SUBSCRIPTION AGREEMENT
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3.7
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Form
of Subscription Agreement($0.40) dated for reference October 31,
2005
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THE
SECURITIES TO WHICH THIS AGREEMENT RELATES HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER AND MAY NOT BE OFFERED OR SOLD DIRECTLY
OR INDIRECTLY (A) WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT
OF U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER, OR AN EXEMPTION FROM, THE
REGISTRATION REQUIREMENTS OF THE 1933 ACT, OR (B) IN CANADA OR TO RESIDENTS
OF
CANADA EXCEPT PURSUANT TO PROSPECTUS EXEMPTIONS UNDER THE APPLICABLE PROVINCIAL
SECURITIES LAWS AND REGULATIONS OR PURSUANT TO AN EXEMPTION ORDER MADE BY THE
APPROPRIATE PROVINCIAL SECURITIES REGULATOR.
Subscription
Agreement
(“Agreement”)
by and
between _________ [
an individual] [a _________ corporation] (the “Subscriber”)
and
Mogul Energy International, Inc., a Delaware Corporation (the “Company”).
RECITALS
WHEREAS,
the
Company is offering, on a no minimum basis, up to an aggregate of 3,000,000
shares
(the
“Subscribed
for Shares”)
of its
common stock $0.0001 par value per share at a price of US$0.40
per
share or US$1,200,000
in the
aggregate (the “Offering”).
All
references herein to “dollars” or “$” shall be to U.S. dollars unless otherwise
specified.
WHEREAS,
the
Company will offer and sell Shares only to investors (the “Qualified
Investors”)
who
either are (i) residents of the United States and are “accredited
investors”
as
defined in Regulation D as promulgated under the Securities Act of 1933, as
amended (the “1933
Act” and
as
more fully set forth as Exhibit
A
hereto
or (ii) offshore investors who are not “US
Persons”
as that
term is defined in Regulation S under the 1933 Act, as more fully set forth
on
Exhibit B hereto; and who otherwise satisfy any applicable criteria established
by the laws of the jurisdiction in which they reside as more fully set forth
in
Section 1.4 hereof.
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WHEREAS,
subject
to the terms and conditions set forth herein, the Company desires to issue
and
sell to the Subscriber and the Subscriber desires to subscribe for the aggregate
number of Subscribed for Shares as set forth in Section 1.1 hereof.
NOW
THEREFORE,
in
consideration of the recitals and the mutual covenants herein contained and
other good and valuable consideration, the receipt and sufficiency of which
are
hereby acknowledged, the parties hereto hereby agree as follows:
AGREEMENTS
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1.
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Subscription
and Purchase of Shares;
Closing.
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1.1
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Subscription
and Purchase of
Shares.
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Subject
to the terms and conditions herein set forth, the Subscriber hereby subscribes
for and agrees to purchase from the Company _______________________ Subscribed
for Shares (the “Subscribed
for Shares”),
at a
price of US$0.40
per
share or an aggregate consideration of $__________________ (the “Purchase
Price”).
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1.2
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Payment
of Purchase Price.
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Simultaneously
with the execution and delivery of this Agreement by the Subscriber, the
Subscriber shall deliver the Purchase Price by
check
payable to the Company or by wire transfer of funds pursuant to wiring
instructions provided by the Company and as set forth on Exhibit
1.2
hereto.
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1.3
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Closing.
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The
closing of the purchase and sale of the Subscribed for Shares (the “Closing”)
shall
take place at the offices of the Company immediately following the execution
of
this Agreement by the Company, or at such other time and place or on such other
business day thereafter as the parties hereto may agree (the “Closing
Date”).
On
the Closing Date, the Company will direct its stock transfer agent to deliver
a
certificate(s) representing the Subscribed for Shares to the Subscriber against
confirmation of collection of the Purchase Price.
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1.4
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Limitations
of Offering.
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The
Subscriber acknowledges that the Company is offering and selling the Subscribed
for Shares only to investors (the “Qualified
Investors”)
who
either are (i) residents of the United States and are “accredited
investors”
as
defined in Regulation D (which definition is set forth on Exhibit
1.4(a)(i)
hereto)
as promulgated under the 1933 Act or (ii) offshore investors who are not
“US
Persons”
as
that
term is defined in Regulation S (which definition is set forth on Exhibit
1.4(a)(ii)
hereto)
as promulgated under the 1933 Act, and who otherwise satisfy any applicable
criteria established by the laws of the jurisdiction in which they reside.
If
the Subscriber is a resident of the United States, the Subscriber must deliver
at or prior to closing, a duly executed Representation Letter in the form
attached as Exhibit
1.4 (b).
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1.5
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Canadian
Investor Suitability Criteria; Prospectus and Registration
Exemptions.
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The
Company intends to rely upon the prospectus and registration exemption afforded
by section 2.4 [Private Issuer] of National Instrument 45-106 - Prospectus
and
Registration Exemptions (“NI-45-106”).
In
addition, the Company may also rely upon the exemptions described
below.
(a) If
the
Subscriber is a resident of the provinces of Alberta, British Columbia,
Saskatchewan or Canada, the Subscriber is purchasing the Subscribed for Shares
as a principal and is:
(i)
a
director, executive officer or control person of the Company, or of an affiliate
of the Company; or
(ii)
a
spouse, parent, grandparent, brother, sister or child of a director, executive
officer or control person of the Company, or of an affiliate of the Company;
or
(iii)
a
parent, grandparent, brother, sister or child of the spouse of a director,
executive officer or control person of the Company or of an affiliate of the
Company; or
(iv)
a
close personal friend of a director, executive officer or control person of
the
Company, or of an affiliate of the Company; or
(v)
a
close business associate of a director, executive officer or control person
of
the Company, or of an affiliate of the Company; or
(vi)
a
founder of the issuer or a spouse, parent, grandparent, brother, sister, child,
close personal friend or close business associate of a founder of the Company;
or
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(vii)
a
parent, grandparent, brother, sister or child of the spouse of a founder of
the
Company; or
(viii)
a
person of which a majority of the voting securities are beneficially owned
by,
or a majority of the directors are, persons described in paragraphs (i) to
(vii); or
(ix)
a
trust or estate of which all of the beneficiaries, or a majority of the trustees
or executors, are persons described in paragraphs (i) to (vii).
If
the
Subscriber is resident in
Alberta, British Columbia or Saskatchewan and
is
purchasing the Subscribed for Shares under this section 1.5(a) , the Subscriber
must deliver, at Closing, a duly completed and executed Representation Letter
in
the form attached hereto as Exhibit "1.5A”.
(b) If
the
purchaser is resident in Saskatchewan
and is
purchasing the Subscribed for Shares under section 1.5(a), the Subscriber must
also deliver, at Closing, a duly completed and executed Risk Acknowledgment
in
Form 45-106F5 attached hereto as Exhibit “1.5B”.
(c) If
the
Subscriber is a resident of Ontario, the Subscriber is purchasing the
Subscribed for Shares as
principal and is (a) a founder of the issuer, (b) an affiliate of a founder
of
the issuer, (c) a spouse, parent, brother, sister, grandparent or child of
an
executive officer, director or founder of the issuer, or (d) a person that
is a
control person of the issuer .
If the
Subscriber is resident in
Ontario and
is
purchasing the Subscribed for Shares under this section 1.5(b) , the Subscriber
must deliver, at Closing, a duly completed and executed Representation Letter
in
the form attached hereto as Exhibit "1.5C”.
(d) If
the
Subscriber is purchasing the Subscribed for Shares as principal, is resident
in
any jurisdiction of Canada and is an
“accredited investor” as defined in NI-45-106, the
Subscriber must deliver at closing, a duly completed and executed Representation
Letter in the form attached hereto as “Exhibit
“1.5D”.
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1.6.
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No
Minimum Number of Subscribed for Shares Need be
Sold.
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The
Subscriber acknowledges that the Company is offering and selling the Subscribed
for Shares on a no minimum basis, and further acknowledges and understands
that
since there is no minimum number of Subscribed for Shares to be sold, no
proceeds will be held in an escrow account and all funds will be immediately
available to, and for use by, the Company.
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2.
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Subscriber’s
Conditions of Closing.
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The
Subscriber’s obligation to purchase and pay for the Subscribed for Shares is
subject to the satisfaction or waiver, of the condition that the
representations, warranties and covenants of the Company set forth in
Section 4 hereof shall be true in all material respects on and as of the
Closing Date, except to the extent of changes caused by the transactions herein
contemplated; and, if the Closing Date is other than the date hereof, the
Company shall deliver to Subscriber a certificate of a duly authorized officer
of the Company, dated the Closing Date, to such effect.
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3.
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Company’s
Conditions of Closing.
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The
Company’s obligation to sell the Subscribed for Shares
is
subject to
the
satisfaction or waiver, on
or
before the Closing Date, of the conditions contained in this Section
3.
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3.1
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Representations,
Warranties and
Covenants.
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The
representations, warranties and covenants of the Subscriber set forth in Section
5 hereof shall be true in all material respects on and as of the Closing
Date.
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3.2
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Payment
of Purchase Price.
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The
Subscriber shall have purchased and paid for the Subscribed for Shares by
delivery of the Purchase Price.
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3.3
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No
Adverse Action or
Decision.
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There
shall be no action, suit, investigation or proceeding pending, or to the
Company’s knowledge, threatened, against or affecting the Company or any of its
properties or rights, or any of its affiliates, associates, officers or
directors, before any court, arbitrator, or administrative or governmental
body
that (i) seeks to restrain, enjoin, prevent the consummation of or otherwise
adversely affect the transactions contemplated by this Agreement, or (ii)
questions the validity or legality of any such transaction or seeks to recover
damages or to obtain other relief in connection with any such
transaction.
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3.4
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Compliance
with Securities Laws.
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The
offer
and sale of the Subscribed for Shares under this Agreement shall have complied
with, and shall not be prohibited by, all applicable requirements of the 1933
Act or applicable Canadian Securities Laws (as hereinafter
defined).
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4.
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Representations
and Warranties of the
Company.
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The
Company represents, warrants and covenants to the Subscriber that:
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4.1
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Corporate
Existence.
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The
Company is a Company duly organized, legally existing, and in good standing
under the laws of the State of Delaware with the requisite corporate power
and
authority to own and use its properties and assets and to carry on its business
as currently conducted.
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4.2
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Authorization;
Enforcement
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The
Company has the requisite corporate power and authority to enter into and to
consummate the transactions contemplated by this Agreement, and otherwise to
carry out its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of the Company. When executed and delivered in accordance with the terms
hereof, this Agreement shall constitute the legal, valid and binding obligation
of the Company enforceable against the Company in accordance with its terms,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation or similar laws relating
to,
or affecting generally the enforcement of, creditors' rights and remedies or
by
other equitable principles of general application. Anything herein to the
contrary notwithstanding, this Agreement shall not become a binding obligation
of the Company until it has been accepted by the Company as evidenced by its
execution by a duly authorized officer.
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4.3
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Agreement
Not in Conflict.
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The
execution and delivery of this Agreement by the Company and the completion
of
the transactions contemplated hereby do not and will not conflict with or result
in a breach or violation of any of the terms or provisions of, or constitute
a
default under (whether after notice or lapse of time or both): (A) any statute,
rule or regulation applicable to the Company; (B) the charter documents, by-laws
or resolutions of the Company which are in effect at the date hereof; (C) any
mortgage, note, indenture, contract, agreement, instrument, lease or other
document to which the Company is a party or by which it is bound; or (D) any
judgment, decree or order binding the Company or, to the best of its knowledge,
information and belief, the property or assets of the Company.
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4.4
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Authorized
and Outstanding Capital
Stock.
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The
Company’s authorized capital stock of consists of 100,000,000
shares
of common stock, $0.0001 par value per share. There are 29,854,310
shares
issued and outstanding. If all of the Subscribed for Shares are sold there
will
be an aggregate of 32,854,310,000
shares
issued and outstanding.
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5.
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Representations,
Warranties and Acknowledgements of
Subscriber.
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The
Subscriber represents, warrants and covenants to the Company that:
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5.1
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Organization;
Authority.
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The
Subscriber has the requisite power and authority to enter into and to consummate
the transactions contemplated hereby and to carry out its obligations hereunder.
The Subscriber, if:
6
(a) a
company, trust, partnership, qualified plan or other entity, it is duly
incorporated or formed, validly existing and in good standing under the laws
of
the jurisdiction of its organization and is authorized and qualified to become
a
holder of the Subscribed for Shares, the person signing this Agreement on behalf
of such entity has been duly authorized to execute and deliver this agreement,
and the acquisition of the Subscribed for Shares by the Subscriber and the
consummation by the Subscriber of the transactions contemplated hereby have
been
duly authorized by all necessary action to be taken on the part of the
Subscriber; or
(b) If
the
Subscriber is not an individual, the Subscriber has the requisite power,
authority and legal capacity to execute and deliver this Subscription Agreement,
to perform all of its obligations hereunder and to undertake all actions
required of the Subscriber hereunder, and all necessary approvals of its
directors, partners, shareholders, trustees or otherwise (as the case may be)
with respect to such matters have been given or obtained.
(c) in
any
case, this Agreement has been duly executed and delivered by the Subscriber
and
constitutes a valid and legally binding obligation of the Subscriber,
enforceable against the Subscriber, in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity. The entering
into of this Agreement and the transactions contemplated hereby will not result
in a violation of any of the terms or provisions of any law applicable to the
Subscriber, or any of the Subscriber’s charter documents, or of any agreement to
which the Subscriber is a party or by which it is bound.
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5.2
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Acquisition
of Subscribed for Shares for
Investment.
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The
Subscriber is acquiring the Subscribed for Shares as principal for its own
account for investment purposes only and not with a view to or for distributing
or reselling the Subscribed for Shares or any part thereof or interest therein,
without prejudice, however, to the Subscriber’s right, subject to the provisions
of this Agreement and in accordance with all applicable laws, at all times
to
sell or otherwise dispose of all or any part of such Subscribed for Shares
as
otherwise permitted hereunder.
Except
as otherwise disclosed in writing to the Company, the Subscriber is not acting
jointly or in concert with any other person or company for the purposes of
acquiring any of the Subscribed for Shares.
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5.3
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Experience
of Subscriber.
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The
Subscriber either alone or together with its representatives, has such
knowledge, sophistication and experience in business and financial matters
so as
to be capable of evaluating and assessing the merits and risks of the
prospective investment in the Subscribed for Shares, and has so evaluated the
merits and risks of such investment and has determined that the Subscribed
for
Shares are suitable to investment for him.
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5.4 Ability
of Subscriber to Bear Risk of Investment.
The
Subscriber acknowledges that the purchase of the Subscribed for Shares is a
highly speculative investment, involving a high degree of risk and the
Subscriber is able to bear the economic risk of an investment in the Subscribed
for Shares; and, at the present time, is able to afford a complete loss of
such
investment.
5.5 No
Conflict or Violation.
The
execution, delivery, and performance of this Agreement by Subscriber and the
consummation by Subscriber of the transactions contemplated hereby will not
conflict with or result in a default under the terms of any material contract,
agreement, obligation or commitment applicable to Subscriber. The execution,
delivery and performance by the Subscriber of this Subscription Agreement and
the completion of the transaction contemplated hereby do not and will not result
in a violation of any law, regulation, order or ruling applicable to the
Subscriber, and do not and will not constitute a breach of or default under
any
of the Subscriber's charter documents (if the Subscriber is not a natural
person) or any agreement to which the Subscriber is a party or by which it
is
bound.
5.6 Regulation
D - US Accredited Investor Status.
Subscriber is an “accredited investor” as defined in Rule 501(a) of Regulation
D. Specifically, Subscriber is either,
(1)
A bank as defined in section 3(a)(2) of the Act, or any savings and loan
association or other institution as defined in section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934; any
insurance company as defined in section 2(13) of the Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; a Small Business Investment
Company licensed by the U.S. Small Business Administration under section 301(c)
or (d) of the Small Business Investment Act of 1958; any plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit of
its
employees, if such plan has total assets in excess of $5,000,000; an employee
benefit plan within the meaning of the Employee Retirement Income Security
Act
of 1974 if the investment decision is made by a plan fiduciary, as defined
in
section 3(21) of such Act, which is either a bank, savings and loan association,
insurance company, or registered adviser, or if the employee benefit plan has
total assets in excess of $5,000,000 or, if a self-directed plan, with
investment decisions made solely by persons that are accredited investors;
(2)
A private business development company as defined in section 202(a)(22) of
the
Investment Advisers Act of 1940;
(3)
An organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
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(4)
A director, executive officer, or general partner of the issuer of the
securities being offered or sold, or any director, executive officer, or general
partner of a general partner of that issuer;
(5)
A natural person whose individual net worth, or joint net worth with that
person's spouse, at the time of his purchase exceeds $1,000,000;
(6)
A natural person who had an individual income in excess of $200,000 in each
of
the two most recent years or joint income with that person's spouse in excess
of
$300,000 in each of those years and has a reasonable expectation of reaching
the
same income level in the current year;
(7)
A trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by
a
sophisticated person as described in Rule 506(b)(2)(ii); or
(8)
An entity in which all of the equity owners are accredited investors (in which
case all of the equity owners must prepare and deliver Schedule A to Exhibit
1.4(c) hereto.
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5.7
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Regulation
S Representations, Acknowledgements and
Warranties.
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If
the
Subscriber is not a US Person as defined in Regulation S, Subscriber further
represents and warrants that:
(a) The
Subscriber acknowledges that the Subscribed for Shares are being offered and
sold in reliance on the exemptions from the registration requirements of the
1933 Act provided by the provisions of Regulation S as promulgated under the
1933 Act, and that the Subscribed for Shares may not be resold in the United
State or to a US Person as defined in Regulation S, except pursuant to an
effective registration statement or an exemption from the registration
provisions of the 1933 Act as evidenced by an opinion of counsel acceptable
to
the Company, and that in the absence of an effective registration statement
covering the Subscribed for Shares or an available exemption from registration
under the 1933 Act, the Subscribed for Shares must be held indefinitely. The
Subscriber further acknowledges that this Agreement is not intended as a plan
or
scheme to evade the registration requirements of the 1933 Act;
(b) The
Subscriber is a resident of the country set forth on the signature page
hereto;
(c) the
Subscriber is not a “US
Person”
as
that
term is defined in Rule 902 of Regulation S, as more fully set forth in
Exhibit
B
hereto;
(d) the
Subscriber is not, and on the Closing Date will not be, an affiliate of the
Company;
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(e) the
Subscriber agrees that all offers and sales of the Subscribed for Shares shall
be made in compliance with all applicable laws of any applicable jurisdiction
and, particularly, in accordance with Rules 903 and 904, as applicable, of
Regulation S or pursuant to registration of the Subscribed for Shares under
the
1933 Act or pursuant to an exemption from registration. In any case, none of
the
Subscribed for Shares have been and will be offered or sold by the Subscriber
to, or for the account or benefit of a U.S. Person or within the United States
until after the end of a one year period commencing on the date on which this
Agreement is accepted by the Company (the "Distribution
Compliance Period"),
except pursuant to an effective registration statement as to the Subscribed
for
Shares or an applicable exemption from the registration requirements of the
1933
Act.
(f) the
Subscribed for Shares have not been offered to the Subscriber in the United
States and the individuals making the decision to purchase the Subscribed for
Shares and executing and delivering this Agreement on behalf of the Subscriber
were not in the United States when the decision was made and this Agreement
was
executed and delivered;
(g) the
Subscriber will not engage in any activity for the purpose of, or that could
reasonably be expected to have the effect of, conditioning the market in the
United States for any of the Subscribed for Shares;
(h) neither
the Subscriber nor any of his affiliates will directly or indirectly maintain
any short position, purchase or sell put or call options or otherwise engage
in
any hedging activities in any of the Subscribed for Shares or any other
Subscribed for Shares of the Company until after the end of the Distribution
Compliance Period, and acknowledges that such activities are prohibited by
Regulation S.
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5.8
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Canadian
Exemptions Representations, Acknowledgements and
Warranties.
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The
Subscriber understands that it is purchasing the Subscribed for Shares
pursuant to certain exemptions from the registration
and prospectus requirements
of
applicable securities legislation in Canada (the “Canadian
Securities Laws”)
afforded by, without limitation, the following sections of NI 45-106: Sections
2.3 [Accredited
Investor],
2.4
[Private
Issuer],
2.5[Family,
friends and business associates], and 2.7 [Family, friends and business
associates (Ontario)]
and, as
a consequence, (A) certain rights, remedies and protections under securities
legislation will not be available to the Subscriber in connection with the
purchase of the Shares; (B) the Subscriber may not receive information that
would otherwise be required to be provided to it under securities legislation;
and (C) the Company is relieved from certain obligations that would otherwise
apply under securities legislation;
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5.9
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Transfer
of Restrictions.
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(a) The
Subscriber acknowledges that the certificates representing Subscribed for Shares
shall bear a legend substantially as follows:
“THE
SECURITIES TO WHICH THIS CERTIFICATE RELATES HAVE NOT BEEN REGISTERED UNDER
THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”) AND THE RULES
AND REGULATIONS PROMULGATED THEREUNDER AND MAY NOT BE OFFERED OR SOLD DIRECTLY
OR INDIRECTLY (A) WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT
OF U.S. PERSONS (AS DEFINED IN REGULATION S) EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER, IN COMPLIANCE WITH
REGULATION S AND/OR OTHER APPLICABLE EXEMPTION FROM, THE REGISTRATION
REQUIREMENTS OF THE 1933 ACT, OR (B) IN CANADA OR TO RESIDENTS OF CANADA EXCEPT
PURSUANT TO PROSPECTUS EXEMPTIONS UNDER THE APPLICABLE PROVINCIAL SECURITIES
LAWS AND REGULATIONS OR PURSUANT TO AN EXEMPTION ORDER MADE BY THE APPROPRIATE
PROVINCIAL SECURITIES REGULATOR, IN EACH CASE AS EVIDENCED BY AN OPINION OF
COUNSEL ACCEPTABLE TO THE COMPANY.”
The
Subscriber further acknowledges that if the Subscriber is a resident of Canada,
the certificates representing Subscribed for Shares shall also bear the
applicable exemption required under National Instrument 45-102 - Resale of
Securities (“NI
45-102”).
(b) The
Subscriber understands and acknowledges that the Company has the right not
to
record a purported transfer of the Subscribed for Shares, without the Company
being satisfied that such transfer is exempt from or not subject to registration
under the U.S. 1933 Act and any applicable state securities laws, as well as
the
Canadian Securities Laws and, until such time as the Company may no longer
be a
“private issuer” as that term is defined in NI-45-106, a transfer of the
Subscribed for Shares may only be effected with the consent of the Company’s
board of directors.
(c) In
addition to resale restrictions imposed under U.S. securities laws, there are
additional restrictions on the Subscriber’s ability to resell the Subscribed for
Shares under applicable Canadian Securities Law, including, but not limited
to
NI 45-102.
(d) The
Subscriber further acknowledges that the Company’s bylaws restrict the number of
shareholders which the Company may have and prohibit transfers of the Company’s
issued and outstanding securities without the consent of the Company’s Board of
Directors.
(e) The
Subscriber understands and acknowledges that the Company is not obligated to
file and has no present intention of filing with any state or provincial
securities administrator or commission any registration statement or prospectus
in respect of re-sales of the Subscribed for Shares in the United States or
elsewhere.
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(f) The
Subscriber confirms that it has been advised to consult its own legal and
financial advisors with respect to the suitability of the Subscribed
for Shares
as
an investment for the Subscriber and the resale restrictions (including "hold
periods") to which the Subscribed for Shares
will be subject under applicable securities legislation and confirms that no
representation has been made to the Subscriber by or on behalf of the Company
with respect thereto.
(g) The
Subscriber will not resell any Subscribed for Shares
except in accordance with the provisions of applicable securities legislation
and stock exchange rules.
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5.10
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No
Offering Memorandum.
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The
Subscriber acknowledges that the offering is being conducted without delivery
of
an offering memorandum and that it has not relied on any oral representation,
warranty or information in connection with the offering of the Subscribed for
Shares by the Company, or any officer, employee, agent, affiliate or subsidiary
of the Company.
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5.11
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No
Approval by Regulatory
Authority.
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The
Subscriber understands that no securities commission, stock exchange,
governmental agency, regulatory body or similar authority has made any finding
or determination or expressed any opinion with respect to the merits of an
investment in Subscribed for Shares of which the Subscribed for Shares are
a
part.
|
5.12
|
No
Representation as to Value of Subscribed for
Shares.
|
The
Subscriber confirms that neither the Company nor any of its directors,
employees, officers, consultants, agents or affiliates, has made any
representations (written or oral) to the Subscriber regarding the future value
of the Subscribed for Shares and acknowledges and confirms that no
representation has been made to the Subscriber with respect to the listing
of
the Subscribed for Shares on any exchange or that application has been or will
be made be made for such listing. In
making
its investment decision with respect to the Subscribed
for Shares,
the Subscriber has relied solely upon publicly available information relating
to
the Company and not upon any verbal or written representation made by or on
behalf of the Company.
|
5.13
|
No
Advertisement.
|
The
Subscriber is not and has not become aware of any advertisement in printed
public media or on radio, television or other form of communication (including
electronic display such as the Internet) with respect to the
Offering.
|
5.14
|
Conditional
Sale.
|
The
Subscriber understands that the sale and delivery of the Subscribed
for Shares
is
conditional upon such sale being exempt from the registration and prospectus
requirements under applicable securities legislation or upon the issuance of
such orders, consents or approvals as may be required to permit such sale and
delivery without complying with such requirements. If required under applicable
securities legislation or regulatory policy, or by any securities commission,
stock exchange or other regulatory authority, the Subscriber will execute,
deliver, file and otherwise assist the Company in filing such reports,
undertakings and other documents with respect to the issue of the
Shares.
12
|
5.15
|
No
Joint Action.
|
Except
as
disclosed in writing to the Company, the Subscriber does not act jointly or
in
concert with any other person or company for the purposes of acquiring the
Subscribed
for Shares.
|
5.16
|
Tax
Consequences.
|
The
investment in the Shares may have tax consequences under applicable taxation
laws, that it is the sole responsibility of the Subscriber to determine and
assess such tax consequences as may apply to its particular circumstances,
and
the Subscriber has not received and is not relying on the Company for any tax
advice whatsoever.
|
5.17
|
Legal
Advice.
|
The
Subscriber is responsible for obtaining such legal advice as it considers
appropriate in connection with the execution and delivery of this Subscription
Agreement and the purchase of the Shares by it; and
|
6.
|
Reliance
and Indemnification.
|
|
6.1
|
Reliance
and Timeliness.
|
The
Subscriber understands and acknowledges that (i) the Shares are being offered
and sold to the Subscriber without registration under the Securities Act or
applicable Canadian Securities Laws in a private placement that is exempt from
the registration provisions of the Securities Act and/or the registration and
prospectus requirements of applicable Canadian Securities Laws and (ii) the
availability of such exemption, depends in part on, and the Company will rely
upon, the accuracy and truthfulness of, the foregoing representations and
warranties and the Subscriber hereby consents to such reliance. The
Subscriber agrees that the representations, warranties and covenants of the
Subscriber contained herein (or in any Representation Letter executed and
delivered by the Subscriber pursuant to the provisions hereof) shall be true
and
correct both as of the execution of this Subscription Agreement and as of the
Closing Date, and shall survive the completion of the distribution of the
Shares. The
Subscriber hereby agrees to notify the Company immediately of any change in
any
representation, warranty, covenant or other information relating to the
Subscriber contained in this Agreement which takes place prior to
Closing.
13
|
6.2
|
Indemnification.
|
The
Subscriber agrees to indemnify the Company, and each of its officers, directors,
employees, consultants and agents from and against all losses, claims, costs,
expenses, damages or liabilities that any of them they may suffer or incur
as a
result of or in connection with their reliance on such representations,
warranties and covenants. The
Subscriber acknowledges and agrees that the Company acts as trustee of the
Subscriber’s covenants hereunder for each of its officers, directors, employees,
consultants and agents entitled to indemnity hereunder and shall be entitled
to
enforce such covenants on behalf of such persons.
|
7.
|
Miscellaneous.
|
|
7.1
|
Amendment;
Waivers.
|
No
provision of this Agreement may be waived or amended except in a written
instrument signed, in the case of an amendment, by both the Company and the
Subscriber; or, in the case of a waiver, by the party against whom enforcement
of any such waiver is sought. No waiver of any default with respect to any
provision, condition or requirement of this Agreement shall be deemed to be
a
continuing waiver in the future or a waiver of any other provision, condition
or
requirement hereof, nor shall any delay or omission of either party to exercise
any right hereunder in any manner impair the exercise of any such right accruing
to it thereafter.
|
7.2
|
Survival
of Representations and
Warranties.
|
All
representations, warranties and agreements contained herein or made in writing
by or on behalf of any party to this Agreement in connection herewith shall
survive the execution and delivery of this Agreement.
|
7.3
|
Successors
and Assigns; No Third
Party.
|
All
covenants and agreements in this Agreement contained by or on behalf of the
parties hereto shall be binding upon and inure to the benefit of the parties
and
their respective successors and assigns and, to the extent provided in this
Agreement.
|
7.4
|
Notices.
|
Any
and
all notices or other communications or deliveries required or permitted to
be
provided hereunder shall be in writing and shall be deemed given and effective
on the earliest of (i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile telephone number specified in this
Section prior to 4:30 p.m. (Pacific Standard Time) on a business day, (ii)
the
business day after the date of transmission, if such notice or communication
is
delivered via facsimile at the facsimile telephone number specified in the
this
Agreement later than 4:30 p.m. (Pacific Standard Time) on any date and earlier
than 11:59 p.m. (Pacific Standard Time) on such date, (iii) the business day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice
is
required to be given. The address for such notices and communications shall
be
as follows:
14
If
to the
Company:At the address set forth next to the Company’s acceptance of this
Agreement as set forth on the signature page hereto.
If
to the
Subscriber: At the address set forth below the Subscriber’s name on the
signature page hereto;
or
such
other address as may be designated in writing hereafter, in the same manner,
by
such party.
|
7.5
|
Headings.
|
The
headings herein are inserted for convenience only and do not constitute a part
of this Agreement. Whenever the context requires, the gender of any word used
in
this Agreement includes the masculine, feminine or neuter, and the number of
any
word includes the singular or plural. Unless the context otherwise requires,
all
references to articles and sections refer to articles and sections of this
Agreement, and all references to schedules are to schedules attached hereto,
each of which is made a part hereof for all purposes. The descriptive headings
of the several articles and sections of this Agreement are inserted for purposes
of reference only, and shall not affect the meaning or construction of any
of
the provisions hereof.
|
7.6
|
Governing
Law; Consent to
Jurisdiction.
|
The
corporate laws of the State of Delaware shall govern all issues concerning
the
relative rights of the Company and its shareholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of
the
state and federal courts sitting in the City of New York, for the adjudication
of any dispute hereunder or in connection herewith or therewith, or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
15
|
7.7
|
Remedies.
|
In
addition to being entitled to exercise all rights provided herein or granted
by
law, including recovery of damages, the Subscriber will be entitled to specific
performance of the obligations of the Company hereunder. The Company and the
Subscriber agree that monetary damages would not be adequate compensation for
any loss incurred by reason of any breach of its obligations described in the
foregoing sentence and hereby agrees to waive in any action for specific
performance of any such obligation the defense that a remedy at law would be
adequate.
|
7.8
|
Entire
Agreement.
|
This
Agreement and the other writings referred to herein or delivered pursuant hereto
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
|
7.9
|
Severability.
|
Any
provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof, and the parties will attempt to agree upon a valid and
enforceable provision which shall be a reasonable substitute therefore, and
upon
so agreeing, shall incorporate such substitute provision in this Agreement.
Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or
render unenforceable such provision in any other jurisdiction.
|
7.10
|
Counterparts.
|
This
Agreement may be executed in two or more counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
This Agreement, once executed by a party, may be delivered to the other parties
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement. In the event any signature
is delivered by facsimile transmission, the party using such means of delivery
shall cause the manually executed execution page(s) hereof to be physically
delivered to the other party within five days of the execution hereof, provided
that the failure to so deliver any manually executed execution page shall not
affect the validity or enforceability of this Agreement.
16
|
7.11
|
Fees
and Expenses.
|
Except
as
otherwise provided herein, each of the parties hereto shall pay its own fees
and
expenses, including attorney fees, in connection with the transactions
contemplated by this Agreement.
|
7.12
|
English
Language.
|
The
Subscriber acknowledges that it has consented to and requested that all
documents evidencing or relating in any way to the sale of the Shares be drawn
up in the English language only.
|
7.13
|
Knowledge.
|
As
used
in this Agreement, the term “knowledge” of any person or entity shall mean and
include (i) actual knowledge and (ii) that knowledge which a reasonably prudent
business person could have obtained in the management of his or her business
affairs after making due inquiry and exercising due diligence which a prudent
business person should have made or exercised, as applicable, with respect
thereto.
|
7.14
|
Reference
Date and Effective
Date.
|
The
reference date of this Agreement is October 13, 2005. The date of acceptance
of
this Agreement by the Company, as set forth on the signature page, shall be
the
“effective
date”
hereof.
SIGNATURES
APPEAR ON THE NEXT PAGE
17
IN
WITNESS WHEREOF,
the
parties hereto caused this Agreement to be duly executed as of the dates set
forth below.
|
|
Number
|
||||
| (Name of Subscriber - please print) |
Of
Shares:
|
||||
|
Aggregate
Consideration:
|
$ | ||||
|
By:
|
Paid
by Delivery of
|
$ | |||
|
Authorized
Signature
|
Date
the Subscription
|
||||
| Agreement signed by the | |||||
| Suscriber: | |||||
|
(Official
Capacity or Title - please print)
|
|
||||
|
(Please
print name of individual whose signature appears above if different
than
the name of the subscriber printed above.)
|
|||||
|
(Subscriber's
Address including Country of Residence)
|
|||||
|
(Telephone
Number)/ (Facsimile Number)
|
|||||
ACCEPTANCE
The
Company hereby accepts the above subscription for the Subscribed for Shares
of
the Company effective the ______day of
,
2005.
|
Address:
|
Mogul
Energy International,
|
|||
|
000
Xxxx Xxxxxx, Xxxxx 0000
|
||||
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
||||
|
By:
|
||||
|
Name:
|
Facsimile:
|
|||
18
Exhibit
1.4 (a) (i)
Regulation
D - Definition of Accredited Investor for US Persons
"Accredited
investor"
shall
mean any person who comes within any of the following categories, or who the
issuer reasonably believes comes within any of the following categories, at
the
time of the sale of the securities to that person:
(1)
Any
bank as defined in section 3(a)(2) of the Act, or any savings and loan
association or other institution as defined in section 3(a)(5)(A) of the Act
whether acting in its individual or fiduciary capacity; any broker or dealer
registered pursuant to section 15 of the Securities Exchange Act of 1934; any
insurance company as defined in section 2(13) of the Act; any investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in section 2(a)(48) of that Act; any Small Business
Investment Company licensed by the U.S. Small Business Administration under
section 301(c) or (d) of the Small Business Investment Act of 1958; any plan
established and maintained by a state, its political subdivisions, or any agency
or instrumentality of a state or its political subdivisions, for the benefit
of
its employees, if such plan has total assets in excess of $5,000,000; any
employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary,
as
defined in section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered adviser, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a self-directed
plan, with investment decisions made solely by persons that are accredited
investors;
(2)
Any
private business development company as defined in section 202(a) (22) of the
Investment Advisers Act of 1940;
(3)
Any
organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not formed
for the specific purpose of acquiring the securities offered, with total assets
in excess of $5,000,000;
(4)
Any
director, executive officer, or general partner of the issuer of the securities
being offered or sold, or any director, executive officer, or general partner
of
a general partner of that issuer;
19
(5)
Any
natural person whose individual net worth, or joint net worth with that person's
spouse, at the time of his purchase exceeds $1,000,000;
(6)
Any
natural person who had an individual income in excess of $200,000 in each of
the
two most recent years or joint income with that person's spouse in excess of
$300,000 in each of those years and has a reasonable expectation of reaching
the
same income level in the current year;
(7)
Any
trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the securities offered, whose purchase is directed by
a
sophisticated person as described in Rule 506(b)(2)(ii); and
(8)
Any
entity in which all of the equity owners are accredited investors.
(b)
Affiliate.
An
"affiliate" of, or person "affiliated" with, a specified person shall mean
a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person
specified.
20
EXHIBIT
1.4(a)(ii)
REGULATION
S - DEFINITION OF US PERSON
Rule
902(k) of Regulation S states:
|
(4)
|
“US
person” means:
|
|
(xxv)
|
Any
natural person resident in the United States;
(1)
|
|
(xxvi)
|
Any
partnership or Company organized or incorporated under the laws of
the
United States;
|
|
(xxvii)
|
Any
estate of which any executor or administrator is a US
person;
|
|
(xxviii)
|
Any
trust of which any trustee is a US
person;
|
|
(xxix)
|
Any
agency or branch of a foreign entity located in the United
States;
|
|
(xxx)
|
Any
non-discretionary account or similar account (other than an estate
or
trust) held by a dealer or other fiduciary for the benefit or account
of a
US person;
|
|
(xxxi)
|
Any
discretionary account or similar account (other than an estate or
trust)
held by a dealer or other fiduciary organized, incorporated, or (if
an
individual) resident in the United States;
and
|
|
(xxxii)
|
Any
partnership or Company if:
|
|
(G)
|
Organized
or incorporated under the laws of any foreign jurisdiction;
and
|
|
(H)
|
Formed
by a US person principally for the purpose of investing in securities
not
registered under the 1933 Act, unless it is organized or incorporated,
and
owned, by accredited investors (as defined in Rule 501(a)) who are
not
natural persons, estates or trusts.
|
|
(5)
|
The
following are not “US persons”:
|
|
(vii)
|
Any
discretionary account or similar account (other than an estate or
trust)
held for the benefit or account of a non-US person by a dealer or
other
professional fiduciary organized, incorporated, or (if an individual)
resident in the United States;
|
21
|
(viii)
|
Any
estate of which any professional fiduciary acting as executor or
administrator is a US person if:
|
|
(G)
|
An
executor or administrator of the estate who is not a US person has
sold or
Subscribed for Shares investment discretion with respect to the assets
of
the estate; and
|
|
(H)
|
The
estate is governed by foreign law;
|
|
(xii)
|
Any
trust of which any professional fiduciary acting as trustee is a
US
person, if a trustee who is not a US person has sole or shared investment
discretion with respect to the trust assets, and no beneficiary of
the
trust (and no settler if the trust is revocable) is a US
person;
|
|
(xiii)
|
An
employee benefit plan established and administrated in accordance
with the
law of a country other than the United States and customary practices
and
documentation of such country;
|
|
(xiv)
|
Any
agency or branch of a US person located outside the United States
if:
|
|
(G)
|
The
agency or branch operates for valid business reasons;
and
|
|
(H)
|
The
agency or branch is engaged in the business of insurance or banking
and is
subject to substantive insurance or banking regulation, respectively,
in
the jurisdiction where located; and
|
|
(ix)
|
The
International Monetary Fund, the International Bank for Reconstruction
and
Development, the Inter-American Development Bank, the Asian Development
Bank, the African Development Bank, the United Nations, and their
agencies, affiliates and pension plans, and any other similar
international organizations, their agencies, affiliates and pension
plans.
|
(1) United
States.
“United
States” means the United States of America, its territories and possessions, any
State of the United States, and the District of Columbia.
22
EXHIBIT
1.4(b)
In
connection with the purchase by the undersigned of the Subscribed for Shares
of
the Company, the undersigned is delivering this representation letter pursuant
to the Subscription Agreement dated for reference as
of
2005 (the “Subscription Agreement”), between the Company and the undersigned.
The Subscriber has responded to the following questions in order to assist
the
Company in determining whether the Subscriber is a Qualified Investor, as
defined in the Subscription Agreement. All capitalized terms used herein and
not
otherwise defined shall have the respective meaning ascribed thereto in the
Subscription Agreement. THE SUBSCRIBER
HAS MARKED,
COMPLETED AND INITIALED
ALL APPROPRIATE SPACES ON THE FOLLOWING PAGES INDICATING THE BASIS UPON WHICH
THE SUBSCRIBER MAY QUALIFY TO PURCHASE AN INTEREST. [INITIALING FEWER THAN
ALL
SPACES APPLICABLE TO THE SUBSCRIBER MAY NOT PROVIDE THE COMPANY WITH ENOUGH
INFORMATION TO DETERMINE IF THE SUBSCRIBER IS A QUALIFIED INVESTOR]. The
Subscriber represents and warrants that all of the information provided by
it,
him or her herein or in any exhibit hereto is true and correct as of the date
hereof.
Part
I: Accredited
Investor and/or Net Worth Status
Check
and initial whichever statements are applicable:
|
(1)
|
The
Subscriber is £
a
natural person, £
a
trust, £
a
corporation, £
a
partnership, £
other (please
specify)______________________.
|
|
(2)
|
The
Subscriber £
has £
has not consulted with or been advised by anyone serving in the capacity
of a Subscriber representative in evaluating the risks and merits
of the
purchase of the Shares. If
the Subscriber has consulted with a Subscriber representative, certain
additional documentation must be completed by the Subscriber and
such
advisor and submitted to the Company. Such documentation is available
from
the Company upon request.
|
If
the Subscriber is a natural person, please complete items (3) through (10).
If
the Subscriber is other than a natural person, please complete item
(11).
|
(3)
|
State
principal
occupation:______________________________________.
|
|
(4)
|
I
have a net worth (with my spouse and including home, furnishings
and
automobiles) of:
|
23
|
£
|
$1,000,000
or more.
|
|
(5)
|
(A)
|
I
had an individual income in each of the last two years
of:
|
|
£
|
$200,000
or more; and I reasonably expect to have an individual income in
the
current year of:
|
|
(6)
|
(A)
|
My
spouse and I had a joint income in each of the last two years
of:
|
|
£
|
$300,000
or more.
|
|
(A)
|
My
spouse and I reasonably expect to have a joint income in the current
year
of:
|
|
£
|
$300,000
or more.
|
|
(11)
|
For
prospective Subscribers which are not natural persons
(Please Check
and initial the appropriate boxes).
|
|
£
|
The
Subscriber is a corporation and has not been formed for the specific
purposes of acquiring the Shares and has total assets exceeding
$5,000,000.
|
|
£
|
The
Subscriber is a trust, has total assets exceeding $5,000,000 and
was not
formed for the specific purpose of acquiring the Shares. The decision
to
invest in the Company by the trust was made by a person who has such
knowledge and experience in financial and business matters that he
or she
is capable of evaluating the merits and risks of the prospective
investment. Identify the name and principal occupation of each such
person
directing the investment decision.
|
|
£
|
The
Subscriber is an organization described in Section 501(c)(3) of the
Internal Revenue Code, as amended, has not been formed for the specific
purpose of acquiring Shares and has total assets exceeding
$5,000,000.
|
|
£
|
The
Subscriber is an entity in which all of the equity owners are (a)
individuals who have individual or joint income in excess of $200,000
or
$300,000, respectively, in each of the past two years and reasonably
expect a similar level of income in the current year, (b) individuals
whose net worth exceeds $1,000,000; or (c) entities which are “accredited
investors” (as such item is defined in Rule 501 of Regulation D under the
Securities Act). Identify and haves each equity owner of the Subscriber
sign opposite his name below, which signature shall be an representation
by that individual that he satisfies the criteria of clause (a),
(b) or
(c) hereof (Please complete and sign Schedule A
hereto).
|
24
| £ |
The
Subscriber is a bank as defined in Section 3(a)(2) of the Securities
Act,
or any savings and loan association or other institution as defined
in
Section 3(a)(5)(A) of the Securities Act whether acting in its individual
or fiduciary capacity; a broker or dealer registered pursuant to
Section
15 of the
Exchange Act; and insurance company as defined in Section 2(13) of
the
Act; an investment company registered under the Investment Company
Act of
1940 or a business development company as defined in Section 2(a)(48)
of
that Securities Act; a Small Business Company licensed by the U.S.
Small
Business Administration under Section 301(c) or (d) of the Small
Business
Investment Act of 1958; a plan established and maintained by a state,
its
political subdivisions, or any agency or instrumentality of a state
or its
political subdivisions for the benefit of its employees, if such
plan has
total assets in excess of $5,000,000; or an employee benefit plan
within
the meaning of the Employee Retirement Income Security Act of 1974
if the
investment decision is made by a plan fiduciary as defined in Section
3(21) thereof, which is either a bank a savings and loan association,
insurance company, or registered investment advisor, or if the employee
benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons
that
are accredited Subscribers.
|
|
£
|
The
Subscriber is a private business development company as defined in
section
202(a) (22) of the Investment Advisers Act of
1940.
|
|
12.
|
£
|
Although
none of the foregoing are applicable to the Subscriber, the Subscriber
represents that it has a has a net worth (exclusive of house and
furnishings) equal to ten (10) times its proposed
investment.
|
|
Part
II:
|
Business
and Investment
Experience
|
|
1.
|
Please
check all applicable descriptions below for any general business,
investment or professional experience that you posses.
|
|
£
Self Employed
|
£Securities
Experience
|
£Small
Business Experience
|
£ Stock
Broker/Dealer
|
|
£
Frequent Investor
|
£
Business Owner
|
£
Financial Advisor
|
£
Attorney or Accountant
|
|
£
Oil & Gas Experience
|
£
Insurance Experience
|
£
Maintain Brokerage Accounts
|
£
Own other xxxxx stocks
|
25
For
questions 2-11, you must answer YES
to at least 6 questions in order to qualify to invest.
|
2.
|
Do
you consider yourself knowledgeable about general business
matter?
|
£
Yes £
No
|
|
|
3.
|
Do
you make your own business decisions?
|
£
Yes £
No
|
|
|
4.
|
Do
you keep informed of business, financial or economic trends and
conditions?
|
£
Yes £
No
|
|
|
5.
|
Do
you read financial publications or watch or listen to programs with
financial themes?
|
£
Yes £
No
|
|
|
6.
|
Do
you invest in stocks, bonds, mutual funds, private businesses or
auction
industry?
|
£
Yes £
No
|
|
|
7.
|
Have
you ever been a principal in a partnership, or an officer or or director
in a corporation or similar entity?
|
£
Yes £
No
|
|
|
8.
|
Have
you every had or shared responsibility for running a
business?
|
£
Yes £
No
|
|
|
9.
|
Do
you have more than 6 years of general business experience?
|
£
Yes £
No
|
|
|
10.
|
Do
you understand financial statements and balance sheets?
|
£
Yes £
No
|
|
|
11.
|
Have
you worked with attorneys and/or financial professionals regarding
business matters?
|
£
Yes £
No
|
|
Part
III: General Information About the
Subscriber
|
|
(1)
|
My
educational background is as
follows:
|
|
College:____________
|
Degree:_____________
|
Year:___________
|
|
Grad
School:_____________
|
Degree:____________
|
Year:____________
|
|
(2)
|
I
am _________ years of age.
|
|
(3)
|
I
have personally invested in excess of $_________ in venture capital
or
similar investments in the past five
years.
|
|
(4)
|
I
£
am
£
am
not an executive officer, director or existing shareholder of the
Company.
|
(b) (1) (Applicable
only if no Purchaser Representative is acting for the Subscriber.)
The
Subscriber has not authorized any person or institution to act as his Purchaser
Representative (as that term is defined in Regulation D of the General Rules
and
Regulations under the Securities Act) in connection with this transaction.
The
Subscriber is experienced in investment and business matters and has such
knowledge and experience in financial and business matters that he is capable
of
evaluating the merits and risks of the prospective investment in the Shares
being offered on the terms and conditions set forth in this Agreement which
the
Subscriber has read and understands. In connection with his review of this
Agreement, the Subscriber has consulted with such independent legal counsel
or
other advisers considered appropriate to assist the Subscriber in evaluating
his
proposed investment in the Company. In particular, and not in limitation
of the
foregoing, the Subscriber has taken full cognizance of and understands: (i)
the
terms and conditions of this Agreement; and (ii) that there are substantial
"Risk Factors” associated with the purchase of Shares.
26
(2)
(Applicable
only if a Purchaser Representative is acting for the Subscriber).
(a) _______________________________whose
office address and telephone number are as follows: _______________________________
has
acted
as the Purchaser Representative of the Subscriber.
(b) In
evaluating a potential purchase of the Shares, the Subscriber has been advised
by the Purchaser Representative as to the merits and risks of the investment
in
general and the suitability of the investment for the Subscriber in particular;
(c) The
Purchaser Representative has confirmed to the Subscriber, in writing, (a copy
of
which instrument shall be delivered to you upon execution of the Subscription
Agreement) the specific details of any and all past, present or future material
relationships, actual or contemplated, between the Purchaser Representative
and
the Company or any affiliate of any of the foregoing; and
(d) The
Subscriber has reviewed with such Purchaser Representative and, accordingly,
has
taken full cognizance of and understands the terms and conditions of this
Agreement; and
(e) Either
directly or through his Purchaser Representative, the Subscriber
has:
(1) Been
furnished with such other information in connection with this transaction as
has
been requested;
(2) Been
afforded the opportunity to ask questions of and receive answers from the
Company or persons acting on his behalf concerning the terms and conditions
of
the transaction and to obtain any additional information, to the extent that
the
Company possess such information or can acquire it without unreasonable effort
or expense, necessary to verify the accuracy of the information furnished;
and
has availed himself of such opportunity to the extent he considers appropriate
in order to permit him to evaluate the merits and risks of an investment in
the
Subscribed for Shares.
27
Schedule
A to
Exhibit
1.4(b)
TO
BE COMPLETED ONLY BY SHAREHOLDERS, PARTNERS OR GRANTORS OF CERTAIN CORPORATIONS,
PARTNERSHIPS AND TRUSTS, RESPECTIVELY, WHO ARE PURCHASING THE SUBSCRIPTION
SHARES, AS ACCREDITED INVESTORS
Dear
Sir;
Please
be
advised that the undersigned is a shareholder, partner, or grantor of/or in
_________________________
(the
"Subscriber"), a corporation/partnership/trust (circle applicable status).
The
undersigned is aware that, for purchase of the Subscribed for Shares (as defined
in and subject to the terms of the Subscription Agreement dated for reference
as
of October ___, 2005 between the Subscriber and Mogul Energy International,
Inc.
(the "Company"), certain corporations, partnerships, trusts or other entities
may qualify to purchase Subscribed for Shares, as an "Accredited Investor"
as
defined in Regulation D as promulgated by the Securities and Exchange Commission
if all of their equity owners are Accredited Investors.
Accordingly,
with knowledge that it will be relied upon by the Company, the undersigned
certifies and represents that (as applicable, please initial):
__________(i) the
undersigned has an individual net worth, or joint net worth with his/her spouse,
in excess of $1,000,000; or,
_________(ii) the
undersigned had an individual income in excess of $200,000 in each of the two
most recent years or joint income with his/her spouse in excess of $300,000
in
each of those two years and has a reasonable expectation of reaching the same
income level in the current year; or,
_________(iii) the
undersigned is a company or partnership not formed for the specific purpose
of
acquiring the securities offered hereby, with total assets in excess of
$5,000,000.
|
Dated:
,2005
|
|||
|
[Signature]
|
|||
|
Print
Name:
|
28
EXHIBIT
1.5(A)
REPRESENTATION
LETTER
FOR
RESIDENTS
XX XXXXXXX XXX XXXXXXX XXXXXXXX, XXXXXX
|
TO:
|
Mogul
Energy International, Inc. (the
"Company")
|
In
connection with the purchase by the undersigned of Subscribed for Shares of
the
Company, the undersigned is delivering this representation letter to the
Subscription Agreement dated, for reference, October __,
2005
made between
the
undersigned and the Company, and hereby represents, warrants and certifies
to
the Company that the undersigned is resident in Alberta or British Columbia
or
is otherwise subject to the securities laws of Alberta or British Columbia,
and
is is purchasing the Subscribed for Shares as a principal and is (please check
all applicable descriptions):
_____
(i)
a director, executive officer or control person of the Company, or of an
affiliate of the Company,
_____
(ii) a spouse, parent, grandparent, brother, sister or child of a director,
executive officer or control person of the Company, or of an affiliate of the
Company,
_____
(iii) a parent, grandparent, brother, sister or child of the spouse of a
director, executive officer or control person of the Company or of an affiliate
of the Company,
_____
(iv) a close personal friend of a director, executive officer or control person
of the Company, or of an affiliate of the Company,
_____
(v)
a close business associate of a director, executive officer or control person
of
the Company, or of an affiliate of the Company,
29
_____
(vi) a founder of the issuer or a spouse, parent, grandparent, brother, sister,
child, close personal friend or close business associate of a founder of the
Company,
_____
(vii) a parent, grandparent, brother, sister or child of the spouse of a founder
of the Company,
_____
(viii) a person of which a majority of the voting securities are beneficially
owned by, or a majority of the directors are, persons described in paragraphs
(i) to (vii), or
_____
(ix) a trust or estate of which all of the beneficiaries, or a majority of
the
trustees or executors, are persons or companies described in paragraphs (i)
to
(vii).
DATED:
, 2005
|
(Name
of Subscriber - please print)
|
|
|
(Authorized
Signature)
|
|
|
(Official
Capacity - please print)
|
|
|
(please
print name of individual whose signature appears
above)
|
|
IMPORTANT:
|
IF
APPLICABLE, PLEASE COMPLETE THE SCHEDULE TO THIS REPRESENTATION LETTER
BY
MARKING YOUR INITIALS BESIDE THE CATEGORY TO WHICH YOU
BELONG.
|
30
Exhibit
1.5(B)
SASKATCHEWAN
RESIDENTS
Form
45-106F5
Risk
Acknowledgement
Saskatchewan
Close Personal Friends and Close Business Associates
I
acknowledge that this is a risky investment:
|
·
|
I
am investing entirely at my own
risk.
|
|
·
|
No
securities regulatory authority has evaluated or endorsed the merits
of
these securities.
|
|
·
|
The
person selling me these securities is not registered with a securities
regulatory authority and has no duty to tell me whether this investment
is
suitable for me. [Instruction:
Delete if sold by registrant]
|
|
·
|
I
will not be able to sell these securities except in very limited
circumstances. I may never be able to sell these securities. [Instruction:
Delete if issuer is reporting]
|
|
·
|
I
will not be able to sell these securities for 4 months. [Instruction:
Delete if issuer is not
reporting]
|
|
·
|
I
could lose all the money I invest.
|
|
·
|
I
do not have a 2-day right to cancel my purchase of these securities
or the
statutory rights of action for misrepresentation I would have if
I were
purchasing the securities under a prospectus.
|
I
am
investing $____________ [total consideration] in total; this includes any amount
I am obliged to pay in future.
I
am a
close
personal
friend or close
business
associate of ____________ [state name], who is a ____________ [state title
-
founder, director, executive officer or control person] of ____________ [state
name of issuer or its affiliate - if an affiliate state “an affiliate of the
issuer” and give the issuer’s name].
I
acknowledge that I am purchasing based on my close relationship with
____________ [state name of founder, director, executive officer or control
person] whom I know well enough and for a sufficient period of time to be able
to assess her/his capabilities and trustworthiness.
I
acknowledge that this is a risky investment and that I could lose all the money
I invest.
|
Date
|
Signature
of Purchaser
|
||
|
Print
name of Purchaser
|
Sign
2
copies of this document. Keep one copy for your records.
31
You
are buying Exempt Market Securities
They
are
called exempt
market securities
because
two parts of securities law do not apply to them. If an issuer wants to sell
exempt
market securities to
you:
|
·
|
the
issuer does not have to give you a prospectus (a document that describes
the investment in detail and gives you some legal protections),
and
|
|
·
|
the
securities do not have to be sold by an investment dealer registered
with
a securities regulatory authority.
|
There
are
restrictions on your ability to resell exempt
market securities.
Exempt
market securities are more risky than other securities.
You
may not receive any written information about the issuer or its
business
If
you
have any questions about the issuer or its business, ask for written
clarification before you purchase the securities. You should consult your own
professional advisers before investing in the securities.
You
will not receive advice [Instruction:
Delete if sold by registrant]
Unless
you consult your own professional advisers, you will not get professional advice
about whether the investment is suitable for you.
The
issuer of your securities is a non-reporting issuer [Instruction:
Delete if issuer is reporting]
A
non-reporting
issuer
does not
have to publish financial information or notify the public of changes in its
business. You may not receive ongoing information about this issuer. You can
only sell the securities of a non-reporting issuer in very limited
circumstances. You may never be able to sell these securities.
The
securities you are buying are not listed [Instruction:
Delete if securities are listed or quoted]
The
securities you are buying are not listed on any stock exchange, and they may
never be listed. There may be no market for these securities. You may never
be
able to sell these securities.
For
more
information on the exempt market, refer to the Saskatchewan Financial Services
Commission’s website at xxxx://xxx.xxxx.xxx.xx.xx.
[Instruction:
The purchaser must sign 2 copies of this form. The purchaser and the issuer
must
each receive a signed copy.]
32
Exhibit
1.5(C)
ONTARIO
RESIDENTS
REPRESENTATION
LETTER
|
TO:
|
Mogul
Energy International, Inc. (the
"Company")
|
In
connection with the purchase by the undersigned of Subscribed for Shares of
the
Company, the undersigned is delivering this representation letter to the
Subscription Agreement dated, for reference, October __,
2005
made between
the
undersigned and the Company, and hereby represents, warrants and certifies
to
the Company that the undersigned is resident in Ontario or is otherwise subject
to the securities laws of Ontario, and is purchasing the Subscribed for Shares
as a principal and is (please check all applicable descriptions):
|
_____
|
(a)
a founder of the issuer,
|
|
_____
|
(b)
an affiliate of a founder of the issuer,
|
|
_____
|
(c)
a spouse, parent, brother, sister, grandparent or child of an executive
officer, director or founder of the issuer, or
|
|
_____
|
(d)
a person that is a control person of the
issuer.
|
DATED:
,2005
|
5.
|
(Name of Purchaser - please print) | |
|
6.
|
|
|
|
7.
|
||
|
8.
|
(Authorized Signature) | |
|
9.
|
||
|
10.
|
|
|
| 11. | (Official Capacity - please print) | |
| 12. | ||
| 13. | ||
|
14.
|
(please
print name of individual whose signature appears above)
|
|
|
15.
|
||
|
IMPORTANT:
|
PLEASE
COMPLETE THE SCHEDULE TO THIS REPRESENTATION LETTER BY MARKING YOUR
INITIALS BESIDE THE CATEGORY TO WHICH YOU
BELONG.
|
33
Exhibit
1.5(D)
CANADIAN
RESIDENTS
REPRESENTATION
LETTER
|
TO:
|
Mogul
Energy International, Inc. (the
"Company")
|
In
connection with the purchase by the undersigned of Subscribed for Shares of
the
Company, the undersigned is delivering this representation letter to the
Subscription Agreement dated, for reference, October __, 2005 the undersigned
and the Company, and hereby represents, warrants and certifies to the Company
that the undersigned is resident in Canada or is otherwise subject to the
securities laws of Canada, and is either an "accredited investor" within the
meaning National Instrument 45-106 (Prospectus and Registration Exemptions)
on
the basis that the undersigned fits within that category of "accredited
investor" identified on the attached Schedule to this Representation Letter
beside which the undersigned has marked its initials.
DATED:
,2005
|
(Name
of Purchaser - please print)
|
|
|
(Authorized
Signature)
|
|
|
(Official
Capacity - please print)
|
|
|
(please
print name of individual whose signature appears
above)
|
|
IMPORTANT:
|
PLEASE
COMPLETE THE SCHEDULE TO THIS REPRESENTATION LETTER BY MARKING YOUR
INITIALS BESIDE THE CATEGORY TO WHICH YOU
BELONG.
|
34
Schedule
A Exhibit 1.5(D)
REPRESENTATION
LETTER
(CANADIAN
RESIDENTS)
PLEASE
COMPLETE THIS SCHEDULE BY MARKING YOUR INITIALS BESIDE THE CATEGORY OF
"ACCREDITED INVESTOR" TO WHICH YOU BELONG.
Meaning
of "Accredited Investor"
The
term
"accredited investor" is defined in National Instrument 45-106 (Prospectus
and Registration Exemptions)
to mean
(Please check all categories that apply to you):
|
(eee)
a Canadian
financial institution,
or an authorized foreign bank listed in Schedule III of the Bank
Act
(Canada);
|
|
|
the
Business Development Bank of Canada incorporated under the Business
Development Bank of Canada Act (Canada);
|
|
|
|
|
|
a
subsidiary
of
any person
referred
to in paragraphs (a) to (b), if the person
owns
all of the voting
securities
of
the subsidiary,
except the voting
securities
required by law to be owned by directors
of
that subsidiary;
|
|
|
|
|
|
a
person
registered
under the securities legislation of a jurisdiction of Canada, as
an
adviser or dealer, other than a person registered solely as a limited
market dealer under one or both of the Securities
Act
(Ontario) or Securities
Act
(Newfoundland and Labrador);
|
|
|
|
|
|
an
individual
registered or formerly registered under the securities legislation
of a
jurisdiction of Canada, as a representative of a person
referred
to in paragraph (d);
|
|
|
|
|
|
the
Government of Canada or a jurisdiction of Canada, or any crown
corporation, agency or wholly owned entity of the Government of Canada
or
a jurisdiction of Canada;
|
|
|
|
|
|
a
municipality, public board or commission in Canada and a metropolitan
community, school board, the Comite’de gestion de la taxe scolaire de
l’ile de Montreal or an intermunicipal management board in
Quebec;
|
|
|
|
|
|
any
national, federal, state, provincial, territorial or municipal government
of or in any foreign
jurisdiction,
or any agency of that government;
|
|
|
|
|
|
a
pension fund that is regulated by either the Office of the Superintendent
of Financial Institutions (Canada) or a pension commission or similar
regulatory authority of a jurisdiction of
Canada;
|
35
|
an
individual
who, either alone or with a spouse, beneficially owns, directly or
indirectly, financial
assets
having an aggregate realizable value that before taxes, but net of
any
related
liabilities,
exceeds $1,000,000;
|
|
|
|
|
|
an
individual
whose net income before taxes exceeded $200,000 in each of the two
most
recent calendar years or whose net income before taxes combined with
that
of a spouse exceeded $300,000 in each of the two most recent calendar
years and who, in either case, reasonably expects to exceed that
net
income level in the current calendar year;
|
|
|
|
|
|
an
individual who, either alone or with a spouse, has net assets of
at least
$5,000,000;
|
|
|
|
|
|
a
person, other than an individual or investment fund, that has net
assets
of at least $5,000,000 as shown on its most recently prepared financial
statements;
|
|
|
|
|
|
an
investment fund that distributes or has distributed its securities
only to
(i) a person that is or was an accredited investor at the time of
the
distribution, (ii) a person that acquires or acquired securities
in the
circumstances referred to in sections o2.10 (of NI-106)[Minimum
amount investment],
and 2.19 (of NI-106) [Additional
investment funds],
or
(iii) a person described in paragraph (i) or (ii) that acquires or
acquired securities under section 2.18 (of NI-106)[Investment
fund reinvestment];
|
|
|
|
|
|
an
investment fund that distributes or has distributed securities under
a
prospectus in a jurisdiction of Canada for which the regulator or,
in
Quebec, the securities regulatory authority, has issued a
receipt;
|
|
|
|
|
|
a
trust company or trust corporation registered or authorized to carry
on
business under the Trust
and Loan Companies Act
(Canada) comparable legislation in a jurisdiction of Canada or a
foreign
jurisdiction, acting on behalf of a fully managed account managed
by the
trust company or trust corporation, as the case may be;
|
|
|
|
|
|
a
person acting on behalf of a fully managed account managed by that
person,
if that person (i) is registered or authorized to carry on business
as an
adviser or the equivalent under the securities legislation of a
jurisdiction of Canada or a foreign jurisdiction, and (ii) in Ontario,
is
purchasing a security that is not a security of an investment
fund;
|
|
|
|
|
|
a
registered charity under the Income
Tax Act
(Canada) that, in regard to the trade, has obtained advice from an
eligibility adviser or an adviser registered under the securities
legislation of the jurisdiction or the registered charity to give
advice
on the securities being traded;
|
|
|
|
|
|
an
entity organized in a foreign jurisdiction that is analogous to any
of the
entities referred to in paragraphs (a) to (d) or paragraph (i) above
in
form and function;
|
|
|
|
|
|
a
person in respect of which all of the owners of interests, direct
or
indirect or beneficial, except the voting securities required by
law to be
owned by directors, are persons that are accredited
investors;
|
|
|
|
|
|
an
investment fund that is advised by a person registered as an adviser
or a
person that is exempt from registration as an adviser;
or
|
|
|
|
|
|
a
person that is recognized or designated by the securities regulatory
or,
except in Ontario and Quebec, the regulator as (i) an accredited
investor,
or (ii) an exempt purchaser in Alberta or British Columbia after
NI-106
comes into force
|
36
The following definitions relate to certain of the categories of "accredited investor" set forth above:
"Canadian
financial institution"
means
(a) an association governed by the Cooperative Credit Associations Act (Canada)
or a central cooperative credit society for which an order has been made under
section 473(1) of that Act or (b) a bank, loan Company, trust company, insurance
company, treasury branch, credit union or caisse populaire that, in each case,
is authorized by an enactment of Canada or a jurisdiction of Canada to carry
on
business in Canada or a jurisdiction of Canada;
"financial
assets"
means
cash, securities or a contract of insurance, a deposit or an evidence of a
deposit that is not a security for the purposes of securities
legislation;
"foreign
jurisdiction"
means a
country other than Canada or a political subdivision of a country other than
Canada;
“fully
managed account”
means
an account of a client for which a person makes investment decisions if that
person has full discretion to trade in securities for the account without
requiring the client’s express consent to a transaction;
"issuer"
means a
person who: (i) has a security outstanding; (ii) is issuing a security; or
(iii)
proposes to issue a security;
“investment
fund”
has
the
same meaning as in National Instrument 81-106 Investment
Fund Continuous Disclosure;
"jurisdiction"
means a
province or territory of Canada, except when used in the term foreign
jurisdiction;
"person
"
includes, an individual, a corporation, a partnership, trust, fund and an
association, syndicate, organization or other organized group of persons,
whether incorporated or not, and an individual or other person in that person’s
capacity as a trustee, executor, administrator or personal or other legal
representative;
37
"securities
legislation"
means:
(i) in British Columbia, the Securities
Act
(British
Columbia), the regulations, rules and forms under that Act and the blanket
rulings and orders issued by the British Columbia Securities Commission; (ii)
in
Alberta, the Securities
Act
(Alberta), the regulations and rules under that Act and the blanket rulings
and
orders issued by the Alberta Securities Commission; in Ontario, the Securities
Act
(Ontario), the regulations, rules and forms under that Act and the blanket
rulings and orders issued by the Ontario Securities Commission; and in the
other
provinces and territories of Canada, the Securities
Act (or
similarly named Act) of such province or territory and the regulations, rules
and forms under that Act and the blanket rulings and orders issued by the
securities commission or other securities regulator of such province or
territory;
“spouse”
means,
an individual who, (a) is married to another individual and is not living
separate and apart with the meaning of the Divorce
Act
(Canada), from the other individual , (b) is living with another individual
in a
marriage-like relationship, including a marriage-like relationship between
individuals of the same gender, or (c) in Alberta, is an individual referred
to
in paragraph (a) or (b), or is an adult interdependent partner with the meaning
of the Adult Interdependent
Relationships Act
(Alberta);
"subsidiary"
means an
issuer that is controlled directly or indirectly by another issuer and includes
a subsidiary of that subsidiary; and
Affiliated
Issuers
An
issuer
is affiliated with another issuer if one of them is the subsidiary of the other
or if each of them is controlled by the same person.
Control
Generally,
a person is considered to control another person (second person) if (a) the
first person, directly or indirectly, beneficially owns or exercises control
or
direction over securities of the second person carrying votes which, if
exercised, would entitle the first person to elect a majority of the directors
of the second person, unless that first person holds the voting securities
only
to secure an obligation, (b) the second person is a partnership, other than
a
limited partnership, and the first person holds more than 50% of the interest
of
the partnership, or (c) the second person is a limited partnership and the
general partner of the limited partnership is the first person. An issuer is
controlled by a person if voting securities of the issuer are held (other than
as security for bona fide debt) by or for the benefit of that person , and
the
voting rights attached to those voting securities are sufficient, if exercised,
to elect a majority of the directors of the issuer.
All
monetary references in this Schedule A Exhibit "1.5(d)" are in Canadian
Dollars.
38
