on the same
basis as active employees until the earlier of (i) thirty six (36) months
following the date of the Employee’s termination of employment or (ii) the
date on which Employee or his eligible dependents become eligible to participate
in a plan of a successor employer.





Thereafter,
Employee shall be entitled to continue coverage under Employer’s health plans
under COBRA.





(c)   "Change in Control." For
purposes of this Agreement, a "Change in Control" shall be deemed to have
occurred if any of the following events occurs:


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(1)   Any
"person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the
Securities and Exchange Act of 1934, as amended (the "1934 Act")), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
Employer (an "Acquiring Person"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of more than
33 1/3% of the then outstanding voting stock of Employer;





(2)   A
merger or consolidation of Employer with any other person or corporation, other
than a merger or consolidation which would result in the voting securities of
Employer outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or by being converted into voting securities of the
surviving entity) at least 50% plus One (1) share of the combined voting power
of the voting securities of Employer or surviving entity outstanding immediately
after such merger or consolidation;





(3)   A
sale or other disposition by Employer of all or substantially all of Employer's
assets;





(4)   During
any period of two (2) consecutive years, individuals who at the beginning of
such period constitute the Board of Directors and any new director (other than a
director who is a representative or nominee of an Acquiring Person) whose
election by the Board of Directors or nomination for election by Employer's
shareholders was approved by a vote of at least a majority of the directors then
still in office who either were directors at the beginning of the period or
whose election or nomination was previously so approved, no longer constitute a
majority of the Board of Directors; provided, however, in no event shall any
acquisition of securities, a change in the composition of the Board of Directors
or a merger or other consolidation pursuant to a plan of reorganization under
chapter 11 of the Bankruptcy Code with respect to Employer ("Chapter 11 Plan"),
or a liquidation under the Bankruptcy Code constitute a Change
in   Control. In addition, notwithstanding Sections 6(c)(1),
6(c)(2), 6(c)(3) and 6(c)(4), a Change in Control shall not be deemed to have
occurred in the event of a sale or conveyance in which Employer continues as a
holding company of an entity or entities that conduct the business or businesses
formerly conducted by Employer, or any transaction undertaken for the purpose of
reincorporating Employer under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of Employer’s
capital stock. Employee’s continued employment without objection following a
Change in Control shall not, by itself, constitute consent to or a waiver of
rights with respect to any circumstances constituting Good Reason
hereunder.


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Section  7:     Protection
of Employer’s Interests.





(a)   Confidentiality. Employee
agrees that he will not at any time, except in performance of his obligations to
Employer hereunder, directly disclose to any person or organization any secret
or "Confidential Information" that Employee may learn or has learned by reason
of his association with Employer.





(b)   Exclusive Property. Employee
confirms that all Employer’s Confidential Information is and shall remain the
exclusive property of Employer. All business records kept or made by Employee
relating to the business of Employer shall be and remain the property of
Employer. Upon the termination of Employee’s employment for any reason, Employee
shall promptly deliver to Employer records made by Employee concerning the
business affairs of Employer.





(c)   Non-Solicitation. Employee
shall not, during his employment under this Agreement, for whatever reason or
cause, in any manner induce, attempt to induce, or assist others to induce, or
attempt to induce, any employee, agent, representative or other person
associated with Employer, to terminate his or her association or contract with
Employer, nor in any manner, directly or indirectly, interfere with the
relationship between Employer and any of such persons or entities.





(d)   Non-Disparagement. Employee
shall not during his employment under this Agreement and for one (1) year
following termination of this Agreement, for whatever reason, make any
statements that are intended to or that would reasonably be expected to harm
Employer or any of its subsidiaries or affiliates, their respective
predecessors, successors, assigns and employees and their respective past,
present or future officers, directors, shareholders, employees, trustees,
fiduciaries, administrators, agents or representatives. Employer and its
officers and directors will not make any statements that are intended to or that
would be expected to harm Employee or his reputation or that reflect negatively
on Employee’s performance, character, skills or ability.





(e)   Relief. Without intending to
limit the remedies available to Employer, Employee acknowledges that a breach of
the covenants in Section 8 may result in material irreparable injury to Employer
for which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of such a
breach or threat thereof, Employer shall be entitled to obtain a temporary
restraining order and/or a preliminary or permanent injunction restraining
Employee from engaging in activities prohibited by Section 7 or such other
relief as may be required to specifically enforce any of the covenants in
Section 7.


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Section
8:     Miscellaneous Provisions.





(a)   Amendments, Waivers, Etc. No
provision of this Agreement may be modified, waived or discharged unless such
waiver, modification or discharge is agreed to in writing signed by both
parties. No waiver by either party hereto at any time of any breach by the other
party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.





(b)   Validity. The invalidity or
unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall
remain in full force and effect.





(d)   Entire Agreement. This
Agreement sets forth the entire agreement and understanding of the parties
hereto with respect to the matters covered hereby and supersedes all prior
agreements and understandings of the parties with respect to the subject matter
hereof. No agreements or representations, oral or otherwise, express or implied,
with respect to the subject matter hereof have been made by either party which
are not expressly set forth in this Agreement and this Agreement shall supersede
all prior agreements, negotiations, correspondence, undertakings and
communications of the parties, oral or written, with respect to the subject
matter hereof.





(e)   Governing Law. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of the State of California.





(g)   Successors and
Assigns.   This Agreement shall be binding upon, and inure
to the benefit of, both parties and their respective successors and
assigns.





(f)   Notice. For the purpose of
this Agreement, notice, demands and all other communication provided for in this
Agreement shall be in writing and shall be deemed to have been duly given when
delivered by hand delivery or overnight courier or mailed by United States
certified or registered mail, return receipt requested, postage prepaid,
addressed as follows or to other addresses as each party may have furnished to
the other:





To
Employer:





Universal
Bioenergy Inc.


19800
MacArthur Blvd., Suite 300


Irvine,
Ca. 92612





To
Employee:





Mr.
Solomon R. C. Ali


1200
Anniston Place


Indian
Trail, NC. 28079


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IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement to be effective as of the date
first written above.





EMPLOYER
              
              EMPLOYEEUNIVERSAL
      BIOENERGY INC/s/ Vince M. Guest
              
              /s/  Solomon R.C.
    AliBy:
      Vince M. Guest
              
              Solomon
      R.C. AliIts:
      President


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