Document:

Exhibit 10.37

 

FIRST AMENDMENT TO THE

1999 OUTSIDE DIRECTORS STOCK OPTION PLAN

 

WHEREAS, the Board of Directors of ITT Educational Services, Inc. (the
“Company”) adopted the 1999 Outside Directors Stock Option Plan (the “Plan”) on
July 28, 1999; and

 

WHEREAS, the Board of Directors now desires to amend the Plan in a
respect that does not require shareholder approval.

 

NOW, THEREFORE, the Plan is hereby amended as follows:

 

1.                                       Section
6 of the Plan is hereby amended to read as follows:

 

6.                                       Automatic Option Grants.  On the tenth business day following the date
of the Annual Meeting each year, commencing in 2003, each Eligible Director who
was an Eligible Director immediately prior to the Annual Meeting in that year
and who remains an Eligible Director on the tenth business day following the
date of the Annual Meeting, shall be automatically granted an Option to
purchase 10,000 shares of Common Stock (subject to adjustment as provided
in Paragraph 8).  Each Option shall
be evidenced by an agreement in such form as the Board shall prescribe from
time to time in accordance with the Plan and shall comply with the following
terms and conditions and such additional terms and conditions not inconsistent
with the Plan as may from time to time be prescribed by the Board.

 

(a)                                  The Option exercise
price per share shall be one hundred percent (100%) of the Fair Market Value of
a share of Common Stock on the date the Option is granted.

 

(b)                                 The Option shall not
be transferable by the Grantee otherwise than by will or the laws of descent
and distribution, and shall be exercisable during his lifetime only by him.

 

(c)                                  The Option shall not
be exercisable before the expiration of one year from the date it is granted.

 

(d)                                 The Option shall not
be exercisable after the expiration of ten years from the date it is granted.

 

(e)                                  To exercise an Option
under the Plan, the Grantee must give written notice to the Company specifying
the number of shares of Common Stock with respect to which the Grantee

 

A-12

 

elects to exercise the Option together with full payment of the Option
exercise price.  The date of exercise
shall be the date on which the notice is received by the Company.  Payment may be made either:

 

(i)                                     in cash (including
check, bank draft or money order);

 

(ii)                                  by tendering shares
of Common Stock already owned by the Grantee and having a Fair Market Value on
the date of exercise equal to the Option exercise price;

 

(iii)                               by the simultaneous
“cashless” exercise of the Option and the sale of the shares of Common Stock
issuable upon exercise of the Option; or

 

(iv)                              by a combination of (i),
(ii) or (iii).

 

(f)                                    An Option shall not
be exercisable unless the person exercising the Option has been, at all times
during the period beginning with the date of grant of the Option and ending on
the date of such exercise, in continuous service on the Board, except that:

 

(i)                                     if any Grantee of
an Option shall die or become permanently disabled or shall retire with the
consent of the Board, holding an Option that has not expired and has not been
fully exercised, he or his executor, administrators, heirs, or distributees, as
the case may be, may, at any time within one year after the date of such event
(but in no event after the Option has expired under the provisions of
subparagraph 6(d) above), exercise the Option with respect to any shares
as to which the Grantee could have exercised the Option at the time of his
death, disability, or retirement; or

 

(ii)                                  if a Grantee shall
cease to serve as a director of the Company for any reason other than those set
forth in 6(f)(i) above, while holding an Option that has not expired and has
not been fully exercised, the Grantee, at any time within three months of the
date he ceased to be such an Eligible Director (but in no event after the
Option has expired under the provisions of subparagraph 6(d) above), may
exercise the Option with respect to any shares of Common Stock as to which he
could have exercised the Option on the date he ceased to be such an Eligible
Director.

 

(g)                                 Each Grantee of an
Option shall pay to the Company, or make arrangements satisfactory to the Board
regarding the payment of, any federal, state, or local taxes of any kind
required by law to be withheld with respect to the shares of Common Stock as to
which an Option is being exercised.

 

2.                                       This
First Amendment to the Plan shall become effective upon its adoption by the
Board of Directors of the Company.

 

	
   

  	
  Adopted by the Board of Directors of ITT
  Educational Services, Inc. on May 6, 2003

  

 

A-13Exhibit 10.38

 

FIRST AMENDMENT TO THE
1997 ITT EDUCATIONAL SERVICES, INC. INCENTIVE STOCK
PLAN

 

 

WHEREAS, the shareholders of ITT Educational Services, Inc. (the
“Company”) approved the 1997 ITT Educational Services, Inc. Incentive Stock
Plan (the “Plan”) on May 13, 1997; and

 

WHEREAS, the Board of Directors of the Company now desires to amend the
Plan in a respect that does not require shareholder approval.

 

NOW, THEREFORE, the Plan is hereby amended as follows:

 

1.                                       Section
15 of the Plan is hereby amended to read as follows:

 

15.                               Effective
Date and Term of Plan.  The
Plan shall become effective upon its adoption by the Board of Directors and
shareholders of the Company.  No Award
shall be granted under this Plan after the Plan’s termination date.  The Plan’s termination date shall be ten
years from the effective date, unless sooner terminated under Section 12
hereof.  The Plan will continue in
effect for existing Awards as long as any such Award is outstanding.

 

2.                                       This
First Amendment to the Plan shall become effective upon its adoption by the
Board of Directors of the Company.

 

	
   

  	
  Adopted by the
  Board of Directors of ITT Educational Services, Inc. on July 15, 2003

  

 

A-14Exhbit 10.1

                            Michael T. Williams, Esq.
                               2503 W. Gardner Ct.
                                 Tampa FL 33611
                               Phone: 813.831.9348
                                Fax: 813.832.5284
                         e-mail: wmslaw@tampabay.rr.com

                                  May 15, 2003

HydroFlo, Inc.
Raleigh NC

Via e-mail and fax

Re:  Engagement Agreement

Dear Sirs:

     This letter sets forth the terms by which I shall be engaged in connection
with matters described below. I agree that the terms and conditions of the
engagement shall be as set forth in this letter.

1.   Engagement. I have been engaged as special counsel for the HydroFlo, Inc.,
["Company"].

The engagement shall be limited to the assistance with following matters:

        o      The preparation of a Forms 10K-SB, 10Q-SB, and 8-K
        o      The preparation of Forms 3, 4, 5, and 13D/G
        o      The establishment of an insider stock trading monitoring program
        o      Availability to respond to general securities law questions

No other services, including but not limited to services in connection with the
offer or sale of securities in a capital-raising transaction, and services that
directly or indirectly promote or maintain a market for your securities, shall
be the subject of or provided under this Agreement.

The term of the engagement shall be for the first 24 months commencing May 15,
2003.

2.   Fees, Costs and Expenses.  My  fee shall be 125,000 shares of common stock,
to be registered on form S-8 as soon as the form is available and issued in 24
equal monthly installments the first day of each month of after services
commence under this agreement, with the final installment due upon the
expiration of this agreement. I shall prepare the S-8 and related legal opinion.
I shall be responsible for expenses of filing, such as edgar and the SEC filing
fee, and you shall be responsible for accounting fees.

                               Sincerely,

                              /s/  Michael T. Williams
                                   Michael T. Williams, Esq.

The above is understood and agreed to:

HydroFlo, Inc.

By: /s/ Dennis Mast, CEO
        Dennis Mast, CEOExhibit 10.2

                               Crescent Fund, Inc.
                 67 Wall Street, 22nd Floor, New York, NY 10005
                    Phone: 212.509.3060   Fax: 212.509.3106
                      Email: crescentfund@crescentfund.com

HydroFlo, Inc.
3721 Junction Blvd.
Raleigh, NC 27603

July 14, 2003

Dear Mr. Mast:

Please issue the stock due as compensation under the attached contract to
Jeffery Stone, the person primarily responsible for performing the services
therein.

Regards,

/s/ Jeffery Stone
    Jeffery Stone
    Managing Director

                       BUSINESS PLAN CONSULTING AGREEMENT

         This Agreement made this 16th day of June, 2003, by and between
Crescent Fund, Inc., a Texas corporation, whose address is 67 Wall Street, 22nd
Floor, New York, New York 10005, hereinafter referred to as "CRESCENT" or
"Consultant" and HydroFlo, Inc., a North Carolina corporation, its agents,
successors or assigns, hereinafter referred to as "HYDROFLO" or "Client", whose
address is 3721 Junction Blvd., Raleigh, North Carolina 27603.

         Whereas Consultant is in the business of providing Business Plan
consulting services to businesses and whereas Client desires to retain
Consultant for the following purposes:

         To assist Client in re-writing and editing its Business Plan.

         For and in consideration of mutual benefits, detriments, and promises,
and the cross considerations hereinafter set forth, the adequacy of which is
hereby acknowledged, the parties hereto, CRESCENT and HYDROFLO, collectively
"THE PARTIES", hereby covenant and agree as follows:

1.   Services

        a.   CRESCENT is hereby engaged by HYDROFLO to assist in restructuring
             HYDROFLO'S business plan.

2.   Compensation

        a.   HYDROFLO hereby agrees to pay CRESCENT for the services set forth
             in Paragraph 1, the following non-refundable retainer items:

                1.   The issuance of 37,500 shares of free-trading common stock
                     (such stock shall be issued within three days after the
                     date hereof)

        b.   HYDROFLO shall pay all out-of-pocket expenses related to the
             services set forth in Paragraph 1 above, subject to budget approval
             by HYDROFLO prior to incurring the expense.

3.   Termination of Agreement

                  This Consulting Agreement may not be terminated by either
party prior to the expiration of the term provided herein above, except as
follows:

        a.   Upon the bankruptcy or liquidation of the other party, whether
             voluntary or involuntary;

        b.   Upon the other party taking the benefit of any insolvency law;

        c.   Upon the other party having or applying for a receiver appointed
             for either party; and/or

        d.   Mutual consent of the parties.

4.   Notices

                  All notices hereunder shall be in writing and addressed to the
party at the address herein set forth, or at such other address which notice
pursuant to this section may be given, and shall be given by either certified
mail, express mail or other overnight courier service. Notices shall be deemed
given upon the earlier of actual receipt or three (3) business days after being
mailed or delivered to such courier service. Any notices to be given hereunder
shall be effective if executed by and/or sent by the attorneys for THE PARTIES
giving such notice and, in connection therewith, THE PARTIES and their
respective counsel agree in giving such notice such counsel may communicate
directly in writing with such party to the extent necessary to give such notice.

5.   Attorney Fees

                  In the event either party is in default of the terms or
conditions of this Consulting Agreement and legal action is initiated or suit be
entered as a result of such default, the prevailing party shall be entitled to
recover all costs incurred as a result of such default including reasonable
attorneys fees, expenses and court costs through trial, appeal and to final
disposition.

6.   Time is of the Essence

                  Time is hereby expressly made of the essence of this
Consulting Agreement with respect to the performance by THE PARTIES of their
respective obligations hereunder.

7.   Inurement

                  This Consulting Agreement shall inure to the benefit of and be
binding upon THE PARTIES hereto and their respective heirs, executors,
administrators, personal representatives, successors, and assigns.

8.   Entire Agreement

                  This Consulting Agreement contains the entire agreement of THE
PARTIES. It is declared by THE PARTIES that there are no other oral or written
agreements or understanding between them affecting this Agreement. This
Agreement supercedes all previous agreements.

9.   Amendments

                  This Agreement may be modified or amended provided such
modifications or amendments are mutually agreed upon by and between THE PARTIES
hereto and that said modifications or amendments are made only by an instrument
in writing signed by THE PARTIES.

10.  Waivers

                  No waiver of any provision or condition of this Agreement
shall be valid unless executed in writing and signed by the party to be bound
thereby, and then only to the extent specified in such waiver.  No waiver of any
provision or condition of this Agreement shall be construed as a waiver of any
other provision or condition of this Agreement, and no present waiver of any
provision or condition of this Agreement shall be construed as a future waiver
of such provision or condition.

11.  Non-Waiver

                  The failure of either party, at any time, to require any such
performance by any other party shall not be construed as a waiver of such right
to require such performance, and shall in no way affect such party's right to
require such performance and shall in no way affect such party's right
subsequently to require a full performance hereunder.

12.  Construction of Agreement

                  Each party and its counsel have participated fully in the
review and revision of this Agreement. Any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not apply
in the interpretation of this Agreement.

13.  Applicable Law

                  THIS AGREEMENT IS EXECUTED PURSUANT TO AND SHALL BE
INTERPRETED AND GOVERNED FOR ALL PURPOSES BY THE LAWS OF THE STATE OF TEXAS FOR
WHICH THE COURTS IN DALLAS COUNTY, TEXAS SHALL HAVE JURISDICTION WITHOUT GIVING
EFFECT TO THE CHOICE OR LAWS OR CONFLICT OF LAWS RULES THEREOF OR OF ANY STATE.

14.  Counterparts

                  This Agreement may be executed in a number of identical
counterparts.  Each such counterpart is deemed an original for all purposes and
all such counterparts shall, collectively, constitute one agreement, but, in
making proof of this Agreement, it shall not be necessary to produce or account
for more than one counterpart. 15. Facsimile

                  A facsimile copy of this Agreement is acceptable.

16.  Acceptance of Agreement.

                  Unless both parties have signed this Agreement within ten (10)
business days of the date listed above, this Agreement shall be deemed
automatically withdrawn and terminated.

         IN WITNESS WHEREOF, THE PARTIES have set forth their hands and seal in
execution of this Consulting Agreement this 16th day of June, 2003, by and
between:

CRESCENT FUND, INC.,                         HYDROFLO, INC.,
a Texas corporation                          a North Carolina corporation

By: _______________________                  By: _____________________________
    Melanie Gee, President                       Dennis Mast, CEO

Date: _____________________                  Date: ___________________________

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