Document:

SUBSCRIPTION
AGREEMENT

THIS
SUBSCRIPTION AGREEMENT (the “Agreement”) is made as of this ___ day of December
2004, by and between MRU HOLDINGS, INC., a Delaware corporation (the “Company”),
and the investor identified on the signature page to this Agreement (the
“Investor”).

W I T N E S S E T H:

WHEREAS,
the Investor desires to subscribe for, purchase and acquire from the Company and
the Company desires to sell and issue to the Investor the number of shares (the
“Shares”) of the Company’s Series A Convertible Preferred Stock, $0.001 par
value per share (the “Preferred Stock”), set forth on the signature page of this
Agreement, upon the terms and conditions and subject to the provisions
hereinafter set forth.

NOW,
THEREFORE, for and in consideration of the mutual premises contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

1. Purchase
and Sale of the Shares. Subject
to the terms and conditions of this Agreement, the Investor subscribes for and
agrees to purchase and acquire from the Company and the Company agrees to sell
and issue to the Investor the Shares, in the manner set forth in Section
2 hereof,
at the purchase price set forth on the signature page of this Agreement (the
“Purchase Price”). 

2. Terms
of Purchase and Sale of the Shares. The
closing of the transactions contemplated hereby (the “Closing”) shall take place
on or before the fifth full business day after the Notice Date (as such term is
defined in the Placement Agent Agreement dated as of November [__], 2004 (the
“Placement Agent Agreement”), between the Company, Sanders Morris Harris Inc.
and Brean Murray & Co., Inc. (collectively, the "Placement Agents”)), at the
offices of McGuireWoods LLP, counsel to the Company, or at such other time and
place as the Company and the Placement Agents may agree upon. Contemporaneously
with the delivery of this Agreement, the Investor shall deliver to Sterling Bank
(the “Escrow Agent”) the Purchase Price by wire transfer of immediately
available funds pursuant to wire transfer instructions given to the Investor by
the Company. At the Closing, the Escrow Agent shall deliver to the Company the
Purchase Price by wire transfer of immediately available funds pursuant to wire
transfer instructions given to the Escrow Agent by the Company, and the Company
shall deliver to the Investor a certificate, registered in the name of the
Investor, representing the Shares. Notwithstanding the foregoing, the
obligations of the Company and the Investor hereunder are subject to the
Company’s receipt of aggregate subscriptions for a minimum of
$9,625,000 in
aggregate proceeds for shares of Preferred Stock on or prior to December 31,
2004 (or such later closing date as may be agreed by the Company and the
Placement Agents), which date may be extended by the Company and the Placement
Agents pursuant to the terms of the Placement Agent Agreement (the “Closing
Date”).

3. Representations
and Warranties of the Company. In order
to induce the Investor to enter into this Agreement, the Company represents and
warrants to the Investor the following:

(a) Authority. The
Company is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware, and has all requisite right, power, and
authority to execute, deliver and perform this Agreement.

(b) Subsidiaries. The
Company has no direct or indirect Subsidiaries other than those set forth in set
forth in the Exchange Act Documents (as defined in Section 3(f)
below). Except as
disclosed in the Exchange Act Documents, the Company owns, directly or
indirectly, all of the capital stock of each Subsidiary free and clear of any
and all liens, and all the issued and outstanding shares of capital stock of
each Subsidiary are validly issued and are fully paid, non-assessable and free
of preemptive and similar rights. 

(c) Enforceability.
The
execution, delivery, and performance of this Agreement by the Company have been
duly authorized by all requisite corporate action. This Agreement has been duly
executed and delivered by the Company, and, upon its execution by the Investor,
shall constitute the legal, valid, and binding obligation of the Company,
enforceable in accordance with its terms, except to the extent that its
enforceability is limited by bankruptcy, insolvency, reorganization, or other
laws relating to or affecting the enforcement of creditors’ rights generally and
by general principles of equity.

(d) No
Violations.
The
execution, delivery, and performance of this Agreement by the Company does not,
and will not, violate or conflict with any provision of the Company’s
Certificate of Incorporation or Bylaws and does not and will not, with or
without the passage of time or the giving of notice, result in the breach of, or
constitute a default, cause the acceleration of performance, or require any
consent under (except such consents as have been obtained as of the date
hereof), or result in the creation of any lien, charge or encumbrance upon any
property or assets of the Company pursuant to, any material instrument or
agreement to which the Company is a party or by which the Company or its
properties are bound, except such consents as have been obtained as of the date
hereof.

 

(e) Capitalization. The
authorized capital stock of the Company consists of: 50,000,000
shares of Common Stock, $0.001
par value per share (“Common Stock”), of which
13,586,202 were issued and outstanding as of November 19, 2004, and 5,000,000
shares of preferred stock, of which no shares are issued and
outstanding. As of
November 19, 2004, the Company has outstanding options and warrants to purchase
4,025,757 shares of Common Stock. Upon issuance in accordance with the terms of
this Agreement against payment of the Purchase Price therefore, the Shares will
be duly and validly issued, fully paid, and nonassessable and free and clear of
all liens imposed by or through the Company, and, assuming the accuracy of the
representations and warranties of the Investor and all other purchasers of
shares of Preferred Stock in the offering contemplated by the Placement Agent
Agreement, will be issued in accordance with a valid exemption from the
registration or qualification provisions of the Securities Act of 1933, as
amended (the “Securities Act”), and any applicable state securities laws (the
“State Acts”). The shares (the “Conversion Shares”) of Common Stock issuable
upon conversion of the Shares have been duly authorized, and upon issuance of
the Conversion Shares upon proper conversion of the Shares, in accordance with
the terms thereof, the Conversion Shares will be validly issued, fully paid, and
non-assessable. 

(f) Exchange
Act Filing. During
the twelve (12) calendar months immediately preceding the date of this
Agreement, all reports and statements required to be filed by the Company with
the Securities and Exchange Commission (“SEC”) under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and the rules and regulations
thereunder, have been timely filed. Such filings, together with all documents
incorporated by reference therein, are referred to as “Exchange Act Documents.”
Each Exchange Act Document, as amended, conformed in all material respects to
the requirements of the Exchange Act and the rules and regulations thereunder,
and no Exchange Act Document, as amended, at the time each such document was
filed, included any untrue statement of a material fact or omitted 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.

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(g) Company
Financial Statements. The
audited financial statements, together with the related notes of the Company at
December 31, 2002 and December 31, 2003, and for the years then ended, included
in the Company’s Definitive Information Statement on Schedule 14c dated June 14,
2004 and filed June 15, 2004, and the unaudited financial statements of the
Company at September 30, 2004, and for the nine months then ended,
(collectively, the “Company Financial Statements”) included in the Company’s
Quarterly Report on Form 10-QSB for the quarter ended September 30, 2004,
respectively, fairly present in all material respects, on the basis stated
therein and on the date thereof, the financial position of the Company at the
respective dates therein specified and its results of operations and cash flows
for the periods then ended (provided that the unaudited financial statements are
subject to normal year-end audit adjustments and lack footnotes and other
presentation items). Such statements and related notes have been prepared in
accord-ance with general-ly accepted accounting principles in the United States
applied on a consistent basis except as expressly noted therein.

(h) No
Material Liabilities. Except
for liabilities or obligations not individually in excess of $100,000, and as
set forth in the Exchange Act Documents, since September 30, 2004, the Company
has not incurred any material liabilities or obligations, direct or contingent,
except in the ordinary course of business and except for liabilities or
obligations reflected or reserved against on the Company’s balance sheet as of
September 30, 2004, and there has not been any change, or to the knowledge of
the Company, development or effect (individually or in the aggregate) that is or
is reasonably likely to be, materially adverse to the condition (financial or
otherwise), business, prospects, or results of operations of the Company and the
Subsidiaries considered as a whole (a “Material Adverse Effect”) or any change
in the capital or material increase in the long-term debt of the Company, nor
has the Company declared, paid, or made any dividend or distribution of any kind
on its capital stock.

(i) No
Disputes Against Company. There is
no material pending or, to the knowledge of the Company, threatened (a) action,
suit, claim, proceeding, or investigation against the Company, at law or in
equity, or before or by any Federal, state, municipal, or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, (b) arbitration proceeding against the Company, (c) governmental
inquiry against the Company, or (d) any action or suit by or on behalf of the
Company pending or threatened against others.

 

    (j) Approvals. Other
than the filing of the Certificate of Designation of Preferences, Rights and
Limitations of the Series A Preferred Stock, which the Company undertakes to
file with the Delaware Secretary of State prior to the Closing, (i) the
execution, delivery, and performance by the Company of this Agreement and the
Registration Rights Agreement (as hereinafter defined), (ii) the offer and sale
of the Shares, and (iii) the issuance of the Conversion Shares upon due
conversion of the Shares require no consent of, action by or in respect of, or
filing with, any person, governmental body, agency, or official other than those
consents that have been obtained and filings that have been made pursuant to the
Securities Act and any State Act which the Company undertakes to file within the
applicable time period.

 

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     (k) Compliance. Neither
the Company nor any Subsidiary (i) is in default under or in violation of (and
no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under),
nor has the Company or any Subsidiary received notice of a claim that it is in
default under or that it is in violation of, any indenture, loan or credit
agreement, or any other agreement or instrument to which it is a party or by
which it or any of its properties is bound (whether or not such default or
violation has been waived), (ii) is in violation of any order of any court,
arbitrator, or governmental body, or (iii) is or has been in violation of any
statute, rule, or regulation of any governmental authority, including without
limitation all foreign, federal, state, and local laws relating to taxes,
environmental protection, occupational health and safety, product quality and
safety and employment and labor matters, except in each case as could not,
individually or in the aggregate, have or reasonably be expected to result in a
Material Adverse Effect. The Company is in compliance with the applicable
requirements of the Sarbanes-Oxley Act of 2002, as amended, and the rules and
regulations thereunder, except where such noncompliance could not have or
reasonably be expected to result in a Material Adverse Effect.

 

(l) Patents
and Trademarks. The
Company and the Subsidiaries have, or have rights to use, all patents, patent
applications, trademarks, trademark applications, service marks, trade names,
copyrights, licenses, and other similar rights that are necessary or material
for use in connection with their respective businesses as described in the
Exchange Act Documents and which the failure to so have could, individually or
in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect (collectively, the “Intellectual Property Rights”). Neither the Company
nor any Subsidiary has received a written notice that the Intellectual Property
Rights used by the Company or any Subsidiary violates or infringes upon the
rights of any person. Except as set forth in the Exchange Act Documents, to the
knowledge of the Company, all such Intellectual Property Rights are enforceable
and there is no existing infringement by another person of any of the
Intellectual Property Rights, except where such infringement could not have or
reasonably be expected to result in a Material Adverse Effect.

(m) Transactions
With Affiliates and Employees. Except
as set forth in the Exchange Act Documents, none of the officers or directors of
the Company and, to the knowledge of the Company, none of the employees of the
Company is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers, and directors),
including any contract, agreement, or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
director, or such employee or, to the knowledge of the Company, any entity in
which any officer, director, or any such employee has a substantial interest or
is an officer, director, trustee, or partner.

(n) Internal
Accounting Controls. The
Company and the Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. The Company has established disclosure controls and procedures (as
defined in Exchange Act rules 13a-14 and 15d-14) for the Company and designed
such disclosure controls and procedures to ensure that material information
relating to the Company, including its Subsidiaries, is made known to the
certifying officers by others within those entities, particularly during the
period in which the Company’s Form 10-KSB or 10-QSB, as the case may be, is
being prepared. The Company’s certifying officers have evaluated the
effectiveness of the Company’s controls and procedures as of a date within 90
days prior to the filing date of the Form 10-QSB for the Company’s most recently
ended fiscal quarter (such date, the “Evaluation Date”). The Company presented
in its most recently filed Form 10-KSB or Form 10-QSB the conclusions of the
certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no significant changes in the Company’s
internal controls (as such term is defined in Item 307(b) of Regulation S-K
under the Exchange Act) or, to the Company’s knowledge, in other factors that
could significantly affect the Company’s internal controls.

4

(o) Solvency. Based
on the financial condition of the Company as of the Closing Date (and assuming
that the Closing shall have occurred), (i) the Company’s fair saleable value of
its assets exceeds the amount that will be required to be paid on or in respect
of the Company’s existing debts and other liabilities (including known
contingent liabilities) as they mature; (ii) the Company’s assets do not
constitute unreasonably small capital to carry on its business for the current
fiscal year as now conducted and as proposed to be conducted including its
capital needs taking into account the particular capital requirements of the
business conducted by the Company, and projected capital requirements and
capital availability thereof; and (iii) the current cash flow of the Company,
together with the proceeds the Company would receive, were it to liquidate all
of its assets, after taking into account all anticipated uses of the cash, would
be sufficient to pay all amounts on or in respect of its debt when such amounts
are required to be paid. The Company does not intend to incur debts beyond its
ability to pay such debts as they mature (taking into account the timing and
amounts of cash to be payable on or in respect of its debt).

(p) Certain
Fees. Except
as may be due to the Placement Agents from the Company, no brokerage or finder’s
fees or commissions are or will be payable by the Company to any broker,
financial advisor or consultant, finder, placement agent, investment banker,
bank, or other person with respect to the transactions contemplated by this
Agreement. The Investor shall have no obligation with respect to any Placement
Agent fees or with respect to any claims (other than such fees or commissions
owed by an Investor pursuant to written agreements executed by the Investor
which fees or commissions shall be the sole responsibility of such Investor)
made by or on behalf of other persons for fees of a type contemplated in this
Section that may be due in connection with the transactions contemplated by this
Agreement. 

(q) Certain
Registration Matters.
Assuming the accuracy of the Investor’s representations and warranties set forth
in Section 4, no registration under the Securities Act is required for the offer
and sale of the Shares by the Company to the Investor hereunder.

(r) Listing
and Maintenance Requirements. Except
as specified in the Exchange Act Documents, the Company has not, in the two
years preceding the date hereof, received notice from any automated dealer
quotation system to the effect that the Company is not in compliance with the
listing or maintenance requirements thereof. The Company is, and has no reason
to believe that it will not in the foreseeable future continue to be, in
compliance with the listing and maintenance requirements for continued listing
of the Common Stock on the OTC Bulletin Board.

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(s) Investment
Company. The
Company is not, and is not an “affiliate” of, an “investment company” within the
meaning of the Investment Company Act of 1940, as amended.

(t) No
Additional Agreements. The
Company does not have any agreement or understanding with any Investor with
respect to the transactions contemplated by this Agreement and the Registration
Rights Agreement on terms that differ from those set forth in this Agreement and
the Registration Rights Agreement.

(u) Disclosure. The
Company confirms that neither it nor any person acting on its behalf has
provided the Investor or its agents or counsel with any information that the
Company believes would constitute material, non-public information following the
announcement of the Closing and the transactions contemplated thereby. The
Company understands and confirms that the Investor will rely on the foregoing
representations and covenants in effecting transactions in securities of the
Company. All disclosure provided to the Investor regarding the Company, its
business and the transactions contemplated hereby, furnished by or on behalf of
the Company (including the Company’s representations and warranties set forth in
this Agreement) are true and correct and do not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading.

4. Representations
and Warranties of the Investor. In order
to induce the Company to enter into this Agreement, the Investor represents and
warrants to the Company the following:

(a) Authority. If a
corporation, partnership, limited partnership, limited liability company, or
other form of entity, the Investor is duly organized or formed, as the case may
be, validly existing, and in good standing under the laws of its jurisdiction of
organization or formation, as the case may be. The Investor has all requisite
individual or entity right, power, and authority to execute, deliver, and
perform this Agreement.

(b) Enforceability. The
execution, delivery, and performance of this Agreement by the Investor have been
duly authorized by all requisite partnership or corporate action, as the case
may be. This Agreement has been duly executed and delivered by the Investor,
and, upon its execution by the Company, shall constitute the legal, valid, and
binding obligation of the Investor, enforceable in accordance with its terms,
except to the extent that its enforceability is limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws relating to or affecting
the enforcement of creditors’ rights generally and by general principles of
equity.

(c) No
Violations.
The
execution, delivery, and performance of this Agreement by the Investor do not
and will not, with or without the passage of time or the giving of notice,
result in the breach of, or constitute a default, cause the acceleration of
performance, or require any consent under, or result in the creation of any
lien, charge or encumbrance upon any property or assets of the Investor pursuant
to, any material instrument or agreement to which the Investor is a party or by
which the Investor or its properties may be bound or affected, and, do not or
will not violate or conflict with any provision of the articles of incorporation
or bylaws, partnership agreement, operating agreement, trust agreement, or
similar organizational or governing document of the Investor, as applicable.

6

(d) Knowledge
of Investment and its Risks. The
Investor has knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of Investor’s investment in the
Shares. The Investor understands that an investment in the Company represents a
high degree of risk and there is no assurance that the Company’s business or
operations will be successful. The Investor has considered carefully the risks
attendant to an investment in the Company, and that, as a consequence of such
risks, the Investor could lose Investor’s entire investment in the
Company.

(e) Investment
Intent. The
Investor hereby represents and warrants that (i) the Shares are being acquired
for investment for the Investor’s own account, and not as a nominee or agent and
not with a view to the resale or distribution of all or any part of the Shares,
and the Investor has no present intention of selling, granting any participation
in, or otherwise distributing any of the Shares within the meaning of the
Securities Act, (ii) the Shares are being acquired in the ordinary course of the
Investor’s business, and (iii) the Investor does not have any contracts,
understandings, agreements, or arrangements, directly or indirectly, with any
person and/or entity to distribute, sell, transfer, or grant participations to
such person and/or entity with respect to, any of the Shares. The Investor is
not purchasing the Shares as a result of any advertisement, article, notice or
other communication regarding the Shares published in any newspaper, magazine or
similar media or broadcast over television or radio or presented at any seminar
or any other general solicitation or general advertisement.

(f) Investor
Status.
The
Investor is an “Accredited Investor” as that term is defined by Rule 501 of
Regulation D promulgated under the Securities Act and the information provided
by the Investor in the Investor’s Questionnaire, a copy of which is attached
hereto as Exhibit A, is truthful, accurate, and complete. The Investor is not
registered as a broker-dealer under Section 15 of the Exchange Act.

(g) Disclosure. The
Investor has reviewed information provided by the Company in connection with the
decision to purchase the Shares, consisting of the Company’s publicly available
filings with the SEC and the information contained therein. The Company has
provided the Investor with all the information that the Investor has requested
in connection with the decision to purchase the Shares. The Investor further
represents that the Investor has had an opportunity to ask questions and receive
answers from the Company regarding the business, properties, prospects, and
financial condition of the Company. All such questions have been answered to the
full satisfaction of the Investor. Neither such inquiries nor any other
investigation conducted by or on behalf of the Investor or its representatives
or counsel shall modify, amend, or affect the Investor’s right to rely on the
truth, accuracy, and completeness of the disclosure materials and the Company’s
representations and warranties contained herein.

(h) No
Registration.
The
Investor understands that Investor may be required to bear the economic risk of
Investor’s investment in the Company for an indefinite period of time. The
Investor further understands that (i) neither the offering nor the sale of
the Shares has been registered under the Securities Act or any applicable State
Acts in reliance upon exemptions from the registration requirements of such
laws, (ii) the Shares and the Conversion Shares must be held by he, she or
it indefinitely unless the sale or transfer thereof is subsequently registered
under the Securities Act and any applicable State Acts, or an exemption from
such registration requirements is available, (iii) except as set forth in the
Registration Rights Agreement between the Company and the Investor, the
Company is under no obligation to register any of the Shares or the Conversion
Shares on the Investor’s behalf or to assist the Investor in complying with any
exemption from registration, and (iv) the Company will rely upon the
representations and warranties made by the Investor in this Subscription
Agreement in order to establish such exemptions from the registration
requirements of the Securities Act and any applicable State Acts. 

7

(i) Transfer
Restrictions.
The
Investor will not transfer any of the Shares or the Conversion Shares unless
such transfer is registered or exempt from registration under the Securities Act
and such State Acts, and, if requested by the Company in the case of an exempt
transaction, the Investor has furnished an opinion of counsel reasonably
satisfactory to the Company that such transfer is so exempt. The Investor
understands and agrees that (i) the certificates evidencing the Shares and the
Conversion Shares will bear appropriate legends indicating such transfer
restrictions placed upon the Shares and the Conversion Shares, (ii) the Company
shall have no obligation to honor transfers of any of the Shares or the
Conversion Shares in violation of such transfer restrictions, and (iii) the
Company shall be entitled to instruct any transfer agent or agents for the
securities of the Company to refuse to honor such transfers.

(j) Principal
Address. The
Investor’s principal residence, if an individual, or principal executive office,
if an entity, is set forth on the signature page of this Subscription
Agreement.

5. Independent
Nature of Investor’s Obligations and Rights. The
obligations of the Investor under this Agreement, the Registration Rights
Agreement, and any other documents delivered in connection herewith and
therewith (collectively, the “Transaction Documents”) are several and not joint
with the obligations of any other purchaser of Shares, and the Investor shall
not be responsible in any way for the performance of the obligations of any
other purchaser of Shares under any Transaction Document. The decision of the
Investor to purchase Shares pursuant to the Transaction Documents has been made
by the Investor independently of any other purchaser of Shares. Nothing
contained herein or in any Transaction Document, and no action taken by any
purchaser of Shares pursuant thereto, shall be deemed to constitute such
purchasers as a partnership, an association, a joint venture, or any other kind
of entity, or create a presumption that the purchasers of Shares are in any way
acting in concert or as a group with respect to such obligations or the
transactions contemplated by the Transaction Document. The Investor acknowledges
that no other purchaser of Shares has acted as agent for the Investor in
connection with making its investment hereunder and that no other purchaser of
Shares will be acting as agent of the Investor in connection with monitoring its
investment in the Shares or enforcing its rights under the Transaction
Documents. The Investor shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement or out of the other Transaction Documents, and it shall not be
necessary for any other purchaser of Shares to be joined as an additional party
in any proceeding for such purpose.

6. Prospectus
Delivery Requirement. The
Investor hereby covenants with the Company not to make any sale of the Shares or
the Conversion Shares without complying with the provisions hereof and of the
Registration Rights Agreement, and without effectively causing the prospectus
delivery requirement under the Securities Act to be satisfied (unless the
Investor is selling such Shares or the Conversion Shares in a transaction not
subject to the prospectus delivery requirement). 

7. Shareholder
Approval. The
Company represents and warrants to the Investor that the vote of the Company’s
Stockholders will not be required to approve the issuance of the Shares or the
Conversion Shares.

8

8. Indemnification
of Investor. In
addition to the indemnity provided in the Registration Rights Agreement, the
Company will indemnify and hold the Investor and its directors, officers,
shareholders, members, managers, partners, employees and agents (each, an
“Investor Party”) harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs, and reasonable attorneys’ fees and
costs of investigation (collectively, “Losses”) that any such Investor Party may
suffer or incur as a result of or relating to any misrepresentation, breach, or
inaccuracy of any representation, warranty, covenant, or agreement made by the
Company in any Transaction Document. In addition to the indemnity contained
herein, the Company will reimburse each Investor Party for its reasonable legal
and other expenses (including the cost of any investigation, preparation, and
travel in connection therewith) incurred in connection therewith, as such
expenses are incurred.

9. Non-Public
Information.
Subsequent to the Closing, the Company covenants and agrees that neither it nor
any other person acting on its behalf will provide Investor or its agents or
counsel with any information that the Company believes constitutes material
non-public information, unless prior thereto Investor shall have executed a
written agreement regarding the confidentiality and use of such information. The
Company understands and confirms that Investor shall be relying on the foregoing
representations in effecting transactions in securities of the
Company.

10. Further
Assurances. The
parties hereto will, upon reasonable request, execute and deliver all such
further assignments, endorsements and other documents as may be necessary in
order to perfect the purchase by the Investor of the Shares.

11. Entire
Agreement; No Oral Modification. This
Agreement contains the entire agreement among the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
with respect thereto and may not be amended or modified except in a writing
signed by both of the parties hereto.

12. Binding
Effect; Benefits. This
Agreement shall inure to the benefit of and be binding upon the parties hereto
and their respective heirs, successors and assigns; however, nothing in this
Agreement, expressed or implied, is intended to confer on any other person other
than the parties hereto, or their respective heirs, successors or assigns, any
rights, remedies, obligations or liabilities under or by reason of this
Agreement.

13. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which together shall be deemed to be one and
the same instrument.

14. Governing
Law. This
Agreement shall be governed by, and construed and enforced in accordance with,
the laws of the United States of America and the State of Delaware, both
substantive and remedial. Any
judicial proceeding brought against either of the parties to this agreement or
any dispute arising out of this Agreement or any matter related hereto shall be
brought in the courts of the State of New York, New York County, or in the
United States District Court for the Southern District of New York and, by its
execution and delivery of this agreement, each party to this Agreement accepts
the jurisdiction of such courts. 

15. Prevailing
Parties. In any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the prevailing
party shall be entitled to receive and the nonprevailing party shall pay upon
demand reasonable attorneys’ fees in addition to any other remedy.

9

16. Notices. All
communication hereunder shall be in writing and, if sent to you shall be mailed,
delivered, telegraphed or sent by facsimile or electronic mail, and confirmed to
an Investor at the address set forth on the signature page of this Agreement, or
if sent to the Company, shall be mailed, delivered, telegraphed or sent by
facsimile or electronic mail and confirmed to the Company at 600 Lexington
Avenue, 3rd Floor, New York, NY 10022; Attention: Edwin McGuinn, Chief Executive
Officer, telephone number (212) 836-4195 and facsimile number (212) 754-1048,
with a copy to McGuireWoods LLP as 1345 Avenue of the Americas, New York, NY
10105, Attention: Louis W. Zehil, telephone number (212) 548-2138 and facsimile
number (212) 548-2175.

17. Headings. The
section headings herein are included for convenience only and are not to be
deemed a part of this Agreement.

[Signature
on following page]

 

 

 

10

IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
first written above.

MRU
HOLDINGS, INC., a Delaware corporation

By:
      

Name:
Edwin McGuinn

Its:
Chief Executive Officer 

INVESTOR

 

____________________________________

By:
      

____________________________________

Print
Name and Title

____________________________________

____________________________________

____________________________________

Principal
Residence or Executive Office

___________________________________________

IRS Tax
Identification No.

____________________________________

Telephone
Number

____________________________________

Fax
Number

____________________________________

E-mail
Address

________________      X         
$3.50       =     ________________

Number of
Shares            Price per
Share           Purchase
Price

 

11REGISTRATION RIGHTS
AGREEMENT

This
Registration Rights Agreement (the “Agreement”) is
made and entered into as of the 4th day of February, 2005 (the “Effective
Date”)
between MRU Holdings, Inc., a Delaware corporation (the “Company”), and
the parties set forth on the signature page and Exhibit A hereto (each, a
“Purchaser” and
collectively, the “Purchasers”).

R 
E C I T A L S:

A. The
Purchasers have purchased shares of the Company’s Preferred Stock (as defined
below) pursuant to Subscription Agreements (each, a “Subscription
Agreement” and
collectively, the “Subscription
Agreements”) by and
between the Company and each Purchaser.

B. The
Company issued warrants (the “Warrants”) to
purchase shares of the Company’s Common Stock to Sanders Morris Harris Inc., a
Texas corporation (“SMH”) and
Brean Murray & Co., Inc., a Delaware corporation (“BMUR”) (each
of SMH and BMUR are individually referred to as a “Placement Agent” and
collectively the “Placement Agents”).

C. The
Company, the Purchasers, and the Placement Agents desire to set forth the
registration rights to be granted by the Company to the Purchasers and the
Placement Agents.

Now,
Therefore, in
consideration of the mutual promises, representations, warranties, covenants,
and conditions set forth herein and in the Subscription Agreements, the parties
mutually agree as follows: 

A
G R E E M E N T:

1. Certain
Definitions. As used
in this Agreement, the following terms shall have the following respective
meanings:

“Approved
Market” means
the NASD OTC Bulletin Board, Nasdaq National Market, the Nasdaq SmallCap Market,
the New York Stock Exchange, Inc., or the American Stock Exchange,
Inc.

“Blackout
Period” means,
with respect to a registration, a period in each case commencing on the day
immediately after the Company notifies the Purchasers and the Placement Agents
that they are required, pursuant to Section 4(f), to suspend offers and sales of
Registrable Securities during which the Company, in the good faith judgment of
its Board of Directors, determines (because of the existence of, or in
anticipation of, any acquisition, financing activity, or other transaction
involving the Company, or the unavailability for reasons beyond the Company’s
control of any required financial statements, disclosure of information which is
in its best interest not to publicly disclose, or any other event or condition
of similar significance to the Company) that the registration and distribution
of the Registrable Securities to be covered by such registration statement, if
any, would be seriously detrimental to the Company and its stockholders and
ending on the earlier of (1) the date upon which the material non-public
information commencing the Blackout Period is disclosed to the public or ceases
to be material and (2) such time as the Company notifies the selling Holders
that the Company will no longer delay such filing of the Registration Statement,
recommence taking steps to make such Registration Statement effective, or allow
sales pursuant to such Registration Statement to resume; provided,
however, that (a)
the Company shall limit its use of Blackout Periods, in the aggregate, to 30
Trading Days in any 12-month period and (b) no Blackout Period may commence
sooner than 60 days after the end of a prior Blackout Period.

“Business
Day” means
any day of the year, other than a Saturday, Sunday, or other day on which the
Commission is required or authorized to close.

“Closing
Date” means
December 17, 2004, or such other time as is mutually agreed between the Company
and the Purchasers for the closing of the sale referred to in Recital A
above.

“Commission” means
the Securities and Exchange Commission or any other federal agency at the time
administering the Securities Act.

“Common
Stock” means
the common stock, par value $.001 per share, of the Company and any and all
shares of capital stock or other equity securities of: (i) the Company which are
added to or exchanged or substituted for the Common Stock by reason of the
declaration of any stock dividend or stock split, the issuance of any
distribution or the reclassification, readjustment, recapitalization or other
such modification of the capital structure of the Company; and (ii) any other
corporation, now or hereafter organized under the laws of any state or other
governmental authority, with which the Company is merged, which results from any
consolidation or reorganization to which the Company is a party, or to which is
sold all or substantially all of the shares or assets of the Company, if
immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities having in the
aggregate more than 50% of the total voting power of such other
corporation.

“Exchange
Act” means
the Securities Exchange Act of 1934, as amended, and the rules and regulations
of the Commission promulgated thereunder.

“Family
Member” means
(a) with respect to any individual, such individual’s spouse, any descendants
(whether natural or adopted), any trust all of the beneficial interests of which
are owned by any of such individuals or by any of such individuals together with
any organization described in Section 501(c)(3) of the Internal Revenue Code of
1986, as amended, the estate of any such individual, and any corporation,
association, partnership or limited liability company all of the equity
interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial
interests of such trust.

“Holder” means
each Purchaser, the Placement Agents, or any of such Purchaser’s respective
successors and Permitted Assigns who acquire rights in accordance with this
Agreement with respect to the Registrable Securities directly or indirectly from
a Purchaser or the Placement Agents, including from any Permitted
Assignee.

“Inspector” means
any attorney, accountant, or other agent retained by a Purchaser for the
purposes provided in Section 4(j).

“Majority
Holders” means
at any time Holders of a majority of the Registrable Securities.

“Offering
Price” means
the Offering Price set forth in the Placement Agent Agreement dated November
[__], 2004, between the Company and the Placement Agents.

2

“Permitted
Assignee” means
(a) with respect to a partnership, its partners or former partners in
accordance with their partnership interests, (b) with respect to a
corporation, its stockholders in accordance with their interest in the
corporation, (c) with respect to a limited liability company, its members
or former members in accordance with their interest in the limited liability
company, (d) with respect to an individual party, any Family Member of such
party, (e) an entity that is controlled by, controls, or is under common control
with a transferor, or (f) a party to this Agreement.

“Preferred
Stock” means
the Series A Convertible Preferred Stock, par value $.001 per share, of the
Company.

The terms
“register,”
“registered,” and
“registration” refers
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.

“Registrable
Securities” means
shares of Common Stock issued or issuable to each Purchaser upon conversion of
the Preferred Stock issued to each pursuant to the Subscription Agreements or
issued or to be issued to the Placement Agents pursuant to the Warrant including
shares of Common Stock into which shares of Preferred Stock issued or issuable
in payment of dividends on such Preferred Stock are convertible, excluding (i) any
Registrable Securities that have been publicly sold or may be sold immediately
without registration under the Securities Act either pursuant to Rule 144 of the
Securities Act or otherwise; (ii) any Registrable Securities sold by a person in
a transaction pursuant to a registration statement filed under the Securities
Act or (iii) any Registrable Securities that are at the time subject to an
effective registration statement under the Securities Act. 

“Registration
Default Date” means
the date which is 120 days following the Closing Date; provided,
however, if the
Registration Statement is subject to review by the SEC staff, the Registration
Default Date shall be the date which is 150 days following the Closing Date.

“Registration
Default Period” means
the period following the Registration Default Date during which any Registration
Event occurs and is continuing.

“Registration
Event” means
the occurrence of any of the following events:

(a) the
Company fails to file with the SEC the Registration Statement on or before the
Registration Filing Date pursuant to Section 3(a),

(b) the
Registration Statement covering Registrable Securities is not declared effective
by the Commission on or before the Registration Default Date,

(c) after the
SEC Effective Date, sales cannot be made pursuant to the Registration Statement
for any reason (including without limitation by reason of a stop order, or the
Company’s failure to update the Registration Statement) but except as excused
pursuant to Section 3(a) or for the reasons specified in clause (d),
or

(d) the
Common Stock generally or the Registrable Securities specifically are not listed
or included for quotation on an Approved Market, or trading of the Common Stock
is suspended or halted on the Approved Market, which at the time constitutes the
principal market for the Common Stock, for more than two full, consecutive
Trading Days; provided,
however, a
Registration Event shall not be deemed to occur if all or substantially all
trading in equity securities (including the Common Stock) is suspended or halted
on the Approved Market for any length of time.

3

“Registration
Statement” means
the registration statement required to be filed by the Company pursuant to
Section 3(a).

“Securities
Act” means
the Securities Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the
time.

“SEC
Effective Date” means
the date the Registration Statement is declared effective by the
Commission.

“Trading
Day” means a
day on whichever (a) the national securities exchange, (b) the Nasdaq Stock
Market, or (c) such other securities market, in any such case which at the time
constitutes the principal securities market for the Common Stock, is open for
general trading of securities.

2. Term. This
Agreement shall continue in full force and effect for a period of three (3)
years from the Effective Date, unless terminated sooner hereunder.

3. Registration.

(a) Registration
on Form SB-2. As
promptly as reasonably practicable after the date hereof, but in any event not
later than 45 days after the Closing Date (the “Registration
Filing Date”), the
Company shall file with the Commission a shelf registration statement on Form
SB-2 relating to the resale by the Holders of all of the Registrable Securities,
and the Company shall use its commercially reasonable best efforts to cause such
registration statement to be declared effective within 90 days after the Closing
Date; provided,
however, that
the Company shall not be obligated to effect any such registration,
qualification, or compliance pursuant to this Section 3(a), or keep such
registration effective pursuant to Section 4: (i) in any particular jurisdiction
in which the Company would be required to qualify to do business as a foreign
corporation or as a dealer in securities under the securities or blue sky laws
of such jurisdiction or to execute a general consent to service of process in
effecting such registration, qualification or compliance, in each case where it
has not already done so; or (ii) during any Blackout Period, in which case the
Registration Filing Date shall be extended to the date immediately following the
last day of such Blackout Period. 

(b) Piggyback
Registration. If the
Company shall determine to register for sale for cash any of its Common Stock,
for its own account or for the account of others (other than the Holders), other
than (i) a registration relating solely to employee benefit plans or securities
issued or issuable to employees, consultants (to the extent the securities owned
or to be owned by such consultants could be registered on Form S-8) or any of
their Family Members (including a registration on Form S-8) or (ii) a
registration relating solely to a Commission Rule 145 transaction, a
registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, or similar event, the Company shall promptly give to the Holders
written notice thereof (and in no event shall such notice be given less than 20
calendar days prior to the filing of such registration statement), and shall,
subject to Section 3(c), include in such registration (and any related
qualification under blue sky laws or other compliance) (a “Piggyback
Registration”), all
of the Registrable Securities specified in a written request or requests, made
within 10 calendar days after receipt of such written notice from the Company,
by any Holder or Holders. However, the Company may, without the consent of the
Holders, withdraw such registration statement prior to its becoming effective if
the Company or such other stockholders have elected to abandon the proposal to
register the securities proposed to be registered thereby. 

 

4

(c) Underwriting. If a
Piggyback Registration is for a registered public offering involving an
underwriting, the Company shall so advise the Holders in writing or as a part of
the written notice given pursuant to Section 3(b). In such event the right of
any Holder to registration pursuant to Section 3(b) shall be conditioned upon
such Holder’s participation in such underwriting and the inclusion of such
Holder’s Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any other stockholders of the
Company distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company or selling stockholders, as
applicable. Notwithstanding any other provision of this Section 3(c), if the
underwriter or the Company determines that marketing factors require a
limitation of the number of shares to be underwritten, the underwriter may
exclude some or all Registrable Securities from such registration and
underwriting. The Company shall so advise all Holders (except those Holders who
failed to timely elect to distribute their Registrable Securities through such
underwriting or have indicated to the Company their decision not to do so), and
the number of shares of Registrable Securities that may be included in the
registration and underwriting, if any, shall be allocated among such Holders as
follows: 

(i) In the
event of a Piggyback Registration that is initiated by the Company, the number
of shares that may be included in the registration and underwriting shall be
allocated first to the Company and then, subject to obligations and commitments
existing as of the date hereof, to all selling stockholders, including the
Holders, who have requested to sell in the registration on a pro rata basis
according to the number of shares requested to be included; and

(ii) In the
event of a Piggyback Registration that is initiated by the exercise of demand
registration rights by a shareholder or stockholders of the Company (other than
the Holders), then the number of shares that may be included in the registration
and underwriting shall be allocated first to such selling stockholders who
exercised such demand and then, subject to obligations and commitments existing
as of the date hereof, to all other selling stockholders, including the Holders,
who have requested to sell in the registration, on a pro rata basis according to
the number of shares requested to be included.

No
Registrable Securities excluded from the underwriting by reason of the
underwriter’s marketing limitation shall be included in such registration. If
any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration;
provided,
however, that,
if by the withdrawal of such Registrable Securities a greater number of
Registrable Securities held by other Holders may be included in such
registration (up to the maximum of any limitation imposed by the underwriters),
then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable
Securities pursuant to the terms and limitations set forth herein in the same
proportion used above in determining the underwriter limitation. 

(d) Other
Registrations. Prior
to the SEC Effective Date the Company will not, without the prior written
consent of the Majority Holders, file or request the acceleration of any other
registration statement filed with the Commission, and during any time subsequent
to the SEC Effective Date when the Registration Statement for any reason is not
available for use by any Holder for the resale of any Registrable Securities,
the Company shall not, without the prior written consent of the Majority
Holders, file any other registration statement or any amendment thereto with the
Commission under the Securities Act or request the acceleration of the
effectiveness of any other registration statement previously filed with the
Commission, other than (A) any registration statement on Form S-8 or Form S-4
and (B) any registration statement or amendment which the Company is required to
file or as to which the Company is required to request acceleration pursuant to
any obligation in effect on the date of execution and delivery of this
Agreement.

5

(e) Failure
to File Registration Statement. If a
Registration Event occurs, then the Company will make payments to each Purchaser
(a “Qualified Purchaser”), as partial liquidated damages for the minimum amount
of damages to the Qualified Purchaser by reason thereof, and not as a penalty,
at a rate equal to one percent (1%) of the Offering Price per share of Preferred
Stock held by such Qualified Purchaser per month, for each calendar month of the
Registration Default Period (pro rated for any period less than 30 days);
provided, however, if a Registration Event occurs (or is continuing) on a date
more than one-year after the Qualified Purchaser acquired the Registrable
Securities (and thus the one-year holding period under Rule 144(d) has elapsed),
liquidated damages shall be paid only with respect to that portion of a
Qualified Purchaser’s Registrable Securities that cannot then be immediately
resold in reliance on Rule 144. Each such payment shall be due and payable
within five days after the end of each calendar month of the Registration
Default Period until the termination of the Registration Default Period and
within five days after such termination. Such payments shall be in partial
compensation to the Qualified Purchaser, and shall not constitute the Qualified
Purchaser’s exclusive remedy for such events. The Registration Default Period
shall terminate upon (i) the filing of the Registration Statement in the case of
clause (a) of the definition of “Registration Event,” (ii) the SEC Effective
Date in the case of clause (b) of the definition of “Registration Event,” (iii)
the ability of the Qualified Purchaser to effect sales pursuant to the
Registration Statement in the case of clause (c) of the definition of
“Registration Event,” (iv) the listing or inclusion and/or trading of the Common
Stock on an Approved Market, as the case may be, in the case of clause (d) of
the definition of “Registration Event,” and (v) in the case of the events
described in clauses (b) and (c) of the definition of “Registration Event,” the
earlier termination of the Registration Default Period. The amounts payable as
partial liquidated damages pursuant to this paragraph shall be payable in lawful
money of the United States. Amounts payable as partial liquidated damages to
each Qualified Purchaser hereunder with respect to each share of Registrable
Securities shall cease when the Qualified Purchaser no longer holds such share
of Registrable Securities or such share of Registrable Securities can be
immediately sold by the Qualified Purchaser in reliance on Rule 144.

4. Registration
Procedures. In the
case of each registration, qualification, or compliance effected by the Company
pursuant to Section 3 hereof, the Company will keep each Holder reasonably
advised in writing (which may include e-mail) as to the initiation of each
registration, qualification, and compliance and as to the completion thereof. At
its expense with respect to any registration statement filed pursuant to Section
3, the Company will:

(a) prepare
and file with the Commission with respect to such Registrable Securities, a
registration statement on Form SB-2 or any other form for which the Company then
qualifies or which counsel for the Company shall deem appropriate, and which
form shall be available for the sale of the Registrable Securities in accordance
with the intended method(s) of distribution thereof, and use its commercially
reasonable efforts to cause such registration statement to become and remain
effective at least for a period ending with the first to occur of (i) the sale
of all Registrable Securities covered by the registration statement, and (ii)
the availability under Rule 144 for the Holder to immediately, freely resell
without restriction all Registrable Securities covered by the registration
statement, (in either case, the
“Effectiveness Period”);

6

(b) if a
registration statement is subject to review by the Commission, promptly respond
to all comments and diligently pursue resolution of any comments to the
satisfaction of the Commission;

(c) prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective during the Effectiveness
Period;

(d) furnish,
without charge, to each Holder of Registrable Securities covered by such
registration statement (i) a reasonable number of copies of such registration
statement (including any exhibits thereto other than exhibits incorporated by
reference), each amendment and supplement thereto as such Holder may reasonably
request, (ii) such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any other
prospectus filed under Rule 424 under the Securities Act) as such Holders may
reasonably request, in conformity with the requirements of the Securities Act,
and (iii) such other documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Holder,
but only during the Effectiveness Period;

(e) use its
commercially reasonable best efforts to register or qualify such Registrable
Securities under such other applicable securities or blue sky laws of such
jurisdictions as any Holder of Registrable Securities covered by such
registration statement reasonably requests as may be necessary for the
marketability of the Registrable Securities (such request to be made by the time
the applicable registration statement is deemed effective by the Commission) and
do any and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Holder; provided that the
Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify but for this
paragraph (e), (ii) subject itself to taxation in any such jurisdiction, or
(iii) consent to general service of process in any such
jurisdiction;

(f) as
promptly as practicable after becoming aware of such event, notify each Holder
of such Registrable Securities at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
which comes to the Company’s attention if as a result of such event the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and the
Company shall promptly prepare and furnish to such Holder a supplement or
amendment to such prospectus (or prepare and file appropriate reports under the
Exchange Act) so that, as thereafter delivered to the purchasers of such
Registrable Securities, such prospectus shall not contain an 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 not misleading, unless suspension of
the use of such prospectus otherwise is authorized herein or in the event of an
Blackout Period, in which case no supplement or amendment need be furnished (or
Exchange Act filing made) until the termination of such suspension or Blackout
Period; 

(g) comply,
and continue to comply during the period that such registration statement is
effective under the Securities Act, in all material respects with the Securities
Act and the Exchange Act and with all applicable rules and regulations of the
Commission with respect to the disposition of all securities covered by such
registration statement;

(h) as
promptly as practicable after becoming aware of such event, notify each Holder
of Registrable Securities being offered or sold pursuant to the Registration
Statement of the issuance by the Commission of any stop order or other
suspension of effectiveness of the Registration Statement at the earliest
possible time;

7

(i) use its
best efforts to cause all the Registrable Securities covered by the Registration
Statement to be quoted on the NASD OTC Bulletin Board or such other principal
securities market on which securities of the same class or series issued by the
Company are then listed or traded; 

(j) provide a
transfer agent and registrar, which may be a single entity, for the Registrable
Securities at all times;

(k) cooperate
with the Holders of Registrable Securities being offered pursuant to the
Registration Statement to issue and deliver certificates (not bearing any
restrictive legends) representing Registrable Securities to be offered pursuant
to the Registration Statement within five Trading Days after delivery of
certificates to the Company and enable such certificates to be in such
denominations or amounts as the Holders may reasonably request and registered in
such names as the Holders may request;

(l) during
the Effectiveness Period, refrain from bidding for or purchasing any Common
Stock or any right to purchase Common Stock or attempting to induce any Person
to purchase any such security or right if such bid, purchase or attempt would in
any way limit the right of the Holders to sell Registrable Securities by reason
of the limitations set forth in Regulation M under the 1934 Act;
and

(m) take all
other reasonable actions necessary to expedite and facilitate disposition by the
Holders of the Registrable Securities pursuant to the Registration
Statement.

5. Suspension
of Offers and Sales. Each
Holder of Registrable Securities agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 4(f)
hereof or of the commencement of an Blackout Period, such Holder shall
discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder’s receipt of
the copies of the supplemented or amended prospectus contemplated by Section
4(f) hereof or notice of the end of the Blackout Period, and, if so directed by
the Company, such Holder shall deliver to the Company (at the Company’s expense)
all copies (including, without limitation, any and all drafts), other than
permanent file copies, then in such Holder’s possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period
mentioned in Section 4(a)(iii) hereof shall be extended by the greater of (i)
ten business days or (ii) the number of days during the period from and
including the date of the giving of such notice pursuant to Section 4(f) hereof
to and including the date when each Holder of Registrable Securities covered by
such registration statement shall have received the copies of the supplemented
or amended prospectus contemplated by Section 4(f) hereof.

6. Registration
Expenses. The
Company shall pay all expenses in connection with any registration, including,
without limitation, all registration, filing, stock exchange fees, printing
expenses, all fees and expenses of complying with securities or blue sky laws,
and the fees and disbursements of counsel for the Company and of its independent
accountants; provided that, in any underwritten registration, each party shall
pay for its own underwriting discounts and commissions and transfer taxes.
Except as provided above in this Section 6 and Section 9, the Company shall not
be responsible for the expenses of any attorney or other advisor employed by a
Holder of Registrable Securities.

8

7. Assignment
of Rights. No
Holder may assign its rights under this Agreement to any party without the prior
written consent of the Company; provided,
however, that a
Holder may assign its rights under this Agreement without such restrictions to a
Permitted Assignee as long as (a) such transfer or assignment is effected in
accordance with applicable securities laws; (b) such transferee or assignee
agrees in writing to become subject to the terms of this Agreement; and (c) the
Company is given written notice by such Holder of such transfer or assignment,
stating the name and address of the transferee or assignee and identifying the
Registrable Securities with respect to which such rights are being transferred
or assigned.

8. Information
by Holder. The
Holder or Holders of Registrable Securities included in any registration shall
furnish to the Company such information regarding such Holder or Holders and the
distribution proposed by such Holder or Holders as the Company may request in
writing.

9

9. Indemnification.

(a) In the
event of the offer and sale of Registrable Securities held by Holders under the
Securities Act, the Company shall, and hereby does, indemnify and hold harmless,
to the fullest extent permitted by law, each Holder, its directors, officers,
partners, each other person who participates as an underwriter in the offering
or sale of such securities, and each other person, if any, who controls or is
under common control with such Holder or any such underwriter within the meaning
of Section 15 of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, and expenses to which the Holder or any such
director, officer, partner or underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages, liabilities or expenses (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
registration statement under which such shares were registered under the
Securities Act, any preliminary prospectus, final prospectus or summary
prospectus contained therein, or any amendment or supplement thereto, or any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein in light of the
circumstances in which they were made not misleading, and the Company shall
reimburse the Holder, and each such director, officer, partner, underwriter and
controlling person for any legal or any other expenses reasonably incurred by
them in connection with investigating, defending or settling any such loss,
claim, damage, liability, action or proceeding; provided that the Company shall
not be liable in any such case (i) to the extent that any such loss, claim,
damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon an untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any such
preliminary prospectus, final prospectus, summary prospectus, amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company through an instrument duly executed by or on behalf of such
Holder specifically stating that it is for use in the preparation thereof or
(ii) if the person asserting any such loss, claim, damage, liability (or action
or proceeding in respect thereof) who purchased the Registrable Securities that
are the subject thereof did not receive a copy of an amended preliminary
prospectus or the final prospectus (or the final prospectus as amended or
supplemented) at or prior to the written confirmation of the sale of such
Registrable Securities to such person because of the failure of such Holder or
underwriter to so provide such amended preliminary or final prospectus and the
untrue statement or alleged untrue statement or omission or alleged omission of
a material fact made in such preliminary prospectus was corrected in the amended
preliminary or final prospectus (or the final prospectus as amended or
supplemented). Such indemnity shall remain in full force and effect regardless
of any investigation made by or on behalf of the Holders, or any such director,
officer, partner, underwriter or controlling person and shall survive the
transfer of such shares by the Holder.

(b) As a
condition to including any Registrable Securities to be offered by a Holder in
any registration statement filed pursuant to this Agreement, each such Holder
agrees to be bound by the terms of this Section 9 and to indemnify and hold
harmless, to the fullest extent permitted by law, the Company, its directors and
officers, and each other person, if any, who controls the Company within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities, joint or several, to which the Company or any such director or
officer or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened, in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information about such Holder as a Holder of the Company furnished to
the Company, and such Holder shall reimburse the Company, and each such
director, officer, and controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating, defending, or
settling and such loss, claim, damage, liability, action, or proceeding;
provided,
however, that
such indemnity agreement found in this Section 9(b) shall in no event exceed the
gross proceeds from the offering received by such Holder. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or on
behalf of the Company or any such director, officer or controlling person and
shall survive the transfer by any Holder of such shares.

10

(c) Promptly
after receipt by an indemnified party of notice of the commencement of any
action or proceeding involving a claim referred to in Section 9(a) or (b) hereof
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the indemnifying party of the commencement of such action; provided that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under Section 9(a) or (b)
hereof, except to the extent that the indemnifying party is actually prejudiced
by such failure to give notice. In case any such action is brought against an
indemnified party, unless in the reasonable judgment of counsel to such
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not
available to the indemnifying party in respect of such claim, the indemnifying
party shall be entitled to participate in and to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party and, after notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the
latter in connection with the defense thereof, unless in such indemnified
party’s reasonable judgment a conflict of interest between such indemnified and
indemnifying parties arises in respect of such claim after the assumption of the
defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation. Neither an
indemnified nor an indemnifying party shall be liable for any settlement of any
action or proceeding effected without its consent. No indemnifying party shall,
without the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation.
Notwithstanding anything to the contrary set forth herein, and without limiting
any of the rights set forth above, in any event any party shall have the right
to retain, at its own expense, counsel with respect to the defense of a
claim.

(d) In the
event that an indemnifying party does or is not permitted to assume the defense
of an action pursuant to Section 9(c) or in the case of the expense
reimbursement obligation set forth in Section 9(a) and (b), the indemnification
required by Section 9(a) and (b) hereof shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills received or expenses, losses, damages, or liabilities are
incurred.

(e) If the
indemnification provided for in this Section 9 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss,
liability, claim, damage or expense referred to herein, the indemnifying party,
in lieu of indemnifying such indemnified party hereunder, shall (i) contribute
to the amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage or expense as is appropriate to reflect the
proportionate relative fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or omission
relates to information supplied by the indemnifying party or the indemnified
party and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law
or provides a lesser sum to the indemnified party than the amount hereinafter
calculated, not only the proportionate relative fault of the indemnifying party
and the indemnified party, but also the relative benefits received by the
indemnifying party on the one hand and the indemnified party on the other, as
well as any other relevant equitable considerations. No indemnified party guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party
who was not guilty of such fraudulent misrepresentation.

11

(f) Other
Indemnification.
Indemnification similar to that specified in the preceding subsections of this
Section 9 (with appropriate modifications) shall be given by the Company and
each Holder of Registrable Securities with respect to any required registration
or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act.

10. Rule
144.
For a
period of at least 24 months following the Closing Date, the
Company will use its commercially reasonable best efforts (a) to timely file all
reports required to be filed by the Company after the date hereof under the
Securities Act and the Exchange Act (including the reports pursuant to Section
13(a) or 15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule
144) and the rules and regulations adopted by the Commission thereunder), (b) if
the Company is not required to file reports pursuant to such sections, it will
prepare and furnish to the Purchasers and make publicly available in accordance
with Rule 144(c) such information as is required for the Purchasers to sell
shares of Common Stock under Rule 144, and (c) to take such further action as
any holder of shares of Common Stock may reasonably request, all to the extent
required from time to time to enable the Purchasers to sell shares of Common
Stock without registration under the Securities Act within the limitation of the
exemptions provided by Rule 144, including causing its attorneys to issue and
deliver any appropriate legal opinion required to permit a Purchaser to sell
shares of Common Stock under Rule 144 upon receipt of appropriate documentation
relating to such sale.

11. Independent
Nature of Each Purchaser’s Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and each Purchaser shall not be
responsible in any way for the performance of the obligations of any other
Purchaser under this Agreement. The decision of each Purchaser to purchase
Preferred Stock and enter into this Agreement has been made by each Purchaser
independently of any other Purchaser. Nothing contained herein and no action
taken by any Purchaser pursuant hereto, shall be deemed to constitute such
Purchasers as a partnership, an association, a joint venture, or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert or as a group with respect to such obligations or the transactions
contemplated by this Agreement. Each Purchaser acknowledges that no other
Purchaser has acted as agent for the Purchaser in connection with making its
investment in Preferred Stock and that no other Purchaser will be acting as
agent of the Purchaser in connection with monitoring its investment in the
Preferred Stock or enforcing its rights under this Agreement. Each Purchaser
shall be entitled to independently protect and enforce its rights, including
without limitation the rights arising out of this Agreement, and it shall not be
necessary for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.

12. Miscellaneous

(a) Governing
Law. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Delaware and the United States of America, both substantive and
remedial. Any
judicial proceeding brought against either of the parties to this agreement or
any dispute arising out of this Agreement or any matter related hereto shall be
brought in the courts of the State of New York, New York County, or in the
United States District Court for the Southern District of New York and, by its
execution and delivery of this agreement, each party to this Agreement accepts
the jurisdiction of such courts. The foregoing consent to jurisdiction shall not
be deemed to confer rights on any person other than the parties to this
Agreement.

12

(b) Successors
and Assigns. Except
as otherwise provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, Permitted Assigns, executors and
administrators of the parties hereto. In the event the Company merges with, or
is otherwise acquired by, a direct or indirect subsidiary of a publicly traded
company, the Company shall condition the merger or acquisition on the assumption
by such parent company of the Company’s obligations under this Agreement.

(c) Entire
Agreement. This
Agreement constitutes the full and entire understanding and agreement between
the parties with regard to the subjects hereof.

(d) Notices,
etc.
All
notices or other communications which are required or permitted under this
Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic
mail, or by courier or overnight carrier, to the persons at the addresses set
forth below (or at such other address as may be provided hereunder), and shall
be deemed to have been delivered as of the date so delivered: 

	
      If
      to the Company:
	
      MRU
      Holdings, Inc.

	 	
      600
      Lexington Avenue, 3rd Floor

	 	
      New
      York, NY 10022

	 	
      Attention:
      Chief Executive Officer

	 	
      Facsimile:
      (212) 836-4195

	 	
      e-mail:
      emcguinn@myrichuncle.com

	 	 
	
      with
      a copy to:
	
      McGuireWoods
      LLP

	 	
      1345
      Avenue of the Americas

	 	
      New
      York, New York 10015

	 	
      Attention:
      Louis W. Zehil, Esq.

	 	
      Facsimile:
      (212) 548-2175

	 	
      Email:
      lzehil@mcguirewoods.com

	 	 
	
      If
      to the Purchasers:
	
      To
      each Purchaser at the address

	 	
      set
      forth on Exhibit A

	 	 
	
      with
      a copy to:
	
      Sanders
      Morris Harris Inc.

	 	
      333
      S. Hope St., 26th Floor

	 	
      Los
      Angeles, CA 90071

	 	
      Attention:
      Gregg Mockenhaupt, Managing Director

	 	
      Facsimile:
      ( 213) 253-2244 

	 	
      e-mail:
      gregg.mockenhaupt@smhgroup.com

or at
such other address as any party shall have furnished to the other parties in
writing.

13

(e) Delays
or Omissions. No
delay or omission to exercise any right, power or remedy accruing to any Holder
of any Registrable Securities, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such Holder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereunder
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
Holder of any breach or default under this Agreement, or any waiver on the part
of any Holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.

(f) Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.

(g) Severability. In the
case any provision of this Agreement shall be invalid, illegal or unenforceable,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.

(h) Amendments. The
provisions of this Agreement may be amended at any time and from time to time,
and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the holders of an
80% majority of the number of shares of Registrable Securities outstanding as of
the date of such amendment or waiver. The Purchasers acknowledge that by the
operation of this Section 12(h), the holders of an 80% majority of the
outstanding Registrable Securities may have the right and power to diminish or
eliminate all rights of the Purchasers under this Agreement.

 

(i) Limitation
on Subsequent Registration Rights. After
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company that would grant such holder registration rights
senior to those granted to the Holders hereunder.

 

[Signatures
on following page]

 

14

 

This
Registration Rights Agreement is hereby executed as of the date first above
written.

        

    

	COMPANY:
	 
	MRU Holdings,
      Inc.
	 
	 
	By:________________________________
	Name:______________________________
	Its:________________________________
	 
	PURCHASER:
	 
	 
	 
	 
	
      (Print
      Name)

	 
	 
	
      By:
	 
	 
	
      Name:
	 
	 
	
      Its:
	 
	 

15

Exhibit
A

Purchaser
Information

	
      Name
	
      Address
	
      Number
      of Shares

	 	 	 
	 	 	 
	 	 	 

 

 

 

 

 

 

16

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