ex10_1.htm


    
      

    

    Exhibit
10.1

     

    
      THIS AGREEMENT made
on  February 12, 2009

      


      
        	
                BETWEEN:

              	
                EXCELARON LLC a company
      incorporated in the State of California and having its principal executive
      office at 1075 Court Street, Suite 207, San Luis Obispo, California,
      United States of America ("Company")

              


      

      


      
        	
                AND

              	
                MOGUL ENERGY INTERNATIONAL INC
      a company having its principal executive office at 201 47 Colborne
      St, Toronto, Ontario, Canada (“Mogul”)

              


      

      


      RECITAL:

      


      The
Company has agreed to permit Mogul to subscribe for a 40% Members Percentage
Interest in the Company in consideration of the Capital Contribution by Mogul to
the Company of US$2,300,000 (which monies the Company shall use to acquire and
develop the Californian Leases (defined below) for the benefit of all Members
and to repay the shareholder loan in accordance with clause 6) on and subject to
the following terms and conditions.

      


      
        THE
PARTIES AGREE:

      

      


      
        	
                1.

              	
                DEFINITIONS
      AND INTERPRETATION

              


      

      


      To the
extent that any terms which are defined in the Company’s Operating Agreement are
used in this Agreement, they shall have the same meaning as in the Operating
Agreement.

      


      “California
Leases” means the petroleum and natural gas lease or permits the members and
Mogul have agreed to cause the Company to acquire in California USA for the
development thereof by the Company.

      


      
        	
                2.

              	
                SUBSCRIPTION
      AND PAYMENT

              


      

      


      Mogul
agrees to subscribe for a 40% Member’s Percentage Interest in the Company by the
payment of a Capital Contribution in the sum of US$2,300,000 as
follows:

      


      
        
          	
                	
                  (a)

                	
                  US$175,000
      within 24 hours of the mutual execution of this
  Agreement;

                


        

      

      


      
        
          	
                	
                  (b)

                	
                  US$275,000
      on 15 April 2009;

                


        

      

      


      
        
          	
                	
                  (c)

                	
                  US$500,000
      on 1 June 2009;

                


        

      

      


      
        
          	
                	
                  (d)

                	
                  US$500,000
      on 1 August 2009; and

                


        

      

      


      
        
          	
                	
                  (e)

                	
                  US$850,000
      on 1 October 2009.

                


        

      

      


      
        	
                3.

              	
                COMPLETION

              


      

      


      The 40%
Member’s Percentage Interest in the Company referred to in the Recitals shall be
issued to Mogul upon payment of the first installment of Capital Contributions
referred to in Clause 2(a).  The Parties will obtain:


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      
        
          	
                	
                  (a)

                	
                  Any
      contractual consent relating to this Agreement and any consent or
      agreement from any persons to the performance of this Agreement necessary
      or desirable to prevent default invalidation or a prejudicial effect in
      relation to any agreement created or property held by
      Excelaron;

                


        

      

      


      
        
          	
                	
                  (b)

                	
                  Any
      Government consent relating to this
Agreement;

                


        

      

      


      
        
          	
                	
                  (c)

                	
                  Any
      securities legislation compliance certificates that may be required for
      Mogul’s purchase of the Member’s Percentage Interest, which Mogul shall
      approve, sign, and deliver as such legislation may
  require;

                


        

      

      


      
        
          	
                	
                  (d)

                	
                  If
      necessary the execution of an agreement by Barisan Energy Limited, W
      Devine (or his approved transferee) and Australian Oil Company No. 2 Pty
      Limited to give effect to amendments of the Operating Agreement required
      in accordance with Clause 9 below;
and

                


        

      

      


      
        
          	
                	
                  (e)

                	
                  To
      the extent the loan outstanding from the Company to AOC comprises short
      term indebtedness of the Company confirmed by its having accepted as
      payable, invoices from AOC for fees for services, the Managers shall have
      so confirmed such debt, and have issued one or more evidences of such
      indebtedness to AOC in respect
therof.

                


        

      

      


      The
Parties will use their best endeavours to achieve contract completion by not
later than 12 February 2009.

      


      
        	
                4.

              	
                NON
      PERFORMANCE

              


      

      


      If for
any reason Mogul fails to make any Capital Contribution payment required under
Clause 2 of this Agreement Excelaron may at its election:

      


      
        
          	
                	
                  (a)

                	
                  Deliver
      a Notice of Default to Mogul that shall have been pre-approved by
      Australian Oil Company Limited and which Notice shall so certify, therein
      providing Mogul with 15 business days from receipt thereof by Mogul to
      commence to resolve or settle the alleged
  default;

                


        

      

      


      
        
          	
                	
                  (b)

                	
                  Deliver
      to Mogul a Notice of Termination of this Agreement if after 15 business
      days following Mogul’s receipt of a Members Notice of Default Mogul does
      not commence to resolve or settle the alleged default set out in a Notice
      of Default issued per (a) above or such default is not resolved or settled
      within a further 10 business
days;

                


        

      

      


      
        
          	
                	
                  (c)

                	
                  If
      Mogul, receives a Notice of Termination of this Agreement and such has
      been approved by Australian Oil Company Limited, the following shall be
      the exclusive remedies of the Members of the Company and the consequences
      arising therefrom:

                


        

      


      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      
        
          	
                	
                  (i)

                	
                  the
      Member’s Percentage Interest Mogul shall have subscribed for in the
      Company shall be amended to be a 2.00% Member’s Percentage Interest for
      each US$250,000.00 Mogul shall have already paid to the Company up to
      $1,000,000; (and part thereof as applicable);  and a 5% Member’s
      Percentage Interest for each US$250,000.00 Mogul shall have already paid
      to the Company in an amount greater than $1,000,000 (and part thereof as
      applicable);

                


        

      

      


      
        
          	
                	
                  (ii)

                	
                  Irrespective
      of that which may become Mogul’s Member’s Percentage Interest upon its
      completion of delivery of Capital Contributions hereunder, all other
      Members’ Percentage Interests shall be reduced from those Members’
      Percentage Interest as they existed prior to the effective date of this
      Agreement to Mogul Member’s Percentage Interest, and relate one to the
      other in the proportions Barisan 4:  UHC 21:  AOC
      35;

                


        

      

      


      
        
          	
                	
                  (iii)

                	
                  despite
      the agreed Amendments to the Company’s Operating Agreement, Mogul shall
      have no Manager Representative if its Member’s Percentage Interest is less
      than 10% and Mogul shall only be entitled to one Manager Representative if
      its Member’s Percentage Interest exceeds 10%, but is less than 20% and the
      amendment to the Operating Agreement as to Section 5.10 shall not come
      into effect.;

                


        

      

      


      


      
        	
                5.

              	
                DELAY

              


      

      


      The
payments of the fourth and fifth installments as set out in sub-clauses (d) and
(e) of Clause 2 of this Agreement may be delayed to the extent that the Company
does not secure Conditional User Permit(s) for the planned operations for the
California Leases until June 30, 2009;  and which delays for each
payment due date, shall be equal to one day for each day from and after June 30,
2009 to and including the day the Company acquires those licenses..

      


      
        	
                6.

              	
                USE
      OF FUNDS

              


      

      


      The
Company will apply the sum of US$235,520 in two installments of $US$120,000 and
US$115,520 from the first and second installments respectively of Mogul’s
Capital Contributions paid in accordance with Clause 2 to repay the shareholder
loan owing by the Company to Australian Oil Company Limited.  The
balance of the Capital Contribution subscribed by Mogul pursuant to this
Agreement will be applied towards budgeted operating expenses.


      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      
        	
                7.

              	
                MANAGERS

              


      

      


      Subject
to having satisfied its obligations under Clause 3, the Members of the Company
shall appoint as Managers whom Mogul nominates from time to time, subject to
those restrictions set out in Clause 4(iii)., in addition to its existing two
Managers.

      


      
        	
                8.

              	
                PRO
      RATA CONTRIBUTIONS

              


      

      


      Upon
payment by Mogul of the five installments of Capital Contributions pursuant to
Clause 2 of this Agreement the Members’ Percentage Interests of all Members
shall be as follows:

      


      
        
          
            
              	
                      Barisan
      Energy Limited

                    	 	 	4	%
	
                      United
      Hydrocarbon Corporation

                    	 	 	21	%
	
                      Australian
      Oil Company No. 2 Limited

                    	 	 	35	%
	
                      Mogul

                    	 	 	40	%
	
                      Total

                    	 	 	100	%


            

          

        

      

      


      At such
time the Managers shall prepare a revised Schedule “B” to the Operating
Agreement reporting the above changes to the Members’ Percentage Interests made
in accordance with the table above, or should the provisions of Clause 4(c)
apply, amended in accordance with the application of that Clause.

      


      
        	
                9.

              	
                OPERATING
      AGREEMENT

              


      

      


      The
Members agree to amend the Operating Agreement as necessary to give full effect
to the matters hereby agreed, to the matters set out in the Schedule hereto and
to incorporate the normal terms applicable to an operating oil exploration,
development and production joint venture.

      


      
        	
                10.

              	
                REPRESENTATIONS
      AND WARRANTIES

              


      

      


      
        	
                10.1

              	
                Company
      Warranties

              


      

      


      The
Company represents and warrants to Mogul that each of the following statements
is true and correct on the date of this Agreement and will be true and correct
as at the date of issue of the Member’s Percentage Interest as if made on that
date:

      


      
        
          	
                	
                  (a)

                	
                  the
      Member’s Percentage Interest will be validly issued and
      allotted;

                


        

      

      


      
        
          	
                	
                  (b)

                	
                  the
      Company has the power to enter into and perform this Agreement;
      and

                


        

      

      


      
        
          	
                	
                  (c)

                	
                  the
      entry into and performance of this Agreement by it does not constitute a
      breach of any obligation or default of any agreement or undertaking by
      which it is bound nor a breach of its Operating
  Agreement.

                


        

      


      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      
        	
                10.2

              	
                Mogul
      Warranties

              


      

      


      Mogul
represents and warrants to the Company that each of the following statements is
true and correct on the date of this Agreement and will be true and correct as
at the date of issue of the Member’s Percentage Interest as if made on that
date.

      


      
        
          	
                	
                  (a)

                	
                  Mogul
      has the power to enter into and perform this Agreement and has, or will at
      the date of issue of the Member’s Percentage Interest, have obtained all
      necessary consents to enable it to do
so;

                


        

      

      


      
        
          	
                	
                  (b)

                	
                  the
      entry into and performance of this Agreement by it does not constitute a
      breach of any obligation or default of any agreement or undertaking by
      which it is bound nor a breach of its
  constitution.

                


        

      

      


      
        	
                11.

              	
                MISCELLANEOUS

              


      

      


      
        	
                11.1

              	
                Entire
      Agreement

              


      

      


      This
Agreement is the entire agreement of the parties about the subject matter of
this Agreement and supersedes all other representations, negotiations,
arrangements, understandings or agreements and all other communications. No
party has entered into this Agreement relying on any representations made by or
on behalf of the other, other than those expressly made in this
Agreement.

      


      
        	
                11.2

              	
                Further
      assurances

              


      

      


      Each
party must, at its own expense, whenever reasonably requested by the other
party, promptly do or arrange for others to do, everything reasonably necessary
to give full effect to this Agreement and the transactions contemplated by this
Agreement.

      


      
        	
                11.3

              	
                Costs

              


      

      


      Each
party must pay its own costs in respect of this Agreement and the documents and
transactions contemplated by this Agreement except that the Company must pay all
stamp duty on this Agreement.

      


      
        	
                11.4

              	
                Amendment

              


      

      


      This
Agreement may be amended only by a document signed by all parties.

      


      
        	
                11.5

              	
                Counterparts

              


      

      


      This
Agreement may be signed in counterparts and all counterparts taken together
constitute one document.

      


      
        	
                11.6

              	
                Governing
      law

              


      

      


      
        This
Agreement is governed by the laws of California.

      


      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      
        	
                11.7

              	
                Jurisdiction

              


      

      


      Each
party irrevocably and unconditionally:

      


      
        
          	
                	
                  (a)

                	
                  submits
      to the non-exclusive jurisdiction of the courts of California;
      and

                


        

      

      


      
        
          	
                	
                  (b)

                	
                  waives,
      without limitation, any claim or objection based on absence of
      jurisdiction or inconvenient
forum.

                


        

      

      


      EXECUTED as an
agreement

      


      
        
          	
                  SIGNED for and on behalf
      of

                  EXCELARON LLC by its
      duly

                  authorised
      representative in the

                  presence
      of:

                	
                  )

                  )

                  )

                  )

                	 
      
	 
      	 
      	 
      
	
                  /s/ (illegible)

                	 
      	
                  /s/ (illegible)

                
	
                  Witness

                	 
      	 
      


        

      

      


      
        
          	
                  SIGNED for and on behalf
      of

                  MOGUL ENERGY
      INTERNATIONAL

                  INC by its duly
      authorised

                  representative
      in the presence of:

                	
                  )

                  )

                  )

                  )

                	 
      
	 
      	 
      	 
      
	
                  /s/ Creenagh Flynn

                	 
      	
                  /s/ Naeem Tyab

                
	
                  Witness

                	 
      	 
      


        

      

      


      Ratified
and Confirmed by the Following as to the applicable Clauses above as shall apply
to all Members and in respect to the Amendments to the Operating Agreement –
Schedule “A” hereto:

      


      
        
          	
                  SIGNED for and on behalf
      of

                  AUSTRALIAN OIL COMPANY
      #2

                  LTD.  by its
      duly authorised

                  representative
      in the presence of:

                	
                  )

                  )

                  )

                  )

                	 
      
	 
      	 
      	 
      
	
                  /s/ (illegible)

                	 
      	
                  /s/ (illegible)

                
	
                  Witness

                	 
      	 
      


        

      

      


      


      
        
          	
                  SIGNED for and on behalf
      of

                  BARISAN ENERGY LTD. by
      its duly

                  authorised
      representative in the

                  presence
      of:

                	
                  )

                  )

                  )

                  )

                	 
      
	 
      	 
      	 
      
	
                  /s/ (illegible)

                	 
      	
                  /s/ (illegible)

                
	
                  Witness

                	 
      	 
      


        

      

      


      


      
        
          	
                  SIGNED for and on behalf
      of

                  UNITED HYDROCARBON INCORPORATED
      by its duly

                  authorised
      representative in the

                  presence
      of:

                	
                  )

                  )

                  )

                  )

                	 
      
	 
      	 
      	 
      
	
                  /s/ Creenagh Flynn

                	 
      	
                  /s/ William Divine

                
	
                  Witness

                	 
      	 
      


        

      


      
        
           


        

        
          6

          
            

          

        

        
           


        

      


      SCHEDULE
“A”

      


      AMENDMENTS
TO OPERATING AGREEMENT

      


      The
Operating Agreement will be amended, by inserting the following
Sections:

      


      5.10            
Notwithstanding Sections 5.1 to 5.3 hereof inclusive, Australian Oil Company
Limited (“AOC”) and
Mogul will jointly control the Company such that:

      


      5.10.1  all
decisions requiring a vote of the “Majority of Members” will need to be agreed
by both AOC and Mogul;

      


      5.10.2  AOC
and Mogul will at all times have a equal number of nominees acting as Managers
and at any meeting of Managers the nominees of AOC and Mogul respectively shall
have a equal number of votes regardless of the actual number of Managers
present;

      


      5.10.3 
in the event that a matter is not agreed by AOC and Mogul as Members or by their
respective nominee Managers, the Members agree to negotiate in good faith to
seek agreement on the matter.  If within 10 business days the Members
have not reached agreement, the Member that originally proposed the matter may
refer it at that Member’s cost, for determination by an independent
person.  If the Members cannot agree upon an independent person, such
person will be appointed at the request of the referring Member by the President
of the Association for Dispute Resolution of Northern California.  The
independent person shall hear submissions from both Members with respect to the
matter and determine it.  The independent person’s determination shall
be binding on both Member.

      


      3.9             
 All Members’ loan and Capital Contributions required to be made will be
made by each Member pro-rata in proportion to its Member’s Percentage
Interest.  Once the Managers approve a Capital Contribution cash call,
they shall deliver a notice to all Members of that cash call, with full
particulars of the use of funds thereof and AFE back-up for the operations the
Company is to conduct with such Capital.  Such notices shall be deemed
received on the next business day of that of being if sent, if sent via
facsimile or email, or on the fifth business day of that of being if sent, if
sent via first class mail.  Each Member shall have until 3:00 p.m. PST
on the 15th
business day following the deemed date of receipt of that cash call notice for
that Member (that Member’s “payment due date”) to remit to the Company a Capital
Contribution equal to that Member’s Percentage Interest in that cash call (plus,
if that Member chooses, a notice to participate in any Capital Contribution cash
call shortfall – see Section 3.9.6 below) or be deemed to have irrevocably
declined to have participated in that cash call.  In the event that a
Member declines to remit timely to the Company a Capital Contribution equal to
that Member’s Percentage Interest in that cash call its Member’s Participating
Interest shall be revised in accordance with the provisions of this
Section:

      


      
        	
              	
                3.9.1

              	
                the
      agreement between the Company and Mogul Energy International Inc. (“Mogul”) made effective
      on _________, 2009 to permit Mogul to become a Member of the Company shall
      be referred to as the “Mogul Agreement”, and
      the aggregate of the payments as to a Member’s Capital Contribution that
      Mogul makes under the Mogul Agreement shall be rounded down to the nearest
      $5,000.00 and be referred to as the “Mogul
      Contribution”;

              


      


      
        
           


        

        
          7

          
            

          

        

        
           


        

      


      
        	
              	
                3.9.2

              	
                the
      Capital Contributions of the Members other than Mogul made to the date
      hereof for the purposes only of this Section shall be deemed to be
      $1,000,000 and the total Capital Contributions of the Members including
      that of the Mogul Contribution shall be referred to as the “Stage 2 Capital
      Contributions”;

              


      

      


      
        	
              	
                3.9.3

              	
                the
      Managers shall determine all Members’ Percentage Interests based upon the
      Member’s Percentage Interest that Mogul acquires under the Mogul Agreement
      as provided for in the Mogul Agreement, and such Members’ Percentage
      Interests shall be factored into the Stage 2 Capital Contributions to
      determine each Member’s “Stage 2 Contribution
      Factor”;  for example, if the Mogul Contribution is
      $2,300,000 as set out in the Mogul Agreement, the Stage 2 Capital
      Contributions will be $3.3 mm and the following calculations of Members’
      Stage 2 Contribution Factors shall
apply:

              


      

      


      
        
          
            
              
                
                  	
                          Member

                        	
                          Capital Contribution

                          Calculation

                        	
                          Stage 2 Contribution
  Factor

                        
	
                          Mogul

                        	
                          40%
      x $(1 + 2.3) mm

                        	
                          $1.320
      mm

                        
	
                          AOC

                        	
                          35%
      x $(1 + 2.3) mm

                        	
                          $1.155
      mm

                        
	
                          UHC

                        	
                          21%
      x $(1 + 2.3) mm

                        	
                          $0.693
      mm

                        
	
                          Barisan

                        	
                          4%    x $(1 + 2.3)
      mm

                        	
                          $0.132 mm

                        
	
                          All Members

                        	
                          100% x $(1 + 2.3)mm

                        	
                          $3.300
mm

                        


                

              

            

          

        

      

      


      
        	
              	
                3.9.4

              	
                The
      Members’ Percentage Interests portions of the next Capital Contribution
      cash call  - the “Stage 3 Capital
      Contributions” shall apply, and if Members effect a Stage 3 Capital
      Contribution that may be equal to, less than or greater than each Member’s
      Percentage Interest portion thereof, that Member’s Percentage Interest
      shall be re-calculated in accordance with the
  following:

              


      

      


      
        
          
            
              	
                      Abbreviation

                    	
                      Definition

                    
	
                      RMI

                    	
                      Revised
      Member’s Percentage Interest after a Member makes whatever its final
      contribution may be to the Stage 3 Capital Contribution cash
      call

                    
	 
      	 
      
	
                      St2
      CF

                    	
                      Stage
      2 Contribution Factor for a Member

                    
	 
      	 
      
	
                      St2
      TCC

                    	
                      Total
      of Stage 2 Capital Contributions of all Members

                    
	 
      	 
      
	
                      St3
      CC

                    	
                      Stage
      3 Capital Contribution being the final contribution amount of a Member to
      a Stage 3 Capital Contribution

                    
	 
      	 
      
	
                      St3
      TCC

                    	
                      Total
      of Stage 3 Capital Contributions of all
Members

                    


            

          

        

      

      


      For each
Member the formula for the re-calculation of its Member’s Percentage Interest
for the Stage 3 Capital Contribution shall be as follows:

      


      
        	
              	
                RMI        =

              	
                St2 CF + St3
      CC

              


      

      St2 TCC +
St3 TCC

      


      For the
Fifth Capital Contribution cash call the formula for each Member would thus be
as follows, the expressions in italics being extrapolated from those
above:

      


      
        	
              	
                RMI        =      
      

              	
                             
      St4 CF +
      St5
      CC          
                 
      

              


      

        
Σ (St2 TCC   St3 TCC   St4
TCC St5
TCC)


      
        
           


        

        
          8

          
            

          

        

        
           


        

      


      
        	
              	
                3.9.5

              	
                For
      the next Capital Contribution (a Stage 4 Capital Contribution) the
      procedure shall be repeated and so on.  Once a Member’s
      Percentage Interest is increased or decreased following the Capital
      Contributions actually made for a Capital Contribution cash call, that
      adjusted Member’s Percentage Interest shall be that in effect thereafter
      for that Member in respect of all assets and liabilities of the Company
      effective the payment due date for that Capital Contribution cash call,
      and until such Member’s Percentage Interest might be further amended
      effective the payment due date of any subsequent Capital Contribution cash
      call.

              


      

      


      
        	
              	
                3.9.6

              	
                When
      a Member remits timely to the Company a Capital Contribution equal to that
      Member’s Percentage Interest in a Capital Contribution cash call, that
      Member shall be entitled to give a notice to the Company to accompany its
      remittance of such Capital Contribution cash call, and to contribute
      towards all or any portion of the shortfall of all Members’ Capital
      Contribution cash calls not paid timely and in full by one or more other
      Members.

              


      

      


      
        	
              	
                3.9.7

              	
                Hence,
      if one or more Members do not timely advance their Member’s Percentage
      Interest portion of a Capital Contribution cash call, the Members who
      timely pay their Member’s Percentage Interest portions of Capital
      Contribution cash calls and give notice to the Company of their
      willingness to make additional Capital Contributions as above, shall be
      entitled to contribute to the shortfall in the total Capital Contribution
      cash call as follows:

              


      

      


      3.9.7.1           all
that shortfall in the total Capital Contribution cash call, subject to Sections
3.9.7.2 to 3.9.7.5 below;

      


      3.9.7.2           if
more than one Member wishes to contribute pursuant to Section 3.9.7.2 above, or
to contribute in an amount equal to that Member’s Percentage Interest portion of
the shortfall as such Member’s Percentage Interest relates to the total of all
Members’ Percentage Interests who so wish to contribute to that shortfall, that
portion of the shortfall in the Capital Contribution equal to that Member’s
Percentage Interest;

      


      3.9.7.3           a
specified amount of a Capital Contribution shortfall less than that which would
be equal to that Member’s Percentage Interest portion of the shortfall as such
Member’s Percentage Interest relates to the total of Members’ Percentage
Interests for those who wish to contribute to that shortfall in accordance with
their Member’s Percentage Interests;

      


      3.9.7.4           if
any shortfall of a Capital Contribution cash call remains unpaid following the
above procedure’s having been implemented, and one or more Members wish to
contribute to that final shortfall, the Managers shall decide the allocation
thereof being fair and reasonable in the process between one or more Members so
wishing to contribute to that shortfall; and

      


      3.9.7.5           if
any shortfall of a Capital Contribution cash call remains unpaid following the
above procedure’s having been implemented, and one or more Members wish to
contribute to that final shortfall, the Managers shall decide the allocation
thereof being fair and reasonable in the process between one or more Members so
wishing to contribute to that shortfall.

       

       

      9