SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) April 6, 2021 (March 31, 2021)
Infinity Energy Resources, Inc.
(Exact name of registrant as specified in its charter)
or other jurisdiction
|(Commission File Number)||
11900 College Blvd.
Overland Park, KS 66210
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (913) 948-9512
Securities registered pursuant to Section 12(b) of the Act:
|Title of each class||Trading Symbol(s)||Name of exchange on which registered|
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
|[ ]||Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)|
|[ ]||Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)|
|[ ]||Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))|
|[ ]||Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))|
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 1.01. Entry into a Material Definitive Agreement.
On March 31, 2021, Infinity Energy Resources, Inc. a Delaware corporation (the “Company”) and Core Energy, LLC (“Core”), as well as all of the members of Core, Mandalay LLC and Coal Creek Energy, LLC (collectively, the “Seller”) entered into that certain side letter agreement (the “Side Letter”), pursuant to which the Company and Core agreed to close the asset purchase agreement (the “APA”) on April 1, 2021 (the “Closing Date”), as previously disclosed in the Company’s Current Report on Form 8-K filed with the U.S. Securities Exchange Commission (the “SEC”) on December 15, 2020.
In addition, in connection with the closing of the APA, on April 1, 2021, the Company entered into that certain Assignment and Bill of Sale (the “Purchase Agreement”) by and among the Company and the Seller, pursuant to which Core granted the Company rights, title, and interest in and to certain properties and interest (collectively, the “Assets”), including, among other assets, oil and gas properties in the Central Kansas Uplift Geological formation, covering over 11,000 contiguous acres (the “Properties”), including, among other things, the production and mineral rights to and a leasehold interest in the Properties and all contracts, agreements and instruments by which the Properties are bound.
As previously disclosed in the Company’s Form 8-K filed with the U.S. Securities Exchange Commission (the “SEC”) on December 14, 2020, the Company entered into an asset purchase and sale agreement with Core, as well as all of the members of Core, Mandalay LLC and Coal Creek Energy, LLC, to purchase the Properties, and as previously disclosed in the Company’s Form 8-K filed with the SEC on September 8, 2020, in consideration for the issuance to Core of 500,000 shares of the Company’s common stock, par value $0.0001 per share, the Company acquired an option from Core to purchase the Properties upon payment to Core of $900,000 at any time prior to November 1, 2020, which was subsequently extended by such parties to January 11, 2021 and ultimately executed and closed on April 1, 2021.
In consideration of $900,000, less a holdback amount of $50,000 to indemnify the Company for certain losses that it may incur and any adjustment for a title defect, the Company purchased from Seller the rights, title, and interest to and in the Properties and certain Leases, Lands, Wells, Units, contracts, equipment, pipelines, and records, as described in and subject to the limitations set forth in the Purchase Agreement. Pursuant to the Purchase Agreement, the Company assumed responsibility for the payment of ad valorem taxes for the 2021 tax year. The Purchase Agreement includes customary terms and conditions for agreements of this nature.
In addition, the Side Letter further specifies that the Company is responsible for reimbursing the Seller for certain prorated revenues and expenses from the January 1, 2021 Effective Date through the April 1, 2021 Closing Date.
On March 31, 2021, the Company also entered into certain debt settlement agreements with five (5) creditors (collectively, the “Creditors”), pursuant to which the Company extinguished an aggregate of $2,866,297.14 of debt and liabilities of the Company owed to each Creditor in consideration for the issuance to each Creditor of (i) an aggregate of $28,664.97 of unsecured convertible promissory notes (the “Notes”), and (ii) common stock purchase warrants (the “Warrants”) to purchase up to an aggregate of 5,155,455 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”). The Notes are convertible into Common Stock at a price of $0.50 per share.
The Notes also contain customary representations, warranties and agreements of the Company and the Creditors and customary indemnification rights and obligations of the parties thereto. The Creditors have represented that they are each “accredited investors” as defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).
In further connection with the Debt Settlement Agreements, the Warrants issued to each Creditor have a term of five (5) years, exercisable six (6) months after issuance, with an exercise price of $0.50 per share, subject to customary adjustments thereunder (collectively, the “Warrants”). Holders of the Warrants may exercise them by paying the applicable cash exercise price or, if there is not an effective registration statement for the sale of the Warrant Shares within six (6) months following the Closing Date, as defined in the Warrants, by exercising on a cashless basis pursuant to the formula provided in the Warrants.
Item 2.01. Completion of Acquisition or Disposition of Assets.
The applicable information set forth in Item 1.01 of this Current Report on Form 8-K (this “Form 8-K”) is incorporated by reference into this Item 2.01.
Item 3.02. Unregistered Sales of Equity Securities.
The applicable information set forth in Item 1.01 of this Current Report on Form 8-K (this “Form 8-K”) is incorporated by reference into this Item 3.02. The issuance of the Notes and Warrants did not involve a public offering and was exempt from the requirements of the Securities Act pursuant to Section 4(a)(2) of the Securities Act, which exempts transactions by an issuer not involving any public offering.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Pursuant to the Debt Settlement Agreements the Company issued (i) 262,854 shares of Common Stock pursuant to the Note and a Warrant to purchase up to 1,051,416 shares of Common Stock to Mr. Stanton Ross, the Company’s President, Chief Executive Officer and Chairman of the Board; and (ii) 831,203 shares of Common Stock pursuant to the Note and a Warrant to purchase up to 3,324,813 shares of Common Stock to Mr. Daniel Hutchins, the Company’s Chief Financial Officer, Treasurer, and Secretary, outside the Company’s existing equity compensation plans.
In addition, the Company’s Board authorized additional limited compensation for Mr. Ross of $30,000 to enable Mr. Ross to devote sufficient time to integrating the acquisition of the Properties and commence the Company’s drilling program.
The above actions were unanimously approved by the Board.
Item 9.01. Financial Statements and Exhibits.
|Assignment and Bill of Sale, by and between Infinity Energy Resources, Inc. and Core Energy, LLC, dated as of March 31, 2021|
|Side Letter, by and between Infinity Energy Resources, Inc. and Core Energy, LLC, dated as of March 31, 2021|
|Exhibit 4.1||Form of Note|
|Form of Warrant|
|Form of Debt Settlement Agreement|
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|Date: April 6, 2021||Infinity Energy Resources, Inc.|
|By:||/s/ Stanton E. Ross|
|Name:||Stanton E. Ross|
|Title:||Chairman, President and Chief Executive Officer|
ASSIGNMENT AND BILL OF SALE
STATE OF KANSAS
COUNTIES OF RUSH & BARTON
THIS ASSIGNMENT AND BILL OF SALE (this “Assignment”) is made between Core Energy, LLC, a Kansas limited liability company having an address of __________________ hereinafter called “Assignor” (whether one or more), and unto Infinity Energy Resources, Inc., a Delaware corporation, 11900 College Blvd., Suite 310, Overland Park, KS 66210, hereinafter called “Assignee”.
IN CONSIDERATION of good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Assignor hereby grants, sells, assigns, bargains, transfers and conveys to Assignee, Assignee’s heirs, successors and assigns, all of Assignor’s right, title and interest in and to the following properties and interests (collectively, the “Assets”):
|a.||All of the oil and gas leases, subleases and other leaseholds, carried interests, farmout rights, options, and other properties and interests described on Exhibit A, subject to such depth limitations and other restrictions as described herein and as may be set forth on Exhibit A (collectively, the “Leases”), together with each and every kind and character of right, title, claim, and interest that Seller has in and to the Leases or the lands currently pooled, unitized, communitized or consolidated therewith; INSOFAR AND ONLY INSOFAR, however, as the Leases cover the lands depicted on Exhibit A-I (the “Lands”);|
|b.||All oil, gas, water or injection wells located on the Lands, whether producing, shut- in, or abandoned, shown on Exhibit A-2 attached hereto (the “Wells”) including the working interests in the Wells;|
|c.||All interest of Seller in or to any currently existing pools or units which include any Lands or all or a part of any Leases or include any Wells, including those pools or units shown on Exhibit A-I as (the “Units”; and collectively with the Leases, Lands and Wells, the “Properties”), and including all interest of Seller in production of hydrocarbons from any such Unit, whether such Unit production of hydrocarbons comes from Wells located on or off of a Lease, and all tenements, hereditaments and appurtenances belonging to the Leases and Units;|
|d.||All contracts, agreements and instruments by which the Properties are bound, or that relate to or are otherwise applicable to the Properties, but only to the extent applicable to the Properties rather than Assignor’s other properties, including but not limited to, operating agreements, unitization, pooling and communitization agreements, declarations and orders, joint venture agreements, farmin and farmout agreements, exploration agreements, participation agreements, exchange agreements, transportation or gathering agreements, agreements for the sale and purchase of oil, gas, casinghead gas or processing agreements to the extent applicable to the Properties or the production of hydrocarbons produced in association therewith from the Properties;|
|e.||All easements, permits, licenses, servitudes, rights-of-way, surface leases and other surface rights appurtenant to, and used or held for use primarily in connection with the Properties, but excluding any permits and other rights to the extent transfer is restricted by third-pally agreement or applicable law and the required consents to transfer are not obtained prior to Closing;|
|f.||All equipment, machinery, fixtures and other tangible personal property and improvements located on the Properties or used or held for use primarily in connection with the operation of the Properties;|
|g.||All flow lines, salt water disposal lines, pipelines, gathering systems and appurtenances thereto located on the Properties or used, or held for use, primarily in connection with the operation of the Properties;|
|h.||All hydrocarbons produced from or attributable to the Leases, Lands, and Wells from and after the Effective Time (as defined below), together with over-production of hydrocarbons or under-production of hydrocarbons or over-deliveries or under- deliveries with respect to hydrocarbons produced from or allocated to the Assets, regardless of whether such arise at the wellhead, pipeline, gathering system, transportation or other location associated with the Properties; and|
|i.||All lease files, land files, well files; gas and oil sales contract files; gas processing files; division order files, abstracts, title opinions, land surveys, non-confidential logs, maps, and other books, records, data, files, and accounting records, in each case to the extent directly related to the Assets, or used or held for use primarily in connection with the maintenance or operation thereof, but excluding (i) any books, records, data, files, maps and accounting records to the extent disclosure or transfer is restricted by third-party agreement or applicable law and the required consents to transfer are not obtained prior to Closing, (ii) computer or communications software or intellectual property (including tapes, codes, data and program documentation and all tangible manifestations and technical information relating thereto), (iii) attorney-client privileged communications and work product of Seller’s legal counsel (other than title opinions), (iv) reserve studies and evaluations, and (v) records relating to the negotiation and consummation of the sale of the Assets.|
TO HAVE AND TO HOLD unto Assignee and its successors and assigns forever, subject to the following terms and conditions:
|1.||This Assignment shall be effective as of January 1, 2021 at 12:01 a.m., local time where the Properties are located (the “Effective Date”).|
|2.||EXCEPT AS EXPRESSLY SET FORTH IN THIS ASSIGNMENT OR THE PURCHASE AND SALE AGREEMENT BETWEEN ASSIGNOR AND ASSIGNOR (WHICH WARRANTIES ARE FOR THE BENEFIT OF ASSIGNEE ONLY AND SHALL NOT BE ASSIGNABLE FROM ASSIGNEE TO ANY SUCCESSOR IN INTEREST), ASSIGNOR CONVEYS THE ASSETS TO ASSIGNEE WITHOUT ANY EXPRESS, STATUTORY, OR IMPLIED WARRANTY OR REPRESENTATION OF ANY KIND, INCLUDING WARRANTIES OR REPRESENTATIONS RELATING TO (1) ASSIGNOR, (11) ASSIGNOR ‘S TITLE IN AND TO THE LEASES AND WELLS, (111) THE CONDITION OF THE WELLS, (IV) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY OF THE WELLS, (V) ANY IMPLIED OR EXPRESS WARRANTY OF THE FITNESS OF THE WELLS FOR A PARTICULAR PURPOSE, (VI) ANY IMPLIED OR EXPRESS WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (HI) ANY AND ALL OTHER IMPLIED WARRANTIES EXISTING UNDER APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, OR (VIN) ANY IMPLIED OR EXPRESS WARRANTY REGARDING COMPLIANCE WITH ANY APPLICABLE ENVIRONMENTAL LAWS, THE RELEASE OF MATERIALS INTO THE ENVIRONMENT, OR PROTECTION OF THE ENVIRONMENT OR HEALTH. EXCEPT AS EXPRESSLY SET FORTH IN THIS ASSIGNMENT, ASSIGNEE ACCEPTS THE ASSETS “AS IS,” “WHERE IS,” AND “WITH ALL FAULTS” AND IN THEIR PRESENT CONDITION AND STATE OF REPAIR. ASSIGNOR MAKES NO REPRESENTATION OR WARRANTY AS TO (A) THE AMOUNT, VALUE, QUALITY, QUANTITY, VOLUME, OR DELIVERABILITY OF ANY HYDROCARBONS OR RESERVES IN, UNDER, OR ATTRIBUTABLE TO THE LEASES OR WELLS, (B) THE PHYSICAL, OPERATING, REGULATORY COMPLIANCE, SAFETY, OR ENVIRONMENTAL CONDITION OF THE WELLS, (C) THE GEOLOGICAL OR ENGINEERING CONDITION OF THE WELLS OR ANY VALUE THEREOF OR (D) THE ACCURACY, COMPLETENESS, OR MATERIALITY OF ANY DATA, INFORMATION, OR RECORDS FURNISHED TO ASSIGNEE IN CONNECTION WITH THIS AGREEMENT. ASSIGNEE ACKNOWLEDGES AND AGREES TO THE FOREGOING AND THAT THE FOREGOING DISCLAIMER IS “ CONSPICUOUS. ”|
|3.||It is agreed that Assignor will be responsible for the payment of any and all production, severance and ad valorem taxes due or payable prior to the Effective Date. Ad valorem taxes for the 2021 tax year shall be paid by Assignee.|
|4.||The terms and conditions contained herein shall constitute covenants running with the land, and shall be binding upon, and for the benefit of, the respective successors and assigns of Assignor and Assignee. This Assignment and the other documents delivered pursuant hereto shall be governed and construed in accordance with the laws of the State of Kansas, without giving effect to principles of conflicts of laws that would result in the application of the laws of another jurisdiction.|
|5.||To the extent permitted by law, Assignee shall be subrogated to Assignor’s rights in and to representations, warranties and covenants given with respect to the Properties. Assignor hereby grants and transfers to Assignee, its successors and assigns, to the extent so transferable and permitted by law, the benefit of and the right to enforce the covenants, representations and warranties, if any, which Assignor is entitled to enforce with respect to the Properties, but only to the extent not enforced by Assignor.|
|6.||In addition to filing this Assignment of record in Rush and Barton Counties, Kansas, the parties shall execute and file with the appropriate authorities, whether state, federal or local, all forms or instruments required by applicable law or regulation to effectuate the conveyance contemplated hereby. The interests conveyed by such separate assignments are the same, and not in addition to, the interests conveyed herein. The parties agree to execute and deliver such other instruments and documents and take such other actions as may be reasonably necessary to evidence and effectuate the transactions contemplated by this Assignment.|
|7.||This Assignment shall be binding on all parties who execute same, regardless of whether all parties named herein agree to execute this Assignment or any other instrument conveying any of the interests described herein.|
|8.||This Assignment may be executed in multiple counterparts, all of which are identical and all of which constitute one and the same instrument.|
EXECUTED AND DELIVERED this 1st day of April, 2021, but to be effective for all purposes as of the Effective Date.
|CORE ENERGY, LLC||INFINITY ENERGY RESOURCES, INC.|
|By:||/s/ Harvey M. Burstein||By:||/s/ Stanton E. Ross|
|Name:||Harvey M. Burstein||Name:||Stanton E. Ross|
|Title:||Managing member||Title:||Chief Executive Officer|
Infinity Energy Resources, Inc.
March 31, 2021
Core Energy, LLC
Re: Acquisition of leasehold interest in certain oil and gas properties in the Central Kansas Uplift geological formation
Reference is made to the Asset Purchase and Sale Agreement, (the “APA”) dated as of December 14, 2020 between Infinity Energy Resources, Inc. (the “Company” nor “Purchaser”) and Core Energy, LLC (the “Seller”). Capitalized terms not otherwise defined in this letter agreement, shall their respective meanings ascribed to them in the APA.
This confirms our understanding with respect to the closing date and the effective date of acquisition and the treatment of operations of the lease from the effective date through the closing date:
(a) Closing Date of the Acquisition. The parties have agreed that the closing date of the acquisition of leasehold interest in certain oil and gas properties in the Central Kansas Uplift geological formation (the “Oil Properties”) as further described in the APA will be April 1, 2021 or as soon thereafter as the parties can execute the closing. The parties agree that the Company will provide the required payment pursuant to the APA to the Seller and the Seller will execute the underlying assignments and cause them to be recorded in the appropriate counties.
(b) Effective Date of the Acquisition. The parties have agreed that the effective date of the commencement of the Company’s responsibilities as owner of the Oil Properties will be January 1, 2021 for purposes of the proration of lease revenue, expense, taxes and similar items. Paragraph (c) below represents the parties best estimate of the proration of revenue and expenses.
(c) Proration of Revenues and Expenses from January 1, 2021 effective date through the April 1, 2021 closing date. The parties agree that the following table represents the parties best estimate of expected revenue and expenses subject to proration adjustments pursuant to this side agreement:
|January 13, CHS McPherson Oil sold||$||6,979.67||Paid to Core Energy, LLC|
|January 31, 2021 Operating Statement from Popp Operating||$||19,961.16||Paid by Core Energy, LLC|
|February 28, 2021 Operating Statement from Popp Operating||$||19,220.06||Unpaid|
|March 31, 2021 Operating Statement from Popp Operating||$||13,113.13||Unpaid|
|Oil in storage tank unsold||Estimated to be at least 400 Barrels of Oil available to sell at the closing date. Such unsold oil in storage will be Infinity’s revenue upon sale.||Unsold|
(d) Agreement of Proration of Revenues and Expenses from January 1, 2021 effective date through the April 1, 20201 closing date. The parties agree that the Company will reimburse Seller a total of $12,981.49 representing the January expenses paid by Seller in excess of the January 2021 oil revenues received by the Seller. In addition, the parties agree that the Company will assume the obligation to pay Popp Operating a total of $32,333.19 representing the unpaid lease expense invoices for February and March 2021. Further, the parties agree that all existing unsold crude oil in the gun barrel and storage tanks on the Oil Properties as of the closing date will be paid to the Company when sold. Such unsold oil is estimated to be in excess of 400 barrels as of the closing date.
(e) The parties have agreed that the payments required to the Seller under this letter agreement will be made as of the closing date as described herein.
(f) This letter agreement shall be deemed to be a Transaction Document for all purposes under the APA. To be free from doubt, this letter agreement shall be subject to all the rights and obligations of the Company and Seller under the Transaction Documents.
Kindly confirm your agreement with the above, by signing below in the space indicated and by PDFing a signed copy of this letter agreement, via email to the undersigned at ________________.
|Infinity Energy Resources, Inc.|
|By:||/s/ Stanton E. Ross|
|Name:||Stanton E. Ross|
|Title:||CEO, President & Chairman|
|Consented and agreed to:|
|Core Energy, LLC|
THIS NOTE AND THE SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THE NOTE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THE NOTE NOR SUCH SHARES OF COMMON STOCK MAY BE OFFERED FOR SALE, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND UNDER ANY APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY, THAT AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
INFINITY ENERGY RESOURCES, INC.
3% CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED, Infinity Energy Resources, Inc., a Delaware corporation (the “Company”), promises to pay to [•], whose address is ________________________________________________ or registered assigns (the “Holder”), the sum of ________ ($[•]) in lawful money of the United States of America on or before the Maturity Date as defined herein, with all Interest thereon as defined and specified herein.
This Note is issued in connection with a Debt Settlement Agreement between Holder and the Company.
1. Interest and Fees. This Note shall bear interest (“Interest”) equal to three percent (3%) per annum. Interest will be calculated on a three hundred sixty-five (365) day year. The Company shall pay the Interest on or before the Maturity Date, as defined below. In no event shall the rate of Interest payable on this Note exceed the maximum rate of interest permitted to be charged under applicable law.
2. Payments. All payments under this Note shall be made by the Company hereunder, whether on account of principal or Interest, without set-off or counterclaim and shall first be credited against costs and expenses provided for in this Note, second to the payment of any penalties, third to the payment of accrued and unpaid Interest, if any, and the remainder shall be credited against principal. All payments due hereunder shall be payable in legal tender of the United States of America, and in same day funds delivered to Holder by cashier’s check, certified check, or bank wire transfer to the mailing address provided below, or at such other place as Holder shall designate in writing for such purpose from time to time made prior to noon, Kansas City, Kansas time, on the Maturity Date. If a payment under this Note otherwise would become due and payable on a Saturday, Sunday or legal holiday (any other day being a “Business Day”), the due date of the payment shall be extended to the next succeeding Business Day, and Interest, if any, shall be payable thereon during such extension.
3. Maturity Date. This Note shall be due and payable in full, including all accrued Interest thereon, on March 30, 2026 (“Maturity Date”), subject to Paragraph 4, “Pre-Payments.”
4. Pre-Payments. At any time prior to the Maturity Date, the Company shall have the right to prepay this Note, in whole or in part without penalty, on ten (10) days’ advance notice to Holder. On such prepayment date, the Company will pay in respect of this Note cash equal to the face amount plus accrued Interest on the Note (or portion thereof) being prepaid.
5. Conversion of Note
5.1 Conversion of Note/Conversion Price. This Note is convertible as to principal and any accrued Interest, at the option of Holder, into shares of the company’s Common Stock (the “Common Stock”) at any time after the issue Date and prior to the close of business on the Business Day preceding the Maturity Date at the rate of Fifty Cents ($0.50) per share (the “Conversion Price”), subject to adjustment as hereinafter provided. The Company will provide written notice of its intent to prepay the Note in whole or in part prior to the Maturity Date. In such case, Holder will have five (5) Business Days following the date on which Holder receives such written notice to determine whether Holder will convert all or part of the Note into Common Stock. No fractional shares will be issued. In lieu thereof, the Company will pay cash for fractional share amounts equal to the fair market value of the Common Stock as quoted as the closing bid price of the Common Stock on the date of conversation.
5.2 Adjustment to Conversion Price.
5.2.1 The Conversion Price shall be adjusted if the Company shall at any time (i) pay a stock dividend on the Common Stock; (ii) subdivide its outstanding Common Stock into a greater number of shares; (iii) combine its outstanding Common Stock into a smaller number of shares; (iv) issue by reclassification of its Common Stock any other special capital stock of the Company; or (v) distribute to all holders of Common Stock evidences of indebtedness or assets (excluding cash dividends) or rights or warrants to subscribe for Common Stock (other than those mentioned above). No adjustment of the Conversion Price will be required until cumulative adjustments amount to One Dollar ($1.00) per Note or more. Upon the occurrence of an event requiring adjustment of the Conversion Price, and thereafter, Holder, upon surrender of this Note for conversion, shall be entitled to receive the number of shares of Common Stock or other capital stock of the Company that Holder would have owned or have been entitled to receive after the happening of any of the events described above had this Note been converted immediately prior to the happening of such event.
5.3 Adjustment Based Upon Merger or Consolidation. In case of any consolidation or merger to which the Company is a party (other than a merger in which the Company is the surviving entity and which does not result in any reclassification of or change in the outstanding Common Stock of the Company), or in case of any sale or conveyance to another person, firm, or corporation of the property of the Company as an entirety or substantially as an entirety, Holder shall have the right to convert this Note into the kind and amount of securities and property (including cash) receivable upon such consolidation, merger, sale or conveyance by Holder of the number of shares of Common Stock into which such Note might have been converted immediately prior thereto.
5.4 Exercise of Conversion Privilege.
5.4.1 The Conversion Privilege provided for in this Note shall be exercisable by Holder by written notice to the Company or its successor and the surrender of this Note in exchange for the number of shares (or other securities and property, including cash, in the event of an adjustment of the Conversion Price) into which this Note is convertible based upon the Conversion Price.
5.4.2 Holder’s conversion right set forth in this Paragraph 5.4 may be exercised at any time and from time to time but prior to payment in full of the principal amount of the accrued interest on this Note. Conversion rights will expire at the close of business on the Business Day prior to the Maturity Date or redemption date of this Note.
5.4.3 Holder may exercise the right to convert all or any portion of the principal amount and accrued Interest on this Note by delivery of (i) this Note and (ii) a completed Conversion Notice in the form attached as Exhibit A on a Business Day to the Company’s principal executive offices. Such conversion shall be deemed to have been made immediately prior to the close of business on the Business Day of such delivery a conversion notice (the “Conversion Date”), and Holder shall be treated for all purposes as the record holder of the shares of Common Stock into which this Note is converted as of such date.
5.4.4 Upon conversion of the entire principal amount and accrued Interest of this Note and the delivery of shares of Common Stock upon conversion of this Note, except as otherwise provided in Paragraph 21, “Representations and Warranties to Survive Closing,” the Company shall be forever released from all of its obligations and liabilities under this Note.
5.5 Corporate Status of Common Stock to be Issued. All Common Stock (or other securities in the event of an adjustment of the Conversion Price) which may be issued upon the conversion of this Note shall, upon issuance, be fully paid and nonassessable.
5.6 Issuance of Certificates. Upon the conversion of this Note, the Company shall, within five (5) Business Days of such conversion, issue to Holder a certificate or certificates representing the number of shares of the Common Stock (or other securities in the event of an adjustment of the Conversion Price) to which the conversion relates.
6. Unsecured Indebtedness. This Note is unsecured.
7. Status of Holder of Note. This Note shall not entitle Holder to any voting rights or other rights as a shareholder of the Company or to any rights whatsoever except the rights herein expressed, and no dividends shall be payable or accrue in respect of this Note or the securities issuable upon the conversion hereof unless and until this Note shall be converted. Upon the conversion of this Note, Holder shall, to the extent permitted by law, be deemed to be the holder of record of the shares of Common Stock issuable upon such conversion, notwithstanding that the stock transfer books of the Company shall then be closed or that the certificates representing such shares of Common Stock shall not then be actually delivered.
8. Reserve of Shares of Common Stock. The Company shall reserve out of its authorized shares of Common Stock, and other securities in the event of an adjustment of the Conversion Price, a number of shares sufficient to enable it to comply with its obligation to issue shares of Common Stock, and other securities in the event of an adjustment of the Conversion Price, upon the conversion of this Note.
9. Transfer Restrictions; Exemption from Registration.
9.1 Holder is an Accredited Investor, as such term is defined Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Act”). Holder has conducted its own due diligence regarding this investment and the Company. Holder understands and can bear the risks associated with this investment, including the loss of its entire investment in the Note and the underlying Common Stock. Holder agrees that (i) this Note and the shares of Common Stock issuable in payment of Interest and upon conversion have not been registered under the Act and may not be sold or transferred without registration under the Act or unless an exemption from such registration is available; (ii) Holder has acquired this Note and will acquire the Common Stock for its own account for investment purposes only and not with a view toward resale or distribution; and (iii) if a registration statement that includes the Common Stock is not effective at the time Common Stock is issued to Holder upon conversion under this Note, and the Common Stock is not exempt from registration under Rule 144, then the Common Stock shall be inscribed with the following legend:
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 HOLDER’S COUNSEL, IN A CUSTOMARY FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
9.2 If an opinion of counsel of Holder provides that registration is not required for the proposed conversion or transfer of this Note or the proposed transfer of the shares of Common Stock issuable upon conversion and that the proposed conversion or transfer in the absence of registration would require the Company to take any action including executing and filing forms or other documents with the Securities and Exchange Commission (the “SEC”) or any state securities agency, or delivering to Holder any form or document in order to establish the right of Holder to effectuate the proposed conversion or transfer, the Company agrees promptly, at its expense, to take any such action; and provided, further, that the Company will reimburse Holder in full for any expenses (including but not limited to the fees and disbursements of such counsel, but excluding brokers’ commissions) incurred by Holder or owner of shares of Common Stock on his, her or its behalf in connection with such conversion or transfer of the Note or transfer of the shares of Common Stock.
10. Rule 144. If the Company has registered a class securities under Section 12 of the Exchange Act and has filed reports under Section 13 or 15(d) of the Exchange Act. At the request of Holder, when Holder proposes to sell securities in compliance with Rule 144 of the SEC, the Company will (i) forthwith furnish to Holder a written statement of compliance with the filing requirements of the SEC as set forth in Rule 144, as such rules may be amended from time to time and (ii) make available to the public and Holder such information and take such other action as is requested by Holder to enable Holder to make sales pursuant to Rule 144.
11. Registration Rights. If, at any time during the five (5) year period commencing on the Issue Date of this Warrant, the Company proposes to file a registration statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account, other than a registration statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the holder(s) of this Warrant and any Warrant Shares as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holder(s) of this Warrant and any Warrant Shares in such notice the opportunity to register the sale of such number of Warrant Shares (the “Registrable Securities”) as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall cause such Registrable Securities to be included in such registration statement and shall cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an underwriter or underwriters shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration. If the managing underwriter or underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company in writing that the dollar amount or number of shares of Registrable Securities which the holder(s) thereof desire to sell, taken together with all other securities which the Company desires to sell and all other securities, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights which the holders thereof desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering, then the Company may remove from such registration statement any Registrable Securities that the managing underwriters shall reasonably request. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the registration statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a registration statement at any time prior to the effectiveness of the registration statement. The Company shall bear all fees and expenses attendant to registering the Registrable Securities, including the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities, but the Holders shall pay any and all underwriting commissions related to the Registrable Securities.
12. Representations and Warranties of the Company. The Company represents and warrants as follows:
12.1 The Company is duly existing and in good standing as a corporation in its jurisdiction of formation and is qualified and licensed to do business and is in good standing in any other jurisdiction in which the conduct of its business or ownership of property requires that it to be qualified, except where the failure to do so could not reasonably be expected to have a material adverse effect on the Company’s business.
12.2 The execution, delivery and performance by the Company of this Note and the Warrant has been duly authorized, and do not (i) conflict with any of the Company’s organizational documents; (ii) contravene, conflict with, constitute a default under or violate any material law applicable to the Company; (iii) contravene, conflict or violate any applicable order, writ, judgment, injunction, decree, determination or award of any governmental authority by which the Company or any of its Subsidiaries or any of their property or assets may be bound or affected; (iv) require any action by, filing, registration, or qualification with, or governmental approval from any governmental authority (except such governmental approvals which have already been obtained and are in full force and effect); or (v) constitute an event of default under any material agreement by which the Company is bound.
12.3 There are no material actions or proceedings pending or threatened by or against the Company, except as set forth in the Company’s annual report on Form 10-K for the year ended December 31, 2019, its report on Form 10-Q for the quarter ended September 30, 2021 and any Form 8-K filed with the Securities and Exchange Commission (the “SEC Reports”).
12.4 All financial statements of the Company contained in its SEC Reports fairly present in all material respects the Company’s financial position and the Company’s results of operations as of the dates thereof, and for the periods indicated therein, subject in the case of the unaudited financial statements to normal year-end audit adjustments.
12.5 The Company’s SEC Reports, as of their respective dates or, if amended, as of the date of the last such amendment, did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
13. Covenants of the Company. The Company will use the proceeds it receives from this Note for general working capital and such other purposes as the Company may deem appropriate.
14. Default. The Company shall perform its obligations and covenants hereunder and in each and every other agreement between the Company and Holder pertaining to the Indebtedness evidenced hereby. The following provisions shall apply upon failure of the Company so to perform.
14.1 Event of Default. Any of the following events shall constitute an “Event of Default” hereunder:
14.1.1 Failure by the Company to pay principal of the Note when due and payable on the Maturity Date, provided that if the Note is not otherwise in default, the Company shall have a fifteen (15) day extension of the Maturity Date (the “Extension Period”) to pay the Note in full. If not paid within such Extension Period, such failure to pay will be an Event of Default and the date of the Event of Default under this Paragraph 13.1.1 shall be as of the Maturity Date;
14.1.2 Failure of the Company to pay Interest when due hereunder, which failure continues for a period of fifteen (15) days after the due date of the amount involved; or
14.1.3 Except for Events of Default set forth in Paragraphs 13.1.1 and 13.1.2, failure of the Company to perform any of the other covenants, conditions, provisions or agreements contained herein, which failure continues for a period of fifteen (15) days after notice of default has been given to the Company by Holder; provided, however, that if the nature of the Company’s obligation is such that more than fifteen (15) days are required for performance, then an Event of Default shall not occur if the Company commences performance within such fifteen (15) day period and thereafter diligently prosecutes the same to completion; or
14.1.4 The entry of an order for relief under Federal Bankruptcy Code as to the Company or entry of any order appointing a receiver or trustee for the Company or approving a petition in reorganization or other similar relief under bankruptcy or similar laws in the United States of America or any other competent jurisdiction, and if such order, if involuntary, is not satisfied or withdrawn within sixty (60) days after entry thereof; or the filing of a petition by the Company seeking any of the foregoing, or consenting thereto; or the filing of a petition to take advantage of any debtor’s act; or making a general assignment for the benefit of creditors; or admitting in writing inability to pay debts as they mature.
14.2 Acceleration. Upon any Event of Default (in addition to any other rights or remedies provided for under this Note), at the option of Holder, all sums evidenced hereby, including all principal, Interest, fees and all other amounts due hereunder, shall become immediately due and payable. If an Event of Default in the payment of principal or Interest should occur and be continuing with respect to the Note, Holder may declare the principal, Interest, fees and all other amounts due hereunder to be immediately due and payable.
14.3 Notice by Company. Upon the happening of any Event of Default specified in this paragraph that is not cured within the respective periods prescribed above, the Company will give prompt written notice thereof to Holder of this Note.
14.4 No Waiver. Failure of Holder to exercise any option hereunder shall not constitute a waiver of the right to exercise the same in the event of any subsequent Event of Default, or in the event of continuance of any existing Event of Default after demand or performance thereof.
14.5 Default Interest and Fees. Default Interest will accrue on an unpaid principal or Interest due hereunder at the rate of sixteen percent (16%) per annum upon the occurrence of any Event of Default until the Event of Default is cured. Default Interest shall be payable monthly basis commencing thirty (30) days after the Default Interest has begun accruing. Default Interest will be computed on a three hundred sixty-five (365) day year.
15. Assignment, Transfer or Loss of the Note.
15.1 Holder may not assign, transfer, hypothecate or sell all or any part of this Note or in any way alienate or encumber the Note without the express written consent of the Company, the granting or denial of which shall be within the absolute discretion of the Company; provided, however, the Holder may assign all or any portion of this Note to any of its Affiliates. Any attempt to effect such transfer without the consent of the Company shall be null and void. The Company has not registered this Note under the Act or the applicable securities laws of any state in reliance on exemptions from registration. Such exemptions depend upon the investment intent of Holder at the time he acquires his Note. Holder is acquiring this Note for his own account for investment purposes only and not with a view toward distribution or resale of such Note within the meaning of the Act and the applicable securities laws of any state. The Company shall be under no duty to register the Note or to comply with an exemption in connection with the sale, transfer or other disposition under the applicable laws and regulations of the Act or the applicable securities laws of any state. The Company may require Holder to provide, at his expense, an opinion of counsel satisfactory to the Company to the effect that any proposed transfer or other assignment of the Note will not result in a violation of the applicable federal or state securities laws or any other applicable federal or state laws or regulations.
15.2 Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of any Note and, in the case of any such loss, theft or destruction of any Note, upon delivery of an indemnity bond in such reasonable amount as the Company may determine (or, in the case of any Note held by the original Noteholder, of an indemnity agreement reasonably satisfactory to the Company), or, in the case of any such mutilation, upon the surrender of such Note to the Company at is principal office for cancellation, the Company at its expense will execute and deliver, in lieu thereof, a new Note of like tenor, dated the date to which interest hereunder shall have been paid on such lost, stolen, destroyed or mutilated Note.
15.3 Subject to Subparagraph 10.1 above, Holder may, at his option, either in person or by duly authorized attorney, surrender this Note for registration of transfer at the principal office of the Company and, upon payment of any expenses associated with the transfer, receive in exchange therefor a Note or Notes, dated as of the date to which interest has been paid on the Note so surrendered, each in the principal amount of $1,000 or any multiple thereof, for the same aggregate unpaid principal amount as the Note so surrendered and registered as payable to such person or persons as may be designated by Holder. Every Note surrendered for registration of transfer shall be duly endorsed or shall be accompanied by a written instrument of transfer duly executed by Holder or his attorney duly authorized in writing. Every Note, so made and delivered by the Company in exchange for any Note surrendered, shall in all other respects be in the same form and have the same terms as the Note surrendered. No transfer of any Note shall be valid unless made in such manner at the principal office of the Company.
15.4 The Company may treat the person in whose name this Note is registered as the owner and Holder of this Note for the purpose of receiving payment of all principal of and all Interest on this Note, and for all other purposes whatsoever, whether or not such Note shall be overdue and, except for transfers effected in accordance with this subparagraph, the Company shall not be affected by notice to the contrary.
16. Notices. All notices provided for herein shall be validly given if in writing and delivered personally or sent by certified mail, postage prepaid, or sent via an express delivery service, such as Federal Express or United Parcel Service, to the office of the Company or such other address as the Company may from time to time designate in writing sent by certified mail, postage prepaid, to Holder at his address set forth below or such other address as Holder may from time to time designate in writing to the Company by certified mail, postage prepaid or otherwise as designated in writing by Holder.
17. Usury. All Interest, Default Interest, fees, charges, goods, things in action or any other sums or things of value, or other contractual obligations (collectively, the “Additional Sums”) paid by the Company hereunder, whether pursuant to this Note or otherwise, with respect to the Indebtedness evidenced hereby, or any other document or instrument in any way pertaining to the Indebtedness, which, under the laws of the State of Delaware may be deemed to be Interest with respect to such loan or Indebtedness, shall, for the purpose of any laws of the State of Delaware, which may limit the maximum amount of Interest to be charged with respect to such loan or Indebtedness, be payable by the Company as, and shall be deemed to be, Interest and for such purposes only, the agreed upon and contracted rate of Interest shall be deemed to be increased by the Additional Sums. Notwithstanding any provision of this Note to the contrary, the total liability for payments in the nature of Interest under this Note shall not exceed the limits imposed by applicable law. The Company shall not assert a claim, and shall actively resist any attempts to compel it to assert a claim, respecting a benefit under any present or future usury laws against any Holder of this Note.
18. Binding Effect. This Note shall be binding upon the parties hereto and their respective heirs, executors, administrators, representatives, successors and permitted assigns.
19. Collection Fees. The Company shall pay all costs of collection, including reasonable attorneys’ fees and all costs of suit and preparation for such suit (and whether at trial or appellate level), in the event the unpaid principal amount of this Note, or any payment of Interest is not paid when due, or in the event Holder is made party to any litigation because of the existence of the Indebtedness evidenced by this Note, or if at any time Holder should incur any attorneys’ fees in any proceeding under the Federal Bankruptcy Code (or other similar laws for the protection of debtors generally) in order to collect any Indebtedness hereunder or to preserve, protect or realize upon any security for, or guarantee or surety of, such Indebtedness whether suit be brought or not, and whether through courts of original jurisdiction, as well as in courts of appellate jurisdiction, or through a bankruptcy court or other legal proceedings.
20. Construction. This Note shall be governed as to its validity, interpretation, construction, effect and in all other respects by and in accordance with the laws and interpretations thereof of the State of Delaware. Unless the context otherwise requires, the use of terms in singular and masculine form shall include in all instances singular and plural number and masculine, feminine and neuter gender.
21. Severability. In the event any one or more of the provisions contained in this Note or any future amendment hereto shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Note or such other agreement, and in lieu of each such invalid, illegal or unenforceable provision there shall be added automatically as a part of this Note a provision as similar in terms to such invalid, illegal or unenforceable provision as may be possible and be valid, legal and enforceable.
22. Entire Agreement. This Note represents the entire agreement and understanding between the parties concerning the subject matter hereof and supersede all prior and contemporaneous agreements, understandings, representations and warranties with respect thereto.
23. Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this Note shall be governed by the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdictions) that would cause the application of the laws of any jurisdictions other than the State of Delaware. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Kansas City, Kansas for the adjudication of any dispute hereunder or in connection herewith or therewith, or with any transaction contemplated hereby or discussed herein, or in any manner arising in connection with or related to the transactions contemplated hereby or involving the parties hereto whether at law or equity and under any contract, tort or any other claim whatsoever and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing or faxing a copy thereof to such party at the address for such notices as listed in this Note and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED HEREBY.
24. Representations and Warranties to Survive Closing. All representations, warranties and covenants contained herein shall survive the execution and delivery of this Note and the issuance of any Conversion Shares upon the conversion hereof.
25. Headings. The headings used in this Note are used for convenience only and are not to be considered in construing or interpreting this Note.
“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” when used with respect to any specified Person means the power to direct the management and policies of such Person directly or indirectly, whether through the ownership of Voting Stock, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.
“Board of Directors” means, with respect to any Person, the Board of Directors of such Person or any committee of the Board of Directors of such Person duly authorized to act on behalf of the Board of Directors of such Person.
“Capital Stock” means, with respect to any Person, any and all shares, interests, equity participations or other equivalents (however designated) of corporate stock or partnership interests and any and all warrants, options and rights with respect thereto (whether or not currently exercisable), including each class of common stock and preferred stock of such Person.
“GAAP” means generally accepted accounting principles as in effect in the United States of America as of the Issue Date.
“Holder” means a Person in whose name a Note is registered on the Company’s books.
“Indebtedness” means, without duplication, with respect to any Person, (a) all obligations of such Person (i) in respect of borrowed money (whether or not the recourse of the lender is to the whole of the assets of such person or only to a portion thereof); (ii) evidenced by bonds, notes, debentures or similar instruments; (iii) representing the balance deferred and unpaid of the purchase price of any property or services (other than accounts payable or other obligations arising in the ordinary course of business); (iv) evidenced by bankers’ acceptances or similar instruments issued or accepted by banks, (v) for the payment of money relating to a capitalized lease obligation under GAAP; or (vi) evidenced by a letter of credit or a reimbursement obligation of such Person with respect to any letter of credit; (b) all net obligations of such Person under interest rate swap obligations and foreign currency hedges; (c) all liabilities of others of the kind described in the preceding clauses (a) or (b) that such Person has guaranteed or that are otherwise its legal liability; (d) Indebtedness (as otherwise defined in this definition) of another Person secured by lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person, the amount of such obligations being deemed to be the lesser of (1) the full amount of such obligations so secured, and (2) the fair market value of such asset, as determined in good faith by the Board of Directors of such Person, which determination shall be evidenced by a board resolution; and (e) any and all deferrals, renewals, extensions, refinancings and refundings (whether direct or indirect) of, or amendments, modifications or supplements to, any liability of the kind described in any of the preceding clauses (a), (b), (c), (d) or this clause (e), whether or not between or among the same parties.
“Insolvency Proceeding” is any proceeding by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief.
“Issue Date” means the date on which the Note is originally issued.
“Maturity Date” means March 30, 2026, or a later date if the original Maturity Date is extended by the Company under the terms of this Note.
“Person” means any individual, corporation, partnership, joint venture, trust, estate, unincorporated organization or government or any agency or political subdivision thereof.
A “subsidiary” of any Person means (i) a corporation a majority of whose Voting Stock is at the time, directly or indirectly, owned by such Person, by one or more subsidiaries of such Person or by such Person and one or more subsidiaries of such Person, (ii) a partnership in which such Person or a subsidiary of such Person is, at the date of determination, a general or limited partner of such partnership, but only if such Person or its subsidiary is entitled to receive more than fifty percent (50%) of the assets of such partnership upon its dissolution, or (iii) any other Person (other than a corporation or partnership) in which such Person, directly or indirectly, at the date of determination thereof, has (x) at least a majority ownership interest or (y) the power to elect or direct the election of a majority of directors or other governing body of such Person.
“Subsidiary” means any subsidiary of the Company.
“Voting Stock” means, with respect to any Person, securities of any class or classes of Capital Stock in such Person entitling the holders thereof, whether at all times or only so long as no senior class of stock has voting power by reason of any contingency to vote in the election of members of the Board of Directors or other governing body of such Person.
27. Miscellaneous. Except as otherwise provided herein, the Company waives demand, diligence, presentment for payment and protest, notice of extension, dishonor, maturity and protest. Time is of the essence with respect to the performance of each and every covenant, condition, term and provision hereof. This Note may be executed by facsimile signature, which signature shall be deemed to be binding upon the Company.
IN WITNESS WHEREOF, this Note has been issued as of the 31 st day of March, 2021.
|INFINITY ENERGY RESOURCES, INC.|
Mailing Address of Holder:
Mailing Address of Company:
(To be signed only upon conversion of this Note)
TO: INFINITY ENERGY RESOURCES, INC.
The undersigned, the registered holder of the Convertible Note (the “Note”) of INFINITY ENERGY RESOURCES, INC. (the “Company”), hereby surrenders the Note for conversion into shares of Common Stock of the Company (the “Common Stock”) to the extent of $_______ unpaid principal amount of the Note and $_______ unpaid accrued Interest due under the Note, all in accordance with the provisions of such Note. The undersigned requests (i) that a certificate representing shares of Common Stock, bearing the appropriate legends, be issued to the undersigned, and (ii) if the unpaid principal amount so converted is less than the entire unpaid principal amount of the Note, that a new substitute note representing the portion of said unpaid principal amount that is not so converted be issued in accordance with the provisions of the Note.
(Signature and name of the registered holder)
THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT. NEITHER THIS SECURITY NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
COMMON STOCK PURCHASE WARRANT
INFINITY ENERGY RESOURCES, INC.
|Warrant Shares: [•]||Issue Date: March 31, 2021|
|Warrant Exercise price: $ [•]||Termination Date: March 30, 2026|
This COMMON STOCK PURCHASE WARRANT (this “Warrant”) certifies that, for value received of $0.001 per Warrant Share issuable hereunder, the receipt of which is hereby acknowledged, [•], or his assigns (the “Holder”) is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time or times on or prior to the close of business on the five (5) year anniversary of the Issue Date (the “Termination Date”) but not thereafter, to subscribe for and purchase from Infinity Energy Resources, Inc., a Delaware Corporation (the “Company”), up to [•] shares of Common Stock (the “Warrant Shares”).
1. Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms shall have the meanings set forth in this Section 1.
(a) “Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 405 under the Securities Act.
(b) “Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
(c) “Commission” means the United States Securities and Exchange Commission.
(d) “Common Stock” means the common stock of the Company, par value $0.01 per share, and any other class of securities into which such securities may hereafter be reclassified or changed.
(e) “Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.
(f) “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
(g) “Person” means an individual, corporation, limited liability company, partnership, association, joint venture, trust, unincorporated organization, other entity or group (as defined in the Exchange Act).
(h) “Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same purpose and effect as such Rule.
(i) “Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
(j) “Trading Day” means a day on which the Trading Market is open for trading.
(k) “Trading Market” means the principal market or exchange on which the Common Stock is listed or quoted for trading on the date in question.
(l) “Transfer Agent” means Action Stock Transfer, the current transfer agent of the Company and any successor transfer agent of the Company.
(a) General. Exercise of the purchase rights represented by this Warrant may be made, in whole or in part, at any time or times on or before the Termination Date by delivery to the Company (or such other office or agency of the Company as it may designate by notice in writing to the Holder at the address of the Holder appearing on the books of the Company) of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (“Notice of Exercise”). Within three (3) Trading Days following the date of exercise as aforesaid, the Holder shall deliver the aggregate Exercise Price (defined below) for the shares specified in the applicable Notice of Exercise by wire transfer or cashier’s check drawn on a United States bank. Notwithstanding anything herein to the contrary, the Holder shall not be required to physically surrender this Warrant to the Company until the Holder has purchased all of the Warrant Shares available hereunder and the Warrant has been exercised in full, in which case, the Holder shall surrender this Warrant to the Company for cancellation within three (3) Trading Days of the date the final Notice of Exercise is delivered to the Company. Partial exercises of this Warrant resulting in purchases of a portion of the total number of Warrant Shares available hereunder shall have the effect of lowering the outstanding number of Warrant Shares purchasable hereunder in an amount equal to the applicable number of Warrant Shares purchased. The Holder and the Company shall maintain records showing the number of Warrant Shares purchased and the date of such purchases. The Company shall deliver any objection to any Notice of Exercise within one (1) Business Day of receipt of such notice. The Holder and any assignee, by acceptance of this Warrant, acknowledge and agree that, by reason of the provisions of this paragraph, following the purchase of a portion of the Warrant Shares hereunder, the number of Warrant Shares available for purchase hereunder at any given time may be less than the amount stated on the face hereof. Under no circumstances will the Company be required to net cash settle this Warrant upon its exercise.
(b) Exercise Price. The exercise price per share of the Warrant Shares shall be (i) fifty cents ($0.50) per share (the “Exercise Price”).
(c) Optional Cashless Exercise. Notwithstanding anything contained herein to the contrary, if a registration statement covering the Warrant Shares that are the subject of the Notice of Exercise (the “Unavailable Warrant Shares”) is not available for the resale of such Unavailable Warrant Shares to the public, the registered holder may, in its sole discretion, in lieu of making the cash payment otherwise contemplated to be made to the Company upon such exercise in payment of the aggregate Exercise Price, elect instead to receive upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula:
Net Number = [(A x B) - (A x C)] / B
For purposes of the foregoing formula:
A= the total number of shares with respect to which the Warrant is then being exercised.
B= the arithmetic average of the Closing Sale Prices of the shares of Common Stock for the five (5) consecutive Trading Days ending on the date immediately preceding the date of the Notice of Exercise.
C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.
|(d)||Mechanics of Exercise.|
(i) Delivery of Certificates Upon Exercise. Shares of Common Stock purchased hereunder shall be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s prime broker with the Depository Trust Company (“DTC”) through its Deposit Withdrawal Agent Commission (“DWAC”) system if the Company is then a participant in such system and either (A) there is an effective registration statement permitting the resale of the Warrant Shares by the Holder or (B) the Warrant Shares are eligible for resale without volume or manner of sale limitations pursuant to Rule 144, and otherwise by physical delivery of a certificate to the address specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (x) the delivery to the Company of the Notice of Exercise Form, (y) surrender of this Warrant (if required) and (z) payment of (A) if this Warrant is exercised on a cash basis, the aggregate Exercise Price as set forth above and (B) all taxes required to be paid by the Holder, if any, pursuant to Section 2(d)(vi) prior to the issuance of such shares (such date, the “Warrant Share Delivery Date”). This Warrant shall be deemed to have been exercised on the first date on which all of the foregoing have been delivered to the Company. The Warrant Shares shall be deemed to have been issued, and Holder or any other person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(c)(v) prior to the issuance of such shares, having been paid.
(ii) Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and upon surrender of the certificate for this Warrant, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.
(iii) Rescission Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the Warrant Shares pursuant to Section 2(d)(i) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind such exercise.
(iv) No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall, at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the Exercise Price or round up to the next whole share.
(v) Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental expense in respect of the issuance of such certificate, all of which taxes and expenses shall be paid by the Company, and such certificates shall be issued in the name of the Holder or in such name or names as may be directed by the Holder; provided, however, that in the event certificates for Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for exercise shall be accompanied by the Assignment Form attached hereto duly executed by the Holder and the Company may require, as a condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto.
(vi) Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof.
3. Certain Adjustments.
(a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding: (i) pays a stock dividend or otherwise makes a distribution or distributions on shares of its Common Stock or any other equity or equity equivalent securities payable in shares of Common Stock (which, for avoidance of doubt, shall not include any shares of Common Stock issued by the Company upon exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock into a larger number of shares, (iii) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (iv) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event, and the number of shares issuable upon exercise of this Warrant shall be proportionately adjusted such that the aggregate Exercise Price of this Warrant shall remain unchanged. Any adjustment made pursuant to this Section 3(a) shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution and shall become effective immediately after the effective date in the case of a subdivision, combination or re-classification.
(b) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.
(c) Notice to Holder.
(i) Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
(ii) Notice to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last address as it shall appear upon the Warrant Register (defined below) of the Company, at least twenty (20) calendar days prior to the applicable record or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation, merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing thereof shall not affect the validity of the corporate action required to be specified in such notice. To the extent that any notice provided hereunder constitutes, or contains, material, non-public information regarding the Company or any of the Subsidiaries, the Company shall simultaneously file such notice with the Commission pursuant to a Current Report on Form 8-K. The Holder shall remain entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering such notice except as may otherwise be expressly set forth herein.
4. Limitation on Sales of Warrant Shares. The Holder acknowledges that the Warrant Shares have not been registered under the Securities Act, and agrees that it shall not sell, pledge, distribute, offer for sale, transfer or otherwise dispose of any Warrant Shares, in the absence of (i) an effective registration statement under the Securities Act as to such Warrant Shares and registration or qualification of such Warrant Shares under any applicable “blue sky” or state securities law then in effect or (ii) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. Without limiting the generality of the foregoing, unless the resale of the Warrant Shares shall have been effectively registered under the Securities Act, the Warrant Shares issued upon exercise of this Warrant shall be imprinted with a legend in substantially the following form:
This security has been acquired for investment and has not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws. This security may not be sold, pledged or otherwise transferred in the absence of such registration or pursuant to an exemption therefrom under the Securities Act and such laws, supported by an opinion of counsel, reasonably satisfactory to the Company and its counsel, that such registration is not required.
5. Transfer of Warrant.
(a) Transfer. Subject to compliance with any applicable state and federal securities laws and the provisions of this Warrant, this Warrant and all rights hereunder may be transferred, in whole or in part, by surrendering this Warrant at the principal office of the Company or its designated agent, together with a written assignment of this Warrant substantially in the form attached hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees, as applicable, and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. The Warrant, if properly assigned in accordance herewith, may be exercised by a new holder for the purchase of Warrant Shares without having a new Warrant issued.
(b) New Warrants. This Warrant may be divided upon presentation hereof at the aforesaid office of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 5(a), as to any transfer which may be involved in such division, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided in accordance with such notice. All Warrants issued on transfers or exchanges shall be dated the initial issuance date set forth on the first page of this Warrant and shall be identical with this Warrant except as to the number of Warrant Shares issuable pursuant thereto.
(c) Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the “Warrant Register”), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary.
6. Registration Rights. If, at any time during the five (5) year period commencing on the Issue Date of this Warrant, the Company proposes to file a registration statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into, equity securities, by the Company for its own account or for shareholders of the Company for their account, other than a registration statement (i) filed in connection with any employee stock option or other benefit plan, (ii) for an exchange offer or offering of securities solely to the Company’s existing shareholders, (iii) for an offering of debt that is convertible into equity securities of the Company or (iv) for a dividend reinvestment plan, then the Company shall (x) give written notice of such proposed filing to the holder(s) of this Warrant and any Warrant Shares as soon as practicable but in no event less than ten (10) days before the anticipated filing date, which notice shall describe the amount and type of securities to be included in such offering, the intended method(s) of distribution, and the name of the proposed managing underwriter or underwriters, if any, of the offering, and (y) offer to the holder(s) of this Warrant and any Warrant Shares in such notice the opportunity to register the sale of such number of Warrant Shares (the “Registrable Securities”) as such holders may request in writing within five (5) days following receipt of such notice (a “Piggy-Back Registration”). The Company shall cause such Registrable Securities to be included in such registration statement and shall cause the managing underwriter or underwriters of a proposed underwritten offering to permit the Registrable Securities requested to be included in a Piggy-Back Registration on the same terms and conditions as any similar securities of the Company and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All holders of Registrable Securities proposing to distribute their securities through a Piggy-Back Registration that involves an underwriter or underwriters shall enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such Piggy-Back Registration. If the managing underwriter or underwriters for a Piggy-Back Registration that is to be an underwritten offering advises the Company in writing that the dollar amount or number of shares of Registrable Securities which the holder(s) thereof desire to sell, taken together with all other securities which the Company desires to sell and all other securities, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights which the holders thereof desire to sell, exceeds the maximum dollar amount or maximum number of shares that can be sold in such offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering, then the Company may remove from such registration statement any Registrable Securities that the managing underwriters shall reasonably request. Any holder of Registrable Securities may elect to withdraw such holder’s request for inclusion of Registrable Securities in any Piggy-Back Registration by giving written notice to the Company of such request to withdraw prior to the effectiveness of the registration statement. The Company (whether on its own determination or as the result of a withdrawal by persons making a demand pursuant to written contractual obligations) may withdraw a registration statement at any time prior to the effectiveness of the registration statement. The Company shall bear all fees and expenses attendant to registering the Registrable Securities, including the expenses of any legal counsel selected by the Holders to represent them in connection with the sale of the Registrable Securities, but the Holders shall pay any and all underwriting commissions related to the Registrable Securities.
(a) No Rights as Stockholder Until Exercise. This Warrant does not entitle the Holder to any voting rights, dividends or other rights as a stockholder of the Company prior to the exercise hereof as set forth in Section 2(d)(i).
(b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate.
(c) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then, such action may be taken or such right may be exercised on the next succeeding Business Day.
(d) Authorized Shares. The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue).
Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform its obligations under this Warrant.
Before taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.
(e) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Warrant shall be commenced exclusively in the state and federal courts sitting in the City of Kansas City, Kansas. Each party hereby irrevocably submits to the exclusive jurisdiction of the federal courts sitting in the Kansas City, Kansas, and the state courts sitting in Wyandotte or Johnson County, Kansas for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
(f) Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies.
(g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto at or prior to 5:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (iii) the second Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. Except as otherwise provided of in this Warrant, the address for such notices and communications shall be as follows: if to (A) the Company, 15612 College Boulevard, Lenexa, Kansas 66219, Attention: Chief Financial Officer, and (B) the Holder, _________________.
(h) Limitation of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
(i) Remedies. The Holder, in addition to being entitled to exercise all rights granted by law, including recovery of damages, will be entitled to specific performance of its rights under this Warrant. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Warrant and hereby agrees to waive and not to assert the defense in any action for specific performance that a remedy at law would be adequate.
(j) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors and permitted assigns of the Company and the successors and permitted assigns of Holder. The provisions of this Warrant are intended to be for the benefit of any Holder from time to time of this Warrant and shall be enforceable by the Holder.
(k) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder.
(l) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant.
(m) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized as of the date first above indicated.
|INFINITY ENERGY RESOURCES, INC.|
|Name:||Stanton E. Ross|
|Title:||Chief Executive Officer|
NOTICE OF EXERCISE
To: Infinity Energy Resources, Inc.
(1) The undersigned hereby elects to exercise Warrant No. (the “Warrant”) with respect to ____________ shares of common stock of the Company (the “Warrant Shares”), pursuant to the terms of the Warrant, and tenders herewith or will tender within the time period specified in the Warrant payment of the exercise price in full (or has elected below to exercise the Warrant on a cashless basis), together with all applicable transfer taxes, if any. If the Warrant is being exercised in full, the Warrant is attached hereto or will be delivered within the time period specified in the Warrant.
(2) Payment of Exercise Price:
|[ ]||Payment shall take the form of lawful money of the United States in accordance with the terms of the Warrant.|
|[ ]||Payment shall take the form of a cashless exercise in accordance with the terms of the Warrant.|
(3) Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is specified below:
The Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:
[SIGNATURE OF HOLDER]
Name of Holder: _________________________________________________________________________________
Name of Signatory (if entity): ________________________________________________________________________
Title of Signatory (if entity): _________________________________________________________________________
(To assign the foregoing warrant, execute this form and supply required information.
Do not use this form to exercise the warrant.)
FOR VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned to:
whose address is:
|Dated: ______________, _______________|
|Name of Holder|
|Name of Signatory (if entity)|
|Title of Signatory (if entity)|
|Address of Holder:|
Signature Guaranteed: ___________________________________________
NOTE: The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.
DEBT SETTLEMENT AGREEMENT
THIS DEBT SETTLEMENT AGREEMENT (the “Agreement”) is dated as of this 31st day of March, 2021, by and between Infinity Energy Resources, Inc., a Delaware corporation (the “Company”), and [•] (the “Creditor”). The Company acknowledges that it is indebted to Creditor in the amount of $[•] (the “Debt”).
In consideration of the mutual covenants and promises made by the parties, the Company and Creditor agree as follows:
|1.||ACKNOWLEDGMENT OF DEBT. The parties agree the Debt is the total amount of all Debt and any other obligations owed by the Company to Creditor as of the date of this Agreement (the “Liabilities”).|
|2.||SETTLEMENT AMOUNT. In return for cancellation of the Debt and Liabilities of the Company to Creditor, the Company will issue Creditor a Convertible Promissory Note in the principal amount of $[•] and Warrants having a value of $[•] for a total of $[•]. The Note and Warrants are in the form attached as Exhibits A and B, respectively.|
|3.||RELEASE. Upon issuance of the Note and Warrants (the “Effective Date”) Creditor cancels the Debt and Liabilities the Company may owe to Creditor and the parties release each other as follows:|
3.1 On the Effective Date, Creditor releases, discharges and covenants not to sue or cause others to sue the Company and its past, present or future agents, successors, attorneys, representatives or assigns, or any one or more of them (the “Creditor Releases”), on any and all claims, actions, causes of actions, suits, debts, sums of money, accounts, covenants, contracts, agreements, representations, warranties, damages, injuries, liabilities and demands whatsoever, in law or in equity, whether known or unknown, contingent or fixed, liquidated or unliquidated, arising out of any events occurring from the beginning of time to the date of this Agreement, including without limitation, those matters related to or arising out of any purported or actual oral or written agreement or any past, present or future business activities between Creditor and the Company. This release of liability shall exclude claims to enforce or protect the rights and duties created by this Agreement.
3.2 On the Effective Date, the Company releases, discharges and covenants not to sue or cause others to sue Creditor and his past, present or future agents, successors, attorneys, representatives or assigns, or any one or more of them (the “Company Releases”), on any and all claims, actions, causes of actions, suits, debts, sums of money, accounts, covenants, contracts, agreements, representations, warranties, damages, injuries, liabilities and demands whatsoever, in law or in equity, whether known or unknown, contingent or fixed, liquidated or unliquidated, arising out of any events occurring from the beginning of time to the date of this Agreement, including without limitation, those matters related to or arising out of any purported or actual oral or written agreement or any past, present or future business activities between the Company and Creditor. This release of liability shall exclude claims to enforce or protect the rights and duties created by this Agreement.
|5.||MISCELLANEOUS. This Agreement supersedes any prior agreements, understandings or negotiations, whether written or oral. This Agreement and interpretation of its terms will be governed in accordance with the laws of Kansas. The parties submit to the exclusive jurisdiction of the federal and sate courts of Jackson County, Kansas.|
IN WITNESS WHEREOF the parties have executed and agreed to this Agreement as of the date first above written.
|Infinity Energy Resources, Inc.|
|Stanton E. Ross|
|Its||Chairman & CEO|