Document:

Exhibit 10.1

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                     PLAN OF REORGANIZATION AND ACQUISITION
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                                    By Which
                                    --------

                         ELITE  FIELD  SERVICE,  INC.,
                           (a  Nevada  corporation)

                                 Shall  Acquire;
                                 --------------

                    ONTUS  TELECOMMUNICATIONS  CORPORATION
                             (a  Nevada  Corporation)

This  Plan  of  Reorganization  and Acquisition is made and dated, September 1st
2004  by  and  between  the  above  referenced  corporations.

1.  The  Parties  to  this  Plan

(1.1)  ELITE  FIELD  SERVICE,  INC. ("EFSV"), (C15160-2002) of 3313 MICHELANGELO
CT.,  LAS  VEGAS,  NEVADA  89129

(1.2) ONTUS TELECOMMUNICATIONS CORP ("ONTUS") (C17000-2003) a Nevada Corporation
with offices at One World Trade Center, 121 SW Salmon St., Suite 1020, Portland,
OR  97204  .

2.  The  Capital  of  the  Parties:

(2.1)  The  Capital  of  EFSV  consists  of  250,000,000  authorized  Class  "A"
common  shares  ($0.001  par  value),  issued  and  outstanding  39,900,000.

   (2.1.1)  5,000,000  Authorized  Series  A  Preferred  ($0.001  par  value)
   (2.1.2)  5,000,000  Authorized  Series  B  Preferred  ($0.001  par  value)
   (2.1.3)  5,000,000  Authorized  Series  C  Preferred  ($0.001  par  value)

There  are  zero  EFSV  Preferred  Shares  series  A, B, C issued & outstanding.

(2.2)  The Capital of ONTUS consists of 20,000,000 shares of common voting stock
($0.001  par  value) authorized, of which 5,928,600 common shares are issued and
outstanding.  The  Company has 2,000,000 preferred shares authorized ($0.001 par
value)  and  zero  preferred  shares  issued  and  outstanding

3.  Plan  of Reorganization and Acquisition. Subject to the terms and conditions
of  this  Plan  of  Reorganization  and  Acquisition,  EFSV  (Nevada)  and ONTUS
(Nevada)  shall  be  reorganized,  such  that EFSV shall acquire ONTUS, and EFSV
shall  be  folded  into  ONTUS  so  that ONTUS shall become the surviving entity

4.  Conditions  Precedent.

(4.1)  The  Boards  of  Directors  of  both Corporations respectively shall have
determined  that  it  is advisable and in the best interests of each of them and
both  of  them  to  proceed  with  the acquisition by the Public Corporation, in
accordance  with  IRS  354  and 368. These U.S. tax provisions provide generally
that  no  gain  or  loss  be  recognized  from  a  statutory  reorganization.

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(4.2)  The  Shareholders  of  both Corporations respectively shall have approved
the  acquisition  and  this  agreement,  and  each  shall have been approved and
adopted  by  the  Board  of Directors of in a manner consistent with the laws of
its  Jurisdiction  and  its  constituent  documents.

(4.3)  Each  party  shall  have  furnished  to the other party all corporate and
financial  information  which  is  customary  and  reasonable,  to  conduct  its
respective  due  diligence,  normal  for  this  kind  of transaction.  If either
party  determines  that  there  is  a  reason  not  to  complete  this  Plan  of
Reorganization  as  a  result  of  their  due  diligence  examination, then they
must  give  written  notice  to  the  other party prior to the expiration of the
due  diligence  examination  period.  The  Due Diligence period, for purposes of
this  paragraph,  shall  expire  on  a  date  determined  by  the  parties;

(4.4)  The  rights  of  dissenting  shareholders,  if  any,  of each party shall
have  been  satisfied  and  the  Board  of  Directors  of  each party shall have
determined  to  proceed  with  this  Plan  of  Reorganization  and  Acquisition.

(4.5)  All of the terms, covenants and conditions of this Plan of Reorganization
and Acquisition to be complied with or performed by each party for Closing shall
have  been  complied  with,  performed  or  waived  in  writing;  and

(4.6)  The representations and warranties of the parties, contained in this Plan
of  Reorganization  and  Acquisition, as herein contemplated, except as amended,
altered  or  waived  by the parties in writing, shall be true and correct in all
material  respects at the Closing Date with the same force and effect as if such
representations  and  warranties are made at and as of such time; and each party
shall  provide  the  other  with  a corporate certificate, of a director of each
party, dated the Closing Date, to the effect, that all conditions precedent have
been met, and that all representations and warranties of such party are true and
correct  as  of  that date. The form and substance of each party's certification
shall  be  in  form  reasonably  satisfactory  to  the  other.

(4.7)  Each  Corporation  hereby  represents  and  warrants  that  the foregoing
recitals  are  true,  correct  and  accurate.

5.  Termination.  This  Plan of Reorganization and Acquisition may be terminated
at  any  time  prior  to  closing,  whether  before  or  after  approval  by the
shareholders  of  either  or  both;  (i)  by  mutual  consent; or (ii) by either
party  if  the  other  is  unable  to  meet  the  specific  conditions precedent
applicable  to  its  performance  within  a  reasonable time; or (iii) by either
or  both  if  holders of a sufficient number of securities exercises dissenters'
rights  such  that  to complete the transaction herein contemplated would create
undue  financial  difficulty  upon either or both. In the event that termination
of  this  Plan  of Reorganization and Acquisition by either or both, as provided
above,  this  Plan  of  Reorganization  and  Acquisition  shall forthwith become
void  and  there  shall  be  no  liability  on the part of either party or their
respective  officers  and  directors.

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6.  Conversion  of  Outstanding  ONTUS  Shares  to  EFSV  shares.

(6.1)  Each  and  every  share  of common and preferred unissued shares of ONTUS
held  in  treasury  shall  be  cancelled.

(6.2)  Each  of  the  5,928,600 common issued shares of ONTUS shall be exchanged
for  an  equal percentage of 64.9612% of EFSV common stock (gross total issuance
equals  73,937,740  common  shares  issued  as  per  Table A attached ) duly and
validly  issued,  fully  paid  and  non-assessable to or for the shareholders of
ONTUS  as  per  Table  A  attached

EFSV  common  stock  means  that such shares shall be "Restricted Securities" as
defined  in  Rule  144(a),  as  promulgated  by  the  Securities  and  Exchange
Commission,  of  the  United  States,  pursuant to 3(b) of the Securities Act of
1933.  The shares converted to EFSV common shares shall be issued in reliance on
4(2)  of  the  Act,

(6.3)  Registration  Rights  there  are  no  existing  rights of any existing or
prospective  shareholders for Demand or Piggyback Registration of any securities
of  either  party;  nor contractual or other restrictions upon the rights of the
issuer  or  any  person  to seek to register securities for sale, resale or as a
class  of  securities  for  trading on NYSE, AMEX, NASDAQ, OTC BB OR PINK SHEETS
or  any  recognized  US stock exchange; except and unless provided for expressly
in  this  Plan  of  Reorganization  and  Acquisition.

7.  Surviving  Corporation.  Upon  the  effective  filing  of the Certificate of
Merger  with  the  Secretary  of  State  of  Nevada,  EFSV  shall be folded into
ONTUS.  Therefore  the  entity  surviving  the  Reorganization  herein  shall be
EFSV,  which  shall  change  its  name  to ONTUS TELECOMMUNICATIONS CORPORATION.
ONTUS  will  continue  to  be  governed  by  the  laws  of  its  State  of
Incorporation.

(7.1)  Surviving  Articles  of  Incorporation:  the Articles of Incorporation of
ONTUS  shall  remain  in  full  force and effect. EFSV will be folded into ONTUS
and  the  appropriate  amendments  to  the Articles of Incorporation of EFSV and
ONTUS  will  be  filed  with  the  Secretary  of  State  of  Nevada.

(7.2)  Surviving  By-Laws:  The  EFSV By-Laws shall have been adopted or amended
in  form  approved  by  ONTUS,  before  the  Closing,  and  such  By-Laws, as so
adopted  or  amended,  shall  then  remain  in full force and effect, unchanged,
by  this  Reorganization.

8.  Rights  of  Dissenting  Shareholders:  The  rights,  if  any,  of dissenting
shareholders  shall  be  determined  as  follows:

(8.1)  Before  Closing:  Before  Closing,  as  hereafter  defined,  each  of the
corporations  shall  be  responsible  for  the  rights  of  its  own  dissenting
shareholders.  Each party shall be responsible for the handling of rights of its
dissenting  shareholders, if any. Either party shall have the right to terminate
this Plan of Reorganization and Acquisition if holders of a sufficient number of
its  shareholders  exercise their lawful dissenters rights such that to complete
the  transactions  herein  contemplated  would create undue burden upon it. Such
determination  shall  be  made by the Board of Directors of such party, in their
sole  discretion,  acting  reasonably.

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(8.2)  After  Closing:  After  Closing,  the  Parent Company shall be the entity
responsible  for  the  rights  of  dissenting  shareholders.

(8.3)  Appointment  of  Agents.  The  Secretaries  of State of the State of each
party's  domicile  shall  be  appointed as agents for service of process for the
shareholders  of  the  corporations  within  their  jurisdictions,  or  formerly
within  their  jurisdictions,  to  whatever  extent  may be required by the laws
of  either  State.

9.  Closing.  Subject to the terms and conditions of this Plan of Reorganization
and  Acquisition,  upon  closing  the  transaction,  the  following  events  and
transactions  ("the  Closing")  will  occur.

(9.1)  EFSV  shall  acquire  ONTUS  pursuant  to  the  laws  of their respective
states,  together  with  all  of  the  property, right and interest of ONTUS and
be  subject  to  all  the  debts,  liabilities  and obligations of ONTUS.  ONTUS
shall  be  the  surviving  corporation.

(9.2)  The  name  of  ONTUS  TELECOMUNICATIONS CORPORATION will be the Company's
known  name

(9.3)  Until  changed  pursuant  to the laws of Nevada, the registered agent and
registered  office  of  EFSV  and  ONTUS  shall  be  INCORP  SERVICES  INC.,

(9.4)  Omitted.

(9.5)  After  Closing.  The  following  events  and  transactions  will  occur
immediately  or  shortly  after  Closing, and are deemed by the parties to be an
integral  part  of  the  Closing  process,  and  material  to  this  agreement:

(9.6)  Subject  to  the  uniform,  customary principles, endorsed in the laws of
Nevada,  to  the  effect  that  the  governance  of the corporation be vested in
the  Board  of  Directors,  and  subject  to  the  right and duty of EFSV's duly
appointed  Board  of  Directors  to  make independent judgment as to all matters
of  corporate  governance;  the  parties  intend  that  the existing Director or
Directors  of  the  resulting  and  Parent  corporation  shall,  forthwith  upon
Closing,  prepare  such  transitional  corporate  minutes  and  documents as are
necessary  and  reasonably  required  to  complete and effectuate the transition
in  a  proper  and  business-like  manner.

(9.7)  Unless  instructed  otherwise  in  writing before Closing, or immediately
following  Closing,  by  ONTUS,  such  transitional  minutes and documents shall
provide,  among  other  matters:

FIRST,  for  the  nomination  of  and  appointment  of  additional directors, as
indicated,  and  the  retirement  and  resignation  of  the  existing directors,
if  any,  and  the  recital  and  signature  of  the duly appointed director, to
the  effect  that  he  shall  have  accepted  his  appointment  and taken office
immediately;

SECOND,  for  the  designation  or  re-designation  of  auditors  for ONTUS such
appointment  to  continue  until  such  time as their successor may be appointed
pursuant  to  applicable  laws;

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THIRD,  for  the  designation  of  Madison Stock Transfer Inc., unless otherwise
determined  by  the  Board  of  Directors  of  ONTUS,  as  the  Certificate  and
Transfer  Agency  of  ONTUS;

FOURTH,  that  fiscal  year-end  of  ONTUS  shall  be  and remain December 31st,
unless  otherwise  determined  by  the  Board  of  Directors;

FIFTH,  that  the  Officers be empowered and directed to issue the common shares
of  EFSV  for  shares  of  ONTUS  to be exchanged; unless such issuance has been
made  previously.

10.  Articles  of  Share  Exchange. The Directors shall, forthwith upon Closing,
prepare  and  file  Articles  of Share Exchange with this Plan of Reorganization
and  Acquisition  with  the  Secretary  of  State  of  Nevada.

11.  Closing/Effective  Date:  The  Reorganization  and Acquisition contemplated
by  this  Agreement  shall  Close  and  become effective on the following dates:
the  Closing  Date,  shall  be  determined  by  the  Boards of Directors of EFSV
and  ONTUS,  in  the  manner provided by the laws of places of incorporation and
consistent  with  the  constituent  corporate  documents of each party, upon the
satisfaction  or  waiver  of  all  of  the  conditions precedent hereinbefore or
hereinafter  after  set  forth;  the  Effective Date shall be the date of filing
the  Articles  of  Share  Exchange  with  the  Secretary  of  State  of  Nevada.

12.  Mutual  Express  Covenants:

(12.1)  Further  Assurances:  The  Directors  of each Corporation shall and will
execute  and  deliver  any  and  all  necessary  documents,  acknowledgments and
assurances  and  do  all  things  proper  to  confirm or acknowledge any and all
rights,  titles  and  interests  created  or confirmed herein. Specifically, and
without  limitation:  each  party  covenants  to  use  all reasonable efforts to
obtain  all  consents,  approvals  and  waivers,  including  the approval of its
directors  and  security  holders,  that  may be necessary or desirable in order
to  complete  the  transactions  contemplated  herein;  take such other measures
as  may  be  appropriate  to  fulfill its obligations hereunder and to carry out
the  transactions  contemplated  herein;  afford  to  the  other parties hereto,
and  their  financial  and  legal  advisors,  reasonable  access  during  normal
business  hours,  to  the  management, properties, books, contracts, commitments
and  records  of  such  party  and  to  allow  the  other party hereto and their
advisors  to  perform  an  examination  of  the  financial  condition, business,
affairs,  property  and  assets  of  the  party  and  during  such period, shall
promptly  furnish  to  the  other  party  hereto,  a  copy  of  all  information
concerning  its  business,  properties  and  personnel as the other party hereto
may  reasonably  request;  and  use  all reasonable efforts to cause each of the
conditions  precedent  set  forth  in  this  Plan  of  Reorganization  and
Acquisition  to  be  completed  or  complied  with  on or before Closing, and to
complete  the  actions  following  Closing  necessary  to  make  the  Closing
effective.

(12.2)  Good  Faith  and  Fair  Dealing:  Each  Corporation  covenants hereby to
deal  with  each  other  and  each others shareholders fairly and in good faith,
in  all  matters  related  to  this  Agreement  and  the events and transactions
contemplated  by  it.

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(12.3)  Executory  Period before Closing: Each Corporation agrees with the other
that  it  will  not,  during  the  "executory  period"  after the making of this
Agreement  and  until Closing: allot or issue any shares of its capital or enter
into  any agreement granting the right, by conversion, exchange or otherwise, to
acquire any of its un-issued capital, except as contemplated herein; declare any
dividends;  sell  all  or  any  part  of its assets, or otherwise enter into any
transactions  or  negotiations  which  could reasonably be expected to interfere
with or be inconsistent with the consummation of this Plan of Reorganization and
Acquisition;  amend  or  alter  its constituent documents except as contemplated
herein;  or  engage in any business, enterprise or activity materially different
from  that  carried  on  by  it  at  the date of this Plan of Reorganization and
Acquisition  or  enter into any transaction or incur any obligation, expenditure
or  liability  other  than  in  the  ordinary  course  of business, as presently
conducted.

13.  General  Mutual  Representations  and  Warranties.  The purpose and general
import  of  the  Mutual  Representations  and Warranties are that each party has
made  appropriate  full  disclosure  to the others, that no material information
has  been  withheld, and that the information exchanged is or shall be accurate,
true  and  correct.  Each  Corporation  acknowledges  and  confirms  that  it is
relying  on  such  representations  and  warranties in connection with this Plan
of  Reorganization  and  Acquisition:

(13.1)  Organization and Qualification. Each Corporation warrants and represents
that it is duly organized and in good standing, and is duly qualified to conduct
any  business  it  may  be  conducting,  as  required by law or local ordinance.

(13.2) Corporate Authority. Each Corporation warrants and represents that it has
Corporate  Authority,  under  the  laws  of its jurisdiction and its constituent
documents,  to  enter  into  this  Agreement  and  to  complete the transactions
contemplated  hereby.

(13.3)  Ownership  of  Assets  and  Property.  Each  Corporation  warrants  and
represents that it is duly incorporated and organized and validly subsisting and
in  good  standing  under  the  laws  of its respective jurisdiction and has the
corporate  power and authority to own or lease its assets as now owned or leased
and  to carry on its business as now carried on and holds all necessary federal,
state  and  municipal  governmental  licenses,  permits  and  authorizations  in
connection  therewith, except for those where the failure to hold such licenses,
permits  and  authorizations  would  not  have  a material adverse effect on the
business, prospects, property, financial condition or results of its operations.
Each  Corporation  has lawful title and ownership of its property as reported to
the  other,  and  as  disclosed  in  its  financial  statements.

(13.4)  Current  Compliance.  To the best of each Corporation's knowledge, it is
in  compliance  with  all applicable governmental laws, by-laws, regulations and
orders  material  to  its  corporate  existence,  operations  and  properties.

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(13.5)  Absence  of  Certain  Changes  or  Events. Each Corporation warrants and
represents  that  there  are  and  shall  be  at  Closing no material changes of
circumstances  or events which have not been fully disclosed to the other party,
and  which,  if  different  than previously disclosed in writing shall have been
disclosed  in writing as current as is reasonably practicable. Certain financial
statements  have  been exchanged between the parties, and others shall have been
exchanged  before Closing. All such financial statements together with the notes
thereto  present,  and  shall  present  fairly,  the  financial position of such
corporation  as  of  its  respective  date,  and  have  been, or shall have been
prepared  in  accordance  with  generally accepted accounting principles applied
on  a  consistent  basis  (except that the unaudited financial statements may or
may  not  contain  notes  and are subject to year-end adjustments).  To the best
of  each  party's  respective  knowledge,  there  have  been  no  changes  n the
condition,  financial  or  otherwise,  or in the results of operations of either
corporation  which  have  had  or  may reasonably be expected to have a material
adverse  effect  on  the  business,  prospects, property, financial condition or
results  of  operations  of either. Neither Corporation has declared or paid any
dividends  or  otherwise  made  any distribution of any kind or nature to any of
its  shareholders  or  has  any  material  liabilities,  debts  or  obligations,
whether  accrued,  absolute  or  contingent,  which  have  not  been  otherwise
disclosed,  or  which  shall  not  have  been  disclosed  to  the  other.

(13.6) Litigation and Enforcements. There are no legal, arbitrable, governmental
or other actions, proceedings or investigations pending or threatened against or
otherwise  affecting either Corporation or any of its assets, and to the best of
each  corporation's  knowledge  there  has  been  no  event or events which have
occurred  that  could  give  rise  to  any  such  material action, proceeding or
investigation.  Each Corporation warrants and represents that there are no legal
proceedings,  administrative  or  regulatory  proceedings, pending or suspected,
which  have  not  been  fully  disclosed  in  writing  to  the  other.

(13.7)  Absence  of  Undisclosed  Liabilities.  Each  Corporation  warrants  and
represents  specifically  that  it  has  and  shall have no material liabilities
which  have  not  been  disclosed  to  the other, in the financial statements or
otherwise  in  writing,  before  the  Acquisition. "Undisclosed Liabilities", as
used  herein,  includes  without  limitation, contingent liabilities of any kind
or  sort,  including  without  limitation,  employment  contracts, and corporate
guaranties;

(13.8)  No  Breach of Other Agreements. Each Corporation warrants and represents
that  this  Agreement,  and the faithful performance of this agreement, will not
cause  any  breach  of  any  other  existing agreement, or any covenant, consent
decree,  or  undertaking  by  either,  not  disclosed  to the other. Neither the
execution  and  delivery  of  this  Plan  of Reorganization and Acquisition, the
consummation  of  the transactions herein contemplated nor the fulfillment of or
compliance  with  the  terms and provisions hereof or thereof will (i) result in
or  constitute a material default under, its articles or by-laws or any material
agreement  to  which its is a party, (ii) constitute an event which would permit
any  party  to any material agreement with it, to terminate such agreement or to
accelerate  the maturity of any indebtedness of it or other obligation of it, or
(iii)  result  in  the creation or imposition of any encumbrance upon its Shares
or  any  of  its  assets.

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(13.9)  Capital  Stock. Each Company warrants and represents that the issued and
outstanding  shares  and  all shares of capital stock of such corporation, is as
detailed  herein,  that all such shares are in fact issued and outstanding, duly
and  validly  issued,  were  issued  as  and  are  fully paid and non-assessable
shares,  and  that,  other  than  as  represented in writing, there are no other
securities,  options,  warrants or rights outstanding, to acquire further shares
of  such  Corporation,  except  as mutually disclosed, represented and warranted
in  Article  I,  Part  B,  hereinabove.

(13.10)  Brokers'  or  Finder's  Fees.  Each Corporation warrants and represents
that  is  aware  of  no  claims  for  brokers'  fees, or finders' fees, or other
commissions  or  fees,  by  any  person  not disclosed to the other, which would
become,  if  valid,  an  obligation  of  either  company.

14.  Miscellaneous  Provisions

(14.1)  At  the  Closing  Date,  their shall be no undisclosed changes from that
reflected  in  the  financial  and  other  statements  exchanged by the parties.

(14.2)  Except  as  required  by  law,  no  party  shall provide any information
concerning  the  Acquisition  or  any aspect of the transactions contemplated by
this  Agreement  to  anyone  other than their respective officers, employees and
representatives  without  the prior written consent of the other parties hereto.
The  aforesaid  obligations  shall  terminate on the earlier to occur of (a) the
Closing,  or  (b)  the date by which any party is required under its articles or
bylaws  or  as  required  by  law,  to  provide  specific  disclosure  of  such
transactions  to its shareholders, governmental agencies or other third parties.
In  the  event  that  the transaction does not close, each party will return all
confidential  information  furnished  in  confidence  to  the  other.

(14.3)  This Agreement may be executed simultaneously in two or more counterpart
originals.  The  parties  can  and may rely upon facsimile signatures as binding
under  this Agreement, however, the parties agree to forward original signatures
to  the other parties as soon as practicable after the facsimile signatures have
been  delivered.

(14.4)  The  Parties  to  this  agreement  have  no  wish to engage in costly or
lengthy  litigation  with  each  other.  Accordingly, any and all disputes which
the  parties  cannot  resolve  by  agreement or mediation, shall be submitted to
binding  arbitration  under  the  rules and auspices of the American Arbitration
Association,  as  a  further  incentive to avoid disputes, each party shall bear
its  own  costs,  with  respect  thereto, and with respect to any proceedings in
any  court brought to enforce or overturn any arbitration award.  This provision
is  expressly  intended  to  discourage  litigation  and  to  encourage orderly,
timely  and  economical  resolution  of  any  disputes  which  may  occur.

(14.5)  If  any  provision  of  this Agreement or the application thereof to any
person or situation shall be held invalid or unenforceable, the remainder of the
Agreement  and  the application of such provision to other persons or situations
shall  not  be  affected thereby but shall continue valid and enforceable to the
fullest  extent  permitted  by  law.

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(14.6)  No  waiver  by  any  party  of  any occurrence or provision hereof shall
be  deemed  a  waiver  of  any  other  occurrence  or  provision.

(14.7)  The  parties  acknowledge that both they and their counsel have reviewed
and  revised  this  agreement and that the normal rule of construction shall not
be  applied  to  cause  the  resolution  of  any  ambiguities  against any party
presumptively.  The  Agreement  shall be governed by and construed in accordance
with  the  laws  of  the  State  of  Nevada.

This  Plan  of  Reorganization  and  Acquisition  is  executed on behalf of each
Company  by  its  duly  authorized  representatives,  and  attested to, pursuant
to  the  laws  of  its  respective place of incorporation and in accordance with
its  constituent  documents.

                                             ELITE  FIELD  SERVICES  INC.,
                                               (a  Nevada  corporation)

                                              By:  /s/  Paul  Taylor
                                              -------------------------
                                                       Paul  Taylor
                                                       President
                                                       September  1,  2004

ONTUS  TELECOMMUNICATIONS  CORP
(a  Nevada  corporation)

By:  /s/  Paul  Peterson     September  1,  2004
     ---------------------------------------
         Paul  R.  Peterson
         CEO,  Director  and  Secretary

By:  /s/  Kenneth  MacDonald     September  1,  2004
     -------------------------------------------
         Kenneth  MacDonald
         President,  Director  and  Treasurer

By  /s/  David  B.  Hoffman     September  1,  2004
    ------------------------------------------
        David  B.  Hoffman
        EVP  and  Director

TABLE  A
                                                 NEW  ISSUE
                                                   CUSIP
                              Ontus              68339C-10-2
                              Shares               Shares
Shareholder                   owned       %        issued
-----------                   -----    ------    -----------
Pan-Peterson  Family  Trust  2,000,000   33.73%    24,963,900
Square  Peg  Investments       150,000    2.53%     1,872,200
Porteous  Equities              20,000    0.34%       294,380
Peter  Budd                     32,000    0.54%       399,600
William  Robertson              10,000    0.17%       125,000
Jim  Cutler                    200,000    3.37%     2,469,020
Art  North                      12,500    0.21%       156,140
Lucketti  /  Ota  JT            75,000    1.27%       936,100
Shizuko  Ota  Trust             75,000    1.27%       936,100
George  Teeny                   50,000    0.84%       623,820
Laurie  &  Devry  Bell          18,000    0.30%       224,960
Stoner  &  Debbie  Bell         15,500    0.26%       193,140
Austin  &  Denise  Bell          4,000    0.07%        49,580
Andrew  Montgomery              25,000    0.42%       312,280
Yoshio  Kurosaki                12,500    0.21%       156,140
Jeff  Teeny                     12,500    0.21%       156,140
Ray  Losli                      10,000    0.17%       125,060
Adrienne  Sparrow                2,500    0.04%        31,080
Dwain  Weston                    7,500    0.13%        93,980
Matthew  Slayton                28,000    0.47%       349,280
Investor  Co.  ITF
     Peter  Budd                25,000    0.42%       312,280
Jim  MacPhail                    7,500    0.13%        93,980
Fred  Mazepa                     2,250    0.04%        28,120
Fred  Mazepa                     3,750    0.06%        46,620
Rory  Shewchuck                  1,500    0.03%        18,500
Melanie  Rowan                   1,500    0.03         18,500
Tom  Schreiber                   3,000    0.05%        37,740
Ted  Cowan                       3,000    0.05%        37,740
Chris  Hemstock                  7,500    0.13%        93,980
Suzanne  Adams                   7,500    0.13%        93,980
Porteous  Equities               6,750    0.11%        84,360
Porteous  Equities               2,250    0.04%        28,120
Porteous  Equities               4,950    0.08%        61,420
Brad  &  Sharon  Black         250,000    4.22%     3,120,580
Guidice  &  Associates          75,000    1.27%       936,100
Kenneth  F.  MacDonald       1,000,000   18.87%    12,481,580
David  B.  Hoffman           1,000,000   18.87%    12,481,580
Jim  MacPhail                    2,500    0.04%        31,080
Fred  Mazepa                     2,000    0.03%        25,160
Rory  Shewchuck                    500    0.01%         5,920
Melanie  Rowan                     500    0.01%         5,920
Tom  Schreiber                   1,000    0.02%        12,580
Ted  Cowan                       1,000    0.02%        12,580
Melanie  Rowan                     500    0.01%         5,920
Tom  Schreiber                   1,000    0.02%        12,580
Ted  Cowan                       1,000    0.02%        12,580
Chris  Hemstock                  2,500    0.04%        31,080
Suzanne  Adams                   2,500    0.04%        31,080
Porteous  Equities               4,650    0.08%        57,720
Managed  Sectors  Fund         250,000    4.22%     3,120,580
Managed  Sectors  Fund          83,333    1.41%     1,040,440
Managed  Sectors  Fund          83,333    1.41%     1,040,440
Managed  Sectors  Fund          83,333    1.41%     1,040,440
Brad  &  Sharon  Black         250,000    4.22%     3,120,580
                           --------------------------------
                             5,928,600  100.00%    73,973,740
                           --------------------------------

<PAGE>

Table  B   Consolidation

Table  B  (Consolidated)                        Common  A

                                                Issued  and
(Com  A  Authorized  -  250,000,000)            Outstanding
--------------------------------            ------------

(Preferred  A,B,C  -  15,000,000)
Preferred  Issued  and                             CUSIP
Outstanding  -  Zero              Percentage    68339C-10-2
------------------------------  ---------    ------------

Ontus  Shareholders  -  (Table  A)   64.9612%    73,973,740

Berkshire  Biotechnology
Holding  Corporation  (Texas)        26.3450%    30,000,000

Public  Float                         8.6938      9,900,000
                                 --------   ------------

Common  Shares  "A"                  100.00%    113,873,740Employee Stock Incentive Plan #7 2004

Exhibit 4.1

 

AMERICAN FIRE RETARDANT CORP.

EMPLOYEE STOCK INCENTIVE PLAN FOR THE YEAR 2004 No. 7

1.        General Provisions.

1.1      Purpose. This Stock Incentive Plan (the "Plan") is intended to allow designated officers and employees (all of whom are sometimes collectively referred to herein as the "Employees," or individually as the "Employee") of American Fire Retardant Corp., a Nevada corporation (the "Company") and its Subsidiaries (as that term is defined below) which they may have from time to time (the Company and such Subsidiaries are referred to herein as the "Company") to receive certain options (the "Stock Options") to purchase common stock of the Company, par value $0.001 per share (the "Common Stock"), and to receive grants of the Common Stock subject to certain restrictions (the "Awards"). As used in this Plan, the term "Subsidiary" shall mean each corporation which is a "subsidiary corporation" of the Company within the meaning of Section 424(f) of the Internal Revenue Code of 1986, as amended (the "Code"). The purpose of this Plan is to provide the Employees, who make significant and extraordinary contributions to the long-term growth and performance of the Company, with equity-based compensation incentives, and to attract and retain the Employees.

1.2      Administration.

1.2.1    The Plan shall be administered by the Compensation Committee (the "Committee") of, or appointed by, the Board of Directors of the Company (the "Board"). The Committee shall select one of its members as Chairman and shall act by vote of a majority of a quorum, or by unanimous written consent. A majority of its members shall constitute a quorum. The Committee shall be governed by the provisions of the Company’s Bylaws and of Nevada law applicable to the Board, except as otherwise provided herein or determined by the Board.

1.2.2    The Committee shall have full and complete authority, in its discretion, but subject to the express provisions of this Plan (a) to approve the Employees nominated by the management of the Company to be granted Awards or Stock Options; (b) to determine the number of Awards or Stock Options to be granted to an Employee; (c) to determine the time or times at which Awards or Stock Options shall be granted; (d) to establish the terms and conditions upon which Awards or Stock Options may be exercised; (e) to remove or adjust any restrictions and conditions upon Awards or Stock Options; (f) to specify, at the time of grant, provisions relating to exercisability of Stock Options and to accelerate or otherwise modify the exercisability of any Stock Options; and (g) to adopt such rules and regulations and to make all other determinations deemed necessary or desirable for the administration of this Plan. All interpretations and constructions of this Plan by the Committee, and all of its actions hereunder, shall be binding and conclusive on all persons for all purposes.

1.2.3    The Company hereby agrees to indemnify and hold harmless each Committee member and each Employee, and the estate and heirs of such Committee member or Employee, against all claims, liabilities, expenses, penalties, damages or other pecuniary losses, including legal fees, which such Committee member or Employee, his estate or heirs may suffer as a result of his responsibilities, obligations or duties in connection with this Plan, to the extent that insurance, if any, does not cover the payment of such items. No member of the Committee or the Board shall be liable for any action or determination made in good faith with respect to this Plan or any Award or Stock Option granted pursuant to this Plan.

1.3      Eligibility and Participation. The Employees eligible under this Plan shall be approved by the Committee from those Employees who, in the opinion of the management of the Company, are in positions which enable them to make significant contributions to the long-term performance and growth of the Company. In selecting the Employees to whom Award or Stock Options may be granted, consideration shall be given to factors such as employment position, duties and responsibilities, ability, productivity, length of service, morale, interest in the Company and recommendations of supervisors.

1.4      Shares Subject to this Plan. The maximum number of shares of the Common Stock that may be issued pursuant to this Plan shall be 2,500,000,000, subject to adjustment pursuant to the provisions of Paragraph 4.1. If shares of the Common Stock awarded or issued under this Plan are re-acquired by the Company due to a forfeiture or for any other reason, such shares shall be cancelled and thereafter shall again be available for purposes of this Plan. If a Stock Option expires, terminates or is cancelled for any reason without having been exercised in full, the shares of the Common Stock not purchased thereunder shall again be available for purposes of this Plan. In the event that any outstanding Stock Option or Award under this Plan for any reason expires or is terminated, the shares of Common Stock allocable to the unexercised portion of the Stock Option or Award shall be available for issuance under the American Fire Retardant Corp. Non-Employee Directors and Consultants Retainer Stock Plan for the Year 2004 No. 7. The Compensation Committee of the Board shall have the authority, in its discretion, to increase the number of shares available for issuance under this Plan, while correspondingly decreasing the number of shares available for issuance under the American Fire Retardant Corp. Non-Employee Directors and Consultants Retainer Stock Plan for the Year 2004 No. 7.

2.        Provisions Relating to Stock Options.

2.1      Grants of Stock Options. The Committee may grant Stock Options in such amounts, at such times, and to the Employees nominated by the management of the Company as the Committee, in its discretion, may determine. Stock Options granted under this Plan shall constitute "incentive stock options" within the meaning of Section 422 of the Code, if so designated by the Committee on the date of grant. The Committee shall also have the discretion to grant Stock Options which do not constitute incentive stock options, and any such Stock Options shall be designated non-statutory stock options by the Committee on the date of grant. The aggregate Fair Market Value (determined as of the time an incentive stock option is granted) of the Common Stock with respect to which incentive stock options are exercisable for the first time by any Employee during any one calendar year (under all plans of the Company and any parent or subsidiary of the Company) may not exceed the maximum amount permitted under Section 422 of the Code (currently, $100,000.00). Non-statutory stock options shall not be subject to the limitations relating to incentive stock options contained in the preceding sentence. Each Stock Option shall be evidenced by a written agreement (the "Option Agreement") in a form approved by the Committee, which shall be executed on behalf of the Company and by the Employee to whom the Stock Option is granted, and which shall be subject to the terms and conditions of this Plan. In the discretion of the Committee, Stock Options may include provisions (which need not be uniform), authorized by the Committee in its discretion, that accelerate an Employees rights to exercise Stock Options following a "Change in Control," upon termination of the Employees employment by the Company without "Cause" or by the Employee for "Good Reason," as such terms are defined in Paragraph 3.1 hereof. The holder of a Stock Option shall not be entitled to the privileges of stock ownership as to any shares of the Common Stock not actually issued to such holder.

2.2      Purchase Price. The purchase price (the "Exercise Price") of shares of the Common Stock subject to each Stock Option (the "Option Shares") shall not be less than 85 percent of the Fair Market Value of the Common Stock on the date of the grant of the option. For an Employee holding greater than 10 percent of the total voting power of all stock of the Company, either Common or Preferred, the Exercise Price of an incentive stock option shall be at least 110 percent of the Fair Market Value of the Common Stock on the date of the grant of the option. As used herein, "Fair Market Value" means the mean between the highest and lowest reported sales prices of the Common Stock on the New York Stock Exchange Composite Tape or, if not listed on such exchange, on any other national securities exchange on which the Common Stock is listed or on The Nasdaq Stock Market, or, if not so listed on any other national securities exchange or The Nasdaq Stock Market, then the average of the bid price of the Common Stock during the last five trading days on the OTC Bulletin Board immediately preceding the last trading day prior to the date with respect to which the Fair Market Value is to be determined. If the Common Stock is not then publicly traded, then the Fair Market Value of the Common Stock shall be the book value of the Company per share as determined on the last day of March, June, September, or December in any year closest to the date when the determination is to be made. For the purpose of determining book value hereunder, book value shall be determined by adding as of the applicable date called for herein the capital, surplus, and undivided profits of the Company, and after having deducted any reserves theretofore established; the sum of these items shall be divided by the number of shares of the Common Stock outstanding as of said date, and the quotient thus obtained shall represent the book value of each share of the Common Stock of the Company.

	 
	 	1 	 
	 

	 

2.3      Option Period. The Stock Option period (the "Term") shall commence on the date of grant of the Stock Option and shall be 10 years or such shorter period as is determined by the Committee. Each Stock Option shall provide that it is exercisable over its term in such periodic installments as the Committee may determine, subject to the provisions of Paragraph 2.4.1. Section 16(b) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") exempts persons normally subject to the reporting requirements of Section 16(a) of the Exchange Act (the "Section 16 Reporting Persons") pursuant to a qualified employee stock option plan from the normal requirement of not selling until at least six months and one day from the date the Stock Option is granted.

2.4      Exercise of Options.

2.4.1    Each Stock Option may be exercised in whole or in part (but not as to fractional shares) by delivering it for surrender or endorsement to the Company, attention of the Corporate Secretary, at the principal office of the Company, together with payment of the Exercise Price and an executed Notice and Agreement of Exercise in the form prescribed by Paragraph 2.4.2. Payment may be made (a) in cash, (b) by cashier’s or certified check, (c) by surrender of previously owned shares of the Common Stock valued pursuant to Paragraph 2.2 (if the Committee authorizes payment in stock in its discretion), (d) by withholding from the Option Shares which would otherwise be issuable upon the exercise of the Stock Option that number of Option Shares equal to the exercise price of the Stock Option, if such withholding is authorized by the Committee in its discretion, or (e) in the discretion of the Committee, by the delivery to the Company of the optionee’s promissory note secured by the Option Shares, bearing interest at a rate sufficient to prevent the imputation of interest under Sections 483 or 1274 of the Code, and having such other terms and conditions as may be satisfactory to the Committee. Subject to the provisions of this Paragraph 2.4 and Paragraph 2.5, the Employee has the right to exercise his or her Stock Options at the rate of at least 20 percent per year over five years from the date the Stock Option is granted.

2.4.2    Exercise of each Stock Option is conditioned upon the agreement of the Employee to the terms and conditions of this Plan and of such Stock Option as evidenced by the Employees execution and delivery of a Notice and Agreement of Exercise in a form to be determined by the Committee in its discretion. Such Notice and Agreement of Exercise shall set forth the agreement of the Employee that (a) no Option Shares will be sold or otherwise distributed in violation of the Securities Act of 1933, as amended (the "Securities Act") or any other applicable federal or state securities laws, (b) each Option Share certificate may be imprinted with legends reflecting any applicable federal and state securities law restrictions and conditions, (c) the Company may comply with said securities law restrictions and issue "stop transfer" instructions to its Transfer Agent and Registrar without liability, (d) if the Employee is a Section 16 Reporting Person, the Employee will furnish to the Company a copy of each Form 4 or Form 5 filed by said Employee and will timely file all reports required under federal securities laws, and (e) the Employee will report all sales of Option Shares to the Company in writing on a form prescribed by the Company.

2.4.3    No Stock Option shall be exercisable unless and until any applicable registration or qualification requirements of federal and state securities laws, and all other legal requirements, have been fully complied with. At no time shall the total number of securities issuable upon exercise of all outstanding options under this Plan, and the total number of securities provided for under any bonus or similar plan or agreement of the Company exceed a number of securities which is equal to 30 percent of the then outstanding securities of the Company, unless a percentage higher than 30 percent is approved by at least two-thirds of the outstanding securities entitled to vote. The Company will use reasonable efforts to maintain the effectiveness of a Registration Statement under the Securities Act for the issuance of Stock Options and shares acquired thereunder, but there may be times when no such Registration Statement will be currently effective. The exercise of Stock Options may be temporarily suspended without liability to the Company during times when no such Registration Statement is currently effective, or during times when, in the reasonable opinion of the Committee, such suspension is necessary to preclude violation of any requirements of applicable law or regulatory bodies having jurisdiction over the Company. If any Stock Option would expire for any reason except the end of its term during such a suspension, then if exercise of such Stock Option is duly tendered before its expiration, such Stock Option shall be exercisable and exercised (unless the attempted exercise is withdrawn) as of the first day after the end of such suspension. The Company shall have no obligation to file any Registration Statement covering resales of Option Shares.

2.5      Continuous Employment. Except as provided in Paragraph 2.7 below, an Employee may not exercise a Stock Option unless from the date of grant to the date of exercise the Employee remains continuously in the employ of the Company. For purposes of this Paragraph 2.5, the period of continuous employment of an Employee with the Company shall be deemed to include (without extending the term of the Stock Option) any period during which the Employee is on leave of absence with the consent of the Company, provided that such leave of absence shall not exceed three months and that the Employee returns to the employ of the Company at the expiration of such leave of absence. If the Employee fails to return to the employ of the Company at the expiration of such leave of absence, the Employees employment with the Company shall be deemed terminated as of the date such leave of absence commenced. The continuous employment of an Employee with the Company shall also be deemed to include any period during which the Employee is a member of the Armed Forces of the United States, provided that the Employee returns to the employ of the Company within 90 days (or such longer period as may be prescribed by law) from the date the Employee first becomes entitled to a discharge from military service. If an Employee does not return to the employ of the Company within 90 days (or such longer period as may be prescribed by law) from the date the Employee first becomes entitled to a discharge from military service, the Employees employment with the Company shall be deemed to have terminated as of the date the Employees military service ended.

2.6      Restrictions on Transfer. Each Stock Option granted under this Plan shall be transferable only by will or the laws of descent and distribution. No interest of any Employee under this Plan shall be subject to attachment, execution, garnishment, sequestration, the laws of bankruptcy or any other legal or equitable process. Each Stock Option granted under this Plan shall be exercisable during an Employees lifetime only by the Employee or by the Employees legal representative.

2.7      Termination of Employment.

2.7.1    Upon an Employees Retirement, Disability (both terms being defined below) or death, (a) all Stock Options to the extent then presently exercisable shall remain in full force and effect and may be exercised pursuant to the provisions thereof, and (b) unless otherwise provided by the Committee, all Stock Options to the extent not then presently exercisable by the Employee shall terminate as of the date of such termination of employment and shall not be exercisable thereafter. Unless employment is terminated for cause, as defined by applicable law, the right to exercise in the event of termination of employment, to the extent that the optionee is entitled to exercise on the date the employment terminates as follows:

 

            (i)     At least six months from the date of termination if termination was caused by death or disability.

 

            (ii)    At least 30 days from the date of termination if termination was caused by other than death or disability.

2.7.2    Upon the termination of the employment of an Employee for any reason other than those specifically set forth in Paragraph 2.7.1, (a) all Stock Options to the extent then presently exercisable by the Employee shall remain exercisable only for a period of 90 days after the date of such termination of employment (except that the 90 day period shall be extended to 12 months if the Employee shall die during such 90 day period), and may be exercised pursuant to the provisions thereof, including expiration at the end of the fixed term thereof, and (b) unless otherwise provided by the Committee, all Stock Options to the extent not then presently exercisable by the Employee shall terminate as of the date of such termination of employment and shall not be exercisable thereafter.

	 
	 	2 	 
	 

	 

2.7.3    For purposes of this Plan:

 

           (a)    "Retirement" shall mean an Employees retirement from the employ of the Company on or after the date on which the Employee attains the age of 65 years; and

 

           (b)    "Disability" shall mean total and permanent incapacity of an Employee, due to physical impairment or legally established mental incompetence, to perform the usual duties of the Employees employment with the Company, which disability shall be determined (i) on medical evidence by a licensed physician designated by the Committee, or (ii) on evidence that the Employee has become entitled to receive primary benefits as a disabled employee under the Social Security Act in effect on the date of such disability.

3.         Provisions Relating to Awards.

3.1       Grant of Awards. Subject to the provisions of this Plan, the Committee shall have full and complete authority, in its discretion, but subject to the express provisions of this Plan, to (1) grant Awards pursuant to this Plan, (2) determine the number of shares of the Common Stock subject to each Award (the "Award Shares"), (3) determine the terms and conditions (which need not be identical) of each Award, including the consideration (if any) to be paid by the Employee for such Common Stock, which may, in the Committee’s discretion, consist of the delivery of the Employees promissory note meeting the requirements of Paragraph 2.4.1, (4) establish and modify performance criteria for Awards, and (5) make all of the determinations necessary or advisable with respect to Awards under this Plan. Each Award under this Plan shall consist of a grant of shares of the Common Stock subject to a restriction period (after which the restrictions shall lapse), which shall be a period commencing on the date the Award is granted and ending on such date as the Committee shall determine (the "Restriction Period"). The Committee may provide for the lapse of restrictions in installments, for acceleration of the lapse of restrictions upon the satisfaction of such performance or other criteria or upon the occurrence of such events as the Committee shall determine, and for the early expiration of the Restriction Period upon an Employees death, Disability or Retirement as defined in Paragraph 2.7.3, or, following a Change of Control, upon termination of an Employees employment by the Company without "Cause" or by the Employee for "Good Reason," as those terms are defined herein. For purposes of this Plan: 

"Change of Control" shall be deemed to occur (a) on the date the Company first has actual knowledge that any person (as such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) has become the beneficial owner (as defined in Rule 13(d)-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40 percent or more of the combined voting power of the Company’s then outstanding securities, or (b) on the date the stockholders of the Company approve (i) a merger of the Company with or into any other corporation in which the Company is not the surviving corporation or in which the Company survives as a subsidiary of another corporation, (ii) a consolidation of the Company with any other corporation, or (iii) the sale or disposition of all or substantially all of the Company’s assets or a plan of complete liquidation.

"Cause," when used with reference to termination of the employment of an Employee by the Company for "Cause," shall mean:

(a)    The Employees continuing willful and material breach of his duties to the Company after he receives a demand from the Chief Executive of the Company specifying the manner in which he has willfully and materially breached such duties, other than any such failure resulting from Disability of the Employee or his resignation for "Good Reason," as defined herein; or

(b)    The conviction of the Employee of a felony; or

(c)    The Employees commission of fraud in the course of his employment with the Company, such as embezzlement or other material and intentional violation of law against the Company; or

(d)    The Employees gross misconduct causing material harm to the Company.

"Good Reason" shall mean any one or more of the following, occurring following or in connection with a Change of Control and within 90 days prior to the Employees resignation, unless the Employee shall have consented thereto in writing:

(a)    The assignment to the Employee of duties inconsistent with his executive status prior to the Change of Control or a substantive change in the officer or officers to whom he reports from the officer or officers to whom he reported immediately prior to the Change of Control; or

(b)    The elimination or reassignment of a majority of the duties and responsibilities that were assigned to the Employee immediately prior to the Change of Control; or

(c)    A reduction by the Company in the Employees annual base salary as in effect immediately prior to the Change of Control; or

(d)    The Company requiring the Employee to be based anywhere outside a 35-mile radius from his place of employment immediately prior to the Change of Control, except for required travel on the Company’s business to an extent substantially consistent with the Employees business travel obligations immediately prior to the Change of Control; or

(e)    The failure of the Company to grant the Employee a performance bonus reasonably equivalent to the same percentage of salary the Employee normally received prior to the Change of Control, given comparable performance by the Company and the Employee; or

(f)    The failure of the Company to obtain a satisfactory Assumption Agreement (as defined in Paragraph 4.13 of this Plan) from a successor, or the failure of such successor to perform such Assumption Agreement. 

3.2       Incentive Agreements. Each Award granted under this Plan shall be evidenced by a written agreement (an "Incentive Agreement") in a form approved by the Committee and executed by the Company and the Employee to whom the Award is granted. Each Incentive Agreement shall be subject to the terms and conditions of this Plan and other such terms and conditions as the Committee may specify.

	 
	 	 3	 
	 

	 

3.3       Amendment, Modification and Waiver of Restrictions. The Committee may modify or amend any Award under this Plan or waive any restrictions or conditions applicable to the Award; provided, however, that the Committee may not undertake any such modifications, amendments or waivers if the effect thereof materially increases the benefits to any Employee, or adversely affects the rights of any Employee without his consent.

3.4       Terms and Conditions of Awards. Upon receipt of an Award of shares of the Common Stock under this Plan, even during the Restriction Period, an Employee shall be the holder of record of the shares and shall have all the rights of a stockholder with respect to such shares, subject to the terms and conditions of this Plan and the Award.

3.4.1    Except as otherwise provided in this Paragraph 3.4, no shares of the Common Stock received pursuant to this Plan shall be sold, exchanged, transferred, pledged, hypothecated or otherwise disposed of during the Restriction Period applicable to such shares. Any purported disposition of such Common Stock in violation of this Paragraph 3.4 shall be null and void.

3.4.2    If an Employees employment with the Company terminates prior to the expiration of the Restriction Period for an Award, subject to any provisions of the Award with respect to the Employees death, Disability or Retirement, or Change of Control, all shares of the Common Stock subject to the Award shall be immediately forfeited by the Employee and reacquired by the Company, and the Employee shall have no further rights with respect to the Award. In the discretion of the Committee, an Incentive Agreement may provide that, upon the forfeiture by an Employee of Award Shares, the Company shall repay to the Employee the consideration (if any) which the Employee paid for the Award Shares on the grant of the Award. In the discretion of the Committee, an Incentive Agreement may also provide that such repayment shall include an interest factor on such consideration from the date of the grant of the Award to the date of such repayment.

3.4.3    The Committee may require under such terms and conditions as it deems appropriate or desirable that (a) the certificates for the Common Stock delivered under this Plan are to be held in custody by the Company or a person or institution designated by the Company until the Restriction Period expires, (b) such certificates shall bear a legend referring to the restrictions on the Common Stock pursuant to this Plan, and (c) the Employee shall have delivered to the Company a stock power endorsed in blank relating to the Common Stock.

 

4.         Miscellaneous Provisions.

4.1       Adjustments Upon Change in Capitalization.

4.1.1    The number and class of shares subject to each outstanding Stock Option, the Exercise Price thereof (and the total price), the maximum number of Stock Options that may be granted under this Plan, the minimum number of shares as to which a Stock Option may be exercised at any one time, and the number and class of shares subject to each outstanding Award, shall not be proportionately adjusted in the event of any increase or decrease in the number of the issued shares of the Common Stock which results from a split-up or consolidation of shares, payment of a stock dividend or dividends exceeding a total of five percent for which the record dates occur in any one fiscal year, a recapitalization (other than the conversion of convertible securities according to their terms), a combination of shares or other like capital adjustment, so that (a) upon exercise of the Stock Option, the Employee shall receive the number and class of shares the Employee would have received prior to any such capital adjustment becoming effective, and (b) upon the lapse of restrictions of the Award Shares, the Employee shall receive the number and class of shares the Employee would have received prior to any such capital adjustment becoming effective.

4.1.2    Upon a reorganization, merger or consolidation of the Company with one or more corporations as a result of which the Company is not the surviving corporation or in which the Company survives as a wholly-owned subsidiary of another corporation, or upon a sale of all or substantially all of the property of the Company to another corporation, or any dividend or distribution to stockholders of more than 10 percent of the Company’s assets, adequate adjustment or other provisions shall be made by the Company or other party to such transaction so that there shall remain and/or be substituted for the Option Shares and Award Shares provided for herein, the shares, securities or assets which would have been issuable or payable in respect of or in exchange for such Option Shares and Award Shares then remaining, as if the Employee had been the owner of such shares as of the applicable date. Any securities so substituted shall be subject to similar successive adjustments.

4.2       Withholding Taxes. The Company shall have the right at the time of exercise of any Stock Option, the grant of an Award, or the lapse of restrictions on Award Shares, to make adequate provision for any federal, state, local or foreign taxes which it believes are or may be required by law to be withheld with respect to such exercise (the "Tax Liability"), to ensure the payment of any such Tax Liability. The Company may provide for the payment of any Tax Liability by any of the following means or a combination of such means, as determined by the Committee in its sole and absolute discretion in the particular case (1) by requiring the Employee to tender a cash payment to the Company, (2) by withholding from the Employees salary, (3) by withholding from the Option Shares which would otherwise be issuable upon exercise of the Stock Option, or from the Award Shares on their grant or date of lapse of restrictions, that number of Option Shares or Award Shares having an aggregate Fair Market Value (determined in the manner prescribed by Paragraph 2.2) as of the date the withholding tax obligation arises in an amount which is equal to the Employees Tax Liability or (4) by any other method deemed appropriate by the Committee. Satisfaction of the Tax Liability of a Section 16 Reporting Person may be made by the method of payment specified in clause (3) above only if the following two conditions are satisfied:

 

            (a)    The withholding of Option Shares or Award Shares and the exercise of the related Stock Option occur at least six months and one day following the date of grant of such Stock Option or Award; and

 

            (b)    The withholding of Option Shares or Award Shares is made either (i) pursuant to an irrevocable election (the "Withholding Election") made by the Employee at least six months in advance of the withholding of Options Shares or Award Shares, or (ii) on a day within a 10-day "window period" beginning on the third business day following the date of release of the Company’s quarterly or annual summary statement of sales and earnings.

Anything herein to the contrary notwithstanding, a Withholding Election may be disapproved by the Committee at any time.

4.3       Relationship to Other Employee Benefit Plans. Stock Options and Awards granted hereunder shall not be deemed to be salary or other compensation to any Employee for purposes of any pension, thrift, profit-sharing, stock purchase or any other employee benefit plan now maintained or hereafter adopted by the Company.

4.4       Amendments and Termination. The Board of Directors may at any time suspend, amend or terminate this Plan. No amendment, except as provided in Paragraph 3.3, or modification of this Plan may be adopted, except subject to stockholder approval, which would (1) materially increase the benefits accruing to the Employees under this Plan, (2) materially increase the number of securities which may be issued under this Plan (except for adjustments pursuant to Paragraph 4.1 hereof), or (3) materially modify the requirements as to eligibility for participation in this Plan.

4.5       Successors in Interest. The provisions of this Plan and the actions of the Committee shall be binding upon all heirs, successors and assigns of the Company and of the Employees.

	 
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4.6       Other Documents. All documents prepared, executed or delivered in connection with this Plan (including, without limitation, Option Agreements and Incentive Agreements) shall be, in substance and form, as established and modified by the Committee; provided, however, that all such documents shall be subject in every respect to the provisions of this Plan, and in the event of any conflict between the terms of any such document and this Plan, the provisions of this Plan shall prevail.

4.7       Fairness of the Repurchase Price. In the event that the Company repurchases securities upon termination of employment pursuant to this Plan, either: (a) the price will not be less than the fair market value of the securities to be repurchased on the date of termination of employment, and the right to repurchase will be exercised for cash or cancellation of purchase money indebtedness for the securities within 90 days of termination of the employment (or in the case of securities issued upon exercise of options after the date of termination, within 90 days after the date of the exercise), and the right terminates when the Company’s securities become publicly traded, or (b) Company will repurchase securities at the original purchase price, provided that the right to repurchase at the original purchase price lapses at the rate of at least 20 percent of the securities per year over five years from the date the option is granted (without respect to the date the option was exercised or became exercisable) and the right to repurchase must be exercised for cash or cancellation of purchase money indebtedness for the securities within 90 days of termination of employment (or in case of securities issued upon exercise of options after the date of termination, within 90 days after the date of the exercise).

4.8       No Obligation to Continue Employment. This Plan and the grants which might be made hereunder shall not impose any obligation on the Company to continue to employ any Employee. Moreover, no provision of this Plan or any document executed or delivered pursuant to this Plan shall be deemed modified in any way by any employment contract between an Employee (or other employee) and the Company.

4.9       Misconduct of an Employee. Notwithstanding any other provision of this Plan, if an Employee commits fraud or dishonesty toward the Company or wrongfully uses or discloses any trade secret, confidential data or other information proprietary to the Company, or intentionally takes any other action which results in material harm to the Company, as determined by the Committee, in its sole and absolute discretion, the Employee shall forfeit all rights and benefits under this Plan.

4.10    Term of Plan. No Stock Option shall be exercisable, or Award granted, unless and until the Directors of the Company have approved this Plan and all other legal requirements have been met. This Plan was adopted by the Board effective October 4, 2004. No Stock Options or Awards may be granted under this Plan after October 4, 2014.

4.11    Governing Law. This Plan and all actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Nevada.

4.12    Assumption Agreements. The Company will require each successor, (direct or indirect, whether by purchase, merger, consolidation or otherwise), to all or substantially all of the business or assets of the Company, prior to the consummation of each such transaction, to assume and agree to perform the terms and provisions remaining to be performed by the Company under each Incentive Agreement and Stock Option and to preserve the benefits to the Employees thereunder. Such assumption and agreement shall be set forth in a written agreement in form and substance satisfactory to the Committee (an "Assumption Agreement"), and shall include such adjustments, if any, in the application of the provisions of the Incentive Agreements and Stock Options and such additional provisions, if any, as the Committee shall require and approve, in order to preserve such benefits to the Employees. Without limiting the generality of the foregoing, the Committee may require an Assumption Agreement to include satisfactory undertakings by a successor:

(a)    To provide liquidity to the Employees at the end of the Restriction Period applicable to the Common Stock awarded to them under this Plan, or on the exercise of Stock Options;

(b)    If the succession occurs before the expiration of any period specified in the Incentive Agreements for satisfaction of performance criteria applicable to the Common Stock awarded thereunder, to refrain from interfering with the Company’s ability to satisfy such performance criteria or to agree to modify such performance criteria and/or waive any criteria that cannot be satisfied as a result of the succession; 

(c)    To require any future successor to enter into an Assumption Agreement; and

(d)    To take or refrain from taking such other actions as the Committee may require and approve, in its discretion.

4.13    Compliance with Rule 16b-3. Transactions under this Plan are intended to comply with all applicable conditions of Rule 16b-3 promulgated under the Exchange Act. To the extent that any provision of this Plan or action by the Committee fails to so comply, it shall be deemed null and void, to the extent permitted by law and deemed advisable by the Committee.

4.14    Information to Shareholders. The Company shall furnish to each of its stockholders financial statements of the Company at least annually.

IN WITNESS WHEREOF, this Plan has been executed effective as of October 4, 2004.

	 	 	 
	 	AMERICAN FIRE RETARDANT, CORP
	 
 	 
 	 
 
	Date: October 4, 2004	By:  	/s/ Stephen F. Owens
	 	

Stephen F. Owens
	 	Title: President

	
5

FormS-8_10-01-04

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