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                                                                    EXHIBIT 10.3

                            DAUGHERTY RESOURCES, INC.

                   2003 INCENTIVE STOCK AND STOCK OPTION PLAN

      1. THE PLAN. The 2003 Incentive Plan (the "Plan") of Daugherty Resources,
Inc. (the "Company") has been adopted by the board of directors of the Company
(the "Board") to provide for the award of shares ("Share Awards") of the
Company's common stock ("Common Stock") and for the grant of options to acquire
Common Stock ("Options"). Options granted under the Plan are intended to be
treated as incentive stock options ("ISOs") within the meaning of section 422 of
the Internal Revenue Code of 1986 (the "Code") or, if so specified at the time
of grant, as nonqualified stock options ("NSOs") not intended to be treated as
ISOs under the Code. Except as otherwise indicated herein, all references in
this Plan to the Company shall include Daugherty Resources, Inc. and its
subsidiaries, together with their respective successors and assigns, and all
references to Sections refer to sections of this Plan.

      2 PURPOSES. The purposes of the Plan are to provide for the grant of Share
Awards as compensation to selected consultants, directors, officers and
employees of the Company and to provide for the grant of Options to selected
officers, directors and key employees of the Company as an incentive to acquire
or increase their proprietary interest in the Company, to continue their
services to the Company and to increase their efforts on its behalf.

      3. THE COMMON STOCK. The aggregate number of shares of Common Stock
issuable under the Plan shall be 4,000,000 or the number and kinds of shares of
capital stock or other securities substituted for the Common Stock as provided
in Section 7. The aggregate number of shares of Common Stock issuable under the
Plan may be set aside out of the authorized but unissued shares of Common Stock
not reserved for any other purpose or out of shares of Common Stock held in or
acquired for the treasury of the Company. All shares of Common Stock subject to
a Share Award that terminates unvested or an Option that terminates unexercised
for any reason may thereafter be subjected to a new Share Award or Option under
the Plan.

      4. ADMINISTRATION. The Plan shall be administered by the Compensation
Committee of the Board (the "Committee"). The Committee shall have plenary
authority in its discretion to (a) select the recipients of Share Awards and
Options ("Grantees"), (b) determine the number of shares of Common Stock subject
to each Share Award or Option and terms of the Share Award or Option issued to
each Grantee, including any conditions to the vesting thereof, and (c) adopt,
amend and rescind rules and regulations for the administration of the Plan and
for its own acts and proceedings, (d) decide all questions and settle all
controversies and disputes of general applicability that may arise in connection
with the Plan and (e) amend certain terms of the Plan as provided in Section 8.
In granting Share Awards under the Plan, the Committee shall consider the nature
and value of the services provided by the Grantee, the market value of the
Common Stock at the time of the grant and any other factors that the Committee
may deem relevant. In granting Options under the Plan, the Committee shall
consider the position held by the Grantee with the Company, the nature and value
of his or her services and accomplishments, the present and potential
contribution of the Grantee to the success of the Company and any other factors
that the Committee may deem relevant. All decisions of the Committee on the
foregoing matters shall be final and binding upon all persons.

      5. EFFECTIVENESS AND TERMINATION OF PLAN. The Plan shall become effective
upon its approval by the shareholders of the Company (the "Effective Date") and
shall terminate on the earliest of (a) the tenth fifth anniversary of the
Effective Date, (b) the date when all shares of Common Stock reserved for
issuance under the Plan shall have been acquired through the vesting of Share
Awards and the exercise of Options granted under the Plan or (c) such earlier
date as the Board may determine. Any Share Award or Option outstanding at the
time the Plan terminates shall remain in effect in accordance with its terms and
conditions and those of the Plan.

      6. GRANT, TERMS AND CONDITIONS. Share Awards and Options may be granted by
the Committee at any time after the Effective Date and prior to the termination
of the Plan. Each Share Award shall be subject to any vesting conditions and
trading restrictions the Committee may specify at the time of grant, any of
which shall be set forth in a written agreement with the Grantee. Each Option
shall be subject to terms and conditions, within the following framework,
specified by the Committee at the time of grant, all of which shall be set forth
in a written

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agreement with the Grantee.

            (a) Option Grantees. Grantees of Options shall be those officers,
directors and key employees of the Company selected by the Committee, provided
that only NSOs may be granted under the Plan to (i) any person owning Common
Stock or other capital stock of the Company possessing more than 10% of the
total combined voting power of all classes of capital stock of the Company (ii)
any director who is not an officer of the Company.

            (b) Option Exercise Price. The exercise price of an Option shall be
no less than the fair market value of the Common Stock, without regard to any
restriction, at the time the Option is granted. The fair market value of the
Common Stock at the time of the grant shall be: (i) the closing price of the
Common Stock on the trading day immediately preceding the date of the grant (the
"Valuation Date") if the Common Stock is listed on a national securities
exchange or the Nasdaq National Market or SmallCap Market ("Nasdaq"); (ii) the
average of the closing bid and asked prices for the Common Stock on the
Valuation Date if the Common Stock is not listed on a national securities
exchange or Nasdaq but is traded over-the-counter; or (iii) the value determined
by the Committee if the Common Stock is neither listed on a national securities
exchange or the Nasdaq nor traded in the over-the-counter market. If the Common
Stock is listed on a national exchange or the Nasdaq or is traded
over-the-counter but is not traded on the Valuation Date, then the price shall
be determined by the Committee by applying the principles contained in
applicable Treasury Regulations under the Code.

            (c) Payment for Common Stock. The exercise price of an Option shall
be paid in full at the time of exercise in cash by check or, if so provided by
the Committee at the time of grant, with securities of the Company owned for at
least six months by the Grantee, valued at their fair market value determined in
accordance with Section 6b). The exercise price shall not be subject to
adjustment, except as provided in Section 7.

            (d) ISO Limitation. Notwithstanding any provision of the Plan to the
contrary, an Option shall not be treated as an ISO under Code section 422 to the
extent to which the aggregate market value (determined as of the time an Option
is granted) of Common Stock for which Options (together with options granted
under all other plans of the Company) are exercisable for the first time by a
Grantee during any calendar year exceeds $100,000.

            (e) Duration and Exercise of Options. Options may be exercisable for
terms of up to but not exceeding ten years from the date of grant. Options shall
be exercisable at the times and in the amounts (up to the full amount thereof)
determined by the Committee at the time of grant. If an Option granted under the
Plan is exercisable in subsequent installments, the Committee shall determine
what events, if any, will make it subject to acceleration. Notwithstanding the
foregoing, an unvested Option shall automatically become 100% vested upon any
Change of Control (as defined below) or any action by the Board in contemplation
of a transaction that would result in a Change of Control. Change of Control
shall mean an event or series of events by which (i) any person (as used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) is or becomes
the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Securities
Exchange Act of 1934), directly or indirectly, of 30% or more of the total
voting power of the outstanding voting securities of the Company, (ii) the
Company conveys, transfers, sells or leases all or substantially all of its
assets to any person other than to a wholly owned subsidiary of the Company,
(iii) the shareholders of the Company approve any plan of liquidation or
dissolution of the Company or (iv) during any period of 12 consecutive months,
individuals who, at the beginning of that period, constituted the Board
(together with any new directors whose election by the Board or whose nomination
for election by the Common Stockholders of the Company, as applicable, was
approved by a vote of not less than a majority of the directors then still in
office who were either directors at the beginning of that period or whose
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the Board then in office.

            (f) Termination of Employment. Except as otherwise determined by the
Committee at the time of an Option grant, (i) upon the termination of a
Grantee's employment or directorship for any reason other than Cause (as defined
below), the Grantee may, within twelve months following termination (three
months for an ISO), exercise the Option for all or any part of the shares
subject thereto in which the right to purchase Common Stock had accrued or
vested at the time of termination of employment, and (ii) if the employment or
directorship of a Grantee is terminated for Cause, the Grantee's rights under
any then outstanding Option shall terminate at the time of termination. "Cause"
shall mean the Grantee's material malfeasance or nonfeasance in the performances
of his duties as a director, officer or employee of the Company.

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            (g) Transferability of Option. No Option shall be transferable
except by will or the laws of descent and distribution. An Option shall be
exercisable during the Grantee's lifetime only by the Grantee.

      7. ADJUSTMENT FOR CHANGES IN THE COMMON STOCK.

            (a) Changes in Common Stock. In the event the shares of Common
Stock, as presently constituted, shall be changed into or exchanged for a
different number or kind of shares of capital stock or other securities of the
Company, whether by reason of merger, consolidation, recapitalization,
reclassification, split, reverse split, combination of shares or otherwise, then
there shall be substituted for or added to each share of Common Stock
theretofore or thereafter subject to an unvested Share Award or an unexercised
Option the number and kind of shares of capital stock or other securities into
which each outstanding share of Common Stock shall be so changed, or for which
each such share shall be exchanged, or to which the holder of each such share
shall be entitled, as the case may be. The price and other terms of outstanding
Options shall also be appropriately amended to reflect the foregoing events. In
the event there shall be any other change in the number or kind of outstanding
shares of the Common Stock, or of any capital stock or other securities into
which the Common Stock shall have been changed or for which it shall have been
exchanged, if the Committee shall, in its sole discretion, determine that the
change equitably requires an adjustment in any Option theretofore granted or
which may be granted under the Plan, then adjustments shall be made in
accordance with its determination.

            (b) Fractional Shares and Notices. Fractional shares resulting from
any adjustment pursuant to this Section 7 may be settled in cash or otherwise as
the Committee shall determine. Notice of any adjustment shall be given by the
Company to each holder of an unvested Share Award or an Option that shall have
been so adjusted.

            (c) Extraordinary Transactions. In the event of the disposition of
all or substantially all of the assets of the Company, or the dissolution of the
Company, or the merger or consolidation of the Company with or into any other
Company, or the merger or consolidation of any other entity into the Company, or
the making of a tender offer to purchase all or a substantial portion of
outstanding Common Stock, the Committee shall have the power to amend all
outstanding Options (upon such conditions as it shall deem appropriate) to (i)
permit the exercise of Options prior to the effective date of the transaction
and to terminate all unexercised Options as of that date, or (ii) require the
forfeiture of all Options, provided the Company pays to each Grantee the excess
of the fair market value of the Common Stock subject to the Option, determined
in accordance with Section 6(b), over the exercise price of the Option, or (iii)
make any other provisions that the Committee deems equitable.

      8. AMENDMENT OF THE PLAN. The Committee may amend the Plan, may correct
any defect or supply any omission or reconcile any inconsistency in the Plan or
in any Share Award or Option in the manner and to the extent deemed desirable to
carry out the Plan without action on the part of the Company's shareholders;
provided that, except as provided in Section 7 and this Section 8, unless the
Company's shareholders shall have first approved thereof, (a) the total number
of shares of Common Stock subject to the Plan shall not be increased, (b) the
expiration date of the Plan shall not be extended and (c) no amendment shall (i)
permit the exercise price of any Option to be less than the fair market value of
the Common Stock at the time of grant, (ii) increase the number of shares of
Common Stock to be received on exercise of an Option, (iii) materially increase
the benefits accruing to a Grantee under an Option or (iv) modify the
eligibility requirements for participation in the Plan.

      9. INTERPRETATION AND CONSTRUCTION. The interpretation and construction of
any provision of the Plan by the Committee shall be final, binding and
conclusive for all purposes.

      10. NO OBLIGATION TO EXERCISE OPTION. The granting of an Option shall
impose no obligation upon the Grantee to exercise an Option.

      11. PLAN NOT A CONTRACT OF EMPLOYMENT. The Plan is not a contract of
employment, and the terms of employment of any Grantee shall not be affected in
any way by the Plan or related instruments except as specifically provided
therein. The establishment of the Plan shall not be construed as conferring any
legal rights upon any Grantee for a continuance of employment, nor shall it
interfere with the right of the Company or any subsidiary to discharge any
Grantee.

      12. EXPENSES OF THE PLAN. All of the expenses of administering the Plan
shall be paid by the Company.

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      13. COMPLIANCE WITH APPLICABLE LAW. The Committee may require, as a
condition of the issuance and delivery of certificates and in order to ensure
compliance with applicable securities laws, regulations and requirements, that
the Grantee make such covenants, agreements and representations as the
Committee, in its sole discretion, deems necessary or desirable.

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