to the Prospectus, including post-effective
amendments, and all material incorporated by reference in such Prospectus.
"REGISTRABLE SHARES" means, at the relevant time of reference thereto, the
Shares and the Warrant Shares
(including any shares of capital stock that may
be issued in respect thereof pursuant to a stock split, stock dividend,
recombination, reclassification or the like), PROVIDED, HOWEVER, that the term
"Registrable Shares" shall not include any of the Shares or Warrant Shares that
are actually sold pursuant to a registration statement that has been declared
effective under the Securities Act by the SEC or that may be sold pursuant to
Rule 144(k) under the Securities Act.
"REGISTRATION STATEMENT" means the Mandatory Registration Statement and any
additional registration statements contemplated by this Agreement, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement or Prospectus.
"RULE 144" means Rule 144 promulgated under the Securities Act and any successor
or substitute rule, law or provision.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and all of the
rules and regulations promulgated thereunder.
"WARRANTS" means the warrants to purchase Common Stock, dated as of the date
hereof, issued by the Company to the Investors pursuant to the Securities
Purchase Agreement, a form of which is attached thereto as Exhibit A.
"WARRANT SHARES" means the shares of Common Stock issued or issuable upon the
exercise of the Warrants.
2.
MANDATORY REGISTRATION STATEMENT.
(A)
AS PROMPTLY AS POSSIBLE AFTER THE CLOSING
DATE, AND IN ANY EVENT PRIOR TO THE DATE THAT IS SIXTY (60) DAYS FOLLOWING THE
CLOSING DATE (THE "MANDATORY FILING DATE"), THE COMPANY SHALL PREPARE AND FILE
WITH THE SEC A REGISTRATION STATEMENT ON FORM S-1, FORM SB-2 OR, IF ELIGIBLE, ON
FORM S-3 FOR THE PURPOSE OF REGISTERING UNDER THE SECURITIES ACT ALL OF THE
REGISTRABLE SHARES FOR RESALE BY, AND FOR THE ACCOUNT OF, EACH INVESTOR AS AN
INITIAL SELLING STOCKHOLDER THEREUNDER (THE "MANDATORY REGISTRATION STATEMENT"),
WHICH THE INVESTORS ACKNOWLEDGE MAY ALSO REGISTER 3,381,538 SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THE OUTSTANDING SHARES OF SERIES A CONVERTIBLE
PREFERRED STOCK PREVIOUSLY ISSUED BY THE COMPANY'S SUBSIDIARY, PARTICLE DRILLING
TECHNOLOGIES, INC., A DELAWARE CORPORATION.
THE MANDATORY REGISTRATION
STATEMENT SHALL PERMIT THE INVESTORS TO OFFER AND SELL, ON A DELAYED OR
CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT, ANY OR ALL OF
THE REGISTRABLE SHARES.
THE COMPANY AGREES TO USE ITS COMMERCIALLY REASONABLE
EFFORTS TO CAUSE THE MANDATORY REGISTRATION STATEMENT TO BE DECLARED EFFECTIVE
AS SOON AS POSSIBLE BUT IN NO EVENT LATER THAN THE DATE THAT IS ONE HUNDRED
EIGHTY (180) DAYS FOLLOWING THE CLOSING DATE (THE "MANDATORY EFFECTIVE DATE")
(INCLUDING FILING WITH THE SEC, WITHIN THREE (3) BUSINESS DAYS OF THE DATE THAT
THE COMPANY IS NOTIFIED (ORALLY OR IN WRITING, WHICHEVER IS EARLIER) BY THE SEC
THAT THE MANDATORY REGISTRATION STATEMENT WILL NOT