Document:

Exhibit 10.7

 

NONSTATUTORY
STOCK OPTION AGREEMENT

 

AGREEMENT made as of the    th
day of           , 200  , between PARTICLE DRILLING TECHNOLOGIES, INC.,
a Nevada corporation (the “Company”), and                               (“Employee”).

 

To carry out the purposes of the PARTICLE DRILLING, INC. 2004 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 $         
per share, which has been determined to be not less than the Fair Market Value
of the Stock at the date of grant of this Option.  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.

 

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 in full 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 in full at any time
during the period of one year following the date of Employee’s death.

 

(c)                                  If Employee’s
employment with the Company terminates for any reason other than as described
in (a) or (b) above, unless such employment is terminated for cause, this
Option may be exercised in full by Employee at any time during the period of
three 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.  As used in this paragraph, the
term “cause” shall mean Employee (i) has been convicted of a misdemeanor
involving moral turpitude or of a felony, (ii) has engaged in gross negligence
or willful misconduct in the performance of the duties of Employee’s
employment, or (iii) has materially breached any material provision of any
written agreement between Employee and the Company or any of its Affiliates.

 

This Option shall not be exercisable in any
event after the expiration of 10 years from the date of grant hereof.  Except as provided in Paragraph 4, 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.                                       Stock
Appreciation Right.  Upon
an exercise of this Option, Employee (or the person exercising this Option in
the event of Employee’s death) may request the Company to compute an amount
(the “Appreciation Amount”) equal to the excess of the aggregate Fair Market
Value of any number of the shares of Stock with respect to which this Option is
exercised over the aggregate purchase price of such number of shares.  Moreover, Employee (or such person) may elect
(subject to the consent or disapproval of the Committee of any election to
receive cash) to have the Company distribute to Employee (or such person), in
lieu of Employee’s purchasing such number of shares, an amount of cash and/or a
whole number of shares of Stock (in any combination thereof as Employee or such
person may elect) in Fair Market Value equal to the Appreciation Amount.
Notwithstanding anything to the contrary herein, if Employee is then an
officer, director or affiliate of the Company who is subject to section 16
of the Securities Exchange Act of 1934, as amended (the “Securities Exchange
Act”), this Option may not be exercised prior to the expiration of six months
from the date of grant

 

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hereof (except
in the event of the death or disability of Employee prior to the expiration of
such six month period); thereafter, any exercise of this Option or election
pursuant to this Paragraph 4 wherein Employee would receive any portion of the
Appreciation Amount in cash (other than cash in lieu of a fractional share) may
be made only during a period beginning on the third business day and ending on
the twelfth business day following the date of release by the Company for
publication of quarterly and annual summary statements of sales and
earnings.  Should Employee elect pursuant
to this Paragraph 4 to receive the Appreciation Amount solely in shares of
Stock, the number of shares of Stock distributable to Employee shall be the
highest whole number of shares whose value does not exceed the Appreciation
Amount, and any fractional share shall be paid in cash.

 

5.                                       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.  Employee may elect with respect to this Option
to surrender or authorize the Company to withhold shares of Stock (valued at
their Fair Market Value on the date of surrender or withholding of such shares)
to satisfy any tax required to be withheld upon exercise of this Option.  An election pursuant to the preceding
sentence shall be referred to herein as a “Stock Withholding Election.”  All Stock Withholding Elections shall be made
by written notice to the Company’s Corporate Secretary (or such other officer
or employee of the Company as the Company may designate from time to
time).  If Employee is not a Section 16
Person (as hereinafter defined), Employee may revoke such election by
delivering to the Company’s Corporate Secretary (or such other designated
officer or employee) written notice of such revocation prior to the date such
election is implemented through actual surrender or withholding of shares of
Stock (the “Withholding Date”).  If
Employee is a Section 16 Person, the Stock Withholding Election must:

 

(a)                                  be irrevocable and made six months prior to the Withholding
Date; or

 

(b)                                 (i)
be approved by the Committee either before or after such election is made, (ii)
be made, and the Withholding Date occur, during a period beginning on the third
business day following the date of release by the Company for publication of
quarterly and annual summary statements of sales and earnings and ending on the
twelfth business day following such date, and (iii) be made more than six
months after the date of the grant of this Option to Employee; or

 

(c)                                  be
made in connection with (i) a delivery to the Company of shares of Stock owned
by Employee prior to the exercise of this Option to satisfy the portion of the
tax required to be withheld with respect to those shares of Stock received by
Employee upon exercise of this Option for which payment of the purchase price
was made to the Company in shares of Stock owned by Employee prior to the
exercise of this Option pursuant to Paragraph 3 hereof and (ii) the exercise of
this Option more than six months after the date of grant hereof.

 

If Employee fails to pay the required amount
to the Company or fails to make a Stock Withholding Election, the Company is
authorized to withhold from any cash remuneration (or, if Employee is not a Section 16
Person, Stock remuneration, including withholding any shares of Stock
distributable to Employee upon exercise of this Option) then or thereafter

 

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payable to
Employee any tax required to be withheld by reason of the exercise of this
Option or the disposition of shares of Stock acquired by exercise of this
Option.  For purposes of this Agreement,
the term “Section 16 Person” means an officer, director or affiliate of
the Company or a former officer, director or affiliate of the Company who is
subject to Section 16 of the Securities Exchange Act.

 

6.                                       Certain
Restrictions.  Shares of
Stock purchased pursuant to the exercise of this Option shall be subject to the
following restrictions (until such time as such restrictions terminate as
provided below):

 

(a)                                  such
shares of Stock may not be sold, assigned, pledged, exchanged, hypothecated or
otherwise transferred, encumbered or disposed of by Employee; and

 

(b)                                 if
Employee’s employment with the Company is terminated for any reason other than
his death, normal or early retirement in accordance with his employer’s
established retirement policies and practices, or disability (within the
meaning of section 22(e)(3) of the Code), the Company (or any subsidiary
of the Company designated by it) shall have the option for 60 days after such
termination of employment to purchase for cash all or any part of such shares
of Stock at the lesser of (i) the purchase price paid therefor upon exercise of
this Option, or (ii) the Fair Market Value of such shares of Stock on the date
of such termination of employment.

 

The restrictions imposed on
such shares of Stock under this Paragraph shall terminate on the earliest to
occur of the following:

 

(a)                                  the
90th day after the date on which shares of Stock are first listed or admitted
to unlisted trading privileges on a national stock exchange or on the National
Market System of NASDAQ or have sales or bid and offer quotations reported in
the automated quotation system operated by the National Association of
Securities Dealers, Inc.;

 

(b)                                 the 10th anniversary of the date of grant of this Option;

 

(c)                                  as
to any shares of Stock for which the Company’s (or a subsidiary’s) 60 day
option to purchase upon termination of Employee’s employment with the Company
shall have become exercisable but shall have expired without having been
exercised, on the first business day of the calendar month next following the
expiration of such 60 day option period;

 

(d)                                 the
first business day of the calendar month next following the termination of
Employee’s employment with the Company because of Employee’s death, normal or
early retirement in accordance with his employer’s established employment
policies or practices, or disability (within the meaning of section 22(e)(3)
of the Code); or

 

(e)                                  the date of the termination of this Option due to an
adjustment being made to this Option pursuant to Paragraph IX of the Plan.

 

7.                                       Lock-up Provision. 
Employee hereby agrees that in the event of any underwritten
public offering of stock, including an initial public offering of stock, made
by the Company pursuant to an effective registration statement filed under the
Securities Act of 1933,

 

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as amended
(the “Securities Act”), Employee shall not offer, sell, contract to sell,
pledge, hypothecate, grant any option to purchase or make any short sale of, or
otherwise dispose of any shares of stock of the Company or any rights to
acquire stock of the Company for such period of time from and after the
effective date of such registration statement as may be established by the
underwriter for such public offering; provided, however, that
such period of time shall not exceed 180 days from the effective date of the
registration statement to be filed in connection with such public
offering.  The foregoing limitation shall
not apply to shares registered in the public offering under the Securities
Act.  Employee shall be subject to this
Paragraph provided and only if the officers and directors of the Company are
also subject to similar arrangements.

 

8.                                       Status of Stock.  Employee understands that at the time of the
execution of this Agreement the shares of Stock to be issued upon exercise of
this Option have not been registered under the Securities Act, or any state
securities law, and that the Company does not currently intend to effect any such registration.  Until the shares of Stock acquirable upon the
exercise of the Option have been registered for issuance under the Securities
Act, the Company will not issue such shares unless the holder of the Option
provides the Company with a written opinion of legal counsel, who shall be
satisfactory to the Company, addressed to the Company and satisfactory in form
and substance to the Company’s counsel, to the effect that the proposed
issuance of such shares to such Option holder may be made without registration
under the Securities Act.  In the event
exemption from registration under the Securities Act is available upon an
exercise of this Option, Employee (or the person 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 shall be acquired for investment without a view to
distribution, within the meaning of the Securities Act, and shall not be sold,
transferred, assigned, pledged or hypothecated in the absence of an effective
registration statement for the shares under the Securities Act and applicable
state securities laws or an applicable exemption from the registration
requirements of the Securities Act and any applicable state securities laws.  Employee also 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.

 

In addition, Employee 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 Paragraph 6,
Paragraph 7, and 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
Paragraph 6, Paragraph 7, or 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.

 

9.                                       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

 

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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.

 

10.                                 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.

 

11.                                 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.

 

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

 

13.                                 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
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.

 

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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 as of the day and
year first above written.

 

	
   

  	
  PARTICLE DRILLING TECHNOLOGIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  EmployeeExhibit 10.8

 

EMPLOYMENT AGREEMENT

 

This EMPLOYMENT AGREEMENT
(the “Agreement”), entered into as of August 18, 2003 (the “Effective Date”) by
and among ProDril Acquisition Company, Inc. to be renamed ProDril Services
Incorporated (collectively referred to as “PSI”) or (the “Company”) and Jon Christopher Boswell (“Executive”);

 

W I T N E S S E T H:

 

WHEREAS, the Company desires
to retain the services of the Executive, and the Executive is willing to
provide such services to the Company, all upon the terms and conditions set
forth herein;

 

NOW THEREFORE, in
consideration of the premises, the terms and provisions set forth herein, the
mutual benefits to be gained by the performance thereof and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:

 

SECTION  1.                               Employment. 
The Company hereby employs the Executive, and the Executive hereby
accepts such employment, all upon the terms and conditions set forth herein.

 

SECTION  2.                               Term. 
Unless sooner terminated pursuant to Section 5 of this Agreement, the
Executive shall be employed for a term commencing on the Effective Date and
ending on the third anniversary of the Effective Date (the “Term”); provided,
however, that the Term shall automatically be extended on a daily basis for an
additional day such that, at all times, the remaining Term shall be three
years.  Notwithstanding any other
provision of this Agreement to the contrary, this Agreement may be terminated
by Company upon written notice, in which case the Agreement will terminate upon
the expiration of the three-year Term.

 

SECTION  3.                               Duties and
Responsibilities.

 

A.                                   Capacity. 
The Executive shall serve in the capacity of Senior Vice President,
Chief Financial Officer and Director of PSI, and in such other or additional
capacity or capacities for the Company or an affiliate of PSI as the Board of
Directors of PSI (the “Board”) may direct from time to time.  During the term of this Agreement, as Senior
Vice-President and Chief Financial Officer of the Company, Executive agrees to
be responsible for the daily execution of the Companies financial
operations.  Executive also shall perform
such duties as are normally incident to that position and shall perform such
other duties and responsibilities commensurate with his position as may be
prescribed from time to time by the board of directors of the Company.

 

B.                                     Full-Time Duties. 
The Executive shall devote his full business time, attention and
energies to the business of the Company and shall not be engaged in any other
business activity, whether or not pursued for gain, profit or other pecuniary
advantage, which would impair his ability to fulfill his duties to the Company
under this Agreement, without the prior written consent of the Board.  Nothing contained in this Section 3(B) shall
prevent the Executive from passively investing his assets in such a form or
manner as will not conflict with the terms of this Agreement and will not require
services on the part of the Executive in the operation of the business of the
companies or other enterprises in which such investments are made.

 

 

C.                                     Standard of Performance. 
The Executive will perform his duties under this Agreement with fidelity
and loyalty, to the best of his ability, experience and talent and in a manner
consistent with his fiduciary responsibilities.

 

SECTION  4.                               Compensation.

 

A. Base Salary. 
The Company shall pay the Executive a salary (the “Base Salary”) of U.S.
$180,000 per annum.  The Base Salary
shall be payable in accordance with the general payroll practices of the
Company in effect from time to time.  The
Company shall review the Base Salary then being paid to the Executive at such
times as the Company regularly reviews the compensation paid to employees.  Upon completion of such review, the Company
in its sole discretion may increase or maintain the Executive’s then current
Base Salary, and any increased salary shall be the “Base Salary” for all
purposes under this Agreement. 
Notwithstanding the above, the Base Salary shall be increased to
$360,000 upon the third anniversary date from the effective date of this
agreement.  The Company may decrease the
Executive’s then current Base Salary after the third anniversary date only with
the prior written consent of the Executive.

 

B. Stock
Options.  The Company shall grant the Executive 500,000
options to purchase the Company’s stock at $2 per share.  Such options shall vest ratably over a three
year period and become exercisable on the third anniversary of the Effective
date and such vested options shall survive Executives termination date.

 

C. Bonus.  The Executive
shall be eligible, in the sole discretion of the Board, to be considered for a
bonus following each fiscal year
ending during the Term based upon the Executive’s performance and the operating
results of the Company and their affiliates during such year in relation to
performance targets established by the Board. Determination of the bonus amount
shall take into account such unusual or nonrecurring items as the Chief
Executive Officer of PSI and/or
the Board deem appropriate.

 

D. Benefits. 
If and to the extent that the Company maintains employee benefit plans
(including, but not limited to, pension, profit sharing, disability, accident,
medical, life insurance and hospitalization plans), the Executive shall be
entitled to participate therein in accordance with the terms of such plans and
the Company’s regular practices with respect to its employees.  In addition, the Company promises to provide
reasonable health and dental insurance for the Executive and his family,
including $500,000 in life insurance. 
The Executive shall be entitled to reimbursement from the Company for
reasonable out-of-pocket expenses incurred by him in the course of the
performance of his duties, hereunder, including all reasonable commuting and
communication costs, upon the submission of appropriate documentation.

 

E. Vacation.
The Executive shall be entitled to four weeks
of paid vacation per calendar year, which, if not taken, may be carried forward
to any subsequent year, except in accordance with Company policy applicable to
the Company’s employees generally.  The
Executive shall also be entitled to such holidays and, subject to the provisions
of Section 5, other paid or unpaid leaves of absence as are consistent with the
Company’s normal policies.

 

SECTION  5.                               Termination of
Employment.

 

Notwithstanding the
provisions of Section 2, the Executive’s employment hereunder shall terminate
under any of the following conditions:

 

A.                                   Death. 
The Executive’s employment under this Agreement shall terminate
automatically upon his death.

 

 

B.                                     Disability. 
The Executive’s employment under this Agreement shall terminate
automatically upon his Disability.  For
purposes of this Agreement, “Disability” means permanent and total disability
(within the meaning of section 22(e)(3) of the Internal Revenue Code of 1986,
as amended, or any successor provision) which has existed for at least 180
consecutive days.

 

C.                                     Termination by the
Company Without Cause.  The Company may terminate the
Executive’s employment hereunder without “Cause” (as hereinafter defined) on
three months written notice by the
Company.

 

D.                                    Termination by the
Company for Cause.  The Executive’s employment hereunder may be
terminated for Cause upon written notice by the Company.  For purposes of this Agreement, “Cause” shall
mean (i) the willful and continued failure by the Executive to substantially
perform his obligations under this Agreement (other than such failure resulting
from his Disability) after a demand for substantial performance has been
delivered to him by the Board which specifically identifies the manner in which
the Board believes the Executive has not substantially performed such
provisions and the Executive has failed to remedy the situation three months
after such demand; (ii) the Executive’s willfully engaging in conduct
materially and demonstrably injurious to the property or business of the
Company, including without limitation, fraud, misappropriation of funds or other
property of the Company, other willful misconduct, gross negligence or
conviction of a felony or any crime of moral turpitude; or (iii) the
Executive’s material breach of this Agreement which breach has not been
remedied by the Executive within three months after the receipt by the
Executive of written notice from the Company that the Executive is in material
breach of this Agreement, specifying the particulars of such breach.

 

For purposes of this
Agreement, no act, or failure to act, on the part of the Executive shall be
deemed “willful” or engaged in “willfully” if it was due primarily to an error
in judgment or negligence, but shall be deemed “willful” or engaged in
“willfully” only if done, or omitted to be done, by the Executive not in good
faith and without reasonable belief that his action or omission was in the best
interest of the Company.  Notwithstanding
the foregoing, the Executive shall not be deemed to have been terminated as a
result of “Cause” hereunder unless and until there shall have been delivered to
the Executive a copy of a resolution duly adopted by the affirmative vote of
not less than three-quarters of the Board then in office at a meeting of the
Board called and held for such purpose (after reasonable notice to the
Executive and an opportunity for the Executive, together with his counsel, to
be heard before the Board), finding that, in the good faith opinion of the
Board, the Executive has committed an act set forth above in this Section 5(D)
and specifying the particulars thereof in detail.  Nothing herein shall limit the right of the
Executive or his legal representative to contest the validity or propriety of
any such determination.

 

E.                                      Termination by the
Executive for Good Reason.  The Executive may terminate
his employment hereunder for “Good Reason.” 
For purposes of this Agreement, “Good Reason” for termination shall mean
any of the following (which occur without the Executive’s prior written
consent):

 

(1)                                  a decrease in the Executive’s Base Salary
not in accordance with section 4 (A) above;

 

(2)                                  a materially adverse diminution of the
overall level of responsibilities of the Executive;

 

(3)                                  a material breach by the Company of any
term or provision of this Agreement;

 

 

(4)                                  after a Change of Control (as defined in
Section 7(B)) and during the Effective Period (as defined in Section 7(C)),
(a) the failure of the Company to continue in effect any benefit or
compensation plan (including, but not limited to, any bonus, incentive,
retirement, supplemental executive retirement, savings, profit sharing,
pension, performance, stock option, stock purchase, deferred compensation, life
insurance, medical, dental, health, hospital, accident or disability plans) in
which the Executive is participating at the time of such Change of Control (or
plans providing to the Executive, in the aggregate, substantially similar
benefits as the benefits enjoyed by the Executive under the benefit and
compensation plans in which the Executive is participating at the time of such
Change of Control), or (b) the taking of any action by the Company that
would adversely affect the Executive’s participation in or materially reduce
the Executive’s benefits under any of such plans or deprive the Executive of
any material fringe benefit enjoyed by the Executive at the time of such Change
in Control;

 

(5)                                  any personal reason that the Compensation
Committee of the Board in its discretion determines shall constitute Good
Reason.

 

However, that no event or
condition described in clauses (1) – (4) of this Section 5(E) shall constitute
Good Reason unless (a) the Executive gives the Company written notice of his
objection to such event or condition within 90 days after the Executive learns
of such event, (b) such event or condition is not corrected by the Company
within 10 days of its receipt of such notice and (c) the Executive voluntarily
resigns his employment with the Company and its affiliates not more than 60
days following the expiration of the 10-day period described in the foregoing
clause (b).

 

F.                                      Voluntary Termination
by the Executive.  The Executive may terminate his employment
hereunder at any time for reason other than Good Reason on 30 days
written notice to the Company.

 

SECTION  6.                               Payments Upon Termination.

 

A.                                   Upon termination of the Executive’s
employment hereunder, the Company shall be obligated to pay and the Executive
shall be entitled to receive, on the pay date for the pay period in which the
termination occurs, all accrued and unpaid Base Salary to the date of
termination.  In addition, the Executive
shall be entitled to any benefits to which he is entitled under the terms of
any applicable employee benefit plan or program or applicable law.

 

B.                                     Except as provided in Section 7(A), upon
termination of the Executive’s employment by the Company without Cause or by
the Executive due to Good Reason, in addition to the amount set forth in
Section 6(A), the Company shall be obligated to pay, and the Executive shall be
entitled to receive, (i) Base Salary for a period of three years and (ii)
continued medical and dental benefits for a period of three years at no cost to
the Executive.  The Company may cease all
payments of Base Salary and bonus under this Section 6(B) in the event of a
willful breach by the Executive of the provisions of Sections 8, 9 or 10 of this
Agreement or any inadvertent breach that continues after notice given to the
Executive by the Company.  As a condition
precedent to the receipt of any of the severance benefits hereunder the
Executive hereby agrees to execute a release of claims against the Company and
its affiliates in form and substance reasonably satisfactory to the Company.

 

C.                                     In the event Executive elects to
terminate employment as set forth in Section 5(F) then in such event any
options not vested as set forth in Section 3(B) shall terminate.

 

 

D.                                    Upon any termination or expiration of the
Executive’s employment hereunder pursuant to Section 5, the Executive shall
have no further liability or obligation under or in connection with this
Agreement; provided, however, that the Executive shall continue to be subject
to the provisions of Sections 8, 9, 10, 11 and 12 hereof (it being understood
and agreed that such provisions shall survive any termination or expiration of
the Executive’s employment hereunder for any reason).  Upon any Voluntary Termination by the
Executive (other than a resignation by the Executive for Good Reason), or
expiration of Executive’s employment agreement, the Company shall have no
further liability under or in connection with this Agreement, except to pay the
portion of the Executive’s Base Salary earned or accrued at the date of
termination.

 

SECTION  7.                               Change of Control.

 

A.                                   In the event that, during the Effective
Period (as hereinafter defined), the Executive’s employment is terminated by
the Company without Cause or by the Executive for Good Reason, in lieu of the
amount set forth in Section 6(B), the
Executive shall immediately become entitled to the following benefits:

 

(1)                                  the outstanding options to acquire shares
of the Company held by the Executive under any share option plan and granted on
or prior to the Change of Control shall become immediately fully exercisable
and shall remain exercisable for three years after termination of employment
or, if less, their remaining term;

 

(2)                                  a lump–payment equal to three times: (a)
the Executive’s then current Base Salary or (b) $360,000, whichever is greater;

 

(3)                                  a lump–sum payment equal to three times
the highest annual bonus allowed under the Executive Bonus Plan for the
Executive during the three-year period preceding the date of the Change of
Control; and

 

(4)                                  continued medical and dental coverage for
three years from the termination date at no cost to the Executive.

 

B.                                    For purposes of this Agreement, a “Change of Control”
shall be deemed to have taken place upon the earliest occurrence of any of the
following: (i) a tender offer is made and consummated for the beneficial
ownership of 25% or more of the outstanding voting securities of PSI; (ii) PSI
is merged or consolidated with another corporation, and as a result of such
merger or consolidation, less than 75% of the outstanding voting securities of
the surviving or resulting corporation are beneficially owned in the aggregate
by the persons or entities who were shareholders of PSI immediately prior to such
merger or consolidation; (iii) PSI sells all or substantially all of its assets
to another entity or person that is not a wholly owned subsidiary; (iv) during
any 15-month period, individuals who at the beginning of such period
constituted the Board (including for this purpose any new member whose election
or nomination for election by the shareholders of PSI was approved by a vote of
at least 2/3 of the members then still in office and who were members at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board; (v) the Compensation Committee of the Board determines,
in its sole discretion, that a Change of Control has occurred for purposes of
this Agreement; (vi) the Company sells all or substantially all of its assets
to another entity or person that is not a subsidiary or affiliate of the
Company or (vii) 80% or more of the outstanding voting securities of the
Company are acquired by any person or entity other than PSI, its subsidiaries
or affiliates.

 

 

C.                                     For purposes of this Agreement,
“Effective Period” shall mean the period beginning on the date of a Change of
Control and ending on the earlier of the third anniversary of the Change of
Control or the expiration of the Term.

 

D.                                    To the extent that the acceleration of
vesting or any payment, distribution or issuance made to the Executive in the
event of a Change of Control is subject to federal income, excise or other tax
at a rate above the rate ordinarily applicable to compensation paid in the
ordinary course of business (collectively, a “Parachute Tax”), whether as a
result of the provisions of Section 280G and 4999 of the Internal Revenue Code
of 1986, as amended, or any similar or analogous provisions of any statute
adopted subsequent to the date hereof, or otherwise, then the Company shall pay
to the Executive an additional sum (the “Additional Amount”) such that the net
amount received by the Executive, after paying any applicable Parachute Tax and
any federal or state income tax on such Additional Amount, shall be equal to
the amount that the Executive would have received if such Parachute Tax were
not applicable.

 

SECTION  8.                              
Confidential Information and Inventions.

 

A.                                    Nondisclosure. 
The Executive hereby acknowledges that the Executive has knowledge of
certain confidential and proprietary information relating to Company, PSI or
their affiliates and that it will be necessary, in connection with the
performance of services hereunder, to provide or make available to the
Executive certain confidential and proprietary information, including, but not
limited to, business and financial information, technological information,
strategies, the status and content of contracts with suppliers or clients,
customer lists and financial information on customers, intellectual property,
trade secrets and other information relating to the businesses, products,
technology, services, customers, methods or tactics of the Company, PSI or its
affiliates (any such confidential or proprietary information being hereinafter
referred to as “Confidential Information”). 
The Executive further acknowledges that the Confidential Information
constitutes valuable trade secrets of Company, PSI and its affiliates and
agrees that any such Confidential Information shall remain the property of the
Company, PSI and their affiliates at all times during the term of this
Agreement and following the expiration or termination hereof.  The Executive shall not publish, disseminate,
distribute, disclose, sell, assign, transfer, copy, remove from the premises of
the Company, PSI or their affiliates, commercially exploit, make available to
others, or otherwise make use of any Confidential Information to or for the use
or benefit of the Executive or any other person, firm, corporation or entity,
except as specifically and previously authorized in writing by the Board or as
required for the due and proper performance of his duties and obligations under
this Agreement.  In addition, the
Executive shall employ all necessary safeguards and precautions in order to ensure
that unauthorized access to the Confidential Information is not afforded to any
person, firm, corporation or entity. 
Upon any expiration or termination of this Agreement, or if the Board or
the Company so requests at any time, the Executive shall promptly return to the
Company, PSI and their affiliates all Confidential Information in the
Executive’s possession, whether in writing, on computer disks or other media,
without retaining any copies, extracts or other reproductions thereof.  Notwithstanding the foregoing, nothing
contained in this Section 8(A) shall prevent the publishing, dissemination,
distribution, disclosure, sale, assignment, transfer, copying, removal,
commercial exploitation or other use by the Executive of any information that
(i) is generally available to the public (other than through a breach of an
obligation of confidentiality, or (ii) is lawfully obtained by the Executive
without obligation of confidentiality from a source other than the Company, PSI
or its affiliates, directors, officers, employees, agents or other
representatives (provided, however, that such source is not bound by a
confidentiality agreement with the Company, PSI or any of its affiliates and is
not otherwise under an obligation of secrecy or confidentiality to either of
them).

 

 

B.                                     Requests for Disclosure. 
It shall not be a breach of the obligations of Section 8(A) if Executive
discloses Confidential Information as required by judicial or administrative
process or, in the written opinion of Executive’s counsel, by the requirements
of applicable law, but only upon satisfaction of the following conditions:  (i) the Executive gives prompt written notice
to the Chairman of the Board of the existence of, and the circumstances
attendant to, such request, sufficient to permit the Company, PSI or an
affiliate to contest or seek to restrict the required disclosure (ii) the
Executive consults with the Chairman of the Board as to the advisability of
taking legally available steps to resist or narrow any such request or otherwise
to eliminate the need for such disclosure, (iii) if disclosure is required, the
Executive cooperates with the Chairman of the Board in obtaining a protective
order or other reliable assurance in form and substance satisfactory to the
Chairman of the Board that confidential treatment will be accorded to such
portion of the Confidential Information as is required to be disclosed, and
(iv) that Executive disclosed only such Confidential Information as is legally
required (or, where applicable, only such information as the written opinion of
Executive’s counsel deems required).

 

C.                                     Confidential
Information of Others.  The Executive shall not
disclose to the Company, PSI or their affiliates, or induce them to use, the
proprietary information, trade secrets, or confidential information of others.

 

D.                                    Disclosure. 
Upon each occurrence of conception, creation, and/or reduction to
practice, the Executive will promptly provide a written description of each
Invention (as hereinafter defined) to the Board or its designee.

 

E.                                      Assignment and
Ownership of Rights.  The Executive agrees that all Inventions
shall and, to the extent necessary, shall become and remain the property of PSI
or the Company, and their successors and assigns, unless expressly released by
PSI and the Company in writing.  The
Executive assigns, and to the extent such assignment is not effective, the
Executive agrees to assign all such Inventions to PSI or the Company.  The Executive agrees that all copyrightable
works created for PSI or the Company during the Executive’s employment are
owned by PSI or the Company and, if necessary or appropriate, are works made
for hire.

 

F.                                      Obtaining Patents. 
PSI or the Company shall have sole discretion to decide whether to
obtain any patent or other protection on any Invention.  If PSI or the Company seeks any such
protection, the Executive shall have no obligation to pay any expenses of the
filing or maintenance of any such patent or other protection.

 

G.                                     Inventions.  “Inventions” means (i) any invention, development,
improvement, or copyrightable work, (ii) created, conceived, or reduced to
practice by the Executive individually or jointly with others while the
Executive is employed by the Company, PSI or their affiliates or within a
six-month period following termination of the Executive’s employment, (iii)
whether patentable or not, (iv) whether or not conceived or reduced to practice
during regular working hours, (v) that relates to any methods, apparatus,
products, or components thereof which, before termination of the Executive’s
employment, are manufactured, sold, leased, or used by the Company, PSI or
their affiliates or which are under development by, or which otherwise pertain
to the business of, the Company, PSI or their affiliates.  However, “Inventions” shall not include any
inventions, developments, improvements, or copyrightable work (i) for which no
equipment, supplies, facility, or trade secret information of the Company, PSI
or their affiliates were used, (ii) which the Executive developed entirely on
the Executive’s own time (iii) which does not relate directly to the business
of the Company, PSI or their affiliates or to their actual or demonstrably
anticipated research or development, or (iv) which does not result from any
work performed by the Executive for the Company, PSI or their affiliates.  The Executive represents that he has provided
PSI, on or prior to the date hereof, a complete written description of all
unpatented

 

 

inventions and improvements in which the Executive has
any rights that are not included in the term “Inventions”, in a form
acknowledged in writing by the Chief Executive Officer of PSI.

 

SECTION  9.                              
Covenant Not to Compete.

 

A.                                   Noncompetition. 
The Executive hereby agrees that during the “Noncompetition Period” (as
hereinafter defined), he will not, except as otherwise permitted under this
Agreement, directly or indirectly (whether as an employee, consultant,
shareholder or director, or whether acting alone or through any of his
affiliates, as a member of a partnership or a joint venture or an investor in,
or a holder of securities of, any corporation or other entity, or otherwise),
engage in any business conducted by the Company, PSI or its affiliates in the
area of particle impact drilling (the “Noncompetition Area”).  Notwithstanding anything to the contrary in
this Section 9, the Executive may passively invest his assets in such a form or
manner as will not conflict with the terms of this Agreement and will not
require services on the part of the Executive in the operation of the business
of the companies or other enterprises in which such investments are made.  The Executive acknowledges that (i) the
provisions set forth in this Section 9 are for the benefit of the Company, PSI
and its affiliates, (ii) his agreement to such provisions is an express
condition to his employment by the Company and (iii) such provisions are
reasonably necessary to protect the goodwill and other business interests of
the Company, PSI and its affiliates.  The
“Noncompetition Period” shall be the period commencing on the Effective Date
and ending on the second anniversary of the date of termination of the
Executive’s employment.

 

B.                                     Reformation of Scope. 
If any of the provisions of this Section 9 is found to be unreasonably
broad, oppressive or unenforceable in an action, suit or proceeding before any
federal or state court, such court (i) shall narrow the Noncompetition Period
or the Noncompetition Area or shall otherwise endeavor to reform the scope of
such agreements in order to ensure that the application thereof is not
unreasonably broad, oppressive or unenforceable and (ii) to the fullest extent
permitted by law, shall enforce such agreements as so reformed.

 

SECTION  10.                         Nonsolicitation. 
The Executive shall not, directly or indirectly, during the
Noncompetition Period, (A) take any action to solicit or divert any business
(or potential business) or customers (or potential customers) away from the
Company, PSI or its affiliates, (B) induce customers, potential customers,
suppliers, agents or other persons under contract or otherwise associated or
doing business with the Company, PSI or its affiliates to terminate, reduce or
alter any such association or business with or from the Company, PSI or its
affiliates and/or (C) induce any person in the employment of the Company, PSI
or its affiliates or any consultant to the Company, PSI or its affiliates to
(i) terminate such employment or consulting arrangement, (ii) accept
employment, or enter into any consulting arrangement, with anyone other than
the Company, PSI or its affiliates (except to the extent the consultant makes
its services available to third parties on a regular basis) and/or (iii)
interfere with the customers, suppliers or clients of the Company, PSI or its
affiliates in any manner or the business of the Company, PSI or its affiliates
in any manner.  For purposes of this
Section 10, a “potential customer” shall mean a person or entity that the
Company, PSI or its affiliates, as of the date the Executive’s employment
terminates, is soliciting or is considering soliciting (or has targeted for
solicitation).

 

SECTION  11.                         Remedies.  The Executive
hereby agrees that a violation of the provisions of Section 8, 9 or 10 hereof
may cause irreparable injury to the Company, PSI and its affiliates for which
they would have no adequate remedy at law. 
Accordingly, in the event of any such violation, the Company, PSI and/or
its affiliates shall be entitled to preliminary and other injunctive relief.  Any such injunctive relief shall be in addition
to any other remedies to which the Company, PSI and/or its affiliates may be
entitled at law or in equity or otherwise.

 

 

SECTION  12.                         Arbitration. 
Any dispute or controversy arising under or in connection with this
Agreement (other than any dispute or controversy arising from a violation or
alleged violation by the Executive of the provisions of Section 8, 9 or 10
hereof) shall be settled exclusively by final and binding arbitration in
Houston, Texas, in accordance with the Rules for the Resolution of Employment
Disputes of the American Arbitration Association (“AAA”).  The arbitrator shall be selected by mutual
agreement of the parties, if possible. 
If the parties fail to reach agreement upon appointment of an arbitrator
within 30 days following receipt by one party of the other party’s notice of
desire to arbitrate, the arbitrator shall be selected from a panel or panels of
persons submitted by the AAA.  The
selection process shall be that which is set forth in the AAA Rules for the
Resolution of Employment Disputes then prevailing, except that, if the parties
fail to select an arbitrator from one or more panels, AAA shall not have the
power to make an appointment but shall continue to submit additional panels
until an arbitrator has been selected. 
This agreement to arbitrate shall not preclude the parties from engaging
in voluntary, nonbinding settlement efforts, including, but not limited to,
mediation.  In the event the arbitration
is decided in whole or in part in favor of the Executive, the Company will
reimburse the Executive for his reasonable costs and expenses of the
arbitration (including reasonable attorneys’ fees).

 

SECTION  13.                         Notices.  All notices
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
registered or certified mail (return receipt requested and with postage prepaid
thereon) or by facsimile transmission to the respective parties at the
following addresses (or at such other address as either party shall have
previously furnished to the other in accordance with the terms of this Section
13):

 

If to the Company:

 

Prodril Acquisition Company Inc.

808 Travis Street, Suite 850

Houston, Texas 77002

Attn:   Prentis Tomlinson

 

if to the Executive:

 

Jon Christopher Boswell

22307 Bute Drive,

Spicewood, Texas  78669

 

SECTION  14.                         No Mitigation.  In the event of any termination of employment
by the Company without Cause, by the Executive for Good Reason, the Executive shall be under no
obligation to seek other employment, or otherwise engage in mitigating
activity, following the date of termination, and there shall be no offset
against amounts due the Executive under this Agreement on account of any
remuneration attributable to any subsequent employment that he may obtain.

 

SECTION  15.                         Indemnification.  PSI and the Company agree that, in the event
the Executive’s employment is terminated during the Term by the Company without
Cause or by the Executive for Good Reason, the Company shall continue to
indemnify the Executive following termination to the fullest extent permitted
by applicable law consistent with the Certificate of Incorporation and By-Laws
and the Company in effect as of the date of termination with respect to Executives
sole, joint or concurrent negligence and any acts or omissions he may have
committed during the period during which he was an officer, director and/or
employee of the Company or any of their affiliates for which he served as an
officer, director or employee at the request of the Company.

 

 

SECTION  16.                         Amendment; Waiver.  The terms and provisions of this Agreement
may be modified or amended only by a written instrument executed by each of the
parties hereto, and compliance with the terms and provisions hereof may be
waived only by a written instrument executed by each party entitled to the
benefits thereof.  No failure or delay on
the part of any party in exercising any right, power or privilege granted hereunder
shall constitute a waiver thereof, nor shall any single or partial exercise of
any such right, power or privilege preclude any other or further exercise
thereof or the exercise of any other right, power or privilege granted
hereunder.

 

SECTION  17.                         Entire Agreement.  This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior written or oral agreements or understandings between the
Executive and the Company or its affiliates relating thereto, including,
without limitation.

 

SECTION  18.                         Severability.  In the event that any term or provision of
this Agreement is found to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining terms and provisions hereof shall
not be in any way affected or impaired thereby, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained therein.

 

SECTION  19.                         Binding Effect; Assignment.  This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns
(it being understood and agreed that, except as expressly provided herein,
nothing contained in this Agreement is intended to confer upon any other person
or entity any rights, benefits or remedies of any kind or character
whatsoever).  The Executive may not
assign this Agreement without the prior written consent of the Company.  Except as otherwise provided in this
Agreement, the Company may assign this Agreement to any of their affiliates or
to any successor (whether by operation of law or otherwise) to all or
substantially all of their business and assets without the consent of the
Executive, and any transfer of employment from the Company to such affiliate or
successor shall be deemed to constitute an assignment and not a termination of
employment hereunder.  In the event of an
assignment of this Agreement by the Company, all references herein to PSI or
the Company shall be deemed to be references to the assignee.  Similarly, in the event PSI is no longer an
affiliate of the Company (or any assignee), all references to PSI shall be
deemed to be references to the Company (or the assignee).

 

SECTION  20.                         Withholding of Taxes.  The Executive agrees that the Company shall
deduct, or shall cause to be deducted, from the amount of any benefits to be
paid hereunder any taxes required to be withheld by the federal or any state or
local government.

 

SECTION  21.                         Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (except that no
effect shall be given to any conflicts of law principles thereof that would
require the application of the laws of another jurisdiction).

 

SECTION  22.                         Headings. 
The headings of the sections contained in this Agreement are for
convenience only and shall not be deemed to control or affect the meaning or
construction of any provision of this Agreement.

 

SECTION  23.                         Counterparts.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

 

SECTION  24.                         Subsidiaries and Affiliates.  As used herein, the term “subsidiary” shall
mean any corporation or other business entity controlled by the corporation in
question, and the term

 

 

“affiliate” shall mean and include any corporation or
other business entity controlling, controlled by or under common control with
the corporation in question.  The terms
“controlled,” “controlling,” “controlled by” and “under common control with,”
as used with respect to any person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise.

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first
above written.

 

	
   

  	
  Prodril
  Acquisition Company, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Prentis B. Tomlinson, Jr.

  	
   

  
	
   

  	
  Prentis B. Tomlinson, Jr.

  
	
   

  	
  Chairman and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Jon Christopher Boswell

  
	
   

  	
   

  
	
   

  	
  /s/ Jon Christopher
  Boswell

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
					

 

 

AMENDMENT TO EMPLOYMENT AGREEMENT

 

WHEREAS, Particle Drilling Inc, formerly ProDril
Acquisition Company, Inc. (“Company”) entered into that certain Employment
Agreement dated August 18, 2003 (the “Agreement”) with Jon Christopher Boswell (“Executive”); and

 

WHEREAS, Company and
Executive amended the Agreement pursuant to that certain Term Sheet for
Modification of Employment Agreement dated September 1, 2003; and

 

WHEREAS, it is the desire of
Company and Executive to properly reflect the role of Executive as a partner in
the Company and to further amend and correct the Agreement with respect to
certain terms and provisions;

 

NOW, THEREFORE, in
consideration of the premises, Company and Executive hereby agree as follows:

 

1.                                       Executive hereby waives any right to receive
Base Salary compensation as set forth in Section 4.A of the Agreement for the
period beginning August 18, 2003 through March 31, 2004, and it is understood
and agreed that Executive has not and shall not accrue any Base Salary during
such period.  Beginning on April 1, 2004
and thereafter, Executive shall accrue Base Salary in accordance with the
Agreement.

 

2.                                       Executive shall receive a Net Profits
Interest (“NPI”) in ProDril Partners, LLC that shall result in the Executive
becoming the beneficial owner of 865,000 shares of common stock in the
Company.  The NPI shall be established
effective as of the date of this Amendment. 
ProDril Partners, LLC shall execute this Amendment to more fully
effectuate the NPI granted as set forth herein.

 

3.                                       Section 4.B. of the Agreement shall be
deleted in its entirety and the following provision shall be substituted
therefor:  The Company shall grant the
following stock options to Executive a.) Non-statutory (fully vested as of this
date) Stock Options to purchase 480,000 shares of the Company’s common stock at
$0.12 per share; and b.) Statutory Incentive Stock Options to purchase another
480,000 shares of the Company’s common stock at $0.12 per share vesting over a
four (4) year period and in accordance with the Incentive Stock Plan as
approved by the Company’s Board of Directors.

 

4.                                       Neither the proposed merger between Company
and Particle Drilling Technologies, Inc. (the “PDI/PDT Merger”), nor the
proposed merger between the surviving company resulting from the PDI/PDT Merger
and the public company that has yet to be identified and as being coordinated

 

 

by
Cagen McAfee Capital Partners shall be considered a “Change of Control” for
purposes of Section 7 of the Agreement. 
This provision shall not constitute a waiver of the provisions of
Section 7 of the Agreement with respect to any other transaction or event.

 

It is further understood and
agreed between Company and Executive that the terms of that certain amendment
referenced above entitled Term Sheet for Modification of Employment Agreement
dated September 1, 2003 shall be null and void and shall be replaced and
superceded in its entirety by this Amendment.

 

The terms, provisions and
conditions of the Agreement are hereby modified and amended to the extent
necessary to conform with the terms and provisions of this Amendment; and all
other terms, provisions and conditions of the Agreement are hereby ratified and
confirmed and Company and Executive hereby recognize the Agreement is a valid
and subsisting Agreement as hereby amended.

 

Agreed to and accepted this
8th day of April 2004, by:

 

	
   

  	
  “Company”

  
	
   

  	
   

  
	
   

  	
  Particle
  Drilling Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Prentis B. Tomlinson,
  Jr.

  	
   

  
	
   

  	
  Prentis B. Tomlinson, Jr.

  
	
   

  	
  President and CEO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ProDril
  Partners, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Prentis B. Tomlinson,
  Jr.

  	
   

  
	
   

  	
  Prentis B. Tomlinson, Jr.

  
	
   

  	
  Managing Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  “Executive”

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Jon Christopher
  Boswell

  	
   

  
	
   

  	
  Jon Christopher Boswell

  
	
   

  	
  Senior Vice President and
  CFO

  
	
   

  	
  Particle Drilling, Inc.

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