UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment
No. )
Filed
by the Registrant ☒
Filed
by a Party other than the Registrant ☐
Check
the appropriate box:
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Preliminary proxy statement
☒
Definitive proxy statement
☐
Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
☐ Definitive Additional Materials
☐
Soliciting Material Under Rule 14a-12
Infinity
Energy Resources, Inc. |
(Name
of Registrant as Specified In Its Charter) |
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(Name
of Person(s) Filing proxy statement, if Other Than the
Registrant) |
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of Filing Fee (Check the appropriate box):
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computed on table below per Exchange Act Rules 14a-6(i)(4) and
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fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
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previously paid: |
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INFINITY
ENERGY RESOURCES, INC.
11900
College Blvd., Suite 310
Overland
Park, Kansas 66210
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held on October 13, 2021
To
the Stockholders of Infinity Energy Resources, Inc.:
Notice
is hereby given that the 2021 Annual Meeting of Stockholders of
Infinity Energy Resources, Inc., a Delaware corporation (the
“Company”), will be held at 15612 College Blvd., Lenexa Kansas
66219, on October 13, 2021 at 10:00 A.M. Central Daylight Time (the
“Annual Meeting”).
The
Annual Meeting is being held for the following purposes:
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1. |
To
elect three directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified; |
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2. |
To approve an amendment to the Company’s Certificate of
Incorporation, as amended, removing the provision providing that
any action taken by the stockholders by written
consent in lieu of a meeting requires that all of the Company’s
stockholders entitled to vote on such action consent in writing
thereto (the “Stockholder Written Consent Amendment
Proposal”); |
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3. |
To approve an amendment to the Company’s Certificate of
Incorporation, as amended, increasing the Company’s authorized
shares of common stock from 75,000,000 shares to 500,000,000 shares
(the “Share Increase Amendment Proposal”); |
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4. |
To approve an amendment to the Company’s Certificate of
Incorporation, as amended, changing the Company’s name to American
Noble Gas, Inc. (the “Name Change Amendment Proposal”); |
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5. |
To approve the adoption of the Company’s 2021 Stock Option and
Restricted Stock Plan (the “2021 Plan Proposal”); |
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6. |
To
ratify the appointment of RBSM LLP as the Company’s independent
registered public accountants for the fiscal year ending December
31, 2021; |
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7. |
To
approve a non-binding advisory proposal to approve the compensation
paid to the Company’s named executive officers (the “Say-on-Pay
Proposal”); |
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8. |
To
approve a non-binding advisory proposal on the frequency of the
stockholder advisory vote on executive compensation (the
“Say-on-Pay Frequency Proposal”); and |
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9. |
To
transact such other business as may properly come before the
meeting. |
The
Board of Directors of the Company unanimously approves and
recommends that you vote “FOR” the election of the three nominees
to the Board of Directors, “FOR” proposals 2,3,4,5,6 and 7, and
every “3 YEARS” for Proposal 8.
The
foregoing items of business are more fully described in the Proxy
Statement that is attached and made a part of this Notice. Only
stockholders of record of the Company’s Common Stock and
stockholders of record of the Company’s Series A Convertible
Preferred Stock (“Series A Preferred Stock”) at the close of
business on August 24, 2021 (the “Record Date”) will be entitled to
notice of, and to vote at, the Annual Meeting or any adjournment
thereof.
All
stockholders who are record or beneficial owners of the Company’s
Common Stock and the Company’s Series A Preferred Stock on the
Record Date are cordially invited to attend the Annual Meeting in
person. Your vote is important regardless of the number of shares
of Common Stock and/or Series A Preferred Stock that you own. Only
record or beneficial owners of the Common Stock and/or Series A
Preferred Stock as of the Record Date may attend the Annual Meeting
in person. When you arrive at the Annual Meeting, you must present
photo identification, such as a driver’s license. Beneficial owners
also must provide evidence of stockholdings as of the Record Date,
such as a recent brokerage account or bank statement.
Please
promptly complete, sign, date and return the enclosed proxy card in
the accompanying reply envelope to assure that your shares of
Common Stock and/or Series A Preferred Stock are represented at the
Annual Meeting. If you attend the Annual Meeting, you may vote in
person, if you wish to do so, even if you have returned a proxy.
Only stockholders who are record or beneficial owners of the
Company’s Common Stock and the Company’s Series A Preferred Stock
of record at the close of business on August 24, 2021 are entitled
to notice of and to vote at the Annual Meeting and at any
adjournments or postponements thereof. A list of stockholders
entitled to vote at the Annual Meeting will be available for
inspection at our offices. The enclosed proxy is being solicited on
behalf of the Board of Directors. If you have any further questions
concerning the Annual Meeting or any of the items of business to be
presented, please contact Stanton E. Ross at (620)
431-8840.
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By
Order of the Board of Directors, |
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Stanton
E. Ross |
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Chief
Executive Officer |
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Overland
Park, Kansas |
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August
30, 2021 |
Your
vote is important. Whether or not you intend to be present at the
Annual Meeting, please vote your shares by telephone or on the
Internet, or, if you request and receive a printed set of these
Proxy Materials by mail, you may also mark, sign, and date the
enclosed proxy and return it in the enclosed envelope to assure
that your shares are represented at the Annual Meeting. If you
attend the Annual Meeting, you may vote in person if you wish to do
so, even if you have previously submitted your
proxy.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF INFINITY ENERGY
RESOURCES, INC.’S
PROXY STATEMENT
We will be using the
Securities and Exchange Commission’s Notice and Access rules, which
allow us to make the Proxy Materials available on the Internet, as
the primary means of furnishing Proxy Materials to stockholders. On
or about August 30, 2021, we will mail to all stockholders a Notice
of Internet Availability of Proxy Materials, which contains
instructions for accessing our Proxy Materials on the Internet and
voting by telephone or on the Internet. The Notice of Internet
Availability of Proxy Materials also contains instructions for
requesting a printed set of Proxy Materials. The Proxy Statement
and Annual Report on Form 10-K for the fiscal year ended December
31, 2020 are available at: infyoilandgas.com.
2021 PROXY STATEMENT TABLE OF CONTENTS
INFORMATION ABOUT THE MEETING AND
VOTING |
1 |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT |
6 |
PROPOSAL NO.
1 ELECTION OF DIRECTORS |
8 |
Vote
Required and Recommendation of Board |
9 |
Family
Relationships |
10 |
Board of
Directors and Committee Meetings |
10 |
Committees
of the Board |
10 |
Report of
the Board Serving the Equivalent Functions of an Audit
Committee |
10 |
Boards’
Role in the Oversight of Risk Management |
11 |
Board
Leadership Structure |
11 |
Stockholder
Communications with the Board |
11 |
Process and
Policy for Director Nominations |
11 |
Code of
Ethics and Conduct |
12 |
Section
16(a) Beneficial Ownership Reporting |
12 |
Director
Compensation |
13 |
PROPOSAL NO.
2 TO APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF
INCORPORATION, AS AMENDED, REMOVING THE PROVISION PROVIDING THAT
ANY ACTION TAKEN BY THE STOCKHOLDERS BY WRITTEN CONSENT IN LIEU OF
A MEETING REQUIRES THAT ALL OF THE COMPANY’S STOCKHOLDERS ENTITLED
TO VOTE ON SUCH ACTION CONSENT IN WRITING THERETO |
19 |
Vote Required and Recommendation of
Board |
20 |
PROPOSAL NO.
3 TO APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF
INCORPORATION, AS AMENDED, INCREASING THE COMPANY’S AUTHORIZED
SHARES OF COMMON STOCK FROM 75,000,000 SHARES TO 500,000,000
SHARES |
21 |
Form of the
Share Increase Amendment |
21 |
Purpose of
the Share Increase Amendment |
21 |
Rights of
Additional Authorized Shares |
21 |
Potential
Adverse Effects of the Share Increase Amount |
22 |
Potential
Anti-Takeover Effects |
22 |
Appraisal
of Dissenters’ Rights |
22 |
Effectiveness of Share Increase
Amendment |
22 |
Executive
Officer and Director Interest |
22 |
Vote
Required and Recommendation of the Board |
22 |
PROPOSAL NO.
4 TO APPROVE AN AMENDMENT TO THE COMPANY’S CERTIFICATE OF
INCORPORATION, AS AMENDED, CHANGING THE COMPANY’S NAME TO AMERICAN
NOBLE GAS, INC. |
23 |
Form of the Name Change Amendment |
23 |
Reason for
Name Change Amendment |
23 |
Effectiveness of Name Change
Amendment |
23 |
Executive
Officer and Director Interest |
23 |
Vote
Required and Recommendation of the Board |
23 |
PROPOSAL NO.
5 TO APPROVE THE ADOPTION OF THE COMPANY’S 2021 STOCK OPTION AND
RESTRICTED STOCK PLAN |
24 |
Overview |
24 |
Plan
Summary |
24 |
Types of
Awards |
25 |
Vote
Required and Recommendation of Board |
28 |
PROPOSAL NO.
6 TO RATIFY AND APPROVE THE APPOINTMENT OF RBSM LLP AS THE
COMPANY’S INDEPENDENT REGISTERED ACCOUNTING FIRM FOR THE FISCAL
YEAR ENDING DECEMBER 31, 2021 |
29 |
Audit and Related Fees |
29 |
Vote
Required and Recommendation of Board |
30 |
PROPOSAL NO.
7 TO APPROVE A NON-BINDING ADVISORY PROPOSAL TO APPROVE THE
COMPENSATION PAID TO THE COMPANY’S NAMED EXECUTIVE
OFFICERS; |
31 |
PROPOSAL NO.
8 TO APPROVE A NON-BINDING ADVISORY PROPOSAL ON THE FREQUENCY OF
THE STOCKHOLDER ADVISORY VOTE ON EXECUTIVE
COMPENSATION; |
32 |
other
matters |
33 |
advance notice
provisions for stockholder proposals and
nominations |
33 |
annual
report |
33 |
STOCKHOLDER
PROPOSALS - 2022 ANNUAL MEETING OF STOCKHOLDERS |
34 |
APPENDIX A: FORM OF SECOND CERTIFICATE OF
AMENDMENT OF CERTIFICATE OF INCORPORTION |
A-1 |
APPENDIX B: 2021 STOCK OPTION AND RESTRICTED
STOCK PLAN. |
B-1 |
INFINITY
ENERGY RESOURCES, INC.
11900
College Blvd., Suite 310
Overland
Park, Kansas 66210
PROXY STATEMENT
General Information
This Proxy Statement (the “Proxy Statement”) is furnished in
connection with the solicitation of proxies by the Board of
Directors (the “Board”) of Infinity Energy Resources, Inc. (“we”,
“us”, “our”, “Infinity or the “Company”) for use at the Company’s
Annual Meeting of Stockholders (the “Annual Meeting”) to be held
at 15612
College Blvd., Lenexa Kansas 66219, on October 13, 2021 at 10:00
A.M ., Central Daylight Time,
and any adjournment(s) or postponement(s) thereof. This Proxy
Statement is being mailed on or about August 30, 2021 to the
stockholders of record of the Company’s (i) common stock, par value
$0.0001 per share (the “Common Stock”) and (ii) Series A
Convertible Preferred Stock, par value $0.0001 per share (the
“Series A Preferred Stock”), which votes with the shares of Common
Stock, on an as converted to Common Stock basis, with respect to
all matters on which the holders of Common Stock are entitled to
vote, as of August 24, 2021 (the “Record Date”).
This Proxy Statement (including the Notice of Annual Meeting of
Stockholders) is first being made available to stockholders
beginning on or before August 30, 2021. The Company’s Annual
Report on Form 10-K for the fiscal year ended December 31, 2020
(“Annual Report”), was filed with the Securities and Exchange
Commission (the “SEC”) on March 30, 2021. This Proxy Statement and
the Annual Report are collectively referred to herein as the “Proxy
Materials.”
INFORMATION ABOUT THE MEETING AND
VOTING
Notice and Access Model
We are making the Proxy
Materials available to stockholders on the Internet under the SEC’s
Notice and Access model. On or before August 30, 2021, we will mail
to all stockholders a Notice of Internet Availability of Proxy
Materials (the “Notice”) in lieu of mailing a full printed set of
the Proxy Materials. Accordingly, our Proxy Materials are first
being made available to our stockholders on the Internet at
https://www.ifnyoilandgas.com, on or before August 30, 2021. The
Notice includes instructions for accessing the Proxy Materials and
voting by mail, telephone or on the Internet. You will also find
instructions for requesting a full printed set of the Proxy
Materials in the Notice.
We believe the electronic
method of delivery under the Notice and Access model will decrease
postage and printing expenses, expedite delivery of Proxy Materials
to you and reduce our environmental impact. We encourage you to
take advantage of the availability of the Proxy Materials on the
Internet. If you received the Notice but would like to receive a
full printed set of the Proxy Materials in the mail, you may follow
the instructions in the Notice for requesting such
materials.
Solicitation/Cost of the
Meeting
The enclosed proxy is being
solicited by the Company’s the Board. The costs of the solicitation
will be borne by the Company. Proxies may be solicited personally
or by mail, telephone, facsimile or email by directors, officers
and employees of the Company, none of whom will receive any
additional compensation for such solicitations. The Company will
reimburse banks, brokers, nominees, custodians and fiduciaries for
their reasonable out-of-pocket expenses incurred in sending the
Proxy Materials to beneficial owners of the Company’s shares of
Common Stock Series A Preferred Stock.
Proposals, Record Date, Voting Rights, and Votes
Required
At the Annual Meeting, the Company’s stockholders will be
asked:
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1. |
To
elect three directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified; |
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2. |
To
approve an amendment to the Company’s Certificate of Incorporation,
as amended, removing the
provision providing that any action taken by the stockholders
by written consent in lieu of a meeting requires that all of
the Company’s stockholders entitled to vote on such action consent
in writing thereto (the “Stockholder Written Consent Amendment
Proposal”); |
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3. |
To approve an amendment to the Company’s Certificate of
Incorporation, as amended, increasing the Company’s authorized
shares of common stock from 75,000,000 shares to 500,000,000 shares
(the “Share Increase Proposal”); |
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4. |
To approve an amendment to the Company’s Certificate of
Incorporation, as amended, changing the Company’s name to American
Noble Gas, Inc. (the “Name Change Proposal”); |
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5. |
To approve the adoption of the Company’s 2021 Stock Option and
Restricted Stock Plan (the “2021 Plan Proposal”); |
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6. |
To
ratify the appointment of RBSM LLP as the Company’s independent
registered public accountants for the fiscal year ending December
31, 2021; |
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7. |
To
approve a non-binding advisory proposal to approve the compensation
paid to the Company’s named executive officers (the “Say-on-Pay
Proposal”); |
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8. |
To
approve a non-binding advisory proposal on the frequency of the
stockholder advisory vote on executive compensation (the
“Say-on-Pay Frequency Proposal”); and |
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9. |
To
transact such other business as may properly come before the
meeting. |
Holders of shares of the Company’s Common Stock and
the Company’s Series A Preferred Stock at the close of business on the Record
Date are entitled to notice of, and to vote at, the Annual
Meeting.
For all proposals, holders of
Common Stock are entitled to one vote per share and holders of
Series A Preferred Stock are entitled to one vote for each share of
Common Stock, on an as-converted basis. Cumulative voting is not
permitted in the election of directors or any of the proposals
being submitted to the stockholders at the Annual
Meeting.
The presence in person or by
proxy of the holders of a majority of the shares entitled to vote
at the Annual Meeting will constitute a quorum for the transaction
of business at the Annual Meeting. As of the Record Date,
18,793,265 shares of
Common Stock were outstanding and entitled to vote and 22,776 shares of Series A
Preferred Stock were outstanding providing the holders on an
as-converted basis to 3,818,880 votes, giving effect to
certain beneficial ownership limitations relating to the Series A
Preferred Stock. Thus, the holders of at least 11,306,073 shares of Common Stock
and shares of Series A Preferred Stock, on an as-converted basis,
collectively, must be deemed present in person or represented by
proxy at the Annual Meeting to have a quorum. Abstentions and
broker non-votes will count towards quorum requirements. If there
is no quorum, the holders of a majority of the shares of Common
Stock and shares of Series A Preferred Stock, on an as-converted
basis, collectively, deemed present at the Annual Meeting in person
or represented by proxy may adjourn the Annual Meeting to another
date.
Broker non-votes occur when a
beneficial owner of shares held in “street name” does not give
instructions to the broker or nominee holding the shares as to how
to vote on matters deemed “non-routine.” Generally, if shares are
held in street name, the beneficial owner of the shares is entitled
to give voting instructions to the broker or nominee holding the
shares. If the beneficial owner does not provide voting
instructions, the broker or nominee can still vote the shares with
respect to matters that are considered to be “routine,” but not
with respect to “non-routine” matters. Proposals No. 3, No. 4 and
No. 6 are considered routine under the current rules of the New
York Stock Exchange. All other proposals are matters considered
non-routine under the current rules of the New York Stock Exchange,
and therefore, may not be voted on by the broker or nominee holding
the shares absent specific instructions from you, and without such
instructions will be considered broker non-votes on these
proposals.
As to the election of directors under Proposal No. 1, if a quorum
is present, directors are elected by a plurality of votes cast,
without respect to either (i) broker non-votes, or (ii) proxies as
to which authority to vote for one or more of the other nominees
being proposed is withheld. If you “Abstain” from voting, it will
have no impact on the vote. Broker non-votes will also not have any
effect on approval of Proposal No. 1, because they are not entitled
to vote on the matter.
As to Proposal No. 2 (the Stockholder Written Consent Amendment
Proposal), if a quorum is present, the affirmative vote of a
majority of the votes cast on the matter is required to approval
the proposal. As to this proposal, a stockholder may: (i) vote
“FOR” the proposal, (ii) vote “AGAINST” the proposal, or (iii)
“ABSTAIN” with respect to the proposal. If you “Abstain” from
voting, it will have no impact on the vote. Broker non-votes will
also not have any effect on approval of Proposal No. 2, because
they are not entitled to vote on the matter.
As to Proposal No. 3 (the
Share Increase Amendment Proposal), if a quorum is present, the
affirmative vote of a majority of the votes cast on the matter is
required to approval the proposal. As to this proposal, a
stockholder may: (i) vote “FOR” the proposal, (ii) vote “AGAINST”
the proposal, or (iii) “ABSTAIN” with respect to the proposal. If
you “Abstain” from voting, it will have the same effect as an
“Against” vote. There will be no broker non-votes on Proposal No.
3.
As to Proposal No. 4 (the
Name Change Amendment Proposal), if a quorum is present, the
affirmative vote of a majority of the votes cast on the matter is
required to approval the proposal. As to this proposal, a
stockholder may: (i) vote “FOR” the proposal, (ii) vote “AGAINST”
the proposal, or (iii) “ABSTAIN” with respect to the proposal. If
you “Abstain” from voting, it will have the same effect as an
“Against” vote. There will be no broker non-votes on Proposal No.
4.
As to Proposal No. 5 (the 2021 Plan Proposal), if a quorum is
present, the affirmative vote of a majority of the votes cast on
the matter is required to approval the proposal. As to this
proposal, a stockholder may: (i) vote “FOR” the proposal, (ii) vote
“AGAINST” the proposal, or (iii) “ABSTAIN” with respect to the
proposal. If you “Abstain” from voting, it will have no impact on
the vote. Broker non-votes will also not have any effect on
approval of Proposal No. 5, because they are not entitled to vote
on the matter.
As to Proposal No. 6, to ratify and approve the appointment of RBSM
LLP as the Company’s independent registered public accountants for
the fiscal year ending December 31, 2021, if a quorum is present,
the affirmative vote of a majority of the votes cast on the matter
is required to approval the proposal. As to this proposal, a
stockholder may: (i) vote “FOR” the proposal, (ii) vote “AGAINST”
the proposal, or (iii) “ABSTAIN” with respect to the proposal. If
you “Abstain” from voting, it will have the same effect as an
“Against” vote. There will be no broker non-votes on Proposal No.
6.
As to Proposal No. 7 (the Say-on-Pay Proposal), if a quorum is
present, the affirmative vote of a majority of the votes cast on
the matter is required to approval the proposal, which is
non-binding on the Company. As to this proposal, a stockholder may:
(i) vote “FOR” the proposal, (ii) vote “AGAINST” the proposal, or
(iii) “ABSTAIN” with respect to the proposal. If you “Abstain” from
voting, it will have no impact on the vote. Broker non-votes will
also not have any effect on approval of Proposal No. 7, because
they are not entitled to vote on the matter.
As to Proposal No. 8 (the Say-on-Pay Frequency Proposal), if a
quorum is present, the affirmative vote of a majority of the votes
cast on the matter is required to approval the proposal, which is
non-binding on the Company. As to this proposal, a stockholder may:
(i) vote in favor of every 1 YEAR as the frequency, (ii) vote in
favor of every 2 YEARS as the frequency; (iii) vote in favor of
every 3 YEARS as the frequency, or (iv) “ABSTAIN” with respect to
the proposal. If you “Abstain” from voting, it will have no impact
on the vote. Broker non-votes will also not have any effect on
approval of Proposal No. 8, because they are not entitled to vote
on the matter.
Voting
Whether you plan to attend the Annual Meeting or not, we urge you
to vote by proxy. All shares represented by valid proxies that we
receive by the Annual Meeting through this solicitation, and that
are not revoked, will be voted in accordance with your instructions
on the proxy card or as instructed via Internet or telephone.
Unless contrary instructions are indicated on the proxy, the shares
of Common Stock or Series A Preferred Stock represented by such
proxy will be voted “FOR” the slate of directors described herein,
and “FOR” each of Proposal Nos. 2, 3, 4, 5, 6, 7 and 8. Voting by
proxy will not affect your right to attend the Annual Meeting. A
proxy may be revoked at any time prior to its exercise by (i)
providing notice in writing to the Company’s corporate secretary
that the proxy is revoked; (ii) presenting to the Company a
later-dated proxy; or (iii) by attending the Annual Meeting and
voting in person. If you plan to attend the Annual Meeting, please
ensure that you have an admission ticket or other authorization
from the record holder of your shares
Registered Holder
If your shares are registered directly in your name through our
stock transfer agent, Action Transfer Corporation (“Action
Transfer”), or you have stock certificates registered in your name,
you may vote:
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By Internet or by telephone. To vote by internet or telephone,
follow the instructions included in the Notice or, if you received
printed materials, follow the instructions in the proxy
card. |
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By mail. If you received a proxy card by mail, you can vote by mail
by completing, signing, dating and returning the proxy card as
instructed on the card. If you sign the proxy card but do not
specify how you want your shares voted, they will be voted in
accordance with the recommendation of our Board as noted
above. |
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In person at the Annual Meeting. If you attend the Annual Meeting,
you may deliver your completed proxy card in person or you may vote
by completing a ballot, which will be available at the Annual
Meeting.
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Telephone and Internet voting facilities for stockholders of record
will be available 24 hours a day and will close on October 12, 2021
at 11:59 p.m. Central Daylight Time.
Beneficial Holder
If your shares are held in “street name” (held in the name of a
bank, broker or other holder of record), you will receive
instructions from the holder of record. You must follow the
instructions of the holder of record in order for your shares to be
voted. If your shares are not registered in your own name and you
plan to vote your shares in person at the Annual Meeting, you
should contact the broker or agent to obtain a legal proxy or
broker’s proxy card and bring it with you to the Annual Meeting in
order to vote. You will not be able to vote at the Annual Meeting
unless you have a proxy card from your broker.
No Dissenters (Appraisal) Rights
The proposed corporate actions on which the stockholders are being
asked to vote are not corporate actions for which stockholders of a
Delaware corporation have appraisal rights under the Delaware
General Corporation Law (the “DGCL”).
Proposals by Security Holders and Other Matters
No stockholder has requested that we include any additional
proposals in this Proxy Statement or otherwise requested that any
proposals be submitted to the stockholders at the Annual Meeting.
Management and the Board of the Company know of no other matters to
be brought before the Annual Meeting other than as described
herein. If any other matters are properly presented to the
stockholders for action at the Annual Meeting and any adjournments
or postponements thereof, the proxy holder named in the enclosed
proxy intends to vote in the holder’s discretion on all matters on
which the shares of Common Stock and Series A Preferred Stock
represented by such proxy are entitled to vote.
Forward-Looking Statements
This Proxy Statement may contain certain “forward-looking”
statements, as defined in Section 27A of the Securities Act of
1933, as amended (the “Securities Act”), and Section 21E of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”),
in connection with the Private Securities Litigation Reform Act of
1995 that involve risks and uncertainties, as well as assumptions
that, if they never materialize or prove incorrect, could cause our
results to differ materially and adversely from those expressed or
implied by such forward-looking statements.
Such forward-looking statements include statements about our
expectations, beliefs or intentions regarding actions contemplated
by this Proxy Statement, our potential business, financial
condition, results of operations, strategies, or prospects. You can
identify forward-looking statements by the fact that these
statements do not relate strictly to historical or current matters.
Rather, forward-looking statements relate to anticipated or
expected events, activities, trends, or results as of the date they
are made and are often identified by the use of words such as
“anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,”
“intend,” “may,” or “will,” and similar expressions or variations.
Because forward-looking statements relate to matters that have not
yet occurred, these statements are inherently subject to risks and
uncertainties that could cause our actual results to differ
materially from any future results expressed or implied by the
forward-looking statements. Many factors could cause our actual
activities or results to differ materially from the activities and
results anticipated in forward-looking statements. These factors
include those described under the caption “Risk Factors” included
in our other filings with the Securities and Exchange Commission
(“SEC”), including the disclosures set forth in Item 1A of our Form
10-K for the year ended December 31, 2020 and our Current Reports
on Forms 8-K and 8-K/A filed with the SEC on March 30, 2021, April 6, 2021, April 22, 2021, May 11, 2021, June 15, 2021, July 13, 2021 and August 13,
2021.
Furthermore, such forward-looking statements speak only as of the
date of this Proxy Statement. We undertake no obligation to update
any forward-looking statements to reflect events or circumstances
occurring after the date of such statements.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of August 24, 2021, information
regarding beneficial ownership of our capital stock by:
|
● |
each
person, or group of affiliated persons, who is known by us to
beneficially own more than 5% of our equity securities; |
|
|
|
|
● |
each
of our named executive officers; |
|
|
|
|
● |
each
of our directors; and |
|
|
|
|
● |
all
of our executive officers and directors as a group. |
The percentage ownership information shown in the table below is
based upon 18,793,265 shares of Common Stock and 22,776 shares of
Series A Preferred Stock outstanding as of August 24, 2021 (which
shares of Series A Preferred Stock are entitled to a total of
3,818,880 votes. The percentage ownership information shown in the
table excludes (a) shares of Common Stock issuable upon the
exercise of outstanding warrants to purchase an aggregate of up to
12,480,784 shares of Common Stock, with a weighted average exercise
price of $0.46 per share, (b) shares of Common Stock issuable upon
outstanding stock options exercisable for up to 2,077,000 shares of
Common Stock, with a weighted average exercise price of $5.73 per
share and (c) 65,930 shares of Common Stock issuable upon
conversion of $57,330 principal balance of 3% Convertible
Promissory Notes outstanding.
Beneficial
ownership is determined according to the rules of the SEC and
generally means that a person has beneficial ownership of a
security if he, she or it possesses sole or shared voting or
investment power of that security, including securities that are
convertible into and exercisable for shares of Common Stock within
sixty (60) days after August 24, 2021. Except as indicated by the
footnotes below, we believe, based on the information furnished to
us, that the persons named in the table below have sole voting and
investment power with respect to all shares of Common Stock and
Series A Preferred Stock shown that they beneficially own, subject
to community property laws where applicable.
For
purposes of computing the percentage of outstanding shares of our
Common Stock held by each person or group of persons named above,
any shares of Common Stock that such person or persons has the
right to acquire within sixty (60) days after August 24, 2021 is
deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other
person. The inclusion herein of any shares of Common Stock listed
as beneficially owned does not constitute an admission of
beneficial ownership.
Except
as otherwise noted below, the address for persons listed in the
table is c/o Infinity Energy Resources, Inc., 11900 College Blvd.,
Suite 310, Overland Park, KS 66210.
Shares Beneficially Owned |
|
|
|
|
|
|
|
% |
|
|
|
|
|
|
|
|
|
Series A Preferred |
|
|
Total
Voting |
|
|
|
Common Stock |
|
|
Stock |
|
|
Power |
|
5% or greater stockholders: |
|
|
Shares |
|
|
|
% |
|
|
|
Shares |
|
|
|
% |
|
|
|
(1) |
|
Lawrence D. Smith, estate |
|
|
4,277,790 |
|
|
|
15.5 |
% |
|
|
- |
|
|
|
- |
%
|
|
|
13.6 |
% |
Thomas J. Heckman (2) |
|
|
2,444,746 |
|
|
|
8.8 |
% |
|
|
347,188 |
|
|
|
9.1 |
% |
|
|
8.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and
executive officers |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stanton E. Ross (3)
President, Chief Executive Officer and Chairman |
|
|
3,221,007 |
|
|
|
11.7 |
% |
|
|
- |
|
|
|
- |
% |
|
|
10.2 |
% |
Daniel F. Hutchins (4)
Director, Chief Financial Officer, Treasurer and Secretary |
|
|
3,938,548 |
|
|
|
14.3 |
% |
|
|
- |
|
|
|
- |
% |
|
|
12.5 |
% |
John Loeffelbein (5)
Chief Operating Officer |
|
|
2,000,000 |
|
|
|
7.2 |
% |
|
|
- |
|
|
|
- |
% |
|
|
6.4 |
% |
Leroy C. Richie (6)
Director |
|
|
1,287,861 |
|
|
|
4.7 |
% |
|
|
- |
|
|
|
- |
%
|
|
|
4.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors and
executive officers as a group (4 persons) (7) |
|
|
10,447,416 |
|
|
|
37.9 |
% |
|
|
- |
|
|
|
- |
% |
|
|
33.2 |
% |
(1)
|
Percentage
of total voting power represents voting power with respect to all
shares of our Common Stock and Series A Preferred Stock, which have
the same voting rights as our shares of Common Stock. Holders of
Common Stock are entitled to one (1) vote per share for each share
of Common Stock held by them and holders of our shares of Series A
Preferred Stock are entitled to one (1) vote for each share of
Common Stock into which the Series A Preferred Stock is
convertible, on an as converted basis. Notwithstanding the
foregoing, the Series A Preferred Stock includes beneficial
ownership limitations so that all holders of our Series A Preferred
Stock are unable to convert their shares of Series A Preferred
Stock to shares of Common Stock so that they would own greater than
4.99% of our issued and outstanding shares of Common Stock, unless
they provide at least 61 days’ prior written notice to increase
such beneficial ownership limitation up to a maximum of 9.99% of
our issued and outstanding shares of Common Stock. These
percentages reflect such beneficial ownership
limitations. |
|
|
(2) |
Such
shares of Common Stock beneficially owned by Mr. Heckman include:
(i) 2,000 shares of Common Stock issuable upon full exercise of
vested options, (ii) 442,746 shares held by Ozark Capital LLC
(“Ozark”), which shares Mr. Heckman is deemed to beneficially own,
and (iii) 1,250,000 restricted shares of Common Stock, which are
subject to forfeiture. Such shares of Common Stock beneficially
owned by Mr. Heckman exclude an aggregate of 603,598 shares of
Common Stock that would be issuable in any combination, but for the
applicable Beneficial Ownership Limitation (i) upon conversion of
1,111 shares of Series A Preferred Stock held by Ozark and (ii)
upon exercise of March Warrants held by Ozark. |
|
|
|
Such shares of Series A Preferred Stock beneficially owned by Mr.
Heckman include 1,111 shares of Series A Preferred Stock held by
Ozark, which shares Mr. Heckman, who in the managing member of
Ozark, is deemed to beneficially own and are convertible into
347,188 shares of Common Stock. Conversion of such shares of Series
A Preferred Stock beneficially owned by Mr. Heckman are subject to
the applicable beneficial ownership limitation.
|
|
|
(3) |
Such
shares of Common Stock beneficially owned by Mr. Ross include: (i)
130,000 shares of Common Stock issuable upon full exercise of
vested options, (ii) up to 1,051,416 shares of Common Stock
issuable upon full exercise of a Creditor Warrant, (iii) 12,091
shares of Common Stock issuable upon full conversion of a Note,
including accruable interest, and (iv) 1,250,000 restricted shares
of Common Stock, which are subject to forfeiture. |
|
|
(4) |
Such
shares of Common Stock beneficially owned by Mr. Hutchins include:
(i) 57,500 shares of Common Stock issuable upon full exercise of
vested options, (ii) up to 3,324,813 shares of Common Stock
issuable upon full exercise of a Creditor Warrant, (iii) 38,235
shares of Common Stock issuable upon full conversion of a Note,
including accruable interest, and (iv) 312,500 restricted shares of
Common Stock, which are subject to forfeiture. |
|
|
(5) |
Such
shares of Common Stock beneficially owned by Mr. Loeffelbein
consist of 2,000,000 restricted shares of Common Stock issued to
Mr. Loeffelbein as compensation in October 2019, which are fully
vested. |
|
|
(6) |
Such
shares of Common Stock beneficially owned by Mr. Richie include:
(i) 52,500 shares of Common Stock issuable upon full exercise of
vested options, (ii) 727,000 shares of Common Stock issuable upon
full exercise of a Creditor Warrant, (iii) 8,361 shares of Common
Stock issuable upon full conversion of a Note, including accruable
interest, and (iv) 312,500 restricted shares of Common Stock, which
are subject to forfeiture. |
|
|
(7) |
See
the information included in footnotes 2 through 6
above. |
PROPOSAL NO. 1 ELECTION OF
DIRECTORS
The
following individuals have been nominated as members of our Board,
each to serve until the 2022 Annual Meeting of Stockholders, until
their successors are elected and qualified or until their earlier
resignation or removal. Pursuant to our Bylaws, directors are to be
elected by a plurality of the votes of the shares of Common Stock
and shares of Common Stock into which the Series A Preferred Stock
are convertible, on an as converted basis, voting together, present
in person or represented by proxy at the Annual Meeting and voting
on such matter. This means that the three (3) candidates receiving
the highest number of affirmative votes at the Annual Meeting will
be elected as directors. Only shares that are voted in favor of a
particular nominee will be counted toward that nominee’s
achievement of a plurality. Proxies cannot be voted for a greater
number of persons than the number of nominees named or for persons
other than the named nominees.
Following
is information about each nominee, including biographical data for
at least the last five (5) years. Should one or more of these
nominees become unavailable to accept nomination or election as a
director, the individuals named as proxies will vote the shares
that they represent for the election of such other persons as the
Board may recommend, unless the Board reduces the number of
directors. We have no reason to believe that any nominee will be
unable or unwilling to serve if elected as a director.
Name of Director |
|
Age |
|
|
Director Since |
Stanton E. Ross |
|
|
59 |
|
|
March 1992 |
Daniel F. Hutchins |
|
|
65 |
|
|
December 2007 |
Leroy C. Richie |
|
|
79 |
|
|
June 1999 |
Stanton E. Ross. From March 1992 to June 2005, Mr.
Ross was Infinity’s Chairman and President and served as an officer
and director of each of its subsidiaries. He resigned all of these
positions with Infinity in June 2005, except Chairman, but was
reappointed as Infinity’s President in October 2006. Mr. Ross has
served as Chairman, President and Chief Executive Officer of
Digital Ally, Inc. (“Digital”) since September 2005. Digital is a
publicly held company whose common stock is traded on the Nasdaq
Capital Market under the symbol DGLY. From 1991 until March 1992,
he founded and served as President of Midwest Financial, a
financial services corporation involved in mergers, acquisitions
and financing for corporations in the Midwest. From 1990 to 1991,
Mr. Ross was employed by Duggan Securities, Inc., an investment
banking firm in Overland Park, Kansas, where he primarily worked in
corporate finance. From 1989 to 1990, he was employed by Stifel,
Nicolaus & Co., a member of the New York Stock Exchange, where
he was an investment executive. From 1987 to 1989, Mr. Ross was
self-employed as a business consultant. From 1985 to 1987, Mr. Ross
was President and founder of Kansas Microwave, Inc., which
developed a radar detector product. From 1981 to 1985, he was
employed by Birdview Satellite Communications, Inc., which
manufactured and marketed home satellite television systems,
initially as a salesman and later as National Sales Manager. Mr.
Ross allocates his time between Digital and the Company as he deems
necessary to discharge his fiduciary duties to each of them.
Because of the Company’s reduced level of activity and the needs of
Digital, he has devoted most of his time to Digital and the balance
to the Company during the last year. Mr. Ross served on the board
of directors of Studio One Media, Inc., a publicly held company,
from January 2013 to March 2013. Mr. Ross holds no public company
directorships other than with Digital and Infinity currently and
has not held any others during the previous five years, except for
Studio One Media, Inc. The Company believes that Mr. Ross’s broad
entrepreneurial, financial and business experience and his
experience with micro-cap public companies and role as Chairman,
President and CEO gives him the qualifications and skills to serve
as a director.
Daniel F. Hutchins. Mr. Hutchins was elected to serve as a
Director of Infinity and was also appointed to serve as Chief
Financial Officer of Infinity effective as of August 13, 2007. Mr.
Hutchins was elected as a Director of Digital Ally, Inc. in
December 2007, serves as Chairman of its Audit Committee and is its
financial expert. He is also a member of Digital’s Nominating and
Governance Committee. Mr. Hutchins, a Certified Public Accountant,
was a Principal with the accounting firm of Hutchins & Haake,
LLC until his retirement on July 1, 2021. He was previously a
member of the Advisory Board of Digital Ally. Mr. Hutchins has
served as an instructor for the Becker CPA exam with the Keller
Graduate School of Management and has over 18 years of teaching
experience preparing CPA candidates for the CPA exam. He has over
30 years of public accounting experience, including five years with
Deloitte & Touche, LLP. He holds no other public directorships
and has not held any others during the previous five years. He has
served on the boards of various non-profit groups and is a member
of the American Institute of Certified Public Accountants. Mr.
Hutchins earned his Bachelor of Business Administration degree in
Accounting at Washburn University in Topeka, Kansas. Mr. Hutchins
holds no other public company directorships currently and for the
previous five years. The Company believes that Mr. Hutchins’
significant experience in finance and accounting gives him the
qualifications to serve as a director.
Leroy C. Richie. Mr. Richie has been a director of Infinity
since June 1, 1999. Since 2005, Mr. Richie has served as the lead
outside director of Digital Ally, Inc. and currently serves as a
member of Digital’s Audit Committee and is the Chairman of its
Nominating and Governance and Compensation Committees.
Additionally, until 2017, Mr. Richie served as a member of the
boards of directors of Columbia Mutual Funds, (or mutual fund
companies acquired by or merged with Columbia Mutual Funds), a
family of investment companies managed by Ameriprise Financial,
Inc. From 2004 to 2015, he was of counsel to the Detroit law firm
of Lewis & Munday, P.C. He holds no other public directorships
and has not held any others during the previous five years, except
for OGE Energy Corp. (2007-2014) and Kerr-McGee Corporation
(1998-2005). Mr. Richie served as Vice-Chairman of the Board of
Trustees and Chairman of the Compensation Committee for the Henry
Ford Health System, in Detroit until retirement in December 2020.
Mr. Richie was formerly Vice President of Chrysler Corporation and
General Counsel for automotive legal affairs, where he directed all
legal affairs for its automotive operations from 1986 until his
retirement in 1997. Before joining Chrysler, he was an associate
with the New York law firm of White & Case (1973-1978), and
served as director of the New York office of the Federal Trade
Commission (1978-1983). Mr. Richie received a B.A. from City
College of New York, where he was valedictorian, and a J.D. from
the New York University School of Law, where he was awarded an
Arthur Garfield Hays Civil Liberties Fellowship. The Company
believes that Mr. Richie’s extensive experience as a lawyer and as
an officer or director of public companies gives him the
qualifications and skills to serve as a Director.
Required Vote and Recommendation of
the Board
Our
Certificate of Incorporation, as amended, does not authorize
cumulative voting. Our Bylaws provide that directors are to be
elected by a plurality of the votes of the shares of Common Stock
and shares of Common Stock into which the Series A Preferred Stock
are convertible, on an as converted basis, voting together, present
in person or represented by proxy at the Annual Meeting and voting
on the matter. This means that the three (3) candidates receiving
the highest number of affirmative votes at the Annual Meeting will
be elected as directors. Only shares that are voted in favor of a
particular nominee will be counted toward that nominee’s
achievement of a plurality. Shares present at the Annual Meeting
that are not voted for a particular nominee or shares present by
proxy where the stockholder properly withheld authority to vote for
such nominee will not be counted toward that nominee’s achievement
of a plurality.
At
the Annual Meeting a vote will be taken on a proposal to approve
the election of the three (3) director nominees.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE ELECTION OF THE THREE (3) DIRECTOR
NOMINEES.
Family Relationships
There
is no family relationship between any of our directors, director
nominees and executive officers.
Board of Directors and Committee
Meetings
Our
Board of Directors (the “Board”) held one meeting during the fiscal
year ended December 31, 2020. Our directors attended all the
meetings of the Board. Our directors are expected, absent
exceptional circumstances, to attend all Board meetings.
Committees of the
Board
We do
not have Audit, Compensation or Nominating and Governance
Committees. Our full Board discharges the duties that such
committees would normally have. We do not have such committees
because of our stage of operations and because our Board consists
of only three members.
Our
full Board is comprised of three Directors, one of whom is
independent, as defined by the rules and regulations of the
Securities and Exchange Commission. The members of our Board are
Stanton E. Ross, Leroy C. Richie and Daniel F. Hutchins. The Board
determined that Mr. Richie qualifies as an “audit committee
financial expert,” as defined under the rules and regulations of
the Securities and Exchange Commission and is independent as noted
above.
Stanton
E. Ross, Leroy C. Richie and Daniel F. Hutchins are the directors
of the Company. Messrs. Ross and Hutchins are not considered
“independent” in accordance with Rule 5605(a)(2) of the NASDAQ
Marketplace Rules. The Board has determined that Mr. Richie is
independent in accordance with the NASDAQ and SEC rules. We are
currently traded on the OTC QB, which does not require that a
majority of the board be independent. If we ever become an issuer
whose securities are listed on a national securities exchange or on
an automated inter-dealer quotation system of a national securities
association, which has independent director requirements, we intend
to comply with all applicable requirements relating to director
independence.
Under
the Sarbanes-Oxley Act of 2002, all audit and non-audit services
performed by the Company’s independent accountants must be approved
in advance by the Board to assure that such services do not impair
the accountants’ independence from the Company. Our full Board
performs the equivalent functions of an audit committee, therefore,
no policies or procedures other than those required by SEC rules on
auditor independence, have been implemented.
Report of the Board Serving the
Equivalent Functions of an Audit Committee
Review and Discussion with Management
Our
Board has reviewed and discussed with management our audited
financial statements for the fiscal year ended December 31, 2020,
the process designed to achieve compliance with Section 404 of the
Sarbanes-Oxley Act of 2002 and our assessment of internal control
over financial reporting.
Review and Discussions with Independent Registered Public
Accounting Firm
Our
Board has discussed with RBSM, LLP, our independent registered
public accounting firm for fiscal year 2020 and 2019, the matters
the Board, serving the equivalent functions of an audit committee,
is required to discuss. Specifically, the Board has discussed with
the independent registered public accounting firm the matters
required to be discussed by the Public Company Accounting Oversight
Board’s Auditing AS 1301 (Communications With Audit Committees), as
modified or supplemented. The discussions occurred with management
and the independent public accountants about the quality (and not
merely the acceptability) of the Company’s accounting principles,
the reasonableness of significant estimates, judgments and the
transparency of disclosures in the Company’s financial
statements.
The
Board has also received written disclosures in a letter from the
independent registered public accounting firm required by
applicable requirements of the Public Company Accounting Oversight
Board regarding the independent registered public accounting firm’s
independence, and has discussed with the independent registered
public accounting firm their independence from the Company and its
management. This review also includes discussions of audit and
non-audit fees as well as evaluation of the Company’s significant
financial policies and accounting systems and controls.
The
Board has also reviewed the independence of the independent
registered public accounting firm considering the compatibility of
non-audit services with maintaining their independence from the
Company. Based on the preceding review and discussions contained in
this paragraph, the Board recommended that the audited financial
statements be included in the Company’s Annual Report on Form 10-K
for the year ended December 31, 2020, for filing with the
Securities and Exchange Commission.
Conclusion
Based
on the review and discussions referred to above, the Board, serving
the equivalent functions of the audit committee, approved our
audited financial statements for the fiscal year ended December 31,
2020 be included in our Annual Report on Form 10-K for the fiscal
year ended December 31, 2020 for filing with the Securities and
Exchange Commission.
Boards’ Role in the Oversight of
Risk Management
We
face a variety of risks, including credit, liquidity and
operational risks. In fulfilling its risk oversight role, our Board
focuses on the adequacy of our risk management process and overall
risk management system. Our Board believes that an effective risk
management system will (i) adequately identify the material risks
that we face in a timely manner; (ii) implement appropriate risk
management strategies that are responsive to our risk profile and
specific material risk exposures; (iii) integrate consideration of
risk and risk management into our business decision-making; and
(iv) include policies and procedures that adequately transmit
necessary information regarding material risks to senior executives
and, as appropriate, to the Board or relevant committee.
Our
Board oversees risk management for us. Accordingly, the Board
schedules time for periodic review of risk management, in addition
to its other duties. In this role, the Board receives reports from
management, certified public accountants, outside legal counsel,
and to the extent necessary, from other advisors, and strives to
generate serious and thoughtful attention to our risk management
process and system, the nature of the material risks we face, and
the adequacy of our policies and procedures designed to respond to
and mitigate these risks.
Board Leadership
Structure
Our
Board has a Chairman of the Board. Our Board does not have a policy
on whether or not the roles of Chief Executive Officer and Chairman
of the Board should be separate and, if they are to be separate,
whether the Chairman of the Board should be selected from the
non-employee directors or be an employee. Our Board believes that
it should be free to make a choice from time to time in any manner
that is in the best interests of us and our stockholders. The Board
believes that Mr. Ross’s service as both Chief Executive Officer
and Chairman of the Board is in the best interests of us and our
stockholders. Mr. Ross possesses detailed and in-depth knowledge of
the issues, opportunities and challenges we face and is thus best
positioned to develop agendas, with the input of the other
directors that ensure that the Board’s time and attention are
focused on the most critical matters. His combined role enables
decisive leadership, ensures clear accountability, and enhances our
ability to communicate our message and strategy clearly and
consistently to our stockholders, employees, customers and
suppliers, particularly given the issues and other challenges the
Company has faced in recent years. Our Board has determined that
our Board leadership structure is appropriate given the size of our
Board and the nature of our business.
Stockholder Communications with the
Board
Stockholders
may communicate with the Board by writing to us as follows:
Infinity Energy Resources, Inc., attention: Corporate Secretary,
11900 College Blvd., Suite 310, Overland Park, KS 66210.
Stockholders who would like their submission directed to a
particular member of the Board may so specify and the communication
will be forwarded as appropriate.
Process and Policy for Director
Nominations
Our
full Board will consider candidates for Board membership suggested
by Board members, management and our stockholders. In evaluating
the suitability of potential nominees for membership on the Board,
the Board members will consider the Board’s current composition,
including expertise, diversity, and balance of inside, outside and
independent directors. The Board considers the general
qualifications of the potential nominees, including integrity and
honesty; recognized leadership in business or professional
activity; a background and experience that will complement the
talents of the other board members; the willingness and capability
to take the time to actively participate in board and committee
meetings and related activities; the extent to which the candidate
possesses pertinent technological, political, business, financial
or social/cultural expertise and experience; the absence of
realistic possibilities of conflict of interest or legal
prohibition; the ability to work well with the other directors; and
the extent of the candidate’s familiarity with issues affecting our
business.
While
the Board considers diversity and variety of experiences and
viewpoints to be important factors, it does not believe that a
director nominee should be chosen solely or mainly because of race,
color, gender, national origin or sexual identity or orientation.
Thus, although diversity may be a consideration in the Board’s
process, it does not have a formal policy regarding the
consideration of diversity in identifying director
nominees.
Stockholder
Recommendations for Director Nominations. Our Board does not
have a formal policy with respect to consideration of any director
candidate recommendation by stockholders. While the Board may
consider candidates recommended by stockholders, it has no
requirement to do so. To date, no stockholder has recommended a
candidate for nomination to the Board. Given that we have not
received director nominations from stockholders in the past and
that we do not canvass stockholders for such nominations, we
believe it is appropriate not to have a formal policy in that
regard. We do not pay a fee to any third party to identify or
evaluate or assist in identifying or evaluating potential
nominees.
Stockholder
recommendations for director nominations may be submitted to the
Company at the following address: Infinity Energy Resources, Inc.,
attention: Corporate Secretary, 11900 College Blvd., Suite 310,
Overland Park, KS 66210. Such recommendations will be forwarded to
the Board for consideration, provided that they are accompanied by
sufficient information to permit the Board to evaluate the
qualifications and experience of the nominees, and provided that
they are in time for the Board to do an adequate evaluation of the
candidate before the annual meeting of stockholders. The submission
must be accomplished by a written consent of the individual to
stand for election if nominated by the Board and to serve if
elected and to cooperate with a background check.
Stockholder
Nominations of Directors. The bylaws of the Company provide
that in order for a stockholder to nominate a director at an annual
meeting, the stockholder must give timely, written notice to the
Secretary of the Company and such notice must be received at the
principal executive offices of the Company not less than 90 days
nor more than 120 days prior to the date of the meeting. Such
stockholder’s notice shall include, with respect to each person
whom the stockholder proposes to nominate for election as a
director, all information relating to such person, including such
person’s written consent to being named in the proxy statement as a
nominee, serving as a director, that is required under the
Securities Exchange Act of 1934, as amended, and cooperating with a
background investigation. In addition, the stockholder must include
in such notice his name and address, as they appear on the
Company’s records, of the stockholder proposing the nomination of
such person, and the name and address of the beneficial owner, if
any, on whose behalf the nomination is made, the class or series
and number of shares of capital stock of the Company that are owned
beneficially and of record by such stockholder of record and by the
beneficial owner, if any, on whose behalf the nomination is made,
and any material interest, relationship, arrangement or
understanding that such stockholder of record and/or the beneficial
owner, if any, on whose behalf the nomination is made may
respectively have in such business or with such nominee. At the
request of the Board, any person nominated for election as a
director shall furnish to the Secretary of the Company the
information required to be set forth in a stockholder’s notice of
nomination which pertains to the nominee.
If
public disclosure of the date of the meeting is made less than 100
days prior to the date of the meeting, a stockholder’s notice must
be received not later than the close of business on the tenth day
following the day on which such public disclosure of the date of
the meeting was made. With respect to a special meeting called at
the written request of stockholders, any notice submitted by a
stockholder making the request must be provided simultaneously with
such request.
Code of Ethics and
Conduct
Our
Board has adopted a Code of Ethics and Conduct that is
applicable to all our employees, officers and directors. Our
Code of Ethics and Conduct is intended to ensure that our
employees act in accordance with the highest ethical standards. A
copy of our Code of Ethics and Conduct may be obtained by
sending a written request to us at 11900 College Blvd., Suite 310,
Overland Park, KS 66210; Attn: President and the Code of Ethics
and Conduct is filed as an exhibit to this Annual Report on
Form 10-K.
Section 16(a) Beneficial Ownership
Reporting
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires
our executive officers and directors, and persons who own more than
ten percent (10%) of our common stock, to file with the Securities
and Exchange Commission reports of ownership of, and transactions
in, our securities and to provide us with copies of those filings.
To our knowledge, based solely on our review of the copies of such
forms received by us, or written representations from certain
reporting persons, we believe that during the year ended December
31, 2020, all filing requirements applicable to our officers,
directors and greater than ten percent beneficial owners were
complied with during fiscal year 2020.
DIRECTOR
COMPENSATION
The
following table discloses the cash, equity awards and other
compensation earned, paid or awarded, as the case may be, to each
of the Company’s directors during the fiscal years ended December
31, 2020 and 2019.
Name
(2) |
|
Year |
|
|
Fees Earned or Paid in Cash ($) |
|
|
Stock Awards ($) |
|
|
Option Awards ($) |
|
|
Non-Equity Incentive Plan Compensation ($) |
|
|
Change in Pension Value and Non-Qualified Deferred Compensation
Earnings ($) |
|
|
All Other Compensation ($) |
|
|
Total ($) |
|
Leroy
C. Richie (1) |
|
|
2020 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
65,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
65,000 |
|
|
|
|
2019 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
(1)
The Company’s Board discontinued compensation for the Company’s
officers and directors effective January 1, 2018. Mr. Richie
received no cash compensation in 2020 and 2019 and has accrued an
aggregate of $363,500 for his services on the Board since January
1, 2008 which remains unpaid as of December 31, 2020. The Company’s
Board approved the grant of 500,000 restricted shares of common
stock effective August 19, 2020 to Mr. Richie. Of the 500,000 total
restricted shares, a total of 62,500 shares vest at the end of
calendar quarter over the following 8 fiscal quarters ending June
30, 2022, assuming that he remains as a member of the Board of the
Company at such points in time. The value of the restricted stock
awards was determined based on the total number of restricted
shares at the closing price on the date of award on August 19,
2020.
(2)
Mr. Ross’ and Mr. Hutchins’ compensation and option awards are
noted in the Executive Compensation table because neither of them
received compensation or stock options for their services as a
director.
INFORMATION
ABOUT OUR EXECUTIVE OFFICERS
Our
executive officers are:
Name |
|
Age |
|
Positions
and Offices Held |
Stanton
E. Ross |
|
59 |
|
Chairman,
President and Chief Executive Officer |
Daniel
F. Hutchins |
|
65 |
|
Director,
Chief Financial Officer, Secretary |
John
Loeffelbein |
|
50 |
|
Chief
Operating Officer |
Biographical information on Messrs.
Ross and Hutchins appear above beginning on page 8.
John Loeffelbein. Mr. Loeffelbein was appointed
Chief Operating Officer of Infinity on September 30, 2019. Mr.
Loeffelbein began his oil & gas career in 1998 working for
Orion Oil and Gas, Inc., a land, mineral and title company, located
in Amarillo, Texas. During his tenure, he was actively involved in
title, acquisition of leases and purchase of right-of-way for major
companies such as Anadarko Petroleum, K&N Energy and other
major oil and gas companies. Since 1998, Loeffelbein has actively
purchased and sold millions of dollars’ worth of oil and gas
projects and owns interests in wells or mineral rights in most of
the major oil and gas basins in the United States. In 2004 Mr.
Loeffelbein formed Coal Creek Energy, LLC which leased acreage and
acquired existing oil & gas production primarily in Kansas
focusing on leases which could be developed and enhanced at a very
low risk/high reward. He has been involved in over 1,000 wells in
the state. In 2014 Coal Creek Energy provided a variety of services
to Viking Energy Group, Inc. in connection with its acquisition of
numerous Kansas oil and gas properties. In 2017, Mr. Loeffelbein
helped found Vulcan Labs, LLC, which specializes in coating pipe
for the oil and gas industry. The coated pipe it supplies reduces
corrosion, friction and wear on production equipment thereby
reducing maintenance costs and down-time. Vulcan Labs supplies
coated pipe to a number of the top 50 oil and gas companies. Mr.
Loeffelbein has not served as a director of any other public
companies within the last five years. The Company believes that Mr.
Loeffelbein’s broad entrepreneurial, financial and business
experience gives him the qualifications and skills to serve as the
Company’s COO.
Executive
Compensation.
The
following table shows compensation paid, accrued or awarded with
respect to our named executive officers during the years indicated,
a significant portion of all compensation after 2008 is accrued but
not paid:
2020
- Summary Compensation Table
Name and
Principal
Position |
|
Year |
|
|
Salary
($) |
|
|
Bonus
($) |
|
|
Stock
Awards
($) |
|
|
Option
Awards
($) |
|
|
Non-Equity
Incentive
Plan
Compensation |
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($) |
|
|
All Other
Compensation
($) |
|
|
Total
($) |
|
Stanton
Ross (1) |
|
|
2020 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
260,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
260,000 |
|
CEO |
|
|
2019 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel
F. Hutchins(2) |
|
|
2020 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
65,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
65,000 |
|
CFO |
|
|
2019 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James
Loeffelbein(3) |
|
|
2020 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
COO |
|
|
2019 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
260,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
260,000 |
|
(1)
The Company’s Board discontinued compensation for the Company’s
officers and directors effective January 1, 2018. In addition, due
to the financial condition of the Company, Mr. Ross has deferred
the receipt of a portion of his salary since January 2009. Mr. Ross
received $40,000 and $-0- of his deferred salary in cash during the
years ended December 31, 2020 and 2019, respectively. As of
December 31, 2020, a total of $525,708 of his salary has been
accrued but was unpaid. The Company’s Board approved the grant of
2,000,000 restricted shares of common stock effective August 19,
2020 to Mr. Ross. Of the 2,000,000 total restricted shares, a total
of 250,000 shares vest at the end of calendar quarter over the
following 8 fiscal quarters ending June 30, 2022, assuming that he
remains as an employee of the Company at such points in time. The
value of the restricted stock awards was determined based on the
total number of restricted shares at the closing price on the date
of award on August 19, 2020.
(2)
The Company’s Board discontinued compensation for the Company’s
officers and directors effective January 1, 2018. Mr. Hutchins
began serving the Company as Chief Financial Officer in August
2007. Since January 2009 he has deferred his compensation and a
total of $900,000 of direct compensation was accrued but unpaid as
of December 31, 2020 and 2019. Previously, Mr. Hutchins received
other indirect compensation consisting of services billed at the
CFO firm’s normal standard billing rate plus out-of-pocket expenses
for general corporate and bookkeeping purposes. For the years ended
December 31, 2020 and 2019 the Company was billed $-0- for such
services. Total amounts accrued for his indirect compensation was
$762,407 as of December 31, 2020 and 2019. The Company’s Board
approved the grant of 500,000 restricted shares of common stock
effective August 19, 2020 to Mr. Hutchins. Of the 500,000 total
restricted shares, a total of 62,500 shares vest at the end of
calendar quarter over the following 8 fiscal quarters ending June
30, 2022, assuming that he remains as an employee of the Company at
such points in time. The value of the restricted stock awards was
determined based on the total number of restricted shares at the
closing price on the date of award on August 19, 2020.
(3)
The Company’s Board appointed John Loeffelbein, as Chief Operating
Officer of Infinity Energy Resources, Inc. effective September 30,
2019. In connection with his appointment as Chief Operating Officer
the Board approved the grant of 2,000,000 restricted shares of
common stock effective October 2, 2019. Of the 2,000,000 total
restricted shares, 1,250,000 vested immediately and the remaining
750,000 vested one year after the date of grant, assuming he
remains as an employee of the Company at that point in time. Mr.
Loeffelbein received no cash compensation for his services for the
remainder of 2019 and calendar year 2020. The value of the
restricted stock awards was determined based on the total number of
restricted shares at the closing price on the date of award or
October 2, 2019.
Compensation
Policies and Objectives
We
structure compensation for executive officers, including the named
executive officers, to drive performance, to accomplish both our
short-term and long-term objectives, and to enable us to attract,
retain and motivate well qualified executives by offering
competitive compensation and by rewarding superior performance. We
also seek to link our executives’ total compensation to the
interests of our stockholders. To accomplish this, our Board relies
on the following elements of compensation, each of which is
discussed in more detail below:
|
● |
salary; |
|
|
|
|
● |
annual
performance-based cash awards; |
|
|
|
|
● |
equity
incentives in the form of stock and/or stock options;
and |
|
|
|
|
● |
other
benefits. |
Our
Board believes that our executive compensation package, consisting
of these components, is comparable to the compensation provided in
the market in which we compete for executive talent and is critical
to accomplishing our recruitment and retention aims.
In
setting the amounts of each component of an executive’s
compensation and considering the overall compensation package, the
Board, serving the equivalent functions of the compensation
committee, generally considers the following factors:
Benchmarking—For
executive officers, the Board considers the level of compensation
paid to individuals in comparable executive positions of other oil
and gas exploration and production companies of a similar size. The
Board believes that these companies are the most appropriate for
review because they are representative of the types of companies
with which we compete to recruit and retain executive talent. The
information reviewed by the Board includes data on salary, annual
and long-term cash incentive bonuses and equity compensation, as
well as total compensation.
Internal
Equity—The Board considers the salary level for each executive
officer and each position in overall management to reflect their
relative value to us.
Individual
Performance—The Board considers the individual responsibilities
and performance of each named executive officer, which is based in
part on the Board’ assessment of that individual’s performance as
well as the evaluation of the individual by the Chief Executive
Officer.
All
executive officers are eligible for annual cash bonuses and equity
incentive awards that reinforce the relationship between pay and
performance by conditioning compensation on the achievement of the
Company’s short- and long-term financial and operating goals,
including operating profits, reserve finding costs, and growth in
the Company’s daily oil and gas production and estimated proved,
probable and possible recoverable oil and gas reserves.
Components
of Executive Compensation
The
following provides an analysis of each element of compensation,
what each element is designed to reward and why the Board chose to
include it as an element of our executive compensation.
Salaries
Salaries
for executive officers are intended to incentivize the officers to
focus on executing the Company’s day-to-day business and are
reviewed annually. Changes are typically effective in April of each
year and are based on the factors discussed above. Compensation
arrangements with Mr. Hutchins were determined through arms-length
negotiations. The Company’s Board discontinued regular cash
compensation for the Company’s officers and directors effective
January 1, 2018.
Annual Bonuses
The
awarding of annual bonuses to executives is in the discretion of
the Board, in their serving the equivalent functions of the
compensation committee discretion. The objective of the annual
bonus element of compensation is to align the interest of executive
officers with the achievement of superior Company performance for
the year and also to encourage and reward extraordinary individual
performance. In light of the Company’s operating results for 2020
and 2019, the Board determined that it was appropriate not to grant
annual bonuses to the executive officers for 2020 and
2019.
Stock Options
Including
an equity component in executive compensation closely aligns the
interests of the executives and our stockholders and rewards
executives consistent with stockholder gains. Stock options produce
value for executives only if our stock price increases over the
exercise price, which is set at the market price on the date of
grant. Also, through vesting and forfeiture provisions, stock
options serve to encourage executive officers to remain with the
Company. Awards made other than pursuant to the annual equity
grants are typically made to newly hired or recently promoted
employees.
In
determining the stock option grants for Messrs. Ross and Hutchins,
the Board considered the number of options previously granted that
remained outstanding, the number and value of shares underlying the
options being granted and the related effect on dilution. The Board
also took into account the number of shares that remained available
for grant under our stock option and restricted stock plans.
Messrs. Ross and Hutchins were not granted stock options during the
year ended December 31, 2020 and 2019. Information regarding all
outstanding equity awards as of December 31, 2020 for the named
executive officers is set forth below in the “Outstanding Equity
Awards at Fiscal Year End” table.
Restricted Stock Grants
Including
an equity component in executive compensation closely aligns the
interests of the executives and our stockholders and rewards
executives consistent with stockholder gains. Restricted stock
grants produce value for executives as our stock price increases.
The awards generally vest over a long period of time only if they
remain as employees of the Company at specified points in time.
Executives generally have to recognize taxable income based on the
market price of the underlying common stock on such vesting dates.
Also, through vesting and forfeiture provisions, restricted stock
grants serve to encourage executive officers to remain with the
Company. Awards made other than pursuant to the annual equity
grants are typically made to newly hired or recently promoted
employees.
In
determining the restricted stock grants for Messrs. Ross and
Hutchins, the Board considered the number of stock options
previously granted that remained outstanding, the number and value
of restricted common shares being granted and the related effect on
dilution. The Board also took into account the number of shares
that remained available for grant under our stock option and
restricted stock plans. Messrs. Ross and Hutchins were granted
2,000,000 and 500,000 restricted shares of common stock during the
year ended December 31, 2020, respectively and none in 2019. The
restricted stock grants in 2020 vest ratably at the end of the next
eight calendar quarters following issuance. Information regarding
all outstanding equity awards as of December 31, 2020 for the named
executive officers is set forth below in the “Outstanding Equity
Awards at Fiscal Year End” table.
Other Elements of Executive Compensation
We
have not provided cash perquisites to our executive officers given
our limited funds.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
(As
of December 31, 2020)
|
|
Option Awards |
|
|
|
|
|
Stock Awards |
|
Name |
|
Number of Securities Underlying
Unexercised Options (#) Exercisable |
|
|
Number of Securities Underlying
Unexercised Options (#) Unexercisable |
|
|
Equity
Incentive
Plan Awards: Number of Securities Underlying Unexercised Unearned
Options (#)
|
|
|
Option Exercise Price ($) |
|
|
Option Expiration Date |
|
|
Number of Shares or Units of Stock
That Have Not Vested (#) |
|
|
Market Value of Shares or Units of
Stock That Have Not Vested ($) |
|
|
Equity Incentive Plan Awards: Number
of Unearned Shares, Units or Other Rights That Have Not Vested
(#) |
|
|
Equity Incentive Plan Awards: Market
or Payout Value of Unearned Shares, Units or Other Rights That Have
Not Vested ($) |
|
Ross |
|
|
20,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
52.50 |
|
|
|
2/10/2021 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
20,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
75.00 |
|
|
|
8/2/2021 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
50,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
30.00 |
|
|
|
11/6/2021 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
60,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
30.00 |
|
|
|
1/17/2024 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,500,000 |
|
|
$ |
165,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Hutchins |
|
|
17,500 |
|
|
|
— |
|
|
|
— |
|
|
$ |
52.50 |
|
|
|
2/10/2021 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
17,500 |
|
|
|
— |
|
|
|
— |
|
|
$ |
75.00 |
|
|
|
8/2/2021 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
25,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
30.00 |
|
|
|
11/6/2021 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
15,000 |
|
|
|
— |
|
|
|
— |
|
|
$ |
30.00 |
|
|
|
1/17/2024 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
375,000 |
|
|
$ |
41,250 |
|
|
|
|
|
|
|
|
|
Loeffelbein |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
|
— |
|
Employment
Contracts and Termination of Employment and Change-In-Control
Arrangements
We
have no employment agreements or similar contracts with Stanton E.
Ross, Daniel F. Hutchins or John Loeffelbein.
Certain
Relationships and Related Transactions and Director
Independence.
The
charter for the Company’s Audit Committee includes a requirement
for the Audit Committee to review and approve any transaction
involving the Company and a related party at least once a year or
upon any significant change in the transaction or relationship. For
these purposes, a “related party transaction” includes any
transaction required to be disclosed pursuant to Item 404 of
Regulation S-K.
John
L. Loeffelbein, the Company’s Chief Operating Officer is a
non-controlling member of Core Energy Resources, LLC (“Core”) . The
Company acquired an Option from Core to purchase the production and
mineral rights/leasehold for the Properties. The Company paid a
non-refundable deposit of $50,000 in 2019 to bind the original
Option, which gave it the right to acquire the Properties for $2.5
million prior to December 31, 2019. The Company was not able to
exercise the Option prior to December 31, 2019. On September 2,
2020, the Company acquired a new Option from Core under similar
terms as the previous Option, however the newly acquired Option
permitted the Company to purchase the Properties at a reduced price
of $900,000 at any time prior to November 1, 2020 and the Company
agreed to immediately conduct a capital raise of between
approximately $2-10 million to fund its acquisition and development
of the Properties. On December 14, 2020 the parties executed an
asset purchase and sale agreement which extended the new Option to
January 11, 2021, which expired. The parties entered into a Side
Letter agreement on March 31, 2021, pursuant to which we and Core
agreed to set the closing date on which the Properties would be
purchased to April 1, 2021. Pursuant to the Side Letter, the
Company is responsible for reimbursing Core for certain prorated
revenues and expenses from January 1, 2021 through the April 1,
2021 closing date. On April 1, 2021 we completed the acquisition of
the Properties, under the same terms of the asset purchase
agreement executed on December 14, 2020 which provided a purchase
price of $900,000. The Company raised approximately $2.05 million
on March 26, 2021 through the issuance of convertible preferred
stock with detachable common stock purchase warrants. The funds
raised pursuant to the Series A Convertible Preferred Stock
issuance were used to complete the acquisition of the Properties on
April 1, 2021 and to retire the outstanding convertible note
payable.
The
Company does not have any employees other than its Chief Executive
Officer, Chief Operating Officer and Chief Financial Officer. In
previous years, certain general and administrative services (for
which payment is deferred) had been provided by the Company’s Chief
Financial Officer’s accounting firm at its standard billing rates
plus out-of-pocket expenses consisting primarily of accounting, tax
and other administrative fees. The Company no longer utilizes its
Chief Financial Officer’s accounting firm for such support services
and was not billed for any such services during the three months
ended March 31, 2021 and 2020. On March 31, 2021 the parties
entered into a Debt Settlement Agreement whereby all amounts due to
such firm for services totaling $762,407 were extinguished upon the
issuance of $7,624 principal balance of 3% Note and the issuance of
warrants to purchase 1,524,814 shares of Common Stock. Total
amounts due to the related party was $-0- and $762,407 as of March
31, 2021 and December 31, 2020, respectively.
The
Company has accrued compensation to its officers and directors in
previous years. The Board authorized the Company to cease the
accrual of compensation for its officers and directors, effective
January 1, 2018. On March 31, 2021 the parties entered into Debt
Settlement Agreements whereby all accrued amounts due for such
services totaling $1,789,208 were extinguished upon the issuance of
$17,892 principal balance of 3% Convertible Promissory Note and the
issuance of warrants to purchase 3,578,416 shares of Common Stock
as further described in Notes 2, 8 & 11. Total amounts due to
the officers and directors related to accrued compensation was $-0-
and $1,789,208 as of March 31, 2021 and December 31, 2020,
respectively.
Offshore
Finance, LLC was owed financing costs in connection with a
subordinated loan to the Company which was converted to common
shares in 2014. The managing partner of Offshore and the Company’s
CFO are partners in the accounting firm which the Company used for
general corporate purposes in the past. On March 31, 2021 the
parties entered into a Debt Settlement Agreement whereby all
amounts due for such services totaling $26,113 were extinguished
upon the issuance of $261 principal balance of 3% Convertible
Promissory Note and the issuance of warrants to purchase 52,226
shares of common stock. Total amounts due to this related party was
$-0- and $26,113 as of March 31, 2021 and December 31, 2020,
respectively.
On
May 13, 2020, the Company borrowed $41,000 from its Chairman, CEO
& President in the form of an unsecured promissory note bearing
6% interest and due on demand. The proceeds were used for general
working capital purposes. The entire $41,000 principal balance and
$654 of accrued interest related to the note was retired on August
19, 2020 and there is no remaining balance as of March 31, 2021 and
December 31, 2020.
Stanton
E. Ross, Leroy C. Richie and Daniel F. Hutchins are the directors
of the Company. Messrs. Ross and Hutchins are not considered
“independent” in accordance with Rule 5605(a)(2) of the NASDAQ
Marketplace Rules. The Board has determined that Mr. Richie is
independent in accordance with the NASDAQ and SEC rules. We are
currently traded on the OTC QB, which does not require that a
majority of the board be independent. If we ever become an issuer
whose securities are listed on a national securities exchange or on
an automated inter-dealer quotation system of a national securities
association, which has independent director requirements, we intend
to comply with all applicable requirements relating to director
independence.
PROPOSAL NO. 2 APPROVAL OF AN AMENDMENT
TO THE COMPANY’S CERTIFICATE OF INCORPORATION, AS AMENDED, REMOVING
THE PROVISION PROVIDING THAT ANY ACTION TAKEN BY THE STOCKHOLDERS
BY WRITTEN
CONSENT IN LIEU OF A MEETING REQUIRES THAT ALL OF THE COMPANY’S
STOCKHOLDERS ENTITLED TO VOTE ON SUCH ACTION CONSENT IN WRITING
THERETO
Our stockholders are being
asked to approve an amendment to our Certificate of Incorporation,
as amended, to remove a provision requiring that any action taken
by the stockholders by written consent, in lieu of a meeting,
requires the consent of the holders of all shares entitled to vote
with respect to such action. On August 14, 2021, the Board approved
a proposal to amend the Certificate of Incorporation, as amended,
to remove Section 7.2 of the Company’s Certificate of
Incorporation, as amended, which currently provides as
follows:
“7.2 Action by Written Consent. Action required or permitted
to be taken at any annual or special meeting of stockholders may be
taken without a meeting, by written consent, only if all the
stockholders entitled to vote on such action consent in writing to
the action.”
The above provision permits the Company to obtain the approval of
stockholders, with respect to any matter required to be submitted
for a vote of the stockholders entitled to vote thereon, by the
unanimous written consent of all of such stockholders entitled to
vote thereon in lieu of holding a meeting of stockholders for such
purpose. This requirement of unanimity is inconsistent with §228 of
the Delaware General Corporation Law (“DGCL”) which provides as
follows:
§ 228. Consent of stockholders or members in lieu of
meeting
(a)
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at any annual or
special meeting of stockholders of a corporation, or any action
which may be taken at any annual or special meeting of such
stockholders, may be taken without a meeting, without prior notice
and without a vote, if a consent or consents, setting forth the
action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and
shall be delivered to the corporation in the manner required by
this section.
(b)
Unless otherwise provided in the certificate of incorporation, any
action required by this chapter to be taken at a meeting of the
members of a nonstock corporation, or any action which may be taken
at any meeting of the members of a nonstock corporation, may be
taken without a meeting, without prior notice and without a vote,
if a consent or consents, setting forth the action so taken, shall
be signed by members having not less than the minimum number of
votes that would be necessary to authorize or take such action at a
meeting at which all members having a right to vote thereon were
present and voted and shall be delivered to the corporation in the
manner required by this section.
(c)
A consent must be set forth in writing or in an electronic
transmission. No consent shall be effective to take the corporate
action referred to therein unless consents signed by a sufficient
number of holders or members to take action are delivered to the
corporation in the manner required by this section within 60 days
of the first date on which a consent is so delivered to the
corporation. Any person executing a consent may provide, whether
through instruction to an agent or otherwise, that such a consent
will be effective at a future time (including a time determined
upon the happening of an event), no later than 60 days after such
instruction is given or such provision is made, if evidence of such
instruction or provision is provided to the corporation. Unless
otherwise provided, any such consent shall be revocable prior to
its becoming effective. All references to a “consent” in this
section means a consent permitted by this section.
(d)
(1) A consent permitted by this section shall be delivered: (i) to
the principal place of business of the corporation; (ii) to an
officer or agent of the corporation having custody of the book in
which proceedings of meetings of stockholders or members are
recorded; (iii) to the registered office of the corporation in this
State by hand or by certified or registered mail, return receipt
requested; or (iv) subject to the next sentence, in accordance with
§ 116 of this title to an information processing system, if any,
designated by the corporation for receiving such consents. In the
case of delivery pursuant to the foregoing clause (iv), such
consent must set forth or be delivered with information that
enables the corporation to determine the date of delivery of such
consent and the identity of the person giving such consent, and, if
such consent is given by a person authorized to act for a
stockholder or member as proxy, such consent must comply with the
applicable provisions of § 212(c)(2) and (3) of this
title.
(2)
Any copy, facsimile or other reliable reproduction of a consent in
writing may be substituted or used in lieu of the original writing
for any and all purposes for which the original writing could be
used, provided that such copy, facsimile or other reproduction
shall be a complete reproduction of the entire original writing. A
consent may be documented and signed in accordance with § 116 of
this title, and when so documented or signed shall be deemed to be
in writing for purposes of this title; provided that if such
consent is delivered pursuant to clause (i), (ii) or (iii) of
paragraph (d)(1) of this section, such consent must be reproduced
and delivered in paper form.
(e)
Prompt notice of the taking of the corporate action without a
meeting by less than unanimous consent shall be given to those
stockholders or members who have not consented and who, if the
action had been taken at a meeting, would have been entitled to
notice of the meeting if the record date for notice of such meeting
had been the date that consents signed by a sufficient number of
holders or members to take the action were delivered to the
corporation as provided in this section. In the event that the
action which is consented to is such as would have required the
filing of a certificate under any other section of this title, if
such action had been voted on by stockholders or by members at a
meeting thereof, the certificate filed under such other section
shall state, in lieu of any statement required by such section
concerning any vote of stockholders or members, that consent has
been given in accordance with this section.
In summary, pursuant to the provisions of §228 of the DGCL, any
action which may be taken at an annual or special meeting of
stockholders may be taken without a meeting, without prior notice
and without a vote, by the written consent of stockholders holding
the requisite number of shares which would be required to approve
the action at such meeting, if all shares were present and voted at
such meeting. In most cases this would require that holders of at
least a majority of the outstanding shares of capital stock of the
Company entitled to vote on such action execute such written
consent, or, in some cases, as otherwise set forth in the
Certificate of Incorporation, as amended, the holders of 66-2/3% of
the outstanding shares of capital stock entitled to vote thereon.
The provisions of §228 of the DGCL also require that the
stockholders entitled to vote who do not execute the written
consent be provided with prompt notice of the actions approved by
written consent. In the case of a corporation subject to the
reporting requirements of the Exchange Act, such as the Company,
this would normally be satisfied by the Company’s delivering a
Schedule 14C Information Statement to all stockholders, promptly
after such written consent has been executed, setting forth, in
detail, all actions approved by written consent.
Holding a special meeting of
the Company’s stockholders to solicit the approval of our
stockholders, with respect to actions requiring their approval,
requires a substantial amount of time and effort, as well as a
substantially greater expense to the Company than would be incurred
if the Company were able to obtain such approval by written consent
of the stockholders. The Company must prepare proxy materials to be
mailed to stockholders, wait the requisite time periods required
for notice of the meeting and mailing of the proxy materials to
stockholders and then hold a special meeting. Although the
Company’s Certificate of Incorporation, as amended, currently
permits the approval of such actions by written consent, in lieu of
a meeting, the written consent must be executed by all of our
holders of Common Stock and Series A Preferred Stock, on an
as-converted to Common Stock basis, as applicable, which, because
of the number of public holders of our shares of Common Stock would
be virtually impossible. By removing the requirement from our
Certificate of Incorporation, as amended, that such written consent
of stockholders be unanimous, the requirement would default to the
provisions of §228 of the DGCL, allowing us to obtain stockholder
approval by the written consent of holders of the requisite number
of shares required for any such approval, thereby resulting in a
more efficient procedure for the approval of actions submitted to
our stockholders, as well as save the Company the substantially
greater expense incurred in conducting a proxy solicitation and
holding a special meeting of stockholders. Ultimately, the results
obtained by written consent, in lieu of a meeting, will be the same
as if such actions had been submitted to the stockholders entitled
to vote thereon at a meeting, since the holders of the requisite
number of shares of capital stock required to approve such actions
at the meeting, who execute any such written consent, will have the
ability, without the votes of any other of the Company’s
stockholders, to approve such actions at the applicable meeting. As
a result, the rights of the Company’s stockholders will, in no way,
be adversely affected by this amendment removing the requirement
that a written consent of stockholders, in lieu of an annual or
special meeting, be executed by all stockholders entitled to
vote.
The summary above is wholly
qualified by the complete text of the Second Certificate of
Amendment of Certificate of Incorporation, in the form attached
here as Appendix A and incorporated herein by
reference.
Vote Required and Recommendation of
Board
Our
Bylaws provide that all matters (other than the election of
directors and except to the extent otherwise required by applicable
Delaware law) shall be determined by a majority of the votes cast
affirmatively or negatively. Accordingly, the affirmative vote of a
majority of the shares of the shares of Common Stock and shares of
Common Stock into which the Series A Preferred Stock are
convertible, on an as converted basis, voting together present at
the Annual Meeting, in person or by proxy, and voting on the
matter, will be required to approve the Stockholder Written Consent
Amendment Proposal.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
STOCKHOLDER WRITTEN CONSENT AMENDMENT PROPOSAL APPROVING THE
AMENDMENT TO THE COMPANY’S CERTIFICATE OF INCORPORATION, AS
AMENDED, REMOVING THE PROVISION PROVIDING THAT ANY ACTION TAKEN BY
THE STOCKHOLDERS BY WRITTEN
CONSENT IN LIEU OF A MEETING REQUIRES THAT ALL OF THE COMPANY’S
STOCKHOLDERS ENTITLED TO VOTE ON SUCH ACTION CONSENT IN WRITING
THERETO.
PROPOSAL NO. 3 APPROVAL OF AN AMENDMENT
TO THE COMPANY’S CERTIFICATE OF INCORPORATION, AS AMENDED,
INCREASING THE COMPANY’S AUTHORIZED SHARES OF COMMON STOCK FROM
75,000,000 SHARES TO 500,000,000 SHARES
Our stockholders are being
asked to approve an amendment to our Certificate of Incorporation,
as amended, to increase the number of authorized shares of Common
Stock. On August 14, 2021, the Board approved a proposal to amend
the Certificate of Incorporation, as amended, to increase the
number of authorized shares of Common Stock from 75,000,000 shares
to 500,000,000 (the “Share Increase”). As of the close of business
on the Record Date, there were 18,793,265 shares of Common Stock
issued and outstanding, and 21,741,214 shares of Common Stock were
reserved for issuance under long-term equity incentive plans, upon
the conversion of convertible notes, upon the exercise of warrants
and upon the conversion of shares of Series A Preferred Stock.
Accordingly, of the total number of shares of Common Stock
currently authorized under our Certificate of Incorporation, as
amended, 34,465,521 shares of Common Stock remain available for
issuance or may be reserved for issuance.
Form of the Share Increase
Amendment
The proposed amendment (the “Share Increase Amendment”) would amend
Paragraph (a) of Article 4, Section 4.1 of our Certificate of
Incorporation, as amended, to read in its entirety as
follows:
“(a) The total number of shares of common stock, par value $0.0001
per share, the Company is authorized to issue is 500,000,000
shares.”
Background and Reasons for the Share Increase
The Certificate of Incorporation, as amended, currently authorizes
the issuance of up to 75,000,000 shares of Common Stock and
10,000,000 shares of preferred stock. As of the close of business
on the Record Date, there were 18,793,265 shares of Common Stock
issued and outstanding, and 21,741,214 shares of Common Stock
were reserved for issuance under long-term equity incentive plans,
upon the conversion of convertible notes, upon the exercise of
warrants and upon the conversion of shares of Series A Preferred
Stock. Accordingly, of the total number of shares of Common Stock
currently authorized under our Certificate of Incorporation, as
amended, 34,465,521
shares of Common Stock remain available for issuance or may be
reserved for issuance.
If the Share Increase Amendment is approved by stockholders, upon
its effectiveness we will have a total of 500,000,000 authorized
shares of Common Stock, with 18,793,265 shares of Common Stock
issued and outstanding (as of the Record Date), and 21,741,214 shares of Common Stock
were reserved for issuance under long-term equity incentive plans,
upon the conversion of convertible notes, upon the exercise of
warrants and upon the conversion of shares of Series A Preferred
Stock, leaving available 459,465,521 shares of Common Stock
authorized and unissued and not reserved for any specific
purpose.
Purpose of the Share Increase
Amendment
The Board believes it is in the best interest of the Company to
increase the number of authorized shares of Common Stock in order
to give the Company greater flexibility in considering and planning
for future general corporate needs, including, but not limited to,
grants under equity compensation plans, stock splits, financings,
potential strategic transactions, as well as other general
corporate transactions. The Board believes that additional
authorized shares of Common Stock will enable the Company to take
timely advantage of market conditions and favorable financing and
acquisition opportunities that become available to the Company by
allowing the issuance of such shares without the expense and delay
of another stockholder meeting.
At this time, the increase in authorized shares of Common Stock is
not in any way related to any plans or intentions to enter into a
merger, consolidation, acquisition or similar business
transaction.
Rights of Additional Authorized
Shares
Any newly authorized shares of Common Stock will be identical to
the shares of Common Stock now authorized and outstanding. The
Amendment will not alter the voting powers or relative rights of
the Common Stock. In accordance with the Certificate of
Incorporation and the Delaware General Corporation Law, any of our
authorized but unissued shares of preferred stock are “blank check”
preferred stock which shall have such voting rights, dividend
rights, liquidation preferences, conversion rights and perceptive
rights as may be designated by the Board pursuant to a certificate
of designation.
Potential Adverse Effects of the Share
Increase Amendment
Adoption of the Share Increase Amendment will have no immediate
dilutive effect on the proportionate voting power or other rights
of
the Company’s existing stockholders. The Board has no current plan
to issue shares from the additional authorized shares provided by
the Share Increase Amendment. However, any future issuance of
additional authorized shares of our Common Stock may, among other
things, dilute the earnings per share of Common Stock and the
equity and voting rights of those holding Common Stock at the time
the additional shares are issued. Additionally, this potential
dilutive effect may cause a reduction in the market price of our
Common Stock.
Potential Anti-Takeover
Effects
By increasing the number of authorized but unissued shares of
Common Stock, our ability to issue additional shares of Common
Stock could, under certain circumstances, have an anti-takeover
effect, although this is not the intent of the Board. For example,
our ability to issued additional shares of Common Stock could
adversely affect the ability of third parties to take over the
Company or effect a change of control of the Company by, for
example, permitting issuances that would dilute the stock ownership
of a person seeking to effect a change in the composition of the
Board or contemplating a tender offer or other transaction for the
combination of us with another company that the Board determines is
not in the Company’s best interests or in the best interests of our
stockholders. The ability of the Board to cause the Company to
issue substantial amounts of Common Stock or preferred stock
without the need for stockholder approval, except as may be
required by law or regulation, upon such terms and conditions as
the Board may determine from time to time in the exercise of its
business judgment may, among other things, result in practical
impediments with respect to changes in control of the Company or
have the effect of diluting the stock ownership of holders of
Common Stock seeking to obtain control of the Company. The issuance
of Common Stock or preferred stock, while providing desirable
flexibility in connection with potential financings and other
corporate transactions, may have the effect of discouraging,
delaying or preventing a change in control of the Company. The
Board, however, does not intend or view the Share Increase
Amendment to effect the Share Increase as an anti-takeover measure,
nor does the Board contemplate using the Share Increase in this
manner at any time in the foreseeable future.
Appraisal or Dissenters’
Rights
Pursuant to the Delaware General Corporation Law, stockholders are
not entitled to appraisal rights or dissenter’s rights with respect
to the Share Increase Amendment or the Share Increase.
Effectiveness of Share Increase
Amendment
If the Share Increase Amendment is approved by the stockholders at
the Annual Meeting, it will become effective upon the filing of a
certificate of amendment to our Certificate of Incorporation with
the Delaware Secretary of State.
Executive Officer and Director
Interest
Our directors and executive officers do not have an interest in
this Proposal No. 4.
The summary above is wholly
qualified by the complete text of the Second Certificate of
Amendment of Certificate of Incorporation, in the form attached
here as Appendix A and incorporated herein by
reference.
Vote Required and Recommendation of
Board
Our
Bylaws provide that all matters (other than the election of
directors and except to the extent otherwise required by applicable
Delaware law) shall be determined by a majority of the votes cast
affirmatively or negatively. Accordingly, the affirmative vote of a
majority of the shares of the shares of Common Stock and shares of
Common Stock into which the Series A Preferred Stock are
convertible, on an as converted basis, voting together present at
the Annual Meeting, in person or by proxy, and voting on the
matter, will be required to approve the Share Increase Amendment
Proposal.
The Board recommends that
stockholders approve the Share Increase Amendment. Under applicable
Delaware law, the affirmative vote of the stockholders holding a
majority of the outstanding shares of Common Stock is required for
approval of the Share Increase Amendment. Abstentions from voting
on this proposal will have the same effect as a vote against this
Proposal No. 3. There will be no broker non-votes on this Proposal
No. 3.
THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE “FOR” THE SHARE INCREASE AMENDMENT
PROPOSAL APPROVONG THE AMENDMENT TO THE COMPANY’S CERTIFICATE OF
INCORPORATION, AS AMENDED, INCREASING THE COMPANY’S AUTHORIZED
SHARES OF COMMON STOCK FROM 75,000,000 SHARES TO 500,000,000
SHARES
PROPOSAL NO. 4 APPROVAL OF AN AMENDMENT
TO THE COMPANY’S CERTIFICATE OF INCORPORATION CHANGING THE
COMPANY’S NAME TO AMERICAN NOBLE GAS, INC.
Our stockholders are being asked to approve an amendment to our
Certificate of Incorporation to change the name of the Company from
Infinity Resources, Inc. to American Noble Gas, Inc. (the “Name
Change”). On August 14, 2021, the Board approved a proposal to
amend the Certificate of Incorporation to change the name of the
Company from Infinity Resources, Inc. to American Noble Gas,
Inc.
Form of the Name Change
Amendment
The proposed amendment (the “Name Change Amendment”) would amend
Article 1 of our Certificate of Incorporation, as amended, to read
in its entirety as follows:
“The name of the corporation is American Noble Gas,
Inc.”
Reason for Name Change
Amendment
The Company believes that the Name Change is necessary to more
accurately reflect the Company’s current business activities. On
April 1, 2021, we acquired the mineral rights and equipment to
approximately 11,000 acres of oil and gas producing properties in
the Kansas Central Uplift region of Kansas (the “Kansas
Properties”). The Company believes that the Kansas Properties may
contain commercial quantities of noble gas reserves in addition to
its traditional oil and natural gas reserves. Based on preliminary
testing, the Company is evaluating the cash flows associated with
developing the noble gas reserves on the Kansas Properties to the
extent that noble gases may generate the majority of the underlying
cash flows within a one to two-year time frame. The Board of
Directors believes that the Kansas Properties may provide our
platform to transform the Company into a global leader in the
exploration, development and production of noble gases, although
there can be no assurance that this will be achieved by the
Company. The Board believes that it is in the Company’s and our
stockholders’ best interests to make the name change to “American
Noble Gas, Inc.” to better communicate to the public the current
and future nature of the Company’s business operations and enable
the Company to integrate its exploration, development and
production of noble gases into one corporate identity.
Effectiveness of Name Change
Amendment
If the stockholders approve the proposed amendment to our
Certificate of Incorporation, as amended, the amendment will become
effective upon the filing of a Second Certificate of Amendment to
our Certificate of Incorporation with the Delaware Secretary of
State, which would be filed shortly after the Annual Meeting. While
the Name Change will cause us to incur certain modest costs, the
Board believes that any potential confusion and costs associated
with the Name Change will be minimal and will be outweighed by the
benefits of the Name Change. The Name Change will not have any
effect on the rights of our existing stockholders. Changing our
name will not affect the validity or transferability of stock
certificates presently outstanding, and the Company’s stockholders
will not be required to exchange any certificates presently held by
them. In the future, new stock certificates will be issued
reflecting the new name.
Executive Officer and Director
Interest
Our directors and executive officers do not have an interest in
this Proposal No. 4.
The summary above is wholly qualified by the complete text of the
Second Certificate of Amendment of Certificate of Incorporation, in
the form attached here as Appendix A and incorporated herein
by reference.
Vote Required and Recommendation of
Board
Our
Bylaws provide that all matters (other than the election of
directors and except to the extent otherwise required by applicable
Delaware law) shall be determined by a majority of the votes cast
affirmatively or negatively. Accordingly, the affirmative vote of a
majority of the shares of the shares of Common Stock and shares of
Common Stock into which the Series A Preferred Stock are
convertible, on an as converted basis, voting together present at
the Annual Meeting, in person or by proxy, and voting on the
matter, will be required to approve the Name Change Amendment
Proposal.
The Board recommends that
stockholders approve the Name Change Amendment. Under applicable
Delaware law, the affirmative vote of the stockholders holding a
majority of the outstanding shares of Common Stock is required for
approval of the Name Change Amendment. Abstentions from voting on
this proposal will have the same effect as a vote against this
Proposal No. 4. There will be no broker non-votes on this Proposal
No. 4.
THE BOARD UNANIMOUSLY
RECOMMENDS THAT YOU VOTE “FOR” THE NAME CHANGE AMENDMENT PROPOSAL
APPROVING THE AMENDMENT TO THE COMPANY’S CERTIFICATE OF
INCORPORATION, AS AMENDED, CHANGING THE COMPANY’S NAME TO AMERICAN
NOBLE GAS, INC.
PROPOSAL NO. 5 APPROVAL OF THE ADOPTION
OF THE COMPANY’S 2021 STOCK OPTION AND RESTRICTED STOCK
PLAN.
Overview
The
Company is seeking stockholder approval for its 2021 Stock Option
and Restricted Stock Plan (the “2021 Plan”) including the
reservation of 5,000,000 shares of Common Stock issuable under the
2021 Plan. The 2021 Plan was adopted by the Board on August 14,
2021, subject to stockholder approval at the Annual Meeting. To
date, no awards have been granted under the 2021 Plan.
The
purpose of the 2021 Plan is to offer all our employees, directors,
and key consultants an opportunity to acquire a proprietary
interest in our success and remain in service to the Company and to
attract new employees, directors and consultants. The 2021 Plan
provides both for the direct award of restricted stock and for the
grant of options to purchase shares. Options granted under the 2021
Plan may include non-statutory options as well as incentive stock
options intended to qualify under Section 422 of the Internal
Revenue Code.
The
Company has a policy of issuing new shares upon the exercise of
stock options, awarding significant amounts of stock options or
restricted stock grants to new employees and regularly awarding
such to employees on an annual basis. Stock options are generally
granted at the market price on the date of grant. Stock options and
restricted stock grants have generally vested over one or more
years for officers and employees, and one year for directors. Stock
options generally can be exercised within seven to ten
years.
The
Board believes that it is in the best interests of the Company and
our stockholders for the existence of the 2021 Plan. There are
relatively few shares compared to the Company’s total authorized
and outstanding shares which are available for grant under
Company’s 2015 Stock Option and Restricted Stock Plan, which was
the last equity plan adopted by the Company. The last stock option
plan of the Company was adopted in 2015 and provided for 500,000
shares to be reserved for grant, however none have been granted
since its original approval. The Board believes that equity awards
assist in retaining, motivating and rewarding employees, executives
and consultants by giving them an opportunity to obtain long-term
equity participation in the Company. In addition, equity awards are
an important contributor to aligning the incentives of the
Company’s employees with the interests of our stockholders. The
Board also believes equity awards are essential to attracting new
employees and retaining current employees. Further, the granting of
options to new and existing employees frequently permits the
Company to pay lower salaries than otherwise might be the case. The
Board believes that to remain competitive with other companies
involved in the exploration for and development of reserves of oil,
natural gas and especially noble gases, the Company must continue
to provide employees with the opportunity to obtain equity in the
Company and that an inability to offer equity incentives to new and
current employees would put the Company at a competitive
disadvantage in attracting and retaining qualified personnel. Our
named executive officers and directors have an interest in this
Proposal No. 5 because they are expected to receive awards under
the 2021 Plan.
Plan Summary
Our Board adopted the 2021 Plan on August 14, 2021. At the Annual
Meeting, we are asking stockholders to approve the 2021 Plan and
the reservation of 5,000,000 shares of Common Stock issuable under
the 2021 Plan. The 2021 Plan authorizes us to issue 5,000,000
shares of Common Stock upon the exercise of options and the grant
of restricted stock awards (collectively, the “Awards”). No Awards
have been granted under the 2021 Plan to date. The 2021 Plan
authorizes us to grant (i) to key employees incentive stock options
to purchase shares of Common Stock, non-qualified stock options to
purchase shares of Common Stock, and restricted stock awards; (ii)
to non-employee directors non-qualified stock options and
restricted stock awards; and (iii) to consultants non-qualified
stock options and restricted stock awards. As of August 24, 2021,
approximately three executive officers/employees, one non-employee
director, and three non-employee consultants were eligible to
participate in the 2021 Plan.
The
following paragraphs provide a summary of the principal features of
the 2021 Plan and its operation. The following summary is qualified
in its entirety by reference to the 2021 Plan as set forth in
Appendix B.
Administration
The
2021 Plan will be administered by the Board or the Compensation
Committee of the Board (the “Compensation Committee”), after the
Company has established a Compensation Committee. The Board or
Compensation Committee will have full authority, subject to the
terms of the 2021 Plan, to interpret the 2021 Plan and establish
rules and regulations for the proper administration of the 2021
Plan. The validity, construction and effect of the 2021 Plan and
any rules and regulations relating to the 2021 Plan shall be
determined in accordance with the laws of the State of
Delaware.
Number of Shares of Common Stock Subject to the 2021 Plan and Award
Limit
The
aggregate maximum number of shares of Common Stock (including
shares of Common Stock underlying options) that may be issued under
the 2021 Plan will be limited to 5,000,000 shares of Common
Stock.
In
the event that, prior to the date on which the 2021 Plan shall
terminate, any award granted under the 2021 Plan expires
unexercised or unvested or is terminated, surrendered or cancelled
without the delivery of shares of Common Stock, or any awards are
forfeited back to the Company, then the shares of Common Stock
subject to such award may be made available for subsequent awards
under the terms of the 2021 Plan.
Eligibility
All
employees (including executive officers) and directors of the
Company or any of its affiliates, as well as consultants,
professionals and service providers who provide services to the
Company are eligible to participate in the 2021 Plan. The selection
of those eligible employees, directors and consultants who will
receive the Awards is within the discretion of the Board or the
Compensation Committee, as applicable. As of August 24, 2021,
approximately three executive officers/employees, one non-employee
director, and three non-employee consultants were eligible to
participate in the 2021 Plan.
Term of 2021 Plan
The
2021 Plan becomes effective as of the date on which it is approved
by the stockholders and it shall automatically terminate one day
before the tenth (10th) anniversary of such date. No Awards may be
granted before the effective date and no further Awards may be
granted under the 2021 Plan after such date of termination. In
addition, in the event that the stockholders of the Company do
approve the 2021 Plan within twelve (12) months of such effective
date, the 2021 Plan shall become void and of no force or effect.
The Board may terminate, suspend or amend the Plan at any time
without stockholder approval except to the extent that stockholder
approval is required to satisfy applicable requirements imposed by
(a) Rule 16b-3 under the Exchange or any successor rule or
regulation; or (b) the rules of any exchange on or through which
the shares of Common Stock are then listed or traded. If the 2021
Plan is terminated, whether by automatic termination on the day
before the tenth (10th) anniversary, or for any other
reason provided under the 2021 Plan, notwithstanding such
termination, all Awards granted prior to such termination shall
continue until they are terminated by their respective
terms.
Adjustments and Changes in Shares
In
the event that there is a merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in
property other than cash, stock split, liquidating dividend,
combination of stock, exchange of stock, change in corporate
structure or other similar corporate change affecting the shares of
Common Stock, the Board shall appropriately adjust the aggregate
number of shares of Common Stock (including shares of Common Stock
underlying stock options) available for Awards under the 2021 Plan
or subject to outstanding Awards, and any other factors, limits or
terms affecting any outstanding or subsequently issuable Awards as
may be appropriate.
Types of Awards
Under the 2021 Plan, the Board or Compensation Committee, as
applicable, is authorized to grant incentive stock options,
non-qualified options and shares of restricted Common Stock.
Stock Options
A
stock option is the right to purchase a specified number of shares
of Common Stock in the future at a specified exercise price and
subject to the other terms and conditions specified in the option
agreement and the 2021 Plan. Stock options may granted in the form
of incentive stock options and non-qualified stock
options.
Incentive
Stock Options. Incentive stock options granted under the 2021
Plan must have an exercise price at least equal to 100% of the fair
market value of the Common Stock as of the date of grant. Incentive
stock options granted to any person who owns, immediately after the
grant, stock possessing more than 10% of the combined voting power
of all classes of our stock, or of any parent or subsidiary
corporation, must have an exercise price at least equal to 110% of
the fair market value of the Common Stock on the date of grant. The
aggregate fair market value, determined as of the time an incentive
stock option is granted, of the Common Stock with respect to which
incentive stock options are exercisable by an employee for the
first time during any calendar year cannot exceed $100,000.
Incentive stock options shall not transferable except by will or by
the laws of descent and distribution and shall only be exercisable
by the option holder during the life time of the option
holder.
Non-qualified
Stock Options. Non-qualified stock options granted under the
2021 Plan must have an exercise price at least equal to 100% of the
fair market value of the Common Stock as of the date of grant.
Non-qualified stock options are transferable, if at all, to the
extent provided in the option agreement granting such options. If
the option agreement does not provide for transferability, then a
nonqualified stock option shall not transferable except by will or
by the laws of descent and distribution and shall only be
exercisable by the option holder during the life time of the option
holder.
Provisions
Relating to All Stock Options.
Payment.
Payment of the exercise price for any stock option may be in cash,
or with the approval of the Board, (i) by withheld shares which,
upon exercise, have a fair market value at the time the option is
exercised equal to the option price (plus applicable withholding
tax), (ii) by surrendering to the Company shares of Common Stock,
subject to restrictions, (iii) by any combination of the foregoing
or (iv) by any other manner acceptable to the Board.
Vesting.
Stock options may vest in periodic installments or be fully vested
at the time of grant. Stock options also may be subject to such
other terms and conditions for exercise (which may be based on
performance or other criteria) as the Board may
determine.
Termination.
Unless otherwise provided in an applicable option agreement, stock
options shall be terminated immediately upon the termination of
employment or provision of services by option holder to the Company
or any subsidiary of the Company; provided, however, that an option
agreement may provide for exercise until the earlier of the
expiration of the stock option or 90 days after such termination of
employment or provision of services to the Company or any
subsidiary, unless such termination was for “cause.” Unless
otherwise provided in the applicable option agreement, in the event
of the permanent disability of death of an option holder, all
unvested stock options will immediately terminate and vested stock
options will be exercisable for a period of 12 months thereafter.
Unless otherwise provided in the applicable option agreement, in
the event of the retirement of an option holder, all unvested stock
options will automatically vest and all stock options will be
exercisable for a period of 12 months thereafter.
Restricted Stock Awards
Restricted
stock is an award of shares of our Common Stock that vests in
accordance with the terms and conditions set forth in the
applicable award agreement entered into by the Company and each
participant. Until the applicable restrictions (as the Board or
Compensation Committee, as applicable, may specify) lapse, such
shares are subject to forfeiture and may not be sold or otherwise
disposed of by the participant who holds them. After all conditions
and restrictions applicable to such shares of restricted stock have
been satisfied or lapse, such shares shall become freely
transferable by such participant.
Each restricted stock
award shall be evidenced by an award agreement specifying the
number of shares, the vesting schedule, the vesting conditions, and
the other terms of the restricted stock award. Vesting of
restricted stock awards may be based on continued employment or
service and/or satisfaction of performance goals or other
conditions established by the Board or Compensation Committee, as
applicable. Unless otherwise provided in the restricted stock Award
Agreement, in the event a restricted stock Award holder’s
employment or other service to the Company terminates prior to a
vesting date set forth in the restricted stock Award Agreement, any
unvested restricted stock Award shall be forfeited and
automatically transferred to and reacquired by the Company at no
cost to the Company, and neither such Award holder nor his or her
heirs, executors, administrators or successors shall have any right
or interest in the restricted stock Award. Notwithstanding the
foregoing, unless otherwise provided in the restricted stock Award
agreement, in the event a such employment or other service to the
Company terminates as a result of (A) being terminated by the
Company for reasons other than for cause, (B) death, (C) the
“Disability” of the holder (as such term is defined in the 2021
Plan), (D) retirement, or (E) a Change of Control (as such term is
defined in the 2021 Plan), then any unvested restricted stock Award
shall vest immediately upon such date. “Change of Control” shall
mean one or more persons acting individually or as a group (i)
acquires sufficient additional stock to constitute more than fifty
percent (50%) of (A) the total fair market value of all Common
Stock issued and outstanding or (B) the total voting power of all
shares of capital stock authorized to vote for the election of
directors; (ii) acquires, in a twelve (12) month period,
thirty-five percent (35%) or more of the voting power of all shares
of capital stock authorized to vote for the election of directors,
or alternatively a majority of the members of the Board is replaced
during any twelve (12) month period by directors whose appointment
was not endorsed by a majority of the members of the Board; or
(iii) acquires, during a twelve (12) month period, more than forty
percent (40%) of the total gross fair market value of all of the
Company’s assets. The foregoing shall not apply to (i) any
transaction involving any stockholder that individually or as a
group owns more than fifty percent (50%) of the outstanding Common
Stock on the date the 2021 Plan is approved by the Company’s
stockholders, until such time as such stockholder first owns less
than forty percent (40%) of the total outstanding Common Stock, or
(ii) any transaction undertaken for the purpose of reincorporating
the Company under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of
the Company’s capital stock.
Restricted
stock awards shall be transferable as provided under the terms of
the applicable award agreement.
New Plan Benefits
The benefits that will be awarded or paid under the 2021 Plan are
not currently determinable (see, however, “Eligibility” above).
Awards granted under the Plan are within the discretion of the
Board or the Compensation Committee, as applicable, and the Board
has not yet determined future Awards or who might receive
them.
Federal Tax Matters Relating to Awards
The following summary is a brief discussion of certain federal
income tax consequences to U.S. taxpayers and to the Company of
stock options and restricted stock awards awarded under the 2021
Plan. This summary is not intended to be a complete discussion of
all the federal income tax consequences of the 2021 Plan or of all
the requirements that must be met in order to qualify for the tax
treatment described below, nor does it discuss state, local or
foreign tax consequences. The following summary is based upon the
provisions of U.S. federal tax law in effect on the date hereof,
which is subject to change (perhaps with retroactive effect) and
does not constitute tax advice. In addition, because tax
consequences may vary, and certain exceptions to the general rules
discussed in this summary may be applicable, depending upon the
personal circumstances of individual recipients and each recipient
should consider its, his or her personal situation and consult with
its, his or her own tax advisor with respect to the specific tax
consequences applicable to it, him or her. The following assumes
stock options have been granted at an exercise price per share at
least equal to 100% of the fair market value of the Common Stock on
the date of grant.
Federal tax matters relating to non-qualified stock
options. In general, an employee, director or consultant
will not recognize income at the time of the grant of nonqualified
options under the 2021 Plan. When an optionee exercises a
non-qualified stock option and if the Common Stock is not subject
to a substantial risk of forfeiture, he or she generally on the day
of exercise will recognize ordinary income equal to the excess, if
any, of the fair market value (determined on the day of exercise)
of the shares of the Common Stock received over the option exercise
price. If the Common Stock is subject to a substantial risk of
forfeiture, then the optionee will generally recognize ordinary
compensation income as of the date or dates on which the risk
terminates. The tax basis of such shares to the optionee will be
equal to the exercise price paid plus the amount of ordinary
compensation income includible in his or her gross income. Upon a
subsequent sale or exchange of shares of Common Stock acquired
pursuant to the exercise of a non-qualified stock option, the
optionee will have taxable capital gain or loss, measured by the
difference between the amount realized on the sale or exchange and
the tax basis of the shares of Common Stock. The capital gain or
loss will be short-term or long-term depending on holding period of
the shares of Common Stock sold.
Federal tax matters relating to incentive stock options. In
general, an employee will not recognize income on the grant of
incentive stock options under the 2021 Plan. Except with respect to
the alternative minimum tax, an optionee will not recognize income
on the exercise of an incentive stock option unless the option
exercise price is paid with stock acquired on the exercise of an
incentive stock option and the following holding period for such
stock has not been satisfied. For purposes of the alternative
minimum tax, however, an optionee will be required to treat an
amount equal to the difference between the fair market value
(determined on the day of exercise) of our shares of the Common
Stock received and the exercise price as an item of adjustment in
computing the optionee’s alternative minimum taxable
income.
An optionee will recognize long-term capital gain or loss on a sale
of the shares acquired on exercise, provided the shares acquired
are not sold or otherwise disposed of before: (i) two years from
the date of grant of the option, and (ii) one year from the date of
exercise of the option. In general, the amount of gain or loss will
equal the difference, if any, between the sale price of such shares
and the exercise price. If the stock is not held for the required
period of time, the optionee will recognize ordinary income to the
extent the fair market value (determined on the day of exercise) of
the stock exceeds the exercise price, but limited to the gain
recognized on sale. The balance of any such gain will be a
short-term or long-term capital gain (depending on the applicable
holding period).
For
the exercise of a stock option to qualify for the foregoing
incentive stock option tax treatment, an optionee generally must be
our employee continuously from the date of the grant until any
termination of employment, and in the event of a termination of
employment, the stock option must be exercised within three months
after the termination.
Federal tax matters relating to restricted stock
awards. In general, the recipient of a stock award that is
not subject to restrictions will recognize ordinary compensation
income at the time the shares of Common Stock are received equal to
the excess, if any, of the fair market value of the shares of
Common Stock received over the amount, if any, the recipient paid
in exchange for the shares of Common Stock. If, however, the shares
of Common Stock are subject to vesting or other restrictions (that
is, they are non-transferable and subject to a substantial risk of
forfeiture) when the shares of Common Stock are granted (for
example, if the employee is required to work for a period of time
in order to have the right to sell the stock), the recipient
generally will not recognize compensation income until the shares
of Common Stock becomes vested or the restrictions otherwise lapse,
at which time the recipient will recognize ordinary compensation
income equal to the excess, if any, of the fair market value of the
shares of Common Stock on the date of vesting (or the date of the
lapse of a restriction) less the amount, if any, the recipient paid
in exchange for the shares of Common Stock. If the shares of Common
Stock are forfeited under the terms of the restricted stock award,
the recipient will not recognize income and will not be allowed an
income tax deduction with respect to the forfeiture.
A
recipient may file an election under Section 83(b) of the Internal
Revenue Code with the Internal Revenue Service within thirty (30)
days of his or her receipt of a restricted stock award to recognize
ordinary compensation income, as of the award date, equal to the
excess, if any, of the fair market value of the shares of Common
Stock on the award date less the amount, if any, the recipient paid
in exchange for the shares of Common Stock. If a recipient makes a
Section 83(b) election, then the recipient will not otherwise be
taxed in the year the vesting or restriction lapses, and, if the
stock award is forfeited, he or she will not be allowed an income
tax deduction. If the recipient does not make a Section 83(b)
election, dividends paid to the recipient on the shares of Common
Stock prior to the date the vesting or restrictions lapse will be
treated as compensation income.
The
recipient’s tax basis for the determination of gain or loss upon
the subsequent disposition of shares of Common Stock acquired as
stock awards will be the amount paid for such shares plus the
amount includible in his or her gross income as compensation in
respect of such shares.
Withholding and other consequences. Any compensation
includible in the gross income of a recipient will be subject to
appropriate federal and state income tax withholding, and will also
be subject to Social Security, Medicare and additional Medicare
taxes.
Tax effect for the Company. We are generally entitled to an
income tax deduction in connection with a non-qualified stock
option or restricted stock award granted under the 2021 Plan
(including dividends paid to the recipient with respect to a
restricted stock award that has not yet vested and is not otherwise
subject to a Section 83(b) election) in an amount equal to the
ordinary compensation income realized by a recipient at the time
the recipient recognizes such income (for example, the exercise of
a non-qualified stock option). We receive no tax deduction on the
grant or exercise of an incentive stock option, but we are entitled
to a tax deduction if the optionee recognizes compensation income
on account of a premature disposition of shares of Common Stock
acquired on exercise of an incentive stock option, in the same
amount and at the same time as the optionee recognizes income.
Special rules may limit the deductibility of compensation paid to
our Chief Executive Officer, Chief Financial Officer and to each of
our three other most highly compensated executive officers under
Section 162(m) of the Internal Revenue Code to the extent that
annual compensation paid to any of the foregoing individuals
exceeds $1,000,000.
THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME
TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE
GRANT AND EXERCISE OF STOCK OPTIONS AND RESTRICTED STOCK AWARDS
UNDER THE 2021 PLAN. IT DOES NOT PURPORT TO BE COMPLETE AND DOES
NOT DISCUSS THE TAX CONSEQUENCES OF A RECIPIENT’S DEATH OR THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY STATE OR
FOREIGN COUNTRY IN WHICH THE RECIPIENT MAY RESIDE. THE FOREGOING
SUMMARY IS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE
USED BY ANY TAXPAYER, TO AVOID PENALTIES THAT MAY BE IMPOSED ON THE
TAXPAYER.
Vote Required and Recommendation of
Board
Our
Bylaws provide that all matters (other than the election of
directors and except to the extent otherwise required by applicable
Delaware law) shall be determined by a majority of the votes cast
affirmatively or negatively. Accordingly, the affirmative vote of a
majority of the shares of the shares of Common Stock and shares of
Common Stock into which the Series A Preferred Stock are
convertible, on an as converted basis, voting together present at
the Annual Meeting, in person or by proxy, and voting on the
matter, will be required to adopt our 2021 Plan.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE
PROPOSAL TO APPROVE THE ADOPTION
OF THE 2021 PLAN.
PROPOSAL NO. 6 TO RATIFY AND APPROVE THE APPOINTMENT OF
RBSM LLP AS THE COMPANY’S INDEPENDENT REGISTERED ACCOUNTING FIRM
FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021
The Board of Directors, serving the equivalent functions as an
audit committee, has appointed RBSM LLP (“RBSM”) as the independent
registered public accounting firm to audit our financial statements
for the year ending December 31, 2021 and recommends that
stockholders vote for ratification of such appointment. Although we
are not required to seek stockholder approval of this appointment,
the Board believes it to be sound corporate governance to do so.
Notwithstanding the selection by the Board of Directors of RBSM,
the Board of Directors may direct the appointment of a new
independent registered public accounting firm at any time during
the year if the Board of Directors determines that such a change
would be in our best interest and in that of our stockholders. If
the appointment is not ratified, the Board of Directors will
investigate the reasons for stockholder rejection and will
reconsider the appointment.
The Board of Directors believes that RBSM is well suited to provide
the services that we require in 2021 and beyond. Representatives of
RBSM are expected to attend the Annual Meeting, where they will be
available to respond to questions and, if they desire, to make a
statement.
RBSM’s audit reports on the Company’s consolidated financial
statements as of and for the fiscal year ended December 31, 2020
did not contain an adverse opinion or a disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or
accounting principles, except that RBSM’s audit reports for the
year ended December 31, 2020 contained an emphasis of a matter
regarding the Company’s ability to continue as a going concern.
During the fiscal year ended December 31, 2020, and the subsequent
interim periods through August 24, 2021, there were (i) no
disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K
and the related instructions) between the Company and RBSM on any
matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which, if not resolved
to RBSM’s satisfaction, would have caused RBSM to make reference
thereto in its reports on the financial statements for such years,
and (ii) no “reportable events” within the meaning of Item
304(a)(1)(v) of Regulation S-K.
During the fiscal year ended December 31, 2020, and the subsequent
interim periods through August 24, 2021, neither the Company nor
anyone acting on its behalf has consulted with RBSM regarding (i)
the application of accounting principles to a specific transaction,
either completed or proposed, or the type of audit opinion that
might be rendered on the Company’s financial statements or the
effectiveness of internal control over financial reporting, and
neither a written report or oral advice was provided to the Company
that RBSM concluded was an important factor considered by the
Company in reaching a decision as to any accounting, auditing, or
financial reporting issue, (ii) any matter that was the subject of
a disagreement within the meaning of Item 304(a)(1)(iv) of
Regulation S-K, or (iii) any reportable event within the meaning of
Item 304(a)(1)(v) of Regulation S-K.
Audit and Related Fees
The following table is a summary of the fees billed to us by RBSM
for fiscal years ended December 31, 2020 and December 31, 2019:
Fee Category |
|
Fiscal
2020
fees
|
|
|
Fiscal
2019
fees
|
|
Audit fees |
|
$ |
58,000 |
|
|
$ |
56,500 |
|
Audit-related fees |
|
|
— |
|
|
|
— |
|
Tax fees |
|
|
— |
|
|
|
— |
|
All other
fees |
|
|
— |
|
|
|
— |
|
Total fees |
|
$ |
58,000 |
|
|
$ |
56,500 |
|
Audit Fees. Such amount consists of fees billed for
professional services rendered in connection with the audit of our
annual financial statements and review of the interim financial
statements included in our quarterly reports. It also includes
services that are normally provided by our independent registered
public accounting firms in connection with statutory and regulatory
filings or engagements.
Audit-Related Fees. Consists of fees billed for
assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and
are not reported under “Audit Fees.” These services include
employee benefit plan audits, consents issued for certain filings
with the SEC, accounting consultations in connection with
acquisitions, attest services that are not required by statute or
regulation, and consultations concerning financial accounting and
reporting standards.
Tax Fees. Tax fees consist of fees billed for
professional services related to tax compliance, tax advice and tax
planning. These services include assistance regarding federal,
state and international tax compliance, tax audit defense, customs
and duties, mergers and acquisitions, and international tax
planning.
All Other Fees. Consists of fees for products and
services other than the services reported above. In fiscal 2019,
such fees were related primarily to server hardware and telephone
system maintenance and upgrades. In fiscal 2018, such fees were
also related primarily to server hardware and telephone system
upgrades.
Serving
the equivalent functions of the audit committee, the Board of
Directors’ practice is to consider and approve in advance all
proposed audit and non-audit services to be provided by our
independent registered public accounting firm. All the fees shown
above were pre-approved by the Board of Directors.
Vote Required and Recommendation of
Board
If a
quorum is present, the affirmative vote of a majority of the shares
present and entitled to vote at the Annual Meeting will be required
to ratify the appointment of RBSM as our independent registered
public accounting firm.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE
FOR THE RATIFICATION OF THE APPOINTMENT OF RBSM LLP AS THE
INDEPENDENT REGISTERED ACCOUNTING FIRM OF INFINITY ENERGY
RESOURCES, INC. FOR THE YEAR ENDING DECEMBER 31,
2021.
PROPOSAL NO. 7 ADVISORY (NON-BINDING)
PROPOSAL ON EXECUTIVE COMPENSATION
Our
compensation policies and procedures are centered on a
pay-for-performance philosophy, and we believe that they are
strongly aligned with the long-term interests of our stockholders.
Our compensation program is designed to attract, motivate, and
retain the key executives who drive our success. Compensation that
rewards excellence and reflects performance, and alignment of that
compensation with the interests of long-term stockholders, are key
principles of our compensation program design. Although we have
made and will continue to make improvements to our compensation
program from time to time, these key principles have been unchanged
for many years.
We
support the principle that our corporate governance policies,
including our executive compensation program, should be responsive
to stockholder concerns. This principle is embodied in a
non-binding, advisory vote that gives you as a stockholder the
opportunity to approve the compensation of our named executive
officers as disclosed in this proxy statement, including, among
other things, our executive compensation objectives, policies and
procedures. This vote is intended to provide an overall assessment
of our executive compensation program rather than to focus on any
specific item of compensation. The Board of Directors, serving the
equivalent functions as a compensation committee, and the Board as
a whole, value the opinions of our stockholders and intend to take
the outcome of this vote into account when considering future
executive compensation arrangements. However, because the vote is
advisory, it will not directly affect any existing compensation
awards of any of our executive officers, including our named
executive officers.
As
discussed above, our executive compensation program is
designed:
|
● |
to
demand and reward excellence from each of our executive officers
and from the management team as a whole; |
|
|
|
|
● |
to
align our interests with the interests of executives and other
employees through compensation programs that recognize individual
contributions toward the achievement of corporate goals and
objectives without encouraging unnecessary or unreasonable
risks; |
|
|
|
|
● |
to
further link executive and stockholder interests through
equity-based compensation and long-term stock ownership
arrangements; |
|
|
|
|
● |
to
recognize and reward excellence in an executive’s performance in
the furtherance of our goals and objectives without undertaking
unnecessary or excessive risk; and |
|
|
|
|
● |
to
attract and retain high caliber executive and employee
talent. |
The
application of these principles and our executive compensation
philosophy, policies and procedures have resulted in a corporate
culture that demands excellence and recognizes individual and team
performance without encouraging unnecessary or excessive risks. We
align the interests of stockholders and executives by linking a
substantial portion of compensation to our performance. For
example, approximately 100% of the total 2020 compensation
disclosed in the Summary Compensation Table for our named executive
officers consisted of either incentives that were subject to
pre-established performance criteria or equity awards whose
ultimate value upon resale depends upon the value of our stock to
stockholders. We have made and will continue to make improvements
to our compensation program from time to time. In most cases,
compensation decisions made during 2020 resulted in the grant of
restricted stock awards rather than an increase in case pay over
the prior year.
We
encourage you to consider the detailed information provided in the
Summary Compensation Table and the tables and other information
that follow it. The Board of Directors will review the advisory
voting results and will take them into account in making future
executive compensation decisions.
After
reviewing the information provided above and in the other parts of
this proxy statement, the Board asks you to approve the following
advisory resolution:
Resolved,
that the stockholders of Infinity Energy Resources, Inc. hereby
approve, on an advisory, nonbinding basis, the compensation paid to
its named executive officers, as disclosed pursuant to Item 402 of
Regulation S-K, including the compensation tables and narrative
discussion in this proxy statement.
This
advisory vote will be approved if it receives the affirmative vote
of a majority of the shares of shares of Common Stock and Common
Stock into which the Series A Preferred Stock are convertible, on
an as converted basis, voting together, present at the Annual
Meeting, in person or by proxy, and voting on the
matter.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE TO APPROVE THE
COMPENSATION PAID TO THE CORPORATION’S NAMED EXECUTIVE OFFICERS AS
DISCLOSED HEREIN.
PROPOSAL NO. 8 ADVISORY (NON-BINDING)
VOTE ON THE FREQUENCY OF STOCKHOLDER VOTES REGARDING EXECUTIVE
COMPENSATION
Our
stockholders are entitled to cast an advisory vote at the Annual
Meeting regarding how frequently stockholders should consider and
cast an advisory vote to approve the compensation of our named
executive officers. Under the Dodd-Frank Act, at least every six
years, the Company is required to seek an advisory (non-binding)
stockholder vote regarding the frequency of the “say-on-pay” vote
such as Proposal 8. The Dodd-Frank Act specifies that stockholders
be given the opportunity to vote on the compensation paid to our
named executive officers every year, every two years or every three
years. Although this vote is advisory and non-binding, our Board of
Directors will review voting results and give serious consideration
to the outcome of such voting. We have not previously held an
advisory (non-binding) stockholder vote regarding the frequency of
the “say-on-pay” vote.
We
believe that a three-year frequency is preferable for such vote
because an annual or even biennial frequency creates the risk of
relying upon hindsight to an unwarranted degree in evaluating the
amount of executive compensation paid in one particular year. Our
financial results in any particular year can be significantly
impacted by factors beyond management’s control and for which our
executives deserve neither credit nor blame, such as difficulties
in forecasting in volatile economic conditions, or unexpected
changes in the markets for our products and those of our customers.
The determination of whether our executives’ compensation is
closely tied to performance and properly rewards excellence is best
viewed over a multi-year period.
In
addition, a three-year frequency would lead to more thoughtful
change, if we received an advisory vote disapproving of our
executive compensation program. We would use the time to fully
understand the specific stockholder concerns that led to that vote
and to develop and consider alternatives. We would likely implement
any resulting changes on a prospective basis beginning not earlier
than the year following the stockholder vote in any case. This
means that few if any of the changes would be reflected in the
executive compensation reported in the proxy statement for the next
stockholders’ meeting. If the vote is held on a three-year
frequency, the additional time will lead to more informed changes
and the creation of sufficient compensation data to permit
meaningful evaluation of any changes.
The
Board values and encourages constructive dialogue with our
stockholders on compensation and other important governance topics.
The Board currently believes that providing stockholders with an
advisory vote on our executive compensation philosophy, policies
and procedures every three years will enhance the value of
stockholder communication by encouraging a longer-term focus. We
note that stockholders will also be asked to express their views
whenever we adopt or materially amend our executive equity
compensation plans, and that stockholders can express their views
to management or the Board at any time by contacting the Company
Secretary.
After
reviewing the information provided above and in the other parts of
this proxy statement, the Board asks you to give your advisory vote
regarding the frequency of stockholder advisory votes to approve
the compensation of our named executive officers. You can give your
advisory vote at the Annual Meeting or by indicating your
preference on the enclosed proxy card, which asks for your vote by
choosing the option of one, two or three years or you may abstain
from voting on this proposal.
Note
that the proxy card provides for the four choices identified above
and that you are not voting to approve or disapprove the
Board’s recommendation. You should check only one alternative. The
Board will consider the results of this advisory vote in
determining the frequency of similar advisory votes in the future
but is not bound by the results of the vote.
The
outcome of this advisory vote will be determined by whichever of
the choices (every three years, every two years or every year)
receives the greatest number of votes cast. If at the most recent
stockholder frequency vote a single frequency (i.e., three years,
two years or one year) receives the support of a majority of the
votes cast and we adopt a frequency that is consistent with that
choice, we may exclude from future proxy statements any stockholder
proposals that recommend a different frequency.
THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE IN FAVOR OF
HOLDING THE ADVISORY VOTE TO APPROVE THE COMPENSATION OF OUR
EXECUTIVE OFFICERS EVERY 3 YEARS.
OTHER MATTERS
The
Board is not aware of any other matters to be presented for action
at the Annual Meeting. However, if any other matter is properly
presented at the Annual Meeting, it is the intention of the persons
named in the enclosed proxy to vote the shares they represent as
the Board may recommend.
ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
In
order for a stockholder to nominate directors at an annual meeting
or to propose business to be brought before an annual meeting, the
stockholder must give timely, written notice to the Secretary of
the Company and such notice must be received at the principal
executive offices of the Company not less than (i) 120 days before
the date of its release of the proxy statement to stockholders in
connection with its previous year’s annual meeting of stockholders,
or (ii) a reasonable time before the Company begins to print and
send its proxy materials, in the event that the date of the 2022
annual meeting of stockholders is changed by more than thirty (30)
days from the anniversary date of the Annual Meeting.
Such
stockholder’s notice shall include, with respect to each matter
that the stockholder proposes to bring before the meeting, a brief
description of the business desired to be brought before the annual
meeting and the reasons for conducting such business at the annual
meeting, and with respect to each person whom the stockholder
proposes to nominate for election as a director, all information
relating to such person, including such person’s written consent to
being named in the proxy statement as a nominee and to serving as a
director, that is required under the Securities Exchange Act of
1934, as amended.
In
addition, the stockholder must include in such notice the name and
address, as they appear on the Company’s records, of the
stockholder proposing such business or nominating such persons, and
the name and address of the beneficial owner, if any, on whose
behalf the proposal or nomination is made, the class and number of
shares of capital stock of the Company that are owned beneficially
and of record by such stockholder of record and by the beneficial
owner, if any, on whose behalf the proposal or nomination is made,
and any material interest or relationship that such stockholder of
record and/or the beneficial owner, if any, on whose behalf the
proposal or nomination is made may respectively have in such
business or with such nominee. At the request of the Board of
Directors, any person nominated for election as a director shall
furnish to the Secretary of the Company the information required to
be set forth in a stockholder’s notice of nomination which pertains
to the nominee.
ANNUAL REPORT
This
Proxy Statement is accompanied by a copy of our 2020 Annual Report
on Form 10-K.
|
BY
ORDER OF THE BOARD OF DIRECTORS |
|
|
August
30, 2021 |
Chief
Executive Officer |
Overland
Park, Kansas |
|
(Continued
and to be dated and signed on reverse side)
2021 ANNUAL MEETING OF STOCKHOLDERS
OF INFINITY ENERGY RESOURCES, INC.
Wednesday,
October 13, 2021
Please
date, sign and mail your proxy card in the envelope provided as
soon as possible.
Please
mark your vote in blue or black ink as shown here. Please detach
along perforated line and mail in the envelope
provided.
The Board of Directors recommends that you vote FOR the
election of the three nominees to the Board of Directors,
FOR Proposals 2, 3, 4, 5, 6 and 7 and every “3 YEARS” for
Proposal 8.
Proposal 1: To elect three directors to serve until the
next annual meeting of stockholders and until their successors are
duly elected and qualified: |
|
|
|
NOMINEES: |
|
[ ]
FOR ALL NOMINEES |
|
|
|
[ ]
Stanton E. Ross |
[ ]
Daniel F. Hutchins |
[ ]
Leroy C. Richie |
|
|
|
[ ]
WITHHOLD AUTHORITY FOR ALL NOMINEES |
[ ]
FOR ALL EXCEPT |
(See
instructions below) |
________________ |
|
|
INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s), mark
“FOR ALL EXCEPT” and fill in the circle next to each nominee
you wish to withhold, as shown here: [ ] |
To
change the address on your account, please check the box at right
and indicate your new address in the address space above. Please
note that changes to the registered name(s) on the account may not
be submitted via this method: [ ]
Proposal 2. FOR the approval of an amendment to the
Company’s Certificate of Incorporation, as amended, removing the provision providing that any
action taken by the stockholders by written consent in lieu
of a meeting requires that all of the Company’s stockholders
entitled to vote on such action consent in writing
thereto.
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
|
[ ] |
|
[ ] |
|
[ ] |
Proposal 3. FOR the approval of an amendment to the
Company’s Certificate of Incorporation, as amended, increasing the
Company’s authorized shares of common stock from 75,000,000 shares
to 500,000,000 shares.
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
|
[ ] |
|
[ ] |
|
[ ] |
Proposal 4. FOR the approval of an amendment to the
Company’s Certificate of Incorporation, as amended, changing the Company’s name to American
Noble Gas, Inc:
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
|
[ ] |
|
[ ] |
|
[ ] |
Proposal 5. FOR the approval of adoption of the Company’s
2021 Stock Option and Restricted Stock Plan:
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
|
[ ] |
|
[ ] |
|
[ ] |
Proposal 6. FOR ratification of the appointment of RBSM LLP
as the Company’s independent registered public accountants for the
fiscal year ending December31, 2021:
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
|
[ ] |
|
[ ] |
|
[ ] |
Proposal 7. FOR the approval of a non-binding advisory
proposal to approve the compensation paid to the Company’s named
executive officers (the “Say-on-Pay Proposal”):
|
|
FOR |
|
AGAINST |
|
ABSTAIN |
|
|
[ ] |
|
[ ] |
|
[ ] |
Proposal 8. To hold an advisory (non-binding) vote, as to
whether the stockholder votes regarding our executive compensation
should occur every three years, every two years or every
year:
[ ] 1 YEAR |
|
[ ] 2 YEARS |
|
[ ] 3 YEARS |
|
[ ] ABSTAIN |
In
his discretion, the proxy is authorized to vote upon such other
business that may properly come before the 2021 Annual
Meeting.
|
|
|
|
|
|
|
Signature
of Stockholder |
|
Date |
|
Signature
of Stockholder |
|
Date |
NOTE: |
Please
sign exactly as name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such.
If a corporation, please sign in full corporate name by President
or other authorized officer. If a partnership, please sign in
partnership name by authorized person. |
Important notice regarding the availability of proxy materials
for the Annual Meeting of Stockholders to be held on October 13,
2021: This Proxy Statement, proxy card and annual report
are available at www. infyoilandgas.com.
APPENDIX A
FORM OF SECOND CERTIFICATE OF AMENDMENT OF CERTIFICATE OF
INCORPORTION
SECOND
CERTIFICATE OF
AMENDMENT OF
CERTIFICATE
OF INCORPORATION
OF
INFINITY
ENERGY RESOURCES, INC.,
a Delaware Corporation
(Pursuant
to Section 242 of the
General
Corporation Law of the State of Delaware)
Infinity
Energy Resources, Inc. (the “Corporation”), a
corporation organized and existing under the General Corporation
Law of the State of Delaware (the “DGCL”), DOES
HEREBY CERTIFY:
The original Certificate of Incorporation of Infinity Energy
Resources, Inc. was filed with the Secretary of State of the State
of Delaware on April 29, 2005. A Corrected Instrument Certificate,
along with a Corrected Certificate of Incorporation was filed with
the Secretary of State of the State of Delaware on September 13,
2006. A Certificate of Amendment of Certificate of Incorporation
was filed with the Secretary of the State of the State of Delaware
on November 17, 2015.
I. |
|
Article
1 of the Certificate of Incorporation, as amended to date, is
stricken and is hereby amended and restated in its entirety to read
as follows: |
“The
name of the corporation is American Noble Gas, Inc. (the
“Company”).”
II. |
|
Article
4, Section 4.1(a) of the Certificate of Incorporation, as amended
to date, is stricken and is hereby amended and restated in its
entirety to read as follows: |
|
(a) |
The
total number of shares of common stock, par value $.0001 per share,
that the Company is authorized to issue is 500,000,000. |
III. |
|
Article
7, Section 7.2 of the Certificate of Incorporation, as amended to
date, is stricken and is hereby deleted in its
entirety. |
All other provisions of the Certificate of Incorporation, as
amended to date, shall remain in full force and effect.
This Second Certificate of Amendment of Certificate of
Incorporation of Infinity Energy Resources, Inc. has been duly
adopted and approved in accordance with the provisions of Section
242 of the General Corporation Law of the State of Delaware by the
directors and stockholders of the Corporation.
[Signature page follows]
IN WITNESS WHEREOF, Infinity Energy Resources, Inc. has caused this
Second Certificate of Amendment of Certificate of Incorporation to
be signed by its Chief Executive Officer this [___] day of
[______], 2021.
|
INFINITY
ENERGY RESOURCES, INC. |
|
|
|
By: |
|
|
Name: |
Stanton
E. Ross
|
|
Title: |
Chief
Executive Officer |
Appendix B
Infinity Energy Resources, Inc.
2021 Stock Option and Restricted Stock Plan
1.
Purposes.
(a)
Background. This 2021 Stock Option and Restricted Stock
Plan was adopted on August 14, 2021 by the Board of Directors,
subject to the approval of the Company’s stockholders. Options
granted under the Plan prior to the stockholders’ approval will be
effective upon approval of the stockholders as of their respective
dates of grant.
(b)
Eligible Award Recipients. The persons eligible to
receive Awards are all employees (including executive officers) and
directors of the Company or any of its affiliates, as well as
consultants, professionals and service providers who provide
services to the Company are eligible to participate in the 2021
Plan.
(c)
Available Awards. The purpose of the Plan is to provide
a means by which eligible recipients may be given an opportunity to
benefit from increases in value of the Common Stock through the
granting of the following: (i) Incentive Stock Options, (ii)
Nonqualified Stock Options, and (iii) rights to acquire restricted
stock.
(d)
General Purpose. The Company, by means of the Plan,
seeks to retain the services of the group of persons eligible to
receive Awards, to secure and retain the services of new members of
this group and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its
Affiliates.
2.
Definitions.
(a)
“Affiliate” means any entity that controls, is
controlled by, or is under common control with the
Company.
(b)
“Award” means any right granted under the Plan,
including an Option, and a right to acquire restricted Common
Stock.
(c)
“Award Agreement” means a written agreement between the
Company and a holder of an Award (other than an Option) evidencing
the terms and conditions of an individual Award grant.
(d)
“Board” means the board of directors of the
Company.
(e)
“Code” means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated
thereunder.
(f)
“Committee” means a pre-existing or newly formed
committee of members of the Board appointed by the Board in
accordance with subsection 3(c).
(g)
“Common Stock” means the shares of the Company’s common
stock par value $0.001 and other rights with respect to such
shares.
(h)
“Company” means Infinity Energy Resources, Inc., a
Delaware corporation.
(i)
“Continuous Service” means that the Participant’s
service with the Company or an Affiliate, whether as an Employee or
Director is not interrupted or terminated. Unless otherwise
provided in an Award Agreement or Option Agreement, as applicable,
the Participant’s Continuous Service shall not be deemed to have
terminated merely because of a change in the capacity in which the
Participant renders service to the Company or an Affiliate as an
Employee or Director or a change in the entity for which the
Participant renders such service, provided that there is no
interruption or termination of the Participant’s service to the
Company or an Affiliate as an Employee or Director. The Board, in
its sole discretion, may determine whether Continuous Service shall
be considered interrupted in the case of any leave of absence,
including sick leave, military leave or any other personal
leave.
(j)
“Covered Employee” means the Company’s chief executive
officer and the four (4) other highest compensated officers of the
Company for whom total compensation is required to be reported to
stockholders under the Exchange Act, as determined for purposes of
Section 162(m) of the Code.
(k)
“Director” means a member of the Board of the
Company.
(l)
“Disability” means the Participant’s inability, due to
illness, accident, injury, physical or mental incapacity or other
disability, to carry out effectively the duties and obligations to
the Company and its Affiliates performed by such person immediately
prior to such disability for a period of at least six (6) months,
as determined in the good faith judgment of the Board.
(m)
“Dollars” or “$” means United States
dollars.
(n)
“Employee” means any person employed by the Company or
an Affiliate. Service as a Director or payment of a director’s fee
by the Company or an Affiliate alone shall not be sufficient to
constitute “employment” by the Company or an Affiliate.
(o)
“Exchange Act” means the Securities Exchange Act of
1934, as amended.
(p)
“Fair Market Value” means, as of any date, the value of
the Common Stock determined as follows:
(i)
If the Common Stock is listed on any established stock exchange, or
traded on the Nasdaq Global Market, the Nasdaq Capital Market or
the OTCQB or other public marketplace, the Fair Market Value of the
Common Stock shall be the closing sales price for such stock (or
the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest
volume of trading in Common Stock if such stock is traded on more
than one such exchange or market) on the last market trading day
prior to the day of determination, as reported by such exchange or
market or such other source as the Board reasonably deems
reliable.
(ii)
In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the
Board.
(q)
“Incentive Stock Option” means an option designated as
an incentive stock option in an Option Agreement and that is
granted in accordance with the requirements of, and that conforms
to the applicable provisions of, Section 422 of the
Code.
(r)
“Independent Director” means (i) a Director who
satisfies the definition of Independent Director or similar
definition under the applicable stock exchange or Nasdaq rules and
regulations upon which the Common Stock is traded from time to time
and (ii) a Director who either (A) is not a current employee of the
Company or an “affiliated corporation” (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code),
is not a former employee of the Company or an “affiliated
corporation” receiving compensation for prior services (other than
benefits under a tax qualified pension plan), was not an officer of
the Company or an “affiliated corporation” at any time and is not
currently receiving direct or indirect remuneration from the
Company or an “affiliated corporation” for services in any capacity
other than as a Director or (B) is otherwise considered an “outside
director” for purposes of Section 162(m) of the Code.
(s)
“Nonqualified Stock Option” means an option that is not
designated in an Option Agreement as an Incentive Stock Option or
was not granted in accordance with the requirements of, and does
not conform to the applicable provisions of, Section 422 of the
Code.
(t)
“Officer” means a person who is an officer of the
Company within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.
(u)
“Option” means an Incentive Stock Option or a
Nonqualified Stock Option granted pursuant to the Plan.
(v)
“Option Agreement” means a written agreement between the
Company and an Optionholder evidencing the terms and conditions of
an individual Option grant.
(w)
“Optionholder” means a person to whom an Option is
granted pursuant to the Plan or, if applicable, such other person
who holds an outstanding Option.
(x)
“Participant” means a person to whom an Award is granted
pursuant to the Plan or, if applicable, such other person who holds
an outstanding Award.
(y)
“Plan” means this Infinity Energy Resources, Inc. 2015
Stock Option and Restricted Stock Plan.
(z)
“Rule 16b-3” means Rule 16b-3 promulgated under the
Exchange Act or any successor to Rule 16b-3, as in effect from time
to time.
(aa)
“Securities Act” means the Securities Act of 1933, as
amended.
(bb)
“Ten Percent Stockholder” means a person who owns (or is
deemed to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined voting
power of all classes of stock of the Company or any parent
corporation or any subsidiary corporation, both as defined in
Section 424 of the Code.
3.
Administration.
(a)
Administration by Board. The Board shall administer the
Plan unless and until the Board delegates administration to a
Committee, as provided in subsection 3(c). The Board may, at any
time and for any reason in its sole discretion, rescind some or all
of such delegation.
(b)
Powers of Board. The Board shall have the power, subject
to, and within the limitations of, the express provisions of the
Plan:
(i)
To determine from time to time which of the persons eligible under
the Plan shall be granted Awards; when and how each Award shall be
granted; what type or combination of types of Award shall be
granted; the provisions of each Award granted (which need not be
identical), including the time or times when a person shall be
permitted to receive Common Stock pursuant to an Award; and the
number of shares of Common Stock with respect to which an Award
shall be granted to each such person.
(ii)
To construe and interpret the Plan, Awards granted under it, Option
Agreements and Award Agreements, and to establish, amend and revoke
rules and regulations for their administration. The Board, in the
exercise of this power, may correct any defect, omission or
inconsistency in the Plan or in any Option Agreement or Award
Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.
(iii)
To amend the Plan, an Award, an Award Agreement or an Option
Agreement as provided in Section 12, provided that, the
Board shall not amend the Fair Market Value of an Award or extend
the term of an Option or Award without obtaining the approval of
the stockholders if required by the rules of any stock exchange
upon which the Common Stock is listed.
(iv)
To reprice any Options granted under the Plan by lowering the
exercise price of an Option after it is granted, canceling an
Option at a time when its exercise price exceeds the Fair Market
Value of the stock underlying the Option, in exchange for another
Option or Award, as well as any other action that is treated as a
repricing under generally accepted accounting
principles.
(v)
Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of
the Company which are not in conflict with the provisions of the
Plan.
(c)
Delegation to Committee.
(i)
General. The Board may delegate administration of the
Plan and its powers and duties thereunder to a Committee or
Committees, and the term “Committee” shall apply to any person or
persons to whom such authority has been delegated. Upon such
delegation, the Committee shall have the powers theretofore
possessed by the Board, including the power to delegate to a
subcommittee any of the administrative powers the Committee is
authorized to exercise (and references in this Plan to the Board
shall thereafter be deemed to include the Committee or
subcommittee), subject, however, to such resolutions, not
inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. In its absolute discretion, the
Board may at any time and from time to time exercise any and all
rights and duties of the Committee under this Plan, except
respecting matters under Rule 16b-3 of the Exchange Act or Section
162(m) of the Code, or any rules or regulations issued thereunder,
which are required to be determined in the sole discretion of the
Committee.
(ii)
Committee Composition. A Committee shall consist solely
of two (2) or more Independent Directors. Within the scope of its
authority, the Board or the Committee may (1) delegate to a
committee of one or more members of the Board who are not
Independent Directors the authority to grant Awards to eligible
persons who are either (a) not then Covered Employees and are not
expected to be Covered Employees at the time of recognition of
income resulting from such Award or (b) not persons with respect to
whom the Company wishes to comply with Section 162(m) of the Code,
and/or (2) delegate to a committee of one or more members of the
Board who are not Independent Directors or to the Company’s Chief
Executive Officer the authority to grant Awards to eligible persons
who are not then subject to Section 16 of the Exchange
Act.
(d)
Effect of Board’s Decision; No Liability. All
determinations, interpretations and constructions made by the Board
in good faith shall not be subject to review by any person and
shall be final, binding and conclusive on all persons. No member of
the Board or the Committee or any person to whom duties hereunder
have been delegated shall be liable for any action, interpretation
or determination made in good faith, and such persons shall be
entitled to full indemnification and reimbursement consistent with
applicable law and in the manner provided in the Company’s Articles
of Incorporation and Bylaws, as the same may be amended from time
to time, or as otherwise provided in any agreement between any such
member and the Company.
4.
Stock Subject to the
Plan.
(a)
Stock Reserve. Subject to the provisions of Section 11
relating to adjustments upon changes in Common Stock, the shares of
Common Stock that may be issued pursuant to Awards shall not exceed
in the aggregate five million (5,000,000) shares of Common
Stock.
(b)
Reversion of Stock to the Stock Reserve. If any Award
shall for any reason expire or otherwise terminate, in whole or in
part, without having been exercised in full, the shares of Common
Stock not acquired under such Award shall revert to and again
become available for issuance under the Plan.
(c)
Source of Stock. The Common Stock subject to the Plan
may be unissued stock or reacquired stock, bought on the market or
otherwise.
5.
Eligibility.
(a)
Eligibility for Specific Awards. Incentive Stock Options
may be granted only to Employees. Awards other than Incentive Stock
Options may be granted to Employees and Directors.
(b)
Ten Percent Stockholders. A Ten Percent Stockholder
shall not be granted an Incentive Stock Option unless the exercise
price of such Option is at least one hundred ten percent (110%) of
the Fair Market Value of the Common Stock at the date of grant and
the Option is not exercisable after the expiration of five (5)
years from the date of grant.
6.
Option
Provisions.
Each
Option Agreement shall be subject to the terms and conditions of
this Plan. Each Option and Option Agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem
appropriate. All Options shall be separately designated Incentive
Stock Options or Nonqualified Stock Options at the time of grant,
and, if certificates are issued, a separate certificate or
certificates will be issued for the shares of Common Stock
purchased on exercise of each type of Option. The provisions of
separate Options need not be identical.
(a)
Provisions Applicable to All Options.
(i)
Consideration. The purchase price of the shares of
Common Stock acquired pursuant to an Option shall be paid as
follows: (a) in cash or by certified or official bank check,
payable to the order of the Company, in the amount (the “Purchase
Price”) equal to the exercise price of the Option multiplied by the
number of shares plus payment of all taxes applicable upon such
exercise; (b) with shares owned by the Optionholder having a Fair
Market Value at the time the Option is exercised equal to the
Purchase Price plus payment in cash of all taxes applicable upon
such exercise, with the prior approval of the Board; (c) by
surrendering to the Company the right to acquire a number of shares
having an aggregate value such that the amount by which the Fair
Market Value of such shares exceeds the aggregate exercise price is
equal to the Purchase Price plus payment in cash of all taxes
applicable upon such exercise, with the prior approval of the
Board; (d) any combination of the foregoing; or (e) a manner
acceptable to the Board.
(ii)
Vesting Generally. An Option may (A) vest, and therefore
become exercisable, in periodic installments that may, but need
not, be equal, or (B) be fully vested at the time of grant. The
Option may be subject to such other terms and conditions on the
time or times when it may be exercised (which may be based on
performance or other criteria) as the Board may deem appropriate.
The vesting provisions, if any, of individual Options may vary. The
provisions of this subsection 6(a)(ii) are subject to any Option
Agreement provisions governing the minimum number of Common Stock
as to which an Option may be exercised.
(iii)
Termination of Continuous Service. Unless otherwise
provided in the Option Agreement, in the event an Optionholder’s
Continuous Service terminates (other than upon the Optionholder’s
death, Disability, retirement or as a result of a Change of
Control), all Options held by the Optionholder shall immediately
terminate; provided, however, that an Option
Agreement may provide that if an Optionholder’s Continuous Service
is terminated for reasons other than for cause, all vested Options
held by such person shall continue to be exercisable until the
earlier of the expiration date of such Option or ninety (90) days
after the date of such termination. All such vested Options not
exercised within the period described in the preceding sentence
shall terminate.
(iv)
Disability or Death of Optionholder. Unless otherwise
provided in the Option Agreement, in the event of an Optionholder’s
Disability or death, all unvested Options shall immediately
terminate, and all vested Options held by such person shall
continue to be exercisable for twelve months after the date of such
Disability or death. All such vested Options not exercised within
such twelve-month period shall terminate.
(v)
Retirement. Unless otherwise provided in the Option
Agreement, in the event of the Optionholder’s retirement, all
unvested Options shall automatically vest on the date of such
retirement and all Options shall be exercisable for the earlier of
twelve (12) months after such retirement date or the expiration
date of such Options. All such Options not exercised within the
period described in the preceding sentence shall
terminate.
(b)
Provisions Applicable to Incentive Stock
Options.
(i)
Term. Subject to the provisions of subsection 5(b)
regarding Ten Percent Stockholders, no Incentive Stock Option shall
be exercisable after the expiration of ten (10) years from the date
it was granted. Further, no grant of an Incentive Stock Option
shall be made under this Plan more than ten (10) years after the
date the Plan is approved by the stockholders of the
Company.
(ii)
Exercise Price of an Incentive Stock Option. Subject to
the provisions of subsection 5(b) regarding Ten Percent
Stockholders, the exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Option on the date
the Option is granted.
(iii)
Transferability of an Incentive Stock Option. An
Incentive Stock Option shall not be transferable except by will or
by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the
Optionholder.
(iv)
Incentive Stock Option $100,000 Limitation.
Notwithstanding any other provision of the Plan or an Option
Agreement, the aggregate Fair Market Value of the Common Stock with
respect to which Incentive Stock Options are exercisable for the
first time by an Optionholder in any calendar year, under the Plan
or any other option plan of the Company or its Affiliates, shall
not exceed One Hundred Thousand Dollars ($100,000). For this
purpose, the Fair Market Value of the Common Stock shall be
determined as of the time an Option is granted. The Options or
portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Nonqualified Stock
Options.
(c)
Provisions Applicable to Nonqualified Stock
Options.
(i)
Exercise Price of a Nonqualified Stock Option. The
exercise price of each Nonqualified Stock Option shall be not less
than one hundred percent (100%) of the Fair Market Value of the
Common Stock subject to the Option on the date the Option is
granted.
(ii)
Transferability of a Nonqualified Stock Option. A
Nonqualified Stock Option shall be transferable, if at all, to the
extent provided in the Option Agreement. If the Option Agreement
does not provide for transferability, then the Nonqualified Stock
Option shall not be transferable except by will or by the laws of
descent and distribution and shall be exercisable during the
lifetime of the Optionholder only by the Optionholder.
7.
RESTRICTED STOCK
AWARDS.
Each
restricted stock Award agreement shall be in such form and shall
contain such restrictions, terms and conditions, if any, as the
Board shall deem appropriate and shall be subject to the terms and
conditions of this Plan. The terms and conditions of restricted
stock Award Agreements may change from time to time, and the terms
and conditions of separate restricted stock Award Agreements need
not be identical, but each restricted stock Award Agreement shall
include (through incorporation of provisions hereof by reference in
the agreement or otherwise) the substance of each of the following
provisions:
(i)
Consideration. A restricted stock Award may be awarded
in consideration for past services actually rendered, or for future
services to be rendered, to the Company or an Affiliate for its
benefit.
(ii)
Vesting. Common Stock awarded under the restricted stock
Award Agreement may (A) be subject to a vesting schedule to be
determined by the Board or (B) be fully vested at the time of
grant.
(iii)
Termination of Participant’s Continuous Service. Unless
otherwise provided in the restricted stock Award Agreement, in the
event a Participant’s Continuous Service terminates prior to a
vesting date set forth in the restricted stock Award Agreement, any
unvested restricted stock Award shall be forfeited and
automatically transferred to and reacquired by the Company at no
cost to the Company, and neither the Participant nor his or her
heirs, executors, administrators or successors shall have any right
or interest in the restricted stock Award. Notwithstanding the
foregoing, unless otherwise provided in the restricted stock Award
agreement, in the event a Participant’s Continuous Service
terminates as a result of (A) being terminated by the Company for
reasons other than for cause, (B) death, (C) Disability, (D)
retirement, or (E) a Change of Control (subject to the provisions
of Section 11(c) hereof), then any unvested restricted stock Award
shall vest immediately upon such date. “Change of Control” shall
mean one or more persons acting individually or as a group (i)
acquires sufficient additional stock to constitute more than fifty
percent (50%) of (A) the total fair market value of all Common
Stock issued and outstanding or (B) the total voting power of all
shares of capital stock authorized to vote for the election of
directors; (ii) acquires, in a twelve (12) month period,
thirty-five percent (35%) or more of the voting power of all shares
of capital stock authorized to vote for the election of directors,
or alternatively a majority of the members of the Board is replaced
during any twelve (12) month period by directors whose appointment
was not endorsed by a majority of the members of the Board; or
(iii) acquires, during a twelve (12) month period, more than forty
percent (40%) of the total gross fair market value of all of the
Company’s assets. The foregoing shall not apply to (i) any
transaction involving any stockholder that individually or as a
group owns more than fifty percent (50%) of the outstanding Common
Stock on the date the 2021 Plan is approved by the Company’s
stockholders, until such time as such stockholder first owns less
than forty percent (40%) of the total outstanding Common Stock, or
(ii) any transaction undertaken for the purpose of reincorporating
the Company under the laws of another jurisdiction, if such
transaction does not materially affect the beneficial ownership of
the Company’s capital stock.
(iv)
Transferability. Rights to acquire Common Stock under
the restricted stock Award Agreement shall be transferable by the
Participant only upon such terms and conditions as are set forth in
the restricted stock Award Agreement, as the Board shall determine
in its discretion, so long as Common Stock awarded under the
restricted stock Award Agreement remain subject to the terms of the
restricted stock Award Agreement.
8.
Availability of
Stock.
Subject
to the restrictions set forth in Section 4(a), during the terms of
the Awards, the Company shall keep available at all times the
number of shares of Common Stock required to satisfy such
Awards.
9.
Use of Proceeds from
Stock.
Proceeds
from the sale of Common Stock pursuant to Awards shall constitute
general funds of the Company.
10.
Miscellaneous.
(a)
Exercise of Awards. Awards shall be exercisable at such
times, or upon the occurrence of such event or events as the Board
shall determine at or subsequent to grant. Awards may be exercised
in whole or in part. Common Stock purchased upon the exercise of an
Award shall be paid for in full at the time of such
purchase.
(b)
Acceleration of Exercisability and Vesting. The Board
shall have the power to accelerate the time at which an Award may
first be exercised or the time during which an Award or any part
thereof will vest in accordance with the Plan, notwithstanding the
provisions in the Award stating the time at which it may first be
exercised or the time during which it will vest.
(c)
Stockholder Rights.
(i)
Options. Unless otherwise provided in and upon the terms
and conditions in the Option Agreement, no Participant shall be
deemed to be the holder of, or to have any of the rights of a
holder with respect to, any Common Stock subject to an Option
unless and until such Participant has satisfied all requirements
for exercise of, and has exercised, the Option pursuant to its
terms.
(ii)
Restricted Stock. Unless otherwise provided in and upon
the terms and conditions in the restricted stock Award Agreement,
the Recipient will have the right to vote the Shares and to receive
any cash dividends. However, stock dividends, stock rights or
others securities issued with respect to the Shares shall subject
to the same restrictions as exist regarding the original
Shares.
(d)
No Employment or other Service Rights. Nothing in the
Plan or any instrument executed or Award granted pursuant thereto
shall confer upon any Participant any right to continue to serve
the Company or an Affiliate in the capacity in effect at the time
the Award was granted, or any other capacity, or shall affect the
right of the Company or an Affiliate to terminate with or without
notice and with or without cause (i) the employment of an Employee
or an Affiliate or (ii) the service of a Director of the Company or
an Affiliate.
(e)
Withholding Obligations. If the Company has or will have
a legal obligation to withhold the taxes related to the grant,
vesting or exercise of the Award, such Award may not be granted,
vested or exercised in whole or in part, unless such tax obligation
is first satisfied in a manner satisfactory to the Company. To the
extent provided by the terms of an Award Agreement or Option
Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition
of Common Stock under an Award by any of the following means (in
addition to the Company’s right to withhold from any compensation
paid to the Participant by the Company) or by a combination of such
means: (i) tendering a cash payment in Dollars; (ii) authorizing
the Company to withhold Common Stock from the Common Stock
otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Award, provided, however,
that no shares of Common Stock are withheld with a value exceeding
the minimum amount of tax required to be withheld by law; or (iii)
delivering to the Company owned and unencumbered Common
Stock.
(f)
Listing and Qualification of Stock. This Plan and the
grant and exercise of Awards hereunder, and the obligation of the
Company to sell and deliver Common Stock under such Awards, shall
be subject to all applicable United States federal and state laws,
rules and regulations, and any other laws applicable to the
Company, and to such approvals by any government or regulatory
agency as may be required. The Company, in its discretion, may
postpone the issuance or delivery of Common Stock upon any exercise
of an Award until completion of any stock exchange listing, or the
receipt of any required approval from any stock exchange or other
qualification of such Common Stock under any United States federal
or state law rule or regulation as the Company may consider
appropriate, and may require any individual to whom an Award is
granted, such individual’s beneficiary or legal representative, as
applicable, to make such representations and furnish such
information as the Board may consider necessary, desirable or
advisable in connection with the issuance or delivery of the Common
Stock in compliance with applicable laws, rules and
regulations.
(g)
Non-Uniform Determinations. The Board’s determinations
under this Plan (including, without limitation, determinations of
the persons to receive Awards, the form, term, provisions, amount
and timing of the grant of such Awards and of the agreements
evidencing the same) need not be uniform and may be made by it
selectively among persons who receive, or are eligible to receive,
Awards under this Plan, whether or not such persons are similarly
situated.
11.
Adjustments Upon Changes in Stock.
(a)
Capitalization Adjustments. If any change is made in the
Common Stock subject to the Plan, or subject to any Award, without
the receipt of consideration by the Company (through merger,
consolidation, reorganization, recapitalization, reincorporation,
stock dividend, dividend in property other than cash, stock split,
liquidating dividend, combination of stock, exchange of stock,
change in corporate structure or other transaction), the Plan will
be appropriately adjusted in the class(es) and maximum number of
securities subject to the Plan pursuant to subsection 4(a) and the
maximum number of securities subject to award to any person
pursuant to subsection 5(c), and the outstanding Awards will be
appropriately adjusted in the class(es) and number of securities
and price per stock of Common Stock subject to such outstanding
Awards. The Board shall make such adjustments, and its
determination shall be final, binding and conclusive. (The
conversion of any convertible securities of the Company shall not
be treated as a transaction “without receipt of consideration” by
the Company.)
(b)
Dissolution or Liquidation. In the event of a
dissolution or liquidation of the Company, then all outstanding
Awards shall terminate immediately prior to such event.
(c)
Asset Sale, Merger, Consolidation or Reverse Merger. In
the event of a Change of Control (as defined below), any unvested
Awards shall vest immediately prior to the closing of the Change of
Control, and the Board shall have the power and discretion to
provide for the Participant’s election alternatives regarding the
terms and conditions for the exercise of, or modification of, any
outstanding Awards granted hereunder, provided, however, such
alternatives shall not affect the then current exercise provisions
without such Participant’s consent. The Board may provide that
Awards granted hereunder must be exercised in connection with the
closing of such transaction, and that if not so exercised such
Awards will expire. Any such determinations by the Board may be
made generally with respect to all Participants, or may be made on
a case-by-case basis with respect to particular Participants. For
the purpose of this Plan, a “Change of Control” shall have occurred
in the event one or more persons acting individually or as a group
(i) acquires sufficient additional stock to constitute more than
fifty percent (50%) of (A) the total Fair Market Value of all
Common Stock issued and outstanding or (B) the total voting power
of all shares of capital stock authorized to vote for the election
of directors; (ii) acquires, in a twelve (12) month period,
thirty-five percent (35%) or more of the voting power of all shares
of capital stock authorized to vote for the election of directors,
or alternatively a majority of the members of the board is replaced
during any twelve (12) month period by directors whose appointment
was not endorsed by a majority of the members of the board; or
(iii) acquires, during a twelve (12) month period, more than forty
percent (40%) of the total gross fair market value of all of the
Company’s assets. Notwithstanding the foregoing, the provisions of
this Section 11(c) shall not apply to (i) any transaction involving
any stockholder that individually or as a group owns more than
fifty percent (50%) of the outstanding Common Stock on the date
this Plan is approved by the Company’s stockholders, until such
time as such stockholder first owns less than forty percent (40%)
of the total outstanding Common Stock, or (ii) any transaction
undertaken for the purpose of reincorporating the Company under the
laws of another jurisdiction, if such transaction does not
materially affect the beneficial ownership of the Company’s capital
stock.
12.
Amendment of the Plan and
Awards.
(a)
Amendment of Plan. The Board at any time, and from time
to time, may amend the Plan. However, except as provided in Section
11 relating to adjustments upon changes in Common Stock, no
amendment shall be effective unless approved by the stockholders of
the Company to the extent stockholder approval is necessary to
satisfy the requirements of Section 422 of the Code, Rule 16b-3 or
any applicable Nasdaq or securities exchange listing
requirements.
(b)
Stockholder Approval. The Board may, in its sole
discretion, submit any other amendment to the Plan for stockholder
approval, including, but not limited to, amendments to the Plan
intended to satisfy the requirements of Section 162(m) of the Code
and the regulations thereunder regarding the exclusion of
performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive
officers.
(c)
Contemplated Amendments. It is expressly contemplated
that the Board may amend the Plan in any respect the Board deems
necessary or advisable to provide eligible Employees with the
maximum benefits provided or to be provided under the provisions of
the Code and the regulations promulgated thereunder relating to
Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance
therewith.
(d)
No Impairment of Rights. Rights under any Award granted
before amendment of the Plan shall not be impaired by any amendment
of the Plan unless the Participant consents in writing.
(e)
Amendment of Awards. Subject to Section 3(b)(iii), the
Board at any time, and from time to time, may amend the terms of
any one or more Awards; provided, however, that the rights under
any Award shall not be impaired by any such amendment unless the
applicable Participant consents in writing.
13.
Termination or Suspension
of the Plan.
(a)
Plan Term. The Board may suspend or terminate the Plan
at any time. Unless sooner terminated, the Plan shall terminate on
the day before the tenth (10th) anniversary of the date the Plan is
adopted by the stockholders of the Company. No Awards may be
granted under the Plan while the Plan is suspended or after it is
terminated.
(b)
No Impairment of Rights. Suspension or termination of
the Plan shall not impair rights and obligations under any Award
granted while the Plan is in effect except with the written consent
of the Participant.
(c)
Savings Clause. This Plan is intended to comply in all
aspects with applicable laws and regulations. In case any one or
more of the provisions of this Plan shall be held invalid, illegal
or unenforceable in any respect under applicable law or regulation,
the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and
the invalid, illegal or unenforceable provision shall be deemed
null and void; however, to the extent permissible by law, any
provision which could be deemed null and void shall first be
construed, interpreted or revised retroactively to permit this Plan
to be construed in compliance with all applicable laws so as to
foster the intent of this Plan.
14.
Effective Date of
Plan.
The
Plan shall not become effective unless and until the Plan has been
approved by the stockholders of the Company, which approval shall
be within twelve (12) months before or after the date the Plan is
adopted by the Board. No Awards may be grated before the effective
date and no further Awards may be granted under the 2021 Plan after
such date of termination. In addition, in the event that the
stockholders of the Company do approve the 2021 Plan within twelve
(12) months of such effective date, the 2021 Plan shall become void
and of no force or effect. The Board may terminate, suspend or
amend the Plan at any time without stockholder approval except to
the extent that stockholder approval is required to satisfy
applicable requirements imposed by (a) Rule 16b-3 under the
Exchange or any successor rule or regulation; or (b) the rules of
any exchange on or through which the shares of Common Stock are
then listed or traded. If the 2021 Plan is terminated, whether by
automatic termination on the day before the tenth (10th)
anniversary, or for any other reason provided under the 2021 Plan,
notwithstanding such termination, all Awards granted prior to such
termination shall continue until they are terminated by their
respective terms.
15.
Choice of
Law.
The
law of the state of Nevada shall govern all questions concerning
the construction, validity and interpretation of this Plan, without
regard to such state’s conflict of laws rules.
(The
Plan was adopted by the Board of Directors on August 14,
2021).
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