September 22, 2005
September
22, 2005
Xxxxxx
Properties, Inc.
Trust
Company Complex
Ajeltake
Road
Ajeltake
Island
Majuro,
Xxxxxxxx Xxxxxxx XX00000
Ignis
Petroleum Corporation
000
Xxxxxxxx Xxxxx, 0xx
Xxxxx
Xxxxxx,
Xxxxx 00000
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Re:
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Loan
Agreement, dated April 22, 2005 (the “Loan
Agreement”),
by and between Ignis Petroleum Corporation (the “Borrower”)
and Xxxxxx Properties, Inc. (“Lender”)
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Ladies
and Gentlemen:
Pursuant
to the above referenced Loan Agreement, Borrower issued a Convertible Promissory
Note, dated April 22, 2005 (the “Note”)
to
Lender in the original principal amount of $1,125,000, which was convertible
at
a conversion price of $0.50 per share into 2,250,000 shares of common stock,
par
value $0.01 per share, of Borrower. Ignis Petroleum Group, Inc., f/k/a Sheer
Ventures, Inc. (the “Company”),
and
its sole director were aware of the Note when the Company entered into the
Stock
Exchange Agreement, dated May 11, 2005 (the “Stock
Exchange Agreement”),
by
and among the Company, Xxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxx Xxx, Gareth
Xxxxx
Xxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxx Xxxxxxxx, Xxxxxx Xxxxxxxx and Borrower,
pursuant to which all 1,600,000 outstanding shares of common stock of the
Borrower were exchanged for 1,600,000 shares of common stock, par value $0.001
per share, of the Company. Upon the consummation of the transaction contemplated
by the Stock Exchange Agreement (the “Exchange”),
Borrower became a wholly-owned subsidiary of the Company. Since the Exchange,
the Company has declared and paid a stock dividend whereby shareholders of
the
Company were issued five (5) additional shares of the Company’s common stock for
each one (1) share of common stock outstanding (the “Stock
Split”).
Each
of the parties hereto agrees that the
conversion
price of the Note should not be adjusted based upon the Stock Split and that
the principal
and accrued but unpaid interest on the Note should now be convertible into
2,325,000 shares of common stock of the Company at the rate of fifty cents
($0.50) per share.
The
purpose of this letter is to confirm Lender’s conversion and Borrower’s and the
Company’s acceptance for conversion of the entire $1,125,000 unpaid principal
balance of the Note plus accrued but unpaid interest thereon of $37,500 into
2,325,000 shares of common stock of the Company (the “Shares”)
effective on the date hereof. As a result of such conversion, the Note and
the
Loan Agreement are hereby terminated, and neither Borrower nor Lender shall
hereafter have any further rights or obligations under the Note or the Loan
Agreement.
Xxxxxx
Properties, Inc.
Ignis
Petroleum Corporation
September
22, 2005
Page
2
Lender
understands that the Shares have not been registered with the Securities
and
Exchange Commission or any state securities board and, as such, the shares
will
be deemed restricted securities, as such term is defined in the Securities
Act
of 1933, as amended (the “Securities
Act”),
and
the regulations promulgated thereunder. In connection with the issuance of
the
Shares, Lender hereby makes the following representations and warranties
to
Lender:
1.
Lender
is
an “accredited investor” as such term is defined in the Securities Act.
2.
Lender
is
purchasing the Shares for its own account, for investment purposes only and
not
with view to any public resale or other distribution thereof. Lender and
its
representatives have received, or have had access to, and have had sufficient
opportunity to review, all books, records, financial information and other
information which Lender considers necessary or advisable to enable it to
make a
decision concerning its conversion of the Note into the Shares, and Lender
possesses such knowledge and experience in financial and business matters
that
it is capable of evaluating the merits and risks of its investment hereunder.
3.
Lender
understands that any sale by Lender of any of the Shares will, under current
law, require either: (a) the registration of the Shares under the Securities
Act
and applicable state securities acts; (b) compliance with Rule 144 of the
Securities Act; or (c) the availability of an exemption from the registration
requirements of the Securities Act. Lender understands that the Company has
not
undertaken and does not presently intend to file a registration statement
to
register the Shares. Lender hereby agrees to execute, deliver, furnish or
otherwise provide to the Company an opinion of counsel reasonably acceptable
to
the Company prior to any subsequent transfer of the Shares, that such transfer
will not violate the registration requirements of the federal or state
securities acts. Lender further agrees to execute, deliver, furnish or otherwise
provide to the Company any documents or instruments as may be reasonably
necessary or desirable in order to evidence and record the Shares acquired
hereby.
4.
To
assist
in implementing the above provisions, Lender hereby consents to the placement
of
the legend, or a substantially similar legend, set forth below, on all
certificates representing ownership of the Shares acquired hereby until the
Shares have been sold, transferred, or otherwise disposed of, pursuant to
the
requirements hereof. The legend shall read substantially as
follows:
Xxxxxx
Properties, Inc.
Ignis
Petroleum Corporation
September
22, 2005
Page
3
"THE
SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED WITHOUT REGISTRATION
UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY APPLICABLE STATE
SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL THEY ARE REGISTERED
UNDER THE
ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO
THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED."
Please
indicate your acceptance of the terms of this letter agreement by (i) signing
a
counterpart of this letter agreement in the space provided therefore below,
and
(ii) marking the original Note “PAID” and returning it to the Company. Upon
receipt of a fully-executed counterpart of this letter agreement and the
original Note, the Company will issue a certificate to Lender representing
2,325,000 shares of common stock of the Company.
[Signature
page follows.]
Xxxxxx
Properties, Inc.
Ignis
Petroleum Corporation
September
22, 2005
Page
4
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Sincerely,
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THE
COMPANY:
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By:
/s/
Xxxxxxx Xxxxxxxxx
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Name:
Xxxxxxx Xxxxxxxxx
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Title:
COO
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Agreed
and Consented to:
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LENDER:
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XXXXXX
PROPERTIES, INC.
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By:
/s/
Xxxxx Xxxxxx
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Name:
Xxxxx Xxxxxx
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Title:
CEO
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Date:
22 September 2005
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BORROWER:
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IGNIS
PETROLEUM CORPORATION
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By:
/s/
Xxxxxxx Xxxxxxxxx
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Name:
Xxxxxxx Xxxxxxxxx
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Title:
COO
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Date:
9/23/05
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