Exhibit 10.1


 


STANDBY PURCHASE AGREEMENT


 


This STANDBY
PURCHASE AGREEMENT (this “Agreement”)
dated March 7, 2008, by and among Particle Drilling Technologies, Inc.,
a Nevada corporation (the “Company”),
and LC Capital Master Fund, Ltd., a Cayman Islands exempted company (“LCC”), and Millennium Partners,
L.P., a Cayman Islands limited partnership (“MLP”
and, together with LCC, the “Standby Purchasers”).


 


W  I  T  N
E  S  S  E  T  H:


 


WHEREAS, the Company
proposes pursuant to the Rights Offering Registration Statement (as defined
herein), to commence an offering on a pro rata basis to all existing holders of
its common stock (the “Common Stock”)
of record as of the close of business on March 17, 2008 (the “Record Date”), of non-transferable
rights (the “Rights”) to subscribe for and
purchase additional shares of Common Stock (the “New
Shares”) at the Subscription Price in accordance with the term
sheet attached hereto as Annex A and incorporated herein by reference (such
term sheet, the “Term Sheet” and, such
offering, the “Rights Offering”); and


 


WHEREAS, pursuant to the
Rights Offering, shareholders of record will receive a Right, as determined in
accordance with the Term Sheet, for each share of Common Stock held by them as
of the Record Date, and each Right will entitle the holder to purchase 0.11025
New Shares at the Subscription Price (the “Basic Subscription
Privilege”); and


 


WHEREAS, each holder of
Rights who exercises in full its Basic Subscription Privilege will be entitled
to subscribe for additional shares of Common Stock up to 100% of such holder’s
Pro Rata Share of the Unsubscribed Shares (as defined herein), at the
Subscription Price, to the extent that other holders of Rights do not exercise
all of their respective Basic Subscription Privileges (the “Over-Subscription Privilege”); and


 


WHEREAS, in order to
facilitate the Rights Offering, the Company has requested the Standby
Purchasers to agree, and each of the Standby Purchasers has agreed that, to the
extent New Shares are not purchased by the Company’s shareholders pursuant to
the exercise of Rights, the Standby Purchasers shall be deemed to have
exercised such Rights immediately prior to the expiration of the Rights
Offering and shall purchase the Unsubscribed Shares from the Company at the
Subscription Price pursuant to the exercise of such Rights; and


 


WHEREAS, in order to
guarantee a minimum participation of the Standby Purchasers, the Company shall
issue Options to the Standby Purchasers as set forth herein;


 


NOW THEREFORE, in
consideration of the foregoing and the mutual covenants herein contained and
other good and valuable consideration, the parties hereto, intending to be
legally bound hereby, agree as follows:


 


Section 1.
Certain Other Definitions. The following terms used herein shall have the meanings
set forth below:


 


“Action”
shall mean any action, suit claim, inquiry, notice of violation, proceeding
(including any partial proceeding such as a deposition) or investigation
against or affecting the Company, any of its Subsidiaries or any of their
respective properties before or by any court, arbitrator, governmental or
administrative agency, regulatory authority (federal, state, county, local or
foreign), public board, stock market, stock exchange or trading facility.


 


“Additional
Shares” shall have the meaning set forth in Section 2(c) hereof.


 


“Affiliate” shall mean
an affiliate (as defined in Rule 12b-2 under the Exchange Act) of such
Standby Purchaser; provided that such Standby Purchaser or any of its
Affiliates exercises investment authority, including, without limitation, with
respect to voting and dispositive rights with respect to such affiliate.


 

















 


“Agreement” shall have
the meaning set forth in the preamble hereof.


 


“Basic
Subscription Privilege”
shall have the meaning set forth in the recitals hereof.


 


“Board” shall mean the
Board of Directors of the Company.


 


“Business Day” shall
mean any day that is not a Saturday, a Sunday or a day on which banks are
generally closed in the State of Texas.


 


“Closing” shall mean
the closing of the purchase described in Section 2 hereof, which shall be
held at 11:00 a.m., Central Time, on the date that is three Business Days
after the Rights Offering Expiration Date, or such other date as may be agreed
to by the parties hereto, at the offices of Bracewell & Giuliani,
located at 711 Louisiana Street, Suite 2300, Houston, Texas 77002, or such
other time and place as may be agreed to by the parties hereto.


 


“Closing Date” shall
mean the date the Closing occurs.


 


“Commission” shall
mean the United States Securities and Exchange Commission, or any successor
agency thereto.


 


“Common Stock” shall
have the meaning set forth in the recitals hereof.


 


“Company” shall have
the meaning set forth in the preamble hereof.


 


“Company Indemnified Persons”
shall have the meaning set forth in Section 9(b) hereof.


 


“Company SEC Documents”
shall have the meaning set forth in Section 3(j) hereof.


 


“Cure Period” shall
have the meaning set forth in Section 8(a) hereof.


 


“Exchange Act” shall
mean the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the Commission thereunder.


 


“Expenses” shall have
the meaning set forth in Section 6(b) hereof.


 


 “Indemnified Persons” shall have the meaning
set forth in Section 9(b) hereof.


 


“Investment
Company” shall have the meaning set forth in Section 3(l) hereof.


 


“Legal
Requirement” means any federal, state, local, municipal,
foreign, international, multinational or other law, rule, regulation, order,
judgment, decree, ordinance, policy or directive, including those entered,
issued, made, rendered or required by any court, administrative or other
governmental body, agency or authority, or any arbitrator.


 


“Market Adverse Effect”
shall have the meaning set forth in Section 7(a)(iii) hereof.


 


“Material Adverse Effect”
shall mean a material adverse effect on the financial condition, or on the
earnings, financial position, operations, assets, results of operations,
business or prospects of the Company and its subsidiaries taken as a whole.


 


“New Shares” shall
have the meaning set forth in the recitals hereof.


 


“Non-Terminating Standby Purchaser”
shall have the meaning set forth in Section 8(c) hereof.


 


“Options”
shall have the meaning set forth in Section 2(c) hereof.


 


“Over-Subscription
Privilege” shall have the meaning set forth in the recitals
hereof.


 


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“Person” shall mean an
individual, corporation, partnership, association, joint stock company, limited
liability company, joint venture, trust, governmental entity, unincorporated
organization or other legal entity.


 


“Pro Rata Share” shall
mean, with respect to each shareholder of the Company as of the Record Date,
such shareholder’s ownership percentage of all issued and outstanding Common
Stock as of the Record Date.


 


“Prospectus” shall
mean a prospectus, as defined in Section 2(10) of the Securities Act,
which meets the requirements of Section 10 of the Securities Act and is
current with respect to the Securities covered thereby.


 


“Record Date” shall
have the meaning set forth in the recitals hereof.


 


“Rights” shall have
the meaning set forth in the recitals hereof.


 


“Rights Offering”
shall have the meaning set forth in the recitals hereof.


 


“Rights Offering Expiration Date”
shall mean April 16, 2008, provided that the Company shall have the option
to extend the Rights Offering for any reason, for a period not to exceed 15
Business Days.


 


“Rights Offering Prospectus”
shall mean the final Prospectus, including any prospectus supplement relating
to the Rights and the underlying shares of Common Stock that is filed with the
Commission and deemed by virtue of Rule 430B of the Securities Act to be
part of such registration statement, each as amended, for use in connection
with the issuance of the Rights, together with the documents incorporated by
reference therein pursuant to Item 12 of Form S-3.


 


“Rights Offering Registration
Statement” shall mean the Company’s shelf Registration Statement
on Form S-3 (Commission File No. 333-149091) filed with the
Commission on February 6, 2008, together with all exhibits thereto and any
prospectus supplement relating to the Rights and the underlying shares of
Common Stock that is filed with the Commission and deemed by virtue of Rule 430B
of the Securities Act to be part of such registration statement, each as
amended, pursuant to which the Rights and underlying shares of Common Stock
have been registered pursuant to the Securities Act.


 


“Securities” shall
mean those of the New Shares, Unsubscribed Shares and Additional Shares  that are purchased at the Closing in a single
transaction by the Standby Purchasers pursuant to Section 2 hereof.


 


“Securities Act” shall
mean the Securities Act of 1933, as amended, and the rules and regulations
promulgated by the Commission thereunder.


 


“Standby Indemnified Persons”
shall have the meaning set forth in Section 9(a) hereof.


 


“Standby Purchasers”
shall have the meaning set forth in the preamble hereof.


 


“Subscription Agent”
shall have the meaning set forth in Section 6(a)(iv) hereof.


 


“Subscription Price”
shall have the meaning set forth in the Term Sheet.


 


“Term
Sheet” shall have the meaning set forth in the recitals hereof.


 


“Terminating Standby Purchaser”
shall have the meaning set forth in Section 8(c) hereof.


 


“Unsubscribed Shares”
shall have the meaning set forth in Section 2(b) hereof.


 


Section 2.
Standby Purchase Commitment.


 


(a) Each of the
Standby Purchasers hereby agrees and agrees to cause any of its Affiliates to
purchase from the Company, and the Company hereby agrees to sell to each of the
Standby Purchasers and 


 


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any such Affiliates, at the Subscription Price, all of the New Shares
that will be available for purchase by each such person pursuant to its Basic
Subscription Privilege and Over-Subscription Privilege.


 


(b) If and to the
extent New Shares are not purchased by the Company’s other shareholders (the “Unsubscribed Shares”) pursuant to
the exercise of Rights (including the Basic Subscription Privilege and the
Over-Subscription Privilege) under the Rights Offering, the Standby Purchasers
shall be deemed to have exercised such Rights immediately prior to the
expiration of the Rights Offering and shall be entitled to and hereby agree to
purchase from the Company, and the Company hereby agrees to sell to the Standby
Purchasers, at the Subscription Price, all such Unsubscribed Shares; provided,
however, it is understood and agreed that, if and to the extent that the
Standby Purchasers are required to purchase Unsubscribed Shares pursuant to
this Section 2, then the first 700,000 Unsubscribed Shares shall be
allocated 20% to MLP and 80% to LCC, and any additional Unsubscribed Shares
shall be allocated 50% to MLP and 50% to LCC, provided that MLP shall not be
allocated in the aggregate (including shares purchased pursuant to its Basic
Subscription Privilege and Over-Subscription Privilege more than 580,000
shares. The obligations of the Standby Purchasers shall be several and not
joint.


 


(c) To guarantee a
minimum participation of the Standby Purchasers, the Company agrees to grant to
Standby Purchasers, options (the “Options”),
exercisable only in the event that there were fewer than 700,000 Unsubscribed
Shares, to purchase, at the Subscription Price, up to a number of additional
shares of Common Stock (the “Additional Shares”)
such that the Standby Purchasers have purchased an aggregate of 700,000 shares
pursuant to this Section 2(b) and 2(c). However, in no event shall
the shares acquired by MLP by virtue of (a), (b) and (c) hereof
together with its existing position of Common Stock exceed 4.9% of the Company’s
Common Stock. The Options for Additional Shares shall be apportioned 20% to MLP
and 80% to LCC. Either Standby Purchaser shall have the right, pursuant to its
Options, to purchase up to the total Additional Shares not purchased by the
other Standby Purchaser. Each Standby Purchaser must indicate its decision to
exercise its Options in whole or in part on failure of the other Standby
Purchaser to exercise its Options to purchase Additional Shares by notice in
writing to the Company prior to the expiration of the Rights Offering.


 


(d) The Company’s
obligation to sell and deliver the Securities to the Standby Purchasers shall
be contingent on each Standby Purchaser’s performance of its obligations under
this Agreement.


 


(e) Payment of the
Subscription Price for the Securities shall be made to the Company by each
Standby Purchaser, on the Closing Date, against delivery of the Securities to
each Standby Purchaser, in United States dollars by means of certified or
cashier’s checks, bank drafts, money orders or wire transfers.


 


Section 3.
Representations and Warranties of the Company. The Company represents and warrants to
each Standby Purchaser as of the date hereof and as of the Closing Date as
follows:


 


(a) The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada and has all requisite corporate power and authority
to own, lease, use and operate its properties and to carry on its business as
now operated and conducted. The Company and each of its subsidiaries is duly
qualified as a foreign corporation or limited liability company to do business
and is in good standing in each jurisdiction in which its ownership or use of
property or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect. Neither the Company nor any its
subsidiaries is in violation of any provision of its respective certificate or
articles of incorporation, articles of organization, partnership agreement,
bylaws or other organizational or charter documents, as the same may have been
amended.


 


(b) This Agreement
has been duly and validly authorized, executed and delivered by the Company and
constitutes a binding obligation of the Company enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether enforcement
is sought in a proceeding at law or in equity).


 


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(c) As of the date
of this Agreement, the authorized capital of the Company consists of
100,000,000 shares of Common Stock, par value $0.001 per share, of which
31,745,589 shares are outstanding, and 10,000,000 shares of preferred stock,
par value $0.001 per share, of which no shares are outstanding, and had
outstanding options and warrants to purchase up to 5,755,516 additional shares
of the Company’s Common Stock in the aggregate. All of the outstanding shares
of Common Stock have been duly authorized, are validly issued, fully paid and
nonassessable and were offered, sold and issued in compliance with all
applicable federal and state securities laws and without violating any
contractual obligation or other preemptive or similar rights.


 


(d) The execution,
delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby will not (i) conflict
with or result in a violation of any provision of the certificate of
incorporation, as amended, of the Company or the bylaws, as amended, of the
Company or (ii) result in a violation of any Legal Requirement (including
federal and state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its subsidiaries or by which any
property or asset of the Company or any of its subsidiaries is bound or
affected (except for such conflicts, defaults, terminations, amendments,
accelerations, cancellations and violations as would not, individually or in
the aggregate, have a Material Adverse Effect). Except with respect to any
filings or notices related to the issuance of the Securities to be filed with
The NASDAQ Stock Market, if any, and as required under the Securities Act and
any applicable state securities laws, the Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with,
any court, governmental agency, regulatory agency, self regulatory organization
or stock market or any third party in order for it to execute, deliver or
perform any of its obligations under this Agreement. All consents,
authorizations, orders, filings and registrations that the Company is required
to effect or obtain pursuant to the preceding sentence have been obtained or
effected on or prior to the date hereof.


 


(e) The Rights
Offering Registration Statement has been filed with, and declared effective by,
the Commission. On the effective date, the Rights Offering Registration
Statement complied in all material respects with the requirements of the
Securities Act and did not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading. On the date of the Rights Offering
Prospectus and on the Closing Date, the Rights Offering Prospectus will not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or omissions
from the Rights Offering Registration Statement or the Rights Offering
Prospectus made in reliance upon and in conformity with the information
furnished to the Company in writing by the Standby Purchasers for use in the
Rights Offering Registration Statement or in the Rights Offering Prospectus.


 


(f) All of the
Securities will have been duly authorized for issuance prior to the Closing,
and, when issued and distributed as set forth in the Rights Offering Prospectus
and this Agreement, will be validly issued, fully paid and non-assessable; and
none of the Securities or  New Shares
will have been issued in violation of the preemptive rights of any security
holders of the Company arising as a matter of law or under or pursuant to the
Company’s certificate of incorporation, as amended, the Company’s bylaws, as
amended, or any material agreement or instrument to which the Company is a
party or by which it is bound.


 


(g) The documents
incorporated by reference into the Rights Offering Prospectus pursuant to
Item 12 of Form S-3 under the Securities Act, when they become
effective or at the time they are filed with the Commission, as the case may
be, did or will comply in all material respects with the applicable provisions
of the Exchange Act.


 


(h) There is no
Action pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company or any of its subsidiaries that (i) adversely
affects or challenges the legality, validity or enforceability of this
Agreement, or (ii) would, if there were an unfavorable decision, have or
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries, nor any director or officer thereof (in his or her
capacity as such), is or 


 


5

















 


has been the subject of any Action involving a claim of violation of or
liability under federal or state securities laws or a claim of breach of
fiduciary duty. There has not been, and to the knowledge of the Company, there
is not pending any investigation by the Commission involving the Company or any
current or former director or officer of the Company (in his or her capacity as
such). The Commission has not issued any stop order or other order suspending
the effectiveness of any registration statement filed by the Company under the
Exchange Act or the Securities Act.


 


(i) The Company and
each of its subsidiaries has made or filed all federal, state and foreign
income and all other material tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the
Company and each of its subsidiaries has set aside on its books provisions
reasonably adequate for the payment of all unpaid and unreported taxes) and has
paid all taxes and other governmental assessments and charges that are material
in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on
its books provisions reasonably adequate for the payment of all taxes for
periods subsequent to the periods to which such returns, reports or
declarations apply. There are no unpaid taxes in any material amount claimed to
be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim. The Company has not executed a
waiver with respect to the statute of limitations relating to the assessment or
collection of any foreign, federal, state or local tax.


 


(j) Since October 1,
2007, the Company has filed with the Commission all forms, reports, schedules,
statements and other documents required to be filed by it through the date
hereof under the Exchange Act or the Securities Act (all such documents, as
supplemented and amended since the time of filing, collectively, the “Company SEC Documents”).
The Company SEC Documents, including without limitation all financial
statements and schedules included in the Company SEC Documents, at the time
filed (and, in the case of registration statements and proxy statements, on the
dates of effectiveness and the dates of mailing, respectively, and in the case
of any Company SEC Document amended or superseded by a filing prior to the date
of this Agreement, then on the date of such amending or superseding filing), (i) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, and (ii) complied in all material respects with the applicable
requirements of the Exchange Act and the Securities Act, as applicable. The
audited consolidated financial statements of Company included in the Company’s
Annual Report on Form 10-K for the fiscal year ended September 30,
2007 comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the
Commission with respect thereto, were prepared in accordance with United States
generally accepted accounting principles applied on a consistent basis during
the periods involved, and present fairly in all material respects, the
consolidated financial position of the Company and its consolidated
subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended.


 


(k) The Company has
established and maintains disclosure controls and procedures (as such term is defined
in Rule 13a-15(e) under the Exchange Act).


 


(l) The Company is
not, and upon the issuance and following the transactions contemplated by this
Agreement will not be, an “investment company” as defined under the Investment
Company Act of 1940 (“Investment Company”).
The Company is not controlled by an Investment Company.


 


(m) The Company has
taken no action which would give rise to any claim by any person for brokerage
commissions, transaction fees or similar payments relating to this Agreement or
the transactions contemplated hereby.


 


(n) Since December 31,
2007, there have not been any events, changes, occurrences or state of facts
that, individually or in the aggregate, have had or would reasonably be
expected to have a Material Adverse Effect, except as disclosed in writing by
the Company to the Standby Purchasers on the date hereof.


 


Section 4.
Representations and Warranties of the Standby Purchasers. Each Standby Purchaser, severally and
not jointly, represents and warrants to the Company, as to itself only, as
follows:


 


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(a) Such Standby
Purchaser is a limited partnership or limited liability company, duly organized
validly existing and in good standing under the laws of the jurisdiction in
which it is incorporated or organized. Each Standby Purchaser is acquiring its
Securities for its own account, with the intention of holding the Securities
for investment and with no present intention of participating, directly or
indirectly, in a distribution of the Securities.


 


(b) This Agreement
has been duly and validly authorized, executed and delivered by such Standby
Purchaser and constitutes a binding obligation of such Standby Purchaser
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws affecting creditors’ rights and remedies generally, and subject,
as to enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).


 


(c) The Standby
Purchasers are not “affiliates”
(within the meaning of Rule 405 of the Securities Act) of one another, are
not acting in concert and are not members of a “group” (within the meaning of Section 13(d)(3) of
the Exchange Act) and have no current intention to act in the future in a
manner that would make them members of such a group.


 


Section 5.
Deliveries at Closing.


 


(a) At the Closing,
the Company shall deliver to each of the Standby Purchasers the following:


 


(i) A
certificate or certificates representing the number of shares of Common Stock
issued to each of the Standby Purchasers pursuant to Section 2 hereof; and


 


(ii) A
certificate of an officer of the Company on its behalf to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct in all material respects on and as of the Closing Date, with
the same effect as if made on the Closing Date.


 


(b) At the Closing,
each of the Standby Purchasers shall deliver to the Company the following:


 


(i) Payment
in an amount equal to the Subscription Price multiplied by the Securities
purchased by such Standby Purchaser, as set forth in Section 2(c) hereof;
and


 


(ii) A
certificate of such Standby Purchaser to the effect that the representations
and warranties of such Standby Purchaser contained in this Agreement are true
and correct in all material respects on and as of the Closing Date with the
same effect as if made on the Closing Date.


 


Section 6.
Covenants.


 


(a) Covenants.
The Company agrees as follows between the date hereof and the earlier of the
Closing Date or the effective date of any termination pursuant to Section 8
hereof:


 


(i) To
use best efforts to effectuate the Rights Offering;


 


(ii) As
soon as reasonably practicable after the Company is advised or obtains
knowledge thereof, to advise the Standby Purchasers with a confirmation in
writing, of (A) the time when the Rights Offering Prospectus or any
amendment or supplement thereto has been filed, (B) the issuance by the
Commission of any stop order, or of the initiation or threatening of any
proceeding, suspending the effectiveness of the Rights Offering Registration
Statement or any amendment thereto or any order preventing or suspending the
use of any preliminary prospectus or the Rights Offering Prospectus or any
amendment or supplement thereto, (C) the issuance by any state securities
commission of any notice of any proceedings for the suspension of the
qualification of the New Shares for offering or sale in any jurisdiction or of
the initiation, or the threatening, of any proceeding for such purpose, (D) the
receipt of any comments from the Commission directed toward the Rights Offering
Registration Statement or any document incorporated therein by reference, and (E) any
request by the Commission for any amendment to the Rights Offering Registration
Statement or any amendment or supplement to the Rights Offering Prospectus or
for additional information. The Company will use its best efforts to prevent
the issuance of any such order or the imposition of any such suspension and, if
any such order is issued or suspension is imposed, to obtain the withdrawal
thereof as promptly as possible;


 


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(iii) To
operate the Company’s business until the Closing Date in the ordinary course of
business consistent with past practice;


 


(iv) To
notify, or to cause the subscription agent for the Rights Offering (the “Subscription Agent”)
to notify, on each Friday during the exercise period of the Rights, or more
frequently if reasonably requested by any Standby Purchaser, the Standby
Purchasers of the aggregate number of Rights known by the Company or the
Subscription Agent to have been exercised pursuant to the Rights Offering as of
the close of business on the preceding Business Day or the most recent
practicable time before such request, as the case may be;


 


(v) Except
as otherwise provided in this Agreement, not to issue any shares of capital
stock of the Company, or options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, securities convertible into or
exchangeable for capital stock of the Company, or other agreements or rights to
purchase or otherwise acquire capital stock of the Company, except for (A) shares
of Common Stock issuable upon exercise of the Company’s presently outstanding
stock options, and (B) new stock options and other awards granted to employees
of the Company after the date hereof at an exercise price no lower than the
Subscription Price under the Company’s incentive plans;


 


(vi) Not
to authorize any stock split, stock dividend, stock combination or similar
transaction affecting the number of issued and outstanding shares of Common
Stock;


 


(vii) Not
to declare or pay any dividends on its Common Stock or repurchase any shares of
Common Stock, other than ordinary quarterly dividends, regularly declared and
paid in accordance with past practice; and


 


(viii) Not
to incur any indebtedness or guarantees thereof, other than borrowings in the
ordinary course of business and consistent with past practice.


 


(b) Expense
Reimbursement. The Company agrees to promptly reimburse the Standby
Purchasers for all of their reasonable out-of-pocket costs and expenses and
reasonable attorneys’ fees (collectively, “Expenses”) incurred by the Standby Purchasers
in connection with this Agreement, any due diligence investigation of the
Company and other activities relating to the transactions contemplated
hereunder upon the Company’s receipt of all reasonably requested documentation
to support the incurrence by such Standby Purchaser of such Expenses.


 


(c) Certain
Acquisitions. Between the date hereof and the Closing Date, none of the
Standby Purchasers nor any of their respective Affiliates shall acquire any
shares of Common Stock; provided, however, that the foregoing
shall not restrict the acquisition of shares of Common Stock by the Standby
Purchasers or any of their respective Affiliates (i) from the Company
pursuant to Section 2 of this Agreement or (ii) from the Standby
Purchasers or any of their respective Affiliates.


 


(d) Information.
The Standby Purchasers agree to furnish to the Company all information with respect
to such Standby Purchaser that may be necessary or appropriate and will make
any information furnished to the Company for the Rights Offering Prospectus by
such Standby Purchaser not contain any untrue statement of material fact or
omit to state a material fact required to be stated in the Rights Offering
Prospectus or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.


 


(e) Public
Statements. Neither the Company nor the Standby Purchasers shall issue any
public announcement, statement or other disclosure with respect to this
Agreement or the transactions contemplated hereby without the prior consent of
the other parties hereto, which consent shall not be unreasonably withheld or
delayed, except (i) if such public announcement, statement or other
disclosure is required by applicable law or applicable stock market
regulations, in which case the disclosing party shall consult in advance with
respect to such disclosure with the other parties to the extent reasonably
practicable, or (ii) the filing of any Schedule 13D or
Schedule 13G, to which a copy of this Agreement may be attached as an
exhibit thereto.


 


(f) Regulatory
Filing. If the Company or any Standby Purchaser determines a filing is or
may be required under applicable law in connection with the transactions
contemplated hereunder, the Company 


 


8

















 


and such Standby Purchaser shall use commercially reasonable efforts to
promptly prepare and file all necessary documentation and to effect all
applications that are necessary or advisable under applicable law with respect
to the transactions contemplated hereunder so that any applicable waiting
period shall have expired or been terminated as soon as practicable after the
date hereof.


 


(g) Registration
of Resale by the Standby Purchasers. 
In the event that the Commission issues any stop order or commences any
regulatory action or investigation alleging that any Standby Purchaser cannot
resell any of the Securities without an effective resale registration statement
or issuer registration statement, on the written request of a Standby
Purchaser, the Company, at its expense, will promptly, and in no event later
than 90 days, file and use best efforts to cause to become effective any such
registration so that the Standby Purchasers can freely sell the
Securities.  The applicable Standby
Purchasers shall provide such information and cooperate with the Company in
connection with any such registration. 
The Company will agree to indemnify the Standby Purchasers in connection
with sales made pursuant to any such registration to the same extent as
provided in this Agreement.


 


(h) Corporate
Actions.  Prior to the Closing, the
Company will not (i) subdivide (by way of stock dividend, stock split or
otherwise) or combine (whether by stock combination, reverse stock split or
otherwise) into a smaller number of shares, its outstanding shares of Common
Stock; (ii)  declare a dividend or make any other distribution upon any
class or series of stock of the Company payable in shares of Common Stock; (iii) make
or issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Company (other than shares of Common Stock) or in cash or other property; (iv) change
the Common Stock issuable upon the exercise of a Right into the same or a
different number of shares of any class(es) or series of stock and/or the right
to receive property, whether by reclassification or otherwise; (v) effect
a reorganization, consolidate with or merge into any other Person, or sell or
transfer all or substantially all of its properties or assets or more than 50%
of the voting capital stock of the Company (whether issued and outstanding,
newly issued, from treasury, or any combination thereof) to any other Person
under any plan or arrangement contemplating the consolidation or merger, sale
or transfer, or dissolution of the Company.


 


Section 7.
Conditions to Closing.


 


(a) The obligations
of each of the Standby Purchasers to consummate the transactions contemplated
hereunder are subject to the fulfillment, as determined by each Standby
Purchaser in its sole discretion, on or prior to or on the Closing Date, of the
following conditions:


 


(i) The
representations and warranties of the Company in Section 3 shall be true
and correct in all material respects as of the date hereof and at and as of the
Closing Date as if made on such date (except for representations and warranties
made as of a specified date, which shall be true and correct in all material
respects as of such specified date);


 


(ii) The
Company has complied with all of the covenants set forth in Section 6;


 


(iii) Subsequent
to the execution and delivery of this Agreement and prior to the Closing Date,
there shall not have been any Material Adverse Effect;


 


(iv) As
of the Closing Date, trading in the Common Stock shall not have been suspended
by the Commission or The NASDAQ Stock Market LLC or trading in securities
generally on the New York Stock Exchange or The NASDAQ Stock Market LLC shall
not have been suspended or limited or minimum prices shall not have been
established on either exchange (a “Market Adverse Effect”); and


 


(v) all
deliveries or performance required under this Agreement to be made by the
Company on the Closing Date shall be made.


 


(b) The obligations
of the Company to consummate the transactions contemplated hereunder are
subject to the fulfillment, prior to or on the Closing Date, of the condition
that the representations and warranties of each of the Standby Purchasers in Section 4
shall be true and correct in all material respects as of the date hereof and at
and as of the Closing Date as if made as of such date (except for
representations and warranties made as of a specified date, which shall be true
and correct in all material respects as of 


 


9

















 


such specified date), and all deliveries or performance required under
this Agreement to be made by the Standby Purchasers on the Closing Date shall
be made.


 


(c) The obligations
of the Company and each of the Standby Purchasers to consummate the
transactions contemplated hereunder in connection with the Rights Offering are
subject to the fulfillment, as determined by each Standby Purchaser in its sole
discretion, prior to or on the Closing Date, of the following conditions:


 


(i) No
judgment, injunction, decree or other legal restraint shall prohibit, or have
the effect of rendering unachievable, the consummation of the Rights Offering
or the material transactions contemplated by this Agreement;


 


(ii) No
stop order suspending the effectiveness of the Rights Offering Registration
Statement or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission; and any
request of the Commission for inclusion of additional information in the
Registration Statement or otherwise shall have been complied with;


 


(iii) The
Securities shall have been authorized for listing on The NASDAQ Capital Market;
and


 


(iv) No
action of any state securities authority challenging the transactions under
this Agreement shall have been instituted or threatened.


 


Section 8.
Termination.


 


(a) This Agreement
may be terminated at any time prior to the Closing Date, by either of the
Standby Purchasers by written notice to the other parties hereto if there is (i) a
Material Adverse Effect or (ii) a Market Adverse Effect that is not cured
within 21 days after the occurrence thereof to the satisfaction of the
notifying Standby Purchaser (the “Cure Period”).


 


(b) This Agreement
may be terminated by the Company on one hand or by the Standby Purchasers on
the other hand, by written notice to the other parties hereto:


 


(i) At
any time prior to the Closing Date, if there is a material breach of this
Agreement by the other party that is not cured within 15 days after the
non-breaching party has delivered written notice to the breaching party of such
breach; or


 


(ii) At
any time after May 31, 2008, unless the Closing has occurred prior to such
date.


 


(c) If any of the
Standby Purchasers (the “Terminating
Standby Purchaser”) shall give written notice of its election to
terminate this Agreement pursuant to this Section 8 at any time prior to
the Closing Date, this Agreement shall remain in effect with respect to the
Company and the other Standby Purchasers (the “Non-Terminating Standby Purchaser”) to
the extent the Non-Terminating Standby Purchasers shall have agreed in writing,
within two Business Days of such Terminating Standby Purchaser’s giving of such
written notice, to assume all of the obligations of the Terminating Standby
Purchaser hereunder, including, without limitation, the obligation to purchase
the Unsubscribed Shares pursuant to Section 2(b) hereof, but subject
to the limitations of Section 2(b) hereof. To the extent that the
Non-Terminating Standby Purchaser does not assume all of the obligations of the
Terminating Standby Purchaser, this Agreement will be deemed terminated with
respect to both Standby Purchasers.


 


Section 9.
Indemnification and Contribution.


 


(a) In the event the
Rights Offering is consummated, the Company shall indemnify and hold harmless
the Standby Purchasers and their respective officers, directors and employees
and each other Person, if any, who controls such Standby Purchaser within the
meaning of the Securities Act (all such Persons being hereinafter referred to,
collectively, as the “Standby
Indemnified Persons”), against any losses, claims, damages or
liabilities, to which any of the Standby Indemnified Persons may become subject
(i) as a result of any breach by the Company of any of its representations
or warranties contained herein or in any certificate delivered hereunder or (ii) under
the Securities Act or any other statute or at common law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any alleged untrue statement of any material fact
contained in the Rights Offering Registration Statement on the effective date
thereof or any alleged omission to state therein a material fact 


 


10

















 


required to be stated therein or necessary to make the statements
therein not misleading or (iii) under the Securities Act or any other
statute or at common law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
alleged untrue statement of any material fact contained, on the date thereof,
in the Rights Offering Prospectus or in any amendment or supplement thereto, or
any alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading, and shall reimburse each such
Standby Indemnified Person for any reasonable legal or any other expenses
reasonably incurred by such Standby Indemnified Person in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Company shall not be liable in any such case to any
Standby Indemnified Person to the extent that any such loss, claim, damage or
liability arises out of or is based upon any actual or alleged untrue statement
or actual or alleged omission made in the Rights Offering Registration
Statement, Rights Offering Prospectus or in any amendment or supplement thereto
or in reliance upon and in conformity with written information furnished to the
Company by such Standby Indemnified Person specifically for use therein. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Standby Indemnified Person, and shall survive the
transfer of such  Securities by such
Standby Indemnified Person.


 


(b) Each Standby
Purchaser by acceptance hereof, severally, and not jointly, agrees to indemnify
and hold harmless the Company, its officers, directors and employees and each
other Person, if any, who controls the Company within the meaning of the
Securities Act (all such Persons being hereinafter referred to, collectively,
as the “Company
Indemnified Persons,” and together with the Standby Indemnified
Persons, the “Indemnified
Persons”) against any losses, claims, damages or liabilities,
joint or several, to which any of the Company Indemnified Persons may become
subject (i) as a result of any breach by such Standby Purchaser of any of
its representations or warranties contained herein or in any certificate
delivered hereunder or (ii) under the Securities Act or any other statute
or at common law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of, or are based upon, information
provided in writing to the Company by such Standby Purchaser specifically for
use in the Rights Offering Registration Statement or Rights Offering Prospectus
or any amendment or supplement thereto.


 


(c) Any Person
entitled to indemnification hereunder will (i) give prompt written notice
to the indemnifying party of any claim with respect to which it seeks
indemnification (provided that the failure to give such notice shall not
limit the rights of such Person, except to the extent the indemnifying party is
actually prejudiced thereby) and (ii) unless, in such indemnified party’s
reasonable judgment, a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided, however, that
any person entitled to indemnification hereunder shall have the right to employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (A) the
indemnifying party has agreed to pay such fees or expenses or (B) the
indemnifying party shall have failed to assume the defense of such claim and
employ counsel reasonably satisfactory to such Person. If such defense is not
assumed by the indemnifying party as permitted hereunder, the indemnifying
party will not be subject to any liability for any settlement made by the
indemnified party without its prior written consent (but such consent will not
be unreasonably withheld or delayed). If such defense is assumed by the
indemnifying party pursuant to the provisions hereof, such indemnifying party
shall not settle or otherwise compromise the applicable claim unless (i) such
settlement or compromise contains a full and unconditional release of the
indemnified party or (ii) the indemnified party otherwise consents in
advance in writing, which consent shall not be unreasonably withheld or
delayed. An indemnifying party who is not entitled to, or elects not to, assume
the defense of a claim will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such indemnifying party
with respect to such claim, unless in the reasonable judgment of any indemnified
party, a conflict of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such claim, in which event
the indemnifying party shall be obligated to pay the reasonable fees and
disbursements of such additional counsel or counsels.


 


(d) (i) If the
indemnification provided for in this Section 9 is unavailable to an
Indemnified Person hereunder in respect of any losses, claims, damages,
liabilities or expenses referred to therein, then the indemnifying party, in
lieu of indemnifying such Indemnified Person, shall contribute to the amount 


 


11

















 


paid or payable by such Indemnified Person as a result of such losses,
claims, damages, liabilities or expenses in such proportion as is appropriate
to reflect the relative fault of the indemnifying party and Indemnified Person
in connection with the actions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative fault of such indemnifying party and Indemnified Persons shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made by, or relates to
information supplied by, the indemnifying party or the Indemnified Persons, and
their relative intent, knowledge, access to information and opportunity to
correct or prevent such action. The amount paid or payable by a party as a
result of the losses, claims, damages, liabilities and expenses referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or proceeding.


 


(ii) The parties
hereto agree that it would not be just and equitable if contribution pursuant
to this Section 9(d) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.


 


Section 10.
Survival.
The representations and warranties of the Company and each of the Standby
Purchasers contained in this Agreement or in any certificate delivered
hereunder shall survive the Closing hereunder.


 


Section 11.
Notices.
All notices, communications and deliveries required or permitted by this
Agreement shall be made in writing signed by the party making the same, shall
specify the Section of this Agreement pursuant to which it is given or
being made and shall be deemed given or made (a) on the date delivered if
delivered by telecopy or in person, (b) on the third Business Day after it
is mailed if mailed by registered or certified mail (return receipt requested)
(with postage and other fees prepaid) or (c) on the day after it is
delivered, prepaid, to an overnight express delivery service that confirms to
the sender delivery on such day, as follows:


 


	
  (i)   if
  to LCC, at:

  	
   

  	
  LC Capital Master Fund,
  Ltd.

  
	
   

  	
   

  	
  680 Fifth Avenue,
  Suite 1202

  
	
   

  	
   

  	
  New York, New York
  10019

  
	
   

  	
   

  	
  Attn: Steven G. Lampe

  
	
   

  	
   

  	
  Telephone: (212)
  581-8989

  
	
   

  	
   

  	
  Facsimile: (212)
  581-8999

  
	
   

  	
   

  	
   

  
	
  (ii)  if to
  MLP, at:

  	
   

  	
  Millennium Partners,
  L.P.

  
	
   

  	
   

  	
  666 Fifth Aveneue

  
	
   

  	
   

  	
  New York, NY 10103

  
	
   

  	
   

  	
  Attn: Terry Feeney

  
	
   

  	
   

  	
  Telephone: (212)
  841-4411

  
	
   

  	
   

  	
  Facsimile: (212)
  905-4333

  
	
   

  	
   

  	
   

  
	
  (iii) if to the
  Company, at:

  	
   

  	
  Particle Drilling
  Technologies, Inc.

  
	
   

  	
   

  	
  5611 Baird Court

  
	
   

  	
   

  	
  Houston, Texas 77041

  
	
   

  	
   

  	
  Attn: J. Chris Boswell

  
	
   

  	
   

  	
  Telephone: (713)
  223-3031

  
	
   

  	
   

  	
  Facsimile: (713)
  224-6361

  



 


12

















 


	
  with a copy to (which copy shall not constitute
  notice):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Bracewell & Giuliani LLP

  
	
   

  	
   

  	
  711 Louisiana Street, Suite 2300

  
	
   

  	
   

  	
  Houston, Texas 77002

  
	
   

  	
   

  	
  Attn: William S. Anderson

  
	
   

  	
   

  	
  Telephone: (713) 221-1122

  
	
   

  	
   

  	
  Facsimile: (713)
  437-5370

  



 


or to such other representative
or at such other address of a party as such party hereto may furnish to the
other parties in writing in accordance with this Section 11.


 


Section 12.
Assignment.
This Agreement will be binding upon, and will inure to the benefit of and be
enforceable by, the parties hereto and their respective successors and assigns,
including any person to whom Securities are transferred in accordance herewith.


 


Section 13.
Entire Agreement. This Agreement embodies the entire agreement and understanding
between the parties hereto in respect of the subject matter contained herein.
There are no restrictions, promises, warranties, or undertakings, other than
those set forth or referred to herein, with respect to the standby purchase
commitments with respect to the Securities and the New Shares. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to the subject matter of this Agreement.


 


Section 14.
Governing Law.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York (other than its rules of conflict
of laws to the extent the application of the laws of another jurisdiction would
be required thereby).


 


Section 15.
Severability.
If any provision of this Agreement or the application thereof to any person or
circumstances is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid, void or unenforceable, shall remain in full force and effect
and shall in no way be affected, impaired or invalidated thereby, so long as
the economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination, the
parties shall negotiate in good faith in an effort to agree upon a suitable and
equitable substitute provision to effect the original intent of the parties.


 


Section 16.
Extension or Modification of Rights Offering. The Company may (a) waive
irregularities in the manner of exercise of the Rights, and (b) waive
conditions relating to the method (but not the timing) of the exercise of the
Rights to the extent that such waiver does not materially adversely affect the
interests of the Standby Purchasers.


 


Section 17.
Miscellaneous.


 


(a) The Company
shall not after the date of this Agreement enter into any agreement with
respect to its securities which is inconsistent with or violates the rights
granted to the Standby Purchasers in this Agreement.


 


(b) The headings in
this Agreement are for purposes of reference only and shall not limit or
otherwise affect the meaning of this Agreement.


 


(c) This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, but all of which, when taken together, shall constitute one and
the same instrument.


 


[Remainder of this page intentionally left blank.]


 


13

















 


IN WITNESS WHEREOF, the
parties have caused this Agreement to be duly executed and delivered as of the
date first above written.


 


 


	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  Particle Drilling
  Technologies, Inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  J. Chris Boswell

  	
   

  
	
   

  	
  Name: 

  	
  J. Chris Boswell

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  
					



 


 


	
   

  	
  STANDBY PURCHASERS:

  
	
   

  	
   

  
	
   

  	
  LC Capital Master Fund, Ltd.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  Steven G. Lampe

  	
   

  
	
   

  	
  Name: 

  	
  Steven G. Lampe

  
	
   

  	
  Title:

  	
  Managing Member of GP

  
					



 


	
   

  	
  Millennium Partners, L.P.

  
	
   

  	
  By: Millennium
  Management LLC, general partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
       /s/
  Larry Statsky

  	
   

  
	
   

  	
  Name: 

  	
  Larry Statsky

  
	
   

  	
  Title:

  	
  Chief Administrative
  Officer

  
					



 

















 


Annex A


 


PARTICLE
DRILLING TECHNOLOGIES, INC.


 


Term
Sheet


 


	
  Issuer:

  	
   

  	
  Particle Drilling
  Technologies, Inc. (the “Company”)

  
	
   

  	
   

  	
   

  
	
  Offering
  Size:

  	
   

  	
  Common equity rights
  offering of approximately $5.25 million

  
	
   

  	
   

  	
   

  
	
  Authorization:

  	
   

  	
  Prior approval of the
  Company’s Board of Directors — no shareholder approval required

  
	
   

  	
   

  	
   

  
	
  Rights
  Offering:

  	
   

  	
  The Company will
  distribute to holders of its common stock (the “Eligible
  Participants”), at no charge, one subscription right for each
  share of the Company’s common stock that Eligible Participants own as of the
  Record Date.

  
	
   

  	
   

  	
   

  
	
  Subscription
  Privilege:

  	
   

  	
  Each subscription right
  will entitle Eligible Participants to purchase 0.11025 of a share of Common
  Stock, upon payment of the Subscription Price in cash.

  
	
   

  	
   

  	
   

  
	
  Subscription
  Commitment:

  	
   

  	
  LC Capital Master Fund,
  Ltd. and Millennium Partners, L.P., and/or their affiliates, will act as
  Standby Purchasers in the Rights Offering for all of the Unsubscribed Shares.

  
	
   

  	
   

  	
   

  
	
  Minimum
  Guarantee Participation for Standby Purchasers:

  	
   

  	
  The Company shall
  guarantee minimum participation to the Standby Purchasers through options in
  accordance with Section 2(c) of the Standby Purchase Agreement.

  
	
   

  	
   

  	
   

  
	
  Launch
  Date:

  	
   

  	
  The Launch Date is to
  be the Record Date at 5:00 p.m., Central Time.

  
	
   

  	
   

  	
   

  
	
  Record
  Date:

  	
   

  	
  March 17, 2008

  
	
   

  	
   

  	
   

  
	
  Rights
  Offering Expiration Date:

  	
   

  	
  The rights would expire
  no later than 30 days after the Launch Date, subject to the Company’s option
  to extend the rights offering for any reason, for a period not to exceed 15
  business days. Rights not exercised by the Rights Offering Expiration Date
  will be null and void

  
	
   

  	
   

  	
   

  
	
  Subscription
  Price:

  	
   

  	
  The Subscription Price
  shall be $1.50 per share and will be paid in cash. All payments must be
  cleared on or before the Rights Offering Expiration Date

  
	
   

  	
   

  	
   

  
	
  Transferability
  of Rights:

  	
   

  	
  The subscription rights
  may not be sold, transferred or assigned

  
	
   

  	
   

  	
   

  
	
  Use
  of Proceeds:

  	
   

  	
  Working capital and for
  general corporate purposes

  
	
   

  	
   

  	
   

  
	
  Subscription
  Agent:

  	
   

  	
  Computershare Trust
  Company, N.A.

  
	
   

  	
   

  	
   

  
	
  Other
  Conditions:

  	
   

  	
  Subject to the
  following conditions: (i) satisfactory negotiation and execution of
  definitive documentation and (ii) Conditions set forth in the Standby
  Purchase Agreement.

  
	
   

  	
   

  	
   

  
	
  Expenses:

  	
   

  	
  All of the expenses
  incurred by the Standby Purchasers are to be reimbursed by the Company.