Document:

Exhibit 4.1

 

FORM OF
SUBSCRIPTION CERTIFICATE

 

THE TERMS
AND CONDITIONS OF THE RIGHTS OFFERING ARE SET FORTH IN

THE
COMPANY’S PROSPECTUS SUPPLEMENT DATED MARCH 18, 2008

(THE “PROSPECTUS SUPPLEMENT”)

AND ARE
INCORPORATED HEREIN BY REFERENCE.

COPIES OF
THE PROSPECTUS SUPPLEMENT ARE AVAILABLE UPON REQUEST FROM

COMPUTERSHARE
TRUST COMPANY, N.A. AS THE SUBSCRIPTION AGENT.

 

STOCKHOLDER NAME AND ADDRESS:

 

 

CERTIFICATE NO.:

 

CERTIFICATE
FOR
                  
RIGHTS

 

PARTICLE
DRILLING TECHNOLOGIES, INC.

INCORPORATED
UNDER THE LAWS OF THE STATE OF NEVADA

 

SUBSCRIPTION
CERTIFICATE

 

EVIDENCING
                
NON-TRANSFERABLE SUBSCRIPTION RIGHTS TO PURCHASE

SHARES OF
COMMON STOCK OF PARTICLE DRILLING TECHNOLOGIES, INC.

 

SUBSCRIPTION
PRICE: $1.50 PER SHARE

 

VOID IF
NOT EXERCISED BEFORE THE EXPIRATION DATE

(AS
DEFINED IN THE PROSPECTUS SUPPLEMENT)

 

REGISTERED OWNER:

 

THIS
CERTIFIES THAT
the registered owner whose name is inscribed herein is the owner of the number
of Subscription Rights set forth above, each of which entitles the owner to
subscribe for and purchase 0.11025 shares of common stock, par value $0.001 per
share (the “Common Stock”), of Particle Drilling Technologies, Inc., a
Nevada corporation (the “Company”), on the terms and subject to the conditions
set forth in the Company’s Prospectus Supplement dated March 18, 2008, and
instructions relating thereto on the reverse side hereof and in the
instructions as to the use of this certificate included in this mailing.  The non-transferable Subscription Rights
represented by this Subscription Certificate may be exercised by duly
completing Section 1 on the reverse side hereof and by returning the full
payment of the subscription price for each share of Common Stock as described
on the reverse side hereof.  Special issuance
or delivery instructions may be specified by completing Section 2 on the
reverse side hereof.

 

THE
SUBSCRIPTION RIGHTS EVIDENCED BY THIS SUBSCRIPTION CERTIFICATE ARE NOT
TRANSFERABLE.  SUCH SUBSCRIPTION RIGHTS MAY NOT
BE EXERCISED UNLESS THE REVERSE SIDE HEREOF IS COMPLETED AND SIGNED.

 

Dated: March 18,
2008

 

	
  /s/ Jim B. Terry

  	
   

  	
  /s/ Thomas E. Hardisty

  
	
   

  	
   

  
	
  Jim B. Terry

  	
  Thomas E. Hardisty

  
	
  Chief Executive
  Officer, President

  	
  Secretary

  

 

	
   

  	
  Countersigned
  By:

  
	
   

  	
  Computershare
  Trust Company, N.A.

  
	
   

  	
   

  
	
   

  	
   

  

 

1

 

SECTION 1
- EXERCISE AND SUBSCRIPTION

 

The undersigned
irrevocably exercises Subscription Rights to subscribe for shares of the
Company’s Common Stock, as indicated below, on the terms and subject to the
conditions specified in the Company’s Prospectus Supplement dated March 18,
2008, relating to the offering of such Subscription Rights, receipt of which is
hereby acknowledged.

 

(a)           Number of shares of the Company’s Common
Stock subscribed for pursuant to the Basic Subscription Privilege:

 

(b)           Number of shares of the Company’s Common
Stock subscribed for pursuant to the Over-Subscription Privilege:

 

 

YOU MAY NOT EXERCISE THE
OVER-SUBSCRIPTION PRIVILEGE UNLESS YOUR BASIC SUBSCRIPTION PRIVILEGE HAS BEEN
EXERCISED IN FULL.

 

(c)           Total Subscription Price (total number of
shares subscribed for pursuant to both the Basic Subscription Privilege plus
the Over-Subscription Privilege multiplied by the Subscription Price of $1.50
per share): $                                      .

 

METHOD OF PAYMENT (CHECK ONE)

 

o                        Uncertified personal check, payable to Computershare
Trust Company, N.A., as Subscription Agent for Particle Drilling Technologies, Inc.  Please note that funds paid by
uncertified personal check may take at least five business days to clear.  Accordingly, subscription rights holders who
wish to pay the purchase price by means of an uncertified personal check are
urged to make payment sufficiently in advance of the expiration date to ensure
that such payment is received and clears by the expiration date, and are urged
to consider payment by means of a certified or bank check, money order or wire
transfer of immediately available funds.

 

o                        Certified check or bank check drawn on a U.S. bank or
money order, payable to Computershare Trust Company, N.A., as Subscription
Agent for Particle Drilling Technologies, Inc.

 

o                        Wire transfer directed to the account maintained by
Computershare Trust Company, N.A. at

 

Colorado Business Bank

15710 Colfax Avenue

Golden, Colorado 80401

(303) 293-2265

ABA# 102003206

Credit Account # 3055035

Account Name:    Computershare
Trust Company, N.A.

CTC Company Escrow Account

 

If the amount enclosed or
transmitted is not sufficient to pay the purchase price for all shares of
Common Stock that are stated to be subscribed for, or if the number of shares
of Common Stock being subscribed for is not specified, the number of shares of
Common Stock subscribed for will be assumed to be the maximum number that could
be subscribed for upon payment of such amount. If the amount enclosed or
transmitted exceeds the purchase price for all shares of Common Stock that the
undersigned has the right to subscribe for under the Basic Subscription
Privilege plus the Over-Subscription Privilege (such excess amount, the “Subscription
Excess”), the Subscription Agent shall return the Subscription Excess to the
subscriber without interest or deduction.

 

2

 

SECTION 2
— SPECIAL ISSUANCE OR DELIVERY INSTRUCTIONS FOR

SUBSCRIPTION
RIGHTS HOLDERS:

 

To be completed ONLY if
the certificate representing the Common Stock is to be issued in a name other
than that of the registered holder or is to be sent to an address other than
that shown above.  (See the Instructions
included with this Subscription Certificate.) 
Do not forget to complete the guarantee of
signature(s) section below.

 

Please issue the
certificate representing the Common Stock in the following name and/or deliver
to the following address:

 

	
  Name:

  	
   

  	
  Soc. Sec.#/Tax ID#:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  
					

 

 

ACKNOWLEDGMENT
– THE SUBSCRIPTION ORDER FORM

IS NOT
VALID UNLESS YOU SIGN BELOW

 

I/We acknowledge receipt
of the Prospectus Supplement and understand that after delivery of this
Subscription Certificate to the Company’s Subscription Agent, I/we may not
modify or revoke this Subscription Certificate. Under penalties of perjury,
I/we certify that the information contained herein, including the social
security number or taxpayer identification number given above, is correct. If
the Special Issuance or Delivery Instructions for Subscription Rights Holders
are completed, I/we certify that although the certificate representing the
Common Stock is to be issued in a name other than the registered holder,
beneficial ownership of the Common Stock will not change.

 

The signature below must
correspond with the name of the registered holder exactly as it appears on the
books of the Company’s transfer agent without any alteration or change
whatsoever.

 

	
  Subscriber’s
  Signature(s):

  	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
						

 

If signature is by
trustee(s), executor(s), administrator(s), guardian(s), attorney(s)-in-fact,
agent(s), officer(s) of a corporation or another acting in a fiduciary or
representative capacity, please provide the following information (please
print).  (See the Instructions included
with this Rights Certificate.)

 

	
  Name:

  	
   

  	
  Capacity:

  	
   

  
	
   

  	
   

  
	
  Address:

  	
   

  	
  Phone:

  	
   

  
						

 

	
   

  	
  Soc. Sec.# or Tax ID#:

  	
   

  

 

GUARANTEE
OF SIGNATURE(S)

 

All Subscription Rights
Holders who specify special issuance or delivery instructions must have their
signatures guaranteed by an Eligible Institution, as defined in Rule 17Ad-15
of the Securities Exchange Act of 1934, as amended.  (See the Instructions.)

 

	
  Signature Guaranteed
  by:

  	
   

  	
   

  
	
   

  	
  Eligible
  Institution

  	
   

  
					

 

3Exhibit 4.2

 

SUBSCRIPTION AGENT AGREEMENT

 

This
Subscription Agent Agreement (the “Agreement”) is made as of March 7, 2008
between Particle Drilling Technologies, Inc., a Nevada corporation (the “Company”), Computershare, Inc., a Delaware corporation
and its fully owned subsidiary Computershare Trust Company, N.A., a federally
chartered trust company (collectively, the “Agent” or
individually “Computershare” and the “Trust Company”, respectively).

 

WHEREAS,
the Company proposes to make a subscription offer by issuing certificates or
other evidences of subscription rights, in the form designated by the Company
(the “Subscription  Certificates”)
to shareholders of record (the “Record Date Shareholders”)
of its Common Stock, par value $0.001 per share (“Common Stock”),
as of a record date specified by the Company (the “Record Date”),
pursuant to which each Record Date Shareholder will have certain rights (the “Rights”) to subscribe for shares of Common Stock, as
described in and upon such terms as are set forth in the Prospectus Supplement
to be filed by the Company with the Securities and Exchange Commission (the “SEC”) in connection with the subscription offer described
herein (the “Prospectus Supplement”), a final
copy of which has been or, upon availability will promptly be, delivered to the
Agent;

 

WHEREAS,
on or about the date of this Agreement, the Company will enter into an
agreement (the “Standby Purchase Agreement”) with
one or more existing shareholders (the “Standby Purchasers”),
pursuant to which the Standby Purchasers will purchase any shares issuable upon
exercise of any unexercised Rights following the allocation of shares of Common
Stock to Record Date Shareholders pursuant to the Basic Subscription Privilege
(as defined below) and the Over-Subscription Privilege (as defined below); and

 

WHEREAS,
the Company wishes the Agent to perform certain acts on behalf of the Company,
and the Agent is willing to so act, in connection with the distribution of the
Subscription Certificates and the issuance and exercise of the Rights to
subscribe therein set forth, all upon the terms and conditions set forth
herein.

 

NOW,
THEREFORE, in consideration of the foregoing and of the mutual agreements set
forth herein, the parties agree as follows:

 

1.           Appointment.

 

The
Company hereby appoints the Agent to act as subscription agent in connection
with the distribution of Subscription Certificates and the issuance and
exercise of the Rights in accordance with the terms set forth in this
Agreement, and the Agent hereby accepts such appointment.

 

2.           Form and Execution of
Subscription Certificates.

 

A.  Each Subscription Certificate shall be
irrevocable and non-transferable.  The
Agent shall, in its capacity as Transfer Agent of the Company, maintain a
register of Subscription Certificates and the holders of record thereof (each
of whom shall be deemed a “Shareholder”  

 

 

hereunder for purposes of determining the
rights of holders of Subscription Certificates).  Each Subscription Certificate shall, subject
to the provisions thereof, entitle the Shareholder in whose name it is recorded
to the following:

 

(1) 
With respect to Record Date Shareholders only, the right to acquire during the
subscription period set forth in the Prospectus Supplement (the “Subscription Period”), at the subscription price set forth
in the Prospectus Supplement (the “Subscription Price”),
a number of shares of Common Stock equal to 0.11025 shares of Common Stock for
every one Right (the “Basic Subscription
Privilege”); and

 

(2) 
With respect to Record Date Shareholders only, the right to subscribe for
additional shares of Common Stock at the Subscription Price, subject to the
availability of such shares and to the allotment of such shares as may be
available among Record Date Shareholders who exercise Over-Subscription Rights
on the basis specified in the Prospectus Supplement; provided, however, that
such Record Date Shareholder has exercised in full his or her Basic
Subscription Privilege (the “Over-Subscription
Privilege”).

 

3.           Rights and Issuance of Subscription
Certificates.

 

A.  Each Subscription Certificate shall evidence
the Rights of the Shareholder therein named to purchase Common Stock upon the
terms and conditions therein and herein set forth.

 

B.  Upon the written advice of the Company,
signed by any of its duly authorized officers, as to the Record Date, the Agent
shall, from a list of the Company Shareholders as of the Record Date to be
prepared by the Agent in its capacity as Transfer Agent of the Company, prepare
and record Subscription Certificates in the names of the Record Date
Shareholders, setting forth the number of Rights to be issued to the Record
Date Shareholders, calculated on the basis of one Right for each whole share of
Common Stock recorded on the books in the name of each such Shareholder as of
the Record Date.  The number of Rights
that are issued to Record Date Shareholders will be rounded down, by the Agent,
to the nearest number of full Rights, as fractional Rights will not be issued.  Each Subscription Certificate shall be dated
as of the Record Date and shall be executed manually or by facsimile signature
of a duly authorized officer of the Agent. 
Upon the written advice, signed as aforesaid, as to the effective date
of the Registration Statement, the Agent shall promptly countersign and deliver
the Subscription Certificates, together with a copy of the Prospectus
Supplement, instruction letter and any other document as the Company deems
necessary or appropriate, to all Record Date Shareholders with record addresses
in the United States (including its territories and possessions and the
District of Columbia).  Delivery shall be
by first class mail (without registration or insurance), except for those
Record Date Shareholders having a registered address outside the United States
(who will only receive copies of the Prospectus Supplement, instruction letter
and other documents as the Company deems necessary or appropriate, if
any).  Delivery shall be by air mail
(without registration or insurance) or by first class mail (without
registration or insurance) to those Record Date Shareholders having APO or FPO
addresses.  No Subscription Certificate
shall be valid for any purpose unless executed as provided in this Section 3(B).

 

C.  The Agent shall not mail the Subscription
Certificate, the Prospectus Supplement, instruction letter, special notice or
any other subscription documents to Record Date 

 

2

 

Shareholders whose record addresses are
outside the United States (including its territories and possessions and the
District of Columbia ) (“Foreign Record Date
Shareholders”).  The Rights to
which such Subscription Certificates relate will be held by the Agent for such
Foreign Record Date Shareholders’ accounts until instructions are received to
exercise, sell or transfer the Rights.

 

4.           Exercise.

 

A.  Each Record Date Shareholder may acquire
shares of Common Stock pursuant to the Basic Subscription Privilege and the
Over-Subscription Privilege by delivery to the Agent as specified in the
Prospectus Supplement of (i) the Subscription Certificate with respect
thereto, duly executed by such Shareholder in accordance with and as provided
by the terms and conditions of the Subscription Certificate, together with (ii) the
Subscription Price, as disclosed in the Prospectus Supplement, for each share
of Common Stock subscribed for by such Shareholder by exercise of such Rights,
in U.S. dollars by money order, check drawn on a bank in the United States or
wire transfer of immediately available funds to an account maintained by the
Agent, in each case payable to the order of Computershare.

 

B.  Rights may be exercised at any time after the
date of issuance of the Subscription Certificates with respect thereto but no
later than 5:00 P.M., Houston, Texas, time on such date as the Company
shall designate to the Agent in writing (the “Expiration
Date”).  For the purpose of
determining the time of the exercise of any Rights, delivery of any material to
the Agent shall be deemed to occur when such materials are received at the
Shareholder Services Division of the Agent specified in the Prospectus
Supplement.

 

C.  Notwithstanding the provisions of Section 4(A) and
4(B) regarding delivery of an executed Subscription Certificate to the
Agent prior to 5:00 P.M., Houston, Texas, time on the Expiration Date, if
prior to such time the Agent receives a Notice of Guaranteed Delivery by
facsimile (telecopy) or otherwise from a bank, a trust company or a member firm
of a registered national securities exchange guaranteeing delivery of (i) payment
of the full Subscription Price for the shares of Common Stock subscribed for
pursuant to the Basic Subscription Privilege and any additional shares of
Common Stock subscribed for pursuant to the Over-Subscription Privilege, and (ii) a
properly completed and executed Subscription Certificate, then such exercise of
the Basic Subscription Privilege and, if applicable, the Over-Subscription
Privilege shall be regarded as timely, subject, however, to receipt of the duly
executed Subscription Certificate and full payment for the Common Stock by the
Agent within three Business Days (as defined below) after the Expiration Date
and full payment for their Common Stock within ten Business Days after the
Confirmation Date (as defined in Section 4(D)).  For the purposes of this Agreement, “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.

 

D.  As soon as practicable after the Expiration
Date (the “Confirmation Date”), Computershare
shall send to each exercising Shareholder (or, if shares of Common Stock on the
Record Date are held by Cede & Co. or any other depository or nominee,
to Cede & Co. or such other depository or nominee) a confirmation
showing the number of shares of Common Stock acquired pursuant to the Basic
Subscription Privilege, and, if applicable, the Over-Subscription Privilege,
the per share and total purchase price for such shares, and any additional
amount payable to the Company by such Shareholder or any excess to be refunded
by the Company to 

 

3

 

such Shareholder in the form of a check and
stub, along with a letter explaining the allocation of shares of Common Stock
pursuant to the Over-Subscription Privilege.

 

E.  Any additional payment required from a
Shareholder must be received by Computershare within ten Business Days after
the Confirmation Date, and any excess payment to be refunded by the Company to
a Shareholder will be mailed by Computershare within ten Business Days after
the Confirmation Date.  If a Shareholder
does not make timely payment of any additional amounts due in accordance with Section 4(D),
Computershare will consult with the Company in accordance with Section 5
as to the appropriate action to be taken. 
Computershare will not issue or deliver certificates or Statements of
Holding for shares subscribed for until payment in full therefore has been
received, including collection of checks and payment pursuant to notices of guaranteed
delivery.

 

5.           Validity of Subscriptions.

 

Irregular
subscriptions not otherwise covered by specific instructions herein shall be
submitted to an appropriate officer of the Company and handled in accordance
with his or her instructions.  Such
instructions will be documented by the Agent indicating the instructing officer
and the date thereof.

 

6.           Over-Subscription.

 

If,
after allocation of shares of Common Stock to Record Date Shareholders pursuant
to the Basic Subscription Privilege, there remain unexercised Rights, then the
Agent shall allot the shares issuable upon exercise of such unexercised Rights
(the “Remaining Shares”) to Record Date
Shareholders who have exercised all the Rights initially issued to them and who
wish to acquire more than the number of shares for which the Rights issued to
them are exercisable, it being understood that the Standby Purchasers will be
required to exercise their Basic Subscription Privilege pursuant to the Standby
Purchase Agreement.  Shares subscribed
for pursuant to the Over-Subscription Privilege will be allocated in the
amounts of such over-subscriptions.  If
the number of shares for which the Over-Subscription Privilege has been
exercised is greater than the Remaining Shares, the Agent shall allocate the
Remaining Shares to Record Date Shareholders exercising their Over-Subscription
Privilege pro rata based on the number of shares of Common Stock owned by them
on the Record Date.  The percentage of
Remaining Shares each over-subscribing Record Date Shareholder may acquire will
be rounded down to result in delivery of whole shares of Common Stock.  The Agent shall advise the Company
immediately upon the completion of the allocation set forth above as to the
total number of shares subscribed and distributable.

 

7.            Delivery of
Shares.

 

The
Agent will deliver (i) certificates or Statement of Holding reflecting new
shares of Common Stock in the Direct Registration System, representing those
shares of Common Stock purchased pursuant to the exercise of the Basic Subscription
Privilege as soon as practicable after the corresponding Rights have been
validly exercised and full payment for such shares has been received and
cleared and (ii) certificates or Statements of Holding representing those
shares purchased pursuant to the exercise of the Over-Subscription Privilege as
soon as practicable after the Expiration Date and after all allocations have
been effected.

 

4

 

8.           Holding Proceeds of Rights
Offering.

 

A.  All proceeds received by Computershare from
Shareholders in respect of the exercise of Rights shall be held by
Computershare, on behalf of the Company, in a segregated account (the “Account”).  No
interest shall accrue to the Company or Shareholders on funds held in the Account
pending disbursement in the manner described in Section 4(E) above.

 

B.  Computershare shall deliver all proceeds
received in respect of the exercise of Rights to the Company as promptly as
practicable, but in no event later than ten Business Days after the
Confirmation Date.

 

C.  The Company acknowledges that the bank
accounts maintained by Computershare in connection with the services provided
under this Agreement will be in its name and that Computershare may receive
investment earnings in connection with the investment at Computershare’s risk
and for its benefit of funds held in those accounts from time to time.

 

9.           Reports.

 

Daily,
during the period commencing on the first Business Day immediately following
the Record Date, until termination of the Subscription Period, the Agent will
report by telephone, facsimile or electronic mail, confirmed by letter, to an
officer of the Company, data regarding Rights exercised, the total number of
shares of Common Stock subscribed for, and payments received therefore,
bringing forward the figures from the previous day’s report in each case so as
to show the cumulative totals and any such other information as may be mutually
determined by the Company and the Agent.

 

10.         Loss or Mutilation.

 

If
any Subscription Certificate is lost, stolen, mutilated or destroyed, the Agent
may, on such terms which will indemnify and protect the Company and the Agent
as the Agent may in its discretion impose (which shall, in the case of a
mutilated Subscription Certificate include the surrender and cancellation
thereof), issue a new Subscription Certificate of like denomination in
substitution for the Subscription Certificate so lost, stolen, mutilated or
destroyed.

 

11.         Compensation for Services.

 

The
Company agrees to pay to the Agent compensation for its services hereunder in
accordance with its Fee Schedule to act as Agent attached hereto as Exhibit A.  The Company further agrees that it will
reimburse the Agent for its reasonable out-of-pocket expenses incurred in the
performance of its duties as such.

 

12.         Instructions, Indemnification and
Limitation of Liability.

 

The
Agent undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions:

 

A.  The Agent shall be entitled to rely upon any instructions
or directions furnished to it by an appropriate officer of the Company, whether
in conformity with the provisions of this Agreement or constituting a
modification hereof or a supplement hereto. 
Without limiting the generality of the foregoing or any other provision
of this Agreement, the Agent, in connection with its duties hereunder, shall
not be under any duty or obligation to inquire into the validity or 

 

5

 

invalidity or authority or lack thereof of any instruction or direction
from an officer of the Company which conforms to the applicable requirements of
this Agreement and which the Agent reasonably believes to be genuine and shall
not be liable for any delays, errors or loss of data occurring by reason of
circumstances beyond the Agent’s control.

 

B.  The Company will indemnify the Agent and its
nominees against, and hold it harmless from, all liability and expense which
may arise out of or in connection with the services described in this Agreement
or the instructions or directions furnished to the Agent relating to this
Agreement by an appropriate officer of the Company, except for any liability or
expense which shall arise out of the gross negligence, bad faith or willful
misconduct of the Agent or such nominees.

 

Promptly
after the receipt by the Agent of notice of any demand or claim or the
commencement of any action, suit, proceeding or investigation, the Agent shall,
if a claim in respect thereof is to be made against the Company, notify the
Company thereof in writing.  The Company
shall be entitled to participate at its own expense in the defense of any such
claim or proceeding, and, if it so elects at any time after receipt of such
notice, it may assume the defense of any suit brought to enforce any such claim
or of any other legal action or proceeding. 
For the purposes of this Section 12, the term “expense or loss”
means any amount paid or payable to satisfy any claim, demand, action, suit or
proceeding settled with the express written consent of the Agent, and all
reasonable costs and expenses, including, but not limited to, reasonable
counsel fees and disbursements, paid or incurred in investigating or defending
against any such claim, demand, action, suit, proceeding or investigation.

 

C.  The Agent shall be responsible for and shall
indemnify and hold the Company harmless from and against any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to Agent’s refusal or failure to comply with the terms
of this Agreement, or which arise out of Agent’s gross negligence or willful
misconduct or which arise out of the breach of any representation or warranty
of Agent hereunder, for which  Agent is
not entitled to indemnification under this Agreement; provided, however, that
Agent’s aggregate liability during any term of this Agreement with respect to,
arising from, or arising in connection 
with  this  Agreement, or from all services provided or
omitted to be provided under this Agreement, whether in contract, or in tort,
or otherwise, is limited to, and shall not exceed, the amounts paid hereunder
by the Company to Agent as fees and charges, but not including reimbursable
expenses, during the twelve (12) calendar months immediately preceding the
event for which recovery from the Agent is being sought.

 

13.         Changes in Subscription Certificate.

 

The
Agent may, without the consent or concurrence of the Shareholders in whose
names Subscription Certificates are registered, by supplemental agreement or
otherwise, concur with the  Company in
making any changes or corrections in a Subscription Certificate that it shall
have been advised by counsel (who may be counsel for the Company) is appropriate
to cure any ambiguity or to correct any defective or inconsistent provision or
clerical omission or mistake or manifest error therein or herein contained, and
which shall not be inconsistent with the provision of the Subscription
Certificate except insofar as any such change may confer additional rights upon
the Shareholders.

 

6

 

14.         Assignment/Delegation.

 

A.  Except as provided in Section 14(B) below,
neither this Agreement nor any rights or obligations hereunder may be assigned
or delegated by either party without the written consent of the other party.

 

B.  The Agent may, without further consent on the
part of the Company, subcontract with other subcontractors for systems,
processing, telephone and mailing services, and post-exchange activities, as
may be required from time to time;  provided,
however, that the Agent shall be as fully responsible to the Company for the
acts and omissions of any subcontractor as it is for its own acts and
omissions.

 

C.  Except as explicitly stated elsewhere in this
Agreement, nothing under this Agreement shall be construed to give any rights
or benefits in this Agreement to anyone other than the Agent and the Company
and the duties and responsibilities undertaken pursuant to this Agreement shall
be for the sole and exclusive benefit of the Agent and the Company.

 

15.         Governing Law.

 

The
validity, interpretation and performance of this Agreement shall be governed by
the law of the Commonwealth of Massachusetts and shall inure to the benefit of
and the obligations created hereby shall be binding upon the successors and
permitted assigns of the parties hereto.

 

16.         Third Party Beneficiaries.

 

This
Agreement does not constitute an agreement for a partnership or joint venture
between the Agent and the Company. 
Neither party shall make any commitments with third parties that are
binding on the other party without the other party’s prior written consent.

 

17.         Force Majeure.

 

In
the event either party is unable to perform its obligations under the terms of
this Agreement because of acts of God, strikes, terrorist acts, equipment or
transmission failure or damage reasonably beyond its control, or other cause
reasonably beyond its control, such party shall not be liable for damages to
the other for any damages resulting from such failure to perform or otherwise
from such causes.  Performance under this
Agreement shall resume when the affected party or parties are able to perform
substantially that party’s duties.

 

18.         Consequential Damages.

 

Neither
party to this Agreement shall be liable to the other party for any
consequential, indirect, special or incidental damages under any provisions of
this Agreement or for any consequential, indirect, penal, special or incidental
damages arising out of any act or failure to act hereunder even if that party
has been advised of or has foreseen the possibility of such damages.

 

19.         Severability.

 

If
any provision of this Agreement shall be held invalid, unlawful, or
unenforceable, the validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired.

 

7

 

20.         Counterparts.

 

This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original and all of which together shall be considered one and the
same agreement.

 

21.         Captions.

 

The
captions and descriptive headings herein are for the convenience of the parties
only.  They do not in any way modify,
amplify, alter or give full notice of the provisions hereof.

 

22.         Confidentiality.

 

The
Agent and the Company agree that all books, records, information and data
pertaining to the business of the other party which are exchanged or received
pursuant to the negotiation or the carrying out of this Agreement including the
fees for services set forth in the attached schedule shall remain confidential,
and shall not be voluntarily disclosed to any other person, except as may be
required by law.

 

23.         Term and Termination.

 

This
Agreement shall remain in effect until the earlier of (a) thirty (30) days
after the Expiration Date; (b) it is terminated by either party upon a
material breach of this Agreement which remains uncured for 30 days after
written notice of such breach has been provided; or (c) 30 days’ written
notice has been provided by either party to the other.

 

24.         Notices.

 

Until
further notice in writing by either party hereto to the other party, all written
reports, notices and other communications between the Exchange Agent and the
Company required or permitted hereunder shall be delivered or mailed by first
class mail, postage prepaid, telecopy or overnight courier guaranteeing next
day delivery, addressed as follows:

 

If
to the Company, to:

 

Particle
Drilling Technologies, Inc.

5611
Baird Court

Houston,
Texas  77041

Attention:
J. Chris Boswell

 

If
to the Agent, to:

 

Computershare
Trust Company, N.A.

C/o
Computershare, Inc.

350
Indiana Street, Suite 800

Golden,
CO  80401

 

8

 

25.         Survival.

 

The
provisions of Paragraphs 12, 15, 17-19, 22, and 24-26 shall survive any
termination, for any reason, of this Agreement.

 

26.         Merger of Agreement.

 

This
Agreement constitutes the entire agreement between the parties hereto and
supersedes any prior agreement with respect to the subject matter hereof
whether oral or written.

 

[Signature page follows]

 

9

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers, hereunto duly authorized, as of the day
and year first above written.

 

 

Computershare, Inc.,
and

Computershare
Trust Company, N.A.

On Behalf of Both Entities

 

 

	
  By:
  

  	
      /s/
  Kellie Gwinn

  	
   

  
	
  Name:

  	
  Kellie
  Gwinn

  
	
  Title:

  	
  Vice
  President

  
	
  Date:

  	
  March 7,
  2008

  
				

 

 

Particle
Drilling Technologies, Inc.

 

 

	
  By:
  

  	
      /s/
  J. Chris Boswell

  	
   

  
	
  Name:

  	
  J.
  Chris Boswell

  
	
  Title:

  	
  Chief
  Financial Officer

  
	
  Date:

  	
  March 7,
  2008

  
				

 

10

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