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September 22, 2005
 

Newton Properties, Inc.
Trust Company Complex
Ajeltake Road
Ajeltake Island
Majuro, Marshall Islands MH96960

Ignis Petroleum Corporation
100 Crescent Court, 7th Floor
Dallas, Texas 75201

 
Re:
Loan Agreement, dated April 22, 2005 (the “Loan Agreement”), by and between
Ignis Petroleum Corporation (the “Borrower”) and Newton Properties, Inc.
(“Lender”)

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 $375,000, which was convertible at a conversion price of
$0.50 per share into 750,000 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, Doug Berry, Philipp Buschmann,
Fraser Tod, Gareth David Ball, Stephen Macrow, Luke Duncan Robinson, Thomas
Thompson 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 775,000 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 $375,000 unpaid principal
balance of the Note plus accrued but unpaid interest thereon of $12,500 into
775,000 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.

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Newton 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:

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Newton 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 775,000 shares of common stock of the Company.

[Signature page follows.]

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Newton Properties, Inc.
Ignis Petroleum Corporation
September 22, 2005
Page 4

 

 
Sincerely,
     
THE COMPANY:
     
IGNIS PETROLEUM GROUP, INC.
         
By: /s/ Philipp Buschmann
 
Name: Philipp Buschmann
 
Title: COO
   
Agreed and Consented to:
     
LENDER:
     
NEWTON PROPERTIES, INC.
         
By: /s/ David Craven
 
Name: David Craven
 
Title: CEO
 
Date: 22 September 2005
             
BORROWER:
     
IGNIS PETROLEUM CORPORATION
         
By: /s/ Philipp Buschmann
 
Name: Philipp Buschmann
 
Title: COO
 
Date: 9/23/05
 

 

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