EMPLOYMENT AGREEMENT


     EMPLOYMENT AGREEMENT made this 12th day of May, 1998, by and between Celtic
Investment,  Inc., an Illinois Corporation (the "Company") and Douglas P. Morris
("Employee").

                                   RECITALS

      WHEREAS,  the  Company  and  Employee  desire to modify  their  employment
relationship by means of this agreement ("Employment Agreement"); and

      WHEREAS,  the  Company  desires  to  continue  to employ  Employee  as its
President  and Employee is willing to continue to accept such  employment by the
Company on the terms and subject to the conditions set forth in this  Employment
Agreement;

      NOW  THEREFORE,  in  consideration  of the promises  and mutual  covenants
contained  herein and other good and  valuable  consideration,  the  receipt and
sufficiency  of  which is  hereby  acknowledged,  the  parties  hereby  agree as
follows:

                                   AGREEMENT

      1.  Employment and Duties.  The Effective Date of this Agreement  shall be
May 12, 1998. Upon the Effective Date of the employment,  the Company shall, and
hereby does,  employ the Employee and Employee  shall,  and hereby does,  accept
employment as President of the Company.  Employee agrees to devote in good faith
substantially  all of his time  and  best  efforts  to the  services  that he is
required  to render  to the  Company  hereunder.  Employee  shall  report to the
Company's  Board of Directors and at all times during the term of this Agreement
shall have  powers and duties at least  commensurate  with his  position  in the
Company.  Employee's  duties with the  Company  shall be  consistent  with those
historically held by Employee as President of the Company.

            1.1.  Disclosure  and  Acceptance of Other  Activities.  The Company
acknowledges  that Employee is currently  involved in other business  activities
including  but no limited to those  related to H & Capital  Investment,  Emerald
Capital   Investments,   Inc.,   American  Polymer  Corporation  and  Millennium
Electronics,  Inc.  The  Company  consents  to the  continued  participation  by
Employee in such activities  subject to his fulfillment of any and all fiduciary
duties he will have as an officer and  director of the Company  including  those
fiduciary duties relating to corporate opportunities.

      2.    Term of Employment.

      2.1  Definitions.  For the  purposes  of this  Employment  Agreement,  the
following terms shall have the following meanings:




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            2.1.1.Stock  Option  Agreement.  "Stock Option Agreement" shall mean
      the Stock  Option  Agreement  dated the date  hereof,  entered into by the
      Company and Employee  whereby  Employee is granted (i) options to purchase
      150,000  shares of the Company's  Common Stock,  which options vest over a
      period of time as  provided  for in the Stock  Option  Agreement  and (ii)
      options to purchase  150,000 shares of the Company's  Common Stock,  which
      options vest on the basis of the achievement of certain  operating results
      as agreed to in the Stock Option Agreement.

            2.1.2.  Termination  for Cause.  "Termination  For Cause" shall mean
      termination  by  the  Company  of  Employee's   employment  by  reason  of
      Employee's willful dishonesty towards, fraud upon, or deliberate injury or
      attempted  injury  to the  Company,  or by reason  of  Employee's  willful
      material  breach  of this  Employment  Agreement  which  has  resulted  in
      material injury to the Company.

            2.1.3 Termination Without Cause.  "Termination  Without Cause" shall
      mean any  termination  of employee's  employment by the Company other than
      for cause by Reason of Disability or by Reason of Death.

     2.1.4.Voluntary Termination. "Voluntary Termination" shall mean termination
by Employee of Employee's  employment by the Company other than (i) as described
in  paragraph  2.1.5  or (ii)  termination  by  reason  of  Employee's  death or
disability as described in paragraphs 2. 5. and 2.6.

            2.1.5.Good Reason Resignation.  "Good Reason Resignation" shall mean
      termination by Employee of Employee's  employment by the Company following
      the  occurrence  of any of the events set out below  unless  such event is
      fully   corrected  by  the  Company  within  30  days  following   written
      notification by Employee to the Company that Employee intends to terminate
      his employment for one or more of the reasons set out below:

                  (a)  removal  of  Employee  from,  or a failure  to appoint or
            reappoint  Employee  to,  any of his  offices or the  assignment  of
            Employee  to any  duties  inconsistent  with  Employee's  status  as
            Chairman and President of the Company;

                 (b) failure by the Company without Employee's consent to pay to
            Employee any portion of Employee's current  compensation,  including
            bonuses,  the vesting of stock  options  and the  issuance of shares
            upon exercise of stock options; or

                 (c) any material breach by the Company of any provision of this
            Employment Agreement.






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      2.2. Initial Term. The term of employment of Employee by the Company under
this  Employment  Agreement  shall be for a period of three (3) years  beginning
with Effective Date ("Initial Term"), unless terminated earlier pursuant to this
Section.  At any time prior to the  expiration of the Initial Term,  the Company
and Employee may, by mutual  written  agreement,  extend  Employee's  employment
under the terms of this Employment Agreement for such additional periods as they
may agree.

     2.3.  Termination  For  Cause.   Termination  for  Cause  may  be  effected
immediately  by the  Company  during  the  term of  this  Agreement  by  written
notification  to Employee.  Upon  Termination  For Cause,  the  following  shall
promptly occur:

            (a) The Company shall pay Employee all accrued  salary earned at the
      date of Termination for Cause;

            (b) The Company shall pay Employee all vacation pay which is accrued
      at the date of Termination for Cause;

            (c) The Company shall pay all business expenses incurred by Employee
      in connection  with his duties  hereunder  which are unpaid at the date of
      Termination for Cause;

            (d) The Company shall pay to Employee all  compensation  or benefits
      due to Employee at the date of  Termination  for Cause under any agreement
      or plans,  excluding stock options which are specifically  provided for in
      paragraphs 2.3 (e) and (f) below;

            (e) Employee has been granted  incentive  stock  options to purchase
      150,000 shares of the Company's  Common Stock pursuant to the Stock Option
      Agreement  which  options  vest solely on the basis of time of  employment
      ("Time Based  Options" and "Time Based Option  Shares").  In the event the
      Employee is Terminated for Cause,  the Time Based Options shall  terminate
      immediately except to the extent such options have vested.

            (f) Employee has been granted  incentive  stock  options to purchase
      150,000 shares of the Company's  Common Stock pursuant to the Stock Option
      Agreement  which  options vest solely on the basis of the  achievement  of
      certain  financial results  ("Performance  Based Options" and "Performance
      Based Option  Shares").  The  Performance  Based Options  shall  terminate
      immediately except to the extent such options have vested.

      2.4.  Termination  Without  Cause.  The Company may  terminate  Employee's
employment  for any reason and  without  cause at any time upon thirty (30) days
written notice to Employee.  Upon Termination without Cause, the following shall
promptly occur:





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            (a) The Company  shall pay  Employee all salary  compensation  for a
      period of one year from the date of Termination Without Cause.

            (b) The Company shall pay Employee all vacation pay which is accrued
      at the date of Termination without Cause;

            (c) The Company shall pay all business expenses incurred by Employee
      in the connection  with his duties  hereunder which are unpaid at the date
      of Termination without Cause;

            (d) The Company shall pay or deliver to Employee all compensation or
      benefits due to Employee at the date of  Termination  without  Cause under
      any agreement or plans  excluding  stock  options  which are  specifically
      provided for in paragraphs 2.4 (e)and (f) below;

            (e) Employee has been granted  incentive  stock  options to purchase
      150,000 Time Based Option Shares which vest solely on the basis of time of
      employment.  In the event the Employee is Terminated  without  Cause,  all
      Time Based Options shall be accelerated and shall vest immediately.

            (f) Employee has been granted  incentive  stock  options to purchase
      150,000 shares of the Company's  Common Stock pursuant to the Stock Option
      Agreement  which vest  solely on the basis of the  achievement  of certain
      operating results.  In the event that Employee's  employment is Terminated
      without Cause all Performance Based Options shall be accelerated and shall
      vest immediately.

      2.5.  Termination  by Reason of  Disability.  If,  during the term of this
Agreement, Employee, in the reasonable judgment of the Board of Directors of the
Company,  has failed to perform his duties  under this  Agreement  on account of
illness  or  physical  or mental  incapacity,  and such  illness  or  incapacity
continues for a period of more than three (3)  consecutive  months,  the Company
shall have the right to terminate Employee's employment hereunder by twenty (20)
days written notification to Employee.  In the event of termination by reason of
disability,  Employee shall pay Employee all cash and other  compensation  which
would be due and  owing  to  Employee  under  paragraph  2.3 of this  Employment
Agreement if Employee's  employment had been Terminated for Cause by the Company
rather than as a result of the Disability of Employee.

      Upon receipt of notice of termination  under this paragraph 2.5,  Employee
may request an  opportunity  to discuss the  termination  of his employment at a
meeting of the Boards of Directors of the Company. Such request must be made, if
at all, in writing and shall be delivered  to the Company  withing five (5) days
from the date Employee receives  notification of termination of employment under
this  paragraph 2.5. Upon receipt of such request,  the Company shall,  within a
reasonable time, call and hold a Board of Directors meeting to allow Employee to
discuss termination for reason of disability.




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      2.6 . Death.  In the event of  Employee's  death  during  the term of this
Agreement,  Employee's  employment  shall be deemed to have terminated as of the
last day of the month during which his death occurs and the Company shall pay to
his estate or such beneficiaries as Employee may from time to time designate, to
the date of Employee's death all cash and other  compensation which would be due
and owing to  Employee  under  paragraph  2.3 of this  Employment  Agreement  if
Employee's  employment had been  Terminated for Cause by the Company rather than
by as a result of the Death of Employee.

      2.7. Voluntary Termination.  In the event of a Voluntary Termination,  The
Company shall pay to Employee all cash and other compensation which would be due
and owing to  Employee  under  paragraph  2.3 of this  Employment  Agreement  if
Employee's  employment had been  Terminated for Cause by the Company rather than
by the Voluntary Termination by Employee.

      2.8. Good Reason  Resignation.  In the event of a Good Reason  Resignation
Employee resigns, The Company shall continue to pay to Employee his salary for a
period  of one (1) year from the date of  Resignation  for Good  Reason  and the
Company shall pay to Employee all cash and other compensation which would be due
and owing to  Employee  under  paragraph  2.4 of this  Employment  Agreement  if
Employee's  employment had been  Terminated  without Cause by the Company rather
than the Good Reason Resignation by Employee.

      3. Compensation.  As his entire  compensation for all services rendered to
the Company during the term of this Agreement,  in whatever  capacity  rendered,
the  Employee  shall  be paid,  subject  to  withholding  and  other  applicable
employment taxes, as follows;

            3.1. Base Salary.  Employee  shall be paid a base salary of $100,000
per year  commencing on the Effective Date. Such base salary shall be payable in
bi-monthly installments, provided however, if the first pay period of employment
is less than a full pay period,  the first  payment  shall be  prorated  for the
number of days worked in the first calendar month of employment. Employee's base
salary shall be reviewed annually by the Board of Directors, and the base salary
for each employment year (or portion  thereof)  beginning July 1, 1999, shall be
determined  by the Board of  Directors  which  shall  authorize  an  increase in
Employee's base salary for such year in an amount which, at a minimum,  shall be
equal to the cumulative  cost-of-living increment on the Base Salary as reported
in the "Consumer  Price Index,  Chicago,  IL, All Items,"  published by the U.S.
Department  of Labor (using  January 1, 1995 as the base date for  computation).
Provided  however,  that the base  salary  shall not  increase  by more than ten
percent (10%) per year due to increases in the Consumer Price Index.

            3.2.  Vacation.  Employee  shall be  entitled  to four (4)  weeks of
vacation  during each year during the term of this  Agreement and any extensions
thereof, prorated for partial years.

            3.3. Automobile Allowance.   The Company shall pay Employee $300 per
month as an automobile allowance.




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            3.4. Reimbursement for Expenses.  During the term of this Agreement,
the Company shall  reimburse  Employee for  reasonable  and properly  documented
out-of-pocket  business and/or  entertainment  expenses  incurred by Employee in
connection  with his duties under this  Agreement.  The Company shall  reimburse
Employee for 100% of his cellular telephone expenses on a monthly basis.

            3.5.  Additional  Benefits.  The Company  shall provide the Employee
with health and  disability  insurance  during the term of this  Agreement.  The
Employee shall be entitled to participate in such benefit and compensation plans
as are  now  generally  available  or  later  made  generally  available  to the
employees or executive officers of the Company,  including,  but not limited to,
401(k) plans, stock option plans,  profit sharing plans and other such plans and
benefits.  The health  plan  offered to Employee  hereunder  will be at least as
advantageous  to Employee as those  offered by the Company  prior to the date of
the execution of this Agreement.

      4. Stock Options.  As additional  consideration  for  Employee's  services
hereunder, the Employee shall be granted an option to purchase 400,000 shares of
Celtic  Investment  common  stock at a price of $1.25 per  share.  The terms and
condition of such options are set forth in Exhibit "A" attached hereto and shall
be included in the Stock Option Agreement.

      5. Covenant not to Compete.  Employee  agrees that he will not, during the
term of his employment,  and for the ("Restriction  Period") which is defined in
paragraph  5.1.2 of this  Employment  Agreement  directly or indirectly,  in any
state, county, city or metropolitan area in which the Company, or any subsidiary
of the Company has  transacted  business in the three (3) years  preceding  said
termination,  own, manage,  operate or control, or participate in the ownership,
management,  operation or control of, or be connected  with or have any interest
in, as a stockholder, director, officer, employee, agent, consultant, partner or
otherwise,  any business which is engaged in the same business as the Company or
any  Subsidiary  of the  Company.  Specifically,  but without  limitation,  this
covenant  shall extend to all  existing  clients or customers of the Company and
all  subsidiaries  of the Company and all of the funding  sources of the Company
and all subsidiaries of the Company.

            5.1.1.If  any of the  provisions  of this  paragraph  are held to be
unenforceable because of the scope,  duration or area of its applicability,  the
court  making  such  determination  shall have the power to modify  such  scope,
duration or area or all of them, and such provision  shall then be applicable in
such modified form. The Company and the Employee  acknowledge the reasonableness
of this covenant not to compete and the  reasonableness  of the geographic  area
and duration of time which are part of this covenant.

            5.1.2.  The  Restricted  Period  shall be that period of time during
which the Covenant not to Compete set forth in this  paragraph 6 is binding upon
Employee.  The Restricted Period shall initially be a period of twenty four (24)
months  commencing on the Effective Date but shall be reduced  thereafter by one
month for each full month of employment  of Employee by the Company.  Subject to
paragraph 6.1.3 below, in no event shall the Restricted Period be less




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than six (6) months from the date of termination of employment regardless of the
number of months of employment prior to termination.

            5.1.3.In  the  event  Employee's  employment  is  terminated  by the
Company  without  cause or in the event  Employee  Resigns for Good Reason,  the
restrictions set forth in this paragraph 6 shall be limited to the time in which
Employee continues to receive a salary from The Company under this Agreement.

      6.  Confidential  Information.   Employee  covenants  and  agrees  not  to
disclose, directly or indirectly, at any time either during employment or within
twenty four (24) months  subsequent to the  termination  of employment to anyone
not an employee or consultant of the Company,  and not to use at any time either
during  employment  or within two (2) years  subsequent  to the  termination  of
employment,   except  in  the  course  of  employment  with  the  Company,   any
Confidential  Information,  as defined  below,  of the  Company  or any  parties
dealing with the Company unless he shall first secure the consent of the Company
in  writing or unless he shall  involuntarily  be  required  to do so by a court
having competent  jurisdiction,  by any governmental  agency having  supervisory
authority  over the  business of he Company,  or by any  administrative  body or
legislative  body  (including a committee  thereof)  with  purported or apparent
jurisdiction  to order  Employee to divulge,  disclose or make  accessible  such
information  after  notice to the  Company.  The  Company  and  Employee  hereby
acknowledge  that: (a) the duration and  geographical  limitations  imposed with
respect to said secret and confidential information are reasonable;  and (b) the
restrictions  stated hereinabove are reasonably  necessary for the protection of
The Company's legitimate proprietary interests.

      For purposes of this Agreement,  the term  Confidential  Information shall
mean any and all:

            (a)  trade  secrets  concerning  the  business  and  affairs  of the
      Company, data, know-how,  customer lists, current and anticipated customer
      requirements,  market studies,  business plans, and any other information,
      however  documented,  that is a trade  secret  within  the  meaning of the
      Illinois Trade Secrets Act; and

            (b)  information  concerning the business and affairs of the Company
      (which includes historical financial statements, financial projections and
      budgets,  historical and projected  sales,  capital  spending  budgets and
      plans, the names and backgrounds of key personnel,  personnel training and
      techniques and materials however documented; and

            (c) notes, analysis,  compilations,  studies,  summaries,  and other
      material  prepared by or for the Company  containing or based, in whole or
      in part, on any information included in the foregoing.

       Nothing contained in this paragraph 6 shall be deemed to apply to (i) any
information  which is or becomes known to the public other than as a result of a
breach of this Section 6 by




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Employee or (ii ) any information  which is lawfully acquired from a third party
who is not obligated to the Company to maintain such information in confidence.

      7.  Solicitation of Other Employees  and/or  Consultants.  Employee agrees
that he will not,  during the course of his employment or for a period of twenty
four (24)  months  commencing  upon the  expiration  of his  employment,  either
voluntary or  involuntary,  for any reason  whatsoever,  directly or indirectly,
individually or on behalf of persons not now parties to this  agreement,  aid or
endeavor to solicit or induce any other employee,  employees,  consultant and/or
consultants of the Company to leave their  employment  with the Company in order
to accept employment of any kind with any other person, firm, partnership or the
Company.

      8. Breach of Covenants by Employee.  In the event that the Employee  shall
breach paragraphs 5,6 or 7 of this agreement, then the Company shall be entitled
to seek injunctive relief against the Employee.  In any proceeding  commenced by
the Company to enforce  paragraphs 5,6 or 7 of this  Employment  Agreement,  the
prevailing party shall be liable and shall pay for all damages, court costs, and
reasonable  attorneys'  fees  incurred  as the direct  result of  commencing  or
defending such proceeding.  The provisions of paragraphs 5, 6 and 7 hereof shall
survive the termination of this Employment Agreement.

      9.    Miscellaneous.

      9.1 This  Employment  Agreement  and the  written  agreements  referred to
herein,  constitutes  the entire  agreement  between  the parties or the matters
discussed  herein. It also supersedes any and all other agreements or contracts,
either oral or written,  between the parties with respect to the subject  matter
hereof.

      9.2. The terms and conditions of this Employment  Agreement may be amended
at any time by  mutual  agreement  of the  parties,  provided  that  before  any
amendment  shall be valid or effective it shall have been  approved by the Board
of Directors  of the  Company,  reduced to writing and signed by the Company and
the Employee.

      9.3. The invalidity or  unenforceability  of any  particular  provision of
this  Employment  Agreement  shall not  affect  its other  provisions,  and this
Employment  Agreement  shall be  construed in all respects as if such invalid or
unenforceable provision had been omitted.

      9.4.  Except as  otherwise  expressly  provided  herein,  this  Employment
Agreement  shall be binding  upon and inure to the benefit of the  Company,  its
successors and assigns,  and upon the Employee,  his administrators,  executors,
legatees, heirs and assigns.

      9.5. This  Employment  Agreement shall be construed and enforced under and
in accordance with the laws of the State of Illinois.

      IN WITNESS  WHEREOF,  the parties have executed this Employment  Agreement
the day and year first above-written.




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Celtic Investment, Inc.                       Employee:



By   /s/Reese Howell, Jr.                      By /s/ Douglas P. Morris
Reese Howell, Jr., Senior Vice President       Douglas P. Morris






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                                  EXHIBIT "A"
                             EMPLOYMENT AGREEMENT


      As additional  compensation  under the  Employment  Agreement to which the
Exhibit "A" is attached,  the Company  shall grant the  Employee,  the following
options("Options") to purchase shares of its common stock.

      1. Exercise Price - All Options granted hereby shall be exercisable at the
price of $1.25  per share  (the  "Exercise  Price"),  the  Closing  Price of the
Company's common stock on the day of the grant of options as reported by NASDAQ.

      2. Initial Option - Upon the Effective  Date of the Employment  Agreement,
the Company shall grant  Employment an Initial Option  entitling him to purchase
100,000 shares of the Company at the Exercise Price. The Initial Option shall be
fully vested as of the Effective Date and shall be  exercisable  for a period of
five years from the Effective Date.

      3. Time Based Options - Options to purchase 150,000 shares shall be deemed
to be "Time  Based  Options  ". The Time Based  Options  shall be granted on the
Effective  Date  but  shall  vest on  each  Anniversary  Date of the  Employment
Agreement. Options to purchase 50,000 shares shall vest on the first anniversary
date of the Employment  Agreement,  Options to purchase 50,000 shares shall vest
on the second  anniversary  date of the  Employment  Agreement,  and  Options to
purchase  50,000  shares  shall  vest  on  the  third  anniversary  date  of the
Employment  Agreement.  All  Time  Based  Options  shall be  exercisable  at the
Exercise Price. All Time Based Options shall be exercisable for a period of five
years from the date of vesting.

      4. Performance Based Options - Options to purchase 150,000 shares shall be
deemed to be "Performance  Based Options ". The Performance  Based Options shall
be granted on the Effective Date but shall vest on each  Anniversary Date of the
Employment Agreement.  The Performance Based Options shall vest upon the Company
achieving  increases in total  assets,  calculated on a  consolidated  basis and
determined in accordance  with its annual  Audited  Financial  Statements or its
unaudited  interim  statements.  The Measuring  Base Date shall be September 30,
1998.  If the  Company's  total  assets,  calculated  on a  consolidated  basis,
increase over the Measuring Base Date as provided below,  the Performance  Based
Options shall vest according to the following schedule:






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