INSIDER PLEDGE AND ESCROW AGREEMENT
Exhibit
4.7
THIS
INSIDER PLEDGE AND ESCROW AGREEMENT
(the
“Agreement”)
is
made and entered into as of January 5, 2006 (the “Effective
Date”)
by and
among XXXXXXX
XXXXXXXXX and XXXXXXX XXXXXX (collectively,
the “Pledgor”),
CORNELL
CAPITAL PARTNERS, LP
(the
“Pledgee”),
IGNIS
PETROLEUM GROUP, INC.,
a Nevada
corporation (the “Company”),
and
XXXXX
XXXXXXXX,
ESQ.,
as
escrow agent (“Escrow
Agent”).
RECITALS:
WHEREAS,
the
Company shall issue and sell to the Pledgee, as provided in the Securities
Purchase Agreement of even date herewith between the Company and the Pledgee
(the “Securities
Purchase Agreement”),
and
the Pledgee shall purchase up to Five Million Dollars ($5,000,000) of secured
convertible debentures (the “Convertible
Debentures”),
which
shall be convertible into shares of the Company’s common stock, par value $0.001
per share (the “Common
Stock”)
(as
converted, the “Conversion
Shares”);
WHEREAS,
to
induce
the Pledgee to enter into the transaction contemplated by the Securities
Purchase Agreement, the Convertible Debentures, the Investor Registration Rights
Agreement of even date herewith between the Company and the Pledgee (the
“Investor
Registration Rights Agreement”),
the
Pledge and Escrow Agreement of even date herewith among the Company, the Pledgee
and the Escrow Agent (the “Pledge
Agreement”),
the
Escrow Agreement of even date herewith among the Company, the Pledgee, and
the
Escrow Agent (the “Escrow
Agreement”),
and
the Irrevocable Transfer Agent Instructions among the Company, the Pledgee,
the
Transfer Agent, and the Escrow Agent (the “Transfer
Agent Instructions”)
(collectively referred to as the “Transaction
Documents”),
the
Pledgor has agreed to irrevocably pledge to the Pledgee without recourse against
the Pledgor Four Million Three Hundred Twenty Thousand (4,320,000) shares (the
“Pledged
Shares”)
of
Common Stock beneficially owned by the Pledgor in the amounts specified on
the
signature line hereto and in accordance with this Agreement.
NOW,
THEREFORE,
in
consideration of the mutual covenants, agreements, warranties, and
representations herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
TERMS
AND CONDITIONS
1. Obligations
Secured. The
obligations secured hereby are any and all obligations of the Company now
existing or hereinafter incurred to the Pledgee under the Transaction Documents
and any other amounts now or hereafter owed to the Pledgee by the Company
thereunder (collectively, the “Obligations”).
2. Pledge
and Transfer of Pledged Shares.
The
Pledgor hereby grants to Pledgee an irrevocable, first priority security
interest in all Pledged Shares as security for the Company’s Obligations.
Simultaneously with the execution of the Transaction Documents, the Pledgor
shall deliver to the Escrow Agent stock certificates made out in favor of the
Pledgor representing the Pledged Shares, together with duly executed stock
powers or other appropriate transfer documents with medallion bank guarantees
and executed in blank by the Pledgor (the “Transfer
Documents”),
and
such stock certificates and Transfer Documents shall be held by the Escrow
Agent
until the earlier of (i) full payment of all Obligations due to the Pledgee,
including the repayment or conversion of all amounts owed by the Company to
the
Pledgee under the Convertible Debentures (whether outstanding principal,
interest, legal fees, or any other amounts owed to the Pledgee by the Company)
or (ii) the receipt by the Escrow Agent of an equal number of shares of common
stock as pledged hereunder from the Company, together with duly executed stock
powers or other appropriate transfer documents executed in blank by the Company
(the “Additional Company Pledged Shares”).
3. Rights
Relating to Pledged Shares.
Upon the occurrence of an Event of Default (as defined herein), the Pledgee
shall be entitled to vote the Pledged Shares, receive dividends and other
distributions thereon, and enjoy all other rights and privileges incident to
the
ownership of the number of Pledged Shares actually released from escrow in
accordance with Section 6.1 hereof.
4. Release
of Pledged Shares from Pledge.
Upon the earlier of (i) receipt by the Escrow Agent of the Additional Company
Pledged Shares or (ii) full payment of all Obligations due to the Pledgee under
the Transaction Documents, including the repayment or conversion in accordance
with the terms of the Convertible Debentures of all amounts owed by the Company
to the Pledgee under the Convertible Debentures (whether outstanding principal,
interest, legal fees, and any other amounts owed to the Pledgee by the Company),
the parties hereto shall notify the Escrow Agent to such effect in writing.
Promptly upon receipt of such written notice, the Escrow Agent shall return
to
the Pledgor the Transfer Documents and the certificates representing the Pledged
Shares (collectively the “Pledged
Materials”),
whereupon any and all rights of Pledgee in the Pledged Materials shall be
terminated. Notwithstanding anything to the contrary contained herein, upon
the
earlier of (i) receipt by the Escrow Agent of the Additional Company Pledged
Shares or (ii) full payment of all amounts due to the Pledgee under the
Convertible Debentures, by repayment or conversion in accordance with the terms
of the Convertible Debentures, this Agreement and Pledgee’s security interest
and rights in and to the Pledged Shares shall terminate.
5. Event
of Default.
An “Event
of Default”
shall
be deemed to have occurred under this Agreement upon an Event of Default under
the Convertible Debentures.
6. Remedies.
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a. Upon
and
anytime after the occurrence of an Event of Default, the Pledgee shall have
the
right to provide written notice of such Event of Default (the “Default
Notice”)
to the Escrow Agent, with a copy to the Pledgor. As soon as practicable after
receipt of the Default Notice, the Escrow Agent shall deliver to Pledgee the
Pledged Materials held by the Escrow Agent hereunder. Upon receipt of the
Pledged Materials and after exercising such rights the Pledgee has under any
shares of common stock pledged by the Company, the Pledgee shall have the right
to (i) sell the Pledged Shares and to apply the proceeds of such sales, net
of
any selling commissions, to the Obligations owed to the Pledgor by the Company
under the Transaction Documents, including, without limitation, outstanding
principal, interest, legal fees, and any other amounts owed to the Pledgee,
and
exercise all other rights and (ii) any and all remedies of a secured party
with
respect to such property as may be available under the Uniform Commercial Code
as in effect in the State of New Jersey. To the extent that the net proceeds
received by the Pledgee are insufficient to satisfy the Obligations in full,
the
Pledgee shall be entitled to a deficiency judgment against the Company but
not
the Pledgor for such amount. The Pledgee shall have the absolute right to sell
or dispose of the Pledged Shares in any manner it sees fit and shall have no
liability to the Pledgor, the Company or any other party for selling or
disposing of such Pledged Shares even if other methods of sales or dispositions
would or allegedly would result in greater proceeds than the method actually
used. The Escrow Agent shall have the absolute right to disburse the Pledged
Shares to the Pledgee in batches not to exceed 9.9% of the outstanding capital
of the Company (which limit may be waived by the Pledgee providing not less
than
65 days’ prior written notice to the Escrow Agent). The Pledgee shall return any
Pledged Shares released to it and remaining after the Pledgee has applied the
net proceeds to all amounts owed to the Pledgee.
b. Each
right, power and remedy of the Pledgee provided for in this Agreement or any
other Transaction Document shall be cumulative and concurrent and shall be
in
addition to every other such right, power or remedy. The
exercise or beginning of the exercise by the Pledgee of any one or more of
the
rights, powers or remedies provided for in this Agreement or any
other
Transaction Document or
now or
hereafter existing at law or in equity or by statute or otherwise shall not
preclude the simultaneous or later exercise by the
Pledgee of all such other rights, powers or remedies, and no failure or delay
on
the part of the Pledgee to exercise any such right, power or remedy shall
operate as a waiver thereof. No notice to or demand on the Pledgor in any case
shall entitle it to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of the rights of the Pledgee to
any
other further action in any circumstances without demand or notice. The Pledgee
shall have the full power to enforce or to assign or contract is rights under
this Agreement to a third party.
7. Representations,
Warranties and Covenants.
a. The
Pledgor represents, warrants and covenants that:
(i) Pledgor
is, and at the time when pledged hereunder will be, the legal, beneficial and
record owner of, and has (and will have)
good and
valid title to, all Pledged Shares pledged hereunder, subject to no pledge,
lien, mortgage, hypothecation, security interest, charge, option or other
encumbrance whatsoever;
(ii)
Pledgor
has full power, authority and legal right to pledge all the Pledged Shares
pledged pursuant to this Agreement; and
(iii)
all
the
Pledged Shares are fully paid and non-assessable and are subject to no options
to purchase or similar rights.
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b. The
Pledgor covenants and agrees to take all reasonable steps to defend the
Pledgee’s right, title and security interest in and to the Pledged Shares and
the proceeds thereof against the claims and demands of all persons whomsoever
(other than the Pledgee and the Escrow Agent); and the Pledgor covenants and
agrees that it will have like title to
and
right to pledge any other property at any time hereafter pledged to the Pledgee
as Collateral hereunder and will likewise take all reasonable steps to defend
the right thereto and security interest therein of the Pledgee.
c. The
Pledgor covenants and agrees to take no action which would violate or be
inconsistent with any of the terms of any Transaction Document, or which would
have the effect of impairing the position or interests of the Pledgee under
any
Transaction Document.
d. This
Agreement is made without recourse. Upon an Event of Default, the Pledgee shall
be deemed to have acquired the Pledged Shares on the date they were acquired
by
the Pledgor. The Pledgor is an “affiliate” of the Company, as such term is
defined in Rule 144(a) promulgated under the Securities Act of 1933, as
amended.
8. Concerning
the Escrow Agent.
a. The
Escrow Agent undertakes to perform only such duties as are expressly set forth
herein and no implied duties or obligations shall be read into this Agreement
against the Escrow Agent.
b. The
Escrow Agent may act in reliance upon any writing or instrument or signature
which it, in good faith, believes to be genuine, may assume the validity and
accuracy of any statement or assertion contained in such a writing or
instrument, and may assume that any person purporting to give any writing,
notice, advice or instructions in connection with the provisions hereof has
been
duly authorized to do so. The Escrow Agent shall not be liable in any manner
for
the sufficiency or correctness as to form, manner, and execution, or validity
of
any instrument deposited in this escrow, nor as to the identity, authority,
or
right of any person executing the same; and its duties hereunder shall be
limited to the safekeeping of such certificates, monies, instruments, or other
document received by it as such escrow holder, and for the disposition of the
same in accordance with the written instruments accepted by it in the
escrow.
c. Pledgee
and the Pledgor hereby agree, to defend and indemnify the Escrow Agent and
hold
it harmless from any and all claims, liabilities, losses, actions, suits, or
proceedings at law or in equity, or any other expenses, fees, or charges of
any
character or nature which it may incur or with which it may be threatened by
reason of its acting as Escrow Agent under this Agreement; and in connection
therewith, to indemnify the Escrow Agent against any and all expenses, including
attorneys’ fees and costs of defending any action, suit, or proceeding or
resisting any claim (and any costs incurred by the Escrow Agent pursuant to
Sections 6.4 or 6.5 hereof). The Escrow Agent shall be vested with a lien on
all
property deposited hereunder, for indemnification of attorneys’ fees and court
costs regarding any suit, proceeding or otherwise, or any other expenses, fees,
or charges of any character or nature, which may be incurred by the Escrow
Agent
by reason of disputes arising between the makers of this escrow as to the
correct interpretation of this Agreement and instructions given to the Escrow
Agent hereunder, or otherwise, with the right of the Escrow Agent, regardless
of
the instructions aforesaid, to hold said property until and unless said
additional expenses, fees, and charges shall be fully paid. Any fees and costs
charged by the Escrow Agent for serving hereunder shall be paid by the
Pledgor.
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d. If
any of
the parties shall be in disagreement about the interpretation of this Agreement,
or about the rights and obligations, or the propriety of any action contemplated
by the Escrow Agent hereunder, the Escrow Agent may, at its sole discretion
deposit the Pledged Materials with the Clerk of the United States District
Court
of New Jersey, sitting in Newark, New Jersey, and, upon notifying all parties
concerned of such action, all liability on the part of the Escrow Agent shall
fully cease and terminate. The Escrow Agent shall be indemnified by the Pledgor,
the Company and Pledgee for all costs, including reasonable attorneys’ fees in
connection with the aforesaid proceeding, and shall be fully protected in
suspending all or a part of its activities under this Agreement until a final
decision or other settlement in the proceeding is received.
e. The
Escrow Agent may consult with counsel of its own choice (and the costs of such
counsel shall be paid by the Pledgor and Pledgee) and shall have full and
complete authorization and protection for any action taken or suffered by it
hereunder in good faith and in accordance with the opinion of such counsel.
The
Escrow Agent shall not be liable for any mistakes of fact or error of judgment,
or for any actions or omissions of any kind, unless caused by its willful
misconduct or gross negligence.
f. The
Escrow Agent may resign upon ten (10) days’ written notice to the parties in
this Agreement. If a successor Escrow Agent is not appointed within this ten
(10) day period, the Escrow Agent may petition a court of competent jurisdiction
to name a successor.
9. Conflict
Waiver.
The Pledgor hereby acknowledges that the Escrow Agent is general counsel to
the
Pledgee, a partner in the general partner of the Pledgee, and counsel to the
Pledgee in connection with the transactions contemplated and referred herein.
The Pledgor agrees that in the event of any dispute arising in connection with
this Agreement or otherwise in connection with any transaction or agreement
contemplated and referred herein, the Escrow Agent shall be permitted to
continue to represent the Pledgee and the Pledgor will not seek to disqualify
such counsel and waives any objection Pledgor might have with respect to the
Escrow Agent acting as the Escrow Agent pursuant to this Agreement.
10. Notices.
Unless otherwise provided herein, all demands, notices, consents, service of
process, requests and other communications hereunder shall be in writing and
shall be delivered in person or by overnight courier service, or mailed by
certified mail, return receipt requested, addressed:
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If
to the Company, to:
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000
Xxxxxxxx Xxxxx - 0xx
Xxxxx
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Xxxxxx,
XX 00000
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Attention:
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Xxxxxxx
Xxxxxx
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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With
a copy to:
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Sichenzia
Xxxx Xxxxxxxx Xxxxxxx LLP
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0000
Xxxxxx xx xxx Xxxxxxxx - 00xx
Xxxxx
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Xxx
Xxxx, XX 00000
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Attention:
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Xxxxxxx
Xxxxxxxxx, Esq.
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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And
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Xxxxxx
& Hanger, LLP
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000
Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxx
Xxxxx, Xxxxx 00000
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Attention:
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Xxxxxxx
X. Xxxxxxx, Esq.
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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If
to the Pledgee:
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Cornell
Capital Partners LP
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000
Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxx
Xxxx, XX 00000
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Attention:
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Xxxx
X. Xxxxxx
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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With
copy to:
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Cornell
Capital Partners, LP
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000
Xxxxxx Xxxxxx, Xxxxx 0000
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Xxxxxx
Xxxx, XX 00000
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Attention:
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Xxxxx
Xxxxxxxx, Esq.
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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If
to the Pledgor, to:
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Xxxxxxx
Xxxxxxxxx
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000
Xxxxxxxx Xxxxx - 0xx
Xxxxx
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Xxxxxx,
XX 00000
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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Xxxxxxx
Xxxxxx
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000
Xxxxxxxx Xxxxx - 0xx
Xxxxx
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Xxxxxx,
XX 00000
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Telephone:
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(000)
000-0000
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Facsimile:
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(000)
000-0000
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Any
such
notice shall be effective (a) when delivered, if delivered by hand delivery
or overnight courier service, or (b) five (5) days after deposit in the
United States mail, as applicable.
11.
Binding
Effect.
All of the covenants and obligations contained herein shall be binding upon
and
shall inure to the benefit of the respective parties, their successors and
assigns.
12.
Governing
Law; Venue; Service of Process.
The validity, interpretation and performance of this Agreement shall be
determined in accordance with the laws of the State of New Jersey applicable
to
contracts made and to be performed wholly within that state except to the extent
that Federal law applies. The parties hereto agree that any disputes, claims,
disagreements, lawsuits, actions or controversies of any type or nature
whatsoever that, directly or indirectly, arise from or relate to this Agreement,
including, without limitation, claims relating to the inducement, construction,
performance or termination of this Agreement, shall be brought in the state
superior courts located in Xxxxxx County, New Jersey or Federal district courts
located in Newark, New Jersey, and the parties hereto agree not to challenge
the
selection of that venue in any such proceeding for any reason, including,
without limitation, on the grounds that such venue is an inconvenient forum.
The
parties hereto specifically agree that service of process may be made, and
such
service of process shall be effective if made, pursuant to Section 8
hereto.
13.
Enforcement
Costs.
If any legal action or other pro-ceeding is brought for the enforcement of
this
Agreement, or because of an alleged dispute, breach, default or
misrepresenta-tion in connection with any provisions of this Agreement, the
successful or prevailing party or parties shall be entitled to recover
reasonable attorneys’ fees, court costs and all expenses even if not taxable as
court costs (including, without limita-tion, all such fees, costs and expenses
incident to appeals), incurred in that action or proceeding, in addition to
any
other relief to which such party or parties may be entitled.
14.
Remedies
Cumulative.
No
remedy herein conferred upon any party is intended to be exclusive of any other
remedy, and each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder or now or here-after existing
at
law, in equity, by statute, or otherwise. No single or partial exercise by
any
party of any right, power or remedy hereunder shall preclude any other or
further exercise thereof.
15.
Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute the same
instrument.
16.
No
Penalties.
No
provision of this Agreement is to be interpreted as a penalty upon any party
to
this Agreement.
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17.
JURY
TRIAL.
EACH OF THE PLEDGEE AND THE PLEDGOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES THE RIGHT WHICH IT MAY HAVE TO A TRIAL BY JURY OF ANY
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION BASED HEREON, OR ARISING OUT OF, UNDER
OR IN ANY WAY CONNECTED WITH THE DEALINGS BETWEEN PLEDGEE AND PLEDGOR, THIS
PLEDGE AND ESCROW AGREEMENT OR ANY DOCUMENT EXECUTED IN CONNECTION HEREWITH,
OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO OR THERETO IN EACH CASE WHETHER NOW EXISTING
OR
HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
[REMAINDER
OF PAGE INTENTIALLY LEFT BLANK]
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IN
WITNESS WHEREOF,
the
parties hereto have duly executed this Insider Pledge and Escrow Agreement
as of
the date first above written.
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CORNELL
CAPITAL PARTNERS, LP
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By:
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Yorkville
Advisors, LLC
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Its:
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General
Partner
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By:
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/s/
XXXX XXXXXX
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Name:
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Xxxx
Xxxxxx
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Title:
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Portfolio
Manager
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PLEDGORS
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By:
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/s/
XXXXXXX XXXXXXXXX
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Name:
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Xxxxxxx
Xxxxxxxxx
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Number
of shares pledged: 3,820,000
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By:
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/s/
XXXXXXX XXXXXX
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Name:
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Xxxxxxx
Xxxxxx
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Number
of shares pledged: 500,000
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By:
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/s/
XXXXXXX XXXXXX
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Name:
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Xxxxxxx
Xxxxxx
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Title:
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President
& CEO
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ESCROW
AGENT
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By:
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/s/
XXXXX XXXXXXXX
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Name:
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Xxxxx
Xxxxxxxx, Esq.
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FOR
VALUE RECEIVED,
the
Pledgor hereby unconditionally and absolutely guarantees the Company’s
Obligations (as defined above) solely to the extent of the Pledged Shares.
This
Agreement is made without any recourse to the Pledgor.
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By:
/s/
XXXXXXX XXXXXXXXX
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By: /s/ XXXXXXX XXXXXX | |
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Name:
Xxxxxxx
Xxxxxxxxx
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Name: Xxxxxxx Xxxxxx | |
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