**Exhibit 10.3**

**FIRST AMENDMENT TO**

**EMPLOYMENTAGREEMENT**

**THIS FIRST AMENDMENT TOEMPLOYMENT AGREEMENT** (“First Amendment”) is entered into byand between Particle Drilling Technologies, Inc., a Nevada corporation (“Company”),and Jim B. Terry (“Executive”) as of August 7, 2007.

**WHEREAS**,Company and Executive have heretofore entered into that certain EmploymentAgreement effective as of January 23, 2006 (the “Employment Agreement”); and

**WHEREAS**,Company and Executive desire to amend the Employment Agreement in certainrespects;

**NOW, THEREFORE**,in consideration of the premises set forth above and the mutual agreements setforth herein, Company and Executive hereby agree, effective as of the datefirst set forth above, that the Employment Agreement shall be amended ashereafter provided:

1.             Section 5.4 of the Employment Agreement shall be deletedand the following shall be substituted therefor:

“**5.4        Parachute Payments**.  Notwithstanding anything to the contrary inthis Agreement, in the event that any payment or distribution by Company to orfor the benefit of Executive, whether paid or payable or distributed ordistributable pursuant to the terms of this Agreement or otherwise (a “Payment”),would be subject to the excise tax imposed by Section 4999 of the Code or anyinterest or penalties with respect to such excise tax (such excise tax,together with any such interest or penalties, are hereinafter collectivelyreferred to as the “Excise Tax”), Company shall pay to Executive an additionalpayment (a “Gross-up Payment”) in an amount such that after payment byExecutive of all taxes (including any interest or penalties imposed withrespect to such taxes), including any Excise Tax imposed on any Gross-upPayment, Executive retains an amount of the Gross-up Payment equal to theExcise Tax imposed upon the Payments. The Gross-up Payment attributable to a particular Payment shall be madeat the time such Payment is made; provided, however, that in no event shall theGross-up Payment be made later than the end of Executive’s taxable year nextfollowing Executive’s taxable year in which Executive remits the relatedtaxes.  Company and Executive shall makean initial determination as to whether a Gross-up Payment is required and theamount of any such Gross-up Payment. Executive shall notify Company in writing of any claim by the InternalRevenue Service which, if successful, would require Company to make a Gross-upPayment (or a Gross-up Payment in excess of that, if any, initially determinedby Company and Executive) within ten days of the receipt of such claim.  Company shall notify Executive in writing atleast ten days prior to the due date of any response required with respect tosuch claim if it plans to contest the claim. If Company decides to contest such claim, Executive shall cooperatefully with Company in such action; provided, however, Company shall bear andpay directly or indirectly 

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all costs and expenses (including additional interestand penalties) incurred in connection with such action and shall indemnify andhold Executive harmless, on an after-tax basis, for any Excise Tax or incometax, including interest and penalties with respect thereto, imposed as a resultof Company’s action.  If, as a result ofCompany’s action with respect to a claim, Executive receives a refund of anyamount paid by Company with respect to such claim, Executive shall promptly paysuch refund to Company.  If Company failsto timely notify Executive whether it will contest such claim or Company determinesnot to contest such claim, then Company shall immediately pay to Executive theportion of such claim, if any, which it has not previously paid to Executive.”

2.             Except as expressly modified by this First Amendment,the terms of the Employment Agreement shall remain in full force and effect andare hereby confirmed and ratified.

**IN WITNESS WHEREOF**,the parties hereto have executed and delivered this First Amendment as of thedate first set forth above.
| **“EXECUTIVE”** | ** ** | **“COMPANY”**                  |
|---------------------------|------------|------------------------------------------|
| ** **                | ** ** | ** **                               |
| ** **                |       | **PARTICLE DRILLING TECHNOLOGIES, INC.** |
| ** **                |       | ** **                               |
| **/**s**/**Jim  B. Terry  | ** ** | **By:**                                  | **/**s**/**Ken  R. LeSuer |
| **Jim B. Terry**          | ** ** | ** **                               | **Name: Ken R. LeSuer** |
| ** **                | ** ** | ** **                               | **Title: Chairman, Board of Directors** |   |

 

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