IRREVOCABLE TRANSFER AGENT INSTRUCTIONS January 5, 2006
Exhibit
4.12
January
5, 2006
Empire
Stock Transfer, Inc.
0000
Xxxx
Xxxx Xxxx Xxxx., Xxxxx 000
Las
Vegas, Nevada 89128
Attention:
Xxxx Xxxxx, President
Ladies
and Gentlemen:
Reference
is made to that certain Securities Purchase Agreement (the “Securities
Purchase Agreement”)
of
even date herewith by and between Ignis Petroleum Group, Inc., a Nevada
corporation (the “Company”),
and
the Buyers set forth on Schedule I attached thereto (collectively the
“Buyers”),
that
certain Pledge and Escrow Agreement (the “Company
Pledge Agreement”)
of
even date herewith among the Company, the Buyers and Xxxxx Xxxxxxxx, as escrow
agent (the “Escrow
Agent”),
that
certain Insider Pledge and Escrow Agreement (“Insider
Pledge Agreement”)
of
even date herewith among the Company, the Buyers, Xxxxxxx Xxxxxxxxx and Xxxxxxx
Xxxxxx and the Escrow Agent (the Company Pledge Agreement and the Insider Pledge
Agreement shall collectively be referred to as the “Pledge
Agreement”),
and
those certain Warrants of even date herewith between the Company and the Buyers
(collectively, the “Warrant”).
Pursuant to the Securities Purchase Agreement, the Company shall sell to the
Buyers, an the Buyers shall purchase from the Company, convertible debentures
(collectively, the “Debentures”)
in the
aggregate principal amount of Five Million Dollars ($5,000,000), plus accrued
interest, which are convertible into shares of the Company’s common stock, par
value $0.001 per share (the “Common
Stock”),
at
the Buyers discretion. These instructions relate to the following stock or
proposed stock issuances or transfers:
| 1. |
The
Company has agreed to issue to the Buyers up to 30,000,000 shares
of the
Company’s Common Stock upon conversion of the Debentures (“Conversion
Shares”)
plus the shares of Common Stock to be issued to the Buyers upon conversion
of accrued interest and liquidated damages into Common Stock (the
“Interest
Shares”)
|
| 2. |
The
Company has agreed to issue to the Buyers up to 5,774,592 shares
(the
“Warrant
Shares”)
of the Company’s Common Stock upon exercise of the
Warrant.
|
| 3. |
The
Company has prepared, or will promptly prepare, a stock certificate
representing 18,750,000 shares of the Company’s Common Stock, in the
Company’s name, which shall be delivered to the Escrow Agent pursuant to
the Pledge Agreement upon the termination of the Insider Pledge Agreement.
The Pledgors (as such term is defined in the Insider Pledge Agreement)
have previously delivered to the Escrow Agent the aggregate number
of
4,320,000 shares of the Company’s Common Stock in accordance with the
terms of the Insider Pledge Agreement (the 18,750,000 shares of Common
Stock to be pledged and the 4,320,000 shares already pledged shall
collectively be referred to as the “Escrowed
Shares”).
|
This
letter shall serve as our irrevocable authorization and direction to Empire
Stock Transfer, Inc. (the “Transfer
Agent”)
to do
the following:
| 1. |
Conversion
Shares and Warrant Shares.
|
| a. |
Instructions
Applicable to Transfer Agent.
With respect to the Conversion Shares, Warrant Shares and the Interest
Shares, the Transfer Agent shall issue the Conversion Shares, Warrant
Shares and the Interest Shares to the Buyers from time to time upon
delivery to the Transfer Agent of a properly completed and duly executed
Conversion Notice (the “Conversion
Notice”),
in the form attached hereto as Exhibit I,
or a properly completed Exercise Notice in the form attached to the
Warrant as Exhibit A thereto (the “Exercise
Notice”),
delivered on behalf of the Company to the Transfer Agent by Xxxxx
Xxxxxxxx, Esq. (the “Escrow
Agent”).
Upon receipt of a Conversion Notice or an Exercise Notice, the Transfer
Agent shall within three (3) Trading Days thereafter (i) issue and
surrender to a common carrier for overnight delivery to the address
as
specified in the Conversion Notice or the Exercise Notice, a certificate,
registered in the name of the Buyers or their designees, for the
number of
shares of Common Stock to which the Buyers shall be entitled as set
forth
in the Conversion Notice or Exercise Notice or (ii) provided Transfer
Agent are participating in The Depository Trust Company (“DTC”)
Fast Automated Securities Transfer Program, upon the request of the
Buyers, credit such aggregate number of shares of Common Stock to
which
the Buyers shall be entitled to the Buyers’ or their designees’ balance
account with DTC through its Deposit Withdrawal At
Custodian (“DWAC”)
system provided the Buyers causes its bank or broker to initiate
the DWAC
transaction. For purposes hereof “Trading
Day”
shall mean any day on which the OTCBB Market is open for customary
trading.
|
| b. |
The
Company hereby confirms to the Transfer Agent and the Buyers that
certificates representing the Conversion Shares and Warrant Shares
shall
not bear any legend restricting transfer and should not be subject
to any
stop-transfer restrictions and shall otherwise be freely transferable
on
the books and records of the Company; provided
that
counsel to the Company delivers (i) the Notice of Effectiveness set
forth
in Exhibit
II
attached hereto and (ii) an opinion of counsel in the form set forth
in
Exhibit
III
attached hereto, and that if the Conversion Shares, Warrant Shares
and the
Interest Shares are not registered for sale under the Securities
Act of
1933, as amended, then the certificates for the Conversion Shares,
Warrant
Shares and Interest Shares shall bear the following
legend:
|
2
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER
SAID
ACT.”
| c. |
In
the event that counsel to the Company fails or refuses to render
an
opinion as required to issue the Conversion Shares in accordance
with the
preceding paragraph (either with or without restrictive legends,
as
applicable), then the Company irrevocably and expressly authorizes
counsel
to the Buyers to render such opinion. The Transfer Agent shall accept
and
be entitled to rely on such opinion for the purposes of issuing the
Conversion Shares.
|
| d. |
Instructions
Applicable to Escrow Agent.
Upon the Escrow Agent’s receipt of a properly completed conversion notice
substantially in the form attached as an exhibit to the Debentures
or
instructions to exercise the Warrant, the Escrow Agent shall, within
one
(1) Trading Day thereafter, send to the Transfer Agent a Conversion
Notice
in the form attached hereto as Exhibit
I,
or an Exercise Notice, which shall constitute an irrevocable instruction
to the Transfer Agent to process such Conversion Notice or Exercise
Notice
in accordance with the terms of these
instructions.
|
| 2. |
Escrowed
Shares.
|
| a. |
With
respect to the Escrowed Shares, upon an event of default as set forth
in
the Pledge Agreement, the Escrow Agent shall send written notice
to the
Transfer Agent (“Escrow
Notice”)
to transfer such number of Escrow Shares as set forth in the Escrow
Notice
to the Buyers. Upon receipt of an Escrow Notice, the Transfer Agent
shall
promptly transfer such number of Escrow Shares to the Buyers as shall
be
set forth in the Escrow Notice delivered to the Transfer Agent by
the
Escrow Agent. Further, the Transfer Agent shall promptly transfer
such
shares from the Buyers to any subsequent transferee promptly upon
receipt
of written notice from the Buyers or their counsel. If the Escrow
Shares
are not registered for sale under the Securities Act of 1933, as
amended,
then the certificates for the Escrow Shares shall bear the legend
set
forth in Section 1b.
|
3
| b. |
In
the event that counsel to the Company fails or refuses to render
an
opinion as may be required by the Transfer Agent to affect a transfer
of
the Escrow Shares (either with or without restrictive legends, as
applicable), then the Company irrevocably and expressly authorizes
counsel
to the Buyers to render such opinion. The Transfer Agent shall accept
and
be entitles to rely on such opinion for the purpose of transferring
the
Escrow Shares.
|
| 3. |
All
Shares.
|
| a. |
The
Transfer Agent shall reserve for issuance to the Buyers the Conversion
Shares, the Escrowed Shares and Warrant Shares. All such shares shall
remain in reserve with the Transfer Agent until the Buyers provides
the
Transfer Agent instructions that the shares or any part of them shall
be
taken out of reserve and shall no longer be subject to the terms
of these
instructions.
|
| b. |
The
Transfer Agent shall rely exclusively on the Conversion Notice, the
Escrow
Notice or the Exercise Notice and shall have no liability for relying
on
such instructions. Any Conversion Notice, Escrow Notice or Exercise
Notice
delivered hereunder shall constitute an irrevocable instruction to
the
Transfer Agent to process such notice or notices in accordance with
the
terms thereof. Such notice or notices may be transmitted to the Transfer
Agent by facsimile or any commercially reasonable
method.
|
| c. |
The
Company hereby confirms to the Transfer Agent and the Buyers that
no
instructions other than as contemplated herein will be given to Transfer
Agent by the Company with respect to the matters referenced herein.
The
Company hereby authorizes the Transfer Agent, and the Transfer Agent
shall
be obligated, to disregard any contrary instructions received by
or on
behalf of the Company.
|
4.
Certain Notice Regarding the Escrow Agent.
The
Company and the Transfer Agent hereby acknowledge that the Escrow Agent is
general counsel to the Buyers, a partner of the general partner of the Buyers
and counsel to the Buyers in connection with the transactions contemplated
and
referred herein. The Company and the Transfer Agent agree 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 Buyers and neither
the
Company nor the Transfer Agent will seek to disqualify such
counsel.
Any
attempt by Transfer Agent to resign as the Company’s transfer agent hereunder
shall not be effective until such time as the Company provides to the Transfer
Agent written notice that a suitable replacement has agreed to serve as transfer
agent and to be bound by the terms and conditions of these Irrevocable Transfer
Agent Instructions.
4
The
Company herby confirms and the Transfer Agent acknowledges that while any
portion of the Debenture
remains unpaid and unconverted, the Company and the
Transfer Agent
shall
not, without the prior consent of the Buyers, (i) issue any Common Stock or
Preferred Stock without consideration or for a consideration per share less
than
its fair market value determined immediately prior to its issuance,
(ii) issue any Preferred Stock, warrant, option, right, contract, call, or
other security or instrument granting the holder thereof the right to acquire
Common Stock without consideration or for a consideration per share less than
such Common Stock’s fair market value determined immediately prior to its
issuance, (iii)
issue any S-8
shares of the Company’s Common Stock.
The
Company and the Transfer Agent hereby acknowledge and confirm that complying
with the terms of this Agreement does not and shall not prohibit the Transfer
Agent from satisfying any and all fiduciary responsibilities and duties it
may
owe to the Company.
The
Company and the Transfer Agent acknowledge that the Buyers is relying on the
representations and covenants made by the Company and the Transfer Agent
hereunder and are a material inducement to the Buyers purchasing convertible
debentures under the Securities Purchase Agreement. The Company and the Transfer
Agent further acknowledge that without such representations and covenants of
the
Company and the Transfer Agent made hereunder, the Buyers would not purchase
the
Debentures.
Each
party hereto specifically acknowledges and agrees that in the event of a breach
or threatened breach by a party hereto of any provision hereof, the Buyers
will
be irreparably damaged and that damages at law would be an inadequate remedy
if
these Irrevocable Transfer Agent Instructions were not specifically enforced.
Therefore, in the event of a breach or threatened breach by a party hereto,
including, without limitation, the attempted termination of the agency
relationship created by this instrument, the Buyers shall be entitled, in
addition to all other rights or remedies, to an injunction restraining such
breach, without being required to show any actual damage or to post any bond
or
other security, and/or to a decree for specific performance of the provisions
of
these Irrevocable Transfer Agent Instructions.
[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK]
5
IN
WITNESS WHEREOF,
the
parties have caused this letter agreement regarding Irrevocable Transfer Agent
Instructions to be duly executed and delivered as of the date first written
above.
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COMPANY:
|
|
|
By:
/s/
XXXXXXX XXXXXX
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|
|
Name: Xxxxxxx
Xxxxxx
|
|
|
Title: President
& CEO
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/s/
XXXXX XXXXXXXX
|
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Xxxxx
Xxxxxxxx, Esq.
|
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EMPIRE
STOCK TRANSFER, INC.
By:
/s/
XXXX XXXXX
Name:
Xxxx
Xxxxx
Title:
President
6
SCHEDULE
I
SCHEDULE
OF BUYERS
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Name
|
Signature
|
Address/Facsimile
Number
of Buyers
|
|
Cornell
Capital Partners, LP
|
By: Yorkville
Advisors, LLC
|
000
Xxxxxx Xxxxxx - Xxxxx 0000
|
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Its: General
Partner
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Jersey
City, NJ 07303
|
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Facsimile:
(000)
000-0000
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||
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By:
/s/
XXXX XXXXXX
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||
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Name: Xxxx
Xxxxxx
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||
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Its: Portfolio
Manager
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SCHEDULE
I-1
