Form of Subscription Agreement ($0.15) MOGUL ENERGY INTERNATIONAL, INC.
Exhibit 3.1
Form of Subscription
Agreement ($0.15)
MOGUL ENERGY INTERNATIONAL,
INC.
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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 “Securities 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
Securities 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(s).
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This
Subscription
Agreement is made by and
between _____________________________________________________________________________,
the undersigned subscriber (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 3,500,000 shares (the “Shares”) of its common stock
$0.0001 par value per share (the “Common Stock”) at a price of
US $0.15 per share or
US $525,000 in the
aggregate (the “Offering”).
Whereas,
the Company is offering and selling the Shares on a no minimum basis, no
proceeds will be held in an escrow account and all funds will be immediately
available to the Company.
Whereas, subject
to the terms and conditions set forth herein, the Company desires to issue and
sell to the Subscriber and the Subscriber desires to subscribe for and purchase
from the Company the aggregate number of Shares set forth on the signature page
hereof (the “Subscribed for
Shares”). All references herein to “dollars” or “$” shall be
to U.S. dollars unless otherwise specified.
Whereas,
the Company is conducting the Offering without any private placement memorandum
and is offering the Shares to prospective investors in jurisdictions outside of
the United States. The Company is offering and selling the Subscribed
for Shares only to Persons who are not “US Persons” as defined in
Regulation S, as promulgated under the United States Securities Act of 1933, as
Amended and the Rules and Regulations promulgated thereunder (the “Securities Act”), and who
otherwise satisfy the requirements of the applicable securities laws, customary
practices and documentation of the jurisdiction of their
residency. No directed selling efforts in connection with this
offering are being made in the United States by the Company, a distributor, any
affiliates of same, or any person acting on of behalf of any of the
foregoing.
1
Regulation S Offering
December 12, 2007
Whereas,
the Company intends to offer and sell the Shares directly through our officers
and directors, it has reserved, nevertheless, the right to sell all or a portion
of the Shares through finders and registered broker/dealers, and in connection
therewith may pay sales commissions (the “Commission Fee”) as follows: (i) a
cash payment equal to eight percent (8%) of the gross sale proceeds from such
sales generated by said finders and registered broker/dealers (the “Cash Commission”) plus (ii)
warrants (the “Placement
Warrants”) to purchase a number of shares equal to ten percent (10%) of
the Shares actually sold pursuant to sales of Shares generated by said finders
and registered broker/dealers. The Placement Warrants will have the
same general terms and conditions as the Company’s previously issued Class B
Warrants, except that the exercise price of the Placement Warrants shall be 15
cents. The Commission, if any, will be paid only to those persons or
entities permitted to receive such payments under applicable laws, and, where
applicable under the Securities Act, who send a confirmation or other notice to
the purchaser stating that the purchaser is subject to the same restrictions on
offers and sales that apply to the distributor.
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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Definitions.
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“Accredited Investor”
shall mean a
person who qualifies as an “Accredited Investor” under Sections 2.3 (b), (c), (d) or (e) hereof, or,
where applicable, is an “Accredited Investor,” as defined in Rule 501 of
Regulation D, as promulgated under the Securities Act.
“Additional Closing" shall
have the meaning ascribed thereto in Section 2.5
hereof.
“Agreement” shall mean this
Subscription Agreement.
“Aggregate Purchase Price”
shall have
the meaning ascribed thereto in Section 2.2 of this
Agreement.
“Applicable Closing Date”
shall mean with respect to any of the Securities, the Closing Date of the
Closing relating to such Securities.
“ASC” shall have the meaning
ascribed thereto in Section 2.3
(b) hereof.
“BCSC” shall have the meaning
ascribed thereto in Section 2.3
(b) hereof.
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Regulation S Offering
December 12, 2007
“Canadian Securities Laws”
shall have the meaning ascribed thereto in Section 7.2
hereof.
“Cash Commission” shall have
the meaning ascribed thereto in the recitals to this Agreement.
“Closing” shall have the
meaning ascribed thereto in Section 2.5(a)
hereof.
“Closing Date” shall have the
meaning ascribed thereto in Section 2.5(a),
hereof.
“Commission” shall mean the Securities and Exchange
Commission.
“Commission Filings” shall have the
meaning ascribed thereto in Section 5.6
hereof.
“Common Stock” shall mean
shares of the Company's common stock, $0.0001 par value, or such securities that
such stock shall hereafter be reclassified into.
“Company” shall have the meaning
ascribed thereto in the recitals to this Agreement.
“Distribution Compliance Period”
shall have
the meaning ascribed thereto in Section 7.1
hereof.
“Effective Date” shall have the
meaning ascribed thereto in Section 9.11
hereof.
“Family and Friends (Alberta and
BC)” shall have the meaning ascribed thereto in Section 2.3 (b)
hereof.
“Family and Friends (Ontario)”
shall have the meaning ascribed thereto in Section 2.3 (d)
hereof.
“Initial Closing" shall have
the meaning ascribed thereto in Section 2.5
hereof.
“NI 45-106” shall have the
meaning ascribed thereto in Section 2.3
hereof.
“OSC” shall have the meaning
ascribed thereto in Section 2.3
hereto.
“Offered Shares” shall mean the
3,500,000 Shares offered by the Company of which the Subscribed for Shares are a
part.
“Offering” shall have the
meaning ascribed thereto in the recitals to this Agreement.
“Person” shall mean an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
“Proceeding” shall mean an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether
commenced or threatened.
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Regulation S Offering
December 12, 2007
“Purchase Price” shall have the
meaning ascribed thereto in Section 2.1
hereof.
“Reference Date” shall have the
meaning ascribed thereto in Section 9.11
hereof.
“Registration Rights Agreement”
shall mean
the Registration Rights Agreement, substantially in the form of Document III of the
Subscription Documents Package, executed and delivered by Subscriber and the
Company pursuant to Sections
4.5 and 3.2 of
this Agreement, respectively.
“Regulation S” shall have the
meaning ascribed thereto in the recitals to this Agreement.
“Securities” shall mean
collectively, the Shares and the Placement Warrants.
“Securities Act” shall have
the meaning ascribed thereto in the recitals to this Agreement.
“Shares” shall have the
meaning ascribed thereto in the recitals to this Agreement.
“Subscriber” shall have the
meaning ascribed thereto in the recitals to this Agreement.
“Subscribed for Shares” shall
have the meaning ascribed thereto in the recitals to this
Agreement.
“Subscription Documents Package”
shall mean
the Subscription Documents Package dated December 12, 2007, inclusive of this
Agreement, the Registration Rights Agreement, and Exhibits.
“US Person” shall have the
meaning ascribed thereto in the recitals to this Agreement.
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2.
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Subscription
and Purchase of Shares;
Closing.
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2.1
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Subscription
and Purchase of Shares.
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(a) Subject
to the terms and conditions herein set forth, the Subscriber hereby subscribes
for and agrees to purchase from the Company the Subscribed for Shares, at a
price of US $0.15 per
Subscribed for Share (the “Purchase Price”).
(b) The
Subscriber acknowledges that this Agreement may be accepted or rejected by the
Company with respect to all or part of the amount subscribed and that, to the
extent the subscription may be rejected, the accompanying cash subscription
payment will be refunded without payment of interest and without deduction of
expenses.
4
Regulation S Offering
December 12, 2007
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2.2
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Payment of Purchase
Price.
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(a) Simultaneously
with the execution and delivery of this Agreement by the Subscriber, the
Subscriber shall deliver to the Company an amount equal to (x) the number of
Subscribed for Shares multiplied
by (y) the Purchase Price (the “Aggregate Purchase Price”) by
check payable to the Company or by wire transfer of funds pursuant to wiring
instructions provided by the Company in Instructions
For Completing Subscription Documents under Transmittal of Funds
hereto.
(b) No
cash proceeds received from the Offering will be held in escrow pending receipt
of any minimum proceeds; all proceeds of the offering from accepted
subscriptions will be made immediately be available to the Company for its use.
The payment (or, in the case of rejection of a portion of the Subscriber’s
subscription, the part of the payment relating to such rejected portion) will be
returned promptly, without interest, if the Subscriber’s subscription is
rejected in whole or in part.
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2.3
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Limitations
of Offering and Investor Suitability
Criteria.
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(a) The
Subscriber acknowledges that the Company is offering and selling the Subscribed
for Shares only
to Persons who are not US Persons as
that term is defined in Regulation S as promulgated under the Securities Act,
and who otherwise satisfy the requirements of the applicable securities laws of
the jurisdiction of their residency. No directed selling efforts in
connection with this offering will be made in the United States by the Company,
a distributor, any affiliates of same, or any person acting on of behalf of any
of the foregoing.
(b) Subject
to the further provisions of Section 2 hereof, if the Subscriber (who is not a
US Person) is a resident of the provinces of Alberta or British Columbia,
Canada, the Subscriber must either be (1) purchasing the Subscribed
for Shares as principal and be an “Accredited Investor” as
defined in National Instrument 45-106 Prospectus and Registration Exemptions
(“NI 45-106”), as
adopted by, respectively, the British Columbia Securities Commission (the “BCSC”), and the Alberta
Securities Commission (the “ASC”), or (2) an investor who is
purchasing the Subscribed for Shares as a principal and who is either
a:
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(i)
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director,
senior officer or control person of the Company, or of an affiliate of the
Company,
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(ii)
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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,
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(iii)
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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,
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(iv)
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close
personal friend of a director, executive officer or control person of the
Company, or of an affiliate of the
Company,
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(v)
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close
business associate of a director, senior officer or control person of the
Company, or of an affiliate of the
Company,
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5
Regulation S Offering
December 12, 2007
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(vi)
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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,
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(vii)
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parent,
grandparent, brother, sister or child of the spouse of a founder of the
Company,
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(viii)
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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), provided such person does not have a “prohibited relationship” with
the Company, as that term is defined in subsection 66(12.671) of the Income Tax
Act (Canada),
or
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(ix)
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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), provided
such trust or estate does not have a “prohibited relationship” with the
Company, as that term is defined in subsection 66(12.671) of the Income Tax
Act
(Canada).
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(c) Collectively,
the categories of prospective investors described in 2.3(b) (i) through (ix) are
herein referred to as “Family
and Friends (Alberta and BC).” If the Subscriber is resident
in Alberta or British Columbia and is purchasing the Subscribed for Shares as an
“Accredited Investor”
within the meaning of NI-45-106 or as Family and Friends (Alberta and B.C.), the
Subscriber must deliver, at Closing, a duly completed and executed
Representation Letter in the form attached hereto as Exhibit C-1.
(d) If
the Subscriber is a resident of Ontario, the Subscriber is purchasing the
Subscribed for Shares as principal and is an “Accredited Investor” as
defined in NI 45-106 as adopted by the Ontario Securities Commission (the “OSC”), or is an investor
purchasing as a principal and is (a) a founder of the Company, (b) an affiliate
of a founder of the Company, (c) a spouse, parent, brother, sister, grandparent
or child of an executive officer, director or founder of the Company, or (d) a
person that is a control person of the Company (collectively “Family and Friends
(Ontario)”). If the Subscriber is resident in Ontario and is purchasing the
Shares as an “Accredited Investor” within the meaning of NI 45-106 or as Family
and Friends (Ontario), the Subscriber must deliver, at Closing, a duly completed
and executed Representation Letter in the form attached hereto as Exhibit
C-2.
(e) If
the Subscriber is resident of Saskatchewan, the subscriber is purchasing the
Subscribed for Shares as principal and is an “Accredited Investor” within
the meaning of NI 45-106, and the Subscriber must deliver at closing, a duly
completed and executed Representation Letter in the form attached hereto as
Exhibit
C-3.
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2.4
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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 Offered
Shares on a no minimum basis, and further acknowledges and understands that
since there is no minimum number of Offered 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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2.5
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Closing.
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(a) The
Company will consummate an initial closing of the Offering (the "Initial Closing") at such time
as the Company, in its sole discretion, may determine with no requirement that a
minimum number of the Offered Shares be sold, and from time to time thereafter
consummate additional closings (each an "Additional Closing") until
such time as all of the Offered Shares have been sold or the Company otherwise
terminates the Offering, but in no event beyond December 31, 2007. As used herein the
term “Closing” means the
Initial Closing and any Additional Closings; and, the term “Closing Date” refers to the
date of a Closing.
(b) At
a Closing, the Company shall either (i) accept this subscription (in whole or in
part) and shall cause its stock transfer agent to deliver to the Subscriber
certificate(s) for the Subscribed for Shares, all against delivery to the
Company of the Aggregate Purchase Price for the Subscribed for Shares; or (ii)
reject this subscription (or portion thereof) and return to the Subscriber,
without interest, his/her/its subscription payment or such portion thereof
applicable to the rejected portion of the Subscribers subscription. The Company
shall also deliver to the Subscriber a countersigned copy of this Subscription
Agreement and the Registration Rights Agreement, effective as of the Closing
Date.
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2.6
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Use of
Proceeds.
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The
Company will use the proceeds of this Offering for general working capital
purposes.
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3.
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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, on or before the Closing Date, of the
conditions set for in this Section 3, and the condition
that the representations, warranties and covenants of the Company set forth in
Section 5 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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3.1
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Representations,
Warranties and Covenants.
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The representations, warranties and
covenants of the Company set forth in Section
5 hereof shall be true in
all material respects on and as of the Closing Date, and at the Closing the
Company shall have delivered to the Subscriber a certificate to such effect
signed by the President of the Company.
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3.2
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Delivery
of Registration Rights
Agreement.
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The
Company shall have delivered a duly executed Registration Rights
Agreement.
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3.3
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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
Securities Act, and the applicable securities laws, customary practices and
documentation of Canada.
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3.4
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Authority.
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All
action required to be taken by or on the part of the Company to authorize the
execution, delivery and performance of this Agreement by Company and
the consummation of the transactions contemplated hereby and thereby shall have
been duly and validly taken by the Board of Directors of the Company and at the
Closing the Company shall have delivered to the Subscriber a certificate to such
effect signed by the Secretary of the Company.
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3.5
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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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4.
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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
4.
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4.1
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Representations,
Warranties and Covenants.
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The
representations, warranties and covenants of the Subscriber set forth in Section 6 and Section 7 hereof shall be
true in all material respects on and as of the Closing Date.
8
Regulation S Offering
December 12, 2007
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4.2
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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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4.3
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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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4.4
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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
Securities Act, and the applicable securities laws, customary practices and
documentation of Canada.
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4.5
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Delivery of
Registration Rights
Agreement.
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The
Subscriber shall have delivered a duly executed Registration Rights
Agreement.
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5.
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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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5.1
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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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5.2
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The Company’s
Business.
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The
Company is an independent, oil and gas exploration company whose goal is to
acquire properties, situated in proximity to producing fields, for exploration
and development.
9
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
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5.3
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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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5.4
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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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5.5
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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 and 10,000,000 shares of preferred stock,
$0.001 par value per share. As of the Reference Date, there were 40,575,424
shares of Common Stock issued and outstanding and no preferred shares issued and
outstanding. In addition, 2,021,667 shares are reserved for issuance
upon exercise of outstanding warrants and 2,250,000 are reserved for issuance
upon exercise of outstanding options. If all of the Offered Shares (and without
giving effect to the exercise of any Warrants) are sold there will be an
aggregate of 44,075,424 shares of common stock issued and outstanding. The
Company has reserved for issuance up to 3,500,000 shares of Common Stock for
issuance in connection with the Offering.
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5.6
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Reporting Issuer
Status.
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The
Company is not a reporting issuer in any
province of Canada. The Company has a reporting obligation under Section 15 (d)
of the 1934 Act and files current, quarterly and annual reports with the
Commission on forms 8-K, 10-QSB and 10-KSB (collectively, the “Commission Filings”). The
filed material may be inspected and copied at the Public Reference Room
maintained by the Commission at 000 X Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
Information about operation of the Public Reference Room can be obtained by
calling the Commission at 1-800-SEC-0330. The Commission also maintains
an Internet site that contains reports, proxy and information statements, and
other information regarding issuers that file electronically with the
U.S. Securities & Exchange Commission at xxxx://xxx.xxx.xxx.
Copies of such material can be obtained from the public reference section of the
U.S. Securities & Exchange Commission at prescribed
rates.
10
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
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5.7
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Other
Offerings.
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Subscriber
acknowledges that the Company will, from time to time, offer and sell additional
shares of Common Stock on such terms and conditions as its Board of Directors,
in its sole discretion, may determine. The terms and conditions of the offer and
sale of any such additional shares of Common Stock may be different from and
better than the terms of this Offering.
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6.
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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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6.1
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Organization;
Authority.
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(a) The
Subscriber:
(i) if
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 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; or
(ii) if
a natural person, (a) has the requisite power, authority and legal capacity to
execute and deliver this Subscription Agreement, to perform all of his
obligations hereunder and to undertake all actions required of the Subscriber
hereunder;
(b) 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 of any
agreement to which the Subscriber is a party or by which it is bound, or, if the
Subscriber is not a natural person, any of the Subscriber’s charter
documents.
11
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
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6.2
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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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6.3
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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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6.4
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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.
|
|
6.5
|
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.
|
|
6.6
|
No Approval by
Regulatory Authority.
|
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 the Subscribed for Shares.
|
|
6.7
|
No Representation as
to Value of the 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.
12
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
|
6.8
|
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.
|
|
6.9
|
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 Subscribed for
Shares.
|
|
6.10
|
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.
|
|
6.11
|
Tax
Consequences.
|
The
investment in the Subscribed for 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.
|
|
6.12
|
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 Subscribed for Shares by it. The Subscriber
acknowledges that it has been advised that no accountant or attorney engaged by
the Company is acting as its representative, accountant or attorney in
connection with this Subscription Agreement and/or the transactions contemplated
hereby.
|
|
6.13
|
Information
Provided by the Subscriber.
|
All
information which the Subscriber has provided or is providing the Company, or to
its agents or representatives concerning the Subscriber’s suitability to invest
in the Company is complete, accurate and correct as of the date of the signature
on the last page of this Agreement. Such information includes, but is
not limited to, information concerning the Subscriber’s personal financial
affairs, business position and the knowledge and experience of the Subscriber
and the Subscriber’s advisors. The Company shall maintain such
information regarding the Subscriber in strict confidence except as may be
required to be disclosed to governmental agencies pursuant to requirements of
applicable corporate securities and tax laws, rules and regulations regarding
the offer and sale of the Shares.
13
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
|
6.14
|
Information Provided
by the Company.
|
The
Subscriber has been provided with copies of all material information requested
by either the Subscriber, the Subscriber’s purchaser representative or other
representing the Subscriber, including any information requested to verify any
information furnished, and there has been direct communication between the
Subscriber and its representatives on the one hand and the Subscriber and the
Subscriber’s representatives and advisors on the other in connection with
information regarding the purchase made hereby. There has been made
available the opportunity to ask questions of and receive answers from the
Company and/or the directors, officers, employees or representatives of the
Company concerning the terms and conditions of this offering and to obtain any
additional information (to the extent the Company possesses such information or
can acquire it without unreasonable effort or expense) desired or necessary to
verify the accuracy of the information provided. Any proprietary
information disclosed or discovered by the Subscriber in reviewing information
made available to the Subscriber by the Company in connection with the offer and
sale of the Subscribed for Shares shall be maintained by the Subscriber in
strict confidence.
|
|
6.15
|
Risk
Acknowledgement.
|
The
Subscriber acknowledges that the purchase of the Offered Shares is a speculative
investment involving substantial risks, including, but not limited to, the
following:
|
|
(a)
|
The
Company is an
exploration stage company with a limited history of operations, which has
incurred substantial losses and, therefore, there is a strong likelihood
that its business may fail;
|
|
|
(b)
|
The
Company has conducted limited drilling activities to
date;
|
|
|
(c)
|
The
Company’s long term profitability is uncertain as it is related to the
success of its exploration program and the ultimate discovery of resources
on its properties;
|
|
|
(d)
|
The
risks inherent to the oil and gas industry may adversely affect on the
Company’s business operations;
|
|
|
(e)
|
The
Company’s ultimate success is dependent upon oil and gas prices which
prices are subject to fluctuation due to factors beyond the Company’s
control;
|
|
|
(f)
|
The
Company’s operations are subject to extensive environmental regulations
the compliance with which may adversely affect its capital
liquidity;
|
|
|
(g)
|
Because
the Company is an exploration stage company with limited assets, it may
not have or be able to obtain the funds required to purchase properties or
initiate additional exploration and or drilling
programs;
|
14
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
|
(h)
|
Because
of its limited resources, the Company may have to limit its exploration
drilling activities;
|
|
|
(i)
|
The
Company has no sources of operating cash flow and it may be unable to meet
its additional funding requirements absent equity and or debt
financings;
|
|
|
(j)
|
The
Company’s management has limited experience in managing an oil and gas
exploration company;
|
|
|
(k)
|
The
Company’s directors and executive officers devote and will continue to
devote only a limited amount of time to the Company’s business
activities;
|
|
|
(l)
|
The
Company’s directors and executive officers may face conflicts of interest
in connection with our participation in certain ventures because they are
or may become directors and officers of other mineral resource
companies;
|
|
|
(m)
|
The
value and transferability of the Subscribed for Shares may be adversely
impacted by a limited trading market for the Company’s shares and the
xxxxx stock rules;
|
|
|
(n)
|
The
Subscriber will incur immediate substantial dilution in the value of his
Subscribed for Shares;
|
|
|
(o)
|
The
Company may, and from time to time will, issue additional shares of its
common stock and that such future issuances of shares by the Company may
reduce the value of issued and outstanding shares of Common Stock and may
dilute the Subscriber’s percentage equity ownership interest in the
Company;
|
|
|
(p)
|
The
purchase price of the Offered Shares was arbitrarily determined by the
Company and thus, is not an indication of the value of the Offered Shares
or of any of the Securities;
|
|
|
(q)
|
Other
risk factors as discussed in the Company’s filings with the U.S.
Securities and Exchange Commission, including the Company’s most recent
Quarterly Report filed on Form
10-QSB.
|
|
|
6.16
|
Potentially Only One
Investor.
|
The
Subscriber acknowledges that because there is no minimum number of Subscribed
for Shares required to be sold in order for the Company to consummate the
Offering, the Subscriber may be the only Person acquiring Subscribed for Shares
in the Offering.
15
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
|
6.17
|
No Offering
Memorandum.
|
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 by the Company, or any
officer, employee, agent, affiliate or subsidiary of the Company.
|
7.
|
Additional Securities
Law Matters
|
|
|
7.1
|
Regulation S
Representations, Acknowledgements and
Warranties.
|
The
Subscriber represents, warrants, acknowledges, and covenants that:
(a) it
is not a “US Person” as
that term is defined in Rule 902 of Regulation S, as promulgated under the
Securities Act;
(b) the
Subscribed for Shares are being offered and sold in reliance on the exemptions
from the registration requirements of the Securities Act provided by the
provisions of Regulation S as promulgated under the Securities Act, and that the
Subscribed for Shares may not be resold in the United States 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 Securities 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 Securities 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 Securities Act;
(c) it
is a resident of Canada;
(d) it
is not, and on the Closing Date will not be, an affiliate of the
Company;
(e) 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 Securities Act or pursuant
to an exemption from registration. In any case, none of the
Subscribed for Shares have been or will be offered or sold by the Subscriber to,
or for the account or benefit of a US 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 Securities Act;
16
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(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) it
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 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
securities of the Company until after the end of the Distribution Compliance
Period, and acknowledges that such activities are prohibited by Regulation
S.
|
|
7.2
|
Canadian Exemptions
Representations, Acknowledgements and
Warranties.
|
Subject
to the further requirements of Section 2.3 hereof, if the
Subscriber is a resident of Alberta, British Columbia, Ontario or Saskatchewan,
Canada, 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, Sections 2.3 [Accredited Subscribers], and
2.5 [Family, friends and
business associates] of NI 45-106 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 Subscribed
for 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
Canadian Securities Laws.
The
Subscriber is purchasing the Subscribed for Shares as principal solely for its
own benefit and not for the benefit of any other person, and not with a view to
the resale or distribution of all or any of the Subscribed for Shares and the
Subscriber is (A) an “Accredited Investor” as such term is defined in NI 45-106,
has executed and delivered a duly completed Representation Letter in the form
attached hereto as “Exhibits
C-1, C-2, or C-3” as applicable, representing that the Subscriber fits
within one of the categories of “Accredited Investor” set forth in such
definition and was not created and/or used solely to purchase or hold the
Subscribed for Shares; or (B) satisfies the definition of Family and Friends
(Alberta and BC) or Family and Friends (Ontario) as applicable in the province
in which he resides.
|
|
7.3
|
Transfer of
Restrictions.
|
(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 APPLICABLE SECURITIES LAWS AND REGULATIONS IN EACH CASE AS EVIDENCED
BY AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY.”
17
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(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. Securities Act, and any applicable state securities laws, or
applicable Canadian Securities Laws.
(c) The
Subscriber understands and acknowledges that except as set forth in the
Registration Rights Agreement, 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.
(d) The
Subscriber understands and acknowledges that 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 laws.
(e) 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 any
"hold periods") to which
the Subscribed for Shares will be subject under applicable securities
legislation, rules and regulations, and confirms that no representation has been
made to the Subscriber by or on behalf of the Company with respect
thereto.
(f) The
Subscriber will not resell any Subscribed for Shares except in accordance with
the provisions of applicable securities legislation, rules and regulations, and
stock exchange rules. The Subscriber understands and acknowledges
that the Subscribed for Shares may not be resold in the United States or to a US
Person as defined in Regulation S, as promulgated under the Securities Act,
except pursuant to an effective registration statement, or an exemption from the
registration provisions of the Securities 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 Securities Act, the Subscribed for Shares
must be held indefinitely.
18
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
8.
|
Reliance
and Indemnification.
|
|
|
8.1
|
Reliance
and Timeliness.
|
The
Subscriber understands and acknowledges that (i) the Subscribed for Shares are
being offered and sold to the Subscriber without registration under the
Securities Act in a private placement that is exempt from the registration
provisions of the Securities Act 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, or any Exhibit hereto, which takes place prior to
Closing.
|
|
8.2
|
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 may suffer or incur as a
result of or in connection with their reliance on the Subscriber’s
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.
|
9.
|
Miscellaneous.
|
|
|
9.1
|
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.
19
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
|
9.2
|
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.
|
|
9.3
|
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.
|
|
9.4
|
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:
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;
|
With
A copy to:
|
The
Xxxx Law Group, PLLC
|
|
|
000
Xxxxx Xxxxxx
|
||
|
Xxxxx
0000
|
||
|
Xxxxxxx,
XX 00000
|
||
|
Attention: Xxxxx
Xxxx, Esq.
|
||
|
Telephone:
(000) 000-0000
|
||
|
Facsimile:
(000) 000-0000
|
||
|
If
to the Subscriber:
|
At
the address set forth below the Subscriber’s name on the signature page
hereto,
|
or, to
such other address as may be designated in writing hereafter, in the same
manner, by such party.
20
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
|
9.5
|
Headings;
Gender.
|
The
headings herein are inserted for convenience only and do not constitute a part
of this Agreement. 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. 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.
|
|
9.6
|
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.
|
|
9.7
|
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.
|
|
9.8
|
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.
|
|
9.9
|
Counterparts.
|
This
Agreement may be executed in any number of counterparts, all of which when taken
together 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, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
21
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
|
9.10
|
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.
|
|
9.11
|
Effective
Date.
|
For
reference purposes only,
date of this Agreement is December 12, 2007 (the “Reference Date”). The date of
acceptance of this Agreement by the Company, as set forth on the signature page,
shall be the “Effective
Date” hereof.
|
|
9.12
|
Currency.
|
Unless
otherwise specifically indicated herein or in any Exhibit hereto, all dollar
references herein are to U.S. dollars unless otherwise indicated.
|
|
9.13
|
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 Washington,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of Washington or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of
Washington. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of Seattle, 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.
[SIGNATURES APPEAR ON THE
NEXT PAGE]
22
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
IN WITNESS WHEREOF, the
Parties hereto caused this Agreement to be duly executed as of the dates set
forth below.
|
(Name
of Subscriber – please print)
|
Number
Of Subscribed for Shares:
|
|
|
By:
|
Aggregate
Consideration: $
|
|
|
Paid
by Delivery of: $
|
||
|
Authorized
Signature
|
||
|
Date
of the Subscription Agreement Signed by the Subscriber:
|
||
|
(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.)
|
The
Subscriber has executed this Subscription Agreement as of the ______ day
of _________________ 2007.
|
|
|
(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 _________________________, 2007, and
agrees to be bound by its terms.
|
Mogul
Energy International, Inc.
|
Address:
|
Mogul
Energy International, Inc.
|
|
000
Xxxx Xxxxxx, Xxxxx 0000
|
||
|
By:
|
Xxxxxxx,
Xxxxxxxxxx 00000
|
|
|
Name:
|
Facsimile:
(000) 000-0000
|
|
|
Its:
|
23
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
EXHIBIT
C-1
To
The Subscription Agreement between
Mogul
Energy International, Inc. and the Undersigned Subscriber
Dated
for Reference as of December 12, 2007
REPRESENTATION
LETTER
FOR
RESIDENTS
XX XXXXXXX XXX XXXXXXX XXXXXXXX, XXXXXX
|
TO:
|
Mogul
Energy International, Inc.
|
000
Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx, XXX, 00000
|
Telephone:
|
(000)
000-0000
|
|
Facsimile:
|
(000)
000-0000
|
In
connection with the purchase by the undersigned of Subscribed for Shares of Mogul Energy International, Inc.
(the “Company”), the undersigned is delivering this representation letter
to the Subscription Agreement dated, for reference, December 12,
2007, 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 either (A) 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; or (B) is purchasing the Subscribed for Shares as a
principal and is (please check all applicable descriptions):
£ (i)
a director, senior 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, senior
officer or control person of the Company, or ofan affiliate of the
Company,
£ (iii)
a parent, grandparent, brother, sister or child of the spouse of a director,
senior officer or control person of the Companyor of an affiliate of the
Company,
£ (iv)
a close personal friend of a director, senior officer or control person of the
Company, or of an affiliate of the Company,
£ (v)
a close business associate of a director, senior officer or control person of
the Company, or of an affiliate of the Company,
£ (vi)
a founder of the issuer or a spouse, parent, grandparent, brother, sister,
child, close personal friend or close businessassociate of a founder of the
Company,
£ (vii)
a parent, grandparent, brother, sister or child of the spouse of a founder of
the Company,
24
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
£ (viii)
a person or company of which a majority of the voting securities are
beneficially owned by, or a majority of thedirectors are, persons or companies
described in paragraphs (i) to (vii), or
£ (ix)
a trust or estate of which all of the beneficiaries or a majority of the
trustees are persons or companies described inparagraphs (i) to
(vii).
|
DATED:
|
,
2007
|
||
|
(Name
of Subscriber – please print)
|
|||
|
By:
|
|||
|
(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.
|
25
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
SCHEDULE
A TO EXHIBIT X-0
(
XXXXXXX XXX XXXXXXX XXXXXXXX)
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 the categories that apply to
you):
|
______
|
(a)
|
a
Canadian financial
institution, or an authorized foreign bank listed in Schedule III
of the Bank Act
(Canada);
|
|
______
|
(b)
|
the
Business Development Bank of Canada incorporated under the Business Development Bank of
Canada Act (Canada);
|
|
______
|
(c)
|
a
subsidiary of any
person or company
referred to in paragraphs (a) to (b), if the person or company owns
all of the voting
securities of the subsidiary, except the
voting securities
required by law to be owned by directors of that subsidiary;
|
|
______
|
(d)
|
a
person registered
under the securities legislation of a jurisdiction of Canada,
or 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);
|
|
______
|
(e)
|
an
individual
registered or formerly registered under the securities legislation of a
jurisdiction of Canada, as a representative of a person or company
referred to in paragraph (d);
|
|
______
|
(f)
|
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;
|
|
______
|
(g)
|
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;
|
|
______
|
(h)
|
any
national, federal, state, provincial, territorial or municipal government
of or in any foreign
jurisdiction, or any agency of that government;
|
| ______ |
(i)
|
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;
|
|
______
|
(j)
|
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;
|
|
______
|
(k)
|
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;
|
|
______
|
(l)
|
an
individual who, either alone or with a spouse, has net assets of at least
$5,000,000;
|
26
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
______
|
(m)
|
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;
|
| ______ |
(n)
|
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];
|
|
(o)
|
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;
|
|
|
(p)
|
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;
|
|
|
(q)
|
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;
|
|
|
(r)
|
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;
|
|
|
(s)
|
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;
|
|
|
(t)
|
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;
|
|
|
(u)
|
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
|
|
|
(v)
|
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
|
The
following definitions relate to certain of the categories of "Accredited
Investor" set forth above:
"adviser" means a person or
company engaging in or holding itself out as engaging in the business of
advising others with respect to investing in or the buying or selling of
securities or exchange contracts, and is registered as an adviser with the
British Columbia Securities Commission or the Alberta Securities Commission, as
applicable;
"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;
27
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
"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 or
company 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 or company" 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;
"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; and
(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;
“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 or company if voting securities of the issuer are held
(other than as security for bona fide debt) by or for the benefit of that person
or company, 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 C-1 are in Canadian
Dollars.
28
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Exhibit
C-2
To
The Subscription Agreement between
Mogul
Energy International, Inc. and the Undersigned Subscriber
Dated
for Reference as of December 12, 2007
REPRESENTATION
LETTER
FOR
ONTARIO
RESIDENTS
|
TO:
|
Mogul
Energy International, Inc.
|
000
Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx, XXX, 00000
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
This
letter is being delivered pursuant to the terms of that certain Subscription
Agreement dated for reference as of December 12, 2007 between Mogul Energy
International, Inc. (the “Company”) and the undersigned
(the “Agreement”), pertaining to the purchase by the undersigned of Subscribed
for Shares (as defined in the Agreement) of the Company. In
connection therewith, the undersigned 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 either (A) 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; or
(B) 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,
director or founder of the issuer;
or,
|
|
|
|
£
|
(d)
|
a
person that is a control person of the
issuer.
|
|
DATED:
|
,
2007
|
||||
|
(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.
|
29
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Schedule
A Exhibit C-2
REPRESENTATION
LETTER
(ONTARIO)
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):
|
______
|
(a)
|
a
Canadian financial
institution, or an authorized foreign bank listed in Schedule III
of the Bank Act
(Canada);
|
|
______
|
(b)
|
the
Business Development Bank of Canada incorporated under the Business Development Bank of
Canada Act (Canada);
|
|
______
|
(c)
|
a
subsidiary of any
person or company
referred to in paragraphs (a) to (b), if the person or company owns
all of the voting
securities of the subsidiary, except the
voting securities
required by law to be owned by directors of that subsidiary;
|
|
______
|
(d)
|
a
person or company
registered under the securities legislation of a jurisdiction of Canada,
or 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);
|
|
______
|
(e)
|
an
individual
registered or formerly registered under the securities legislation of a
jurisdiction of Canada, as a representative of a person or company
referred to in paragraph (d);
|
|
______
|
(f)
|
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;
|
|
______
|
(g)
|
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;
|
|
______
|
(h)
|
any
national, federal, state, provincial, territorial or municipal government
of or in any foreign
jurisdiction, or any agency of that government;
|
|
______
|
(i)
|
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;
|
|
______
|
(j)
|
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;
|
|
______
|
(k)
|
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;
|
30
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
______
|
(l)
|
an
individual who, either alone or with a spouse, has net assets of at least
$5,000,000;
|
|
______
|
(m)
|
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;
|
|
______
|
(n)
|
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];
|
|
(o)
|
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;
|
|
|
(p)
|
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;
|
|
|
(q)
|
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;
|
|
|
(r)
|
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;
|
|
|
(s)
|
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;
|
|
|
(t)
|
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;
|
|
|
(u)
|
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
|
|
|
(v)
|
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
|
The following definitions
relate to certain of the categories of "Accredited Investor" set forth
above:
"adviser" means a person or
company engaging in or holding itself out as engaging in the business of
advising others with respect to investing in or the buying or selling of
securities or exchange contracts, and is registered as an adviser with the
British Columbia Securities Commission or the Alberta Securities Commission, as
applicable;
"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;
31
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
"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 or
company 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 or company" 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;
"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; and
(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;
“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 or company if voting securities of the issuer are held
(other than as security for bona fide debt) by or for the benefit of that person
or company, 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 "C-2" are in Canadian Dollars.
32
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Exhibit
C-3
SASKATCHEWAN RESIDENTS
REPRESENTATION
LETTER
|
TO:
|
Mogul Energy International,
Inc.
|
000
Xxxx Xxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx, XXX, 00000
Telephone:
(000) 000-0000
Facsimile: (000)
000-0000
This
letter is being delivered pursuant to the terms of that certain Subscription
Agreement dated for reference as of December 12, 2007 between Mogul Energy
International, Inc. (the “Company”) and the undersigned
(the “Agreement”), pertaining to the purchase by the undersigned of Subscribed
for Shares (as defined in the Agreement) of the Company. In
connection therewith, the undersigned hereby represents, warrants and certifies
to the Company that the undersigned is resident in Saskatchewan or is otherwise
subject to the securities laws of Saskatchewan, and is either (A) 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:
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,
2007
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||||
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(Name of Purchaser – please
print)
|
|||||
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(Authorized
Signature)
|
|||||
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(Official
Capacity - please print)
|
|||||
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(please
print name of individual whose signature appears
above)
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|||||
|
IMPORTANT:
|
PLEASE
COMPLETE THE SCHEDULE TO THIS REPRESENTATION LETTER BY MARKING YOUR
INITIALS BESIDE THE CATEGORY TO WHICH YOU
BELONG.
|
33
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
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):
|
______
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(a)
|
a
Canadian financial
institution, or an authorized foreign bank listed in Schedule III
of the Bank Act
(Canada);
|
|
______
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(b)
|
the
Business Development Bank of Canada incorporated under the Business Development Bank of
Canada Act (Canada);
|
|
______
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(c)
|
a
subsidiary of any
person or company
referred to in paragraphs (a) to (b), if the person or company owns
all of the voting
securities of the subsidiary, except the
voting securities
required by law to be owned by directors of that subsidiary;
|
|
______
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(d)
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a
person or company
registered under the securities legislation of a jurisdiction of Canada,
or 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);
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|
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||
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______
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(e)
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an
individual
registered or formerly registered under the securities legislation of a
jurisdiction of Canada, as a representative of a person or company
referred to in paragraph (d);
|
|
______
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(f)
|
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;
|
|
______
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(g)
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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;
|
|
______
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(h)
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any
national, federal, state, provincial, territorial or municipal government
of or in any foreign
jurisdiction, or any agency of that government;
|
|
______
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(i)
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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;
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______
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(j)
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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;
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|
______
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(k)
|
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;
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______
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(l)
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an
individual who, either alone or with a spouse, has net assets of at least
$5,000,000;
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______
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(m)
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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;
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34
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
|
______
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(n)
|
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];
|
|
______
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(o)
|
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;
|
|
______
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(p)
|
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;
|
|
______
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(q)
|
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;
|
|
______
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(r)
|
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;
|
|
______
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(s)
|
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;
|
|
______
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(t)
|
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;
|
|
______
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(u)
|
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
|
|
______
|
(v)
|
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
|
The following definitions
relate to certain of the categories of "Accredited Investor" set forth
above:
"adviser" means a person or
company engaging in or holding itself out as engaging in the business of
advising others with respect to investing in or the buying or selling of
securities or exchange contracts, and is registered as an adviser with the
British Columbia Securities Commission or the Alberta Securities Commission, as
applicable;
"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;
35
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
"issuer" means a person or
company 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 or company" 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;
"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; and
(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;
“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 or company if voting securities of the issuer are held
(other than as security for bona fide debt) by or for the benefit of that person
or company, 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 C-3 are in Canadian
dollars
36
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
THIS
Registration Rights Agreement, is entered into as of the Effective Date
(as defined below), by and between Mogul
Energy International, Inc., a Delaware corporation, and the Person named
on the signature page hereof (the “Purchaser”).
In
consideration of the mutual promises herein contained and other consideration,
the receipt and adequacy of which is hereby acknowledged, the parties hereto
hereby agree as follows:
Section
1
Certain
Definitions
All capitalized terms used herein and
not otherwise defined shall have the meaning ascribed thereto to in the
Subscription Agreement. As used in this Agreement, the following terms
shall have the following meanings:
“Advice” shall have the meaning
set forth in Section
6.6.
“Affiliate” shall mean, with
respect to any Person, any other Person that directly or indirectly controls or
is controlled by or under common control with such Person. For the
purposes of this definition, "control," when used with respect to any Person,
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise; and the terms of
"affiliated," "controlling" and "controlled" have meanings correlative to the
foregoing.
“Agreement” shall mean this
Registration Rights Agreement.
“Business Day” shall mean any
day except Saturday, Sunday and any day which shall be a legal holiday or a day
on which banking institutions in the State of Washington are generally
closed.
“Commission” shall mean the
Securities and Exchange Commission.
“Common Shares” shall mean
shares of the Company's common stock, $0.0001 par value, or such securities that
such stock shall hereafter be reclassified into.
“Company” shall mean Mogul Energy
International, Inc.
“Effectiveness Date”
shall mean
the date that the Registration Statement is declared effective by the
Commission.
“Effectiveness Period” shall
have the meaning set forth in Section 2.1.
“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended.
1
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
“Filing Date” shall have the meaning
ascribed thereto in Section
2.1 hereof.
“Holder” or “Holders” shall mean the holder
or holders, as the case may be, from time to time, of Registrable
Securities.
“Indemnified Party” shall have
the meaning set forth in Section 5.3.
“Indemnifying Party” shall have
the meaning set forth in Section 5.3.
“Offering” shall mean the
offering of the 3,500,000 Shares offered by the Company in accordance with the
Subscription Agreement.
“Person” shall mean an
individual or a corporation, partnership, trust, incorporated or unincorporated
association, joint venture, limited liability company, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
“Plan of Distribution” shall
have the meaning set forth in Section 2.1.
“Proceeding” shall mean an
action, claim, suit, investigation or proceeding (including, without limitation,
an investigation or partial proceeding, such as a deposition), whether
commenced or threatened.
“Prospectus” shall mean the
prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective Registration Statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Securities covered by the Registration Statement, and
all other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
“Purchaser” shall have the
meaning set forth in the recitals to this Agreement.
“Registrable Securities” shall
mean (i) Offered Shares, (ii) the Common Shares issuable upon exercise of the
Warrants, (iii) issued and outstanding Common Shares deemed “Restricted Shares,” as that
term is defined in the rules and regulations promulgated under the Securities
Act and not otherwise transferable in their entirety by the holder thereof
pursuant to Rule 144. Shares shall cease to be Registrable Securities
when they have (a) been effectively registered under the Securities Act and
disposed of in accordance with the Registration Statement covering them, (b)
been sold to the public in accordance with Rule 144, (c) otherwise transferred
and new certificates for them not bearing a Securities Act restrictive legend
have been delivered by the Company, or (d) as to any Holder, become eligible to
be sold in a single sale in accordance with Rule 144. Notwithstanding
anything herein to the contrary any shares owned by any Holder which may be sold
pursuant to 144(k), as of the date of the filing of the Registration Statement,
shall not be included in any such Registration Statement.
2
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
“Registration Statement” shall
mean the registration statements required to be filed hereunder with respect to
the Registrable Securities including (in each case) the Prospectus, amendments
and supplements to such registration statement or Prospectus, including pre- and
post-effective amendments, all exhibits thereto, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
“Restricted Shares” shall have the meaning
ascribed thereto in the definition of Registrable Securities in this Section 1.
“Rule 144” shall mean Rule 144
promulgated by the Commission pursuant to the Securities Act as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission having substantially the same effect as such
Rule.
“Rule 415” shall mean Rule 415
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule.
“Rule 424” shall mean Rule 424
promulgated by the Commission pursuant to the Securities Act, as such Rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission having substantially the same purpose and effect as
such Rule.
“Securities Act” shall mean
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Selling Shareholder
Questionnaire” shall have the meaning set forth in Section 3(a).
“Subscription Agreement” shall
mean the several Subscription Agreements between the Company and the individual
subscribers executing the same, including the Purchaser, dated December 12, 2007
for reference, pursuant to which the Company offered for sale up to 3,500,000
Units at a price of $0.15 per share.
3
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Section
2
Registration
Rights
2.1 Shelf
Registration. Within 60 days from the Offering Termination
Date (the “Filing Date”)
the Company shall prepare and file with the Commission a “Shelf” Registration
Statement covering the resale of 100% of the Registrable Securities on such
Filing Date for an offering to be made on a continuous basis pursuant to Rule
415. The Registration Statement shall be on Form SB-2 (except if the Company is
not then eligible to register for resale the Registrable Securities on Form
SB-2, in which case such registration shall be on another appropriate form in
accordance herewith) and shall contain substantially the “Plan of Distribution” attached
hereto as Exhibit
A. Subject to the terms of this Agreement, the Company shall use its best
efforts to cause a Registration Statement to be declared effective under the
Securities Act as promptly as possible after the filing thereof, and shall use
its best efforts to keep such Registration Statement continuously effective
under the Securities Act until all Registrable Securities covered by such
Registration Statement have been sold, or may be sold without volume
restrictions pursuant to Rule 144(k), as determined by the counsel to the
Company pursuant to a written opinion letter to such effect, addressed and
acceptable to the Company's transfer agent and the affected Holders, but in no
event for more than two years following the Effectiveness Date (the “Effectiveness Period”). The
Company shall telephonically request effectiveness of a Registration Statement
as of 5:00 p.m. Eastern Standard time. The Company shall immediately notify the
Holders via facsimile or e-mail of the effectiveness of a Registration Statement
on the same Business Day that the Company telephonically confirms effectiveness
with the Commission, which shall be the date requested for effectiveness of a
Registration Statement. The Company shall on the Business Day after the
Effective Date file a final Prospectus with the Commission as required by Rule
424.
2.2 Expenses of
Registration. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with any trading market or exchange on which the Common
Stock is then listed for trading, (B) in compliance with applicable state
securities or Blue Sky laws reasonably agreed to by the Company in writing
(including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications or exemptions of the
Registrable Securities) and (C) if not previously paid by the Company in
connection with an Issuer Filing, with respect to any filing that may be
required to be made by any broker through which a Holder intends to make sales
of Registrable Securities with NASD Regulation, Inc. pursuant to the NASD Rule
2710, so long as the broker is receiving no more than a customary brokerage
commission in connection with such sale, (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable
Securities), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company; (v) and fees and disbursements up to
an aggregate of $5,000 for one counsel for all of the Holders, (vi) Securities
Act liability insurance, if the Company so desires such insurance, and (vii)
fees and expenses of all other Persons retained by the Company in connection
with the consummation of the transactions contemplated by this Agreement. In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder. In no event shall the Company be responsible for any broker or
similar commissions of any Holder or, except to the extent provided for in the
Transaction Documents, any legal fees or other costs of the
Holders.
4
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Section
3
Obligations of the Company
with Respect to the Filing of a Registration Statement
In
connection with the Company's registration obligations hereunder, the Company
shall:
(a) Not
less than five Business Days prior to the filing of the Registration Statement
and not less than one Business Day prior to the filing of any related Prospectus
or any amendment or supplement thereto (including any document that would be
incorporated or deemed to be incorporated therein by reference), the Company
shall (i) furnish to each Holder copies of all such documents proposed to be
filed, which documents (other than those incorporated or deemed to be
incorporated by reference) will be subject to the review of such Holders and
(ii) cause its officers and directors, counsel and independent certified public
accountants to respond to such inquiries as shall be necessary, to conduct a
reasonable investigation within the meaning of the Securities Act. The Company
shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of a majority of the
Registrable Securities shall reasonably object in good faith, provided that the
Company is notified of such objection in writing no later than five Business
Days after the Holders have been so furnished copies of a Registration Statement
or one Business Day after the Holders have been so furnished copies of any
related Prospectus or amendments or supplements thereto. Each Holder agrees to
furnish to the Company a completed Questionnaire in the form attached to this
Agreement (with such changes as may be required to reasonably comply with all
then applicable federal and state securities laws) as Exhibit
B (the “Selling
Shareholder Questionnaire”) not less than two Business Days prior to the
Filing Date or by the end of the fourth Business Day following the date on which
such Holder receives draft materials in accordance with this
Section.
(b) (i) Prepare
and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep such Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period and prepare and file with the Commission such additional Registration
Statements in order to register for resale under the Securities Act all of the
Registrable Securities; (ii) cause the related Prospectus to be amended or
supplemented by any required Prospectus supplement (subject to the terms of this
Agreement), and, as so supplemented or amended, to be filed pursuant to Rule
424; (iii) respond as promptly as reasonably possible to any comments received
from the Commission with respect to a Registration Statement or any amendment
thereto; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by a Registration Statement during the applicable
period in accordance (subject to the terms of this Agreement) with the intended
methods of disposition by the Holders thereof set forth in such Registration
Statement as so amended or in such Prospectus as so
supplemented.
5
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(c) Notify
the Holders of Registrable Securities to be sold (which notice shall, pursuant
to clauses (iii) through (vi) hereof, be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made) as
promptly as reasonably possible (and, in the case of (i)(A) below, not less than
one Business Day prior to such filing) and (if requested by any such Person)
confirm such notice in writing no later than one Business Day following the day
(i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed; (B) when the
Commission notifies the Company whether there will be a “review” of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement; and (C) with respect to the Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other federal or state governmental authority
for amendments or supplements to a Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission or any other
federal or state governmental authority of any stop order suspending the
effectiveness of the Registration Statement covering any or all of the
Registrable Securities or the initiation of any Proceedings for that purpose;
(iv) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of the
Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; (v) of the occurrence of any
event or passage of time that makes the financial statements included in the
Registration Statement ineligible for inclusion therein or any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or that
requires any revisions to the Registration Statement, Prospectus or
other documents so that, in the case of the Registration Statement or the
Prospectus, as the case may be, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; and (vi) the occurrence or existence of
any pending corporate development with respect to the Company that the Company
believes may be material and that, in the determination of the Company, makes it
not in the best interest of the Company to allow continued availability of the
Registration Statement or Prospectus; provided that any and all of such
information shall remain confidential to each Holder until such information
otherwise becomes public, unless disclosure by a Holder is required by
law; provided, further,
notwithstanding each Holder's agreement to keep such information confidential,
the Holders make no acknowledgement that any such information is material,
non-public information.
(d) Use
its best efforts to avoid the issuance of, or, if issued, obtain the withdrawal
of (i) any order suspending the effectiveness of the Registration Statement, or
(ii) any suspension of the qualification (or exemption from qualification) of
any of the Registrable Securities for sale in any jurisdiction, at the earliest
practicable moment.
6
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(e) Furnish
to each Holder, without charge, at least one conformed copy of each such
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference to the extent requested by such Person, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(f) Subject
to the terms of this Agreement, the Company hereby consents to the use of such
Prospectus and each amendment or supplement thereto by each of the selling
Holders in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto, except after
the giving of any notice pursuant to Section 3(c).
(g) Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
Registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep each
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by each Registration Statement; provided, that the Company
shall not be required to qualify generally to do business in any jurisdiction
where it is not then so qualified, subject the Company to any material tax in
any such jurisdiction where it is not then so subject or file a general consent
to service of process in any such jurisdiction.
(h) If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may
reasonably request.
(i) Upon
the occurrence of any event contemplated by this Section 3, as promptly as
reasonably possible under the circumstances taking into account the Company's
good faith assessment of any adverse consequences to the Company and its
stockholders of the premature disclosure of such event, prepare a supplement or
amendment, including a post-effective amendment, to a Registration Statement or
a supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither a Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. If the Company notifies the Holders in accordance with
clauses (iii) through (vi) of Section 3(c) above to suspend
the use of any Prospectus until the requisite changes to such Prospectus have
been made, then the Holders shall suspend use of such Prospectus. The Company
will use its best efforts to ensure that the use of the Prospectus may be
resumed as promptly as is practicable. The Company shall be entitled to exercise
its right under this Section 3(k) to suspend the availability of a Registration
Statement and Prospectus, subject to the payment of partial liquidated damages
pursuant to Section 2(b), for a period not to exceed 60 calendar days (which
need not be consecutive days) in any 12 month period.
7
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(j) Comply
with all applicable rules and regulations of the Commission.
(k) The
Company may require each selling Holder to furnish to the Company a certified
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if required by the Commission, the natural persons thereof that have
voting and dispositive control over the Shares. During any periods that the
Company is unable to meet its obligations hereunder with respect to the
registration of the Registrable Securities solely because any Holder fails to
furnish such information within three Business Days of the Company's request,
any liquidated damages that are accruing at such time as to such Holder only
shall be tolled and any Event that may otherwise occur solely because of such
delay shall be suspended as to such Holder only, until such information is
delivered to the Company.
Section
4
Furnish Information
It shall
be a condition precedent to the obligations of the Company to take any action
pursuant to Sections 2 or
3 hereof that the selling Holders shall furnish to the Company such
information regarding themselves, the Registrable Securities held by them and
the intended method of disposition of such securities as shall be required to
timely effect the registration of their Registrable Securities. The Company may require,
at any time prior to the Filing Date, each Holder to furnish to the Company a
statement as to the number of shares of Common Stock beneficially owned by such
Holder and, if requested by the Commission and the Holder is not an individual,
the controlling person thereof, within three business days of the Company’s
request.
8
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Section
5
Indemnification
5.1 By
the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Holder and the
Placement Agent, the officers, directors, members, partners, agents, brokers
(including brokers who offer and sell Registrable Securities as principal as a
result of a pledge or any failure to perform under a margin call of Common
Stock), investment advisors and employees (and any other Persons with a
functionally equivalent role of a Person holding such titles, notwithstanding a
lack of such title or any other title) of each of them, each Person who controls
any such Holder or the Placement Agent (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
members, shareholders, partners, agents and employees (and any other Persons
with a functionally equivalent role of a Person holding such titles,
notwithstanding a lack of such title or any other title) of each such
controlling Person, to the fullest extent permitted by applicable law, from and
against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys' fees) and expenses (collectively,
“ Losses ”), as
incurred, arising out of or relating to (1) any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, any
Prospectus or any form of prospectus or in any amendment or supplement thereto
or in any preliminary prospectus, or arising out of or relating to any omission
or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in light of the circumstances under which
they were made) not misleading or (2) any violation or alleged violation by the
Company of the Securities Act, the Exchange Act or any state securities law, or
any rule or regulation thereunder, in connection with the performance of its
obligations under this Agreement, except to the extent, but only to the extent,
that (i) such untrue statements or omissions are based solely upon information
regarding such Holder furnished in writing to the Company by such Holder
expressly for use therein, or to the extent that such information relates to
such Holder or such Holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such Holder
expressly for use in a Registration Statement, such Prospectus or such form of
Prospectus or in any amendment or supplement thereto (it being understood that
the Holder has approved Exhibit
A hereto for this purpose) or (ii) in the case of an occurrence of an
event of the type specified in Section 3(d)(iii)-(vi), the use by such Holder of
an outdated or defective Prospectus after the Company has notified such Holder
in writing that the Prospectus is outdated or defective and prior to the receipt
by such Holder of the Advice contemplated in Section 6(d). The Company shall
notify the Holders promptly of the institution, threat or assertion of any
Proceeding arising from or in connection with the transactions contemplated by
this Agreement of which the Company is aware.
5.2 Indemnification By Selling Holders.
Each Holder shall, severally and not jointly, indemnify and hold harmless the
Company, its directors, officers, agents and employees, each Person who controls
the Company (within the meaning of Section 15 of the Securities Act and Section
20 of the Exchange Act), and the directors, officers, agents or employees of
such controlling Persons, to the fullest extent permitted by applicable law,
from and against all Losses, as incurred, to the extent arising out of or based
solely upon: (x) such Holder's failure to comply with the prospectus delivery
requirements of the Securities Act or (y) any untrue or alleged untrue statement
of a material fact contained in any Registration Statement, any Prospectus, or
any form of prospectus, or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading (i) to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company specifically for inclusion in
such Registration Statement or such Prospectus or (ii) to the extent that such
information relates to such Holder's proposed method of distribution of
Registrable Securities and was reviewed and expressly approved in writing by
such Holder expressly for use in a Registration Statement (it being understood
that the Holder has approved Exhibit A hereto for this
purpose), such Prospectus or such form of Prospectus or in any amendment or
supplement thereto or (ii) in the case of an occurrence of an event of the type
specified in Section 3(d)(iii)-(vi), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(d). In no event shall the liability of
any selling Holder hereunder be greater in amount than the dollar amount of the
net proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation.
9
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
5.3 Conduct of Indemnification
Proceedings.
(a) If
any Proceeding shall be brought or asserted against any Person entitled to
indemnity hereunder (an “Indemnified
Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought
(the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to the
Indemnified Party and the payment of all fees and expenses incurred in
connection with defense thereof; provided, that the failure of any Indemnified
Party to give such notice shall not relieve the Indemnifying Party of its
obligations or liabilities pursuant to this Agreement, except (and only) to the
extent that such failure shall have prejudiced the Indemnifying
Party.
(b) An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (2) the Indemnifying Party shall have failed promptly to assume the
defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (3) the named parties to any such
Proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall have been advised
by counsel that a material conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense
thereof and the expense of one such counsel for each Holder shall be at the
expense of the Indemnifying Party). The Indemnifying Party shall not
be liable for any settlement of any such Proceeding effected without its written
consent, which consent shall not be unreasonably withheld. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any pending Proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the
subject matter of such Proceeding.
10
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(c) Subject
to the terms of this Agreement, all fees and expenses of the Indemnified Party
(including reasonable fees and expenses to the extent incurred in connection
with investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within ten Business Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification
hereunder).
5.4 Contribution. In
order to provide for just and equitable contribution to joint liability under
the Securities Act in any case in which contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this
Section 5; then, and in each such case, the Company and such Holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
Holder is responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by and sold under
the Registration Statement bears to the public offering price of all securities
offered by and sold under such Registration Statement, and the Company and other
selling Holders are responsible for the remaining portion in proportion to the
securities offered by and sold by each under such Registration Statement;
provided, however, that, in any such case, (A) no such Holder will be
required to contribute any amount in excess of the public offering price of all
such Registrable Securities offered and sold by such Holder pursuant to such
Registration Statement and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities
Act) will be entitled to contribution from any person or entity who was not
guilty of such fraudulent misrepresentation.
5.6 Survival. The
obligations of the Company and Holders under this Section 5 shall survive
the completion of any offering of Registrable Securities in a Registration
Statement, and otherwise.
Section
6
General
Provisions
6.1 Remedies. In the
event of a breach by the Company or by a Holder, of any of their
obligations under this Agreement, each Holder or the Company, as the case
may be, in addition to being entitled to exercise all rights granted by law and
under this Agreement, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company
and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of
the provisions of this Agreement and hereby further agrees that, in the event of
any action for specific performance in respect of such breach, it shall waive
the defense that a remedy at law would be adequate. The remedies provided herein
are cumulative and not exclusive of any other remedies provided by
law.
11
Mogul Energy International, Inc.
Regulation S Offering
December 12, 2007
6.2 Compliance. Each
Holder covenants and agrees that it will comply with the prospectus delivery
requirements of the Securities Act as applicable to it in connection with sales
of Registrable Securities pursuant to the Registration Statement.
6.3 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, if any, specified in
this Agreement no later than 4:30 p.m. (Pacific Standard time) on any date and
earlier than 11:59 p.m. (Pacific Standard Time 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:
|
If
to the Company:
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Mogul Energy
International, Inc.
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000
Xxxx Xxxxxx, Xxxxx 0000
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Xxxxxxx,
Xxxxxxxxxx 00000
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Attention:
Naeem Tyab,
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President
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With
copies to:
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The
Xxxx Law Group, PLLC
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000
Xxxxx Xxxxxx
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Xxxxx
0000
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Xxxxxxx,
XX 00000
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Attention: Xxxxx
Xxxx, Esq.
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Telephone:
(000) 000-0000
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Facsimile:
(000) 000-0000
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If
to a Holder:
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To
the address of such Holder as it appears in the stock transfer books of
the Company,
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||
or such
other address as may be designated in writing hereafter, in the same manner, by
such Person.
12
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
6.4 Successors and
Assigns. This Agreement shall inure to the benefit of and be
binding upon the successors and permitted assigns of each of the parties and
shall inure to the benefit of each Holder. The Company may not assign
its rights or obligations hereunder without the prior written consent of each
Holder. Each Holder may assign their respective rights hereunder in
the manner and to the Persons as may be permitted under the Subscription
Agreement.
6.5 Counterparts. This
Agreement may be executed in any number of counterparts, all of which when taken
together 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, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.
6.6 Discontinued Disposition. By
its acquisition of Registrable Securities, each Holder agrees that, upon receipt
of a notice from the Company of the occurrence of any event of the kind
described in Section 3(c) (iii)
through (vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under a Registration Statement until it is advised in
writing (the “Advice”)
by the Company that the use of the applicable Prospectus (as it may have been
supplemented or amended) may be resumed. The Company will use its best efforts
to ensure that the use of the Prospectus may be resumed as promptly as it
practicable.
6.7 Cumulative
Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.
6.8 Severability. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable efforts to
find and employ an alternative means to achieve the same or substantially the
same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without terms that may be invalid,
illegal, void or unenforceable.
6.9 Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.
6.10
Shares Held by the Company and
its Affiliates. Whenever the consent or approval of Holders of
a specified percentage of Registrable Securities is required hereunder, the
Registrable Securities held by the Company or its Affiliates (other than any
Holder or transferees or successors or assigns thereof if such Holder is deemed
to be an Affiliate solely by reason of its holdings of such Registrable
Securities) shall not be counted in determining whether such consent or approval
was given by the Holders of such required percentage.
13
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
6.11 Independent Nature of Holders' Obligations and
Rights.
The
Holder who is a party to this Agreement, acknowledges that the Company is
entering into substantially identical agreements with other holders of the
Company’s Registrable Securities; each such agreement being deemed a separate
and independent agreement between the Company and such other Holders, except
that each Holder acknowledges and consents to the rights granted to each other
Holder under such agreements. The obligations of each Holder hereunder are
several and not joint with the obligations of any other Holder hereunder, and
neither Holder shall be responsible in any way for the performance of the
obligations of any other Holder hereunder. Nothing contained herein
or in any other agreement or document delivered at any closing, and no action
taken by any Holder pursuant hereto or thereto, shall be deemed to constitute
the Holders as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Holders are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Holder shall be entitled to protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Holder to be joined as an
additional party in any Proceeding for such purpose.
6.12.
Entire Agreement. This
Agreement, together with all the exhibits hereto, constitutes and contains the
entire agreement and understanding of the parties with respect to the subject
matter hereof and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties respecting
the subject matter hereof.
6.13
Third Parties. Nothing
in this Agreement, express or implied, is intended to confer upon any person,
other than the parties hereto and their successors and assigns, any rights or
remedies under or by reason of this Agreement.
6.14 Costs and Attorneys’ Fees. In
the event that any action, suit or other proceeding is instituted concerning or
arising out of this Agreement or any transaction contemplated hereunder, the
prevailing party shall recover all of such party’s costs and attorneys’ fees
incurred in each such action, suit or other proceeding, including any and all
appeals or petitions therefrom.
6.15
Adjustments for Stock Splits
and Certain Other Changes. Wherever in this Agreement there is
a reference to a specific number of shares of Common Stock or Preferred Stock of
the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of
stock, the specific number of shares so referenced in this Agreement shall
automatically be proportionally adjusted to reflect the effect on the
outstanding shares of such class or series of stock by such subdivision,
combination or stock dividend.
14
Mogul Energy International, Inc.
Regulation S Offering
December 12, 2007
6.16
Rule 144 Reporting.
With a view to making available the benefits of certain rules and regulations of
the Commission which may at any time permit the sale of the Registrable
Securities to the public without registration, the Company agrees
to:
(a) make
and keep public information available, as those terms are understood and defined
in Rule 144 under the Securities Act, at all times during the Effectiveness
Period; and
(b) use
its best efforts to file with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act during the Effectiveness Period.
6.17 Governing
Law. 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 Washington, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Washington or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of Washington. Each party hereby
irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the City of Seattle, 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.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
[BALANCE
OF THIS PAGE INTENTIONALLY LEFT BLANK]
15
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
IN WITNESS WHEREOF, the
parties hereto have executed this Registration Rights Agreement as of the dates
and year set forth opposite their respective names.
EFFECTIVE
DATE:
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Mogul
Energy International, Inc.
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By:
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Name:
Title:
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Telephone:
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Facsimile
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Execution
Date:
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Purchaser:
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Signed:
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Printed:
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Title
(if applicable):
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Address:
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Telephone:
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Facsimile:
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16
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Exhibit
A
Plan
of Distribution
If our
shares of common stock are not quoted on the Over-the-Counter Bulletin Board or
other stock exchange, the Selling Stockholders may from time to time sell their
shares pursuant to this prospectus only at the registered price of $0.15 per
share.
However,
currently our shares of common stock are quoted on the Over-the-Counter Bulletin
Board. As such, each Selling Stockholder, or his pledgees, assignees
and successors-in-interest of the common stock may, from time to time, sell any
or all of their shares of common stock on the Over-the-Counter Bulletin Board,
or any other stock exchange, market or trading facility on which the shares may
be traded, or in private transactions. These sales may be at fixed or negotiated
prices and shall comply with all U.S. securities laws and resale restrictions. A
Selling Stockholder may use any one or more of the following methods when
selling shares:
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ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
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block
trades in which the broker-dealer will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to
facilitate the transaction;
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purchases
by a broker-dealer as principal and resale by the broker-dealer for its
account;
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an
exchange distribution in accordance with the rules of the applicable
exchange;
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privately
negotiated transactions;
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settlement
of short sales entered into after the effective date of the registration
statement of which this prospectus is a
part;
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broker-dealers
may agree with the Selling Stockholders to sell a specified number of such
shares at a stipulated price per
share;
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through
the writing or settlement of options or other hedging transactions,
whether through an options exchange or
otherwise;
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a
combination of any such methods of sale;
or
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any
other method permitted pursuant to applicable
law.
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17
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act of 1933, as amended (the “Securities Act”), if
available, rather than under this prospectus.
Broker-dealers
engaged by the Selling Stockholders may arrange for other brokers-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the Selling Stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, but,
except as set forth in a supplement to this Prospectus, in the case of an agency
transaction not in excess of a customary brokerage
commission in compliance with NASDR Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with NASDR
IM-2440.
In
connection with the sale of the common stock or interests therein, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions, which may in turn engage in short sales of the common
stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the common stock short and deliver these
securities to close out their short positions, or loan or pledge the common
stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such
transaction).
The
Selling Stockholders and any broker-dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker-dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. Each Selling Stockholder has informed the
Company that it does not have any written or oral agreement or understanding,
directly or indirectly, with any person to distribute the Common Stock. In no
event shall any broker-dealer receive fees, commissions and markups which, in
the aggregate, would exceed eight percent (8%).
The
Company is required to pay certain fees and expenses incurred by the Company
incident to the registration of the shares. The Company has agreed to indemnify
the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
Because
Selling Stockholders may be deemed to be “underwriters” within the meaning of
the Securities Act, they will be subject to the prospectus delivery requirements
of the Securities Act including Rule 172 thereunder. In addition, any securities
covered by this prospectus which qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than under this prospectus.
There is no underwriter or coordinating broker acting in connection with the
proposed sale of the resale shares by the Selling Stockholders.
18
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
We agreed
to keep this prospectus effective until the earlier of (i) the date on which the
shares may be resold by the Selling Stockholders without registration and
without regard to any volume limitations by reason of Rule 144(k) under the
Securities Act or any other rule of similar effect, (ii) all of the shares have
been sold pursuant to this prospectus or Rule 144 under the Securities Act or
any other rule of similar effect, or (iii) two years from the date that the
registration statement of which this prospectus is part was ordered effective by
the Commission. The resale shares will be sold only through registered or
licensed brokers or dealers if required under applicable state securities laws.
In addition, in certain states, the resale shares may not be sold unless they
have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
Under
applicable rules and regulations under the Exchange Act, any person engaged in
the distribution of the resale shares may not simultaneously engage in market
making activities with respect to the common stock for the applicable restricted
period, as defined in Regulation M, prior to the commencement of the
distribution. In addition, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including Regulation M, which may limit the timing of purchases and
sales of shares of the common stock by the Selling Stockholders or any other
person. We will make copies of this prospectus available to the Selling
Stockholders and have informed them of the need to deliver a copy of this
prospectus to each purchaser at or prior to the time of the sale (including by
compliance with Rule 172 under the Securities Act).
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Exhibit
B
Mogul
Energy International, Inc.
Selling
Stockholder Notice and Questionnaire
To: Mogul
Energy International, Inc.
000
Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxxxxxxx 00000
Facsimile: (000)
000-0000
The
undersigned beneficial owner (the “Selling Stockholder”) of
_________ shares of common stock (the “Registrable Securities”) of
Mogul Energy International,
Inc. a Delaware corporation (the “Company”), understands that
the Company has filed or intends to file with the Securities and Exchange
Commission (the “Commission”) a registration
statement (the “Registration
Statement ”) for the registration and resale under Rule 415 of the
Securities Act of 1933, as amended (the “Securities Act”), of the
Registrable Securities, in accordance with the terms of the Registration Rights
Agreement (the “Registration
Rights Agreement”) to which this document is annexed. A copy of the
Registration Rights Agreement is available from the Company upon request at the
address set forth below. All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Registration Rights
Agreement.
Your
responses to the questions set forth in the Questionnaire will be utilized in
connection with the preparation of a Registration Statement. The
information requested in the Questionnaire is for your protection and that of
the Company. The information supplied in response to the
Questionnaire will be used to assure that the information included in the
Registration Statement will be correct. Accordingly, great care
should be exercised in completing the Questionnaire.
Certain
legal consequences arise from being named as a selling security holder in the
Registration Statement and the related prospectus. Accordingly, holders and
beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling security holder in the Registration Statement and the related
prospectus. Certain terms used in the Questionnaire are italicized, and
definitions of such italicized terms are provided in Annex
A to the Questionnaire.
NOTICE
The
undersigned Selling Stockholder of Registrable Securities hereby elects to
include the Registrable Securities owned by it in the Registration Statement. In
connection therewith, the undersigned hereby provides the following information
to the Company and represents and warrants that such information is
accurate:
20
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
QUESTIONNAIRE
1. Name.
(a) Full
Legal Name of Selling Stockholder
|
|
(b) Full
Legal Name of Registered Holder (if not the same as (a) above) through which
Registrable Securities are held:
|
|
(c) Full
Legal Name of Natural Control Person (which means a natural person who directly
or indirectly alone or with others has power to vote or dispose of the
securities covered by the questionnaire):
|
|
2.
Address for Notices to Selling Stockholder:
|
Address:
|
|
|
|
|
|
|
|
Telephone:
|
|
Fax:
|
|
Contact
Person:
|
21
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
3. Share
Ownership. Please identify the number of shares of the
Company, or any of its parents or any subsidiary's equity securities that you
beneficially own as of the date of the Questionnaire. Include all shares of the
Company’s securities which are (i) registered in your name, including shares
registered in your name as trustee, executor, custodian, pledgee, agent or
nominee, either alone or with others, (ii) owned beneficially by you or any
associate of yours, or (iii) registered in the name of a nominee or in street
name, including any such shares held for the account of any of the
above.
|
Name
and Address of Record Owner
|
Type
of Security
|
No.
of Shares and
%
of Class
|
Type
of Ownership
(trust,
partnership,
direct,
personal, etc.)
|
Rights to Acquire
Shares. Please identify on the following table the number of
shares of the Company’s equity securities which you have the right to acquire
(including stock options, warrants, conversion or otherwise) within (60) days of
the proposed effective date. Include in this table all rights to
acquire the Company’s securities which are (i) registered in your name,
including shares registered in your name as trustee, executor, custodian,
pledgee, agent or nominee, either alone or with others, (ii) owned beneficially
by you or any associate of yours, or (iii) registered in the name of a nominee
or in a street name, including any such shares held for the account of the
above.
|
Name
of Record Owner
|
Type
of Security
|
Number
of Shares
|
Type
of Ownership
(trust,
partnership,
direct,
personal, etc.)
|
Disclaimer of Beneficial
Ownership. Do you wish to disclaim shares beneficially owned
and reported above for purposes other than for use in the Registration
Statement?
|
ANSWER:
|
YES
|
NO
|
|
22
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
NOTE: You may wish to consult
with counsel regarding this disclaimer as it may be important not only in
connection with securities laws, but also because, without it, your reporting
the ownership of such shares might be construed as an admission of ownership for
other purposes, such as short swing trading liabilities.
If “yes,”
please provide the information requested in the following table with respect to
the person(s) who should be shown as the beneficial owner(s) of the shares in
question:
|
Class
of Stock
|
Number
of Shares
Beneficially
Owned
|
Name
of Actual
Beneficial
Owner
|
Relationship
of Such
Person
to You
|
Please
explain the nature of any indirect ownership (i.e., “as trustee for
children,” “by wife,” “by Trust,” "through partnership," "through limited
liability company," etc.):
4.
Broker-Dealer Status:
(a) Are
you an NASD member, a person associated or affiliated with an NASD member or an
underwriter or related person with respect to the proposed public
offering? Please identify any NASD member with whom you are
associated or affiliated and describe your relationship to that
member. If you are a “private investment group,” such as a hedge
fund, investment partnership or other group of purchasers, please answer this
question to the best of your knowledge not only with respect to yourself but
also with respect to all persons comprising such group since those persons are
considered by the NASD to be the beneficial owners of the Company’s securities
held by the group.
Yes £ No £
(b) If
“yes” to Section 3(a), did you receive your Registrable Securities as
compensation for investment banking services to the Company.
Yes £ No £
Note: If
no, the Commission's staff has indicated that you should be identified as an
underwriter in the Registration Statement.
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(c) Are
you an affiliate of a broker-dealer?
Yes £ No £
(d) If
you are an affiliate of a broker-dealer, do you certify that you bought the
Registrable Securities in the ordinary course of business, and at the time of
the purchase of the Registrable Securities to be resold, you had no agreements
or understandings, directly or indirectly, with any person to distribute the
Registrable Securities?
Yes £ No £
Note: If
no, the Commission's staff has indicated that you should be identified as an
underwriter in the Registration Statement.
5.
Relationships with the Company:
(a) Except
as set forth below, neither the undersigned nor any of its affiliates, officers,
directors, family members, or principal equity holders (owners of 5% of more of
the equity securities of the undersigned) has held any position or office or has
had any other material relationship with the Company (or its predecessors or
affiliates) during the past three years.
State any
exceptions here:
|
|
|
|
|
|
(b) Please
state whether you know of any arrangements made or to be made by any person, or
any transaction already effected:
|
|
·
|
to
limit or restrict the sale of common stock during the period of the
offering of the common stock to be registered by the Registration
Statement;
|
|
|
·
|
to
stabilize the market for the common stock;
or
|
|
|
·
|
to
withhold commissions or otherwise to hold each underwriter or dealer
responsible for the distribution of his participation in the contemplated
offering of the common stock.
|
24
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
(c) Interest
in Any Transaction.
Did you,
any member of your immediate
family or any of your associates have a direct or
indirect material
interest in any transaction or series of similar transactions in which the
amount involved exceeded $60,000 (computed without regard to the amount of
profit or loss involved in the transaction) during the Company’s Current Fiscal
Year or the Company’s last completed fiscal years to which the Company or any
subsidiary was a
party?
Will you,
any member of your immediate
family or any of your associates have a direct or
indirect material
interest in any currently proposed transaction or series of transactions in
which the amount involved exceeds $60,000 (computed without regard to the amount
of profit or loss involved in the transaction), to which the Company or any
subsidiary will be a
party?
|
|
ANSWER:
|
YES
|
NO
|
|
| If “yes,” please describe. | ||||
6. General
The
regulations of the Commission require that, if otherwise disclosable, the
information you have furnished in response to the questions above be included in
the Registration Statement. If you know of any additional information
necessary to make the answers you have given above not misleading in the light
of the circumstances under which your answers were made, please disclose in
additional sheets and attach to this Questionnaire.
25
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
Acknowledgements
The
undersigned hereby agrees to notify the Company promptly of any inaccuracies or
changes in the foregoing information which should be made as a result of any
developments, including the passage of time.
The
understands and acknowledges that the Company will rely on the information set
forth herein for purposes of preparing and filing the Registration Statement
covering an underwritten public offering of the Company’s securities. By signing
below, the undersigned consents to the disclosure of the information contained
herein in its answers to Items 1 through 5 and the inclusion of such information
in the Registration Statement and the related prospectus and any amendments or
supplements thereto. The undersigned understands that such information will be
relied upon by the Company in connection with the preparation or amendment of
the Registration Statement and the related prospectus.
The
understands that material misstatements or the omission of material facts in the
Registration Statement may give rise to civil and criminal liabilities to the
Company, to each officer and director of the Company signing the Registration
Statement and other persons signing the Registration Statement. I will notify
the Company and its legal counsel (The Xxxx Law Group, PLLC) of any
misstatement of a material fact in the Registration Statement or any amendment
thereto, and of the omission of any material fact necessary to make the
statements contained therein not misleading, as soon as practicable after a copy
of the Registration Statement or any such amendment has been provided to
me. I will promptly notify the Company and its legal counsel (The Xxxx Law Group, PLLC) of any
change in the foregoing information which occurs prior to the effective date of
the Registration Statement.
IN
WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice
and Questionnaire to be executed and delivered either in person or by its duly
authorized agent.
Dated:_______________________
Beneficial
Owner:_____________________
By:________________________________
Name:
Title:
PLEASE
FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND
QUESTIONNAIRE,
AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:
[Insert
Address]
26
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
ANNEX A
Definitions
The term
“affiliate” means a
person or entity that directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, another
person.
The term
“arrangement” means any
plan, contract, authorization or understanding, whether or not set forth in a
formal document.
The term
“associate” as used
throughout the Questionnaire, means (a) any corporation or organization
(other than the Company or any subsidiary) of which you are an officer,
director, member or partner or of which you are, directly or indirectly, the
beneficial owner of 5% or more of any class of equity securities, (b) any
trust or other estate in which you have a substantial beneficial interest or as
to which you serve as trustee or in a similar capacity, (c) your spouse,
(d) any relative of your spouse or any relative of yours who has the same
home as you or who is a director or officer or key executive of the Company or
any subsidiary, (e) any partner, syndicate member or person with whom you
have agreed to act in concert with respect to the acquisition, holding, voting
or disposition of shares of the Company’s securities.
The term
“beneficially,” when
used in connection with the ownership of securities, means (a) any interest
in a security which entitles you to any of the rights or benefits of ownership
even though you may not be the owner of record or (b) securities owned by
you directly or indirectly, including those held by you for your own benefit
(regardless of how registered) and securities held by others for your benefit
(regardless of how registered), such as by custodians, brokers, nominees,
pledges, etc., and including securities held by an estate or trust in which you
have an interest as legatee or beneficiary, securities owned by a partnership of
which you are a partner, securities held by a personal holding company of which
you are a shareholder, shares held by a public company of which you are a
director, officer or holder of more than a 5% interest, and securities held in
the name of your spouse, minor children and any relative of yours (sharing the
same home) or your spouse.
A “beneficial owner” of a
security includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or
shares:
(1) voting
power which includes the power to vote, or to direct the voting of, such
security; and/or
(2) investment
power which includes the power to dispose, or to direct the disposition, of such
security.
27
Mogul Energy International,
Inc.
Regulation S Offering
December 12, 2007
The term
“control” means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of the person specified, whether
through the ownership of voting securities, by contract or
otherwise.
A “control person” of a specified
person is a person that directly or indirectly through one or more
intermediaries, controls the person specified.
The term
“executive officer(s)”
means the president, any vice president in charge of a principal business unit,
division or function (such as sales, administration or finance), any other
officer who performs a policy making function or any person who performs similar
policy making functions for the Company (or other entity that may be
indicated).
The term
“family relationship”
means any relationship by blood, marriage or adoption, not more remote than
first cousin.
The term
“immediate family”
includes the spouse; parents; children; siblings; mothers and fathers-in-law;
sons and daughters-in-law; and brothers and sisters-in-law of the person
specified.
The term
“material relationship”
has not been defined by the Commission. However, the Commission has
indicated that it will probably construe as a “material relationship” any
relationship which tends to prevent arms-length bargaining in dealings with a
company, whether arising from a close business connection or family
relationship, a relationship of control or otherwise. It seems
prudent, therefore, to consider that you would have such a relationship, for
example, with any organization of which you are an officer, director, trustee or
partner or in which you own, directly or indirectly, 5% or more of the
outstanding voting stock, or in which you have some other substantial interest,
and with any person or organization with whom you have, or with whom any
relative or spouse (or any other person or organization as to which you have any
of the foregoing other relationships) has, a contractual
relationship.
The NASD
defines a “member” as
being any broker or dealer or individual, partnership, corporation or other
legal entity admitted to membership in the NASD or any officer or partner of
such a member, or the executive representative of such a member or the
substitute for such a representative.
28
