AMERICAN
      ETHANOL, INC.

     

    AMENDMENT
      TO

     

    EXECUTIVE
      EMPLOYMENT AGREEMENT

    


    This
      Amendment to Executive Employment Agreement (the “Amendment”)
      is
      made by and between American Ethanol, Inc., a Nevada corporation (the
“Company”),
      and
      Surendra Ajjarapu (“Executive”) as of June 1, 2007 (the “Effective
      Date”).

     

    WHEREAS,
      Executive and American Ethanol, LLC, the predecessor-in-interest to the Company,
      entered into an Executive Employment Agreement dated January 12, 2006 (the
      “Employment
      Agreement”);

     

    WHEREAS,
      effective March 2006, American Ethanol, LLC and the Company merged, with the
      Company being the surviving corporation and the Company assumed all of American
      Ethanol, LLC’s rights and obligations to and under the Employment Agreement;


     

    WHEREAS,
      the
      parties now desire to amend the Employment Agreement as set forth
      herein;

     

    NOW
      THEREFORE,
      in
      consideration of the mutual covenants and other agreements contained in this
      Amendment, the Company and the Executive hereby agree as follows:

     

    1.  Executive’s
      Title.
      Executive’s title shall be President, effective as of the date of this
      Amendment.

     

    2.  Base
      Salary.
      While
      employed by the Company, the Company shall pay the Executive as compensation
      for
      his services a base salary at the annualized rate of Two Hundred Thousand
      ($200,000) per year (the “Base Salary”). Such salary shall be paid periodically
      in accordance with normal Company payroll practices and subject to required
      withholding.

     

    3.  2006
      Bonus.
      Executive shall be entitled to receive an annual bonus for the 2006 calendar
      year of $80,000 payable as set forth in the Employment Agreement. Bonuses for
      any year other than calendar 2006 shall be payable as set forth in the
      Employment Agreement.

     

    4.  Equity
      Award.
      Executive will be granted a stock option, which will be, to the extent possible
      under the $100,000 rule of Section 422(d) of the Internal Revenue Code of
      1986, as amended (the “Code”), an “incentive stock option” (as defined in
      Section 422 of the Code), to purchase 300,000 shares of the Company's
      Common Stock at an exercise price equal to the fair market value of the
      underlying shares on the date of grant (the “Option”), which the Company
      anticipates will be $3.00 per share. The Option will be fully vested on the
      date
      of grant. The Option will be subject to the terms, definitions and provisions
      of
      the Company's 2007 Stock Plan (the “Option Plan”) and the stock option agreement
      by and between Executive and the Company (the “Option Agreement”), both of which
      documents are incorporated herein by reference.

     

    5.  Entire
      Agreement.
      This
      Amendment, the Employment Agreement, the Option Agreement, and the other
      documents and employee benefit plans referred to in the Employment Agreement
      (the “Employment
      Documents”)
      represent the entire agreement and understanding between the Company and
      Executive concerning Executive’s employment relationship with the Company, and
      supersede and replace any and all prior agreements and understandings concerning
      Executive’s employment relationship with the Company. Except as expressly set
      forth herein, all other terms and conditions of the Employment Documents shall
      remain in full force and effect.

     

    
      
         

      

      
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    6.  No
      Oral Modification, Cancellation or Discharge.
      This
      Amendment may only be amended, canceled or discharged in writing signed by
      Executive and the Chairman of the Board (or in the event that Executive is
      Chairman, then a duly authorized representative of the majority of the members
      of the Board).

     

    7.  Governing
      Law.
      This
      Amendment shall be governed by the laws of the State of California without
      reference to rules relating to conflict of law.

     

    IN
      WITNESS WHEREOF, the undersigned have executed this Amendment as of the date
      first written above.

     

    
      
        	
                AMERICAN
                  ETHANOL, INC., a Nevada corporation

              
	 
	 
	
                /s/
                  Eric A McAfee

              
	
                Eric
                  A. McAfee

              
	
                Executive
                  Chairman

              
	 
	 
	
                EXECUTIVE

              
	 
	 
	
                /s/
                  Surendra Ajjarapu

              
	
                Surendra
                  Ajjarapu

              


      

    

     

    
      
         

      

      
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