Document:

Unassociated Document

    EXHIBIT
      10.3

    

    REGISTRATION
      RIGHTS AGREEMENT

    

    This
      Registration Rights Agreement (this “Agreement”)
      is
      made and entered into as of this 19th day of June 2006 (the “Effective
      Date”)
      between Alternative Energy Sources, Inc., a Delaware corporation (the
“Company”),
      and
      the parties set forth on the signature page and Exhibit
      A
      hereto
      (each, a “Purchaser”
and
      collectively, the “Purchasers”).

     

    RECITALS:

     

     

    WHEREAS,
      the Company and Beemer Energy, Inc. (“Beemer”),
      have
      agreed to enter into an Agreement and Plan of Merger and Reorganization,
      pursuant to which a newly organized, wholly-owned subsidiary of the Company
      will
      merge with and into Beemer, with Beemer being the surviving entity and a
      wholly-owned subsidiary of the Company (the “Merger”)
      (the
      date such Merger becomes effective hereinafter referred to as the “Merger Effective
      Date”);

     

    WHEREAS,
      as a condition to the consummation of the Merger, and to provide the capital
      required by Beemer for working capital purposes, the Company is offering in
      compliance with Rule 506 of Regulation D of the Securities Act of 1933, as
      amended (the “Securities
      Act”),
      to
      accredited investors in a private placement transaction (the “Offering”),
      a
      minimum of 5,000,000 units (the “Units”)
      and a
      maximum of 10,000,000 Units of the Company’s securities, or such greater amount
      as the Company may determine, each Unit consisting of one share of the Company’s
      common stock, par value $0.0001 per share (“Common
      Stock”)
      and a
      warrant (the “Investor Warrants”) to purchase one share of Common Stock for five
      years at the exercise price of $2.00 per whole share of Common Stock, at the
      purchase price of $1.00 per Unit;

     

    WHEREAS,
      The
      Offering will terminate upon the earlier of i) the receipt of acceptable
      subscriptions totaling $10,000,000 or such greater amount as the Company may
      determine, or ii) the election of the Company upon receipt of subscriptions
      totaling at least $5,000,000; provided however, that the initial closing of
      the
      Offering shall be concurrent with the close of the Merger
      (the
“Closing
      Date”);
      and

     

    WHEREAS,
      the Purchasers, in connection with their intent to purchase Units in the
      Offering, shall execute and deliver Subscription Agreements (the “Subscription
      Agreements”)
      and
      Investor Questionnaires (the “Investor
      Questionnaires”)
      memorializing the Purchasers’ agreement to purchase and the Company’s agreement
      to sell the number of Units set forth therein at the purchase price of $1.00
      per
      Unit (the “Purchase
      Price”)
      and
      this Agreement, pursuant to which the Company will provide certain registration
      rights related to the shares of Common Stock underlying the Units and the
      Investor Warrants on the terms set forth herein (the Subscription Agreements,
      Investor Questionnaires and the Registration Rights Agreements are collectively
      referred to as the “Transaction
      Documents”).

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises, representations, warranties, covenants,
      and conditions set forth herein, the parties mutually agree as follows:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    1.  Certain
      Definitions.
      As used
      in this Agreement, the following terms shall have the following respective
      meanings:

     

    “Approved
      Market”
means
      the NASD Over-The-Counter Bulletin Board, the Nasdaq National Market, the Nasdaq
      Capital Market, the New York Stock Exchange, Inc. or the American Stock
      Exchange, Inc.

     

    “Blackout
      Period”
means,
      with respect to a registration, a period, in each case commencing on the day
      immediately after the Company notifies the Purchasers that they are required,
      because of the occurrence of an event of the kind described in Section 4(f)
      hereof, to suspend offers and sales of Registrable Securities during which
      the
      Company, in the good faith judgment of its board of directors, determines
      (because of the existence of, or in anticipation of, any acquisition, financing
      activity, or other transaction involving the Company, or the unavailability
      for
      reasons beyond the Company’s control of any required financial statements,
      disclosure of information which is in its best interest not to publicly
      disclose, or any other event or condition of similar significance to the
      Company) that the registration and distribution of the Registrable Securities
      to
      be covered by such registration statement, if any, would be seriously
      detrimental to the Company and its stockholders and ending on the earlier of
      (1)
      the date upon which the material non-public information commencing the Blackout
      Period is disclosed to the public or ceases to be material and (2) such time
      as
      the Company notifies the selling Holders that the Company will no longer delay
      such filing of the Registration Statement, recommence taking steps to make
      such
      Registration Statement effective, or allow sales pursuant to such Registration
      Statement to resume; provided, however,
      that (a)
      the Company shall limit its use of Blackout Periods, in the aggregate, to 30
      Trading Days in any 12-month period and (b) no Blackout Period may commence
      sooner than 60 days after the end of a prior Blackout Period.

     

    “Business
      Day”
means
      any day of the year, other than a Saturday, Sunday, or other day on which the
      Commission is required or authorized to close.

     

    “Closing
      Date”
means
      the date set forth in the Recitals of this Agreement.

     

    “Commission”
means
      the Securities and Exchange Commission or any other federal agency at the time
      administering the Securities Act.

     

    “Common
      Stock”
means
      the common stock, par value $0.0001 per share, of the Company and any and all
      shares of capital stock or other equity securities of: (i) the Company which
      are
      added to or exchanged or substituted for the Common Stock by reason of the
      declaration of any stock dividend or stock split, the issuance of any
      distribution or the reclassification, readjustment, recapitalization or other
      such modification of the capital structure of the Company; and (ii) any other
      corporation, now or hereafter organized under the laws of any state or other
      governmental authority, with which the Company is merged, which results from
      any
      consolidation or reorganization to which the Company is a party, or to which
      is
      sold all or substantially all of the shares or assets of the Company, if
      immediately after such merger, consolidation, reorganization or sale, the
      Company or the stockholders of the Company own equity securities having in
      the
      aggregate more than 50% of the total voting power of such other
      corporation.

     

    
      
         

      

      
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    “Exchange
      Act”
means
      the Securities Exchange Act of 1934, as amended, and the rules and regulations
      of the Commission promulgated thereunder.

     

    “Family
      Member”
means
      (a) with respect to any individual, such individual’s spouse, any descendants
      (whether natural or adopted), any trust all of the beneficial interests of
      which
      are owned by any of such individuals or by any of such individuals together
      with
      any organization described in Section 501(c)(3) of the Internal Revenue Code
      of
      1986, as amended, the estate of any such individual, and any corporation,
      association, partnership or limited liability company all of the equity
      interests of which are owned by those above described individuals, trusts or
      organizations and (b) with respect to any trust, the owners of the beneficial
      interests of such trust.

     

    “Holder”
means
      each Purchaser or any of such Purchaser’s respective successors and Permitted
      Assigns who acquire rights in accordance with this Agreement with respect to
      the
      Registrable Securities directly or indirectly from a Purchaser or from any
      Permitted Assignee.

     

    “Investor
      Warrants” mean
      the
      warrants issued in relation to the Purchasers purchase of Units in the private
      placement offering.

     

    “Majority
      Holders”
means
      at any time Holders representing a majority of the Registrable
      Securities.

     

    “Permitted
      Assignee”
means
      (a) with respect to a partnership, its partners or former partners in
      accordance with their partnership interests, (b) with respect to a
      corporation, its stockholders in accordance with their interest in the
      corporation, (c) with respect to a limited liability company, its members
      or former members in accordance with their interest in the limited liability
      company, (d) with respect to an individual party, any Family Member of such
      party, (e) an entity that is controlled by, controls, or is under common control
      with a transferor or (f) a party to this Agreement.

     

    “Piggyback
      Registration”
means,
      in any registration of Common Stock as set forth in Section 3(b), the ability
      of
      holders of Common Stock to include Registrable Securities in such registration.
      

     

    “Purchase
      Price”
means
      the Purchase Price per Unit set forth in the Subscription Agreement.

     

    The
      terms
“register,
“
      “registered,
“
and
      “registration”
refer
      to a registration effected by preparing and filing a registration statement
      in
      compliance with the Securities Act, and the declaration or ordering of the
      effectiveness of such registration statement.

     

    “Registrable
      Securities”
means
      the shares of Common Stock issued or issuable to each Purchaser in connection
      with such Purchaser’s purchase of Units pursuant to the Subscription Agreements,
      including the shares of Common Stock issuable on exercise of the Investor
      Warrants issued to the Purchasers in connection with their purchase of Units
      but
      excluding (i) any Registrable Securities that have been publicly sold or may
      be
      sold immediately without registration under the Securities Act either pursuant
      to Rule 144 of the Securities Act or otherwise; (ii) any Registrable Securities
      sold by a person in a transaction pursuant to a registration statement filed
      under the Securities Act or (iii) any Registrable Securities that are at the
      time subject to an effective registration statement under the Securities Act.
      

     

    
      
         

      

      
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    “Registration
      Default Date”
means
      the date that is 120 days following the Registration Filing Date. 

     

    “Registration
      Default Period”
means
      the period following the Registration Default Date during which any Registration
      Event occurs and is continuing.

     

    “Registration
      Event”
means
      the occurrence of any of the following events:

     

    (a)  the
      Company fails to file with the Commission the Registration Statement on or
      before the Registration Filing Date (as defined in Section 3(a));

     

    (b)  the
      Registration Statement is not declared effective by the Commission on or before
      the Registration Default Date;

     

    (c)  after
      the
      SEC Effective Date, sales cannot be made pursuant to the Registration Statement
      for any reason (including without limitation by reason of a stop order, or
      the
      Company’s failure to update the Registration Statement) except as excused
      pursuant to Section 3(a); or

     

    (d)  the
      Common Stock generally or the Registrable Securities specifically are not listed
      or included for quotation on an Approved Market, or trading of the Common Stock
      is suspended or halted on the Approved Market, which at the time constitutes
      the
      principal market for the Common Stock, for more than two full, consecutive
      Trading Days; provided, however, a Registration Event shall not be deemed to
      occur if all or substantially all trading in equity securities (including the
      Common Stock) is suspended or halted on the Approved Market for any length
      of
      time.

     

    “Registration
      Filing Date”
means
      the date that is 120 days after the closing of the Merger.

     

    “Registration
      Statement”
means
      the registration statement that the Company is required to file pursuant to
      this
      Agreement to register the Registrable Securities.

     

    “Rule
      144”
means
      Rule 144 promulgated by the Commission under the Securities Act. 

     

    “Securities
      Act”
means
      the Securities Act of 1933, as amended, or any similar federal statute
      promulgated in replacement thereof, and the rules and regulations of the
      Commission thereunder, all as the same shall be in effect at the
      time.

     

    “SEC
      Effective Date”
means
      the date the Registration Statement is declared effective by the
      Commission.

     

    “Subscription
      Agreement”
means
      the Subscription Agreement dated as of the date hereof between the Company
      and
      the Purchaser setting forth the terms and conditions of the Company’s offer of
      Units and the Purchaser’s purchase of Units.

     

    
      
         

      

      
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    “Trading
      Day”
means
      any day on which the national securities exchange, the Nasdaq Stock Market,
      the
      NASD Over the Counter Bulletin Board or such other securities market or
      quotation system, which at the time constitutes the principal securities market
      for the Common Stock, is open for general trading of securities.

     

    “Units”
mean
      the units offered by the Company and purchased by the Purchaser pursuant to
      the
      Subscription Agreement which consist of one share of Common Stock and an
      Investor Warrant representing the right of the Purchaser to purchase one share
      of Common Stock at the exercise price of $2.00 per share.

     

    2.  Term.
      This
      Agreement shall continue in full force and effect for a period of two years
      from
      the Effective Date, unless terminated sooner hereunder.

     

    3.  Registration.

     

    (a)  Registration
      on Form SB-2.
      Not
      later than the Registration Filing Date, the Company shall file with the
      Commission a registration statement on Form SB-2, or other applicable form,
      relating to the resale by the Holders of all of the Registrable Securities,
      and
      the Company shall use its commercially reasonable best efforts to cause such
      registration statement to be declared effective prior to the Registration
      Default Date; provided, however, that the Company shall not be obligated to
      effect any such registration, qualification, or compliance pursuant to this
      Section, or keep such registration effective pursuant to the terms hereunder:
      (i) in any particular jurisdiction in which the Company would be required to
      qualify to do business as a foreign corporation or as a dealer in securities
      under the securities or blue sky laws of such jurisdiction or to execute a
      general consent to service of process in effecting such registration,
      qualification or compliance, in each case where it has not already done so
      or
      (ii) during any Blackout Period, in which case the Registration Filing Date
      shall be extended to the date immediately following the last day of such
      Blackout Period. 

     

    (b)  Piggyback
      Registration.
      If the
      Company shall determine to register for sale for cash any of its Common Stock,
      for its own account or for the account of others (other than the Holders),
      other
      than (i) a registration relating solely to employee benefit plans or securities
      issued or issuable to employees, consultants (to the extent the securities
      owned
      or to be owned by such consultants could be registered on Form S-8) or any
      of
      their Family Members (including a registration on Form S-8) or (ii) a
      registration relating solely to a Commission Rule 145 transaction, a
      registration on Form S-4 in connection with a merger, acquisition, divestiture,
      reorganization, or similar event, the Company shall promptly give to the Holders
      written notice thereof (and in no event shall such notice be given less than
      20
      calendar days prior to the filing of such registration statement), and shall,
      subject to Section 3(c), include as a Piggyback Registration all of the
      Registrable Securities specified in a written request delivered by the Holder
      within 10 calendar days after receipt of such written notice from the Company.
      However, the Company may, without the consent of the Holders, withdraw such
      registration statement prior to its becoming effective if the Company or such
      other stockholders have elected to abandon the proposal to register the
      securities proposed to be registered thereby. 

     

    
      
         

      

      
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    (c)  Underwriting.
      If a
      Piggyback Registration is for a registered public offering involving an
      underwriting, the Company shall so advise the Holders. In such event, the right
      of any Holder to Piggyback Registration shall be conditioned upon such Holder’s
      participation in such underwriting and the inclusion of such Holder’s
      Registrable Securities in the underwriting to the extent provided herein. All
      Holders proposing to include the Registrable Securities they hold through such
      underwriting shall (together with the Company and any other stockholders of
      the
      Company selling their securities through such underwriting) enter into an
      underwriting agreement in customary form with the underwriter selected for
      such
      underwriting by the Company or the selling stockholders, as applicable.
      Notwithstanding any other provision of this Section, if the underwriter or
      the
      Company determines that marketing factors require a limitation of the number
      of
      shares of Common Stock or the amount of other securities to be underwritten,
      the
      underwriter may exclude some or all Registrable Securities from such
      registration and underwriting. The Company shall so advise all Holders (except
      those Holders who failed to timely elect to include their Registrable Securities
      through such underwriting or have indicated to the Company their decision not
      to
      do so), and indicate to each such Holder the number of shares of Registrable
      Securities that may be included in the registration and underwriting, if any.
      The number of shares of Registrable Securities to be included in such
      registration and underwriting shall be allocated among such Holders as follows:
      

     

    (i)  In
      the
      event of a Piggyback Registration that is initiated by the Company, the number
      of shares that may be included in the registration and underwriting shall be
      allocated first to the Company and then, subject to obligations and commitments
      existing as of the date hereof, to all selling stockholders, including the
      Holders, who have requested to sell in the registration on a pro rata basis
      according to the number of shares requested to be included; and

     

    (ii)  In
      the
      event of a Piggyback Registration that is initiated by the exercise of demand
      registration rights by a stockholder or stockholders of the Company (other
      than
      the Holders), then the number of shares that may be included in the registration
      and underwriting shall be allocated first to such selling stockholders who
      exercised such demand and then, subject to obligations and commitments existing
      as of the date hereof, to all other selling stockholders, including the Holders,
      who have requested to sell in the registration, on a pro rata basis according
      to
      the number of shares requested to be included.

     

    No
      Registrable Securities excluded from the underwriting by reason of the
      underwriter’s marketing limitation shall be included in such registration. If
      any Holder disapproves of the terms of any such underwriting, such Holder may
      elect to withdraw their Registrable Securities therefrom by delivery of written
      notice to the Company and the underwriter. The Registrable Securities so
      withdrawn from such underwriting shall also be withdrawn from such registration;
      provided, however, that, if by the withdrawal of such Registrable Securities
      a
      greater number of Registrable Securities held by other Holders may be included
      in such registration (up to the maximum of any limitation imposed by the
      underwriters), then the Company shall offer to all Holders who have included
      Registrable Securities in the registration the right to include additional
      Registrable Securities pursuant to the terms and limitations set forth herein
      in
      the same proportion used above in determining the underwriter limitation.

     

    (d)  Other
      Registrations.
      Prior
      to the SEC Effective Date, the Company will not, without the prior written
      consent of the Majority Holders, file or request the acceleration of any other
      registration statement filed with the Commission, and during any time subsequent
      to the SEC Effective Date when the Registration Statement for any reason is
      not
      available for use by any Holder for the resale of any Registrable Securities,
      the Company shall not, without the prior written consent of the Majority
      Holders, file any other registration statement or any amendment thereto with
      the
      Commission under the Securities Act or request the acceleration of the
      effectiveness of any other registration statement previously filed with the
      Commission, other than (i) any registration statement on Form S-8 or Form S-4
      and (ii) any registration statement or amendment which the Company is required
      to file or as to which the Company is required to request acceleration pursuant
      to any obligation in effect on the date of execution and delivery of this
      Agreement.

     

    
      
         

      

      
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    (e)  Occurrence
      of Registration Event.
      If a
      Registration Event occurs, then the Company will make payments to each Purchaser
      (a “Qualified
      Purchaser”),
      as
      partial liquidated damages for the minimum amount of damages to the Qualified
      Purchaser by reason thereof, and not as a penalty, at a rate equal to 1% of
      the
      Purchase Price per share of Registrable Securities then held by a Qualified
      Purchaser monthly, for each calendar month of the Registration Default Period
      (pro rated for any period less than 30 days); provided, however, if a
      Registration Event occurs (or is continuing) on a date more than one-year after
      the Qualified Purchaser acquired the Registrable Securities (and thus the
      one-year holding period under Rule 144(d) has elapsed), liquidated damages
      shall
      be paid only with respect to that portion of the Qualified Purchaser’s
      Registrable Securities that cannot then be immediately resold in reliance on
      Rule 144. Each such payment shall be due and payable within five days after
      the
      end of each calendar month of the Registration Default Period until the
      termination of the Registration Default Period and within five days after such
      termination. Such payments shall constitute the Qualified Purchaser’s exclusive
      remedy for such events. The Registration Default Period shall terminate upon
      (i)
      the filing of the Registration Statement in the case of clause (a) of the
      definition of Registration Event, (ii) the SEC Effective Date in the case of
      clause (b) of the definition of Registration Event, (iii) the ability of the
      Qualified Purchaser to effect sales pursuant to the Registration Statement
      in
      the case of clause (c) of the definition of Registration Event, (iv) the listing
      or inclusion and/or trading of the Common Stock on an Approved Market, as the
      case may be, in the case of clause (d) of the definition of Registration Event,
      and (v) in the case of the events described in clauses (b) and (c) of the
      definition of Registration Event, the earlier termination of the Registration
      Default Period. The amounts payable as partial liquidated damages pursuant
      to
      this paragraph shall be payable in lawful money of the United States. Amounts
      payable as liquidated damages to each Qualified Purchaser hereunder with respect
      to each share of Registrable Securities shall cease when the Qualified Purchaser
      no longer holds such shares of Registrable Securities or such shares of
      Registrable Securities can be immediately sold by the Qualified Purchaser in
      reliance on Rule 144(k). 

     

    4.  Registration
      Procedures.
      The
      Company will keep each Holder reasonably advised as to the filing and
      effectiveness of the Registration Statement. At its expense with respect to
      the
      Registration Statement, the Company will:

     

    (a)  prepare
      and file with the Commission with respect to the Registrable Securities, a
      registration statement on Form SB-2, or any other form for which the Company
      then qualifies or which counsel for the Company shall deem appropriate and
      which
      form shall be available for the sale of the Registrable Securities in accordance
      with the intended methods of distribution thereof, and use its commercially
      reasonable efforts to cause such registration statement to become and remain
      effective at for a period of two years or for such shorter period ending on
      the
      earlier to occur of (i) the sale of all Registrable Securities and (ii) the
      availability under Rule 144(k) for the Holder to sell the Registrable Securities
      (in either case, the “Effectiveness
      Period”);

     

    
      
         

      

      
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    (b)  if
      a
      registration statement is subject to review by the Commission, promptly respond
      to all comments and diligently pursue resolution of any comments to the
      satisfaction of the Commission;

     

    (c)  prepare
      and file with the Commission such amendments and supplements to such
      registration statement and the prospectus used in connection therewith as may
      be
      necessary to keep such registration statement effective during the Effectiveness
      Period;

     

    (d)  furnish,
      without charge, to each Holder of Registrable Securities covered by such
      registration statement (i) a reasonable number of copies of such registration
      statement (including any exhibits thereto other than exhibits incorporated
      by
      reference), each amendment and supplement thereto as such Holder may reasonably
      request, (ii) such number of copies of the prospectus included in such
      registration statement (including each preliminary prospectus and any other
      prospectus filed under Rule 424 under the Securities Act) as such Holders may
      reasonably request, in conformity with the requirements of the Securities Act,
      and (iii) such other documents as such Holder may require to consummate the
      disposition of the Registrable Securities owned by such Holder, but only during
      the Effectiveness Period;

     

    (e)  use
      its
      commercially reasonable best efforts to register or qualify such registration
      under such other applicable securities or blue sky laws of such jurisdictions
      as
      any Holder of Registrable Securities covered by such registration statement
      reasonably requests and as may be necessary for the marketability of the
      Registrable Securities (such request to be made by the time the applicable
      registration statement is deemed effective by the Commission) and do any and
      all
      other acts and things necessary to enable such Holder to consummate the
      disposition in such jurisdictions of the Registrable Securities owned by such
      Holder; provided, however, that the Company shall not be required to (i) qualify
      generally to do business in any jurisdiction where it would not otherwise be
      required to qualify but for this paragraph, (ii) subject itself to taxation
      in
      any such jurisdiction, or (iii) consent to general service of process in any
      such jurisdiction;

     

    (f)  as
      promptly as practicable after becoming aware of such event, notify each Holder
      of Registrable Securities, the disposition of which requires delivery of a
      prospectus relating thereto under the Securities Act, of the happening of any
      event, which comes to the Company’s attention, that will after the occurrence of
      such event cause the prospectus included in such registration statement, if
      not
      amended or supplemented, to contain an untrue statement of a material fact
      or an
      omission to state a material fact required to be stated therein or necessary
      to
      make the statements therein not misleading and the Company shall promptly
      thereafter prepare and furnish to such Holder a supplement or amendment to
      such
      prospectus (or prepare and file appropriate reports under the Exchange Act)
      so
      that, as thereafter delivered to the purchasers of such Registrable Securities,
      such prospectus shall not contain an untrue statement of a material fact or
      omit
      to state any material fact required to be stated therein or necessary to make
      the statements therein not misleading, unless suspension of the use of such
      prospectus otherwise is authorized herein or in the event of a Blackout Period,
      in which case no supplement or amendment need be furnished (or Exchange Act
      filing made) until the termination of such suspension or Blackout Period;

     

    
      
         

      

      
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    (g)  comply,
      and continue to comply during the Effectiveness Period, in all material respects
      with the Securities Act and the Exchange Act and with all applicable rules
      and
      regulations of the Commission with respect to the disposition of all securities
      covered by such registration statement;

     

    (h)  as
      promptly as practicable after becoming aware of such event, notify each Holder
      of Registrable Securities being offered or sold pursuant to the Registration
      Statement of the issuance by the Commission of any stop order or other
      suspension of effectiveness of the Registration Statement;

     

    (i)  use
      its
      best efforts to cause all the Registrable Securities covered by the Registration
      Statement to be quoted on the NASD OTC Bulletin Board or such other principal
      securities market on which securities of the same class or series issued by
      the
      Company are then listed or traded; 

     

    (j)  provide
      a
      transfer agent and registrar, which may be a single entity, for the shares
      of
      Common Stock at all times;

     

    (k)  cooperate
      with the Holders of Registrable Securities being offered pursuant to the
      Registration Statement to issue and deliver, or cause its transfer agent to
      issue and deliver, certificates representing Registrable Securities to be
      offered pursuant to the Registration Statement within a reasonable time after
      the delivery of certificates representing the Registrable Securities to the
      transfer agent or the Company, as applicable, and enable such certificates
      to be
      in such denominations or amounts as the Holders may reasonably request and
      registered in such names as the Holders may request;

     

    (l)  during
      the Effectiveness Period, refrain from bidding for or purchasing any Common
      Stock or any right to purchase Common Stock or attempting to induce any person
      to purchase any such security or right if such bid, purchase or attempt would
      in
      any way limit the right of the Holders to sell Registrable Securities by reason
      of the limitations set forth in Regulation M under the Exchange Act;
      and

     

    (m)  take
      all
      other reasonable actions necessary to expedite and facilitate the disposition
      by
      the Holders of the Registrable Securities pursuant to the Registration
      Statement.

     

    5.  Suspension
      of Offers and Sales.
      Each
      Holder agrees that, upon receipt of any notice from the Company of the happening
      of any event of the kind described in Section 4(f) hereof or of the commencement
      of an Blackout Period, such Holder shall discontinue the disposition of
      Registrable Securities included in the Registration Statement until such
      Holder’s receipt of the copies of the supplemented or amended prospectus
      contemplated by Section 4(f) hereof or notice of the end of the Blackout Period,
      and, if so directed by the Company, such Holder shall deliver to the Company
      (at
      the Company’s expense) all copies (including, without limitation, any and all
      drafts), other than permanent file copies, then in such Holder’s possession, of
      the prospectus covering such Registrable Securities current at the time of
      receipt of such notice.

     

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    6.  Registration
      Expenses.
      The
      Company shall pay all expenses in connection with any registration obligation
      provided herein, including, without limitation, all registration, filing, stock
      exchange fees, printing expenses, all fees and expenses of complying with
      securities or blue sky laws, and the fees and disbursements of counsel for
      the
      Company and of its independent accountants; provided that, in any underwritten
      registration, each party shall pay for its own underwriting discounts and
      commissions and transfer taxes. Except as provided in this Section and Section
      9, the Company shall not be responsible for the expenses of any attorney or
      other advisor employed by a Holder.

     

    7.  Assignment
      of Rights.
      No
      Holder may assign its rights under this Agreement to any party without the
      prior
      written consent of the Company; provided, however, that a Holder may assign
      its
      rights under this Agreement without such consent to a Permitted Assignee as
      long
      as (a) such transfer or assignment is effected in accordance with applicable
      securities laws; (b) such transferee or assignee agrees in writing to become
      subject to the terms of this Agreement; and (c) the Company is given written
      notice by such Holder of such transfer or assignment, stating the name and
      address of the transferee or assignee and identifying the Registrable Securities
      with respect to which such rights are being transferred or
      assigned.

     

    8.  Information
      by Holder.
      Holders
      included in any registration shall furnish to the Company such information
      as
      the Company may reasonable request in writing regarding such Holders and the
      distribution proposed by such Holders.

     

    9.  Indemnification.

     

    (a)  In
      the
      event of the offer and sale of Registrable Securities under the Securities
      Act,
      the Company shall, and hereby does, indemnify and hold harmless, to the fullest
      extent permitted by law, each Holder, its directors, officers, partners, each
      other person who participates as an underwriter in the offering or sale of
      such
      securities, and each other person, if any, who controls or is under common
      control with such Holder or any such underwriter within the meaning of Section
      15 of the Securities Act, against any losses, claims, damages or liabilities,
      joint or several, and expenses to which the Holder or any such director,
      officer, partner or underwriter or controlling person may become subject under
      the Securities Act or otherwise, insofar as such losses, claims, damages,
      liabilities or expenses (or actions or proceedings, whether commenced or
      threatened, in respect thereof) arise out of or are based upon any untrue
      statement of any material fact contained in any registration statement prepared
      and filed by the Company under which shares of Registrable Securities were
      registered under the Securities Act, any preliminary prospectus, final
      prospectus or summary prospectus contained therein, or any amendment or
      supplement thereto, or any omission to state therein a material fact required
      to
      be stated therein or necessary to make the statements therein in light of the
      circumstances in which they were made not misleading, and the Company shall
      reimburse the Holder, and each such director, officer, partner, underwriter
      and
      controlling person for any legal or any other expenses reasonably incurred
      by
      them in connection with investigating, defending or settling any such loss,
      claim, damage, liability, action or proceeding; provided that the Company shall
      not be liable in any such case (i) to the extent that any such loss, claim,
      damage, liability (or action or proceeding in respect thereof) or expense arises
      out of or is based upon an untrue statement in or omission from such
      registration statement, any such preliminary prospectus, final prospectus,
      summary prospectus, amendment or supplement in reliance upon and in conformity
      with written information furnished to the Company through an instrument duly
      executed by or on behalf of such Holder specifically stating that it is for
      use
      in the preparation thereof or (ii) if the person asserting any such loss, claim,
      damage, liability (or action or proceeding in respect thereof) who purchased
      the
      Registrable Securities that are the subject thereof did not receive a copy
      of an
      amended preliminary prospectus or the final prospectus (or the final prospectus
      as amended or supplemented) at or prior to the written confirmation of the
      sale
      of such Registrable Securities to such person because of the failure of such
      Holder or underwriter to so provide such amended preliminary or final prospectus
      and the untrue statement or omission of a material fact made in such preliminary
      prospectus was corrected in the amended preliminary or final prospectus (or
      the
      final prospectus as amended or supplemented). Such indemnity shall remain in
      full force and effect regardless of any investigation made by or on behalf
      of
      the Holders, or any such director, officer, partner, underwriter or controlling
      person and shall survive the transfer of such shares by the Holder.

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    (b)  As
      a
      condition to including Registrable Securities in any registration statement
      filed pursuant to this Agreement, each Holder agrees to be bound by the terms
      of
      this Section 9 and to indemnify and hold harmless, to the fullest extent
      permitted by law, the Company, its directors and officers, and each other
      person, if any, who controls the Company within the meaning of Section 15 of
      the
      Securities Act, against any losses, claims, damages or liabilities, joint or
      several, to which the Company or any such director or officer or controlling
      person may become subject under the Securities Act or otherwise, insofar as
      such
      losses, claims, damages or liabilities (or actions or proceedings, whether
      commenced or threatened, in respect thereof) that arises out of or is based
      upon
      an untrue statement in or omission from such registration statement, any such
      preliminary prospectus, final prospectus, summary prospectus, amendment or
      supplement in reliance upon and in conformity with written information furnished
      to the Holder through an instrument duly executed by or on behalf of the Company
      specifically stating that it is for use in the preparation thereof, and such
      Holder shall reimburse the Company, and each such director, officer, and
      controlling person for any legal or other expenses reasonably incurred by them
      in connection with investigating, defending, or settling and such loss, claim,
      damage, liability, action, or proceeding; provided, however, that such indemnity
      agreement found in this Section 9 shall in no event exceed the gross proceeds
      from the offering received by such Holder. Such indemnity shall remain in full
      force and effect, regardless of any investigation made by or on behalf of the
      Company or any such director, officer or controlling person and shall survive
      the transfer by any Holder of such shares.

     

    (c)  Promptly
      after receipt by an indemnified party of notice of the commencement of any
      action or proceeding involving a claim referred to in this Section (including
      any governmental action), such indemnified party shall, if a claim in respect
      thereof is to be made against an indemnifying party, give written notice to
      the
      indemnifying party of the commencement of such action; provided that the failure
      of any indemnified party to give notice as provided herein shall not relieve
      the
      indemnifying party of its obligations under this Section, except to the extent
      that the indemnifying party is actually prejudiced by such failure to give
      notice. In case any such action is brought against an indemnified party, unless
      in the reasonable judgment of counsel to such indemnified party a conflict
      of
      interest between such indemnified and indemnifying parties may exist or the
      indemnified party may have defenses not available to the indemnifying party
      in
      respect of such claim, the indemnifying party shall be entitled to participate
      in and to assume the defense thereof, with counsel reasonably satisfactory
      to
      such indemnified party and, after notice from the indemnifying party to such
      indemnified party of its election so to assume the defense thereof, the
      indemnifying party shall not be liable to such indemnified party for any legal
      or other expenses subsequently incurred by the latter in connection with the
      defense thereof, unless in such indemnified party’s reasonable judgment a
      conflict of interest between such indemnified and indemnifying parties arises
      in
      respect of such claim after the assumption of the defenses thereof or the
      indemnifying party fails to defend such claim in a diligent manner, other than
      reasonable costs of investigation. Neither an indemnified nor an indemnifying
      party shall be liable for any settlement of any action or proceeding effected
      without its consent. No indemnifying party shall, without the consent of the
      indemnified party, consent to entry of any judgment or enter into any
      settlement, which does not include as an unconditional term thereof the giving
      by the claimant or plaintiff to such indemnified party of a release from all
      liability in respect of such claim or litigation. Notwithstanding anything
      to
      the contrary set forth herein, and without limiting any of the rights set forth
      above, in any event any party shall have the right to retain, at its own
      expense, counsel with respect to the defense of a claim.

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (d)  In
      the
      event that an indemnifying party does or is not permitted to assume the defense
      of an action pursuant to Sections 9(c) or in the case of the expense
      reimbursement obligation set forth in Sections 9(a) and (b), the indemnification
      required by Sections 9(a) and (b) hereof shall be made by periodic payments
      of
      the amount thereof during the course of the investigation or defense, as and
      when bills received or expenses, losses, damages, or liabilities are
      incurred.

     

    (e)  If
      the
      indemnification provided for in this Section is held by a court of competent
      jurisdiction to be unavailable to an indemnified party with respect to any
      loss,
      liability, claim, damage or expense referred to herein, the indemnifying party,
      in lieu of indemnifying such indemnified party hereunder, shall (i) contribute
      to the amount paid or payable by such indemnified party as a result of such
      loss, liability, claim, damage or expense as is appropriate to reflect the
      proportionate relative fault of the indemnifying party on the one hand and
      the
      indemnified party on the other (determined by reference to, among other things,
      whether the untrue or alleged untrue statement of a material fact or omission
      relates to information supplied by the indemnifying party or the indemnified
      party and the parties’ relative intent, knowledge, access to information and
      opportunity to correct or prevent such untrue statement or omission), or (ii)
      if
      the allocation provided by clause (i) above is not permitted by applicable
      law
      or provides a lesser sum to the indemnified party than the amount hereinafter
      calculated, not only the proportionate relative fault of the indemnifying party
      and the indemnified party, but also the relative benefits received by the
      indemnifying party on the one hand and the indemnified party on the other,
      as
      well as any other relevant equitable considerations. No indemnified party guilty
      of fraudulent misrepresentation (within the meaning of Section 11(f) of the
      Securities Act) shall be entitled to contribution from any indemnifying party
      who was not guilty of such fraudulent misrepresentation.

     

    (f)  Other
      Indemnification.
      Indemnification similar to that specified in this Section (with appropriate
      modifications) shall be given by the Company and each Holder of Registrable
      Securities with respect to any required registration or other qualification
      of
      securities under any federal or state law or regulation or governmental
      authority other than the Securities Act.

     

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    10.  Rule
      144.
      For
      a
      period of at least 24 months following the Closing Date,
      the
      Company will use its commercially reasonable best efforts to timely file all
      reports required to be filed by the Company after the date hereof under the
      Securities Act and the Exchange Act and the rules and regulations adopted by
      the
      Commission thereunder, and if the Company is not required to file reports
      pursuant to such sections, it will prepare and furnish to the Purchasers and
      make publicly available in accordance with Rule 144(c) such information as
      is
      required for the Purchasers to sell shares of Common Stock under Rule
      144.

     

    11.  Independent
      Nature of Each Purchaser’s Obligations and Rights.
      The
      obligations of each Purchaser under this Agreement are several and not joint
      with the obligations of any other Purchaser, and each Purchaser shall not be
      responsible in any way for the performance of the obligations of any other
      Purchaser under this Agreement. Nothing contained herein and no action taken
      by
      any Purchaser pursuant hereto, shall be deemed to constitute such Purchasers
      as
      a partnership, an association, a joint venture, or any other kind of entity,
      or
      create a presumption that the Purchasers are in any way acting in concert or
      as
      a group with respect to such obligations or the transactions contemplated by
      this Agreement. Each Purchaser shall be entitled to independently protect and
      enforce its rights, including without limitation the rights arising out of
      this
      Agreement, and it shall not be necessary for any other Purchaser to be joined
      as
      an additional party in any proceeding for such purpose.

     

    12.  Miscellaneous.

     

    (a)  Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of New York and the United States of America, both substantive and
      remedial, without regard to New York conflicts of law principles. Any
      judicial proceeding brought against either of the parties to this agreement
      or
      any dispute arising out of this Agreement or any matter related hereto shall
      be
      brought in the courts of the State of New York, New York County, or in the
      United States District Court for the Southern District of New York and, by
      its
      execution and delivery of this agreement, each party to this Agreement accepts
      the jurisdiction of such courts. The foregoing consent to jurisdiction shall
      not
      be deemed to confer rights on any person other than the parties to this
      Agreement.

     

    (b)  Successors
      and Assigns.
      Except
      as otherwise provided herein, the provisions hereof shall inure to the benefit
      of, and be binding upon, the successors, Permitted Assigns, executors and
      administrators of the parties hereto. In the event the Company merges with,
      or
      is otherwise acquired by, a direct or indirect subsidiary of a publicly traded
      company, the Company shall condition the merger or acquisition on the assumption
      by such parent company of the Company’s obligations under this Agreement.

     

    (c)  Entire
      Agreement.
      This
      Agreement constitutes the full and entire understanding and agreement between
      the parties with regard to the subjects hereof.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    (d)  Notices,
      etc.
      All
      notices or other communications which are required or permitted under this
      Agreement shall be in writing and sufficient if delivered by hand, by facsimile
      transmission, by registered or certified mail, postage pre-paid, by electronic
      mail, or by courier or overnight carrier, to the persons at the addresses set
      forth below (or at such other address as may be provided hereunder), and shall
      be deemed to have been delivered as of the date so delivered: 

     

    If
      to the
      Company before the Closing Date to:

    

    Alternative
      Energy Sources, Inc.

    88
      West
      44th
      Avenue

    Vancouver,
      British Columbia, Canada, V5Y 2V1

    Attention:
      Stephen Jackson, President and Chief Executive Officer

    Facsimile:
      (604) 661-0759

    

    If
      to the
      Company after the Closing Date to:

    

    Alternative
      Energy Sources, Inc.

    c/o
      McGuireWoods LLP

    1345
      Avenue of the Americas, 7th
      Floor

    New
      York,
      New York 10105

    Attention:
      Mark Beemer, Chief Executive Officer

    Facsimile:
      (212) 548-2175

    

    If
      to the
      Purchasers:  

    

    To
      each
      Purchaser at the address

    set
      forth
      on Exhibit A

    

    or
      at
      such other address as any party shall have furnished to the other parties in
      writing.

     

    (e)  Delays
      or Omissions.
      No
      delay or omission to exercise any right, power or remedy accruing to any Holder,
      upon any breach or default of the Company under this Agreement, shall impair
      any
      such right, power or remedy of such Holder nor shall it be construed to be
      a
      waiver of any such breach or default, or an acquiescence therein, or of or
      in
      any similar breach or default thereunder occurring; nor shall any waiver of
      any
      single breach or default be deemed a waiver of any other breach or default
      theretofore or thereafter occurring. Any waiver, permit, consent or approval
      of
      any kind or character on the part of any Holder of any breach or default under
      this Agreement, or any waiver on the part of any Holder of any provisions or
      conditions of this Agreement, must be in writing and shall be effective only
      to
      the extent specifically set forth in such writing. All remedies, either under
      this Agreement, or by law or otherwise afforded to any holder, shall be
      cumulative and not alternative.

     

    (f)  Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      enforceable against the parties actually executing such counterparts, and all
      of
      which together shall constitute one instrument. In the event that any signature
      is delivered by facsimile transmission, such signature shall create a valid
      and
      binding obligation of the party executing (or on whose behalf such signature
      is
      executed) with the same force and effect as if such facsimile signature page
      were an original thereof.

     

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    (g)  Severability.
      In the
      case any provision of this Agreement shall be invalid, illegal or unenforceable,
      the validity, legality and enforceability of the remaining provisions shall
      not
      in any way be affected or impaired thereby.

     

    (h)  Amendments.
      The
      provisions of this Agreement may be amended at any time and from time to time,
      and particular provisions of this Agreement may be waived, with and only with
      an
      agreement or consent in writing signed by the Company and the Majority Holders.
      The Purchasers acknowledge that by the operation of this Section, the Majority
      Holders may have the right and power to diminish or eliminate all rights of
      the
      Purchasers under this Agreement.

     

    (i)  Limitation
      on Subsequent Registration Rights.
      After
      the date of this Agreement, the Company shall not, without the prior written
      consent of the Majority Holders, enter into any agreement with any holder or
      prospective holder of any securities of the Company that would grant such holder
      registration rights senior to those granted to the Holders
      hereunder.

     

    

     

    [SIGNATURE
      PAGES FOLLOW]

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    This
      Registration Rights Agreement is hereby executed as of the date first above
      written.

     

    COMPANY:

     

    Alternative
      Energy Sources, Inc.

     

    By: ___________________________

    Name:
      Stephen Jackson

    Its: President
      and Chief Executive Officer

     

    

     

    [SIGNATURE
      PAGE OF PURCHASER FOLLOWS]

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    

     

    This
      Registration Rights Agreement is hereby executed as of the date first above
      written.

     

     

    

    
      	PURCHASER: 
	 
	 
	 
	 
	 
	
              (Print
                Name)

            
	 
	 
	
              By:

            	 
	 
	
              Name:

            	 
	 
	
              Its:

            	 
	 

    

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    

    

    Exhibit
      A

     

    Purchasers

     

    

    
      	
               

              Purchaser
                Name

            	
               

              Purchaser
                Address

            	
               

              Number
                of Units

            
	 	 	 
	 	 	 
	 	 	 

    

    

     

    
      
         

      

        18Unassociated Document

    EXHIBIT
      10.4

    EMPLOYMENT
      AGREEMENT

    

    THIS
      EMPLOYMENT AGREEMENT (this “Agreement”)
      is
      made, entered into and effective as of June 19, 2006 (the “Effective
      Date”),
      between Alternative Energy Sources, Inc. (the “Company”),
      and
      Mark Beemer, an individual (the “Executive”).

    

    WHEREAS,
      the Company and the Executive wish to memorialize the terms and conditions
      of
      the Executive’s employment by the Company in the positions of President and
      Chief Executive Officer; 

    

    NOW,
      THEREFORE, in consideration of the covenants and promises contained herein,
      the
      Company and the Executive agree as follows:

    

    1. Employment
      Period.
      The
      Company offers to employ the Executive, and the Executive agrees to be employed
      by Company, in accordance with the terms and subject to the conditions of this
      Agreement, commencing on the Effective Date and terminating on the fourth
      anniversary of the Effective Date (the “Scheduled
      Termination Date”),
      unless terminated in accordance with the provisions of Section 12 below, in
      which case the provisions of Section 12 shall control; provided,
      however,
      that
      unless either party provides the other party with written notice of his or
      its
      intention not to renew this Agreement at least 90 days prior to the expiration
      of the initial term or any renewal term of this Agreement (as the case may
      be),
      this Agreement shall automatically renew for additional one-year periods
      commencing on the day after such expiration date. The Executive affirms that
      no
      obligation exists between the Executive and any other entity which would prevent
      or impede the Executive’s immediate and full performance of every obligation of
      this Agreement.

    

    2. Position
      and Duties.
      During
      the term of the Executive’s employment hereunder, the Executive shall continue
      to serve in, and assume duties and responsibilities consistent with, the
      positions of President and Chief Executive Officer, unless and until otherwise
      instructed by the Company. The Executive agrees to devote to the Company
      substantially all of his working time, skill, energy and best business efforts
      during the term of his employment with the Company, and the Executive shall
      not
      engage in business activities outside the scope of his employment with the
      Company if such activities would detract from or interfere with his ability
      to
      fulfill his responsibilities and duties under this Agreement or require
      substantial amounts of his time or of his services. 

    

    3. No
      Conflicts.
      The
      Executive covenants and agrees that for so long as he is employed by the
      Company, he shall inform the Company of each and every future business
      opportunity presented to the Executive that arises within the scope of the
      Business of the Company (as defined below) and would be feasible for the
      Company, and that he will not, directly or indirectly, exploit any such
      opportunity for his own account. 

    

    4. Hours
      of Work.
      The
      Executive’s normal days and hours of work shall coincide with the Company’s
      regular business hours. The nature of the Executive’s employment with the
      Company requires flexibility in the days and hours that the Executive must
      work,
      and may necessitate that the Executive work on other or additional days and
      hours. 

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    5. Location.
      The
      locus of the Executive’s employment with the Company shall be the Company’s
      office located in Kansas City, Missouri and any other locus where the Company
      now or hereafter has a business facility. 

    

    6. Compensation.
      

    

    (a) Base
      Salary.
      During
      the term of this Agreement, the Company shall pay, and the Executive agrees
      to
      accept, in consideration for the Executive’s services hereunder, pro
      rata
      bi-weekly payments of the annual salary of $190,000.00, less all applicable
      taxes and other appropriate deductions. 

    

    (i) Upon
      successful completion of financing in such amount as is sufficient, in the
      opinion of the Company’s Board of Directors (the “Board”),
      to
      enable the Company to finance the acquisition or construction of the Company’s
      initial operating facility (the “Initial
      Facility”),
      the
      Executive’s annual base salary shall be increased to $205,000.00. 

    

    (ii) The
      Executive’s base salary shall be increased to $240,000 at such time as the
      Initial Facility becomes operational.

    

    The
      Compensation Committee (the “Compensation Committee”) of the Board shall also
      review the Executive’s base salary annually and shall make a recommendation to
      the Board as to whether such base salary should be increased, which decision
      shall be within the Board’s sole discretion.

    

    (b) Annual
      Bonus.
      During
      the term of this Agreement, the Executive shall be entitled to an annual bonus
      of up to 125% of his base salary, decreasing to a maximum of 100% of his base
      salary (considered at the end of the period for which the bonus is being
      calculated) at such time as the Initial Facility becomes operational, the actual
      amount of which bonus shall be determined according to achievement of
      performance-related financial and operating targets established annually for
      the
      Company and the Executive by the Compensation Committee (or by the independent
      members of the Board if there exists no Compensation Committee). Such
      performance targets for each fiscal year shall be adopted by the Compensation
      Committee promptly after the end of the prior fiscal year, but in no event
      later
      than March 31st
      of the
      current fiscal year (except for fiscal year 2006, the performance targets for
      which are annexed to this Agreement as Exhibit A. Each annual bonus shall be
      paid by the Company to the Executive promptly after the first meeting of the
      Board following the completion of the annual audit, which meeting shall occur
      on
      or about April 15th of each year.

    

    7. Expenses.
      During
      the term of this Agreement, the Executive shall be entitled to payment or
      reimbursement of any reasonable expenses paid or incurred by him in connection
      with and related to the performance of his duties and responsibilities hereunder
      for the Company. All requests by the Executive for payment of
      reimbursement of such expenses shall be supported by appropriate invoices,
      vouchers, receipts or such other supporting documentation in such form and
      containing such information as the Company may from time to time require,
      evidencing that the Executive, in fact, incurred or paid said expenses.

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    8. Vacation.
      During
      the term of this Agreement, the Executive shall be entitled to accrue, on a
      pro
      rata basis,
      20
      vacation days, per year. The Executive shall be entitled to carry over any
      accrued, unused vacation days from year to year without limitation.

    

    9. Lock-Up
      Agreement.
      The
      Executive shall enter into a Lock-Up Agreement with the Company in the form
      attached hereto as Exhibit B.

    

    10. Stock
      Options.
      The
      Company hereby agrees that the Executive
      shall be granted a non-qualified stock option on the terms and conditions
      hereinafter stated:

    

    (a) Grant
      of Options.
      On the
Effective
      Date,
      the
      Company will grant
      the
      Executive an option to purchase an aggregate of 300,000 shares of the
      Company’s common voting stock (the “Option”)
      under
      the Company’s 2006 Stock Option Plan (the “Stock
      Option Plan”).
      Such
      grant shall be evidenced by an Option Agreement as contemplated by the Stock
      Option Plan. In subsequent years the Executive shall be eligible for such grants
      of Options and other permissible awards (collectively with Options, “Awards”)
      under the Stock Option Plan as the Compensation Committee or the Board shall
      determine.

    

    (b) Option
      Price; Term.
      The
      per
      share
      exercise price of the Option shall be $1.00, which represents the fair market
      value per share of Company common voting stock on the Effective Date. The term
      of the Option shall be ten years from the date of grant.

    

    (c) Vesting
      and Exercise.
      One
      third (33.3%) of the Option shall be vested and exercisable on the first
      anniversary of the grant of the Option, an additional one third (33.3%) of
      the
      Option shall be vested and become exercisable on the second anniversary of
      the
      grant of the Option and the remaining one third (33.4%) of the Options shall
      be
      vested and become exercisable on third anniversary of the grant of the Option.
      

    

    (d) Termination
      of Service; Accelerated Vesting. 

     

    (i) If
      the
      Executive’s employment is terminated for Cause, as such term is defined below,
      all Awards, whether or not vested, shall immediately expire effective the date
      of termination of employment. 

    

    (ii) If
      the
      Executive’s employment is terminated voluntarily by the Executive without Good
      Reason, as such term is defined below, all unvested Awards shall immediately
      expire effective the date of termination of employment. Vested Awards, to the
      extent unexercised, shall expire one month after the termination of
      employment.

    

    (iii) If
      the
      Executive’s employment terminates on account of death or Disability, as defined
      below, all unvested Awards shall immediately expire effective the date of
      termination of employment. Vested Awards, to the extent unexercised, shall
      expire one year after the termination of employment.

    

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    (iv) If
      the
      Executive’s employment is terminated (A) in connection with a Change of Control,
      as defined below, (B) by the Company without Cause or (C) by the Executive
      for
      Good Reason, all unvested Awards shall immediately vest and become exercisable
      effective the date of termination of employment, and, to the extent unexercised,
      shall expire one year after any such event.

    

    (e) Payment.
      The
      full consideration for any shares purchased by the Executive upon exercise
      of
      the Option shall be paid in cash. 

     

    11. Other
      Benefits.
      

    

    (a) During
      the term of this Agreement, the Executive shall be eligible to participate
      in
      incentive, savings, retirement (401(k)), and welfare benefit plans, including,
      without limitation, health, medical,
      dental,
      vision,
      life (including accidental death and dismemberment)
      and
      disability insurance plans (collectively, “Benefit
      Plans”),
      in
      substantially the same manner, including but not limited to responsibility
      for
      the cost thereof, and at
      substantially the same levels, as the Company makes
      such
      opportunities available to all of the Company’s managerial
      or salaried executive
      employees. 

    

    (b) The
      Executive’s spouse and dependent minor children will be covered under the
      Benefit Plans providing health, medical, dental, and vision benefits, in
      substantially the same manner, including but not limited to responsibility
      for
      the cost thereof, and at substantially the same levels, as the Company makes
      such opportunities available to the spouses and dependent minor children to
      all
      of the Company’s managerial or salaried executive employees. 

    

    (c) The
      Company shall purchase and maintain traditional directors and officers liability
      insurance coverage in the amount of at least $5,000,000 covering the Company’s
      officers and directors, including the Executive, as soon as practicable after
      the Effective Date, but in no event later than 30 days following the Effective
      Date, provided such coverage is available on commercially reasonable
      terms.

    

    (d)
       Until
      such time as Executive becomes covered by Company medical coverage, the Company
      shall pay the cost of COBRA coverage provided by Executive’s prior employer, to
      the same extent as such coverage was paid for by such prior
      employer.

    

    12. Termination
      of Employment.

    

    (a) Death.
      In the
      event that during the term of this Agreement the Executive dies, this Agreement
      and the Executive’s employment with the Company shall automatically terminate
      and the Company shall have no further obligations or liability to the Executive
      or his heirs, administrators or executors with respect to compensation and
      benefits accruing thereafter, except for the obligation to pay the Executor’s
      heirs, administrators or executors any earned but unpaid base salary, unpaid
      pro
      rata
      annual
      bonus and unused vacation days accrued through the date of death; provided,
      that
      nothing contained in this paragraph shall be deemed to excuse any breach by
      the
      Company of any provision of this Agreement. The Company shall deduct, from
      all
      payments made hereunder, all applicable taxes, including income tax, FICA and
      FUTA, and other appropriate deductions.

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    (b) “Disability.”
      In
      the
      event that, during the term of this Agreement the Executive shall be prevented
      from performing his duties and responsibilities hereunder to the full extent
      required by the Company by reason of Disability (as defined below) this
      Agreement and the Executive’s employment with the Company shall automatically
      terminate and the Company shall have no further obligations or liability to
      the
      Executive or his heirs, administrators or executors with respect to compensation
      and benefits accruing thereafter, except for the obligation to pay the Executive
      or his heirs, administrators or executors any earned but unpaid base salary,
      unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last date of
      Employment with the Company; provided,
      that
      nothing contained in this paragraph shall be deemed to excuse any breach by
      the
      Company of any provision of this Agreement including any failure to maintain
      the
      long-term disability insurance coverage required pursuant to Section 10(b)(iv).
      The Company shall deduct, from all payments made hereunder, all applicable
      taxes, including income tax, FICA and FUTA, and other appropriate deductions
      through
      the last date of the Executive’s employment with the Company. For purposes of
      this Agreement, “Disability”
shall
      mean a physical or mental disability that prevents the performance by the
      Executive, with or without reasonable accommodation, of his duties and
      responsibilities hereunder for a period of not less than an aggregate of three
      months during any twelve consecutive months. 

    

    (c) “Cause.”
      

    

    (i) At
      any
      time during the term of this Agreement, the Company may terminate this Agreement
      and the Executive’s employment hereunder for “Cause.” For purposes of this
      Agreement, “Cause”
shall
      be defined as the occurrence of: (A)
      gross
      neglect, malfeasance or gross insubordination in performing the Executive’s
      duties under this Agreement; (B) the Executive’s conviction for a felony,
      excluding convictions associated with traffic violations; (C) an egregious
      act
      of dishonesty (including without limitation theft or embezzlement) or a
      malicious action by the Executive toward the Company’s customers or employees;
      (D) a willful and material violation of any provision of Sections 13 and 14
      hereof; (E) intentional reckless conduct that is materially detrimental to
      the
      business or reputation of the Company; or (F) material failure, other than
      by
      reason of Disability, to carry out reasonably assigned duties or instructions
      consistent with the titles of President and Chief Executive Officer (provided
      that material failure to carry out reasonably assigned duties shall be deemed
      to
      constitute Cause only after a finding by the Board of Directors, or a duly
      constituted committee thereof, of material failure on the part of the Executive
      and the failure to remedy such performance to the Board’s or the committee’s
      satisfaction within 30 days after delivery of written notice to the Executive
      of
      such finding).

    

    (ii) Upon
      termination of this Agreement for Cause, the Company shall have no further
      obligations or liability to the Executive or his heirs, administrators or
      executors with respect to compensation and benefits thereafter, except for
      the
      obligation to pay the Executive any earned but unpaid base salary, unpaid
pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company. The Company shall deduct, from all payments made
      hereunder, all applicable taxes, including income tax, FICA and FUTA, and other
      appropriate deductions.

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    (d) Change
      of Control.
      For
      purposes of this Agreement, “Change
      of Control”
means
      the occurrence of, or the Company’s Board votes to approve: (A) any
      consolidation or merger of the Company pursuant to which the stockholders
      of the Company immediately before the transaction do not retain immediately
      after the transaction, in substantially the same proportions as their ownership
      of shares of the Company’s
      voting
      stock immediately before the transaction, direct or indirect beneficial
      ownership of more than 50% of the total combined voting power of the outstanding
      voting securities of the surviving business entity;
      (B) any
      sale, lease, exchange or other transfer (in one transaction or a series of
      related transactions) of all, or substantially all, of the assets of the Company
      other than any sale, lease, exchange or other transfer to any company where
      the
      Company owns, directly or indirectly, 100% of the outstanding voting securities
      of such company after any such transfer; (C)
      the
      direct or indirect sale or exchange in a single or series of related
      transactions by the stockholders of the Company of more than 50% of the voting
      stock of the Company.

    

    (e) “Good
      Reason.”

     

    (i) At
      any
      time during the term of this Agreement, subject to the conditions set forth
      in
      Section 12(e)(ii) below, the Executive may terminate this Agreement and the
      Executive’s employment with the Company for “Good Reason.” For purposes of this
      Agreement, “Good
      Reason”
shall
      mean the occurrence of any of the following events: (A) the
      assignment, without the Executive’s consent, to the Executive of duties that are
      significantly different from, and that result in a substantial diminution of,
      the duties that he assumed on the Effective Date; (B) the
      assignment, without the Executive’s consent, to the Executive of a title that is
      different from and subordinate to the title specified in Section 2 above,
      provided, however, that the retention of another executive as President and
      Chief Operating Officer shall not, in and of itself, entitle the Executive
      to
      claim a termination for Good reason hereunder; (C) any termination of the
      Executive’s employment by the Company, other than a termination for Cause,
within
      12
      months after a Change of Control;
      (D) the
      assignment, without the Executive’s consent, to the Executive of duties that are
      significantly different from, and that result in a substantial diminution of,
      the duties that he assumed on the Effective Date within 12 months after a Change
      of Control; or (E) material
      breach by the Company of this Agreement. 

    

    (ii) The
      Executive shall not be entitled to terminate his employment with the Company
      and
      this Agreement for Good Reason unless and until he shall have delivered written
      notice to the Company of his intention to terminate this Agreement and his
      employment with the Company for Good Reason, which notice specifies in
      reasonable detail the circumstances claimed to provide the basis for such
      termination for Good Reason, and the Company shall not have eliminated the
      circumstances constituting Good Reason within 30 days of its receipt from the
      Executive of such written notice. 

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    (iii) In
      the
      event that the Executive terminates this Agreement and his employment with
      the
      Company for Good Reason, the Company shall pay or provide to the Executive
      (or,
      following his death, to the Executive’s heirs, administrators or executors):
      (A)
      any
      earned but unpaid base salary, unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company; (B) the
      Executive’s full base salary through the Scheduled Termination Date (as the same
      may have been extended through any extensions of this Agreement); (C)
the
      value
      of vacation days that the Executive would have accrued through the Scheduled
      Termination Date; (D) continued
      coverage, at the Company’s expense, under all Benefits Plans in which the
      Executive was a participant immediately prior to his last date of employment
      with the Company, or, in the event that any such Benefit Plans do not permit
      coverage of the Executive following his last date of employment with the
      Company, under benefit plans that provide no less coverage than such Benefit
      Plans, through the Scheduled Termination Date; and
      (E)
      severance in an amount equal to one year’s base salary, as in effect immediately
      prior to the Executive’s termination hereunder. All payments due hereunder shall
      be made within 45 days after the date of termination of the Executive’s
      employment.
      The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

     

    (iv) The
      Executive shall have no duty to mitigate his damages, except that continued
      benefits required to be provided under Section 11(e)(iii)(D) shall be canceled
      or reduced to the extent of any comparable benefit coverage offered to the
      Executive during the period prior to the Scheduled Termination Date by a
      subsequent employer or other person or entity for which the Executive performs
      services, including but not limited to consulting services. 

    

    (f) Without
      “Cause.”

     

    (i) By
      The
      Executive.
      At any
      time during the term of this Agreement, the Executive shall be entitled to
      terminate this Agreement and the Executive’s employment with the Company without
      Cause by providing prior written notice of at least 90 days to the Company.
      Upon
      termination by the Executive of this Agreement and the Executive’s employment
      with the Company without Cause, the Company shall have no further obligations
      or
      liability to the Executive or his heirs, administrators or executors with
      respect to compensation and benefits thereafter, except for the obligation
      to
      pay the Executive any earned but unpaid base salary, and unused vacation days
      accrued through the Executive’s last day of employment with the Company. The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate
      deductions.

    

    (ii) By
      The
      Company.
      At any
      time during the term of this Agreement, the Company shall be entitled to
      terminate this Agreement and the Executive’s employment with the Company without
      Cause by providing prior written notice of at least 90 days to the Executive.
      Upon termination by the Company of this Agreement and the Executive’s employment
      with the Company without Cause, the Company shall pay or provide to the
      Executive (or, following his death, to the Executive’s heirs, administrators or
      executors): (A) any earned but unpaid base salary, unpaid pro
      rata
      annual
      bonus and unused vacation days accrued through the Executive’s last day of
      employment with the Company; (B) the Executive’s full base salary through the
      Scheduled Termination Date (as the same may have been extended through any
      extensions of this Agreement); (C) the value of vacation days that the Executive
      would have accrued through the Scheduled Termination Date; (D) continued
      coverage, at the Company’s expense, under all Benefits Plans in which the
      Executive was a participant immediately prior to his last date of employment
      with the Company, or, in the event that any such Benefit Plans do not permit
      coverage of the Executive following his last date of employment with the
      Company, under benefit plans that provide no less coverage than such Benefit
      Plans, through the Scheduled Termination Date; and (E) severance in an amount
      equal to one year’s base salary, as in effect immediately prior to the
      Executive’s termination hereunder. All payments due hereunder shall be made
      within 45 days after the date of termination of the Executive’s employment. The
      Company shall deduct, from all payments made hereunder, all applicable taxes,
      including income tax, FICA and FUTA, and other appropriate deductions.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    13. Confidential
      Information.
      

    

    (a) The
      Executive expressly acknowledges that, in the performance of his duties and
      responsibilities with the Company, he has been exposed since prior to the
      Effective Date, and will be exposed, to the trade secrets, business and/or
      financial secrets and confidential and proprietary information of the Company,
      its affiliates and/or its clients, business partners or customers (“Confidential
      Information”).
      The
      term “Confidential Information” includes information or material that has actual
      or potential commercial value to the Company, its affiliates and/or its clients,
      business partners or customers and is not generally known to and is not readily
      ascertainable by proper means to persons outside the Company, its affiliates
      and/or its clients or customers.

    

    (b) Except
      as
      authorized in writing by the Board, during the performance of the Executive’s
      duties and responsibilities for the Company and until such time as any such
      Confidential Information becomes generally known to and readily ascertainable
      by
      proper means to persons outside the Company, its affiliates and/or its clients,
      business partners or customers, the Executive agrees to keep strictly
      confidential and not use for his personal benefit or the benefit to any other
      person or entity (other than the Company) the Confidential Information.
“Confidential Information” includes the following, whether or not expressed in a
      document or medium, regardless of the form in which it is communicated, and
      whether or not marked “trade secret” or “confidential” or any similar legend:
      (i) lists
      of
      and/or information concerning customers, prospective customers, suppliers,
      employees, consultants, co-venturers and/or joint venture candidates of the
      Company, its affiliates or its clients or customers; (ii) information
      submitted by customers, prospective customers, suppliers, employees, consultants
      and/or co-venturers of the Company, its affiliates and/or its clients or
      customers; (iii) non-public
      information proprietary to the Company, its affiliates and/or its clients or
      customers, including, without limitation, cost information, profits, sales
      information, prices, accounting, unpublished financial information, business
      plans or proposals, expansion plans (for current and proposed facilities),
      markets and marketing methods, advertising and marketing strategies,
      administrative procedures and manuals, the terms and conditions of the Company’s
      contracts and trademarks and patents under consideration, distribution channels,
      franchises, investors, sponsors and advertisers; (iv) proprietary
      technical information concerning products and services of the Company, its
      affiliates and/or its clients, business partners or customers, including,
      without limitation, product data and specifications, diagrams, flow charts,
      know
      how, processes, designs, formulae, inventions and product development; (v)
      lists
      of
      and/or information concerning applicants, candidates or other prospects for
      employment, independent contractor or consultant positions at or with any actual
      or prospective customer or client of Company and/or its affiliates,
      any and
      all confidential processes, inventions or methods of conducting business of
      the
      Company, its affiliates and/or its clients, business partners or customers;
      (vi)
      acquisition or merger targets; (vii) business plans or strategies, data,
      records, financial information or other trade secrets concerning the actual
      or
      contemplated business, strategic alliances, policies or operations of the
      Company or its affiliates; or (viii) any
      and
      all versions of proprietary computer software (including source and object
      code), hardware, firmware, code, discs, tapes, data listings and documentation
      of the Company;
      or (ix
      any other confidential information disclosed to the Executive by, or which
      the
      Executive obligated under a duty of confidence from, the Company, its
      affiliates, and/or its clients, business partners or customers.

    

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    (c) The
      Executive affirms that he does not possess and will not rely upon the protected
      trade secrets or confidential or proprietary information of his prior
      employer(s) in providing services to the Company. 

    

    (d) In
      the
      event that the Executive’s employment with the Company terminates for any
      reason, the Executive shall deliver forthwith to the Company any and all
      originals and copies of Confidential Information.

    

    14. Non-Competition
      And Non-Solicitation.
      

     

    (a) The
      Executive agrees and acknowledges that the Confidential Information that the
      Executive has already received and will receive is valuable to the
      Company and
      that
      its protection and maintenance constitutes a legitimate business interest of
      the
      Company, to be protected by the non-competition restrictions set forth herein.
      The Executive agrees and acknowledges that the non-competition restrictions
      set
      forth herein are reasonable and necessary and do not impose undue hardship
      or
      burdens on the Executive. The Executive also acknowledges that the products
      and
      services developed or provided by the Company, its
      affiliates and/or its clients or customers
      are or
      are intended to be sold, provided, licensed and/or distributed to customers
      and
      clients in and throughout the Mid-West (the “Geographic
      Boundary”)
      (to
      the extent the Company comes to own or operate any material asset in other
      areas
      of the United States during the term of the Executive’s employment, the
      definition of Geographic Boundary shall be automatically expanded to cover
      such
      other areas), and that the Geographic Boundary, scope of prohibited competition,
      and time duration set forth in the non-competition restrictions set forth below
      are reasonable and necessary to maintain the value of the Confidential
      Information of, and to protect the goodwill and other legitimate business
      interests of, the Company, its
      affiliates and/or its clients or customers.
      

    

    (b) The
      Executive hereby agrees and covenants that he shall not, without the prior
      written consent of the Company, directly or indirectly, in any capacity
      whatsoever, including, without limitation, as an employee, employer, consultant,
      principal, partner, shareholder, officer, director or any other individual
      or
      representative capacity (other than a holder of less than one percent (5%)
      of
      the outstanding voting shares of any publicly held company), or whether on
      the
      Executive’s own behalf or on behalf of any other person or entity or otherwise
      howsoever, during the Executive’s employment with the Company and for a period
      equal to the greater of (i) one year (two years, if termination of this
      Agreement or of Executive’s employment is pursuant to Section 12(f)(i) hereof)
      following the termination of this Agreement or of the Executive’s employment
      with the Company or (ii) the period during which the Executive continues to
      receive his base salary pursuant to Sections 12(e) or 12(f)(ii) of this
      Agreement following the termination of this Agreement and of the Executive’s
      employment, in the Geographic Boundary:

    

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    (i) Engage,
      own, manage, operate, control, be employed by, consult for, participate in,
      or
      be connected in any manner with the ownership, management, operation or control
      of any business in competition with the Business of the Company. The
“Business
      of the Company”
is
      defined as the development and production of ethanol and other alternatives
      to
      petroleum-based fuels within the Geographic Boundary.

    

    (ii) Recruit,
      solicit or hire, or attempt to recruit, solicit or hire, any employee, or
      independent contractor of the Company to leave the employment (or independent
      contractor relationship) thereof, whether or not any such employee or
      independent contractor is party to an employment agreement. 

    

    (iii) Attempt
      in any manner to solicit or accept from any customer of the Company, with whom
      the Executive had significant contact during the term of the Agreement, business
      of the kind or competitive with the business done by the Company with such
      customer or to persuade or attempt to persuade any such customer to cease to
      do
      business or to reduce the amount of business which such customer has customarily
      done or is reasonably expected to do with the Company, or if any such customer
      elects to move its business to a person other than the Company, provide any
      services (of the kind or competitive with the Business of the Company) for
      such
      customer, or have any discussions regarding any such service with such customer,
      on behalf of such other person.

    

    (iv) Interfere
      with any relationship, contractual or otherwise, between the Company and any
      other party, including; without limitation, any supplier, co-venturer or joint
      venturer of the Company to discontinue or reduce its business with the Company
      or otherwise interfere in any way with the Business of the Company.

    

    15. Dispute
      Resolution.
      The
      Executive and the Company agree that any dispute or claim, whether based on
      contract, tort, discrimination, retaliation, or otherwise, relating to, arising
      from, or connected in any manner with this Agreement or with the Executive’s
      employment with Company shall be resolved exclusively through final and binding
      arbitration under the auspices of the American Arbitration Association
      (“AAA”).
      The
      arbitration shall be held in Kansas City, Missouri. The arbitration shall
      proceed in accordance with the National Rules for the Resolution of Employment
      Disputes of the AAA in effect at the time the claim or dispute arose, unless
      other rules are agreed upon by the parties. The arbitration shall be conducted
      by one arbitrator who is a member of the AAA, unless the parties mutually agree
      otherwise. The arbitrators shall have jurisdiction to determine any claim,
      including the arbitrability of any claim, submitted to them. The arbitrators
      may
      grant any relief authorized by law for any properly established claim. The
      interpretation and enforceability of this paragraph of this Agreement shall
      be
      governed and construed in accordance with the United States Federal Arbitration
      Act, 9. U.S.C. § 1, et
      seq.
      More
      specifically, the parties agree to submit to binding arbitration any claims
      for
      unpaid wages or benefits, or for alleged discrimination, harassment, or
      retaliation, arising under Title VII of the Civil Rights Act of 1964, the Equal
      Pay Act, the National Labor Relations Act, the Age Discrimination in Employment
      Act, the Americans With Disabilities Act, the Employee Retirement Income
      Security Act, the Civil Rights Act of 1991, the Family and Medical Leave Act,
      the Fair Labor Standards Act, Sections 1981 through 1988 of Title 42 of the
      United States Code, COBRA, the New York State Human Rights Law, the New York
      City Human Rights Law, and any other federal, state, or local law, regulation,
      or ordinance, and any common law claims, claims for breach of contract, or
      claims for declaratory relief. The Executive acknowledges that the purpose
      and
      effect of this paragraph is solely to elect private arbitration in lieu of
      any
      judicial proceeding he might otherwise have available to him in the event of
      an
      employment-related dispute between him and the Company. Therefore, the Executive
      hereby waives his right to have any such employment-related dispute heard by
      a
      court or jury, as the case may be, and agrees that his exclusive procedure
      to
      redress any employment-related claims will be arbitration.

    

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    16. Notice.
      For
      purposes of this Agreement, notices and all other communications provided for
      in
      this Agreement or contemplated hereby shall be in writing and shall be deemed
      to
      have been duly given when personally delivered, delivered by a nationally
      recognized overnight delivery service or when mailed United States Certified
      or
      registered mail, return receipt requested, postage prepaid, and addressed as
      follows:

    

    If
      to the
      Company: 

    

    Alternative
      Energy Sources, Inc.

    c/o
      McGuireWoods LLP

    1345
      Avenue of the Americas, Seventh Floor

    New
      York,
      New York 10105

    Attention:
      Louis W. Zehil, Esq., Corporate Secretary

    (212)
      548-2175 (facsimile)

    (212)
      548-2138 (direct)

    If
      to the
      Executive:

    

    12720
      Connell Drive

    Overland
      Park, Kansas 66213

     

    17. Miscellaneous.

    

    (a) All
      issues and disputes concerning, relating to or arising out of this Agreement
      and
      from the Executive’s employment by the Company, including, without limitation,
      the construction and interpretation of this Agreement, shall be governed by
      and
      construed in accordance with the internal laws of the State of Missouri, without
      giving effect to that State’s principles of conflicts of law.

    

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    (b) The
      Executive and the Company agree that any provision of this Agreement deemed
      unenforceable or invalid may be reformed to permit enforcement of the
      objectionable provision to the fullest permissible extent. Any provision of
      this
      Agreement deemed unenforceable after modification shall be deemed stricken
      from
      this Agreement, with the remainder of the Agreement being given its full force
      and effect.

    

    (c) The
      Company shall be entitled to equitable relief, including injunctive relief
      and
      specific performance as against the Executive, for the Executive’s threatened or
      actual breach of Sections 13 or 14 of this Agreement, as money damages for
      a
      breach thereof would be incapable of precise estimation, uncertain, and an
      insufficient remedy for an actual or threatened breach of Sections 13 or 14
      of
      this Agreement. The Executive and the Company agree that any pursuit of
      equitable relief in respect of Sections 13 or 14 of this Agreement shall have
      no
      effect whatsoever regarding the continued viability and enforceability of
      Section 15 of this Agreement.

    

    (d) Any
      waiver or inaction by the Company for any breach of this Agreement shall not
      be
      deemed a waiver of any subsequent breach of this Agreement.

    

    (e) The
      Executive and the Company independently have made all inquiries regarding the
      qualifications and business affairs of the other which either party deems
      necessary. The Executive affirms that he fully understands this Agreement’s
      meaning and legally binding effect. Each party has participated fully and
      equally in the negotiation and drafting of this Agreement. Each party assumes
      the risk of any misrepresentation or mistaken understanding or belief relied
      upon by him or it in entering into this Agreement.

    

    (f) The
      Executive’s obligations under this Agreement are personal in nature and may not
      be assigned by the Executive to any other person or entity.

    

    (g) This
      instrument constitutes the entire Agreement between the parties regarding its
      subject matter. When signed by all parties, this Agreement supersedes and
      nullifies all prior or contemporaneous conversations, negotiations, or
      agreements, oral and written, regarding the subject matter of this Agreement.
      In
      any future construction of this Agreement, this Agreement should be given its
      plain meaning. This Agreement may be amended only by a writing signed by the
      Company and the Executive.

    

    (h) This
      Agreement may be executed in counterparts, a counterpart transmitted via
      facsimile, and all executed counterparts, when taken together, shall constitute
      sufficient proof of the parties’ entry into this Agreement. The parties agree to
      execute any further or future documents which may be necessary to allow the
      full
      performance of this Agreement. This Agreement contains headings for ease of
      reference. The headings have no independent meaning.

    

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    (i) THE
      EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT
      AND THAT HE HAS READ AND UNDERSTOOD EACH AND EVERY PROVISION THEREOF. THIS
      AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH
      PARTIES.

    

    

    [Signature
      Page Follows]

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    IN
      WITNESS WHEREOF, the Company and the Executive have executed this Employment
      Agreement as of the day and year first above written.

     

    
      	Executive 	 	 	Alternative
              Energy Sources, Inc.
	 	 	 	 
	 	 	
              By:

            	 
	
              
Mark
              Beemer 	 	 	
              
Name
Title

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    Exhibit
      A

    

    Annual
      Performance Targets

    [To
      Be
      Discussed and Added]

     

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    Exhibit
      B

    Lock-up
      Agreement

    

    

    June
      19,
      2006

    

    Tompkins
      Capital Group

    488
      Madison Avenue,

    New
      York,
      New York 10022

    Attention:
      Mr. Mark N. Tompkins

    

    Mr.
      Tompkins:

    

    Reference
      is made to that certain Term Sheet (the “Term Sheet”), dated May 8, 2006,
      relating to a proposed business combination between Alternative Energy Sources,
      Inc., a Delaware corporation (the “Company”) and Beemer Energy, Inc., a Delaware
      corporation (“BEEMER”) and a related private placement financing (the
“Transactions”). In connection with the Transactions, the Company and BEEMER
      also entered into that certain Merger Agreement (the “Merger Agreement”), dated
      as of June 19, 2006, pursuant to which BEEMER stockholders received common
      stock, par value $0.0001 per share, of the Company (the “Common Stock”) in
      consideration for shares of BEEMER held by them at the effective time of the
      merger. In consideration of the Company and BEEMER entering into the
      Transaction, and for Tompkins Capital Group to facilitate the Transactions
      and
      for other good and valuable consideration, the receipt and sufficiency of which
      are hereby acknowledged, the undersigned hereby agrees as follows:

    

    1. The
      undersigned hereby covenants and agrees, except as provided herein, not to
      (1)
      offer, sell, contract to sell or otherwise dispose of and (2) transfer title
      to
      (a “Prohibited Sale”) any of the shares (the “Acquired Shares”) of Common Stock
      acquired by the undersigned pursuant to or in connection with the Merger
      Agreement, during the period commencing on the “Closing Date” (as that term is
      defined in the Term Sheet) and ending on the 24-month anniversary of the Closing
      Date (the “Lockup Period”), without the prior written consent of the Company and
      Tompkins Capital Group (which consent shall not be unreasonably withheld).
      Notwithstanding the foregoing, the undersigned shall be permitted from time
      to
      time during the Lockup Period, without the prior written consent of the Company
      or Tompkins Capital Group, as applicable, (i) to acquire shares of Common Stock
      pursuant to the undersigned’s participation in the Company’s stock option plan,
      or (ii) to transfer all or any part of the Acquired Shares to any family member,
      for estate planning purposes or to an affiliate thereof (as such term is defined
      in Rule 405 under the Securities Exchange Act of 1934, as amended), provided
      that such transferee agrees with the Company and Tompkins Capital Group to
      be
      bound hereby, and in any transaction in which holders of the Common Stock of
      the
      Company participate or have the opportunity to participate pro rata, including,
      without limitation, a merger, consolidation or binding share exchange involving
      the Company, a disposition of the Common Stock in connection with the exercise
      of any rights, warrants or other securities distributed to the Company’s
      stockholders, or a tender or exchange offer for the Common Stock, and no
      transaction contemplated by the foregoing clauses (i) or (ii) shall be deemed
      a
      Prohibited Sale for purposes of this Letter Agreement.

    

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    2. This
      Letter Agreement shall be governed by and construed in accordance with the
      laws
      of the State of New York, without regard to its conflict of laws
      principles.

    

    3. This
      Letter Agreement will become a binding agreement among the undersigned as of
      the
      Closing Date. This Letter Agreement (and the agreements reflected herein) may
      be
      terminated by the mutual agreement of the Company, Tompkins Capital Group and
      the undersigned, and if not sooner terminated, will terminate upon the
      expiration date of the Lockup Period. This Letter Agreement may be duly executed
      by facsimile and in any number of counterparts, each of which shall be deemed
      an
      original, and all of which together shall be deemed to constitute one and the
      same instrument. Signature pages from separate identical counterparts may be
      combined with the same effect as if the parties signing such signature page
      had
      signed the same counterpart. This Letter Agreement may be modified or waived
      only by a separate writing signed by each of the parties hereto expressly so
      modifying or waiving such agreement.

    

    

    Very
      truly yours,

    

    Signature:__________________

    Print
      Name:________________

    

    

    Address:
      ______________________________________

    Number
      of
      shares of Common Stock owned: __________

    Certificate
      Numbers: _____________________________

    

    

    

    
      
         

      

        17

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