Document:

<PAGE>
EXHIBIT 10.18
                                                                  Edward C. Hall
                              AETHLON MEDICAL, INC.
                           7825 FAY AVENUE, SUITE 200
                               LA JOLLA, CA 92037
                                TEL. 858/456-5777
                                FAX 858/456-4690

                                                                  James A. Joyce
                                                     Chairman, President and CEO

                              EMPLOYMENT AGREEMENT

August 12, 2002

Mr. Edward C. Hall 4645 Vereda Luz Del So! San Diego, CA 92130

Dear Ned:

This letter will serve as the entire agreement between Aethlon Medical, Inc (the
"Company") and you, Edward C. (Ned) Hall (the "Employee"), with respect to your
employment with the Company.

TERM
The Employee will work one (1) day per week, beginning on the week of August 12,
2002 (the `Beginning Date"). As an employee of the Company you will serve as its
Chief Financial Officer and perform such services as are customary for an
individual having such title and holding such position.

SALARY
The Employee will earn a weekly salary (the "Salary") of $1,000, paid $2,000
every two weeks. The salary rate for each additional day is $1,000. However, if
the Company agrees to increase Employee's work to three (3) days per week, the
Employee will earn a weekly salary of $2,500, paid $5,000 every two weeks. The
Salary rate for each additional day beyond three days per week is $1,000, The
Salary will be subject to increase by the Company from time to time. The Salary
will be processed through payroll and paid at the same time as other employees.

INCENTIVE BONUS AND EQUITY PARTICIPATION
The Employee will be entitled to receive incentive cash bonuses and/or warrants
or options for the purchase of the Company's stock as may be specified and
agreed to by the Aethlon Medical board of directors.

<PAGE>
                                                                  Edward C. Hall
Page two
August 12, 2002
Employment Agreement - Edward C. Hall

TATUM RESOURCES
The Company acknowledges and agrees that the Employee is and will remain a
partner of, and has and will retain an interest in, Tatum CFO Partners, LLP
("Tatum"), which will benefit the Company in that the Employee will have access
to certain Tatum resources. The Company further acknowledges and agrees that the
Employee has requested that a portion of his or her Salary and bonuses be
allocated to Tatum as compensation for Tatum's provision of resources to the
Employee as provided in the Resources Agreement between the Company and Tatum,
dated on or about the date of this agreement (the "Resources Agreement"). After
allocation of a portion of the Salary to Tatum, the Employee will be paid
$1,666.67 every two weeks, based on one (1) day per week. The Company and the
Employee agree that any payments made to Tatum will reduce the Employee's
compensation for purposes of determining taxable income and should not be
reflected as compensation in the Employee's W-2 report.

EMPLOYEE BENEFITS
The Employee will be eligible for vacation and holidays consistent with the
Company's policy as it applies to senior management.

The Company will reimburse the Employee for all reasonable out-of-pocket
business expenses promptly after they are incurred.

The Employee may elect to participate in the Company's employee retirement plan
and/or 401(k) plan, and the Employee will be exempt from any delay periods
required for eligibility. In lieu of the Employee participating in the
Company-sponsored employee health benefit and disability plan(s) the Employee
will participate in Tatum's group plan as a partner of Tatum, and the Company
will pay the Employee a pro-rated amount based on time commitment equal to the
costs that would normally be incurred by the Company for the Employee's
participation in the Company's plan(s), if the Employee is eligible under such
plan(s). Notwithstanding the preceding sentence, the Company may include the
Employee as a participant in the Company's own health benefit and disability
plan(s) if required to do so by law for plan qualification.

The Employee must receive written evidence that the Company maintains adequate
director and officer insurance to cover the Employee at no additional cost to
the Employee, and the Company will maintain such insurance at all times while
this agreement remains in effect.

The Company agrees to indemnify the Employee to the full extent permitted by law
for any losses, costs, damages, and expenses, including reasonable attorneys'
fees, as they arc incurred, in connection with any cause of action, suit, or
other proceeding arising in connection with employment with the Company
including, but not limited to, indemnification for deductibles on insurance
policies. This indemnity will not apply to employee gross negligence or willful
misconduct or to actions taken by the employee in bad faith.

<PAGE>
                                                                  Edward C. Hall
Page Three
August 12, 2002
Employment Agreement - Edward C. Hall

TERMINATION
The Company may terminate the Employee's employment for any reason upon at least
30 days' prior written notice to the Employee, such termination to be effective
on the date specified in the notice, provided that such date is no earlier than
30 days from the date of delivery of the notice. Likewise, the Employee may
terminate his or her employment for any reason upon at least 30 days' prior
written notice to the Company, such termination to be effective on the date 30
days following the date of the notice.

The Employee will continue to render services and to be paid during such 30-day
period, regardless of who gives such notice. The Employee may terminate this
letter agreement immediately if the Company has not remained current in its
obligations under this letter or if the Company engages in or asks the Employee
to engage in or to ignore any illegal or unethical conduct.

This agreement will terminate immediately upon the death or permanent disability
of the Employee. For purposes of this agreement, permanent disability will be as
defined by the applicable policy of disability insurance or, in the absence of
such insurance, by the Company's Board of Directors acting in good faith.

The Salary will be prorated for the final pay period based on the number of days
in the final pay period up to the effective date of termination or expiration.

MISCELLANEOUS
This agreement contains the entire agreement between the parties, superseding
any prior oral or written statements or agreements.

Neither the Employee nor the Company will be deemed to have waived any rights or
remedies accruing under this agreement unless such waiver is in writing and
signed by the party electing to waive the right or remedy. This agreement binds
and benefits the successors of the parties.

The provisions in this agreement concerning the payment of Salary and Bonuses
and confidentiality will survive any termination or expiration of this
agreement.

The terms of this letter agreement are severable and may not be amended except
in a writing signed by the parties. If any portion of this agreement is found to
be unenforceable, the rest of this agreement will be enforceable except to the
extent that the severed provision deprives either party of a substantial portion
of its bargain.

This agreement will be governed by and construed in all respects in accordance
with the laws of the State of California, without giving effect to
conflicts-of-laws principles.

Each person signing below is authorized to sign on behalf of the party
indicated, and in each case such signature is the only one necessary.

<PAGE>
                                                                  Edward C. Hall
Page Four
August 12, 2002
Employment Agreement - Edward C. Hall

Please sign below and return a signed copy of this letter to indicate your
agreement with its terms and conditions.

Sincerely yours,

AETHLON MEDICAL, INC.

By: /s/ James A. Joyce
    ----------------------------
    James A Joyce, CEO

Acknowledged and agreed by:

                                    EMPLOYEE

                                    /s/ Edward C. Hall
                                    --------------------------
                                    Edward C. Hall

                                    Date: 8/14/02

<PAGE>
                                                                  Edward C. Hall

SCHEDULE A
----------

                Incentive Cash Bonus, Stock, or Warrants/Options

                                       TBD

<PAGE>
                                                                  Edward C. Hall

                              AETHLON MEDICAL, INC.

                AGREEMENT RESTRICTING COMPETITION AND DISCLOSURE

          THIS AGREEMENT is made this 14th day of August 2002 by and between
AETHLON MEDICAL, INC., a Nevada corporation (hereinafter referred to as the
"Company") and Edward C. Hall (hereinafter referred to as "Disclosee").

          WHEREAS, the Company has expended considerable time, effort,
resources, and capital in developing a proprietary platform technology known as
the Hemopurifier(TM) to develop an extracorporeal therapeutic treatment system
for the removal of certain viruses from blood (the "Technology") and is
developing blood filtration products that address, among other things, the
treatment of HIV/AIDS and Hepatitis-C (the "Products"); and

          WHEREAS, Disclosee has desires to work with the Company in the further
development and operations of the Technology, the Products, the Company's
business or in connection with possible financing, merger, acquisition,
consolidation or other business arrangements that may be beneficial to the
Company's business; and

          WHEREAS, in connection with Disclosee's discussions with senior
officers of the Company, Disclosee will be provided with and have access to
certain "Confidential Information," as defined below, and the Company desires to
protect the Confidential Information;

          NOW THEREFORE, the parties agree as follows:

          1. DEFINITION OF CONFIDENTIAL INFORMATION. The term "Confidential
Information," for purposes of this Agreement, shall mean all non-public
confidential information, whether in oral, written, or other form, which the
Company provides Disclosee with access to or discloses including but not limited
to information of a technical, operational, administrative, economic, marketing,
planning, business or financial nature or in the nature of intellectual property
of any kind relating to the business of the Company. "Confidential Information"
shall not include information that (i) is or becomes generally available to the
public, other than as a result of a disclosure or other fault by you in
violation of this Agreement; (ii) becomes rightfully available to you on a
non-confidential basis, provided that the source of such information is not
prohibited from disclosing such information, to you by legal, contractual, or
fiduciary obligations; or (iii) is rightfully in the possession of Disclosee by
or on behalf of the Company, provided that the source of such information is not
prohibited from disclosing such information to you by legal, contractual or
fiduciary obligations.

          2. DISCLOSURE OF INFORMATION.

                  2.1 In consideration of Disclosee's promise to keep the
Confidential Information confidential and its promise not to circumvent the
Company in pursuing a business plan similar to the Company's, except to the
extent that they already are, the Company agrees to make available to Disclosee
such portion of the Confidential Information as the Company deems necessary,
promptly upon its execution and delivery of this Agreement, to enable Disclosee
to determine if it desires to work with the Company. Disclosee will hold the
Confidential Information in strict confidence and will not disclose to anyone
directly or indirectly at any time for a period of three years from the date of
this Agreement any of the Confidential Information relating to the business of
the Company that is confidential, without the prior written consent of the
Company. Disclosee agrees that the Confidential Information will not be used for
any purpose other than in connection with the evaluation of the Company. All
documents that Disclosee prepares or Confidential Information that is given
Disclosee in connection with this Agreement are the exclusive property of the
Company and shall be promptly returned to the Company at its request.

<PAGE>

                  2.2 Disclosee will within 15 days of receipt of a written
demand from the Company:

                            (i) return to the Company all Confidential
Information (and all and any copies thereof or of any part thereof);

                            (ii) remove and expunge all Confidential Information
from any computer or any similar device into which it was programmed or
installed;

                            (iii) destroy all notes, analyses or memoranda
containing Confidential Information prepared by Disclosee or on Disclosee's
behalf.

                  2.3 If any proceedings are commenced or action taken which
could result in Disclosee becoming compelled to disclose Confidential
Information, Disclosee will immediately notify the Company of such proceedings
or action in writing and will take all available steps to resist or avoid such
proceeding or actions, including all steps the Company may reasonably request
and keep the Company fully and promptly informed of all matters and developments
relating thereto. if Disclosee is required by law or otherwise obliged to
disclose Confidential Information to any third Party, Disclosee will disclose
such information only to such third Party, and only to the extent that required
by law or otherwise is to be disclosed.

                  2.4 Disclosee will insure that Disclosee's officers and
employees and advisors each act, or omit to act, as if he or she had agreed with
the Company on the same terms as this Agreement. Disclosee shall also insure
that each person to whom disclosure of Confidential Information is authorized to
be made by Disclosee or on Disclosee's behalf or in the course of representing
or advising Disclosee is made aware of and adheres to the terms of this
Agreement.

          3. NON-CIRCUMVENTION; PROHIBITION AGAINST COMPETITION. Neither
Disclosee nor any affiliate (as that term is defined in Federal securities
laws), officer, director, partner or agent of Disclosee, any principal
represented by Disclosee, or any corporation affiliated with Disclosee, shall at
any time for a period of three years from the date of this Agreement,
participate or hold an interest in any business or enterprise that is engaged in
a business that utilizes any of the Confidential Information whether as agent,
principal, partner, stockholder, or in any other individual or representative
capacity.

          4. REMEDIES. Disclosee recognizes and acknowledges that the Company
has made a substantial investment in developing the Confidential Information,
the Technology, the Products, and the business of the Company, and that the
restrictions on Disclosee's activities as contained in this Agreement are
required for the Company's reasonable protection. Disclosee agrees that in the
event of breach of this Agreement, the Company will be entitled, if it so
elects, to institute proceedings at law or in equity to obtain damages or to
enforce the specific performance of this Agreement by Disclosee or to enjoin
Disclosee from engaging in any activity in violation thereof.

          5. ATTORNEY'S FEES. In the event of any controversy, claim or dispute
between the parties hereto involving the terms and conditions of this Agreement,
or arising out of or relating to this Agreement or the breach thereof, the
prevailing party in any arbitration (as provided for in Section 10 below) shall
be entitled to recover reasonable expenses, attorney's fees and costs in such
arbitration as determined by the arbitrator(s).

          6. PARTIAL INVALIDITY, If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable the
remaining provisions shall nevertheless continue in full force and effect
without being impaired or invalidated in any way.

          7. GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of California.

                                   Page 2 of 3
<PAGE>
                                                                  Edward C. Hall

          8. WAIVER; AMENDMENT. No failure or delay by either party in
exercising any right, power or privilege to which it is entitled hereunder shall
operate as a waiver nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise. The terms of this
Agreement and the obligations and acknowledgements hereunder may only be waived
or modified by an agreement in writing between the parties.

          9. ASSIGNMENT. Neither party shall not assign or transfer any of its
rights or obligations under this Agreement to any third party without the prior
written consent of the other Party.

          10. DISPUTE RESOLUTION. All disputes, claims, controversies and
differences ("Disputes") arising out of or relating to this Agreement shall, if
they cannot be amicably settled within a period of 30 days from the date of
notification of the Dispute to the other party, be referred to and finally
settled by arbitration in accordance with the rules of the American Arbitration
Association (the "Rules") in San Diego County, California, Disputes shall be
referred to a single arbitrator nominated and agreed upon by parties to this
Agreement. If the parties cannot agree upon the identity of a single arbitrator
within one month's time after the first call for arbitration has been made,
Disputes shall be finally settled by three arbitrators appointed in accordance
with the Rules. The decision or decisions of the arbitrators shall be binding
upon the parties to this Agreement and may be enforced in any court of competent
jurisdiction.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first specified above.

THE COMPANY:                                AETHLON MEDICAL, INC.

                                            By: /s/ James A. Joyce
                                                --------------------------------
                                                James A Joyce, CEO
                                                Its Duly Authorized Agent

DISCLOSEE:                                      /s/ Edward C. Hall
                                                --------------------------------
                                                Edward C. Hall

                                  Page 3 of 3<PAGE>

EXHIBIT 4.8

THIS WARRANT AND ANY SHARES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT FILED UNDER SUCH ACT OR PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT. THIS WARRANT MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR
ASSIGNED TO ANY OTHER PERSON OR ENTITY, EXCEPT AS SET FORTH HEREIN.

                                     WARRANT

                  TO SUBSCRIBE FOR AND PURCHASE COMMON STOCK OF
                           ALLIS-CHALMERS CORPORATION

            VOID AFTER 5:00 P.M., CENTRAL TIME, ON FEBRUARY 28, 2009,
           OR IF NOT A BUSINESS DAY, AS DEFINED HEREIN. AT 5:00 P.M.,
             CENTRAL TIME ON THE IMMEDIATELY FOLLOWING BUSINESS DAY

Date of Issuance:  March 1, 2004

         THIS CERTIFIES that, for good and valuable consideration, MORGAN JOSEPH
& CO., INC., a Delaware corporation ("MJ"), or registered assigns, is entitled
to subscribe for and purchase from Allis-Chalmers Corporation, a Delaware
corporation (the "COMPANY"), at the price of $0.50 per share (such price, as
from time to time to be adjusted as hereinafter provided, being hereinafter
called the "WARRANT PRICE"), at any time and from time to time after the date
hereof but not later than the Expiration Date (as defined below), up to such
number of fully paid, nonassessable shares of Common Stock, par value $0.15 per
share ("COMMON STOCK"), of the Company as is specified in the following
sentence, subject, however, to the provisions and upon the terms and conditions
hereinafter set forth, including without limitation the provisions of Section 3
hereof. This Warrant shall be exercisable for up to 1,700,000 shares of Common
Stock upon issuance, subject to adjustment as provided herein. "EXPIRATION DATE"
shall mean 5:00 P.M., Central time, on February 28, 2009, PROVIDED, that if such
day is not a Business Day, as defined herein, at 5:00 P.M., Central time, on the
immediately following Business Day. "BUSINESS DAY" shall mean a day other than a
Saturday, Sunday or other day on which banks in the State of Texas are
authorized by law to remain closed.

SECTION 1.     EXERCISE OF WARRANT

         (a) CASH OR CASHLESS EXERCISE

         This Warrant may be exercised, at any time and from time to time but
not later than the Expiration Date, by the holder hereof (hereinafter referred
to as the "WARRANTHOLDER"), in whole or in part (but not as to a fractional
share of Common Stock), by the completion of the subscription form attached
hereto and by the surrender of this Warrant (properly endorsed) at the Company's
offices at 7660 Woodway, Suite 200, Houston, Texas 77063 (or at such other
location in the United States as the Company may designate by notice in writing

<PAGE>

to the Warrantholder at the address of the Warrantholder appearing on the books
of the Company), and by payment to the Company of the Warrant Price for each
share being purchased, (i) in cash or by certified or official bank check or
(ii) by delivering notice to the Company that the Warrantholder is exercising
this Warrant by authorizing the Company to reduce the number of shares of Common
Stock subject to this Warrant by the number of shares having an aggregate Fair
Market Value equal to the applicable Warrant Price. For purposes of this
Warrant, the term "Fair Market Value" shall mean on any date specified herein,
with respect to Common Stock, the amount per share equal to (a) the average of
the closing prices thereof on the ten (10) trading days prior to such date, in
each case as officially reported on the principal national securities exchange
on which the same are then listed or admitted to trading, or (b) if no shares of
Common Stock are then listed or admitted to trading on any national securities
exchange, the average of the reported closing bid and asked prices thereof on
the ten (10) trading days prior to such date as quoted in the Nasdaq National
Market or, if no shares of Common Stock are then quoted in the Nasdaq National
Market, as published by the National Quotation Bureau, Incorporated or any
similar successor organization, and in either case as reported by any member
firm of the New York Stock Exchange selected by the Company; PROVIDED that with
respect to (b) above, if the average daily trading volume for the subject shares
for the thirty (30) days prior to the date of determination shall be less than
1,000 shares per day, then the subject Market Price shall be the average of the
closing bid price of such shares on the ten (10) trading days prior to the date
of determination, or (c) if not so reported, the fair market value of the Common
Stock, as determined in good faith by the Board of Directors of the Company.

         (b) PROCEDURE FOR EXERCISE

         In the event of any exercise of the rights represented by this Warrant,
a certificate or certificates for the total number of whole shares of Common
Stock so purchased, registered in the name of the Warrantholder, shall be
delivered to the Warrantholder within a reasonable time, not exceeding five
Business Days, after the rights represented by this Warrant shall have been so
exercised; and, unless this Warrant has expired, a new Warrant representing the
number of shares (except a remaining fractional share), if any, with respect to
the unexercised portion of this Warrant shall also be issued to the
Warrantholder within such time. With respect to any such exercise, the
Warrantholder shall for all purposes be deemed to have become the holder of
record of the number of shares of Common Stock evidenced by such certificate or
certificates, from the date on which this Warrant was surrendered and, if
exercise is pursuant to SECTION 1(a), payment of the Warrant Price was made,
irrespective of the date of delivery of such certificate, except that, if the
date of such surrender and payment is a date on which the stock transfer books
of the Company are closed, such person shall be deemed to have become the holder
of such shares at the close of business on the next succeeding date on which the
stock transfer books are open. No fractional shares shall be issued upon
exercise of this Warrant and no payment or adjustment shall be made upon any
exercise on account of any cash dividends on the Common Stock issued upon such
exercise. If any fractional interest in a share of Common Stock would, except
for the provisions of this SECTION 1, be delivered upon any such exercise, the
Company, in lieu of delivering the fractional share thereof, shall pay to the
Warrantholder an amount in cash equal to the current Fair Market Value of such
fractional interest, as determined above.

                                       2

<PAGE>

SECTION 2.     ADJUSTMENT OF NUMBER OF SHARES

         Upon each adjustment of the Warrant Price for any stock dividend or
distribution or any subdivision or combination of the outstanding shares of the
Common Stock as provided in SECTION 3, the Warrantholder shall thereafter be
entitled to purchase, at the Warrant Price resulting from such adjustment (each
an "ADJUSTED WARRANT PRICE"), the number of shares (calculated to the nearest
hundredth of a share) obtained by multiplying the Warrant Price in effect
immediately prior to such adjustment by the number of shares purchasable
pursuant hereto immediately prior to such adjustment and dividing the product
thereof by the Adjusted Warrant Price resulting from such adjustment

SECTION 3.     ADJUSTMENT OF WARRANT PRICE AND OTHER MATTERS

         The Warrant Price and the number and kind of shares issuable hereunder
shall be subject to adjustment from time to time upon the happening of certain
events as provided in this SECTION 3.

         (a) ADJUSTMENT PROVISIONS; OTHER MATTERS

               (1) If at any time prior to the exercise of this Warrant in full,
the Company shall (A) declare a dividend or make a distribution on the Common
Stock payable in shares of its capital stock (whether shares of Common Stock or
of capital stock of any other class); (B) subdivide, reclassify or recapitalize
its outstanding Common Stock into a greater number of shares; (C) combine,
reclassify or recapitalize its outstanding Common Stock into a smaller number of
shares; or (D) issue any shares of its capital stock by reclassification of its
Common Stock (excluding any such reclassification in connection with a
consolidation or a merger that is subject to SECTION 3(b)(4)), the Warrant Price
in effect at the time of the record date of such dividend, distribution,
subdivision, combination, reclassification or recapitalization shall be adjusted
so that the Warrantholder shall be entitled to receive the aggregate number and
kind of shares which, if this Warrant had been exercised in full immediately
prior to such event, it would have owned upon such exercise and been entitled to
receive by virtue of such dividend, distribution, subdivision, combination,
reclassification or recapitalization. Any adjustment required by this SECTION
3(b) shall be made immediately after the record date, in the case of a dividend
or distribution, or the effective date, in the case of a subdivision,
combination, reclassification or recapitalization, to allow the purchase of such
aggregate number and kind of shares.

               (2) If at any time prior to the exercise of this Warrant in full,
the Company shall make a distribution to all holders of the Common Stock of (i)
stock of a subsidiary or securities convertible into or exercisable for such
stock, or (ii) evidence of indebtedness of the Company or any subsidiary or
assets of the Company or any subsidiary (excluding cash dividends or
distributions out of earned surplus), then in lieu of an adjustment in the
Warrant Price or the number of shares of Common Stock purchasable upon the
exercise of this Warrant (and in addition to the Common Stock or other
securities to be received upon exercise of this Warrant as provided herein),
each Warrantholder, upon the exercise hereof at any time after such
distribution, shall be entitled to receive from the Company, such subsidiary or
both, as the Company shall determine, the stock or other securities to which
such Warrantholder would have been entitled if such Warrantholder had exercised

                                       3

<PAGE>

this Warrant immediately prior thereto, all subject to further adjustment as
provided in this SECTION 3, and the Company shall reserve, for the life of the
Warrant, such securities of such subsidiary or other corporation; PROVIDED,
HOWEVER, that no adjustment in respect of dividends or interest on such stock or
other securities shall be made during the term of this Warrant or upon its
exercise.

               (3) In the event of any capital reorganization of the Company
(other than an event referred to in SECTION 3(a)(1)), or in case of the
consolidation of the Company with, the merger of the Company with or into or the
sale of all or substantially all of the properties and assets of the Company to
any other person, if in connection therewith consideration is payable to holders
of Common Stock (or other securities or property purchasable upon exercise of
this Warrant) in exchange therefor, this Warrant shall remain subject to the
terms and conditions set forth in this Warrant and this Warrant shall, after
such capital reorganization, consolidation, merger or sale be exercisable for
the number of shares of stock or other securities or assets to which a holder of
the number of shares of Common Stock purchasable (at the time of such capital
reorganization, reclassification of such Common Stock, consolidation, merger or
sale) upon exercise of this Warrant would have been entitled if this Warrant had
been exercised immediately prior to such capital reorganization,
reclassification of such Common Stock, consolidation, merger or sale; and in any
such case, if necessary, the provisions set forth in this Warrant with respect
to the rights and interests thereafter of the Warrantholder shall be
appropriately adjusted so as to be applicable, as nearly as may reasonably be,
to any shares of stock or other securities or assets thereafter deliverable on
the exercise of this Warrant. The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof, the successor corporation (if other than the Company)
resulting from such consolidation or merger or the corporation purchasing such
assets or the appropriate corporation or entity shall assume, by written
instrument, the obligation to deliver to the Warrantholder the shares of stock,
securities or assets to which the Warrantholder may be entitled pursuant to this
SECTION 3(a)(3).

               (4) Notwithstanding SECTION 3(a)(3), (i) if the Company merges or
consolidates with, or sells all or substantially all of its property and assets
to, any other person and consideration is payable to holders of Common Stock in
exchange for their Common Stock in connection with such merger, consolidation or
sale which consists solely of cash, or (ii) in the event of the dissolution,
liquidation or winding up of the Company, then the Warrantholder shall be
entitled to receive distributions on the date of such event on an equal basis
with holders of Common Stock (or other securities issuable upon exercise of this
Warrant) as if this Warrant had been exercised immediately prior to such event,
less the Warrant Price. Upon receipt of such payment if any, the rights of the
Warrantholder shall terminate and cease and this Warrant shall expire. In case
of any such merger, consolidation or sale of assets, the surviving or acquiring
person and, in the event of any dissolution, liquidation or winding up of the
Company, the Company shall promptly, after receipt of this surrendered Warrant,
make payment by delivering a check in such amount as is appropriate (or, in the
case of consideration other than cash, such other consideration as is
appropriate) to such person as it may be directed in writing by the
Warrantholder surrendering this Warrant.

                                       4

<PAGE>

               (5) No adjustment in the Warrant Price shall be required unless
such adjustment would require an increase or decrease of at least one cent
($.0l) in such price; provided, however, that any adjustments which by reason of
this SECTION 3(a)(5) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All calculations under this
SECTION 3(a) shall be made to the nearest cent or to the nearest hundredth of a
share, as the case may be. Notwithstanding anything in this SECTION 3(a) to the
contrary, the Warrant Price shall not be reduced to less than the then existing
par value of the Common Stock as a result of any adjustment made hereunder.

               (6) In the event that at any time, as the result of any
adjustment made pursuant to this SECTION 3(a), the Warrantholder thereafter
shall become entitled to receive any securities other than Common Stock,
thereafter the number of such other securities so receivable upon exercise of
any Warrant shall be subject to adjustment from time to time in a manner and on
terms as nearly equivalent as practicable to the provisions with respect to the
Common Stock contained in SECTION 3(b).

         (b) NO ADJUSTMENT FOR CASH DIVIDENDS

         Except as provided in SECTION 3(a) of this Agreement, no adjustment in
respect of any cash dividends shall be made during the term of this Warrant or
upon the exercise of this Warrant.

         (c) FORM OF WARRANT AFTER ADJUSTMENTS

         The form of this Warrant need not be changed because of any adjustments
in the Warrant Price or the number or kind of the shares purchasable pursuant to
this Warrant, and Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated in this
Warrant, as initially issued, provided, however, that the Company may, at any
time in its sole discretion (which shall be conclusive), make any change in the
form of Warrant certificate that it may deem appropriate and that does not
affect the substance thereof. Any Warrant certificate thereafter issued, whether
upon registration of transfer of, or in exchange or substitution for, an
outstanding Warrant certificate may be in the form so changed.

         (d) TREATMENT OF WARRANTHOLDER

         Prior to due presentment for registration of transfer of this Warrant,
the Company may deem and treat the Warrantholder as the absolute owner of this
Warrant (notwithstanding any notation of ownership or other writing hereon) for
all purposes and shall not be affected by any notice to the contrary.

         (e) NOTICE OF ADJUSTMENT

         Upon any adjustment of the Warrant Price, then and in each such case
the Company shall give written notice thereof, by first-class mail, postage
prepaid, addressed to each Warrantholder at the address of such holder as shown
on the books of the Company, which notice shall state the Warrant Price
resulting from such adjustments setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based.

                                       5

<PAGE>

         (f) STOCK TO BE RESERVED

         The Company will at all times reserve and keep available out of its
authorized Common Stock, solely for the purpose of issuance upon the exercise of
this Warrant as herein provided, such number of shares of Common Stock as shall
then be issuable upon the exercise of this Warrant. The Company covenants that
all shares of Common Stock which shall be so issued, upon full payment of the
Warrant Price therefor or as otherwise set forth herein, shall be duly and
validly issued and fully paid and nonassessable and free from all taxes, liens
and charges with respect to the issue thereof, and, without limiting the
generality of the foregoing, the Company covenants that it will from time to
time take all such action as may be required to ensure that the par value per
share, if any, of the Common Stock is at all times equal to or less than the
effective Warrant Price. The Company will take all such action as may be
necessary to ensure that all such shares of Common Stock may be so issued
without violation of any applicable law or regulation, or of any requirement of
any national securities exchange or automated quotation system upon which the
Common Stock of the Company may be listed or quoted. The Company will not take
any action which results in any adjustment of the Warrant Price if the total
number of shares of Common Stock issued and issuable after such action upon
exercise of this Warrant would exceed the total number of shares of Common Stock
then authorized by the Company's Certificate of Incorporation. The Company has
not granted and will not grant any right of first refusal with respect to shares
issuable upon exercise of this Warrant, and there are no preemptive rights
associated with such shares.

         (g) ISSUE TAX

         The issuance of certificates for shares of Common Stock upon exercise
of any Warrant shall be made without a charge to the Warrantholder for any
issuance tax in respect thereto provided that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issuance and delivery of any certificate in a name other than that of the
Warrantholder.

         (h) CLOSING OF BOOKS

         The Company will at no time close its transfer books against the
transfer of the shares of Common Stock issued or issuable upon the exercise of
this Warrant in any manner which interferes with the timely exercise of this
Warrant.

         (i) DEFINITION OF COMMON STOCK

         The shares purchasable pursuant to this Warrant shall include only
securities designated as Common Stock of the Company. As used herein the term
"COMMON STOCK" shall mean and include the Common Stock, par value $.15 per
share, of the Company as authorized on the date hereof, or shares of any class
or classes resulting from any recapitalization or reclassification thereof which
are not limited to any fixed sum or percentage and are not subject to redemption
by the Company and in case at any time there shall be more than one such
resulting class, the shares of each class then so issuable shall be
substantially in the proportion which the total number of shares of such class
resulting from all such reclassification bears to the total number of shares of
all such classes resulting from all such reclassification.

                                       6

<PAGE>

SECTION 4.     NOTICE OF RECORD DATES

         In the event of:

         (a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend or other distribution (other than cash
dividends out of earned surplus), or any right to subscribe for, purchase or
otherwise acquire any shares of stock of any class or any other securities or
property, or to receive any right to sell shares of stock of any class or any
other right; or

         (b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all or
substantially all the assets of the Company to or consolidation or merger of the
Company with or into any other corporation or entity; or

         (c) any voluntary or involuntary dissolution, liquidation or winding-up
of the Company;

then and in each such event the Company will give notice to the Warrantholder
specifying (1) the date on which any such record is to be taken for the purpose
of such dividend, distribution or right and stating the amount and character of
such dividend, distribution or right, and (2) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Common Stock will be
entitled to exchange their shares of Common Stock for securities or other
property deliverable upon such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation or
winding-up. Such notice shall be given at least 20 days and not more than 90
days prior to the date therein specified, and such notice shall state that the
action in question or the record date is subject to the effectiveness of a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act"), or to a favorable vote of stockholders, if either is
required.

SECTION 5.     STOCKHOLDERS RIGHTS AND LIABILITIES

         No provision hereof, in the absence of affirmative action by the
Warrantholder to purchase shares of Common Stock, and no mere enumeration herein
of the rights or privileges of the Warrantholder shall give rise to any
liability of such Warrantholder for the Warrant Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.

SECTION 6.     LOST, STOLEN, MUTILATED OR DESTROYED WARRANT

         Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction or mutilation of any Warrant and, in the case of any such
loss, theft or destruction, upon receipt of indemnity or security reasonably
satisfactory to the Company or, in the case of any such mutilation, upon
surrender and cancellation of such Warrant, the Company will make and deliver,
in lieu of such lost, stolen, destroyed or mutilated Warrant, a new Warrant of
like tenor and representing the right to purchase the same aggregate number of
shares of Common Stock as provided for in such lost, stolen, destroyed or
mutilated Warrant.

                                       7

<PAGE>

SECTION 7.     NOTICES

         All notices, requests and other communications required or permitted to
be given or delivered hereunder shall be in writing, and shall be delivered, or
shall be sent by certified or registered mail or overnight courier, postage
prepaid and addressed, or by facsimile, and if to the Warrantholder to such
Warrantholder at such address or facsimile number as shall have been furnished
to the Company by notice from such Warrantholder and if to the Company, at 7660
Woodway, Suite 200, Houston, Texas 77063, facsimile (713) 369-0555 or at such
other address or facsimile number as shall have been furnished to the
Warrantholder by notice from the Company.

SECTION 8.     RESTRICTIONS ON TRANSFER

         This Warrant may not be sold, transferred, hypothecated or assigned to
any other person or entity other than (i) the respective successors to MJ in a
merger or consolidation; (ii) the respective purchasers of all or substantially
all of the assets of MJ; or (iii) the partners in MJ in the event MJ is
liquidated or dissolved. MJ agrees not to make any sale or other disposition of
either the Warrant or the underlying Common Stock except pursuant to a
registration statement which has become effective under the Securities Act,
setting forth the terms of such offering, the underwriting discount and the
commissions and any other pertinent data with respect thereto, unless MJ has
provided the Company with an opinion of counsel reasonably acceptable to the
Company that such registration is not required. This Warrant shall bear a legend
setting forth the foregoing restriction.

SECTION 9.     AMENDMENTS AND WAIVERS

         This Warrant and any term hereof may be changed, waived, discharged or
terminated only by an instrument in writing signed by each of (i) a majority in
interest of the holders of this Warrant and (ii) an authorized representative of
the Company.

SECTION 10.    SEVERABILITY

         If one or more provisions of this Warrant are held to be unenforceable
under applicable law, such provisions shall be excluded from this Warrant, and
the balance of this Warrant shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.

SECTION 11.    GOVERNING LAW

         THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF DELAWARE WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.

SECTION 12.    HEADINGS

         The headings in this Warrant are for purposes of reference only and
shall not limit or otherwise affect any of the terms hereof.

                                       8

<PAGE>

SECTION 13.    COUNTERPARTS

         This Warrant may be executed in any number of counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.

IN WITNESS WHEREOF, the Company and MJ have executed this warrant on and as of
the day and year first above written.

                                    COMPANY:

                                    ALLIS-CHALMERS CORPORATION

                                    By:     /s/ Munawar H. Hidayatallah
                                            ---------------------------
                                            Munawar H. Hidayatallah
                                    Its:    Chief Executive Officer

                                    MORGAN JOSEPH & CO, INC.:

                                    By:     /s/ Andrew J. Silver
                                            ---------------------------
                                            Andrew J. Silver
                                    Its:    Managing Director

                                       9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00071-of-00352.parquet"}]]