into a Material Definitive Agreement.
reported in a current report on Form 8-K on May 8, 2015, effective May 7, 2015, Infinity Energy Resources, Inc. (the “Company”)
completed the May 2015 Private Placement of a $12.0 million principal amount secured convertible note (the “Convertible
Note”) and Warrant to purchase 1,800,000 shares of the Company’s common stock, $0.0001 par value (the “Warrant”).
Convertible Note and Warrant were issued pursuant to a Securities Purchase Agreement, dated May 7, 2015, by and between the Company
and the Investor. The May 2015 Private Placement was made pursuant to an exemption from registration under such Act. At the closing,
the Investor acquired the secured convertible note by paying $450,000 in cash and issuing a secured promissory note, secured by
cash, with an aggregate initial principal amount of $9,550,000 (the “Investor Note”).
May 4, 2017, the Investor notified the Company that it elected to effect an Investor Optional Offset under Section 7(a) of the
Investor Note of the full $9,490,000 principal amount outstanding under the Investor Note against $9,490,000 in aggregate principal
outstanding under the Convertible Note. It did so by surrendering and concurrently cancelling $9,490,000 in aggregate principal
of the Convertible Note in exchange for the satisfaction in full and cancellation of the Investor Note. The Convertible Note had
an aggregate outstanding principal balance of $11,687,231 as of the date of the exchange. The Investor requested the Company to
deliver a new convertible note (the “Replacement Note”) with respect to the remaining principal balance of $2,197,231
to replace the Convertible Note. The aggregate outstanding principal balance of $11,687,231 of the Convertible Note included an
approximate $2.0 million original issue discount; however, the Investor funded only $510,000 under the Investor Note. The Company
had recorded the fair value of the Replacement Note assuming that the remaining par value is $2,197,231 as asserted by the Investor.
The Replacement Note provided for a maturity date of May 7, 2018, a conversion price of $0.50 per share and was due in monthly
installment payments through May 2018 either in cash or stock, among other terms. The Company did not repay the Replacement Note
at its maturity and it was therefore in technical default. The Replacement Note was to be secured to the same extent as the Convertible
Note. The Company and the Holder have negotiated a resolution of thess outstanding matters regarding the default status
and the issuance of the Replacement Note under the terms of the financing.
May 23, 2019, the Parties agreed to an omnibus resolution to these outstanding matters and entered into an Exchange Agreement
and a Side-Letter Agreement as described below:
Under the Exchange Agreement, the Investor exchanged all of its rights under the original securities”
issued in the May 2015 Private Placement (including: i. Convertible Note subject to the Optional Offset with a current balance
of $2,197,231.00, ii. Related accrued interest under the Convertible Note with a balance of $26,107.52 as of March 31, 2019, iii.
Warrant to purchase 1,800,000 common shares (post-split basis), iv. Related Securities and Pledge Agreement, v. Related Guarantee
Agreement and the, vi. Related Registration Rights Agreement) (the “Original Securities”) for 770,485 fully paid and
nonassessable shares of the Company’s common stock, par value $0.0001.
consummation of the exchange transactions described above, the Holder no longer owns any of the Original Securities including
any rights thereunder, and the Company cancelled the certificate(s) and other physical documentation evidencing the ownership
of the Original Securities.
Concurrent with the Exchange Agreement described above the parties also entered into a side-letter agreement
(the “Side-Letter Agreement”). The Side-Letter Agreement provides that on November 23, 2019, the Company will, if
required if required under the Side-letter Agreement, issue additional shares of common stock to the Investor based on an increase
in the fully-diluted shares outstanding (as defined below) of the Company from the date of the Side-Letter Agreement’s execution
to its six-month anniversary (the “True-Up Shares”). The issuance of the True-Up Shares, if any, shall provide the
Holder with rights to acquire additional shares to be calculated according to the following formula:
Aggregate Number of Rights Shares
= 9.99% of shares of Common Stock outstanding on the Six-Month Anniversary (calculated based on the Number of Fully-Diluted
Shares Outstanding (as defined below))
= The shares of Common Stock Issued to the Purchaser contemporaneously with the Agreement
the purposes of this Side-Letter Agreement, “Number of Fully-Diluted Shares Outstanding” means, as of any time of
determination, the sum of (i) the aggregate number of issued and outstanding shares of common stock as of such time of determination,
(ii) the aggregate maximum number of shares of common stock issuable on an as-converted and as-exchanged basis, as applicable
(excluding any exercise of warrants to purchase Common Stock and all Rights issued pursuant to the Agreement), pursuant to all
capital stock and all other securities of the Company or any of its Subsidiaries (excluding any warrants to purchase common stock
and all rights to acquire common shares issued pursuant to the Side-Letter Agreement) outstanding as of such time of determination
(or issuable pursuant to agreements in effect as of such time).
the foregoing, if any warrants to purchase common stock are outstanding (or issuable upon conversion or exchange of securities
outstanding) as of the six-month anniversary of the Side-Letter Agreement (each, an “Outstanding Warrant”), on such
six-month anniversary the Company shall issue the Investor an additional right to acquire a warrant (the “New Warrant”)
exercisable into 9.99% of the shares of common stock issuable upon exercise of all Outstanding Warrants as of the six-month anniversary
(the “New Warrant Shares”). The New Warrant Shares shall be of like tenor to the Outstanding Warrants.
Company also agrees that from the date of the Side-Letter Agreement until a date that is twelve (12) months from the date on which
the Side-Letter Agreement was executed, the Company will not raise capital at a price that is below $0.10 per share (as adjusted
for stock splits, stock dividends, stock combinations, recapitalizations and similar events) without the Investor’s consent.