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Exhibit 10.1
 
PLACEMENT AGENCY AGREEMENT
 
This Placement Agency Agreement (this “Agreement”) is made and entered into as
of October 21, 2005 (the “Effective Date”), by and between Ignis Petroleum
Group, Inc., a Nevada corporation (the “Company”), and Stonegate Securities,
Inc., a Texas corporation (“Stonegate”).
 
WHEREAS, the Company desires to retain Stonegate as its exclusive placement
agent, and Stonegate is willing to act in such capacity, in each case subject to
the terms and conditions of this Agreement.
 
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the Company and Stonegate (each a “Party” and collectively, the
“Parties”) hereby agree as follows:
 
1.
RETENTION OF STONEGATE; SCOPE OF SERVICES.

 

 
(a)
Subject to the terms and conditions set forth herein, the Company hereby retains
Stonegate to act as the exclusive placement agent to the Company during the
Contract Period (as defined in Section 2 below), and Stonegate hereby agrees to
be so retained.

 

 
(b)
Subject to the terms and conditions of this Agreement, as the exclusive
placement agent to the Company, Stonegate will have the exclusive right during
the Contract Period to identify for the Company prospective purchasers
(collectively, the “Purchasers” and each individually, a “Purchaser”) in one or
more placement (each, a “Placement” and collectively, the “Placements”) of debt
and/or equity securities to be issued by the Company, the type and dollar amount
being as mutually agreed to by the Parties (the “Securities”).

 

 
(c)
Terms of the Placements shall be as set forth in subscription documents,
including any stock purchase or subscription agreement, escrow agreement,
registration rights agreement, warrant agreement and/or other documents to be
executed and delivered in connection with each Placement (collectively, the
“Subscription Documents”). The Placements are intended to be exempt from the
registration requirements of the Securities Act of 1933, as amended (the
“Securities Act”), pursuant to Regulation D (“Regulation D”) of the rules and
regulations of the Securities and Exchange Commission (the “SEC”) promulgated
under the Securities Act.

 

 
(d)
Stonegate will act on a best efforts basis and will have no obligation to
purchase any of the Securities offered in any Placement. During the Contract
Period, subject to the terms and conditions of this Agreement, Stonegate shall
have the exclusive right to arrange for all sales of Securities in the
Placements, including without limitation the exclusive right to identify
potential buyers for the Securities. All sales of Securities in the Placements
shall be subject to the approval of the Company, which approval may be withheld
in the Company’s sole discretion.

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2.
CONTRACT PERIOD AND TERMINATION.

 

 
(a)
Subject to the terms and conditions of this Agreement, Stonegate shall act as
the Company’s exclusive placement agent under this Agreement for a period
commencing on the Effective Date and continuing thereafter until the earlier to
occur of (i) termination by either party upon ten (10) days prior written notice
to the other party, or (ii) six (6) months from the date hereof unless extended
by the parties in writing (the “Contact Period”).

 

 
(b)
Upon termination, neither party will have any further obligation under this
Agreement, except as provided in Sections 5, 6, 7, 8, 9 and 10 hereof.

 
3.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 
The representations and warranties of the Company made to the Purchasers as set
forth in the Subscription Documents are hereby incorporated by reference as of
the date of consummation of the sale of the Securities (the “Closing”) and all
such representations and warranties are hereby deemed made by the Company
directly to Stonegate as though set forth in full herein. The Company represents
and warrants that it has full power and authority to enter into this Agreement
and to perform its obligations hereunder. This Agreement is enforceable against
the Company in accordance with its terms, subject to applicable laws governing
bankruptcy, insolvency and creditors’ rights generally. The Agreement does not
conflict with, violate, breach, cause a default, right of termination, or
acceleration (whether through the passage of time or otherwise) under any
contract, agreement, or understanding, or any law, rule, or regulation binding
upon or applicable to the Company or any subsidiary of the Company.
 
4.
COVENANTS OF THE COMPANY.

 
The Company covenants and agrees as follows:
 

 
(a)
Neither the Company nor any affiliate of the Company (as defined in Rule 501(b)
of Regulation D) will sell, offer for sale or solicit offers to buy or otherwise
negotiate in respect of any security (as defined in the Securities Act) of the
Company which will be integrated with the sale of the Securities in a manner
which would cause the offering of the Securities to not be exempt from
registration under the Securities Act.

 

 
(b)
Any and all filings and documents required to be filed in connection with or as
a result of the Placements pursuant to federal and state securities laws are the
responsibility of the Company and will be filed by the Company.

 

 
(c)
Any press release to be issued by the Company announcing or referring to any
Placement shall be subject to the prior review of Stonegate, and each such press
release shall, subject to applicable law and regulations, at the request of
Stonegate, identify Stonegate as the placement agent. Stonegate shall be
permitted to publish a tombstone or similar advertisement upon completion of
each Placement identifying itself as the Company’s placement agent with respect
thereto. This Agreement may be filed publicly by the Company without the prior
written consent of Stonegate, if based on advice of counsel, such filing is
required by applicable law or regulation.

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5.
FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY.

 

 
(a)
In connection with Stonegate’s activities hereunder on the Company’s behalf, the
Company shall furnish Stonegate with all reasonable information concerning the
Company and its operations that Stonegate deems necessary or appropriate (the
“Company Information”) and shall provide Stonegate with reasonable access to the
Company’s books, records, officers, directors, employees, accountants and
counsel. The Company acknowledges and agrees that, in rendering its services
hereunder, Stonegate will be using and relying upon the Company Information
without independent verification thereof or independent appraisal of any of the
Company’s assets and may, in its sole discretion, use additional information
contained in public reports or other information furnished by the Company or
third parties.

 

 
(b)
Stonegate agrees that the Company Information will be used solely for the
purpose of performing its services hereunder. Subject to the limitations set
forth in subsection (c) below, Stonegate will keep the Company Information
provided hereunder confidential and will not disclose such Company Information
or any portion thereof, except (i) to a third party contacted by Stonegate on
behalf of, and with the prior approval of, the Company pursuant hereto who has
agreed to be bound by a confidentiality agreement satisfactory in form and
substance to the Company, or (ii) to any other person for which the Company’s
consent to disclose such Company Information has been obtained.

 

 
(c)
Stonegate’s confidentiality obligations under this Agreement shall not apply to
any portion of the Company Information which (i) at the time of disclosure to
Stonegate or thereafter is generally available to and known by the public (other
than as a result of a disclosure directly or indirectly by Stonegate in
violation of this Agreement); (ii) was available to Stonegate on a
non-confidential basis from a source other than the Company, provided that such
source is not and was not bound by a confidentiality agreement with the Company;
(iii) has been independently acquired or developed by Stonegate without
violating any of its obligations under this Agreement; or (iv) the disclosure of
which is legally compelled (whether by deposition, interrogatory, request for
documents, subpoena, civil or administrative investigative demand or other
similar process). In the event that Stonegate becomes legally compelled to
disclose any of the Company Information, Stonegate shall provide the Company
with prompt prior written notice of such requirement so that the Company may
seek a protective order or other appropriate remedy and/or waive compliance with
the terms of this Agreement.

 

 
(d)
The obligations of the Parties under this Section 5 shall survive the
termination of this Agreement for 36 months.

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6.
FEES AND EXPENSES.

 

 
(a)
As compensation for services rendered by Stonegate in connection with the
Placements, the Company agrees to pay Stonegate a fee (the “Agency Fee”) as
follows: (i) with respect to the sale of any Securities sold in a Placement
pursuant to an equity line of credit, a fee of seven percent (7%) of the gross
proceeds of that portion of total gross proceeds for amounts received up to and
including Five Million Dollars ($5,000,000) plus six percent (6%) of that
portion of total gross proceeds received in excess of Five Million Dollars
($5,000,000); and (ii) with respect to the sale of any Securities sold in a
Placement other than pursuant to an equity line of credit (a) eight percent (8%)
of that portion of total gross proceeds from the sale of Securities in the
Placements for amounts up to and including Five Million Dollars ($5,000,000);
plus (b) seven percent (7%) of that portion of total gross proceeds from the
sale of Securities for between Five Million Dollars ($5,000,000) and up to and
including Ten Million Dollars ($10,000,000) of Securities sold in the
Placements; plus (c) six percent (6%) of that portion of total gross proceeds
from the sale of Securities for any Securities sold in the Placements in excess
of Ten Million Dollars ($10,000,000). In addition, the Company agrees to pay
Stonegate an Agency Fee of five percent (5%) of the gross proceeds received by
the Company from the exercise of any warrants issued to investors as part of any
Placement. Other than as provided for in the immediately proceeding sentence,
“gross proceeds” referenced in this Section 6(a) shall not include proceeds
received by the Company from the exercise of a warrant issued in any Placement.
The Agency Fee shall be paid immediately upon the closing of each sale of
Securities by the Company, and upon the exercise of any warrants by an investor.
Notwithstanding anything in this Agreement to the contrary, Stonegate shall not
be entitled to any Agency Fee upon the exercise of any warrant issued to
Stonegate pursuant to Section 6(d) of this Agreement, or for any sales of
Securities to the Excluded Contacts (as defined in Section 8 hereof).

 

 
(b)
As compensation to Stonegate for its initial due diligence efforts, the Company
shall deliver to Stonegate (or Stonegate’s designee) 50,000 shares of fully paid
non-assessable shares of common stock of the Company (the “Shares”). Of the
Shares, 25,000 of such Shares shall be issued by the Company effective upon
execution of this Agreement. The remaining 25,000 shares shall be issued by the
Company the earlier of (i) in 30 days, at the sole discretion of the Company, or
(ii) upon the closing of a Placement. Stonegate acknowledges and agrees that the
Shares will be issued pursuant to an exemption from the registration
requirements of the Securities Act of 1933, as amended, that is an “accredited
investor” as such term is defined under Regulation D, and that at the time it
receives the Shares it will take them without a view toward distribution. The
Shares will be subject to the registration rights provisions set forth on
Appendix I hereto. The Company will issue the Shares to such affiliates of
Stonegate and in such denominations as will be designated by Stonegate, so long
as such designee represent that it is an “accredited investor” and that at the
time its take such shares it will do so without a view toward distribution.

 

 
(c)
The Company shall also promptly reimburse Stonegate for all reasonable
documented out-of-pocket expenses incurred by Stonegate and its directors,
officers and employees in connection with the performance of Stonegate’s
services under this Agreement. For these purposes, “out-of-pocket expenses”
shall include, but not be limited to, attorney’s fees and costs, long distance
telephone, facsimile, courier, mail, supplies, travel and similar expenses,
provided that in no event shall the Company be required to reimburse expenses in
excess of $25,000 without the prior written consent of the Company.

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(d)
Upon closing of the Placement, the Company agrees to issue to Stonegate a
Securities Purchase Warrant (the “Representative’s Warrant”) entitling the
holder(s) thereof to purchase an amount of shares of common stock of the Company
equal to ten percent (10%) of the total number of shares of common stock sold in
the Placement (excluding options or warrants that are part of the Placement) at
an exercise price per share equal to the price at which the Securities are sold
to Purchasers. With respect to a Placement (or any portion of a Placement) which
involves (i) the issuance by the Company of convertible preferred stock or
convertible debt, the Representative Warrant shall entitle the holder to
purchase an amount of shares of common stock equal to ten percent (10%) of the
amount of shares of common stock that the convertible preferred stock or
convertible debt is convertible assuming conversion of the entire amount
thereof, or (ii) the issuance of any instrument of indebtedness, loan, or any
Securities not convertible into common stock, the Representative Warrant shall
entitled the holder to purchase an amount of shares of common stock equal to ten
percent (10%) of the aggregate face amount of such debt, loan or other Security
divided by the market price of the common stock of the Company on the date
following the public announcement of the Closing of the Placement. The
Representative’s Warrant shall be for a period of five (5) years and shall
otherwise be substantially in the form of Exhibit A attached hereto.

 

 
(e)
The obligations of the Parties under this Section 6 shall survive the
termination of this Agreement for any reason.

 
7.
INDEMNIFICATION.

 

 
(a)
The Company agrees to indemnify and hold Stonegate harmless from and against any
and all losses, claims, damages or liabilities (or actions, including
securityholder actions, in respect thereof) related to or arising out of
Stonegate’s engagement hereunder or its role in connection herewith, and will
reimburse Stonegate for all reasonable expenses (including reasonable costs,
expenses, awards and counsel fees and/or judgments) as they are incurred by
Stonegate in connection with investigating, preparing for or defending any such
action or claim, whether or not in connection with pending or threatened
litigation in which Stonegate is a party. The Company will not, however, be
responsible for any claims, liabilities, losses, damages or expenses which are
finally judicially determined to have resulted primarily from the bad faith,
gross negligence or willful misconduct of Stonegate (a “Non-Indemnified Claim”).
In this regard, Stonegate shall reimburse the Company for any payments made
herein for a Non-Indemnified Claim. The Company also agrees that Stonegate shall
not have any liability to the Company for or in connection with such engagement,
except for any such liability for losses, claims, damages, liabilities or
expenses incurred by the Company that result from the bad faith, gross
negligence or willful misconduct of Stonegate and/or any of its affiliates,
agents or representatives. In the event that the foregoing indemnity is
unavailable (except by reason of the bad faith, willful misconduct or gross
negligence of Stonegate and/or any of its affiliates, agents or
representatives), then the Company shall contribute to amounts paid or payable
by Stonegate in respect of its losses, claims, damages and liabilities in such
proportion as appropriately reflects the relative benefits received by, and
fault of, the Company and Stonegate in connection with the matters as to which
such losses, claims, damages or liabilities relate, and other equitable
considerations. The foregoing shall be in addition to any rights that Stonegate
may have at common law or otherwise and shall extend upon the same terms to and
inure to the benefit of any director, officer, employee, agent or controlling
person of Stonegate.

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(b)
Stonegate agrees to indemnify and hold the Company harmless from and against any
and all losses, claims, damages or liabilities (or actions, including
securityholder actions, in respect thereof) which are finally judicially
determined to have resulted primarily from the bad faith, gross negligence or
willful misconduct of Stonegate and/or any of its affiliates, agents or
representatives, and will reimburse the Company for all reasonable expenses
(including reasonable costs, expenses, awards and counsel fees and/or judgments)
as they are incurred by the Company in connection with investigating, preparing
for or defending any such action or claim, whether or not in connection with
pending or threatened litigation in which the Company is a party. In the event
that the foregoing indemnity is unavailable, then Stonegate shall contribute to
amounts paid or payable by the Company in respect of its losses, claims, damages
and liabilities in such proportion as appropriately reflects the relative
benefits received by, and fault of, the Company and Stonegate in connection with
the matters as to which such losses, claims, damages or liabilities relate, and
other equitable considerations. The foregoing shall be in addition to any rights
that the Company may have at common law or otherwise and shall extend upon the
same terms to and inure to the benefit of any director, officer, employee, agent
or controlling person of the Company.

 

 
(c)
The obligations of the Parties under this Section 7 shall survive the
termination of this Agreement.

 
8.
NON-CIRCUMVENTION.

 
The Company hereby agrees that, for a period of one year from the end of the
Contract Period or other termination of this Agreement, the Company will not
enter into any agreement, transaction or arrangement with any of the
institutions (including their agents, principals and affiliates and the accounts
and funds which they manage or advise) which Stonegate has introduced to the
Company pursuant to a face to face meeting, telephone conference or video
conference, as prospective purchasers of the Securities in the Placements
(collectively, the “Stonegate Contacts”), regardless of whether a transaction is
consummated with such prospective purchasers, unless the Company notifies
Stonegate in writing of the agreement, transaction or arrangement, and pays
Stonegate a fee equal to the Agency Fee for securities of the Company sold to
Stonegate Contacts. Upon the termination or expiration of this Agreement,
Stonegate and the Company shall in good faith prepare a list of each Stonegate
Contact to which this Section 8 is applicable. The entities listed on the
attached Schedule A shall not be considered Stonegate Contacts (the “Excluded
Contacts”).
 
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9.
GOVERNING LAW.

 
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PROVISIONS
THEREOF.
 
10.
ARBITRATION.

 
Stonegate and the Company will attempt to settle any claim or controversy
arising out of this Agreement through consultation and negotiation in good faith
and a spirit of mutual cooperation. Any dispute which the parties cannot resolve
may then be submitted by either party to binding arbitration in Dallas, Texas
under the rules of the American Arbitration Association for resolution. Nothing
in this paragraph will prevent either party from resorting to judicial
proceedings if (a) good faith efforts to resolve the dispute under these
procedures have been unsuccessful or (b) interim relief from a court is
necessary to prevent serious and irreparable injury.
 
11.
NO WAIVER.

 
The failure or neglect of any party hereto to insist, in any one or more
instances, upon the strict performance of any of the terms or conditions of this
Agreement, or waiver by any party of strict performance of any of the terms or
conditions of this Agreement, shall not be construed as a waiver or
relinquishment in the future of such term or condition, but the same shall
continue in full force and effect.
 
12.
SUCCESSORS AND ASSIGNS.

 
The benefits of this Agreement shall inure to the benefit of the Parties, their
respective successors, assigns and representatives, and the obligations and
liabilities assumed in this Agreement by the Parties shall be binding upon their
respective successors and assigns. This Agreement may not be assigned by either
Party without the express written consent of the other Party.
 
13.
NOTICES.

 
All notices and other communications required or permitted to be given under
this Agreement shall be in writing and shall be delivered personally or sent by
certified mail, return receipt requested, recognized overnight delivery service,
or facsimile as follows:
 

 
If to the Company:
     
Ignis Petroleum Group, Inc.
 
100 Crescent Court, 7th Floor
 
Dallas, Texas 75201
 
Facsimile: (214) 459-3101
 
Attention: Michael P. Piazza, Chief Executive Officer

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If to Stonegate:
     
Stonegate Securities, Inc.
 
5940 Sherry Lane, Suite 410
 
Dallas, Texas 75225
 
Facsimile: (214) 987-1981
 
Attention: Scott Griffith, President

Either Party may change its address or facsimile number set forth above by
giving the other Party notice of such change in accordance with the provisions
of this Section 13. A notice shall be deemed given (a) if by personal delivery,
on the date of such delivery, (b) if by certified mail, on the date shown on the
applicable return receipt, (c) if by overnight delivery service, on the day
after the date delivered to the service, or (d) if by facsimile, on the date of
transmission.
 
14.
NATURE OF RELATIONSHIP.

 
The Parties intend that Stonegate’s relationship to the Company and the
relationship of each director, officer, employee or agent of Stonegate to the
Company shall be that of an independent contractor and not as an employee of the
Company or an affiliate thereof. Nothing contained in this Agreement shall
constitute or be construed to be or create a partnership or joint venture
between Stonegate and the Company or their respective successors or assigns.
Neither Stonegate nor any director, officer, employee or agent of Stonegate
shall be considered to be an employee of the Company by virtue of the services
provided hereunder.
 
15.
MISCELLANEOUS

 
Stonegate’s obligations under this Agreement are subject to the following
general conditions:
 

 
(a)
All relevant terms, conditions, and circumstances relating to the Placements
will be reasonably satisfactory to Stonegate and its counsel.

 

 
(b)
Stonegate reserves the right to solicit the assistance of licensed outside
dealers (“Dealers”) to assist in the offer and sale of the Placements with the
prior written consent of the Company; provided, however, that any such Dealers
agree in writing to be bound by the terms of the applicable Placement. It is
understood that Stonegate, in its sole discretion, shall be entitled to pay over
to any such Dealers any portion of the compensation received by Stonegate
hereunder. The Company shall have no financial liability for any fees or
expenses of any such Dealers.

 
16.
CAPTIONS.

 
The Section titles herein are for reference purposes only and do not control or
affect the meaning or interpretation of any term or provision hereof.
 
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17.
AMENDMENTS.

 
No alteration, amendment, change or addition hereto shall be binding or
effective unless the same is set forth in a writing signed by a duly authorized
representative of each Party.
 
18.
PARTIAL INVALIDITY.

 
If it is finally determined that any term or provision hereof is invalid or
unenforceable, (a) the remaining terms and provisions hereof shall be
unimpaired, and (b) the invalid or unenforceable term or provision shall be
replaced by a term or provision that is valid and enforceable and that comes as
close as possible to expressing the intention of the invalid or unenforceable
term or provision.
 
19.
ENTIRE AGREEMENT.

 
This Agreement embodies the entire agreement and understanding of the Parties
and supersedes any and all prior agreements, arrangements and understandings
relating to the matters provided for herein.
 
20.
COUNTERPARTS.

 
This Agreement may be executed in one or more counterparts, each of which shall
be an original, but all of which together shall be considered one and the same
agreement.
 
IN WITNESS WHEREOF, this Placement Agency Agreement has been executed as of the
date first written above by duly authorized representatives of the Company and
Stonegate.
 

 
IGNIS PETROLEUM GROUP, INC.
             
By: /s/ MICHAEL PIAZZA
 
Title: President and Chief Executive Officer
     
STONEGATE SECURITIES, INC.
             
By:/s/ SCOTT GRIFFITH
 
Title: President

 
 
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