Document:

Unassociated Document

    EXHIBIT
      10.1

     

    OMNIBUS
      AMENDMENT AND CONSENT 

    

    OMNIBUS
      AMENDMENT AND CONSENT EFFECTIVE AS OF September 22, 2006 (this “Omnibus
      Amendment and Consent”)
      by and
      among Acura Pharmaceuticals, Inc. (the “Company”),
      and
      Acura Pharmaceutical Technologies, Inc. and the following lenders (“Lenders”):
      Galen
      Partners III, L.P. (as agent for the other lenders (“Agent”)
      and as
      a lender itself), Galen Partners International, III, L.P., Galen Employee Fund
      III, L.P., Care Capital Offshore Investments II, LP, Care Capital Investments
      II, LP, Essex Woodlands Health Ventures V, L.P., Dennis Adams, George E.
      Boudreau, Michael Weisbrot, Susan Weisbrot; and the following persons with
      respect to Sections 5, 6, 7, and 8: John E. Heppe Jr. and Peter Steiglitz
      (“Additional
      Watson Holders”).

    

    Capitalized
      terms used herein and not defined herein have the meanings set forth in the
      Subordination Agreement dated as of January 31, 2006 among the Lenders, the
      Company and others (the “Subordination
      Agreement”).

    

    R
      E C I T A L S

    

    WHEREAS
      the
      Company and one or more Lenders have entered into the June 2005 Loan Agreement,
      the September 2005 Loan Agreement, the November 2005 Loan Agreement and the
      January 2006 Loan Agreement (collectively, the “Loan
      Agreements”)
      and
      such other agreements, notes and instruments executed in connection with such
      loan agreements (collectively, the “Loan
      Documents”);
      and

    

    WHEREAS,
      the
      Company and certain Lenders and the Additional Watson Holders are parties to
      the
      Watson Note (as defined in the Subordination Agreement); and

    

    WHEREAS,
      the
      loans extended pursuant to the Loan Agreements are due to mature on October
      1,
      2006 (the “Original
      Maturity Date”);
      and

    

    WHEREAS,
      the
      Company and the Lenders wish to extend the Original Maturity Date.

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual covenants herein contained, the parties mutually
      agree as follows:

    

    AMENDMENT
      AND CONSENT 

    

    

    1.
       Amendments:

    

    
      	 	
              (a)

            	
              Each
                of the June 2005 Loan Agreement, the September 2005 Loan Agreement,
                the
                November 2005 Loan Agreement and the January 2006 Loan Agreement
                is
                amended by replacing “October 1, 2006” in Section 2.1 thereof with
                “November 1, 2006”. 

            

    

    

    
      	 	
              (b)

            	
              Each
                of the June 2005 Notes, the September 2005 Notes, the November 2005
                Notes
                and the January 2006 Notes (and each of the forms of such Notes attached
                to the June 2005 Loan Agreement, the September 2005 Loan Agreement,
                the
                November 2005 Loan Agreement and the January 2006 Loan Agreement)
                is
                amended by:

            

    

    

    (i)
      replacing the words October 1, 2006, wherever they appear therein with “November
      1, 2006”; and 

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (ii)
      appending the following additional section to such note:

    

    References
      to Loan Agreement.
      References to the Loan Agreement in this Note shall mean references to the
      Loan
      Agreement, as amended, and as the same may be further amended, supplemented
      or
      modified from time to time.

    

    
      	
            	(c)	
              In
                the event a Replacement Note (as hereinafter defined) is issued pursuant
                to Section 4 hereof, then in such Replacement Note the words “Secured
                Promissory Note” shall be replaced with “Amended and Restated Promissory
                Secured Note” and the following section shall be appended thereto:
                 

            

    

    

     Amended
      and Restated Secured Promissory Note.
      This Amended and Restated Secured Promissory Note issued by the Company in
      favor
      of the Payee amends and restates in its entirety, and is issued by the Company
      in replacement of and substitution for a Secured Promissory Note of identical
      principal amount issued to Payee pursuant to the Loan Agreement(the “Original
      Note”). The Company and the Payee acknowledge and agree that upon the execution
      delivery of this Amended and Restated Secured Promissory Note, the Original
      Note
      shall be null and void and of no further legal force or effect.

    

    The
      form
      of such Replacement Note shall be also be attached to the applicable Loan
 Agreement
      as an acceptable form of note to be issued pursuant thereto.

    

    2. References
      to Loan Documents:
      Any
      reference to any Loan Document in any other Loan Document shall mean the Loan
      Document, as amended hereby. 

    

    3.
       Attachment
      to All Notes:
      The
      Lenders covenant to give a copy of this Omnibus Amendment and Consent to any
      purchaser of the June 2005 Notes, the September 2005 Notes, the November 2005
      Notes or the January 2006 Notes prior to the actual purchase and to attach
      a
      copy of this Omnibus Amendment and Consent to any of such notes where the
      undersigned is the named payee or holder.

    

    4. Amended
      and Restated Notes. 
      Upon
      request of the Company, each Lender agrees to deliver to the Company any of
      the
      June 2005 Notes, the September 2005 Notes, the November 2005 Notes or the
      January 2006 Notes issued to them, in exchange for an amended and restated
      Note
      (the “Replacement
      Note”)
      incorporating the amendments set forth in this Omnibus Amendment and Consent.
      

    

    5. Subordination
      Agreement.  Each
      Lender and Additional Watson Holder agrees to the provisions of this Omnibus
      Amendment and Consent, including without limitation, to the amendments to the
      June 2005, September 2005 Notes, the November 2005 Notes and the January 2006
      Notes and acknowledges that the Subordination Agreement shall remain in full
      force and effect.

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    6.  Notes
      and Agreements Not Assigned. The
      undersigned Lenders and Additional Watson Holders acknowledge that they have
      not
      transferred, conveyed or assigned any of the Watson Note, the June 2005 Notes,
      the September 2005 Notes, the November 2005 Notes or the January 2006 Notes
      issued to them and the undersigned Lenders and Additional Watson Holders
      acknowledge that they have not assigned any rights under the Loan Documents
      or
      under the Subordination Agreement.

    

    7.
       Counterparts:
      This
      Omnibus Amendment and Consent may be executed in one or more counterparts and
      by
      different parties hereto in separate counterparts, including by facsimile,
      each
      of which when so executed and delivered shall be deemed an original, but all
      such counterparts together shall constitute but one and the same instrument.
      

    

    8.
       Governing
      Law:
      THIS
      OMNIBUS AMENDMENT AND CONSENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
      HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
      THE
      STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF
      LAWS.

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

       

    

    IN
      WITNESS WHEREOF, each of the Parties have caused this Omnibus Amendment and
      Consent to be duly executed and delivered as of the day and year first above
      written.

     

    
      	
            	ACURA
              PHARMACEUTICALS, INC.
               

              By: 
                /s/
                Peter A. Clemens

              
                

              

              Name:
                Peter A. Clemens

              Title:
                Sr. Vice President and CFO

            
	 	 
	
            	
              
                ACURA
                  PHARMACEUTICAL TECHNOLOGIES
                  , INC.

              

               

               

              By: 
                /s/
                Peter A. Clemens

              
                

              

              Name:
                Peter A. Clemens

              Title:
                Sr. Vice President and CFO

            
	 	 
	
              LENDER
                AND AGENT:

              GALEN
                PARTNERS III, L.P.

              By:
                Claudius, L.L.C., General Partner

              610
                Fifth Avenue, 5th
                Fl.

              New
                York, New York 10019

               

              /s/
                Bruce Wesson 
                

              

              By:
                Bruce Wesson

              Its:
                General Partner

            	
              LENDER:

              CARE
                CAPITAL OFFSHORE INVESTMENTS II, LP

              By:
                Care Capital II, LLC, as general partner

              47
                Hulfish Street, Suite 310

              Princeton,
                NJ 08542

               

              By: 
                /s/
                David Ramsay

              
                

              

              By:
                David R. Ramsay

              Its:
                Authorized Signatory

            
	 	 
	
              LENDER:

              GALEN
                PARTNERS INTERNATIONAL, III, L.P.

              By:
                Claudius, L.L.C., General Partner

              610
                Fifth Avenue, 5th
                Floor

              New
                York, New York 10020

               

              /s/
                Bruce Wesson 
                

              

              By:
                Bruce Wesson

              Its:
                General Partner

            	
              LENDER:

              CARE
                CAPITAL INVESTMENTS II, LP

              By:
                Care Capital II, LLC, as general partner

              47
                Hulfish St., Suite 310

              Princeton,
                NJ 08542

               

              By: 
                /s/
                David Ramsay

              
                

              

              Name:
                David R. Ramsay

              Title:
                Authorized Signatory

            

    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	
              LENDER:

              GALEN
                EMPLOYEE FUND III, L.P.

              By:
                Wesson Enterprises, Inc.

              610
                Fifth Avenue, 5th
                Floor

              New
                York, New York 10020

               

              /s/
                Bruce F. Wesson 
                

              

              By:
                Bruce F. Wesson

              Its:
                General Partner

            	
              LENDER:

              ESSEX
                WOODLANDS HEALTH 

              VENTURES
                V, L.P.

              190
                South LaSalle Street, Suite 2800

              Chicago,
                IL 60603

               

              /s/ 
                Immanuel Thangaraj 
                

              

              By:
                Immanuel Thangaraj

              Its:
                Managing Director

            
	 	 
	
              LENDER:

              MICHAEL
                WEISBROT

              1136
                Rock Creek Road

              Gladwyne,
                Pennsylvania 19035

               

               

              /s/
                Michael Weisbrot 
                

              

            	
              LENDER:

              SUSAN
                WEISBROT

              1136
                Rock Creek Road

              Gladwyne,
                Pennsylvania 19035

               

               

              /s/
                Susan Weisbrot 
                

              

            
	 	 
	
              LENDER:

              DENNIS
                ADAMS

              120
                Kynlyn Road

              Radnor,
                Pennsylvania 19312

               

              /s/
                Dennis Adams 
                

              

            	
              LENDER:

              GEORGE
                E. BOUDREAU

              222
                Elbow Lane

              Haverford,
                PA 19041

               

              /s/
                George Boudreau 
                

              

            
	 	 
	
              ADDITIONAL
                WATSON HOLDER:

              PETER
                STIEGLITZ

              RJ
                Palmer LLC

              156
                West 56th Street, 5th Floor

              New
                York, New York 10019

               

              /s/
                Peter Stirglitz 
                

              

            	
              ADDITIONAL
                WATSON HOLDER:

              JOHN
                E. HEPPE, JR. 

              237
                W. Montgomery Avenue

              Haverford,
                Pennsylvania 19041

               

               

              /s/
                John Heppe 
                

              

            
	 	 

    

     

    
      
        
        

      

      -5-EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

      THIS  EMPLOYMENT  AGREEMENT (this  "Agreement") is made,  entered into and
effective as of September 20, 2006 (the "Effective Date"),  between  Alternative
Energy Sources,  Inc. (the "Company"),  and Dr. John A. Ward, 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
Executive Vice President and Director of Operations;

      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 Executive Vice President and
Director of Operations,  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.

<PAGE>

      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 and, during the
first year of the initial term hereof,  Executive will be operating primarily in
Ireland.

      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
$180,000.00,  less all applicable taxes and other appropriate deductions, taking
into account Irish tax laws.

            (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 $260,000.00.

      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 100% of his base salary 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.  Without
limiting the foregoing, (i) the Company shall pay the costs associated with, (A)
Executive's obtaining a U.S. H-1B Visa, including legal fees; (B) preparation of
Executive's US and foreign tax returns; (C) Executive's relocation to the United
States;  (D)  Executive's  housing in the United States during the first six (6)
months  of  the  initial  term  hereof;  (E)  following   Executive's  full-time
relocation  to the  United  States,  Company  will  provide  a  Company  car for
Executive's   business  use,  and  (ii)  the  Executive  shall  be  entitled  to
reimbursement  for certain personal travel expenses as annexed to this Agreement
as Exhibit B.

<PAGE>

      8. Vacation.  During the term of this  Agreement,  the Executive  shall be
entitled  to accrue,  on a pro rata  basis,  25  vacation  days,  per year.  The
Executive shall be entitled to carry over any accrued, unused vacation days from
year to year without limitation.

      9. Intentionally deleted.

      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 400,000  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 the  market  price  at the  close of  business  on the date the  Option
Agreement  is  executed,  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 fourth  (25%) of the Option shall be
vested and exercisable on the first  anniversary of the grant of the Option,  an
additional one fourth (25%) of the Option shall be vested and become exercisable
on the second  anniversary of the grant of the Option,  an additional one fourth
(25%)  of the  Option  shall be  vested  and  become  exercisable  on the  third
anniversary of the grant of the Option and the remaining one fourth (25%) of the
Options shall be vested and become  exercisable on the fourth anniversary of the
grant of the Option notwithstanding that either party may have provided a Notice
of Nonrenewal  of this  Agreement in  accordance  with the  provisions of Sec. 1
hereof.

<PAGE>

            (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, or on account of Executive's inability to
obtain an H-1B Visa as provided by Section  12(c)  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.

                  (iv)  If  the  Executive's  employment  is  terminated  (A) in
connection  with a Change of Control,  as defined below. or (B) 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.

<PAGE>

      (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, taking into account, Irish tax laws.

      (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  which affects major life activity and which prevents the performance
by the Executive, with reasonable  accommodation,  of his significant duties and
responsibilities  hereunder  for a period of not less than an aggregate of three
months during any twelve consecutive months,  provided however, that such period
shall not include any leave granted under the Americans With Disabilities Act or
the Family and Medical Leave Act.

      (c) H-1B Visa. Executive shall use his best efforts to obtain an H-1B Visa
effective  through the term of this Agreement.  If Executive is unable to obtain
such visa by July 1 2007, this Agreement and the Executive's employment with the
Company may, at the option of the Company,  be  terminated  on thirty (30) days'
notice,  and if so terminated  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.

<PAGE>

      If this Agreement is renewed beyond its initial term,  Company shall, upon
the request of Executive  thereafter,  pay the cost,  including  legal fees, for
Executive to apply for a U.S. Green Card.

      (d) "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)  intentional  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 Executive Vice
President and Director of Operations  (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.

      (e) 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.

<PAGE>

      (f) "Good Reason."

            (i) At any time  during the term of this  Agreement,  subject to the
conditions  set forth in Section  12(f)(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 Executive Vice  President and Director of Operations  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 which adversely impacts Executive's pay, benefits,  working conditions
or duties.

            (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 60 days of its receipt from
the Executive of such written notice.

            (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.

<PAGE>

            (iv) The  Executive  shall  have no duty to  mitigate  his  damages,
except  that   continued   benefits   required  to  be  provided  under  Section
12(f)(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.

      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.

<PAGE>

      (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.

      (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
throughout  North America (the  "Geographic  Boundary")  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.

<PAGE>

      (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  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(f) of this Agreement  following the termination of this Agreement
and of the Executive's employment, in the Geographic Boundary:

            (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.

<PAGE>

      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. The arbitration shall be held
in Kansas City, Missouri.  The arbitration shall be conducted by one arbitrator.
If the parties are unable to agree upon an arbitrator within 10 days, each party
shall select an arbitrator  within 5 days  thereafter and those two  arbitrators
shall,  within 15 days after the second of them is selected , select  someone to
act as the sole arbitrator.  The arbitrator shall have jurisdiction to determine
any claim,  including the  arbitrability  of any claim.The  arbitrator  shall be
bound by any judicial  decisions  of the United  States Court of Appeals for the
Eighth  Circuit and any statutes and common law  decisions  applicable in and to
the Eighth  Circuit.  The arbitrator 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.  ss. 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,  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.

      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:

      Mark Beemer, Chief Executive Officer
      Alternative Energy Sources, Inc.
      310 W. 20th, 2nd Floor
      Kansas City, MO 64108

<PAGE>

            With a copy to:

      Arthur E. Fillmore, II, Esq.
      Levy and Craig, P.C.
      1301 Oak St.
      Kansas City, MO 64106

      If to the Executive:

      Dr. John A. Ward Elmbank Church Rd. Carrigaline County Cork, Ireland

      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.

      (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) Notwithstanding the provisions of Sec. 15 hereof, the Company shall be
entitled to seek  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. If Executive substantially prevails in any action by the Company
for equitable relief,  Company shall pay Executive's attorney's fees incurred in
any such action.

      (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.

<PAGE>

      (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.

      (i) Notwithstanding  anything in this Agreement to the contrary, the party
not  substantially  prevailing  in any  action or dispute  resolution  procedure
between the parties shall pay the attorney's fees and costs of the substantially
prevailing party.

      (j) 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]

<PAGE>

      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:_____________________________
Dr. John A. Ward                        Name:
                                        Title:

<PAGE>

                                    Exhibit A

                           Annual Performance Targets
                                [To Be Discussed]

<PAGE>

                                    Exhibit B

                            Personal Travel Expenses
                                [To Be Discussed]

            Company will reimburse  Executive for up to five roundtrip  business
      class  airfares for himself and up to six roundtrip  coach class  airfares
      for his family members, between the United States and Ireland.

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