**Exhibit 10.1**

**RESTRICTEDSTOCK AGREEMENT**

**THIS RESTRICTED STOCK AGREEMENT**(this “Agreement”) is made as of the 7th day of August, 2007, between **PARTICLE DRILLING TECHNOLOGIES, INC.**, a Nevada corporation(the “Company”), and **JIM B. TERRY**(“Employee”).

1.             **Award.**  Pursuant to the **PARTICLEDRILLING TECHNOLOGIES, INC. 2005 STOCK INCENTIVE PLAN**, as amended(the “Plan”), as of the date of this Agreement, 329,250 shares (the “RestrictedShares”) of the Company’s common stock shall be issued as hereinafter providedin Employee’s name subject to certain restrictions thereon.  The Restricted Shares shall be issued uponacceptance hereof by Employee and upon satisfaction of the conditions of thisAgreement.  Employee acknowledges receiptof a copy of the Plan, and agrees that this award of Restricted Shares shall besubject to all of the terms and provisions of the Plan, including futureamendments thereto, if any, pursuant to the terms thereof.  In the event of any conflict between theterms of this Agreement and the Plan, the Plan shall control.  Capitalized terms used but not defined inthis Agreement shall have the meaning attributed to such terms under the Plan,unless the context requires otherwise.

2*.            ***Restricted Shares.**  Employee hereby accepts the Restricted Shareswhen issued and agrees with respect thereto as follows:

(a)           **Forfeiture Restrictions.**  The Restricted Shares may not be sold,assigned, pledged, exchanged, hypothecated or otherwise transferred, encumberedor disposed of to the extent then subject to the Forfeiture Restrictions (ashereinafter defined), and in the event of termination of Employee’s employmentwith the Company, except as otherwise provided in Section 2(b) hereof, Employeeshall, for no consideration, forfeit to the Company all Restricted Shares tothe extent then subject to the Forfeiture Restrictions.  The prohibition against transfer and theobligation to forfeit and surrender Restricted Shares to the Company upontermination of employment are herein referred to as the “Forfeiture Restrictions.”  The Forfeiture Restrictions shall be bindingupon and enforceable against any transferee of Restricted Shares.

(b)           **Lapse of ForfeitureRestrictions.**

The Forfeiture Restrictions shall lapse as to 129,250of the Restricted Shares upon achievement of the following performance target,provided that Employee has been continuously employed by the Company from thedate of this Agreement through the date of such lapse:

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The date the Companyfiles its first quarterly or annual report with the U.S. Securities andExchange Commission in which the Company reports Adjusted EBITDA for a fiscalquarter that is greater than $0.  Forthis purpose, “Adjusted EBITDA” for a particular fiscal quarter shall becalculated as the Company’s net income (or net loss), increased by the reportedamount of (i) interest expense net of interest income, (ii) income tax expense,(iii) depreciation expense, (iv) amortization expense and (v) non-cash,stock-based compensation expense, with each such item to be determined inaccordance with generally accepted accounting principles.

The Forfeiture Restrictions shall lapse as to 200,000of the Restricted Shares upon achievement of the following performance target,provided that Employee has been continuously employed by the Company from the dateof this Agreement through the date of such lapse:

The date the Companyconsummates a strategic transaction with a third party that the Committee, inits sole discretion, determines satisfies the following criteria:

(i) the transaction issupported by the holders of a majority of the Company’s securities entitled tovote in the election of directors generally if the approval of suchstockholders is required by applicable law (including the rules and regulationsof any exchange or other self regulatory organization applicable to theCompany);

(ii) the transaction isapproved by a majority of the members of the Board;

(iii) the transactiondoes not expose the Company to a significant risk of litigation due to eitherthe type of transaction or the method of consummating the transaction;

(iv) the transactioncreates additional liquidity for the Company;

(v) the transactionresults in a relationship with a third party that provides strategicadvantages; and

(vi) the transactioncreates significant additional value for the Company’s stockholders.

Notwithstanding the foregoing, the ForfeitureRestrictions shall lapse as to all of the Restricted Shares then subject to theForfeiture Restrictions (i) in accordance with the provisions of that certainEmployment Agreement between Employee and the Company effective as of January23, 2006, as the same may be amended from time to time, or (ii) on the dateEmployee’s employment with the Company is terminated by reason of death ordisability (within the meaning of section 22(e)(3) of the Code).

(c)           **Certificates.**  A certificate evidencing the RestrictedShares shall be issued by the Company in Employee’s name, pursuant to whichEmployee shall have all 

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of the rights of a stockholder of the Company withrespect to the Restricted Shares, including, without limitation, voting rightsand the right to receive dividends (provided, however, that dividends paid inshares of the Company’s stock shall be subject to the Forfeiture Restrictionsand further provided that dividends that are paid other than in shares of theCompany’s stock shall be paid no later than the end of the calendar year inwhich the dividend for such class of stock is paid to stockholders of suchclass or, if later, the 15th day of the third month following the date thedividend is paid to stockholders of such class of stock). Employee may notsell, transfer, pledge, exchange, hypothecate or otherwise dispose of the stockuntil the Forfeiture Restrictions have expired and a breach of the terms ofthis Agreement shall cause a forfeiture of the Restricted Shares. Thecertificate shall be delivered upon issuance to the Secretary of the Company orto such other depository as may be designated by the Committee as a depositoryfor safekeeping until the forfeiture of such Restricted Shares occurs or theForfeiture Restrictions lapse pursuant to the terms of the Plan and this award.Employee agrees to deliver to the Company a stock power, endorsed in blank,relating to the Restricted Shares. Upon the lapse of the Forfeiture Restrictionswithout forfeiture, the Company shall cause a new certificate or certificatesto be issued without legend (except for any legend required pursuant toapplicable securities laws or any other agreement to which Employee is a party)in the name of Employee in exchange for the certificate evidencing theRestricted Shares.  However, the Company,in its sole discretion, may elect to deliver the certificate either incertificate form or electronically to a brokerage account established forEmployee’s benefit at a brokerage/financial institution selected by theCompany.  Employee agrees to complete andsign any documents and take additional action that the Company may request toenable it to deliver the shares on Employee’s behalf.

(d)           **Corporate Acts.**  The existence of the Restricted Shares shallnot affect in any way the right or power of the Board or the stockholders ofthe Company to make or authorize any adjustment, recapitalization,reorganization or other change in the Company’s capital structure or itsbusiness, any merger or consolidation of the Company, any issue of debt orequity securities, the dissolution or liquidation of the Company or any sale,lease, exchange or other disposition of all or any part of its assets orbusiness or any other corporate act or proceeding. The prohibitions of Section2(a) hereof shall not apply to the transfer of Restricted Shares pursuant to aplan of reorganization of the Company, but the stock, securities or otherproperty received in exchange therefor shall also become subject to theForfeiture Restrictions and provisions governing the lapsing of such ForfeitureRestrictions applicable to the original Restricted Shares for all purposes ofthis Agreement and the certificates representing such stock, securities or otherproperty shall be legended to show such restrictions.

3.             **Withholdingof Tax/Tax Election**.To the extent that the receipt of the Restricted Shares or the lapse of anyForfeiture Restrictions results in compensation income or wages to Employee forfederal, state or local tax purposes, Employee shall deliver to the Company atthe time of such receipt or lapse such amount of money as the Company mayrequire to meet its minimum obligation under applicable tax laws or regulationsor make such other arrangements to satisfy such withholding obligation as theCompany or the Committee may approve.  Inaddition, the Company may withhold unrestricted shares of stock of the Company(valued at their fair market value on the date of withholding of such shares)otherwise to be issued upon the lapse of the Forfeiture Restrictions to satisfyits withholding obligations.  If Employeemakes the election 

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authorized bysection 83(b) of the Code in connection with the award of the RestrictedShares, Employee shall submit to the Company a copy of the statement filed byEmployee to make such election.

4.             **Status ofStock**.  Employee agrees that the Restricted Sharesissued under this Agreement will not be sold or otherwise disposed of in anymanner which would constitute a violation of any applicable securities laws,whether federal or state. Employee also agrees that (a) the certificatesrepresenting the Restricted Shares may bear such legend or legends as theCommittee deems appropriate in order to reflect the Forfeiture Restrictions andto assure compliance with applicable securities laws, (b) the Company mayrefuse to register the transfer of the Restricted Shares on the stock transferrecords of the Company if such proposed transfer would constitute a violationof the Forfeiture Restrictions or, in the opinion of counsel satisfactory tothe Company, of any applicable securities law, and (c) the Company may giverelated instructions to its transfer agent, if any, to stop registration of thetransfer of the Restricted Shares.

5.*            ***Employment Relationship**. For purposes of this Agreement, Employee shall be considered to be inthe employment of the Company as long as Employee remains an employee of eitherthe Company, an Affiliate, or any successor corporation.  Withoutlimiting the scope of the preceding sentence, it is expressly provided thatEmployee shall be considered to have terminated employment with the Company atthe time of the termination of the “Affiliate” status under the Plan of theentity or other organization that employs Employee.  Any question as to whether and whenthere has been a termination of such employment, and the cause of suchtermination, shall be determined by the Committee and its determination shallbe final.

6.             **Notices**.Any notices or other communications provided for in this Agreement shall besufficient if in writing.  In the case ofEmployee, such notices or communications shall be effectively delivered if handdelivered to Employee at his principal place of employment or if sent byregistered or certified mail to Employee at the last address Employee has filedwith the Company. In the case of the Company, such notices or communicationsshall be effectively delivered if sent by registered or certified mail to theCompany at its principal executive offices.

7.             **EntireAgreement; Amendment**. This Agreement replaces and merges allprevious agreements and discussions relating to the same or similar subjectmatters between Employee and the Company and constitutes the entire agreementbetween Employee and the Company with respect to the subject matter of thisAgreement.  Without limiting the scope ofthe preceding sentence, all prior understandings and agreements, if any, amongthe parties hereto relating to the subject matter hereof are hereby null andvoid and of no further force and effect. Any modification of this Agreement shall be effective only if it is inwriting and signed by both Employee and an authorized officer of the Company.

8.               **BindingEffect**. This Agreement shall be binding upon and inure to the benefitof any successors to the Company and all persons lawfully claiming underEmployee.

9.               **GoverningLaw**. **This Agreement shall begoverned by, and construed in accordance with, the laws of the State of Nevada,without regard to conflicts of laws principles thereof.**

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10.             **Jurisdiction**.         Eachof the Company and Employee hereby irrevocably (i) submits and consents to thepersonal jurisdiction of the state and federal courts sitting in Harris County,Texas with respect to any suit, action, or proceeding arising out of or basedupon this Agreement or the transactions contemplated hereby and (ii) waives theright to contend in any such action that venue is improperly laid in any suchcourt or that it is an improper or inconvenient forum or lacks personal jurisdiction.  If Employee now or hereafter resides outsidethe State of Texas, Employee hereby irrevocably appoints the General Counsel ofthe Company as Employee’s authorized agent upon whom process may be served atsuch General Counsel’s Company office for notices under this Agreement in anysuit, action, or proceeding arising out of or based upon this Agreement or thetransactions contemplated hereby that may be instituted in any state or federalcourt in the State of Texas by the Company, and Employee hereby agrees to soact.  Employee agrees to take any and allaction, including the filing of any and all documents and instruments, that maybe necessary to continue such appointment in full force and effect asaforesaid.  Service of process upon theauthorized agent of Employee and written notice of such service to Employeeshall be deemed, in every respect, effective service of process as to Employeefor purposes of any such suit, action, or proceeding instituted in any state orfederal court in the State of Texas.

**INWITNESS WHEREOF**, the Company has caused this Agreement to beduly executed by its officer thereunto duly authorized, and Employee hasexecuted this Agreement, all effective as of the day and year first abovewritten.
|        |   | **PARTICLE DRILLING TECHNOLOGIES, INC.** |
|--------|--------|------------------------------------------|
|   |   |                                     |
|   |   | By:                                      | /s/ Ken R. LeSuer |
|   |   | Name:                                    | Ken R. LeSuer |
|   |   | Position: Chairman of the Board          |   |   |
|   |   |                                     |   |   |
|   |   | **EMPLOYEE**                             |   |   |
|   |   |                                     |   |   |
|   |   | /s/ Jim B. Terry                         |
|   |   | Jim B. Terry                             |   |   |
|        |        |                                          |  |  |  |  |

 

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