MOGUL ENERGY INTERNATIONAL, INC. SEATTLE, WASHINGTON 98101 Telephone: (206) 357-4220 Facsimile: (206) 357-4211
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Facsimile:
(206) 357-4211
July
24, 2006
Dear:
Reference
is hereby to the Subscription Agreement between you (the “Holder”)
and
Mogul Energy International, Inc. (the “Company”)
dated
for reference (the “Subscription
Agreement”).
Since
the Company has agreed to register the shares of certain of its stockholders,
it
has also agreed to register for resale the [----] purchased by the Holder
pursuant to the Subscription Agreement, all on the terms and conditions set
forth herein.
SECTION
1
CERTAIN
DEFINITIONS
As
used
in this Agreement, the following terms shall have the following
meanings:
“Agreement”
means
this Registration Rights Agreement.
“Business
Day”
means
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 New York generally are
closed.
“Commission”
means
the Securities and Exchange Commission.
“Common
Shares”
means
shares of the Company's common stock, or such securities that such stock
shall
hereafter be reclassified into.
“Company”
means
Mogul Energy International, Inc.
“Effective
Date” means
August 15, 2006.
“Exchange
Act”
means
the Securities Exchange Act of 1934, as amended.
“Person”
means
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.
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“Proceeding”
means
an action, claim, suit, investigation or proceeding (including, without
limitation, an investigation or partial proceed-ing, such as a deposition),
whether commenced or threatened.
“Prospectus”
means
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.
“Registrable
Securities”
means
all of the Company’s Common Shares issuable (i) upon conversion of the
convertible debentures may be converted (ii) upon the exercise of issued
and
outstanding warrants as of the date of the Closing Date (as defined in the
Subscription Agreement), and (iii) issued and outstanding common shares,
including but not limited to the Offered 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 144K, as of the date of the filing of the Registration Statement, shall
not
be included in any such Registration Statement.
“Registration
Statement”
means
a
Registration Statement filed pursuant to the Securities Act on Form S-1 or
any
similar or successor Registration Statement pursuant to which the Registrable
Securities may be registered.
“Restricted
shares” shall
have the meaning set forth in Section 1
hereof.
“Rule
144”
means
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.
“Securities
Act”
means
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.
“Subscription
Agreement” shall
have the meaning set forth in the recitals to this Agreement.
“Violation”
shall
have the meaning ascribed thereto in Section 5 hereof.
All
other capitalized terms used herein and not otherwise defined shall have
the
meaning ascribed thereto to in the Subscription
Agreement.
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SECTION
2
REGISTRATION
2.1 Filing.
No
later
than 30 days from the Effective Date, the Company shall prepare and file,
or
cause to be filed on its behalf, a Registration Statement with respect to
all
Registrable Securities subject to registration rights, and will use its best
efforts to cause such Registration Statement to be declared effective by
the
Commission. The Company shall be obligated to maintain such Registration
Statement effective for a period not to exceed two (2) years from the effective
date of such Registration Statement.
2.2 Expenses.
All
expenses incurred in connection with the registration pursuant to this
Section
2,
including without limitation all registration and qualification fees, printers’
and accounting fees, fees and disbursements of counsel for the Company will
be
paid by the Company. In no event shall the Company be responsible for any
broker
or similar commissions or any legal fees or other costs of the
Holders.
SECTION
3
OBLIGATIONS
OF THE COMPANY WITH RESPECT TO THE FILING OF A REGISTRATION
STATEMENT
The
Company shall as reasonably possible:
(a) Prepare
and file with the Commission a Registration Statement with respect to such
Registrable Securities and use its best efforts to cause such Registration
Statement to become effective, and, keep such Registration Statement effective
for up to 2 years from the date such Registration Statement is declared
effective.
(b) Prepare
and file with the Commission such amendments and supplements to such
Registration Statement and the prospectus used in connection with such
Registration Statement as may be necessary to comply with the provisions
of the
Securities Act with respect to the disposition of all securities covered
by such
Registration Statement.
(c) Furnish
to the Holders such number of copies of a prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and
such
other documents as they may be reasonably required in order to facilitate
the
disposition of the Registrable Securities owned by them that are included
in
such registration.
(d) Use
its
best efforts to register and qualify the securities covered by such Registration
Statement under such other securities or Blue Sky laws of such jurisdictions
as
shall be reasonably requested by the Holders, provided that the Company shall
not be required in connection therewith or as a condition thereto to qualify
to
do business or to file a general consent to service of process in any such
states or jurisdictions;
(e) Notify
each Holder of Registrable Securities covered by such Registration Statement
at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act on the happening of any event as a result of which the
prospectus included in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein
not
misleading in the light of the circumstances then existing.
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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.
SECTION
5
INDEMNIFICATION
5.1 By
the Company.
To the
extent permitted by law, the Company will indemnify and hold harmless each
Holder, the partners, officers and directors of each Holder, any underwriter
(as
defined in the Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the Securities
Act or
the Exchange Act, against any losses, claims, damages, or liabilities (joint
or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages,
or
liabilities (or actions in respect thereof) arise out of or are based upon
any
of the following statements, omissions or violations (collectively a
“Violation”):
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any
untrue statement or alleged untrue statement of a material fact
contained
in such Registration Statement, including any preliminary prospectus
or
final prospectus contained therein or any amendments or supplements
thereto;
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the
omission or alleged omission to state therein a material fact required
to
be stated therein, or necessary to make the statements therein
not
misleading; or
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any
violation or alleged violation by the Company of the Securities
Act, the
Exchange Act, any federal or state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act
or any
federal or state securities law in connection with the offering
covered by
such Registration Statement;
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and
the
Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending
any
such loss, claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this subsection (a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if
such
settlement is effected without the consent of the Company (which consent
shall
not be unreasonably withheld), nor shall the Company be liable in any such
case
for any such loss, claim, damage, liability or action to the extent that
it
arises out of or is based upon a Violation which occurs in reliance upon
and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
5.2 By
Selling Holders.
To the
extent permitted by law, each selling Holder, severally and not jointly,
will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement, each person, if any,
who
controls the Company within the meaning of the Securities Act, any underwriter
and any other Holder selling securities under such Registration Statement
or any
of such other Holder’s partners, directors or officers or any person who
controls such Holder within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several)
to
which the Company or any such director, officer, controlling person, underwriter
or other such Holder, partner or director, officer or controlling person
of such
other Holder may become subject under the Securities Act, the Exchange Act
or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred and as incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, partner, officer, director
or
controlling person of such other Holder in connection with investigating
or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section
5.2
shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of
the
Holder, which consent shall not be unreasonably withheld.
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SECTION
6
ADDITIONAL
ACKNOWLEDGEMENTS
The
Holder acknowledges and agrees that the registration statement shall be subject
to the requirements of the Securities Act and the rules and regulations
promulgated thereunder, and may require the resale of the Registrable Securities
at a price fixed by the Company on the basis of the highest exercise price
set
forth in the Company’s issued and outstanding warrants at the time of filing and
included in the registration statement, until such time as the Company’s shares
are quoted for trading on the NASD’ Over the Counter Bulletin Board or other
stock exchange. Any Registrable Securities remaining unsold upon the termination
of the Registration Statement shall continue to be deemed restricted securities
as contemplated by the Securities Act.
SECTION
7
TERMINATION
OF THE COMPANY’S OBLIGATIONS
The
Company shall have no obligations hereunder if, in the opinion of counsel
to the
Company, all such Registrable Securities proposed to be sold by a Holder
may be
sold in a three-month period without registration under the Securities Act
pursuant to Rule 144 under the Securities Act.
SECTION
8
GENERAL
PROVISIONS
8.1 Remedies.
In the
event of a breach by the Company or by a Holder, of any of their obliga-tions
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 dam-ages, 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 com-pensation 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.
8.2 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.
8.3 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 6:30 p.m. (New York City 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 6:30 p.m. (New York City time) on any date and
earlier than 11:59 p.m. (New York City 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:
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If
to the Company:
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Attention:
Naeem Tyab,
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President
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With
copies to:
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▇▇▇▇▇▇▇▇, Esq.
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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,
at
such other address as may be designated in writing hereafter, in the same
manner, by such Person.
8.4 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.
8.5 Counterparts.
This
Agreement may be executed in any number of counterparts, each of which when
so
executed shall be deemed to be an original and, all of which taken together
shall constitute one and the same Agreement. In the event that any signature
is
delivered by facsimile transmission, such signature shall create a valid
binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
were the original thereof.
8.6 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 New York,
without giving effect to any choice of law or conflict of law provision or
rule
(whether of the State of New York or any other jurisdictions) that would
cause
the application of the laws of any jurisdictions other than the State of
New
York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the
state and federal courts sitting in the City of New York, for the adjudication
of any dispute hereunder or in connection herewith or therewith, or with
any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court,
that
such suit, action or proceeding is brought in an inconvenient forum or that
the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to
such
party at the address for such notices to it under this Agreement and agrees
that
such service shall constitute good and sufficient service of process and
notice
thereof. Nothing contained herein shall be deemed to limit in any way any
right
to serve process in any manner permitted by law. EACH
PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
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8.7 Cumulative
Remedies.
The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
8.8 Severability.
If any
term, provision, covenant or restriction of this Agree-ment 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
restric-tion. It is hereby stipulated and declared to be the intention of
the
parties that they would have executed the remaining terms, provisions,
cove-nants and restrictions without terms that may be invalid, illegal, void
or
unenforceable.
8.9 Headings.
The
headings in this Agreement are for convenience of reference only and shall
not
limit or other-wise affect the meaning hereof.
8.10 Independent
Nature of Holders'
Obligations and Rights.
The
Holder who is a party to this Agreement, acknowledges that the Company is
entering into identical agreement 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 is 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.
8.11 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.
8.12 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.
8.13 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.
If
the
foregoing is acceptable to you please sign and fax back to us a copy of this
Agreement no later than August 15, 2006 (the “Effective
Date”); if
not
received by us on or before the Effective Date your securities will not be
included in the Registration Statement.
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Very
truly yours,
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By:
_________________________________________
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Name:
Naeem Tyab
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Title:
President
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The
foregoing is accepted and agreed to
this
day
of ,
2006.
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Name
of Holder:
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By:
_________________________________________
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Authorized
Signatory:
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Print
Name (if different from Holder)
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Title
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