Document:

exhibit10_2.htm

    
      

      

    

    

    THIS
SECURED NOTE AND THE SECURITIES INTO WHICH IT IS CONVERTIBLE (COLLECTIVELY, THE
“SECURITIES”) HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS.  THE SECURITIES HAVE
BEEN ACQUIRED SOLELY FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TOWARD RESALE
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 GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS.

     

    PLATINA
ENERGY GROUP, INC.

     

     

    Convertible
Note

     

     

    May
21, 2008

     

    

    
      	
              No.  N-2

            	
              US$2,300,000

            

    

    

    This
Secured Note (the “Note”) is issued on
May 21, 2008 (the “Closing Date”)
by Platina Energy Group, Inc., a Delaware corporation (the “Company”), to
Trafalgar Capital Specialized Investment Fund, Luxembourg (together with its
permitted successors and assigns, the “Holder”) pursuant to
exemptions from registration under the Securities Act of 1933, as
amended.

     

     

    Article
I

     

    Principal
and Interest.  For value
received, the Company hereby promises to pay to the order of the Holder on
August 21, 2011 in lawful money of the United States of America and in
immediately available funds the principal sum of Two Million Three Hundred
Thousand U.S. Dollars (US$2,300,000) together with
interest on the unpaid principal of this Note at the rate of ten percent (10.0%)
per annum compounded monthly from the date hereof until
paid.  Interest shall be computed on the basis of a 360-day year and
the actual days elapsed and the Holder shall deduct two (2) interest payments at
each Closing (as defined in the Securities Purchase Agreement).  The
Holder shall in no event be entitled to convert this Note for a number of shares
of Common Stock in excess of that number of shares of Common Stock which, upon
giving effect to such conversion, would cause the aggregate number of shares of
Common Stock beneficially owned by the Holder and its affiliates to exceed 4.99%
of the outstanding shares of the Common Stock following such
conversion.

     

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    Optional
Conversion.  The Holder is
entitled, at its option, to convert, and sell on the same day or at any
subsequent time, at any time and from time to time, until payment in full of
this Note, all or any part of the principal amount of the Note, plus accrued
interest, into shares (the “Conversion Shares”)
of the Company’s common stock, par value US $.001 per share (“Common Stock”), at
the price per share (the “Conversion Price”)
equal to $0.081 (the “Fixed Price”) when
the Common Stock is trading at or above $0.30 per share.  The Holder
shall also have the right to convert at a price equal to eighty-five
percent (85%) of the lowest daily closing bid price of the Company’s Common
Stock, as quoted by Bloomberg, LP, for the ten (10) trading days immediately
preceding the Conversion Date (as defined herein) when the monthly
installment of the Mandatory Redemption (as described in Section 1.05 hereof) is
not paid within five (5) days of the due date of such
installment.  Subparagraphs (a) and (b) above are individually
referred to as a “Conversion
Price”.  As used herein, “Principal Market”
shall mean The National Association of Securities Dealers Inc.’s
Over-The-Counter Bulletin Board, Nasdaq Capital Market, or American Stock
Exchange.  No fraction of shares or scrip representing fractions of
shares will be issued on conversion, but the number of shares issuable shall be
rounded to the nearest whole share.  To convert this Note, the Holder
hereof shall deliver written notice thereof, substantially in the form of
Exhibit “A” to this Note, with appropriate insertions (the “Conversion Notice”),
to the Company at its address as set forth herein.  The date upon
which the conversion shall be effective (the “Conversion Date”)
shall be deemed to be the date set forth in the Conversion
Notice.  Within three (3) days of receipt of a Conversion Notice from
the Holder, the Company may redeem any conversion for cash in lieu of issuing
the Conversion Shares at using the Redemption Amount.

     

    Reservation
of Common Stock.  The Company shall
reserve and keep available out of its authorized but unissued shares of Common
Stock, solely for the purpose of effecting the conversion of this Note, such
number of shares of Common Stock as shall from time to time be sufficient to
effect such conversion, based upon the Conversion Price.  If at any
time the Company does not have a sufficient number of Conversion Shares
authorized and available, then the Company within ten (10) business days for the
sole purpose of increasing the number of shares authorized shall either (i)
obtain sufficient written consents from the Company’s shareholders and file an
Information Statement with the Securities and Exchange Commission (the “SEC”) or
(ii) file a preliminary proxy statement with the Securities and Exchange
Commission within ten (10) business day after such occurrence and shall call and
hold a special meeting of its stockholders as soon as practicable after such
occurrence for the sole purpose of increasing the number of authorized shares of
Common Stock. Notwithstanding the foregoing, the Holders hereby acknowledge that
the Company currently does not have sufficient shares of its Common Stock
authorized as shall be necessary to effect the issuance of the Conversion
Shares, but has obtained the written consent of a sufficient number of votes of
its shareholders to authorize such increase and has filed an Information
Statement with the SEC reflecting such approval.

     

    Issuance
of Common Stock upon Conversion. The Company shall promptly,
but no later than five (5) days following the Company’s receipt of a Conversion
Notice, cause the delivery of the full amount of the Common Stock due to be
issued to Holder at that time.  In the event that the shares of Common
Stock are not delivered within ten (10) days of the Company’s receipt of a
Conversion Notice, the Company shall pay the Holder a cash amount within three
(3) business days, after the end of the month in which such shares were due,
equal to two percent (2%) of the liquidated value of the Notes then outstanding,
as liquidated damages and not as a penalty.  The Company acknowledges
that such a failure to deliver the shares due pursuant to a Conversion Notice is
likely to cause material financial hardship to Holder and shall constitute and
Event of Default hereunder.

     

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    Mandatory
and Optional Redemption.  The Company shall redeem this Note
starting on the third month following issuance in equal installments of the then
outstanding principal and interest due plus a redemption premium of fifteen
percent (15%) on the value of the Note as it is redeemed.  The Company
shall also have the option to prepay the then outstanding principal and any
accrued but unpaid interest of this Note in full or in part at any time and from
time to time by providing the Holder a Redemption Notice. Notwithstanding the
preceding sentences, the Company shall not be permitted to redeem this Note when
the Common Stock is trading at or above $0.30 per share.

     

    Interest
Payments.  The interest so payable will be paid monthly
beginning on the first month following the Closing (the “Interest Payment
Date”) to the person in whose name this Note is
registered.  Holder shall deduct the first two (2) interest payments
at the Closing.  At the time such interest is payable, the Holder, in
its sole discretion, may elect to receive the interest in cash (via wire
transfer or certified funds) or in the form of Common Stock.  In the
event of default, as described in Article III Section 3.01 hereunder,
the Holder may elect that the interest be paid in cash (via wire transfer or
certified funds) or in the form of Common Stock.  If paid in the form
of Common Stock, the amount of stock to be issued will be calculated as follows:
the value of the stock shall be the Closing Bid Price
on:  (i) the date the interest payment is due; or (ii) if
the interest payment is not made when due, the date the interest payment is
made.  A number of shares of Common Stock with a value equal to the
amount of interest due shall be issued.  No fractional shares will be
issued; therefore, in the event that the value of the Common Stock per share
does not equal the total interest due, the Company will pay the balance in
cash.

     

    Paying
Agent and Registrar.  Initially, the Company will act as paying
agent and registrar.  The Company may change any paying agent,
registrar, or Company-registrar by giving the Holder not less than ten (10)
business days’ written notice of its election to do so, specifying the name,
address, telephone number and facsimile number of the paying agent or
registrar.  The Company may act in any such capacity.

     

    Secured
Nature of Note.  This Note is secured by all of the assets and
property of the Company as set forth on Exhibit A to the Security Agreement
dated the date hereof between the Company and the Holder (the “Security
Agreement”).  As set forth in the Security Agreement, Holder’s
security interest shall terminate upon the occurrence of an Expiration Event as
defined in the Security Agreement.

     

    Section
1.09                                                                          Currency
Exchange Rate Protections for Non U.S. Buyers.  This Section
1.09 only applies to non U.S Buyers.

     

        (a)     “Closing Date Exchange Rate” means the
Euro to US dollar spot exchange rate as converted by the Holder’s Custodian on
the date funds are transferred into escrow.

     

        (b)              “Redemption
Notice” means advance written notice provided at least three business days prior
to a Redemption.

          

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

        (c)               “Redemption
Amount” means the amount of principal and interest redeemed pursuant to a
Redemption Notice.

     

        (d)             “Repayment
Exchange Rate” means in relation to each date of a Conversion Notice or
date of a Redemption Notice, the Euro to US dollar spot exchange rate as
quoted by Bloomberg or Proquote on such date.

     

        (e)                       If
on the date of any Conversion Notice or Redemption Notice, the Repayment
Exchange Rate is more than the Closing Date Exchange Rate then the number of
Shares to be issued shall be increased by the same percentage as results from
dividing the Repayment Exchange Rate by the relevant Closing Date Exchange
Rate.  By way of example, if the number of Shares to be issued in
respect of a particular Conversion Notice or Redemption Notice would, but for
this Section 1.08, be 1,000 and if the Closing Date Exchange Rate is 1.75 and
the relevant Repayment Exchange Rate is 1.80, then 1,029 Shares will be issued
in relation to that Conversion Notice or Redemption Notice, as the case may
be.  For the avoidance of doubt, the formula for such calculation, by
way of example for this Section, equals ((1.80 /1.75)-1)*1000 = 29 additional
shares.

     

        (f)                       If
on the Repayment Date or any Interest Repayment Date, the Cash Payment Date
Exchange Rate, as defined below is less than the Closing Date Exchange Rate then
the amount of cash required to satisfy the amounts due at such time shall be
increased by the same percentage as results from dividing the Cash Payment Date
Exchange Rate by the relevant Closing Date Exchange Rate. “Cash Payment Date
Exchange Rate” relation to each Repayment Date or Interest Repayment Date
the US dollar spot exchange rate as quoted by Bloomberg or Proquote on such
date.  By way of example, if the amount of cash required to repay all
amounts due on such date would, but for this Section 1.08, be $1,000 and if the
Closing Date Exchange Rate is 1.75 and the relevant Repayment Date Exchange Rate
is 1.80 then the amount of cash from the Cash Payment required to repay all
amounts due on such date will be $1,028.57.  For the avoidance of
doubt, the formula for such calculation, by way of example for this Section,
equals ((1.80/1.75)-1)*$1000 = $28.57 additional dollars.

     

     

    Article II

     

    Amendments and Waiver of Default.  The Note may not
be amended.  Notwithstanding the above, without the consent of the
Holder, the Note may be amended to cure any ambiguity, defect or inconsistency,
or to provide for assumption of the Company obligations to the
Holder.

     

     

    Article III

     

    Events of
Default.  An Event of
Default is defined as follows: (a) failure by the Company to pay amounts
due hereunder within fifteen (15) days of the date of maturity of this
Note; (b) failure by the Company to comply with the terms of the
Irrevocable Transfer Agent Instructions attached to the Securities Purchase
Agreement; (c) after the Registration Statement has been declared effective,
failure by the Company’s transfer agent to issue freely tradeable Common Stock
(including Common Stock tradable under Rule 144) to the Holder within
five (5) days of the Company’s receipt of the attached Notice of Conversion
from Holder; (d) failure by the Company for ten (10) days after notice
to it to comply with any of its other agreements in the Note; (e) events of
bankruptcy or insolvency; (f) a breach by the Company of its obligations
under the Securities Purchase Agreement which is not cured by the Company within
ten (10) days after receipt of written notice thereof or (g) any attempts,
actions or inactions taken by or under the direction of the Company made with
the intention of rescinding, cancelling or modifying in any matter the
Irrevocable Transfer Agent Instructions executed on the date
hereof.  Upon the occurrence of an Event of Default, the Holder may,
in its sole discretion, accelerate full repayment of all Notes outstanding and
accrued interest thereon or may, notwithstanding any limitations contained in
this Note and/or the Securities Purchase Agreement dated the date hereof between
the Company and Trafalgar Capital Specialized Investment Fund, Luxembourg (the
“Securities Purchase
Agreement”), convert all Notes outstanding and accrued interest thereon
into shares of Common Stock pursuant to Section 1.02 herein.

     

    Failure
to Issue Common Stock.
As indicated in Article III Section 3.01, a breach by the
Company of its obligations under the Securities Purchase Agreement shall be
deemed an Event of Default, which if not cured within ten (10) days, shall
entitle the Holder to accelerate full repayment of the Notes together with
accrued interest thereon or, notwithstanding any limitations contained in this
Note and/or the Securities Purchase Agreement, to convert all amounts
outstanding under the Notes together with accrued interest thereon into shares
of Common Stock pursuant to Section 1.02 herein.  The Company
acknowledges that failure to honor a Notice of Conversion except as set forth
herein, shall cause irreparable harm to the Holder.

     

     

    

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    Article IV

    Re-issuance
of Note.  When the Holder
elects to convert a part of the Note, then the Company shall reissue a new Note
in the same form as this Note to reflect the new principal amount.

     

     

    Article V

     

    Anti-dilution.  In the event that
the Company shall at any time subdivide the outstanding shares of Common Stock,
or shall issue a stock dividend on the outstanding Common Stock, the Conversion
Price in effect immediately prior to such subdivision or the issuance of such
dividend shall be proportionately decreased, and in the event that the Company
shall at any time combine the outstanding shares of Common Stock, the Conversion
Price in effect immediately prior to such combination shall be proportionately
increased, effective at the close of business on the date of such subdivision,
dividend or combination as the case may be.

     

    Consent  of
Holder to Sell Capital Stock, Incur Debt or Grant Security Interests.  Except for the
Securities Purchase Agreement dated the date hereof between the Company and
Trafalgar Capital Specialized Investment Fund, Luxembourg, and except for shares
of the Company’s common stock permitted to be issued pursuant to the securities
purchase agreement between the Company and Buyer entered into as of December 31,
2007 (the “Prior Agreement”, so long as any of the principal of or interest on
this Note remains unpaid and unconverted, the Company shall not, without the
prior consent of the Holder:  (i) issue or sell in excess of
fifty thousand dollars ($50,000) worth of Common Stock or Preferred Stock, none
of which shall be issued or sold without consideration or for a consideration
per share less than the bid price of the Common Stock determined immediately
prior to its issuance, (ii) issue or sell in excess of fifty thousand
dollars ($50,000) worth of Preferred Stock, warrant, option, right, contract,
call, or other security or instrument granting the holder thereof the right to
acquire Common Stock, however no Preferred Stock or Common Stock shall be issued
or sold without consideration or for a consideration per share less than such
Common Stock’s bid price value determined immediately prior to its issuance,
(iii) enter into any security instrument granting the holder a security interest
in any of the assets of the Company, (iv) file any registration statement on
Form S-8 or (v) other than in the ordinary course of business consistent with
past practice, directly or indirectly permit, create, incur assume, permit to
exist, increase, renew or extend on or after the date hereof any additional debt
or permit any subsidiary of the Company to do or allow any of the foregoing
without the Holder’s prior written consent beyond that which is set forth in
Schedule 4(j) attached to the Securities Purchase Agreement.  In the
event that Holder does provide its consent hereunder to issue any such
securities described under (i), (ii) or (iv) of this Section or the Company
issues any of the Common Stock permitted to be issued under the Prior Agreement,
in either event if the Company defaults under the Note, the Fixed Price
hereunder shall be equal to the lesser of: (a) the Fixed Price as defined herein
and (b) eighty-five percent (85%) of the lowest consideration paid per share for
any such security issued by the Company.

     

    

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    Article VI

    

     

    Notice.  Notices regarding
this Note shall be sent to the parties at the following addresses, unless a
party notifies the other parties, in writing, of a change of
address:

     

    
      	
              If
      to the Company, to:

            	
              Blair
      Merriam, CEO

            
	 
      	
              14850
      Montfort Drive, Suite 131

            
	 
      	
              Dallas,
      Texas 75254

            
	 
      	
              Telephone:
      (303) 881-2604

            
	 
      	
              Facsimile:
      (480)287-9560

            
	 
      	 
      
	
              With
      a copy to:

            	
              Michael
      J. Tauger, Esq.

            
	 
      	
              5445
      DTC Parkway, Suite 520

            
	 
      	
              Greenwood
      Village, CO 80111

            
	 
      	
              Telephone:
      (303) 713-0363

            
	 
      	
              Facsimile:
      (720) 489-1587

            
	 
      	 
      
	 
      	 
      
	
              If
      to the Holder:

            	
              Trafalgar
      Capital Specialized Investment Fund

            
	 
      	
              8-10
      Rue Mathias Hardt

            
	 
      	
              BP
      3023

            
	 
      	
              L-1030
      Luxembourg

            
	 
      	
              Attention:                                  Andrew
      Garai, Chairman of the Board of

            
	 
      	
              Facsimile:                                  011-44-207-405-0161
      and

                                      001-786-323-1651

            
	 
      	 
      
	
              With
      a copy to:

            	
              James
      G. Dodrill II, P.A.

            
	 
      	
              5800
      Hamilton Way

            
	 
      	
              Boca
      Raton, FL  33496

            
	 
      	
              Attention:                                  James
      Dodrill, Esq.

            
	 
      	
              Telephone:                                  (561)
      862-0529

            
	 
      	
              Facsimile:                                  (561)
      892-7787

            

    

    

    Governing
Law.  This Note shall
be deemed to be made under and shall be construed in accordance with the laws of
the State of Florida without giving effect to the principals of conflict of laws
thereof.  Each of the parties consents to the jurisdiction of the
U.S. District Court sitting in the Southern District of the State of
Florida or the state courts of the State of Florida sitting in Broward County,
Florida in connection with any dispute arising under this Note and hereby
waives, to the maximum extent permitted by law, any objection, including any
objection based on forum non conveniens to the
bringing of any such proceeding in such jurisdictions.

     

    Severability.  The invalidity of
any of the provisions of this Note shall not invalidate or otherwise affect any
of the other provisions of this Note, which shall remain in full force and
effect.

     

    Entire
Agreement and Amendments.  This Note
represents the entire agreement between the parties hereto with respect to the
subject matter hereof and there are no representations, warranties or
commitments, except as set forth herein.  This Note may be amended
only by an instrument in writing executed by the parties hereto.

     

    Counterparts.  This Note may be
executed in multiple counterparts, each of which shall be an original, but all
of which shall be deemed to constitute on instrument.

     

    IN WITNESS WHEREOF, with the
intent to be legally bound hereby, the Company has executed this Note as of the
date first written above.

     

    
      	 
      	
              PLATINA
      ENERGY GROUP, INC.

            
	 
      	 
      
	 
      	
              By:

            
	 
      	
              Name:
      Blair Merriam

            
	 
      	
              Title:
      Chief Executive Officer

            

    

    

    

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    EXHIBIT
“A”

     

     

    NOTICE
OF CONVERSION

     

     

    (To
be executed by the Holder in order to Convert the Note)

     

    

    
      	
              TO:

            	 
      

    

    

    The
undersigned hereby irrevocably elects to convert US$ of the principal amount of
the above Note into Shares of Common Stock of Platina Energy Group,
Inc., according to the conditions stated therein, as of the Conversion
Date written below.

     

    
      	
              Conversion
      Date:

            	 
      
	
              Applicable
      Conversion Price:

            	 
      
	
              Signature:

            	 
      
	
              Name:

            	 
      
	
              Address:

            	 
      
	
              Amount
      to be converted:

            	
              US$ 

            
	
              Amount
      of Note unconverted:

            	
              US$

            
	
              Conversion
      Price per share:

            	
              US$ 

            
	
              Number
      of shares of Common Stock to be issued:

            	 
      
	
              Please
      issue the shares of Common Stock in the following name and to the
      following address:

            	 
      
	
              Issue
      to:

            	 
      
	
              Authorized
      Signature:

            	 
      
	
              Name:

            	 
      
	
              Title:

            	 
      
	
              Phone
      Number:

            	 
      
	
              Broker
      DTC Participant Code:

            	 
      
	
              Account
      Number:exhibit10_3.htm

    
      

      

    

    PLEDGE
AGREEMENT

     

     

    THIS PLEDGE AGREEMENT (the
“Agreement”) is
made and entered into as of May 21, 2008 (the “Effective Date”) by
and among PLATINA ENERGY GROUP,
INC., a corporation organized and existing under the laws of Delaware
(the “Company”
or “Pledgor”), TRAFALGAR
CAPITAL SPECIALIZED INVESTMENT FUND, LUXEMBOURG, (the “Pledgee”), and JAMES G. DODRILL II, P.A., as
escrow agent (“Escrow
Agent”).

     

     

    RECITALS:

     

     

    WHEREAS, in order to secure
the full and prompt payment when due (whether at the stated maturity, by
acceleration or otherwise) of all of the Company’s obligations (the “Obligations”) to the
Pledgee or any successor to the Pledgee under this Agreement, the Securities
Purchase Agreement of even date herewith between the Company and the Pledgee (the
“Securities Purchase
Agreement”), the Convertible Debentures (the “Convertible
Debentures”) issued or to be issued by the Company to the Pledgee, either
now or in the future, up to a total of Four Million Six Hundred Thousand Dollars
($4,600,000) of principal, plus any interest, costs, fees, and other amounts
owed to the Pledgee thereunder, the Security Agreement of even date herewith
between the Company and
the Pledgee (the “Security Agreement”),
and all other contracts entered into between the Company and Pledgor in connection
with Securities Purchase Agreement (collectively, the “Transaction
Documents”), the Company has agreed to irrevocably pledge to the Pledgee
Fifty Seven Thousand Five Hundred (57,500) restricted shares of the Company’s
Series E Preferred Stock (the “Pledged Shares”) in
the denominations set forth in Schedule 1 hereto.  The parties
acknowledge and agree that all of such shares are unrestricted, freely
transferable shares and the remaining shares may be restricted.

     

    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. Pledge
and Transfer of Pledged Shares.

     

     

    1.1. The
Pledgor hereby grants to Pledgee a security interest in all Pledged Shares as
security for the Company’s obligations under the Convertible Debentures.
Simultaneously with the execution of the Transaction Documents, the Pledgor
shall deliver to the Escrow Agent stock certificates representing the Pledged
Shares, in such denominations as requested by the Pledgee, together with duly
executed stock powers or other appropriate transfer documents 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 full payment of all amounts due to the Pledgee under the
Convertible Debentures and through repayment in accordance with the terms of the
Convertible Debentures, or the termination or expiration of this
Agreement.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    2. Rights
Relating to Pledged Shares. Upon the occurrence and during the continuance of
an Event of Default (as defined herein), the Pledgee shall be entitled to vote
the Pledged Shares, to receive dividends and other distributions thereon, and to
enjoy all other rights and privileges incident to the ownership of the Pledged
Shares.

     

    3. Release
of Pledged Shares from Pledge. Upon the payment of all amounts due to the
Pledgee under the Convertible Debentures by repayment in accordance with the
terms of the Convertible
Debentures, the parties hereto shall notify the Escrow Agent to such
effect in writing. Upon receipt of such written notice for payment of the
amounts due to the Pledgee under the Convertible Debentures, 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 full
payment of all amounts due to the Pledgee under the Convertible Debentures, by
repayment 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.

    4. Event of
Default. An “Event of Default”
shall be deemed to have occurred under this Agreement upon an Event of Default
under the Transaction Documents.

    5. Remedies.
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, 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 Pledgee by the Pledgor 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 Florida.
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 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 Pledgor (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.

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    5.1. 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.

     

        5.2. Demand
Registration Rights. In addition to all other remedies available to the
Pledgee, upon an Event of Default, the Pledgor shall promptly, but in no event
more than sixty (60) days after the date
of the Default Notice, file a registration statement to register with the
Securities and Exchange Commission the Pledged Shares for the resale by the
Pledgee. The Pledgor shall cause the registration statement to remain in effect
until all of the Pledged Shares have been sold by the Pledgee.

     

    6. Concerning
the Escrow Agent.

     

        6.1. 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.

     

        6.2. 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.

     

        6.3. 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, except for Escrow Agent’s gross
negligence or willful misconduct; 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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

        6.4. 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 Southern District of Florida, sitting in Miami, Florida, 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.

     

        6.5. 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.

     

        6.6. 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.

     

        6.7 Conflict Waiver. The Pledgor hereby
acknowledges that the Escrow Agent is securities counsel to 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.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

        6.8 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:

     

    
      	 
      	 
      	 
      	 
      	 
      
	
                If
      to a Pledgor, to such

            	 
      	 
      
	
               
      Pledgor’s attention c/o:

            	 
      	
              14850
      Montfort Drive, Suite 131

            
	 
      	 
      	
              Dallas,
      Texas 75254

            
	 
      	 
      	
              Attention:  Blair
      Merriam, CEO

            
	 
      	 
      	
              Telephone:
      (303) 881-2604

            
	 
      	 
      	
              Facsimile:  (480)
      287-9560

            
	 
      	 
      	 
      
	
                With
      a copy to:

            	 
      	 
      
	 
      	 
      	
              Michael
      J. Tauger, Esq.

            
	 
      	 
      	
              5445
      DTC Parkway, Suite 520

            
	 
      	 
      	
              Greenwood
      Village, CO 80111

            
	 
      	 
      	
              Telephone:   (303)
      713-0363

            
	 
      	 
      	
              Facsimile:  (720)
      489-1587 

            
	 
      	 
      	 
      
	
                If
      to the Pledgee:

               

            	 
      	
              Trafalgar
      Capital Specialized

               Investment
      Fund, Luxembourg

            
	 
      	 
      	
              8-10
      Rue Mathias Hardt

            
	 
      	 
      	
              BP
      3023

            
	 
      	 
      	
              L-1030
      Luxembourg

            
	 
      	 
      	
              Attention:
      Andrew Garai, Chairman of the Board of

              Trafalgar
      Capital Sarl, the General Partner

            
	 
      	 
      	
              Facsimile:
      011-44-207-405-0161

            
	 
      	 
      	
              and
      001-786-323-1651

            
	 
      	 
      	 
      
	
                With
      copy to:

            	 
      	
              James
      G. Dodrill II, P.A.

            
	 
      	 
      	
              5800
      Hamilton Way

            
	 
      	 
      	
              Boca
      Raton, FL  33496

            
	 
      	 
      	
              Telephone:
      (561) 862-0529

            
	 
      	 
      	
              Facsimile:
      (561) 892-7787

            

    

     

    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.

     

     

    7. 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.

     

        8. 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 Florida 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 courts located in Broward County,
Florida or United States District Courts for the Southern District of Florida,
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.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

        9. Enforcement
Costs. If any
legal action or other proceeding is brought for the enforcement of this
Agreement, or because of an alleged dispute, breach, default or
misrepresentation 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 limitation, 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.

     

        10. 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 hereafter 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.

     

        11. 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.

     

        12. No
Penalties. No
provision of this Agreement is to be interpreted as a penalty upon any party to
this Agreement.

     

        13. 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.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

     

    

     

    IN WITNESS WHEREOF, the
parties hereto have duly executed this Pledge Agreement as of the date first
above written.

     

    
      	 
      	
              PLATINA
      ENERGY GROUP, INC.

            
	 
      	 
      
	 
      	
              By:
      /s/ Blair Merriam

            
	 
      	
              Name:                 Blair
      Merriam

            
	 
      	
              Title:                 Chief
      Executive Officer

            
	 
      	 
      
	 
      	
              TRAFALGAR
      CAPITAL SPECIALIZED

            
	 
      	
              INVESTMENT
      FUND, LUXEMBOURG

            
	 
      	 
      
	 
      	
              By:                 Trafalgar
      Capital Sarl

            
	 
      	
              Its:                 General
      Partner

            
	 
      	 
      
	 
      	
              By:
      /s/ Andrew Garai

            
	 
      	
              Name:                 Andrew
      Garai

            
	 
      	
              Title:                 Chairman
      of the Board

            
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	 
      
	 
      	
              JAMES
      G. DODRILL II, P.A.

            
	 
      	 
      
	 
      	
              By:

            
	 
      	
              Name:                 James
      Dodrill, Esq.

            
	 
      	
              Title:                 President

            

    

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

     

    Schedule
1

    

    

    Pledgor:                                                                   Number of Shares
Pledged:                                                                   Free
Trading?:

    

    Platina
Energy
Group                                                   57,500
Shares of Series
E                                                                                    No

    Preferred
Stock

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