Exhibit 99.1


 


PARTICLE
DRILLING TECHNOLOGIES, INC.


 


2005
STOCK INCENTIVE PLAN


 


I.                                         PURPOSE


 


The purpose of
the PARTICLE DRILLING
TECHNOLOGIES, INC. 2005 STOCK INCENTIVE PLAN (the “Plan”) is to
provide a means through which PARTICLE DRILLING TECHNOLOGIES, INC., a Nevada corporation
(the “Company”), and its Affiliates may attract able persons to serve as
Directors or Consultants or to enter the employ of the Company and its
Affiliates and to provide a means whereby those individuals upon whom the
responsibilities of the successful administration and management of the Company
and its Affiliates rest, and whose present and potential contributions to the
Company and its Affiliates are of importance, can acquire and maintain stock
ownership, thereby strengthening their concern for the welfare of the Company
and its Affiliates.  A further purpose of
the Plan is to provide such individuals with additional incentive and reward
opportunities designed to enhance the profitable growth of the Company and its
Affiliates.  Accordingly, the Plan
provides for granting Incentive Stock Options, options that do not constitute
Incentive Stock Options, Restricted Stock Awards, or any combination of the
foregoing, as is best suited to the circumstances of the particular employee, Consultant
or Director as provided herein.


 


II.                                     DEFINITIONS


 


The following
definitions shall be applicable throughout the Plan unless specifically
modified by any paragraph:


 


(a)           “Affiliate” means any corporation, partnership, limited
liability company or partnership, association, trust or other organization
which, directly or indirectly, controls, is controlled by, or is under common
control with, the Company.  For purposes
of the preceding sentence, “control” (including, with correlative meanings, the
terms “controlled by” and “under common control with”), as used with respect to
any entity or organization, shall mean the possession, directly or indirectly,
of the power (i) to vote more than 50% of the securities having ordinary voting
power for the election of directors of the controlled entity or organization,
or (ii) to direct or cause the direction of the management and policies of the
controlled entity or organization, whether through the ownership of voting
securities or by contract or otherwise.


 


(b)           “Award” means, individually or collectively, any Option
or Restricted Stock Award.


 


(c)           “Board” means the Board of Directors of the Company.


 


(d)           “Code” means the Internal Revenue Code of 1986, as
amended.  Reference in the Plan to any
section of the Code shall be deemed to include any amendments or successor
provisions to such section and any regulations under such section.


 


(e)           “Committee” means a committee of the Board that is
selected by the Board as provided in Paragraph IV(a).


 





















 


(f)            “Common Stock” means the common stock, par value $0.001
per share, of the Company, or any security into which such common stock may be
changed by reason of any transaction or event of the type described in
Paragraph IX.


 


(g)           “Company” means Particle Drilling Technologies, Inc., a
Nevada corporation, and any successor thereto that adopts the Plan.


 


(h)           “Consultant” means any person who is not an employee or a
Director and who is providing advisory or consulting services to the Company or
any Affiliate.


 


(i)            “Corporate Change” shall have the meaning assigned to
such term in Paragraph IX(c) of the Plan.


 


(j)            “Director” means an individual who is a member of the
Board.


 


(k)           An
“employee” means any person
(including a Director) in an employment relationship with the Company or any
Affiliate.


 


(l)            “Fair Market Value” means, as of any specified date, the
mean of the high and low sales prices of the Common Stock (i) reported by the
National Market System of NASDAQ on that date or (ii) if the Common Stock is
listed on a national stock exchange, reported on the stock exchange composite
tape on that date (or such other reporting service approved by the Committee);
or, in either case, if no prices are reported on that date, on the last
preceding date on which such prices of the Common Stock are so reported.  If the Common Stock is traded over the
counter at the time a determination of its fair market value is required to be
made hereunder, its fair market value shall be deemed to be equal to the average
between the reported high and low or closing bid and asked prices of Common
Stock on the most recent date on which Common Stock was publicly traded.  In the event Common Stock is not publicly
traded at the time a determination of its value is required to be made
hereunder, the determination of its fair market value shall be made by the
Committee in such manner as it deems appropriate.


 


(m)          “Incentive Stock Option” means an incentive stock option
within the meaning of section 422 of the Code.


 


(n)           “1934 Act” means the
Securities Exchange Act of 1934, as amended.


 


(o)           “Option” means an Award granted under Paragraph VII of
the Plan and includes both Incentive Stock Options to purchase Common Stock and
Options that do not constitute Incentive Stock Options to purchase Common
Stock.


 


(p)           “Option Agreement” means a written agreement between the
Company and a Participant with respect to an Option.


 


(q)           “Participant” means an employee, Consultant, or Director
who has been granted an Award.


 


(r)            “Plan” means the Particle Drilling Technologies, Inc.
2005 Stock Incentive Plan, as amended from time to time.


 


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(s)           “Restricted Stock Agreement” means a written agreement
between the Company and a Participant with respect to a Restricted Stock Award.


 


(t)            “Restricted Stock Award” means an Award granted under
Paragraph VIII of the Plan.


 


(u)           “Stock Appreciation Right” shall have the meaning
assigned to such term in Paragraph VII(d) of the Plan.


 


III.                                 EFFECTIVE
DATE AND DURATION OF THE PLAN


 


The Plan shall
become effective upon the date of its adoption by the Board and may be
presented to the stockholders of the Company for approval within 12 months
therafter. If such stockholder approval is not obtained within 12 months of the
adoption of the Plan by the Board, the Plan shall remain in full force and
effect; provided, however, that notwithstanding any provision in the Plan or in
any Option Agreement to the contrary, no Incentive Stock Options shall
thereafter be granted under the Plan and all Options theretofore granted and
intended to constitute Incentive Stock Options shall be automatically converted
into Options that do not constitute Incentive Stock Options without need for
any action on the part of the Board, the Committee or any Participant.  Further, notwithstanding any provision in the
Plan or in any Option Agreement to the contrary, no Option intended to
constitute an Incentive Stock Option shall be exercisable prior to the
expiration of 12 months following the date of the adoption of the Plan by the
Board.  No further Awards may be granted
under the Plan after 10 years from the date the Plan is adopted by the
Board.  The Plan shall remain in effect
until all Options granted under the Plan have been satisfied or expired, and
all Restricted Stock Awards granted under the Plan have vested or been
forfeited.


 


IV.                                ADMINISTRATION


 


(a)           Composition of
Committee.  The Plan shall
be administered by a committee of, and appointed by, the Board that shall be
comprised solely of two or more “Non-Employee Directors” (as defined in SEC
Rule 16b-3 promulgated under the 1934 Act, as such may be amended from time to
time, and any successor rule, regulation or statute fulfilling the same or
similar function).


 


(b)           Powers.  Subject to the express provisions of the
Plan, the Committee shall have authority, in its discretion, to determine which
employees, Consultants, or Directors shall receive an Award, the time or times
when such Award shall be made, whether an Incentive Stock Option or
nonqualified Option shall be granted, and the number of shares to be subject to
each Option or Restricted Stock Award. 
In making such determinations, the Committee shall take into account the
nature of the services rendered by the respective employees, Consultants, or
Directors, their present and potential contribution to the Company’s success
and such other factors as the Committee in its discretion shall deem relevant.


 


(c)           Additional
Powers.  The Committee
shall have such additional powers as are delegated to it by the other
provisions of the Plan.  Subject to the
express provisions of the Plan, this shall include the power to construe the
Plan and the respective agreements executed hereunder, to prescribe rules and
regulations relating to the Plan, and to determine the terms, restrictions and
provisions of the agreement relating to each Award, including such terms,


 


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restrictions
and provisions as shall be requisite in the judgment of the Committee to cause
designated Options to qualify as Incentive Stock Options, and to make all other
determinations necessary or advisable for administering the Plan.  The Committee may correct any defect or
supply any omission or reconcile any inconsistency in the Plan or in any
agreement relating to an Award in the manner and to the extent it shall deem
expedient to carry it into effect.  The
determinations of the Committee on the matters referred to in this Paragraph IV
shall be conclusive.


 


V.                                    SHARES
SUBJECT TO THE PLAN; GRANT OF AWARDS


 


(a)           Shares Subject
to the Plan.  Subject to
adjustment in the same manner as provided in Paragraph IX with respect to
shares of Common Stock subject to Options then outstanding, the aggregate
number of shares of Common Stock that may be issued under the Plan, and the
aggregate number of shares of Common Stock that may be issued under the Plan
through Incentive Stock Options, shall not exceed 2,000,000 shares.  Shares shall be deemed to have been issued
under the Plan only to the extent actually issued and delivered pursuant to an
Award.  To the extent that an Award
lapses or the rights of its holder terminate, any shares of Common Stock
subject to such Award shall again be available for the grant of an Award under
the Plan.  In addition, shares issued
under the Plan and forfeited back to the Plan, shares surrendered in payment of
the exercise price or purchase price of an Award, and shares withheld for
payment of applicable employment taxes and/or withholding obligations
associated with an Award shall again be available for the grant of an Award
under the Plan.


 


(b)           Grant of Awards.
The Committee may from time to time grant Awards to one or more employees,
Consultants, or Directors determined by it to be eligible for participation in
the Plan in accordance with the terms of the Plan.


 


(c)           Stock Offered.  Subject to the limitations set forth in
Paragraph V(a), the stock to be offered pursuant to the grant of an Award may
be authorized but unissued Common Stock or Common Stock previously issued and
outstanding and reacquired by the Company. 
Any of such shares which remain unissued and which are not subject to
outstanding Awards at the termination of the Plan shall cease to be subject to
the Plan but, until termination of the Plan, the Company shall at all times
make available a sufficient number of shares to meet the requirements of the
Plan.


 


VI.                                ELIGIBILITY


 


Awards may be
granted only to persons who, at the time of grant, are employees, Consultants,
or Directors.  An Award may be granted on
more than one occasion to the same person, and, subject to the limitations set
forth in the Plan, such Award may include an Incentive Stock Option, an Option
that is not an Incentive Stock Option, a Restricted Stock Award, or any
combination thereof.


 


VII.                            STOCK
OPTIONS


 


(a)           Option Period.  The term of each Option shall be as specified
by the Committee at the date of grant; provided, however, that each such Option
by its terms shall not be exercisable after the expiration of ten years from
the date of grant.


 


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(b)           Limitations on
Exercise of Option.  An
Option shall be exercisable in whole or in such installments and at such times
as determined by the Committee.


 


(c)           Special
Limitations on Incentive Stock Options.  An Incentive Stock Option may be granted only
to an individual who is employed by the Company or any parent or subsidiary
corporation (as defined in section 424 of the Code) of the Company at the time
the Option is granted. To the extent that the aggregate fair market value
(determined at the time the respective Incentive Stock Option is granted) of
stock with respect to which Incentive Stock Options are exercisable for the
first time by an individual during any calendar year under all incentive stock
option plans of the Company and its parent and subsidiary corporations exceeds
$100,000, such Incentive Stock Options shall be treated as Options which do not
constitute Incentive Stock Options. The Committee shall determine, in
accordance with applicable provisions of the Code, Treasury Regulations and
other administrative pronouncements, which of a Participant’s Incentive Stock
Options will not constitute Incentive Stock Options because of such limitation
and shall notify the Participant of such determination as soon as practicable
after such determination.  No Incentive
Stock Option shall be granted to an individual if, at the time the Option is
granted, such individual owns stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company or of its parent
or subsidiary corporation, within the meaning of section 422(b)(6) of the Code,
unless (i) at the time such Option is granted the option price is at least 110%
of the Fair Market Value of the Common Stock subject to the Option and (ii)
such Option by its terms is not exercisable after the expiration of five years
from the date of grant.  An Incentive
Stock Option shall not be transferable otherwise than by will or the laws of
descent and distribution, and shall be exercisable during the Participant’s
lifetime only by such Participant or the Participant’s guardian or legal
representative.


 


(d)           Option
Agreement.  Each Option
shall be evidenced by an Option Agreement in such form and containing such
provisions not inconsistent with the provisions of the Plan as the Committee
from time to time shall approve, including, without limitation, provisions to
qualify an Incentive Stock Option under section 422 of the Code.  Each Option Agreement shall specify the
effect of termination of (i) employment, (ii) the consulting or advisory
relationship, or (iii) membership on the Board, as applicable, on the
exercisability of the Option.  An Option
Agreement may provide for the payment of the option price, in whole or in part,
by the delivery of a number of shares of Common Stock (plus cash if necessary)
having a Fair Market Value equal to such option price.  Moreover, an Option Agreement may provide for
a “cashless exercise” of the Option by establishing procedures satisfactory to
the Committee with respect thereto. 
Further, an Option Agreement may provide for the surrender of the right
to purchase shares under the Option in return for a payment in cash or shares
of Common Stock or a combination of cash and shares of Common Stock equal in
value to the excess of the Fair Market Value of the shares with respect to
which the right to purchase is surrendered over the option price therefor (“Stock
Appreciation Rights”), on such terms and conditions as the Committee in its
sole discretion may prescribe.  In the
case of any such Stock Appreciation Right that is granted in connection with an
Incentive Stock Option, such right shall be exercisable only when the Fair
Market Value of the Common Stock exceeds the price specified therefor in the
Option or the portion thereof to be surrendered.  The terms and conditions of the respective
Option Agreements need not be identical. 
Subject to the consent of the Participant, the Committee may, in its
sole discretion, amend an outstanding Option Agreement from time to time in any
manner that is not inconsistent with the provisions of the Plan (including,
without limitation, an


 


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amendment that
accelerates the time at which the Option, or a portion thereof, may be
exercisable).


 


(e)           Option Price
and Payment.  The price at
which a share of Common Stock may be purchased upon exercise of an Option shall
be determined by the Committee but, subject to adjustment as provided in
Paragraph IX, such purchase price shall not be less than the Fair Market Value
of a share of Common Stock on the date such Option is granted.  The Option or portion thereof may be
exercised by delivery of an irrevocable notice of exercise to the Company, as
specified by the Committee.  The purchase
price of the Option or portion thereof shall be paid in full in the manner
prescribed by the Committee.  If
permitted by applicable law, the Company may assist a Participant who has
received an Option in the payment of such Option’s purchase price by lending
the amount of some or all of such purchase price to such Participant on such
terms and such rates of interest and upon such security (or unsecured) as shall
have been authorized by or under authority of the Board; provided, however,
that the Company may not under any circumstances lend any amount or otherwise
extend credit or arrange for the extension of credit to any Participant who is
a Director or an executive officer of the Company.  Separate stock certificates shall be issued
by the Company for those shares acquired pursuant to the exercise of an
Incentive Stock Option and for those shares acquired pursuant to the exercise
of any Option that does not constitute an Incentive Stock Option.


 


(f)            Stockholder
Rights and Privileges. 
The Participant shall be entitled to all the privileges and rights of a
stockholder only with respect to such shares of Common Stock as have been
purchased under the Option and for which certificates of stock have been
registered in the Participant’s name.


 


(g)           Options and
Rights in Substitution for Options Granted by Other Employers.  Options and Stock Appreciation Rights may be
granted under the Plan from time to time in substitution for options held by
individuals providing services to corporations or other entities who become
employees, Consultants, or Directors as a result of a merger or consolidation
or other business transaction with the Company or any Affiliate.


 


VIII.                        RESTRICTED
STOCK AWARDS


 


(a)           Forfeiture
Restrictions To Be Established by the Committee.  Shares of Common Stock that are the subject
of a Restricted Stock Award shall be subject to restrictions on disposition by
the Participant and an obligation of the Participant to forfeit and surrender
the shares to the Company under certain circumstances (the “Forfeiture
Restrictions”).  The Forfeiture Restrictions
shall be determined by the Committee in its sole discretion, and the Committee
may provide that the Forfeiture Restrictions shall lapse upon (i) the
attainment of one or more performance targets established by the Committee,
(ii) the Participant’s continued employment with the Company or an Affiliate or
continued service as a Consultant or Director for a specified period of time,
(iii) the occurrence of any event or the satisfaction of any other condition
specified by the Committee in its sole discretion, or (iv) a combination of any
of the foregoing.  Each Restricted Stock
Award may have different Forfeiture Restrictions, in the discretion of the
Committee.


 


(b)           Other Terms and
Conditions.  Common Stock
awarded pursuant to a Restricted Stock Award shall be represented by a stock
certificate registered in the name of the Participant.


 


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Unless
provided otherwise in a Restricted Stock Agreement, the Participant shall have
the right to receive dividends with respect to Common Stock subject to a
Restricted Stock Award, to vote Common Stock subject thereto and to enjoy all
other stockholder rights, except that (i) the Participant shall not be entitled
to delivery of the stock certificate until the Forfeiture Restrictions have
expired, (ii) the Company shall retain custody of the stock until the
Forfeiture Restrictions have expired, (iii) the Participant may not sell,
transfer, pledge, exchange, hypothecate or otherwise dispose of the stock until
the Forfeiture Restrictions have expired, and (iv) a breach of the terms and
conditions established by the Committee pursuant to the Restricted Stock
Agreement shall cause a forfeiture of the Restricted Stock Award.  At the time of such Award, the Committee may,
in its sole discretion, prescribe additional terms, conditions or restrictions
relating to Restricted Stock Awards, including, but not limited to, rules
pertaining to the termination of employment or service as a Consultant or
Director (by retirement, disability, death or otherwise) of a Participant prior
to expiration of the Forfeitures Restrictions. 
Such additional terms, conditions or restrictions shall be set forth in
a Restricted Stock Agreement made in conjunction with the Award.


 


(c)           Payment for
Restricted Stock.  The
Committee shall determine the amount and form of any payment for Common Stock
received pursuant to a Restricted Stock Award, provided that in the absence of
such a determination, a Participant shall not be required to make any payment
for Common Stock received pursuant to a Restricted Stock Award, except to the
extent otherwise required by law.


 


(d)           Committee’s
Discretion to Accelerate Vesting of Restricted Stock Awards.  The Committee may, in its discretion and as
of a date determined by the Committee, fully vest any or all Common Stock
awarded to a Participant pursuant to a Restricted Stock Award and, upon such
vesting, all restrictions applicable to such Restricted Stock Award shall
terminate as of such date.  Any action by
the Committee pursuant to this Subparagraph may vary among individual
Participants and may vary among the Restricted Stock Awards held by any
individual Participant.


 


(e)           Restricted Stock Agreements.   At the time any Award is made under this
Paragraph VIII, the Company and the Participant shall enter into a Restricted
Stock Agreement setting forth each of the matters contemplated hereby and such
other matters as the Committee may determine to be appropriate.  The terms and provisions of the respective
Restricted Stock Agreements need not be identical. Subject to the consent of the Participant, the Committee
may, in its sole discretion, amend an outstanding Restricted Stock Agreement
from time to time in any manner that is not inconsistent with the provisions of
the Plan.


 


IX.                                RECAPITALIZATION
OR REORGANIZATION


 


(a)           No Effect on
Right or Power.  The
existence of the Plan and the Awards granted hereunder shall not affect in any
way the right or power of the Board or the stockholders of the Company to make
or authorize any adjustment, recapitalization, reorganization or other change
in the Company’s or any Affiliate’s capital structure or its business, any
merger or consolidation of the Company or any Affiliate, any issue of debt or
equity securities ahead of or affecting Common Stock or the rights thereof, the
dissolution or liquidation of the Company or any Affiliate or any sale, lease,
exchange or other disposition of all or any part of its assets or business or
any other corporate act or proceeding.


 


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(b)           Subdivision or
Consolidation of Shares; Stock Dividends.  The shares with respect to which Options may
be granted are shares of Common Stock as presently constituted, but if, and
whenever, prior to the expiration of an Option theretofore granted, the Company
shall effect a subdivision or consolidation of shares of Common Stock or the
payment of a stock dividend on Common Stock without receipt of consideration by
the Company, the number of shares of Common Stock with respect to which such
Option may thereafter be exercised (i) in the event of an increase in the
number of outstanding shares shall be proportionately increased, and the
purchase price per share shall be proportionately reduced, and (ii) in the
event of a reduction in the number of outstanding shares shall be
proportionately reduced, and the purchase price per share shall be
proportionately increased.  Any
fractional share resulting from such adjustment shall be rounded up to the next
whole share.


 


(c)           Recapitalizations
and Corporate Changes.  If
the Company recapitalizes, reclassifies its capital stock, or otherwise changes
its capital structure (a “recapitalization”), the number and class of shares of
Common Stock covered by an Option theretofore granted shall be adjusted so that
such Option shall thereafter cover the number and class of shares of stock and
securities to which the Participant would have been entitled pursuant to the
terms of the recapitalization if, immediately prior to the recapitalization,
the Participant had been the holder of record of the number of shares of Common
Stock then covered by such Option.  If
(i) the Company shall not be the surviving entity in any merger or
consolidation (or survives only as a subsidiary of an entity), (ii) the Company
sells, leases or exchanges or agrees to sell, lease or exchange all or
substantially all of its assets to any other person or entity, (iii) the
Company is to be dissolved and liquidated, (iv) any person or entity, including
a “group” as contemplated by Section 13(d)(3) of the 1934 Act, acquires or
gains ownership or control (including, without limitation, power to vote) of
more than 50% of the outstanding shares of the Company’s voting stock (based
upon voting power), or (v) as a result of or in connection with a contested
election of Directors, the persons who were Directors of the Company before
such election shall cease to constitute a majority of the Board (each such
event is referred to herein as a “Corporate Change”), no later than (x) 10 days
after the approval by the stockholders of the Company of such merger,
consolidation, reorganization, sale, lease or exchange of assets or dissolution
or such election of Directors or (y) 30 days after a Corporate Change of the
type described in clause (iv), the Committee, acting in its sole discretion
without the consent or approval of any Participant, shall effect one or more of
the following alternatives, which alternatives may vary among individual
Participants and which may vary among Options held by any individual
Participant:  (1) accelerate the time at
which Options then outstanding may be exercised so that such Options may be
exercised in full for a limited period of time on or before a specified date
(before or after such Corporate Change) fixed by the Committee, after which
specified date all unexercised Options and all rights of Participants
thereunder shall terminate, (2) require the mandatory surrender to the Company
by selected Participants of some or all of the outstanding Options held by such
Participants (irrespective of whether such Options are then exercisable under
the provisions of the Plan) as of a date, before or after such Corporate
Change, specified by the Committee, in which event the Committee shall
thereupon cancel such Options and cause the Company to pay to each Participant
an amount of cash per share equal to the excess, if any, of the amount
calculated in Subparagraph (d) below (the “Change of Control Value”) of the
shares subject to such Option over the exercise price(s) under such Options for
such shares, or (3) make such adjustments to Options then outstanding as the
Committee deems appropriate to reflect such Corporate Change (provided,
however, that the Committee may determine in its sole discretion that no
adjustment is necessary to Options then outstanding), including, without


 


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limitation,
adjusting an Option to provide that the number and class of shares of Common
Stock covered by such Option shall be adjusted so that such Option shall
thereafter cover securities of the surviving or acquiring corporation or other
property (including, without limitation, cash) as determined by the Committee
in its sole discretion.


 


(d)           Change of
Control Value.  For the
purposes of clause (2) in Subparagraph (c) above, the “Change of Control Value”
shall equal the amount determined in clause (i), (ii) or (iii), whichever is
applicable, as follows: (i) the per share price offered to stockholders of the
Company in any such merger, consolidation, sale of assets or dissolution
transaction, (ii) the per share price offered to stockholders of the Company in
any tender offer or exchange offer whereby a Corporate Change takes place, or
(iii) if such Corporate Change occurs other than pursuant to a tender or exchange
offer, the fair market value per share of the shares into which such Options
being surrendered are exercisable, as determined by the Committee as of the
date determined by the Committee to be the date of cancellation and surrender
of such Options.  In the event that the
consideration offered to stockholders of the Company in any transaction
described in this Subparagraph (d) or Subparagraph (c) above consists of
anything other than cash, the Committee shall determine the fair cash
equivalent of the portion of the consideration offered which is other than
cash.


 


(e)           Other Changes
in the Common Stock.  In
the event of changes in the outstanding Common Stock by reason of
recapitalizations, reorganizations, mergers, consolidations, combinations,
split-ups, split-offs, spin-offs, exchanges or other relevant changes in
capitalization or distributions to the holders of Common Stock occurring after
the date of the grant of any Award and not otherwise provided for by this
Paragraph IX, such Award and any agreement evidencing such Award shall be
subject to adjustment by the Committee at its discretion as to the number and
price of shares of Common Stock or other consideration subject to such
Award.  In the event of any such change
in the outstanding Common Stock or distribution to the holders of Common Stock,
or upon the occurrence of any other event described in this Paragraph IX, the
aggregate number of shares available under the Plan and the aggregate number of
shares that may be issued under the Plan through Incentive Stock Options shall
be appropriately adjusted to the extent, if any, determined by the Committee,
whose determination shall be conclusive.


 


(f)            Stockholder
Action.  Any adjustment
provided for in the above Subparagraphs shall be subject to any required
stockholder action.


 


(g)           No Adjustments
unless Otherwise Provided. 
Except as hereinbefore expressly provided, the issuance by the Company
of shares of stock of any class or securities convertible into shares of stock
of any class, for cash, property, labor or services, upon direct sale, upon the
exercise of rights or warrants to subscribe therefor, or upon conversion of
shares or obligations of the Company convertible into such shares or other
securities, and in any case whether or not for fair value, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
of shares of Common Stock subject to Awards theretofore granted or the purchase
price per share, if applicable.


 


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X.                                    AMENDMENT
AND TERMINATION OF THE PLAN


 


The Board in
its discretion may terminate the Plan at any time with respect to any shares of
Common Stock for which Awards have not theretofore been granted.  The Board shall have the right to alter or
amend the Plan or any part thereof from time to time; provided that no change
in the Plan may be made that would impair the rights of a Participant with
respect to an Award theretofore granted without the consent of the Participant.


 


XI.                                MISCELLANEOUS


 


(a)           No Right To An
Award.  Neither the
adoption of the Plan nor any action of the Board or of the Committee shall be
deemed to give an employee, Consultant, or Director any right to be granted an
Option, a right to a Restricted Stock Award, or any other rights hereunder
except as may be evidenced by an Option Agreement or a Restricted Stock
Agreement duly executed on behalf of the Company, and then only to the extent
and on the terms and conditions expressly set forth therein.  The Plan shall be unfunded.  The Company shall not be required to
establish any special or separate fund or to make any other segregation of
funds or assets to assure the performance of its obligations under any Award.


 


(b)           No
Employment/Membership Rights Conferred.  Nothing contained in the Plan shall (i)
confer upon any employee or Consultant any right with respect to continuation
of employment or of a consulting or advisory relationship with the Company or
any Affiliate or (ii) interfere in any way with the right of the Company or any
Affiliate to terminate his or her employment or consulting or advisory
relationship at any time.  Nothing
contained in the Plan shall confer upon any Director any right with respect to
continuation of membership on the Board.


 


(c)           Other Laws;
Withholding.  The Company
shall not be obligated to issue any Common Stock pursuant to any Award granted
under the Plan at any time when the shares covered by such Award have not been
registered under the Securities Act of 1933, as amended, and such other state
and federal laws, rules and regulations as the Company or the Committee deems
applicable and, in the opinion of legal counsel for the Company, there is no
exemption from the registration requirements of such laws, rules and
regulations available for the issuance and sale of such shares.  No fractional shares of Common Stock shall be
delivered, nor shall any cash in lieu of fractional shares be paid.  The Company shall have the right to deduct in
connection with all Awards any taxes required by law to be withheld and to require
any payments required to enable it to satisfy its withholding obligations.


 


(d)           No Restriction
on Corporate Action. 
Nothing contained in the Plan shall be construed to prevent the Company
or any Affiliate from taking any action which is deemed by the Company or such
Affiliate to be appropriate or in its best interest, whether or not such action
would have an adverse effect on the Plan or any Award made under the Plan.  No Participant, beneficiary or other person shall
have any claim against the Company or any Affiliate as a result of any such
action.


 


(e)           Restrictions on
Transfer.  An Award (other
than an Incentive Stock Option, which shall be subject to the transfer
restrictions set forth in Paragraph VII(c)) shall not be transferable otherwise
than (i) by will or the laws of descent and distribution, (ii) pursuant to a


 


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qualified
domestic relations order as defined by the Code or Title I of the Employee
Retirement Income Security Act of 1974, as amended, or the rules thereunder, or
(iii) with the consent of the Committee.


 


(f)            Governing Law.  The Plan shall be governed by, and construed in accordance with, the
laws of the State of Nevada, without regard to conflicts of law principles
thereof.


 


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