Document:

REGISTRATION RIGHTS
AGREEMENT

       

      REGISTRATION RIGHTS AGREEMENT
(this “Agreement”), dated as
of July 16, 2010, by and between MEGOLA, INC. a Nevada
corporation (the “Company”), and TANGIERS INVESTORS, LP, a
Delaware limited partnership (the “Investor”).

       

      WHEREAS:

       

      A.    In connection
with the Securities Purchase Agreement by and between the parties hereto of even
date herewith (the “Securities Purchase
Agreement”), the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell to the
Investor that number of shares of the Company’s common stock, par value $0.001
per share (the “Common
Stock”), which can be purchased pursuant to the terms of the Securities
Purchase Agreement for an aggregate purchase price of up to Five
Million  Dollars ($5,000,000). Capitalized terms not defined
herein shall have the meaning ascribed to them in the Securities Purchase
Agreement.

       

      B.    To induce the
Investor to execute and deliver the Securities Purchase Agreement, the Company
has agreed to provide certain registration rights under the Securities Act of
1933, as amended, and the rules and regulations thereunder, or any similar
successor statute (collectively, the “Securities Act”), and
applicable state securities laws.

       

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

       

      1.    DEFINITIONS.

       

      As used
in this Agreement, the following terms shall have the following
meanings:

       

      a.    “Person” means a
corporation, a limited liability company, an association, a partnership, an
organization, a business, an individual, a governmental or political subdivision
thereof or a governmental agency.

       

      b.    “Register,” “registered,” and
“registration”
refer to a registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the Securities Act
and pursuant to Rule 415 under the Securities Act or any successor rule
providing for offering securities on a continuous or delayed basis (“Rule 415”), and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the United States Securities and Exchange Commission (the “SEC”).

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      c.    “Registrable
Securities” means the Investor’s Shares, as defined in the Securities
Purchase Agreement, and shares of Common Stock issuable to Investors pursuant to
the Securities Purchase Agreement.

      

      d.    “Registration
Statement” means a registration statement under the Securities Act, which
covers the Registrable Securities.

       

      2.    REGISTRATION.

       

      a.    Mandatory
Registration. The Company shall prepare and file with the SEC a
Registration Statement on Form S-1 or on such other form as is available. The
Company shall cause such Registration Statement to be declared effective by the
SEC prior to the first sale to the Investor of the Company’s Common Stock
pursuant to the Securities Purchase Agreement. The Company shall cause the
Registration Statement to remain effective until the full completion of the
Commitment Period (as such term is defined in the Securities Purchase
Agreement).

       

      b.    Sufficient Number of Shares
Registered. In the event the number of shares available under a
Registration Statement filed pursuant to Section 2(a) is insufficient to cover
all of the Registrable Securities pursuant to the Securities Purchase Agreement,
the Company shall amend the Registration Statement, or file a new Registration
Statement (on the short form available therefore, if applicable), or both, so as
to cover all of such Registrable Securities pursuant to the Securities Purchase
Agreement as soon as practicable, but in any event not later than fifteen (15)
days after the necessity therefore arises, subject to applicable laws or
regulations. The Company shall use its commercially reasonable best efforts to
cause such amendment and/or new Registration Statement to become effective as
soon as practicable following the filing thereof. For purposes of the foregoing
provision, the number of shares available under a Registration Statement shall
be deemed “insufficient to cover all of the Registrable Securities” if at any
time the number of Registrable Securities issuable on an Advance Notice Date is
greater than the number of shares available for resale under such Registration
Statement.

       

      3.    RELATED
OBLIGATIONS.

       

      a.    The Company
shall keep the Registration Statement effective pursuant to Rule 415 at all
times until the completion of the Commitment Period (as such term is defined in
the Securities Purchase Agreement) (the “Registration
Period”), which Registration Statement (including any amendments or
supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      b.    The Company
shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the Securities Act, as may
be necessary to keep such Registration Statement effective at all times during
the Registration Period, and, during such period, comply with the provisions of
the Securities Act with respect to the disposition of all Registrable Securities
of the Company covered by such Registration Statement until such time as all of
such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the Company’s filing a
report on Form 10-K, Form 10-Q or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), the
Company shall have incorporated such report by reference into the Registration
Statement, if applicable, or shall file such amendments or supplements with the
SEC on the same day on which the Exchange Act report is filed which created the
requirement for the Company to amend or supplement the Registration
Statement.

      

      c.    The Company
shall furnish to the Investor without charge, (i) at least one copy of such
Registration Statement as declared effective by the SEC and any amendment(s)
thereto, including financial statements and schedules, all documents
incorporated therein by reference, all exhibits and each preliminary prospectus,
(ii) ten (10) copies of the final prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Investor may reasonably request) and (iii) such other documents
as such Investor may reasonably request from time to time in order to facilitate
the disposition of the Registrable Securities owned by such
Investor.

       

      d.    The Company
shall use its commercially reasonable best efforts to (i) register and qualify
the Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of such jurisdictions in the United States as the
Investor reasonably requests, (ii) prepare and file in those jurisdictions,
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its certificate of incorporation or by-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify the Investor of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or “blue sky” laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threat of any proceeding
for such purpose.

       

      e.    As promptly
as practicable after becoming aware of such event or development, the Company
shall notify the Investor in writing of the happening of any event as a result
of which the prospectus included in a Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material, nonpublic
information), and promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
copies of such supplement or amendment to each Investor (which may be electronic
copies). The Company shall also promptly notify the Investor in writing (i) when
a prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment has
become effective (notification of such effectiveness shall be delivered to the
Investor by facsimile on the same day of such effectiveness), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company’s
reasonable determination that a post-effective amendment to a Registration
Statement would be appropriate.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      f.    The Company
shall use its commercially reasonable best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
or the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify the Investor of the
issuance of such order and the resolution thereof or its receipt of actual
notice of the initiation or threat of any proceeding for such
purpose.

       

      g.    At the
reasonable request of the Investor, the Company shall furnish to the Investor,
on the date of the effectiveness of the Registration Statement and thereafter
from time to time on such dates as the Investor may reasonably request (i) a
letter, dated such date, from the Company’s independent certified public
accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
Investor.

      

      h    The Company
shall hold in confidence and not make any disclosure of information concerning
the Investor provided to the Company unless (i) disclosure of such information
is necessary to comply with federal or state securities laws, (ii) the
disclosure of such information is necessary to avoid or correct a misstatement
or omission in any Registration Statement, (iii) the release of such information
is ordered pursuant to a subpoena or other final, non-appealable order from a
court or governmental body of competent jurisdiction, or (iv) such information
has been made generally available to the public other than by disclosure in
violation of this Agreement or any other agreement. The Company agrees that it
shall, upon learning that disclosure of such information concerning the Investor
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt written notice to the Investor and allow the
Investor, at the Investor’s expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such
information.

       

      i.    The Company
shall use its commercially reasonable best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or to secure the
inclusion for quotation on the National Association of Securities Dealers, Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).

       

      j.    The Company
shall cooperate with the Investor to the extent applicable, to facilitate the
timely preparation and delivery of certificates (not bearing any restrictive
legend) representing the Registrable Securities to be offered pursuant to a
Registration Statement and enable such certificates to be in such denominations
or amounts, as the case may be, as the Investor may reasonably request and
registered in such names as the Investor may request.

       

      k.    The Company
shall use its commercially reasonable best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable
Securities.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      l.    The Company
shall otherwise use its commercially reasonable best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.

       

      m.    Within two
(2) business days after a Registration Statement which covers Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall
cause legal counsel for the Company to deliver, to the transfer agent for such
Registrable Securities (with copies to the Investor) confirmation that such
Registration Statement has been declared effective by the SEC in the form
attached hereto as Exhibit
A.

       

      n.    The Company
shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of Registrable Securities pursuant to a Registration
Statement.

      

      4.    OBLIGATIONS OF THE
INVESTOR.

       

      The
Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), the Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until the Investor’s receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required. Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
certificates for shares of Common Stock to a transferee of the Investor in
accordance with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which the Investor has
entered into a contract for sale prior to the Investor’s receipt of a notice
from the Company of the happening of any event of the kind described in Section
3(f) or the first sentence of 3(e) and for which the Investor has not yet
settled.

      

      For so
long as any Registrable Securities remain held by the Investors,  the
Investor shall not directly or indirectly engage in any short selling of the
Company’s registered securities either for itself or on behalf of any third
party for whom the Investor receives consideration, provided that the Company
acknowledges and agrees that upon receipt of an Advance Notice the Investor has
the right to sell the shares to be issued to the Investor pursuant to the
Advance Notice during the applicable Pricing Period. 

       

      5.    EXPENSES OF
REGISTRATION.

       

      All
expenses incurred in connection with registrations, filings or qualifications
pursuant to Sections 2 and 3, including, without limitation, all registration,
listing and qualifications fees, printers, legal and accounting fees shall be
paid by the Company.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      6.    INDEMNIFICATION.

       

      With
respect to Registrable Securities which are included in a Registration Statement
under this Agreement:

       

      a.    To the
fullest extent permitted by law, the Company will, and hereby does, indemnify,
hold harmless and defend the Investor, the directors, officers, partners,
employees, agents, representatives of, and each Person, if any, who controls the
Investor within the meaning of the Securities Act or the Exchange Act (each, an
“Indemnified
Person”), against any losses, claims, damages, liabilities, judgments,
fines, penalties, charges, costs, reasonable attorneys’ fees, amounts paid in
settlement or expenses, joint or several (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims
(or actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or
the omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). The
Company shall reimburse the Investor and each such controlling person promptly
as such expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim.

      

      b.    In connection
with a Registration Statement, the Investor agrees to indemnify, hold harmless
and defend, to the same extent and in the same manner as is set forth in Section
6(a), the Company, each of its directors, each of its officers who signs the
Registration Statement and each Person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act (each an “Indemnified Party”),
against any Claim or Indemnified Damages to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim or Indemnified Damages arise out of or is based upon any Violation,
in each case to the extent, and only to the extent, that such Violation occurs
in reliance upon and in conformity with written information furnished to the
Company by the Investor expressly for use in connection with such Registration
Statement; and, subject to Section 6(d), the Investor will reimburse any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such Claim; provided, however, that the indemnity agreement
contained in this Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in settlement of any
Claim if such settlement is effected without the prior written consent of the
Investor, which consent shall not be unreasonably withheld. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of such Indemnified Party. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6(b)
with respect to any prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
prospectus was corrected and such new prospectus was delivered to the Investor
prior to the Investor’s use of the prospectus to which the Claim
relates.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      c.    Promptly
after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving a Claim, such Indemnified Person or
Indemnified Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the reasonable fees and
expenses of not more than one counsel for such Indemnified Person or Indemnified
Party to be paid by the indemnifying party, if, in the reasonable opinion of
original counsel retained by the indemnified parties, the representation by such
counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent, provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

       

      d.    The
indemnification required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and
when bills are received or Indemnified Damages are incurred.

       

      e.    The indemnity
agreements contained herein shall be in addition to (i) any cause of action or
similar right of the Indemnified Party or Indemnified Person against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.

      

      7.    CONTRIBUTION.

          

      To the
extent any indemnification by an indemnifying party is prohibited or limited by
law, the indemnifying party agrees to make the maximum contribution with respect
to any amounts for which it would otherwise be liable under Section 6 to the
fullest extent permitted by law; provided, however, that: (i) no seller of
Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
fraudulent misrepresentation; and (ii) contribution by any seller of Registrable
Securities shall be limited in amount to the net amount of proceeds received by
such seller from the sale of such Registrable Securities.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      8.    REPORTS UNDER THE EXCHANGE
ACT.

       

      With a
view to making available to the Investor the benefits of Rule 144 promulgated
under the Securities Act or any similar rule or regulation of the SEC that may
at any time permit the Investors to sell securities of the Company to the public
without registration (“Rule 144”) the
Company agrees to:

       

      a.    make and keep
public information available, as those terms are understood and defined in Rule
144;

       

      b.    file with the
SEC in a timely manner all reports and other documents required of the Company
under the Securities Act and the Exchange Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company’s obligations under Section 6.3 of the Securities Purchase
Agreement) and the filing of such reports and other documents is required for
the applicable provisions of Rule 144; and

       

      c.    furnish to
the Investor so long as the Investor owns Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act,
(ii) a copy of the most recent annual or quarterly report of the Company and
such other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Investor to sell such
securities pursuant to Rule 144 without registration.

       

      9.    AMENDMENT OF REGISTRATION
RIGHTS.

       

      Provisions
of this Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only by a written agreement between the Company and the
Investor. Any amendment or waiver effected in accordance with this Section 9
shall be binding upon the Investor and the Company. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or modification of
any provision of any of this Agreement unless the same consideration also is
offered to all of the parties to this Agreement.

      

      10.    MISCELLANEOUS.

       

      a.    A Person is
deemed to be a holder of Registrable Securities whenever such Person owns or is
deemed to own of record such Registrable Securities. If the Company receives
conflicting instructions, notices or elections from two or more Persons with
respect to the same Registrable Securities, the Company shall act upon the basis
of instructions, notice or election received from the registered owner of such
Registrable Securities.

       

      b.    Any notices,
consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
business day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall
be:

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      
        
          	
                  If
      to the Company, to:

                	 
      	
                  Megola,
      Inc.

                  704
      Mara Street, Suite 111

                  Point
      Edward, Ontario N7V 1X4

                  c/o
      Joel Gardner

                
	 
      	 
      	
                  Telephone:
      (519) 336-0628

                
	 
      	 
      	
                  Facsimile:
      ____________

                

        

      

      

      
        
          
            	
                    If
      to the Investor, to:

                  	 
      	
                    Tangiers
      Capital, LLC

                  
	 
      	 
      	
                    402
      West Broadway, Suite 400

                  
	 
      	 
      	
                    San
      Diego, California 92101

                  
	 
      	 
      	
                    Attention:

                  	
                    Michael
      Sobeck

                  
	 
      	 
      	 
      	
                    Managing
      Partner

                  
	 
      	 
      	
                    Telephone:

                  	
                    619-615-4255

                  
	 
      	 
      	
                    Facsimile:

                  	
                    619-566-2011

                  

          

        

      

      

      Any party
may change its address by providing written notice to the other parties hereto
at least five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.

      

      c.    Failure of
any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      d.    The corporate
laws of the State of California govern all issues concerning the relative rights
of the Company and the Investor. All other questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall
be governed by the internal laws of the State of California, without giving
effect to any choice of law or conflict of law provision or rule (whether of the
State of California or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of California. Each party
hereby irrevocably submits to the non-exclusive jurisdiction of the Superior
Courts of the State of California, sitting in California and the Federal
District Court for the District of California, for the adjudication of any
dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

      

      e.    This
Agreement, the Securities Purchase Agreement and the Registration Rights
Agreement constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.

      

      f.    This
Agreement shall inure to the benefit of and be binding upon the permitted
successors and assigns of each of the parties hereto.

      

      g.    The headings
in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

          

      h.    This
Agreement may be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the same agreement.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.

      

      i.    Each party
shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.

      

      j.    The language
used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent and no rules of strict construction will be
applied against any party.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      k.    This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person.

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      IN WITNESS WHEREOF, the
parties have caused this Registration Rights Agreement to be duly executed as of
day and year first above written.

       

      
        
          	
                  COMPANY:

                
	
                  MEGOLA,
      INC.

                
	 
      	 
      
	 
      	
                   

                
	
                  Name: 

                	
                   Joel
      Gardner

                
	
                  Title:

                	
                  Chief
      Executive Officer

                
	 
      	 
      
	
                  INVESTOR:

                
	
                  Tangiers
      Investors, LP

                
	 
      	 
      
	 
      	
                   

                
	
                  By:

                	
                  Tangiers
      Capital, LLC

                
	
                  Its:

                	
                  General
      Partner

                
	 
      	 
      

        

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      EXHIBIT
A

      FORM
OF NOTICE OF EFFECTIVENESS

      OF
REGISTRATION STATEMENT

      

      Attention:

      

      Re:    MEGOLA,
INC.

      

      Ladies
and Gentlemen:

      

      We are
counsel to MEGOLA,
INC. (the “Company”), and have
represented the Company in connection with that certain Securities Purchase
Agreement (the “Securities Purchase
Agreement”) entered into by and between the Company and Tangiers
Investors, LP (the “Investor”) pursuant
to which the Company issued to the Investor shares of its Common Stock, par
value $0.001 per share (the “Common Stock”).
Pursuant to the Securities Purchase Agreement, the Company also has entered into
a Registration Rights Agreement with the Investor (the “Registration Rights
Agreement”) pursuant to which the Company agreed, among other things, to
register the Registrable Securities (as defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the “Securities Act”). In
connection with the Company’s obligations under the Registration Rights
Agreement, on ____________ ____, the Company filed a Registration Statement on
Form ________ (File No. 333-_____________) (the “Registration
Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the
Registrable Securities which names the Investor as a selling stockholder
thereunder.

      

      In
connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the Securities Act at [ENTER TIME OF EFFECTIVENESS]
on [ENTER DATE OF
EFFECTIVENESS] and we have no knowledge, after telephonic inquiry of a
member of the SEC’s staff, that any stop order suspending its effectiveness has
been issued or that any proceedings for that purpose are pending before, or
threatened by, the SEC and the Registrable Securities are available for resale
under the Securities Act pursuant to the Registration Statement.

       

      
        
          
            
              	
                      Very
      truly yours,

                    
	 
      
	
                      By:

                    	 

            

          

        

      

      

      cc:    MEGOLA,
INC.NEITHER
THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

    

    Date of
Issuance: July 16, 2010

    

    $20,000

    

    9%
CONVERTIBLE DEBENTURE

    

    Due April
16, 2011

    

    THIS
DEBENTURE is a duly authorized 9% Convertible Debenture of MEGOLA, INC., a
Nevada corporation (the “Company”) issued to TANGIERS INVESTORS, LP (the
“Holder”) and designated as its 9% Convertible Debenture, due April 16, 2011
(the “Debenture”).

    

    FOR VALUE
RECEIVED, the Company promises to pay to the Holder, the principal sum of Twenty
Thousand ($20,000) on April 6, 2011 or such earlier date as this Debenture is
required or permitted to be repaid as provided hereunder (the “Maturity Date”),
and to pay interest to the Holder on the aggregate unconverted and then
outstanding principal amount of this Debenture at the rate of 9% per annum,
payable on the Maturity Date, unless the Debenture is converted to shares
of common stock in accordance with the terms and conditions herein.

    

    THE
COMPANY MAY PREPAY ANY PORTION OF THE PRINCIPAL AMOUNT ALONG WITH ANY
ACCRUED INTEREST OF THIS DEBENTURE AT ANY TIME.

    

    This
Debenture is subject to the following additional provisions:

    

    Section 1.     Exchange. This Debenture is
exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No
service charge will be made for such registration of transfer or
exchange.

     

    Section 2.    Transferability. This
Debenture may be transferred or exchanged only in compliance with applicable
federal and state securities laws and regulations. Prior to due presentment to
the Company for transfer of this Debenture, the Company and any agent of the
Company may treat the Person in whose name this Debenture is duly registered on
the Debenture Register as the owner hereof for the purpose of receiving payment
as herein provided and for all other purposes, whether or not this Debenture is
overdue, and neither the Company nor any such agent shall be affected by notice
to the contrary.

    

    Section
3.    
Events of Default.

    

    a)    "Event of
Default", wherever used herein, means any one of the following events (whatever
the reason and whether it shall be voluntary or involuntary or effected by
operation of law or pursuant to any judgment, decree or order of any court, or
any order, rule or regulation of any administrative or governmental
body):

    

    i) any
default in the payment of the principal of, interest (including Late Fees) on,
or liquidated damages in respect to this Debenture, free of any claim of
subordination, as and when the same shall become due and payable (whether on a
Conversion Date or the Maturity Date or by acceleration or otherwise) which
default is not cured, if possible to cure, within 3 days of notice of such
default sent by the Holder;

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    ii) the
Company or any of its subsidiaries shall commence, or there shall be commenced
against the Company or any such subsidiary a case under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor
thereto, or the Company commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to the Company or any subsidiary thereof or there is commenced
against the Company or any subsidiary thereof any such bankruptcy, insolvency or
other proceeding which remains undismissed for a period of 30 days; or the
Company or any subsidiary thereof is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or the Company or any subsidiary thereof suffers any appointment of any
custodian or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of 60 days; or the Company or
any subsidiary thereof makes a general assignment for the benefit of creditors;
or the Company shall fail to pay, or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or the Company
or any subsidiary thereof shall call a meeting of its creditors with a view to
arranging a composition, adjustment or restructuring of its debts; or the
Company or any subsidiary thereof shall by any act or failure to act expressly
indicate its consent to, approval of or acquiescence in any of the foregoing; or
any corporate or other action is taken by the Company or any subsidiary thereof
for the purpose of effecting any of the foregoing;

     

    (iii) at
any time commencing 90 days after the date hereof, the Company shall thereafter
fail to timely file all reports required to be filed by it with the SEC pursuant
to Section 13 or 15(d) of the Securities and Exchange Act of 1934, as amended
(the “Exchange Act”), or otherwise required by the Exchange Act; or

    

    (iv)
at any time
commencing 180 days after the date hereof or following the declaration of
effectiveness of any registration statement registering Common Stock issuable
pursuant to a conversion of the principal amount or interest under this
Debenture (whichever is later), the Common Stock of the Company shall
cease to be quoted for trading or listing for trading on any of (a) the American
Stock Exchange, (b) New York Stock Exchange, (c) the Nasdaq National Market, (d)
the Nasdaq Capital Market, or (e) the NASD OTC Bulletin Board (“OTC”) (each, a “Primary Market”) and
shall not again be quoted or listed for trading on any Primary Market within
five (5) trading days of such delisting.

    

    b)    If any Event
of Default occurs and is continuing, the full principal amount of this
Debenture, together with interest and other amounts owing in respect thereof, to
the date of acceleration shall become at the Holder's election, immediately due
and payable in cash. The Holder need not provide and the Company hereby waives
any presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of
its rights and remedies hereunder and all other remedies available to it under
applicable law. Such declaration may be rescinded and annulled by Holder at any
time prior to payment hereunder and the Holder shall have all rights as a
Debenture holder until such time, if any, as the full payment under this Section
shall have been received by it. No such rescission or annulment shall affect any
subsequent Event of Default or impair any right consequent thereon.

    

    Section
4.    Conversion.

    

    i) At any time after the Original Issue
Date until this Debenture is no longer outstanding, this Debenture, including
interest and principal, shall be convertible into shares of Common Stock at the
lower of $0.01 per share or a price of seventy percent (70%) of the average of
the two lowest volume weighted average prices (“VWAPs”), determined on the then
current trading market for the Company’s common stock, for ten (10) trading days
prior to conversion (the “Set Price”), at the option of the Holder, in whole at
any time and from time to time.  The Holder shall effect conversions
by delivering to the Company the form of Notice of Conversion attached hereto as
Annex A (a "Notice of Conversion"), specifying the date on which such conversion
is to be effected (a "Conversion Date"). If no Conversion Date is specified in a
Notice of Conversion, the Conversion Date shall be the date that such Notice of
Conversion is provided hereunder. To effect conversions hereunder, the Holder
shall not be required to physically surrender Debentures to the Company. The
Company shall deliver any objection to any Notice of Conversion within 2
Business Days of receipt of such notice. In the event of any dispute or
discrepancy, the records of the Holder shall be controlling and determinative in
the absence of manifest error. The Holder and any assignee, by acceptance of
this Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted principal amount of this Debenture may be less than the amount
stated on the face hereof.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    ii) Shares from any
such conversion delivered to Company by 4:00pm EST will be delivered to Holder
by 2:30pm EST within 2 (two) business days of conversion notice delivery (see
4(i)). If those shares are not delivered in accordance with this timeframe
stated in this Section 4(ii), at any time for any reason prior to offering those
shares for sale in a private transaction or in the public market through its
broker, Holder may rescind that particular conversion to have the conversion
amount returned to the note balance with the conversion shares returned to the
Borrower. The Company will
make its commercially reasonable best efforts to deliver shares to Holder same
day / next day. For each conversion, in the event that shares are not
delivered by the third business day (inclusive of the day of the conversion), a
penalty of $2,000 per day will be assessed for each day after the third business
day (inclusive of the day of the conversion) until share delivery is made. Any
such penalty will be added to the principal balance of the Note, under Holders
expectation that any penalty amounts will tack back to the original date of the
note). If the Company does not request the issuance of the shares underlying
this Debenture after receipt of a notice of conversion within three (3) business
days following the period allowed for any objection, Joel Garner shall, in his
personal capacity, be responsible for any differential in the value of the
converted shares underlying this Debenture between the value of the closing
price on the date the shares should have been delivered (the third business day
following the submission of a conversion request) and the date the shares are
actually delivered. The Holder and any assignee, by acceptance of this
Debenture, acknowledge and agree that, by reason of the provisions of this
paragraph, following conversion of a portion of this Debenture, the unpaid and
unconverted principal amount of this Debenture may be less than the amount
stated on the face hereof.

    

    Section
5.    Dividends and
Restructuring

    

    i) If the
Company, at any time while this Debenture is outstanding: (A) shall pay a stock
dividend or otherwise make a distribution or distributions on shares of its
Common Stock or any other equity or equity equivalent securities payable in
shares of Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company pursuant to this Debenture,
including as interest thereon), (B) subdivide outstanding shares of Common
Stock into a larger number of shares, (C) combine (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (D) issue by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then the Set Price shall be multiplied by a
fraction of which the numerator shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding before such event and of which
the denominator shall be the number of shares of Common Stock outstanding after
such event. Any adjustment made pursuant to this Section shall become effective
immediately after the record date for the determination of stockholders entitled
to receive such dividend or distribution and shall become effective immediately
after the effective date in the case of a subdivision, combination or
re-classification.

    

    ii)  Whenever
the Set Price is adjusted pursuant to any of Section 4, the Company shall
promptly mail to each Holder a notice setting forth the Set Price after such
adjustment and setting forth a brief statement of the facts requiring such
adjustment.

    

    iii) If
(A) the Company shall declare a dividend (or any other distribution) on the
Common Stock; (B) the Company shall declare a special nonrecurring cash dividend
on or a redemption of the Common Stock; (C) the Company shall authorize the
granting to all holders of the Common Stock rights or warrants to subscribe for
or purchase any shares of capital stock of any class or of any rights; (D) the
approval  of any stockholders of the Company shall be required in
connection with any reclassification of the Common Stock, any consolidation or
merger to which the Company is a party, any  sale or transfer of all
or substantially all of the assets of the Company, of any compulsory share
exchange whereby the Common Stock is converted into other securities, cash or
property; (E) the Company shall authorize the voluntary or involuntary
dissolution, liquidation or winding up of the affairs of the Company; then, in
each case, the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of the Debentures, and shall cause to
be mailed to the Holders at their last addresses as they shall  appear
upon the stock books of the Company, at least 20 calendar days prior to the
applicable record or effective date hereinafter specified, a notice stating (x)
the date on which a record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not to be taken,
the date as of which the holders of the Common Stock of record to be entitled to
such dividend, distributions, redemption, rights or warrants are to be
determined or (y) the date on which such reclassification, consolidation,
merger, sale, transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the Common Stock
of record shall be entitled to exchange their shares of the Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, sale, transfer or share exchange; provided, that the
failure to mail such notice or any defect therein or in the mailing thereof
shall not affect the validity of the corporate action required to be specified
in such notice. Holders are entitled to convert Debentures during the 20-day
period commencing the date of such notice to the effective date of the event
triggering such notice.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    iv) If,
at any time while this Debenture is outstanding, (A) the Company effects any
merger or consolidation of the Company with or into another Person, (B) the
Company effects any sale of all or substantially all of its assets in one or a
series of related transactions, (C) any tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of
Common Stock are permitted to tender or exchange their shares for other
securities, cash or property, or (D) the Company effects any reclassification of
the Common Stock or any compulsory share exchange pursuant to which the Common
Stock is effectively converted into or exchanged for other securities, cash or
property (in any such case, a "Fundamental Transaction"), then upon any
subsequent conversion of this Debenture, the Holder shall have the right to
receive, for each Underlying Share that would have been issuable upon such
conversion absent such Fundamental Transaction, the same kind and amount of
securities, cash or property as it would have been entitled to receive upon the
occurrence of such Fundamental Transaction if it had been, immediately prior
to  such Fundamental Transaction, the holder of one share
of  Common Stock (the "Alternate Consideration"). For purposes of any
such conversion, the determination of the Set Price shall be appropriately
adjusted to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common Stock in such
Fundamental Transaction, and the Company shall apportion the Set Price among the
Alternate Consideration in a reasonable manner reflecting the relative value of
any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash  or property to
be received in a Fundamental Transaction, then  the Holder shall be
given the same choice as to the Alternate consideration it receives upon any
conversion of this Debenture following such Fundamental Transaction. To the
extent necessary to effectuate the foregoing provisions, any successor to the
Company or surviving entity in such Fundamental Transaction shall issue to the
Holder a new debenture consistent with the foregoing provisions and evidencing
the Holder's right to convert such debenture into Alternate Consideration. The
terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply
with the provisions of this paragraph (c) and insuring that this Debenture (or
any such replacement security) will be similarly adjusted upon any subsequent
transaction analogous to a Fundamental Transaction. If any Fundamental
Transaction constitutes or results in a Change of Control Transaction, then at
the request of the Holder delivered before the 90th day
after such Fundamental Transaction, the Company (or any such successor or
surviving entity) will purchase the Debenture from the Holder for a purchase
price, payable in cash within five Trading Days after such request (or,
if  later, on the effective date of the Fundamental Transaction),
equal to the 100% of the remaining unconverted principal amount of this
Debenture on the date of such request, plus all accrued and unpaid interest
thereon, plus all other accrued and unpaid amounts due hereunder.

    

    Section 6.    Reservation of Shares. The
Company covenants that it will at all times reserve and keep available out of
its authorized and unissued shares of Common Stock solely for the purpose of
issuance upon conversion of the Debenture

    

    Section 7.    Notices. Any and all notices
or other communications or deliveries to be provided by the Holders hereunder,
including, without limitation, any Notice of Conversion, shall be in
writing and delivered personally, by facsimile, sent by a nationally
recognized overnight courier service, addressed to the Company, at the
address set forth or such other address or facsimile number as the Company
may specify for such purposes by notice to the Holders delivered in accordance
with this Section. Any and all notices or other communications or deliveries to
be provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile
telephone   number or address of such Holder appearing on the
books of the Company,   or if no such facsimile telephone number
or address appears, at the principal place of business of the Holder. Any notice
or other    communication or deliveries hereunder shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile
telephone number specified in this Section prior to 5:30 p.m. (New
York   City time), (ii) the date after the date of transmission,
if such notice or communication is delivered via facsimile at the
facsimile  telephone number specified in this Section later than 5:30
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City  time) on such date, (iii) the second Business Day following the
date of  mailing, if sent by nationally recognized overnight courier
service, or  (iv) upon actual receipt by the party to whom such notice
is required to be given.

    

    Section 8.    Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this
Debenture: (a) capitalized terms not otherwise defined herein have the meanings
given to such terms in the Purchase Agreement, and (b) the following terms shall
have the following meanings:

    

    "Business
Day" means any day except Saturday, Sunday and any day which shall be a federal
legal holiday in the United States or a day on which banking institutions in the
State of New York are authorized or required by law or other government action
to close.

    

    "Common
Stock" means the common stock, $.001 par value per share, of the Company
and stock of any other class into which such shares may hereafter have been
reclassified or changed.

    

    "Person"
means a corporation, an association, a partnership, organization, a business, an
individual, a government or political subdivision thereof or a governmental
agency.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    "Securities
Act" means the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder

    

    "Set
Price" shall have the meaning set forth in Section 4.

    

    Section 9.    Obligations.
Except as expressly provided herein, no provision of this Debenture shall alter
or impair the obligation of the Company, which is absolute and unconditional, to
pay the principal of, interest and liquidated damages (if any) on, this
Debenture at the time, place, and rate, and in the coin or currency, herein
prescribed. This Debenture is a direct debt obligation of the Company. This
Debenture ranks pari passu with all other Debentures now or hereafter issued
under the terms set forth herein. As long as this Debenture is outstanding, the
Company shall not and shall cause it subsidiaries not to, without the consent of
the Holder, (a) amend its certificate of incorporation, bylaws or other charter
documents so as to adversely affect any rights of the Holder; (b) repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de
minimis number of shares of its Common Stock or other equity securities other
than as to the Underlying Shares to the extent permitted or required hereunder;
or (c) enter into any agreement with respect to any of the
foregoing.

    

    Section 10.    Lost or
Stolen. If this Debenture shall be mutilated, lost, stolen or destroyed,
the Company shall execute and deliver, in exchange and substitution for and upon
cancellation of a mutilated Debenture, or in lieu of or in substitution for a
lost, stolen or destroyed Debenture, a new Debenture for the principal amount of
this Debenture so mutilated, lost, stolen or destroyed but only upon receipt of
evidence of such loss, theft or destruction of such Debenture, and of the
ownership hereof, and indemnity, if requested, all reasonably satisfactory to
the Company.

    

    Section 11.    Jurisdiction. All questions
concerning the construction, validity, enforcement and interpretation of this
Debenture shall be governed by and construed and enforced in accordance with the
internal laws of the State of California, without regard to the principles of
conflicts of law thereof. Each party agrees that all legal proceedings
concerning the interpretations, enforcement and defense of the transactions
contemplated hereby (whether brought against a party hereto or its respective
affiliates, directors, officers, shareholders, employees or agents) shall be
commenced in the state and federal courts sitting in California. Each party
hereto hereby irrevocably submits to the exclusive jurisdiction of the
California courts for the adjudication of any dispute hereunder or in connection
herewith or with any transaction contemplated hereby or discussed herein, and
hereby irrevocably waives, and agrees not to assert in any suit, action or
proceeding, any claim that it is not personally subject to the jurisdiction of
any such court, or such California courts are improper or inconvenient venue for
such proceeding. Each party hereby irrevocably waives personal service of
process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Debenture and agrees that such
Service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable law, any and
all right to trial by jury in any legal proceeding arising out of or relating to
this Debenture or the transactions contemplated hereby. If either party shall
commence an action or proceeding to enforce any provisions of this Debenture,
then the prevailing party in such action or proceeding shall be reimbursed by
the other party for its attorneys’ fees and other costs and expenses incurred
with the investigation, preparation and prosecution of such action or
proceeding.

    

    Section 12.    Waiver. Any
waiver by the Holder shall not operate as or be construed to be a waiver of any
other breach of such provision or of any breach of any other provision of this
Debenture. The failure of the Company or the Holder to insist upon strict
adherence to any term of this Debenture on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist upon
strict adherence to that term or any other term of this Debenture. Any waiver
must be in writing.

    

    Section 13.    Piggy Back Registration
Rights. For six months from the date of this Debenture, the Holders shall
be entitled to “piggyback” registration rights on registrations initiated by the
Company on forms which permit the general sale of securities to the public,
subject to customary cut-backs if deemed necessary or advisable by the
underwriters for any such registration; except for any draw down or “Pipe”
transactions.

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    

    Section 14.    Unenforceability.
If any provision of this Debenture is invalid, illegal or unenforceable, the
balance of this Debenture shall remain in effect, and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances. If it shall be found that any
interest or other amount deemed interest due hereunder violates applicable laws
governing usury, the applicable rate of interest due hereunder shall
automatically be lowered to equal the maximum permitted rate of interest. The
Company covenants (to the extent that it may lawfully do so) that it shall not
at any time insist upon, plead, or in any manner whatsoever claim or take the
benefit or advantage of, any stay, extension or usury law or other law which
would prohibit or forgive the Company from paying all or any portion of the
principal of or interest on the Debentures as contemplated herein, wherever
enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this indenture, and the Company (to the extent
it may lawfully do so) hereby expressly waives all benefits or advantage of any
such law, and covenants that it will not, by resort to any such law, hinder,
delay or impeded the execution of any power herein granted to the Holder, but
will suffer and permit the execution of every such as though no such law has
been enacted.

    

    Section 15.    Business Day.
Whenever any payment or other obligation hereunder shall be due on a day other
than a Business Day, such payment shall be made on the next succeeding Business
Day.

    

    *********************

    Signature
Page Follows

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Company has caused this Convertible Debenture to be duly
executed by a duly authorized officer as of the date first above
indicated

     

    
      
        
          	 
      	
                  MEGOLA,
      INC.

                	 
      
	 
      	 
      	 
      	 
      
	 
      	
                  By: 

                	  
      	 
      
	 
      	 
      	
                  Name:
      Joel Garner

                	 
      
	 
      	 
      	
                  Title:
      CEO

                	 
      

        

      

    

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    ANNEX
A

    

    NOTICE OF
CONVERSION

    

     The
undersigned hereby elects to convert principal under the 9% Convertible
Debenture of MEGOLA, INC. (the "Company"), due on _________, 20____, into
____________ shares of common stock, $.001 par value per share (the "Common
Stock"), of the Company according to the conditions hereof, as of the date
written below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates and opinions as reasonably
requested by the Company in accordance therewith. No fee will be charged to the
holder for any conversion, except for such transfer taxes, if any.

    

    By the
delivery of this Notice of Conversion the undersigned represents and warrants to
the Company that its ownership of the Company's Common Stock does not exceed the
amounts determined in accordance with Section 13(d) of the Exchange Act,
specified under Section 4 of this Debenture.

    

    Conversion
calculations:

    

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	 
      	
                                    Date
      to Effect Conversion: ________________________

                                  
	 
      	 
      
	 
      	
                                    70%
      of the average of the two lowest VWAPs for 10 trading days prior to
      conversion.

                                  
	 
      	 
      	 
      
	 
      	________________________________________  
      	 
      
	 
      	
                                    Principal
      Amount of Debentures to be Converted:

                                  	 
      
	 
      	 
      	 
      
	 
      	__________________________________________  
      	 
      
	 
      	
                                    Interest
      Amount of Debentures to be Converted

                                  	 
      
	 
      	 
      	 
      
	 
      	_______________________________________	 
      
	 
      	
                                    Number
      of shares of Common Stock to be issued:

                                  	 
      
	 
      	 
      	 
      
	 
      	___________________________________	 
      
	 
      	 
      	 
      
	 
      	
                                    Signature:
      ____________________________

                                  	 
      
	 
      	 
      	 
      
	 
      	
                                    Name:
      _______________________________

                                  	 
      
	 
      	 
      	 
      
	 
      	
                                    Address:
      _____________________________

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]