Document:

AMERICAN
      ETHANOL, INC.

     

    AMENDMENT
      TO

     

    EXECUTIVE
      EMPLOYMENT AGREEMENT

    

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    
      
         

      

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

     

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

     

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

     

    
      
        	
                AMERICAN
                  ETHANOL, INC., a Nevada corporation

              
	 
	 
	
                /s/
                  Eric A McAfee

              
	
                Eric
                  A. McAfee

              
	
                Executive
                  Chairman

              
	 
	 
	
                EXECUTIVE

              
	 
	 
	
                /s/
                  Surendra Ajjarapu

              
	
                Surendra
                  Ajjarapu

              

      

    

     

    
      
         

      

      
        2AMERICAN
      ETHANOL, LLC

     

    WILLIAM
      MAENDER EXECUTIVE EMPLOYMENT AGREEMENT

    

    This
      Agreement is made by and between American Ethanol, LLC, a California limited
      liability corporation (the “Company”), and William Maender (“Executive”) to be
      effective as of January 12, 2006 (the “Effective Date”).

     

    1.  Duties
      and Scope of Employment.

     

    (a)  Position;
      Employment Commencement Date; Duties.
      Executive’s employment with the Company pursuant to this Agreement is effective
      as of January 12, 2006 (the “Employment Commencement Date”). On and after the
      Employment Commencement Date, the Company shall employ the Executive as the
      Chief Financial Officer of the Company reporting to the Board of Directors
      of
      the Company (the “Board”).  During
      the Employment Term (as defined in section 2 herein), Executive shall render
      such business and professional services in the performance of his duties as
      are
      consistent with Executive’s position within the Company, and as shall reasonably
      be assigned to him by the Board. 

     

    (b)  Obligations.
      During
      the Employment Term, Executive shall devote his full business efforts and time
      to the Company. Executive agrees, during the Employment Term, not to actively
      engage in any other employment, occupation or consulting activity for any direct
      or indirect remuneration without the prior approval of the Board; provided,
      however, that Executive may serve in any capacity with any civic, educational
      or
      charitable organization, or as a member of corporate boards of directors or
      committees thereof. 

     

    2.  Employment
      Term.
      It is
      intended that the employment arrangement contemplated by this Agreement shall
      continue until the third anniversary of the Effective Date (such three year
      period being referred to herein as the “Employment Term”). Notwithstanding the
      foregoing, the parties agree that neither this Agreement nor any provision
      herein is intended to guarantee the continuation of Executive’s employment for
      the duration of the Employment Term. In the event that Executive’s employment
      with the Company terminates prior to the expiration of the Employment Term
      for
      any reason, the parties agree that Executive shall be entitled to receive only
      those benefits that are expressly provided by this Agreement in such
      circumstances. 

     

    3.  Employee
      Benefits.
      During
      the Employment Term, Executive shall be eligible to participate in the employee
      and fringe benefit plans maintained by the Company that are applicable to other
      senior management to the full extent provided for under those plans for the
      position held by the Executive. 

     

    4.  Vacation.
      During
      the Employment Term, Executive shall have three weeks of paid vacation per
      year.
      The Company’s vacation policy may be revised from time to time by action of the
      Board of Directors. In the event of termination, any unused vacation weeks
      shall
      be paid as salary continuation. 

     

    
      
         

      

      
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    5.  Expenses.
      While
      Executive is employed during the Employment Term, the Company will reimburse
      Executive for reasonable travel, entertainment or other expenses incurred by
      Executive in the furtherance of or in connection with the performance of
      Executive's duties hereunder, in accordance with the Company's expense
      reimbursement policy as in effect from time to time. 

     

    6.  Compensation.

     

    (a)  Base
      Salary.
      While
      employed by the Company, the Company shall pay the Executive as compensation
      for
      his services a base salary at the annualized rate of One Hundred Eighty Thousand
      ($180,000) per year (the “Base Salary”). Such salary shall be paid periodically
      in accordance with normal Company payroll practices and subject to required
      withholding. 

     

    (b)  Bonus.
      Executive shall be entitled to receive, within 90 days after the end of each
      year, an annual bonus (the “Bonus”) of up to $50,000 based upon Executive’s
      performance and the Company’s attainment of objectives established by the
      Compensation Committee of the Board. Except as permitted under Section 7,
      Executive must be employed by the Company during the entire applicable bonus
      period for the payment of the Bonus. With respect to any subjective milestones,
      the determination of whether Executive has attained the mutually agreed upon
      milestones for the Bonus shall be reasonably determined by the Compensation
      Committee.

     

    (c)  Unit
      Repurchase.
      The
      Company hereby acknowledges that Executive purchased 200,000 units of the
      Company on January 12, 2006 at a purchase price of $0.01 per unit (the “Units”).
      As of January 12, 2006, the Company and Executive have entered into a Restricted
      Unit Purchase Agreement (the “Repurchase Agreement”) pursuant to which the
      Company will have the right, in the event of the termination of the Executive’s
      employment with the Company, to repurchase the Units at a purchase price of
      $0.01 per Unit on the terms and conditions set forth in the Repurchase
      Agreement. 

     

    (d)  Severance.

     

    (i)  Involuntary
      Termination Other Than for Cause; Constructive Termination Prior to Change
      of
      Control.
      If,
      prior to a Change of Control, Executive’s employment with the Company is
      Constructively Terminated or involuntarily terminated by the Company other
      than
      for Cause (as defined below), Executive’s death, or Executive’s Total
      Disability, then, subject to Executive executing and not revoking a standard
      form of mutual release of claims with the Company,
      Executive
      shall be entitled to receive continuing payments of severance pay (less
      applicable withholding taxes) at the rate equal to Executive’s Base Salary rate,
      as then in effect, for a period of 6 months from the date of such termination
      in
      accordance with the Company’s normal payroll practices. In addition to the
      severance benefits set forth in subsection (i) and (ii) above, Executive shall
      receive at the Company’s expense 100% of Company-paid health, dental and vision
      insurance benefits at the same level of coverage as was provided to Executive
      immediately prior to the termination of Executive’s employment with the Company
      (“Company-Paid Coverage”). If such coverage included Executive’s dependents
      immediately prior to Executive’s termination, such dependents shall also be
      covered at the Company’s expense. Company-Paid Coverage shall continue until the
      earlier of (i) 6 months following the date of the termination of Executive’s
      employment (the “Benefits Termination Date”), or (ii) the date upon which
      Executive, or if such coverage includes Executive’s dependents, Executive and
      Executive’s dependents, become covered under another employer’s group health,
      dental and vision insurance benefit plans. In addition to the severance benefits
      set forth above, the Company’s right to repurchase the Units pursuant to the
      Repurchase Agreement shall lapse.

     

    
      
         

      

      
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    (ii)  Involuntary
      Termination Other Than for Cause; Constructive Termination On or Following
      Change of Control.
      If, on
      or following a Change of Control, Executive’s employment with the Company is
      Constructively Terminated or involuntarily terminated by the Company other
      than
      for Cause, Executive’s death, or Executive’s Total Disability, then, subject to
      Executive executing and not revoking a standard form of mutual release of claims
      with the Company, the Company shall forgo its rights under the Repurchase
      Agreement. 

     

    (1)   

     

    (iii)  Cause
      Definition.
      For the
      purposes of this Agreement, “Cause” means (1) 
      Executive’s material, willful and continuing breach of his obligations to the
      Company set forth in the employment agreement after thirty (30) days
      written notice from the Company specifying the nature of Executive’s breach and
      demanding that such breach be remedied (unless such breach by its nature cannot
      be cured, in which case notice and an opportunity to cure shall not be
      required); (2) Executive’s conviction of a felony that is injurious to the
      Company or its business; or (3) act or acts of dishonesty by Executive that
      are injurious to the Company or its business.

     

    (iv)  Constructive
      Termination Definition.
      For the
      purposes of this Agreement,
      “Constructive Termination” means, without Executive’s written consent, (i) a
      material reduction in Executive’s salary or benefits; provided, however, that a
      reduction in Executive’s salary or benefits will not constitute a Constructive
      Termination if it is part of and proportional to an Executive team reduction
      in
      salary or benefits, (ii) a material diminution of Executive’s officer title,
      duties, authority or responsibilities as in effect immediately prior to such
      diminution.

     

    (v)  Change
      of Control Definition.
      For the
      purposes of this Agreement, “Change of Control” means, in one or a series of
      transactions: (1) any reorganization, merger or other transaction in which
      the unitholders of the Company immediately prior to such transaction own less
      than fifty percent (50%) of the voting power of the surviving or continuing
      entity or the entity controlling the surviving or continuing entity; (2) a
      sale of all or substantially all of the assets of the Company; (3) a change
      in the majority of the Board not approved by at least two-thirds of the
      Company’s directors in office prior to such change; or (4) the adoption of
      any plan of liquidation providing for the distribution of all or substantially
      all of the Company’s assets. Notwithstanding the foregoing, an equity
      transaction the primary purpose of which is capital raising shall not constitute
      a Change of Control for purposes of this Agreement.

     

    (vi)  Total
      Disability Definition.
      For the
      purposes of this Agreement, “Total Disability” shall mean Executive’s mental or
      physical impairment which has or is likely to prevent Executive from performing
      the responsibilities and duties of his position for three (3) months or more
      in
      the aggregate during any six (6) month period. Any question as to the existence
      or extent of Executive’s disability upon which the Executive and the Company
      cannot agree shall be resolved by a qualified independent physician who is
      an
      acknowledged expert in the area of the mental or physical impairment, selected
      in good faith by the Board and Executive (or his personal
      administrator).

     

    
      
         

      

      
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    (vii)  No
      Mitigation.
      Except
      as specifically provided herein, the Executive shall not be required to mitigate
      the value of any severance benefits contemplated by this Agreement, nor shall
      any such benefits be reduced by any earnings or benefits that the Executive
      may
      receive from any other source.

     

    (viii)  Voluntary
      Termination other than pursuant to a Constructive Termination; Involuntary
      Termination for Cause.
      If,
      during the Employment Term, the Executive's employment is terminated by the
      Company for Cause, or by Executive for any reason, other than death, Total
      Disability or pursuant to a Constructive Termination, then the Company shall
      have the right to repurchase the Units as set forth in the Repurchase Agreement
      and all payments of compensation by the Company to Executive hereunder will
      terminate immediately (except as to amounts already earned). 

     

    (ix)  Involuntary
      Termination on Death. If, during the Employment Term, the Executive's employment
      is terminated by the Company as a result of Executive’s death, then the
      Company’s rights under the Repurchase Agreement shall terminate as to 50% of the
      Units repurchasable at the time of Executive’s death. 

     

    7.  Assignment.
      This
      Agreement shall be binding upon and inure to the benefit of (a) the heirs,
      beneficiaries, executors and legal representatives of Executive upon Executive’s
      death and (b) any successor of the Company. Any such successor of the
      Company shall be deemed substituted for the Company under the terms of this
      Agreement for all purposes. As used herein, “successor” shall include any
      person, firm, corporation or other business entity which at any time, whether
      by
      purchase, merger or otherwise, directly or indirectly acquires all or
      substantially all of the assets or business of the Company. 

     

    8.  Notices.
      All
      notices, requests, demands and other communications called for hereunder shall
      be in writing and shall be deemed given if (i) delivered personally or by
      facsimile, (ii) one (1) day after being sent by Federal Express or a
      similar commercial overnight service, or (iii) three (3) days after being
      mailed by registered or certified mail, return receipt requested, prepaid and
      addressed to the parties or their successors in interest at the following
      addresses, or at such other addresses as the parties may designate by written
      notice in the manner aforesaid:

    

      
        	
                If
                  to the Company:

              	
                American
                  Ethanol, LLC

              
	 	
                Attn:
                  Eric McAfee, Chairman

              
	 	
                10600
                  N. De Anza Blvd., Suite 250

              
	 	
                Cupertino,
                  CA 95014

              
	 	
                Fax:
                  (408) 904-7536

              
	 	 
	
                If
                  to Executive:

              	
                William
                  Maender

              
	 	
                501
                  S. Heilbron Dr.

              
	 	
                Media,
                  PA 19063

              
	 	
                Fax:

              
	 	 
	or
                at the
                last residential address known by the
                Company.

      

    

     

    
      
         

      

      
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    9.  Proprietary
      Information Agreement.
      Executive agrees to enter into the Company’s standard Employment, Confidential
      Information and Invention Assignment Agreement (the “Proprietary Information
      Agreement”) upon commencing employment hereunder.

     

    10.  Entire
      Agreement.
      This
      Agreement, the option agreement, the Repurchase Agreement (if applicable),
      the
      employee benefit plans referred to in Section 3 and the Proprietary
      Information Agreement represent the entire agreement and understanding between
      the Company and Executive concerning Executive’s employment relationship with
      the Company, and supersede and replace any and all prior agreements and
      understandings concerning Executive’s employment relationship with the
      Company.

     

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

     

    12.  Withholding.
      The
      Company shall be entitled to withhold, or cause to be withheld, from payment
      any
      amount of withholding taxes required by law with respect to payments made to
      Executive in connection with his employment hereunder.

     

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

     

    
      
         

      

      
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    IN
      WITNESS WHEREOF, the undersigned have executed this Agreement as of January
      12,
      2006:

     

    
      
        	
                AMERICAN
                  ETHANOL, LLC

              
	 
	 
	
                /s/
                  Eric McAfee

              
	
                Eric
                  McAfee

              
	
                Chairman/CEO

              
	 
	 
	
                EXECUTIVE

              
	 
	 
	
                /s/
                  William Maender

              
	
                William
                  Maender

              

      

    

     

    
      
         

      

      
        6

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