Exhibit 10.2


 


NONSTATUTORY STOCK OPTION
AGREEMENT


 


AGREEMENT
made as of the            day
of           ,       ,
between PARTICLE
DRILLING TECHNOLOGIES, INC., a Nevada corporation (the “Company”),
and                (“Employee”).


 


To carry out the purposes of
the PARTICLE DRILLING
TECHNOLOGIES, INC. 2005 STOCK INCENTIVE  PLAN (the “Plan”), by affording
Employee the opportunity to purchase shares of the common stock of the Company,
par value $0.001 per share (“Stock”), and in consideration of the mutual agreements
and other matters set forth herein and in the Plan, the Company and Employee
hereby agree as follows:


 


1.                                       Grant of Option.  The Company hereby irrevocably grants to
Employee the right and option (“Option”) to purchase all or any part of an
aggregate of           
shares of Stock on the terms and conditions set forth herein and in the Plan,
which Plan is incorporated herein by reference as a part of this
Agreement.  In the event of any conflict
between the terms of this Agreement and the Plan, the Plan shall control.  Capitalized terms used but not defined in
this Agreement shall have the meaning attributed to such terms under the Plan,
unless the context requires otherwise. 
This Option shall not be treated as an incentive stock option within the
meaning of section 422(b) of the Code.


 


2.                                       Purchase Price.  The purchase price of Stock purchased
pursuant to the exercise of this Option shall be the Stock’s Fair Market Value
on the date of grant of this Option, which will be determined after the close
of the date of grant (such purchase price being $                           
per share).  For all purposes of this
Agreement, Fair Market Value of Stock shall be determined in accordance with
the provisions of the Plan.


 


3.                                       Exercise of
Option.  Subject to the earlier
expiration of this Option as herein provided, this Option may be exercised, by
written notice to the Company at its principal executive office addressed to
the attention of its Corporate Secretary (or such other officer or employee of
the Company as the Company may designate from time to time), at any time and
from time to time after the date of grant hereof, but, except as otherwise
provided below, this Option shall not be exercisable for more than a percentage
of the aggregate number of shares offered by this Option determined by the
number of full years from the date of grant hereof to the date of such
exercise, in accordance with the following schedule:


 




	
  Number of Full Years

  	
   

  	
  Percentage of Shares

  That May Be Purchased

  	
   

  
	
  Less than 

  	
  1 year

  	
   

  	
  0

  	
  %

  
	
   

  	
  1 year

  	
   

  	
  331/3

  	
  %

  
	
   

  	
  2 years

  	
   

  	
  662/3

  	
  %

  
	
   

  	
  3 years or
  more

  	
   

  	
  100

  	
  %

  






 





















 


Notwithstanding the exercise
schedule above, if Employee has been continuously employed by the Company
during the period beginning on the date of grant of this Option and ending
immediately prior to the consummation of any Corporate Change (as defined
below), this Option shall be exercisable for the entire number of shares set
forth in Paragraph 1 hereof upon the consummation of such Corporate
Change.  For purposes of the preceding
sentence, the term “Corporate Change” shall have the same meaning as is
assigned to such term in the Plan; provided, however, that the term “Corporate
Change” shall not include any reorganization, merger, consolidation, or similar
transaction or series of transactions pursuant to which the record holders of
the outstanding shares of the Company’s stock immediately prior to such
transaction or series of transactions continue to hold immediately following
such transaction or series of transactions 50% or more of the outstanding
voting securities (based upon voting power) of (a) any entity which owns
(directly or indirectly) the stock of the Company, (b) any entity with which
the Company has merged, or (c) any entity that owns an entity with which the
Company has merged.  In addition, in no
event shall a recapitalization of the Company, a reclassification of the
Company’s capital stock, or other change in the Company’s capital structure (a “recapitalization”)
constitute a Corporate Change, and the exercise of this Option shall not be
accelerated upon the occurrence of any such recapitalization.


 


This Option may be exercised
only while Employee remains an employee of the Company and will terminate and
cease to be exercisable upon Employee’s termination of employment with the Company,
except that:


 


(a)                                  If
Employee’s employment with the Company terminates by reason of disability
(within the meaning of section 22(e)(3) of the Code), this Option may be
exercised for the entire number of shares set forth in Paragraph 1 hereof by
Employee (or Employee’s estate or the person who acquires this Option by will
or the laws of descent and distribution or otherwise by reason of the death of
Employee) at any time during the period of one year following such termination.


 


(b)                                 If
Employee dies while in the employ of the Company, Employee’s estate, or the
person who acquires this Option by will or the laws of descent and distribution
or otherwise by reason of the death of Employee, may exercise this Option for
the entire number of shares set forth in Paragraph 1 hereof at any time during
the period of one year following the date of Employee’s death.


 


(c)                                  If
Employee’s employment with the Company is subject to an Involuntary Termination
during a Change of Control Period (as such terms are defined in that certain
Employment Agreement effective as of January 23, 2006 between Employee and the
Company, as the same may be amended from time to time (the “Employment
Agreement”)), this Option may be exercised for the entire number of shares set
forth in Paragraph 1 hereof by Employee (or Employee’s estate or the person who
acquires this Option by will or the laws of descent and distribution or
otherwise by reason of the death of Employee) at any time during the period of
one year following such termination.


 


(d)                                 If
Employee’s employment with the Company terminates for any reason other than as
described in (a), (b), or (c) above, unless such employment is terminated for
cause, this Option may be exercised by Employee at any time during the period of
three


 


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months
following such termination, or by Employee’s estate (or the person who acquires
this Option by will or the laws of descent and distribution or otherwise by
reason of the death of Employee) during a period of one year following Employee’s
death if Employee dies during such three month period, but in each case only as
to the number of shares Employee was entitled to purchase hereunder as of the
date Employee’s employment so terminates. 
As used in this paragraph, the term “cause” shall have the meaning
ascribed such term in the Employment Agreement.


 


This Option
shall not be exercisable in any event after the expiration of 10 years from the
date of grant hereof.  The purchase price
of shares as to which this Option is exercised shall be paid in full at the
time of exercise (a) in cash (including check, bank draft or money order
payable to the order of the Company), (b) by delivering or constructively
tendering to the Company shares of Stock having a Fair Market Value equal to
the purchase price (provided such shares used for this purpose must have been
held by Employee for such minimum period of time as may be established from
time to time by the Committee), (c) if the Stock is readily tradable on a national
securities market, through a “cashless exercise” in accordance with a Company
established policy or program for the same, or (d) any combination of the
foregoing.  No fraction of a share of
Stock shall be issued by the Company upon exercise of an Option or accepted by
the Company in payment of the exercise price thereof; rather, Employee shall
provide a cash payment for such amount as is necessary to effect the issuance
and acceptance of only whole shares of Stock. 
Unless and until a certificate or certificates representing such shares
shall have been issued by the Company to Employee, Employee (or the person
permitted to exercise this Option in the event of Employee’s death) shall not
be or have any of the rights or privileges of a shareholder of the Company with
respect to shares acquirable upon an exercise of this Option.


 


4.                                       Withholding of Tax.  To the extent that the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option results in compensation income or wages to Employee for federal, state
or local tax purposes, Employee shall deliver to the Company at the time of
such exercise or disposition such amount of money as the Company may require to
meet its minimum obligation under applicable tax laws or regulations or make
such other arrangements to satisfy such withholding obligation as the Company
or the Committee may approve.  In
addition, the Company may withhold a number of shares (valued at their fair
market value on the date of withholding of such shares) otherwise to be
delivered on exercise to satisfy such withholding obligation.  No exercise of this option shall be effective
until Employee (or the person entitled to exercise this Option, as applicable)
has made arrangements approved by the Company or the Committee to satisfy all
applicable minimum tax withholding requirements of the Company.


 


5.                                       Status of Stock.  The Company intends to register for issuance
under the Securities Act of 1933, as amended (the “Securities Act”), the shares
of Stock acquirable upon exercise of this Option, and to keep such registration
effective throughout the period this Option is exercisable.  In the absence of such effective registration
or an available exemption from registration under the Securities Act, issuance
of shares of Stock acquirable upon exercise of this Option will be delayed
until registration of such shares is effective or an exemption from
registration under the Securities Act is available.  The Company intends to use its reasonable
efforts to ensure that no such delay will occur.  In the event exemption from registration
under the Securities Act is available upon an exercise of this Option, Employee
(or the person


 


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permitted to exercise this Option in the event
of Employee’s death or incapacity), if requested by the Company to do so, will
execute and deliver to the Company in writing an agreement containing such
provisions as the Company may require to assure compliance with applicable
securities laws.


 


Employee agrees that the shares of Stock
which Employee may acquire by exercising this Option will not be sold or
otherwise disposed of in any manner which would constitute a violation of any
applicable federal or state securities laws. 
Employee also agrees that (i) the certificates representing the shares
of Stock purchased under this Option may bear such legend or legends as the
Committee deems appropriate in order to assure compliance with applicable
securities laws, (ii) the Company may refuse to register the transfer of the
shares of Stock purchased under this Option on the stock transfer records of
the Company if such proposed transfer would in the opinion of counsel
satisfactory to the Company constitute a violation of any applicable securities
law, and (iii) the Company may give related instructions to its transfer agent,
if any, to stop registration of the transfer of the shares of Stock purchased
under this Option.


 


6.                                       Employment
Relationship.  For
purposes of this Agreement, Employee shall be considered to be in the
employment of the Company as long as Employee remains an employee of either the
Company, an Affiliate, or a corporation or a parent or subsidiary of such
corporation assuming or substituting a new option for this Option.  Without
limiting the scope of the preceding sentence, it is expressly provided that
Employee shall be considered to have terminated employment with the Company at
the time of the termination of the “Affiliate” status under the Plan of the
entity or other organization that employs Employee.  Any question as to whether and when
there has been a termination of such employment, and the cause of such
termination, shall be determined by the Committee and its determination shall
be final.


 


7.                                       Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of any successors to the Company and all persons lawfully
claiming under Employee.


 


8.                                       Entire
Agreement.  This Agreement constitutes the entire
agreement of the parties with regard to the subject matter hereof, and contains
all the covenants, promises, representations, warranties and agreements between
the parties with respect to the Option granted hereby.  Without limiting the scope of the preceding
sentence, all prior understandings and agreements, if any, among the parties
hereto relating to the subject matter hereof are hereby null and void and of no
further force and effect.  Any
modification of this Agreement shall be effective only if it is in writing and
signed by both Employee and an authorized officer of the Company.


 


9.                                       Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Nevada, without regard to
conflicts of laws principles thereof.


 


10.                                 Jurisdiction.                          Each of
the Company and Employee hereby irrevocably (i) submits and consents to the
personal jurisdiction of the state and federal courts sitting in Harris County,
Texas with respect to any suit, action, or proceeding arising out of or based
upon this Agreement or the transactions contemplated hereby and (ii) waives the
right to contend in any


 


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such action that venue is improperly laid in
any such court or that it is an improper or inconvenient forum or lacks
personal jurisdiction.  If Employee now
or hereafter resides outside the State of Texas, Employee hereby irrevocably
appoints the General Counsel of the Company as Employee’s authorized agent upon
whom process may be served at such General Counsel’s Company office for notices
under this Agreement in any suit, action, or proceeding arising out of or based
upon this Agreement or the transactions contemplated hereby that may be
instituted in any state or federal court in the State of Texas by the Company,
and Employee hereby agrees to so act. 
Employee agrees to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid.  Service of process upon the authorized agent
of Employee and written notice of such service to Employee shall be deemed, in
every respect, effective service of process as to Employee for purposes of any
such suit, action, or proceeding instituted in any state or federal court in
the State of Texas.


 


IN WITNESS
WHEREOF, the Company has caused this Agreement
to be duly executed by its officer thereunto duly authorized, and Employee has
executed this Agreement, all effective as of the day and year first above
written.


 


	
   

  	
  PARTICLE DRILLING TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Position:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  



 


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