Exhibit 99.4
FORM OF LETTER
PARTICLE DRILLING TECHNOLOGIES, INC.
SUBSCRIPTION RIGHTS TO PURCHASE SHARES OF COMMON STOCK
OFFERED PURSUANT TO SUBSCRIPTION RIGHTS
DISTRIBUTED TO SHAREHOLDERS OF
PARTICLE DRILLING TECHNOLOGIES, INC.
March 18, 2008
To Security Dealers, Commercial Banks,
Trust Companies and Other Nominees:
This letter is being distributed to securities dealers, commercial banks, trust companies and other nominees in connection with the rights offering (the “Rights Offering”) by Particle Drilling Technologies, Inc. (“Particle Drilling”) of shares of Common Stock (as such term is defined below), pursuant to non-transferable subscription rights (the “Rights”) distributed to all holders of record (the “Recordholders”) of shares of Particle Drilling common stock, par value $0.001 per share (the “Common Stock”), at 5:00 p.m., Central Time, on March 17, 2008 (the “Record Date”). The Rights and Common Stock are described in the offering prospectus supplement, dated March 18, 2008, and the related prospectus (collectively, the “Prospectus”).
In the Rights Offering, Particle Drilling is offering an aggregate of 3,500,000 shares of Common Stock, as described in the Prospectus.
The Rights will expire, if not exercised prior to 5:00 p.m., Central Time, on April 16, 2008, unless extended for a period not to exceed 15 business days (as it may be extended, the “Expiration Time”).
As described in the accompanying Prospectus, each beneficial owner of shares of Common Stock registered in your name or the name of your nominee is entitled to one Right for each share of Common Stock owned by such beneficial owner at 5:00 p.m., Central Time, on the Record Date. Each Right will allow the holder thereof to subscribe for 0.11025 shares of Common Stock (the “Basic Subscription Privilege”) at the cash price of $1.50 per full share (the “Subscription Price”). For example, if a Recordholder owned 100 shares of Common Stock as of 5:00 p.m., Central Time, on the Record Date, it would receive 100 Rights and would have the right to purchase 11.025 shares of Common Stock (rounded down to 11 shares, with the total subscription payment being adjusted accordingly, as discussed below) for the Subscription Price.
If a holder purchases all of the shares of Common Stock available to it pursuant to its basic subscription privilege, it may also exercise an over-subscription privilege (the “Over-Subscription Privilege”) to purchase a portion of any shares of our Common Stock that are not purchased by our shareholders through the exercise of their Basic Subscription Privileges (the “Unsubscribed Shares”), subject to availability and the allocation process more fully described in the Prospectus. The maximum number of shares of Common Stock that could be purchased by such holder pursuant to the holder’s Over-Subscription Privilege will be determined according to the following formula based in part on such holder’s percentage ownership of our outstanding Common Stock as of 5:00 p.m., Central Time, on the Record Date: total number of Unsubscribed Shares multiplied by the Recordholder’s ownership
percentage of our outstanding Common Stock at the Record Date. For example, if a Recordholder owned 2% of the outstanding Common Stock, it may purchase up to 2% of the Unsubscribed Shares pursuant to its Over-Subscription Privilege. Each Recordholder can determine its ownership percentage by dividing the number of Rights it receives in the Rights Offering by 31,769,089, the current number of outstanding shares of Common Stock.
Each Recordholder will be required to submit payment in full for all the shares it wishes to buy with its Over-Subscription Privilege. Because we will not know the total number of Unsubscribed Shares prior to the expiration of the Rights Offering, if a Recordholder wishes to maximize the number of shares it purchases pursuant to the Recordholder’s Over-Subscription Privilege, the Recordholder will need to deliver payment in an amount equal to the aggregate Subscription Price for the maximum number of shares of Common Stock available to the Recordholder, assuming that no shareholders other than such Recordholder and LC Capital Master Fund Ltd. and Millennium Partners, L.P. (collectively, the “Standby Purchasers”) purchase any shares of Common Stock pursuant to their Basic Subscription Privilege. Fractional shares of Common Stock resulting from the exercise of the Over-Subscription Privilege will be eliminated by rounding down to the nearest whole share, with the total subscription payment being adjusted accordingly. Any excess subscription payments received by the Subscription Agent will be returned, without interest, as soon as practicable.
Particle Drilling can provide no assurances that each Recordholder will actually be entitled to purchase the number of shares of Common Stock issuable upon the exercise of its Over-Subscription Privilege in full at the expiration of the Rights Offering. Particle Drilling will not be able to satisfy a Recordholder’s exercise of the Over-Subscription Privilege if all of the shareholders exercise their Basic Subscription Privileges in full, and we will only honor an Over-Subscription Privilege to the extent sufficient shares of Common Stock are available following the exercise of subscription rights under the Basic Subscription Privileges.
· To the extent the aggregate Subscription Price of the maximum number of Unsubscribed Shares available to a Recordholder pursuant to the Over-Subscription Privilege is less than the amount the Recordholder actually paid in connection with the exercise of the Over-Subscription Privilege, the Recordholder will be allocated only the number of Unsubscribed Shares available to it as soon as practicable after the Expiration Time, and the Recordholder’s excess subscription payment received by the Subscription Agent will be returned, without interest, as soon as practicable.
· To the extent the amount the Recordholder actually paid in connection with the exercise of the Over-Subscription Privilege is less than the aggregate Subscription Price of the maximum number of Unsubscribed Shares available to the Recordholder pursuant to the Over-Subscription Privilege, such Recordholder will be allocated the number of Unsubscribed Shares for which it actually paid in connection with the Over-Subscription Privilege.
The Rights will be evidenced by a non-transferable Rights certificate (the “Rights Certificate”) registered in the Recordholder’s name or its nominee and will cease to have any value at the Expiration Time.
We are asking persons who hold shares of Common Stock beneficially and who have received the Rights distributable with respect to those shares through a broker, dealer, commercial bank, trust company or other nominee, as well as persons who hold certificates of Common Stock directly and prefer to have such institutions effect transactions relating to the Rights on their behalf, to contact the appropriate institution or nominee and request it to effect the transactions for them. In addition, we are asking beneficial owners
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who wish to obtain a separate Rights Certificate to contact the appropriate nominee as soon as possible and request that a separate Rights Certificate be issued.
All commissions, fees and other expenses (including brokerage commissions and transfer taxes), other than fees and expenses of the Subscription Agent, incurred in connection with the exercise of the Rights will be for the account of the holder of the Rights, and none of such commissions, fees or expenses will be paid by Security Bank or the Subscription Agent.
Enclosed are copies of the following documents:
1. Prospectus;
2. Instructions as to the use of Particle Drilling Technologies, Inc. Rights Certificates (including a Notice of Guaranteed Delivery for Rights Certificates Issued by Particle Drilling Technologies, Inc.);
3. A form of letter that may be sent to your clients for whose accounts you hold shares of Common Stock registered in your name or the name of your nominee, with an attached form of instructions;
4. Notice of Guaranteed Delivery for Rights Certificates Issued by Particle Drilling Technologies, Inc.; and
5. A return envelope addressed to Computershare Trust Company, N.A., the Subscription Agent.
Your prompt action is requested. To exercise the Rights, you should deliver the properly completed and signed Rights Certificate (or Notice of Guaranteed Delivery if you are following the Guaranteed Delivery Procedures), with payment of the Subscription Price in full for each share of Common Stock subscribed for pursuant to the Basic Subscription Privilege and the Over-Subscription Privilege, to the Subscription Agent, as indicated in the Prospectus. The Subscription Agent must receive the Rights Certificate or Notice of Guaranteed Delivery with payment of the Subscription Price, including final clearance of any checks, prior to the Expiration Time. A Recordholder cannot revoke the exercise of its Rights. Rights not exercised prior to the Expiration Time will expire.
Additional copies of the enclosed materials may be obtained from Computershare, Inc., the Information Agent. The Information Agent’s telephone number is (800) 962-4284, and the Information Agent’s e-mail address is: John.Harmann@computershare.com. Any questions or requests for assistance concerning the rights offering should be directed to the Information Agent.
Very truly yours,
Particle Drilling Technologies, Inc.
NOTHING IN THIS PROSPECTUS OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY PERSON AS AN AGENT OF PARTICLE DRILLING TECHNOLOGIES, INC., THE SUBSCRIPTION AGENT OR ANY OTHER PERSON MAKING OR DEEMED TO BE MAKING OFFERS OF THE SECURITIES ISSUABLE UPON VALID EXERCISE OF THE RIGHTS, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFERING EXCEPT FOR STATEMENTS MADE IN THE PROSPECTUS.
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