EXHIBIT 10.63

 

EXCHANGE AGREEMENT

 

THIS EXCHANGE AGREEMENT (the “Agreement”) is dated this 23rd day of May, 2019,
by and among Infinity Energy Resources, Inc., a Delaware corporation (the
“Company”) and Hudson Bay Master Fund Ltd., a company organized under the laws
of the Cayman Islands (the “Holder”).

 

WHEREAS, the Holder beneficially owns and holds the securities of the Company as
set forth on Exhibit A hereto (the “Original Securities”) (capitalized terms not
defined herein shall have the meaning as set forth in the Original Securities);

 

WHEREAS, the Holder desires to exchange (the “Exchange”) the Original Securities
for (x) 770,485 shares (the “Exchange Shares”) of Common Stock, par value
$0.0001 (the “Common Stock”) and one or more rights (each a “Right”, and
together with the Exchange Shares, the “Exchange Primary Securities”) to acquire
a New Warrant (as defined in the Side Letter (as defined below)) and/or such
aggregate number of shares of Common Stock (the “Right Shares”, and together
with the New Warrant and the Exchange Primary Securities, the “Exchange
Securities”) as determined by the side letter attached hereto as Exhibit B (the
“Side Letter”), and the Company desires to convey the Exchange Primary
Securities in exchange for the Original Securities and, all on the terms and
conditions set forth in this Agreement in reliance on the exemption from
registration provided by Section 3(a)(9) of the Securities Act of 1933, as
amended (the “Securities Act”); and

 

WHEREAS, upon the consummation of the transactions contemplated hereby, the
Holder shall no longer own any Original Securities, and the Company shall cancel
the certificate(s) and other physical documents evidencing the ownership of the
Original Securities.

 

NOW, THEREFORE, in consideration of the terms and conditions contained herein,
and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the Company and the Holder hereby agree as follows:

 

Section 1. Exchange. Subject to and upon the terms and conditions set forth in
this Agreement, the Holder agrees to surrender to the Company the Original
Securities and, in exchange therefor, the Company shall convey to the Holder the
Exchange Primary Securities.

 

1.1 Closing. On the Closing Date (as defined below), the Company will convey and
deliver (or cause to be conveyed and delivered) (a) the Exchange Shares to the
Holder by deposit/withdrawal at custodian in accordance with the instructions
attached hereto as Schedule I, which Exchange Shares shall be issued without
restricted legend and shall be freely tradable by the Holder and (b) cause to be
delivered to the Holder (or its designee) a certificate evidencing the Rights at
the address for delivery set forth on the signature page attached hereto and the
Holder will surrender to the Company the Original Securities, without restricted
legends, for cancellation. Notwithstanding the foregoing, the Company and the
Holder acknowledge and agree that a certificate evidencing the Senior Secured
Convertible Note, dated May 7, 2015, in the original principal amount of
$2,197,231 (the “Note”), which is identified on Exhibit A hereto as part of the
Original Securities, was never certificated by the Company to the Holder, but
has been held in book-entry form. Therefore, the Holder is not required to
deliver a certificate evidencing the Note as a condition to the closing of the
Exchange. The closing of the Exchange shall occur as on the date hereof, or as
soon thereafter as the parties may mutually agree in writing (the “Closing
Date”), subject to the provisions of Section 4 and Section 5 herein.

 

 

 

 

1.2 Section 3(a)(9). Assuming the accuracy of the representations and warranties
of each of the Company and the Holder set forth in Sections 2 and 3 of this
Agreement, the parties acknowledge and agree that the purpose of such
representations and warranties is, among other things, to ensure that the
Exchange qualifies as an exchange of securities under Section 3(a)(9) of the
Securities Act.

 

1.3 Mutual Releases. On the Closing Date, (a) the Holder shall duly execute and
deliver to the Company a release in the form attached hereto as Exhibit C and
(b) the Company shall duly execute and deliver to the Holder a release in the
form attached hereto as Exhibit D (collectively, the “Releases”).

 

Section 2. Representations and Warranties of the Company. The Company represents
and warrants to the Holder that:

 

2.1 Organization and Qualification. Except as set forth on Schedule 2.1, the
Company is an entity duly incorporated or otherwise organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation or
organization, with the requisite power and authority to own and use its
properties and assets and to carry on its business as currently conducted.
Neither the Company, nor any subsidiary is in violation or default of any of the
provisions of its respective certificate or certificates of incorporation,
bylaws or other organizational or charter documents. Each of the Company and its
subsidiaries is duly qualified to conduct business and is in good standing as a
foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in a
material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company, taken as a whole
(a “Material Adverse Effect”).

 

2.2 Authorization; Enforcement. The Company has the requisite corporate power
and authority to enter into and to consummate the transactions contemplated by
this Agreement, the Side Letter, the Releases, the New Warrant and the Rights
(collectively, the “Exchange Documents”) and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of this
Agreement and each of the other Exchange Documents by the Company and the
consummation by it of the transactions contemplated hereby and thereby have been
duly authorized by all necessary action on the part of the Company and no
further action is required by the Company, the Board of Directors or the
Company’s stockholders in connection herewith or therewith. This Agreement and
each other Exchange Document to which it is a party has been (or upon delivery
will have been) duly executed by the Company and, when delivered in accordance
with the terms hereof and thereof, will constitute the valid and binding
obligation of the Company enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors’ rights generally; (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies; and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.

 

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2.3 Issuance of Exchange Securities. The issuance of the Exchange Primary
Securities by the Company is duly authorized and, upon conveyance in accordance
with the terms hereof, the Exchange Primary Securities shall be validly issued,
fully paid and non-assessable and free from all free and clear of any mortgage,
lien, pledge, charge, security interest, encumbrance, title retention agreement,
option, rights, proxies, equity or other adverse claim thereto (collectively,
“Liens”). The Exchange Shares shall not bear any restrictive legend and shall be
freely tradeable by the Holder pursuant to and in accordance with Rule 144. Upon
issuance in accordance herewith or pursuant to the Rights, as applicable, the
Rights Shares, when issued, will be validly issued, fully paid and nonassessable
and free from all Liens with respect to the issue thereof, with the holders
being entitled to all rights accorded to a holder of Common Stock. Upon issuance
in accordance herewith or pursuant to the Rights, as applicable, the New
Warrant, when issued, will be validly issued, fully paid and nonassessable and
free from all Liens with respect to the issue thereof. Upon issuance pursuant to
the New Warrant and full payment of the exercise price therefor, whether in
cash, or if permitted by the terms of such New Warrant, in a cashless exercise
in accordance therewith, the New Warrant Shares (as defined in the Side Letter),
when issued, will be validly issued, fully paid and nonassessable and free from
all Liens with respect to the issue thereof, with the holders being entitled to
all rights accorded to a holder of Common Stock. Upon issuance and conveyance in
accordance herewith, the conveyance by the Company of the Exchange Primary
Securities (and upon exercise of the Rights, the Rights Shares and/or the New
Warrant, as applicable, and upon exercise of the New Warrant, the New Warrant
Shares) is exempt from the registration requirements of the Securities Act under
Section 3(a)(9) of the Securities Act.

 

2.4 No Conflicts. The execution, delivery and performance by the Company of this
Agreement and the other Exchange Documents to which it is a party, the issuance
of the Exchange Primary Securities (and upon exercise of the Rights, the Rights
Shares and/or the New Warrant, as applicable, and upon exercise of the New
Warrant, the New Warrant Shares) and the consummation by it of the transactions
contemplated hereby and thereby do not and will not conflict with or violate any
provision of the Company’s certificate of incorporation, bylaws or other
organizational or charter documents.

 

2.5 Acknowledgment Regarding the Exchange. The Company acknowledges and agrees
that the Holder is acting solely in the capacity of an arm’s length third party
with respect to this Agreement and the transactions contemplated hereby. The
Company further acknowledges the Holder is not acting as a financial advisor or
fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby, and any advice given by the
Holder or any of its representatives or agents in connection with this Agreement
is merely incidental to the Exchange.

 

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2.6 No Commission; No Other Consideration. The Company has not paid or given,
and has not agreed to pay or give, directly or indirectly, any commission or
other remuneration for soliciting the Exchange. The Exchange Primary Securities
(and upon exercise of the Rights, the Rights Shares and/or the New Warrant, as
applicable, and upon exercise of the New Warrant, the New Warrant Shares) are
being conveyed exclusively for the exchange of the Original Securities and no
other consideration has or will be paid for the Exchange Securities.

 

2.7 3(a)(9) Representation. The Company has not, nor has any person acting on
its behalf, directly or indirectly made any offers or sales of any security or
solicited any offers to buy any security under circumstances that would cause
the Exchange and the issuance of the Exchange Primary Securities (and upon
exercise of the Rights, the Rights Shares and/or the New Warrant, as applicable,
and upon exercise of the New Warrant, the New Warrant Shares) pursuant to this
Agreement to be integrated with prior offerings by the Company for purposes of
the Securities Act which would prevent the Company from delivering the Exchange
Primary Securities (and upon exercise of the Rights, the Rights Shares and/or
the New Warrant, as applicable, and upon exercise of the New Warrant, the New
Warrant Shares) to the Holder pursuant to Section 3(a)(9) of the Securities Act,
nor will the Company take any action or steps that would cause the Exchange,
issuance and delivery of the Exchange Primary Securities (and upon exercise of
the Rights, the Rights Shares and/or the New Warrant, as applicable, and upon
exercise of the New Warrant, the New Warrant Shares) to be integrated with other
offerings to the effect that the delivery of the Exchange Primary Securities
(and upon exercise of the Rights, the Rights Shares and/or the New Warrant, as
applicable, and upon exercise of the New Warrant, the New Warrant Shares) to the
Holder would be seen not to be exempt pursuant to Section 3(a)(9) of the
Securities Act.

 

2.8 No Third-Party Advisors. Other than legal counsel, the Company has not
engaged any third parties to assist in the solicitation with respect to the
Exchange.

 

2.9 SEC Reports; Financial Statements. The Company has filed all reports,
schedules, forms, statements and other documents required to be filed by the
Company under the Securities Act and the Exchange Act of 1934, as amended (the
“Exchange Act”), including pursuant to Section 13(a) or 15(d) of the Exchange
Act, for the two years preceding the date hereof (or such shorter period as the
Company was required by law or regulation to file such material) (the foregoing
materials, including the exhibits thereto and documents incorporated by
reference therein, being collectively referred to herein as the “SEC Reports”)
on a timely basis or has received a valid extension of such time of filing and
has filed any such SEC Reports prior to the expiration of any such extension.

 

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2.10 [Reserved.]

 

2.11 Filings, Consents and Approvals. Other than as set forth on Schedule 2.11,
or any filings required to be made with the SEC or any state securities
commission, in connection with the transactions contemplated under this
Agreement, the Company is not required to obtain any consent, waiver,
authorization or order of, give any notice to, or make any filing or
registration with, any court or other federal, state, local or other
governmental authority or other Person in connection with the execution,
delivery and performance by the Company of the Side Letter.

 

2.12 Capitalization. The capitalization of the Company is as set forth in the
SEC Reports. No Person has any right of first refusal, preemptive right, right
of participation, or any similar right to participate in the transactions
contemplated by the Exchange Documents. Except as set forth on Schedule 2.12,
there are no outstanding options, warrants, scrip rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities, rights or
obligations convertible into or exercisable or exchangeable for, or giving any
Person any right to subscribe for or acquire any shares of Common Stock, or
contracts, commitments, understandings or arrangements by which the Company or
any Subsidiary is or may become bound to issue additional shares of Common
Stock, Options or Convertible Securities. The issuance of the Exchange
Securities will not obligate the Company to issue shares of Common Stock or
other securities to any Person (other than the Purchasers) and will not result
in a right of any holder of Company securities to adjust the exercise,
conversion, exchange or reset price under any of such securities. All of the
outstanding shares of capital stock of the Company are duly authorized, validly
issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was
issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. No further approval or authorization of any stockholder,
the Board of Directors or others is required for the issuance of the Exchange
Securities. There are no stockholders’ agreements or other similar agreements
with respect to the Company’s capital stock to which the Company is a party or,
to the knowledge of the Company, between or among any of the Company’s
stockholders.

 

2.13 [Reserved].

 

2.14 DTC Eligibility. The Company, through the Company’s transfer agent (the
“Transfer Agent”), currently participates in the DTC Fast Automated Securities
Transfer (FAST) Program and the Common Stock can be transferred electronically
to third parties via the DTC Fast Automated Securities Transfer (FAST) Program.

 

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2.15 Material Changes; Undisclosed Events, Liabilities or Developments. Since
the date of the latest audited financial statements included within the SEC
Reports, except as specifically disclosed in a subsequent SEC Report filed prior
to the date hereof: (i) there has been no event, occurrence or development that
has had or that could reasonably be expected to result in a Material Adverse
Effect, (ii) the Company has not incurred any liabilities (contingent or
otherwise) other than (A) trade payables and accrued expenses incurred in the
ordinary course of business consistent with past practice and (B) liabilities
not required to be reflected in the Company’s financial statements pursuant to
GAAP or disclosed in filings made with the SEC, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any
dividend or distribution of cash or other property to its stockholders or
purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to
any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the SEC any request for
confidential treatment of information. Except for the issuance of the Exchange
Primary Securities contemplated by this Agreement, no event, liability, fact,
circumstance, occurrence or development has occurred or exists or is reasonably
expected to occur or exist with respect to the Company or its subsidiaries or
their respective businesses, properties, operations, assets or financial
condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed
made that has not been publicly disclosed at least 1 Trading Day prior to the
date that this representation is made, which for purposes of this Agreement,
Trading Day shall refer to any day on which The NASDAQ Stock Market LLC is open
for trading business.

 

2.16 Litigation. Other than as set forth in the SEC Reports, there is no action,
suit, inquiry, notice of violation, proceeding or investigation pending or, to
the knowledge of the Company, threatened against or affecting the Company or any
of its properties before or by any court, arbitrator, governmental or
administrative agency or regulatory authority (federal, state, county, local or
foreign) (collectively, an “Action”) which (i) adversely affects or challenges
the legality, validity or enforceability of any of the Exchange Documents or the
Exchange Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect.

 

2.17 Compliance. Except as set forth in the SEC Reports, neither the Company nor
any Subsidiary: (i) is in material default under or in material violation of
(and no event has occurred that has not been waived that, with notice or lapse
of time or both, would result in a material default by the Company or any
Subsidiary under), nor has the Company or any Subsidiary received notice of a
claim that it is in material default under or that it is in material violation
of, any indenture, loan or credit agreement or any other agreement or instrument
set forth in the Company’s most recent Annual Report on Form 10-K to which it is
a party or by which it or any of its properties is bound (whether or not such
default or violation has been waived), (ii) is in material violation of any
judgment, decree or order of any court, arbitrator or other governmental
authority or (iii) to its knowledge, is or has been in violation of any statute,
rule, ordinance or regulation of any governmental authority, including without
limitation all foreign, federal, state and local laws relating to environmental
protection, occupational health and safety, product quality and safety and
employment and labor matters, except in each case as could not have or
reasonably be expected to result in a Material Adverse Effect.

 

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2.18 Regulatory Permits. The Company and the Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their
respective businesses as described in the SEC Reports, except where the failure
to possess such permits could not reasonably be expected to result in a Material
Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary
has received any notice of proceedings relating to the revocation or
modification of any Material Permit.

 

2.19 Transactions with Affiliates and Employees. Except as set forth in the SEC
Reports, none of the officers or directors of the Company or any Subsidiary and,
to the knowledge of the Company, none of the employees of the Company or any
Subsidiary is presently a party to any transaction with the Company or any
Subsidiary (other than for services as employees, officers and directors),
including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or personal
property to or from providing for the borrowing of money from or lending of
money to, or otherwise requiring payments to or from any officer, director or
such employee or, to the knowledge of the Company, any entity in which any
officer, director, or any such employee has a substantial interest or is an
officer, director, trustee, stockholder, member or partner, in each case in
excess of $120,000 other than for: (i) payment of salary or consulting fees for
services rendered, (ii) reimbursement for expenses incurred on behalf of the
Company and (iii) other employee benefits, including stock option agreements
under any stock option plan of the Company.

 

2.20 Certain Fees. No brokerage or finder’s fees or commissions are or will be
payable by the Company or any Subsidiaries to any broker, financial advisor or
consultant, finder, placement agent, investment banker, bank or other Person
with respect to the transactions contemplated by the Exchange Documents.

 

2.21 No Integrated Offering. Assuming the accuracy of the Holder’s
representations and warranties set forth in Section 3, neither the Company, nor
any of its Affiliates, nor any Person acting on their behalf has, directly or
indirectly, made any offers or sales of any security or solicited any offers to
buy any security, under circumstances that would cause the Exchange to be
integrated with prior offerings by the Company for purposes of (i) the
Securities Act which would require the registration of any such securities under
the Securities Act, or (ii) any applicable shareholder approval provisions of
any Trading Market on which any of the securities of the Company are listed or
designated.

 

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2.22 Acknowledgment Regarding Holder’s Exchange of the Original Securities. To
the knowledge of the Company the Holder is acting solely in the capacity of an
arm’s length party with respect to the Exchange Documents and the transactions
contemplated thereby.

 

2.23 Office of Foreign Assets Control. Neither the Company nor any Subsidiary
nor, to the Company’s knowledge, any director, officer, agent, employee or
affiliate of the Company or any Subsidiary is currently subject to any U.S.
sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department (“OFAC”).

 

Section 3. Representations and Warranties of the Holder. The Holder represents
and warrants to the Company that:

 

3.1 Ownership of the Original Securities. The Holder is the legal and beneficial
owner of the Original Securities. The Holder paid for the Original Securities
and has continuously held the Original Securities since its purchase. The Holder
owns the Original Securities outright and free and clear of any options,
contracts, agreements, liens, security interests, or other encumbrances.

 

3.2 No Public Sale or Distribution. The Holder is acquiring the Exchange
Securities in the ordinary course of business for its own account and not with a
view toward, or for resale in connection with, the public sale or distribution
thereof; provided, however, that by making the representations herein, the
Holder does not agree to hold any of the Exchange Securities, for any minimum or
other specific term and reserves the right to dispose of the Exchange Securities
at any time in accordance with an exemption from the registration requirements
of the Securities Act and applicable state securities laws. Except as
contemplated herein, the Holder does not presently have any agreement or
understanding, directly or indirectly, with any person to distribute, or
transfer any interest or grant participation rights in, the Original Securities
or the Exchange Securities.

 

3.3 Accredited Investor and Affiliate Status. The Holder is an “accredited
investor” as that term is defined in Rule 501 of Regulation D under the
Securities Act. The Holder is not, and has not been, for a period of at least
three months prior to the date of this Agreement (a) an officer or director of
the Company, (b) an “affiliate” of the Company (as defined in Rule 144) (an
“Affiliate”) or (c) a “beneficial owner” of more than ten percent (10%) of the
common stock (as defined for purposes of Rule 13d-3 of the Exchange Act).

 

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3.4 Reliance on Exemptions. The Holder understands that the Exchange is being
made in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying
in part upon the truth and accuracy of, and the Holder’s compliance with, the
representations, warranties, agreements, acknowledgments and understandings of
the Holder set forth herein in order to determine the availability of such
exemptions and the eligibility of the Holder to complete the Exchange and to
acquire the Exchange Primary Securities (and upon exercise of the Rights, the
Rights Shares and/or the New Warrant, as applicable, and upon exercise of the
New Warrant, the New Warrant Shares).

 

3.5 Information. The Holder has been furnished with all materials relating to
the business, finances and operations of the Company and materials relating to
the Exchange which have been requested by the Holder. The Holder has been
afforded the opportunity to ask questions of the Company. Neither such inquiries
nor any other due diligence investigations conducted by the Holder or its
representatives shall modify, amend or affect the Holder’s right to rely on the
Company’s representations and warranties contained herein. The Holder
acknowledges that all of the documents filed by the Company with the SEC under
Sections 13(a), 14(a) or 15(d) of the Exchange Act that have been posted on the
SEC’s EDGAR site are available to the Holder, and the Holder has not relied on
any statement of the Company not contained in such documents in connection with
the Holder’s decision to enter into this Agreement and the Exchange.

 

3.6 Risk. The Holder understands that its investment in the Exchange Securities
involves a high degree of risk. The Holder is able to bear the risk of an
investment in the Exchange Securities including, without limitation, the risk of
total loss of its investment. The Holder has sought such accounting, legal and
tax advice as it has considered necessary to make an informed investment
decision with respect to the Exchange.

 

3.7 No Governmental Review. The Holder understands that no United States federal
or state agency or any other government or governmental agency has passed on or
made any recommendation or endorsement in connection with the Exchange or the
fairness or suitability of the investment in the Exchange Securities nor have
such authorities passed upon or endorsed the merits of the Exchange Securities.

 

3.8 Organization; Authorization. The Holder is duly organized, validly existing
and in good standing under the laws of its state of formation and has the
requisite organizational power and authority to enter into and perform its
obligations under this Agreement.

 

3.9 Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Holder and shall constitute the legal,
valid and binding obligations of the Holder enforceable against the Holder in
accordance with its terms. The execution, delivery and performance of this
Agreement by the Holder and the consummation by the Holder of the transactions
contemplated hereby (including, without limitation, the irrevocable surrender of
the Original Securities) will not result in a violation of the organizational
documents of the Holder.

 

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3.10 Prior Investment Experience. The Holder acknowledges that it has prior
investment experience, including investment in securities of the type being
exchanged, including the Original Securities and the Exchange Securities, and
has read all of the documents furnished or made available by the Company to it
and is able to evaluate the merits and risks of such an investment on its
behalf, and that it recognizes the highly speculative nature of this investment.

 

3.11 Tax Consequences. The Holder acknowledges that the Company has made no
representation regarding the potential or actual tax consequences for the Holder
which will result from entering into the Agreement and from consummation of the
Exchange. The Holder acknowledges that it bears complete responsibility for
obtaining adequate tax advice regarding the Agreement and the Exchange.

 

3.12 No Registration, Review or Approval. The Holder acknowledges, understands
and agrees that the Exchange Primary Securities (and upon exercise of the
Rights, the Rights Shares and/or the New Warrant, as applicable, and upon
exercise of the New Warrant, the New Warrant Shares) are being exchanged
hereunder pursuant to an exchange offer exemption under Section 3(a)(9) of the
Securities Act.

 

Section 4. Conditions Precedent to Obligations of the Company. The obligation of
the Company to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of each of the following conditions, provided that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion by providing the Holder with prior
written notice thereof:

 

4.1 Delivery. The Holder shall have delivered to the Company the Original
Securities.

 

4.2 No Prohibition. No order of any court, arbitrator, or governmental or
regulatory authority shall be in effect which purports to enjoin or restrain any
of the transactions contemplated by this Agreement; and

 

4.3 Representations. The accuracy in all material respects when made and on the
Closing Date of the representations and warranties of the Holder contained
herein (unless as of a specific date therein).

 

Section 5. Conditions Precedent to Obligations of the Holder. The obligation of
the Holder to consummate the transactions contemplated by this Agreement is
subject to the satisfaction of each of the following conditions, provided that
these conditions are for the Holder’s sole benefit and may be waived by the
Holder at any time in its sole discretion by providing the Company with prior
written notice thereof:

 

5.1 No Prohibition. No order of any court, arbitrator, or governmental or
regulatory authority shall be in effect which purports to enjoin or restrain any
of the transactions contemplated by this Agreement;

 

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5.2 Representations. The representations and warranties of the Company (i) shall
be true and correct in all material respects when made and on the Closing Date
(unless as of a specific date therein) for such representations and warranties
contained herein that are not qualified by “materiality” or “Material Adverse
Effect” and (ii) shall be true and correct when made and on the Closing Date
(unless as of specific date therein) for such representations and warranties
contained herein that are qualified by “materiality” or “Material Adverse
Effect”;

 

5.3 All Obligations. All obligations, covenants and agreements of the Company
required to be performed at or prior to the Closing Date shall have been
performed; and

 

5.3 No Suspension. From the date hereof to the Closing Date, trading in the
Common Stock shall not have been suspended by the SEC or any Trading Market and,
at any time prior to the Closing Date, trading in securities generally as
reported by Bloomberg L.P. shall not have been suspended or limited, or minimum
prices shall not have been established on securities whose trades are reported
by such service, or on any trading market, nor shall a banking moratorium have
been declared either by the United States or New York State authorities nor
shall there have occurred any material outbreak or escalation of hostilities or
other national or international calamity of such magnitude in its effect on, or
any material adverse change in, any financial market which, in each case, in the
reasonable judgment of the Holder makes it impracticable or inadvisable to
consummate the Exchange and accept the Exchange Primary Securities and the
Rights at the closing.

 

Section 6. Other Agreements between the Parties.

 

6.1 Integration. The Company shall not sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any security (as defined in Section 2
of the Securities Act) that would be integrated with the Exchange of the
Original Securities in a manner that would require the registration under the
Securities Act of the sale of the Exchange Securities or that would be
integrated with the offer of the Exchange Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

 

6.2 Replacement of Securities. If any certificate or instrument evidencing any
of the Exchange Securities is mutilated, lost, stolen or destroyed, the Company
shall convey or cause to be conveyed in exchange and substitution for and upon
cancellation thereof (in the case of mutilation), or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence
reasonably satisfactory to the Company of such loss, theft or destruction. The
applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity)
associated with the issuance of such replacement securities.

 

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Section 7. Right to Issue Shares.

 

7.1 General. In the Exchange, the Company shall issue the Holder the Rights to
receive the Rights Shares (or, if applicable the New Warrant (as defined in the
Side Letter), which Rights shall have such terms and conditions as set forth in
this Section 7 (or, if exercisable into the New Warrant (excluding such portion
of this Section 7 (including Section 7.8 hereof), which shall be reflected in
the terms of the New Warrant), in accordance with this Section 7, mutatis
mutandis). The Company and the Holder hereby agree that no additional
consideration is payable in connection with the issuance of the Rights or the
exercise of the Rights.

 

7.2 Exercise of Right of Issuance of Shares. Subject to the terms hereof, the
exercise of the Rights may be made, in whole or in part, at any time or times on
or after the date hereof by delivery to the Company (or such other office or
agency of the Company as it may designate by notice in writing to the registered
Holder at the address of the Holder appearing on the books of the Company) of a
duly executed PDF copy of the Notice of Issuance Form annexed hereto as Exhibit
E (each, a “Notice of Issuance”, and the corresponding date thereof, the
“Exercise Date”). Partial exercises of the Rights resulting in issuances of a
portion of the total number of Rights Shares available thereunder shall have the
effect of lowering the outstanding number of Rights Shares purchasable
thereunder in an amount equal to the applicable number of Rights Shares issued.
The Holder and the Company shall maintain records showing the number of Rights
Shares issued and the date of such issuances. The Company shall deliver any
objection to any Notice of Issuance Form within one (1) Trading Day of receipt
of such notice. The Holder acknowledges and agrees that, by reason of the
provisions of this paragraph, following each exercise of the Rights issued
hereunder and the issuance of a portion of the Rights Shares pursuant thereto,
the number of Rights Shares available for issuance pursuant to the Rights issued
hereunder at any given time may be less than the amount stated in the recitals
hereof.

 

7.3 Delivery of Rights Shares. The Rights Shares issued hereunder shall be
transmitted by the Transfer Agent to the Holder by crediting the account of the
Holder’s prime broker with The Depository Trust Company through its
Deposit/Withdrawal at Custodian system (“DWAC”) if the Company is then a
participant in such system and either (A) there is an effective registration
statement permitting the issuance of the Rights Shares to or resale of the
Rights Shares by the Holder or (B) the Rights Shares are eligible for resale by
the Holder without volume or manner-of-sale limitations pursuant to Rule 144,
and otherwise by physical delivery to the address specified by the Holder in the
Notice of Issuance by the date that is two (2) Trading Days after the delivery
to the Company of the Notice of Issuance (such date, the “Share Delivery
Deadline”). The Rights Shares shall be deemed to have been issued, and Holder or
any other person so designated to be named therein shall be deemed to have
become the holder of record of such shares for all purposes, as of the date the
Rights have been exercised.

 

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7.4 Charges, Taxes and Expenses. Issuance of Rights Shares shall be made without
charge to the Holder for any issue or transfer tax or other incidental expense
in respect of the issuance of such certificate, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder. The Company shall pay all Transfer Agent fees required for
same-day processing of any Notice of Issuance.

 

7.5 Authorized Shares. The Company covenants that, during the period the Rights
are outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Rights Shares
upon the exercise of the Rights and, if applicable, the New Warrant Share
issuable upon exercise of the New Warrants. The Company further covenants that
its issuance of the Rights shall constitute full authority to its officers who
are charged with the duty of executing stock certificates to execute and issue
the necessary certificates for the Rights Shares upon the due exercise of the
Rights and the New Warrant Shares issuable upon exercise of the New Warrants.
The Company will take all such reasonable action as may be necessary to assure
that such Rights Shares and New Warrant Shares, as applicable, may be issued as
provided herein without violation of any applicable law or regulation, or of any
requirements of the Principal Market upon which the Common Stock may be listed.
The Company covenants that all Rights Shares which may be issued upon the
exercise of the Rights and all New Warrant Shares issuable upon exercise of the
New Warrants, as applicable, represented by this Agreement, the Rights, and or
the New Warrants, as applicable, will, upon exercise of the Rights and the New
Warrants, respectively, be duly authorized, validly issued, fully paid and
non-assessable and free from all taxes, Liens and charges created by the Company
in respect of the issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).

 

7.6 Impairment. Except and to the extent as waived or consented to by the
Holder, the Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms of this Agreement, but will at all times in
good faith assist in the carrying out of all such terms and in the taking of all
such actions as may be necessary or appropriate to protect the rights of the
Holder as set forth in this Agreement against impairment. Without limiting the
generality of the foregoing, the Company will (i) not increase the par value of
any Rights Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as
may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable Rights Shares upon the exercise of
the Rights and (iii) use reasonable best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof, as may be, necessary to enable the Company to perform its
obligations under this Agreement.

 

7.7 Authorizations. Before taking any action which would result in an adjustment
in the number of Rights Shares for which the Rights provides for, the Company
shall obtain all such authorizations or exemptions thereof, or consents thereto,
as may be necessary from any public regulatory body or bodies having
jurisdiction thereof.

 

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7.8 Limitations on Exercise. The Company shall not effect the exercise of any
Rights, and the Holder shall not have the right to exercise any portion of any
Rights pursuant to the terms and conditions of this Agreement and any such
exercise shall be null and void and treated as if never made, to the extent that
after giving effect to such exercise, the Holder together with the other
Attribution Parties (as defined below) collectively would beneficially own in
excess of 9.99% (the “Beneficial Ownership Limitation”) of the shares of Common
Stock outstanding immediately after giving effect to such exercise. For purposes
of the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by the Holder and the other Attribution Parties shall include
the number of shares of Common Stock held by the Holder and all other
Attribution Parties plus the number of shares of Common Stock issuable upon
exercise of the Rights issued hereunder with respect to which the determination
of such sentence is being made, but shall exclude shares of Common Stock which
would be issuable upon (A) exercise of the remaining, nonexercised portion of
the Rights beneficially owned by the Holder or any of the other Attribution
Parties and (B) exercise or conversion of the unexercised or nonconverted
portion of any other securities of the Company (including, without limitation,
any convertible notes or convertible preferred stock or warrants) beneficially
owned by the Holder or any other Attribution Party subject to a limitation on
conversion or exercise analogous to the limitation contained in this Section
7.8. For purposes of this Section 7.8 beneficial ownership shall be calculated
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended (the “1934 Act”). For purposes of determining the number of outstanding
shares of Common Stock the Holder may acquire upon the exercise of the Rights
without exceeding the Beneficial Ownership Limitation, the Holder may rely on
the number of outstanding shares of Common Stock as reflected in (x) the
Company’s most recent Annual Report on Form 10-K, Quarterly Report on Form 10-Q,
Current Report on Form 8-K or other public filing with the SEC, as the case may
be, (y) a more recent public announcement by the Company or (z) any other
written notice by the Company or the Transfer Agent, if any, setting forth the
number of shares of Common Stock outstanding (the “Reported Outstanding Share
Number”). If the Company receives a Notice of Issuance from the Holder at a time
when the actual number of outstanding shares of Common Stock is less than the
Reported Outstanding Share Number, the Company shall notify the Holder in
writing of the number of shares of Common Stock then outstanding and, to the
extent that such Notice of Issuance would otherwise cause the Holder’s
beneficial ownership, as determined pursuant to this Section 7.8, to exceed the
Beneficial Ownership Limitation, the Holder must notify the Company of a reduced
number of shares of Common Stock to be purchased pursuant to such Notice of
Issuance. For any reason at any time, upon the written or oral request of the
Holder, the Company shall within one (1) Business Day confirm orally and in
writing or by electronic mail to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of
securities of the Company, including the Rights, by the Holder and any other
Attribution Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of shares of Common Stock to
the Holder upon exercise of the Rights results in the Holder and the other
Attribution Parties being deemed to beneficially own, in the aggregate, more
than the Beneficial Ownership Limitation of the number of outstanding shares of
Common Stock (as determined under Section 13(d) of the 1934 Act), the number of
shares so issued by which the Holder’s and the other Attribution Parties’
aggregate beneficial ownership exceeds the Beneficial Ownership Limitation (the
“Excess Shares”) shall be deemed null and void and shall be cancelled ab initio,
and the Holder shall not have the power to vote or to transfer the Excess
Shares. Upon delivery of a written notice to the Company, the Holder may from
time to time increase (with such increase not effective until the sixty-first
(61st) day after delivery of such notice) or decrease the Beneficial Ownership
Limitation to any other percentage not in excess of 9.99% as specified in such
notice; provided that (i) any such increase in the Beneficial Ownership
Limitation will not be effective until the sixty-first (61st) day after such
notice is delivered to the Company and (ii) any such increase or decrease will
apply only to the Holder and the other Attribution Parties and not to any other
holder of Rights that is not an Attribution Party of the Holder. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms of the Rights
hereunder in excess of the Beneficial Ownership Limitation shall not be deemed
to be beneficially owned by the Holder for any purpose including for purposes of
Section 13(d) or Rule 16a-1(a)(1) of the 1934 Act. No prior inability to
exercise any Rights pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. The provisions of this paragraph shall be
construed and implemented in a manner otherwise than in strict conformity with
the terms of this Section 7.8 to the extent necessary to correct this paragraph
(or any portion of this paragraph) which may be defective or inconsistent with
the intended beneficial ownership limitation contained in this Section 7.8 or to
make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not be waived
and shall apply to a successor holder of Rights. For the purpose of this
Agreement: (x) “Attribution Parties” means, collectively, the following Persons
and entities: (i) any investment vehicle, including, any funds, feeder funds or
managed accounts, currently, or from time to time after the Closing Date,
directly or indirectly managed or advised by the Holder’s investment manager or
any of its Affiliates or principals, (ii) any direct or indirect Affiliates of
the Holder or any of the foregoing, (iii) any Person acting or who could be
deemed to be acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Company’s Common
Stock would or could be aggregated with the Holder’s and the other Attribution
Parties for purposes of Section 13(d) of the 1934 Act. For clarity, the purpose
of the foregoing is to subject collectively the Holder and all other Attribution
Parties to the Beneficial Ownership Limitation, (y) “Group” means a “group” as
that term is used in Section 13(d) of the 1934 Act and as defined in Rule 13d-5
thereunder and (z) “Affiliate” means, with respect to any Person, any other
Person that directly or indirectly controls, is controlled by, or is under
common control with, such Person, it being understood for purposes of this
definition that “control” of a Person means the power directly or indirectly
either to vote 10% or more of the stock having ordinary voting power for the
election of directors of such Person or direct or cause the direction of the
management and policies of such Person whether by contract or otherwise.

 

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7.9 Closing of Books. The Company will not close its stockholder books or
records in any manner which prevents the timely exercise of the Rights, pursuant
to the terms hereof.

 

7.10 Stock Dividends and Splits. If the Company, at any time while the Rights
exist: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock, (ii) subdivides
outstanding shares of Common Stock into a larger number of shares, (iii)
combines (including by way of reverse stock split) outstanding shares of Common
Stock into a smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the Company, then in
each case the number of Rights Shares issuable upon exercise of the Rights shall
be proportionately adjusted. Any adjustment made pursuant to this Section 7.10
shall become effective immediately upon the record date for the determination of
stockholders entitled to receive such dividend or distribution (provided that if
the declaration of such dividend or distribution is rescinded or otherwise
cancelled, then such adjustment shall be reversed upon notice to the Holder of
the termination of such proposed declaration or distribution as to any
unexercised portion of the Rights at the time of such rescission or
cancellation) and shall become effective immediately after the effective date in
the case of a subdivision, combination or re-classification.

 

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7.11 Compensation for Buy-In on Failure to Timely Deliver Rights Shares. If the
Company shall fail, for any reason or for no reason, on or prior to the
applicable Share Delivery Deadline, either (x) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, to issue
and deliver to the Holder (or its designee) a certificate for the number of
shares of Common Stock to which the Holder is entitled and register such shares
of Common Stock on the Company’s share register or, (y) if the Transfer Agent is
participating in the DTC Fast Automated Securities Transfer Program, to credit
the balance account of the Holder or the Holder’s designee with DTC for such
number of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise of a Right (a “Delivery Failure”), and if on or after such
Share Delivery Deadline the Holder purchases (in an open market transaction or
otherwise) shares of Common Stock corresponding to all or any portion of the
number of shares of Common Stock issuable upon such exercise that the Holder is
entitled to receive from the Company and has not received from the Company in
connection with such Delivery Failure (a “Buy-In”), then, in addition to all
other remedies available to the Holder, the Company shall, within two (2)
Business Days after receipt of the Holder’s request and in the Holder’s
discretion, either: (I) pay cash to the Holder in an amount equal to the
Holder’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so purchased
(including, without limitation, by any other Person in respect, or on behalf, of
the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so
issue and deliver such certificate (and to issue such shares of Common Stock) or
credit the balance account of such Holder or such Holder’s designee, as
applicable, with DTC for the number of shares of Common Stock to which the
Holder is entitled upon the Holder’s exercise of Rights hereunder (as the case
may be) (and to issue such shares of Common Stock) shall terminate, or (II)
promptly honor its obligation to so issue and deliver to the Holder a
certificate or certificates representing such shares of Common Stock or credit
the balance account of such Holder or such Holder’s designee, as applicable,
with DTC for the number of shares of Common Stock to which the Holder is
entitled upon the Holder’s exercise of Rights hereunder (as the case may be) and
pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In
Price over the product of (x) such number of shares of Common Stock multiplied
by (y) the lowest Closing Sale Price (as defined below) of the Common Stock on
any Trading Day during the period commencing on the date of the applicable
Notice of Issuance and ending on the date of such issuance and payment under
this clause (II). Nothing shall limit the Holder’s right to pursue any other
remedies available to it hereunder, at law or in equity, including, without
limitation, a decree of specific performance and/or injunctive relief with
respect to the Company’s failure to timely deliver certificates representing
shares of Common Stock (or to electronically deliver such shares of Common
Stock) upon the exercise of the Rights as required pursuant to the terms hereof.
“Closing Bid Price” and “Closing Sale Price” means, for any security as of any
date, the last bid price or last trade price, respectively, of such security
prior to 4:00:00 p.m., New York time, as reported by Bloomberg, L.P., or, if the
Principal Market is not the principal securities exchange or trading market for
such security, the last closing bid price or last trade price, respectively, of
such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, L.P., or if the foregoing
do not apply, the last closing bid price or last trade price, respectively, of
such security in the over-the-counter market on the electronic bulletin board
for such security as reported by Bloomberg, L.P., or, if no closing bid price or
last trade price, respectively, is reported for such security by Bloomberg,
L.P., the average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the “pink sheets” by OTC Markets
Group Inc. (formerly Pink Sheets LLC). If the Closing Bid Price or the Closing
Sale Price cannot be calculated for a security on a particular date on any of
the foregoing bases, the Closing Bid Price or the Closing Sale Price (as the
case may be) of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. All such determinations shall
be appropriately adjusted for any stock splits, stock dividends, stock
combinations, recapitalizations or other similar transactions during such
period.

 

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7.12 Subsequent Rights Offerings. Except with respect to any adjustments
pursuant to Section 7.10 above, if at any time the Company grants, issues or
sells any Convertible Securities, Options or rights to purchase stock, warrants,
securities or other property pro rata to the record Holders of any class of
shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete exercise of the Rights
(without regard to any limitations on exercise hereof, including without
limitation, the Beneficial Ownership Limitation) immediately before the date on
which a record is taken for the grant, issuance or sale of such Purchase Rights,
or, if no such record is taken, the date as of which the record Holders of
shares of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights (provided, however, to the extent that the Holder’s right to
participate in any such Purchase Right would result in the Holder exceeding the
Beneficial Ownership Limitation, then the Holder shall not be entitled to
participate in such Purchase Right to such extent (or beneficial ownership of
such shares of Common Stock as a result of such Purchase Right to such extent)
and such Purchase Right to such extent shall be held in abeyance for the Holder
until such time, if ever, as its right thereto would not result in the Holder
exceeding the Beneficial Ownership Limitation).

 

7.13 Fundamental Transaction. If, at any time while the Rights remain
outstanding, a Fundamental Transaction occurs, then, upon any subsequent
exercise of the Rights, the Holder shall have the right to receive, for each
Rights Share that would have been issuable upon such exercise immediately prior
to the occurrence of such Fundamental Transaction, at the option of the Holder
(without regard to any limitation in Section 7.8 on the exercise of the Right),
the number of shares of Common Stock of the successor or acquiring corporation
or of the Company, if it is the surviving corporation, and any additional
consideration receivable as a result of such Fundamental Transaction by a Holder
of one share of Common Stock. Upon the occurrence of any such Fundamental
Transaction, the any successor entity in a Fundamental Transaction in which the
Company is not the survivor (the “Successor Entity”) shall succeed to, and be
substituted for (so that from and after the date of such Fundamental
Transaction, the provisions of this Agreement and the other Exchange Documents
referring to the “Company” shall refer instead to the Successor Entity), and may
exercise every right and power of the Company and shall assume all of the
obligations of the Company under this Agreement and the other Exchange Documents
with the same effect as if such Successor Entity had been named as the Company
herein.

 

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7.14 Notice to Allow Exercise of Right. If at any time while the Rights remain
outstanding, (A) the Company shall declare a dividend (or any other distribution
in whatever form) on the Common Stock, (B) the Company shall declare a special
nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all Holders of the Common Stock rights
or warrants to subscribe for or purchase any shares of capital stock of any
class or of any rights, (D) the approval of any stockholders of the Company
shall be required in connection with any reclassification of the Common Stock,
any consolidation or merger to which the Company is a party, any sale or
transfer of all or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted into other
securities, cash or property, or (E) the Company shall authorize the voluntary
or involuntary dissolution, liquidation or winding up of the affairs of the
Company, then, in each case, the Company shall cause to be mailed to the Holder
at least 10 calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, redemption, rights or
warrants, or if a record is not to be taken, the date as of which the Holders of
the Common Stock of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date on which
such reclassification, consolidation, merger, sale, transfer or share exchange
is expected to become effective or close, and the date as of which it is
expected that holders of the Common Stock of record shall be entitled to
exchange their shares of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer or
share exchange; provided that the failure to mail such notice or any defect
therein or in the mailing thereof shall not affect the validity of the corporate
action required to be specified in such notice. To the extent that any notice
provided hereunder constitutes, or contains, material, non-public information
regarding the Company or any of the Subsidiaries, the Company shall
simultaneously file such notice with the Commission pursuant to a Current Report
on Form 8-K. The Holder shall remain entitled to exercise the Rights during the
period commencing on the date of such notice to the effective date of the event
triggering such notice except as may otherwise be expressly set forth herein.

 

7.15 No Rights as Stockholder Until Exercise. Each Right does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof.

 

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7.16 Transferability. Subject to compliance with any applicable securities laws,
the Rights and all rights hereunder (including, without limitation, any
registration rights) are transferable, in whole or in part, upon written
assignment substantially in the form attached hereto duly executed by the Holder
or its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer of this Agreement delivered to the principal
office of the Company or its designated agent. Upon such assignment and, if
required, such payment, the Company shall enter into a new agreement with the
assignee or assignees, as applicable, and this Agreement shall promptly be
cancelled. Any Right, if properly assigned in accordance herewith, may be
exercised by a new Holder for the issue of Rights Shares without having a new
agreement executed.

 

Section 8. Governing Law; Jurisdiction; Waiver of Jury Trial. This Agreement
shall be construed under the laws of the State of Delaware, without regard to
principles of conflicts of law or choice of law that would permit or require the
application of the laws of another jurisdiction. The Company and the Holder each
hereby agrees that all actions or proceedings arising directly or indirectly
from or in connection with this Agreement shall be litigated only in the Supreme
Court of the State of New York or the United States District Court for the
Southern District of New York located in New York County, New York. The Company
and the Holder each consents to the exclusive jurisdiction and venue of the
foregoing courts and consents that any process or notice of motion or other
application to either of said courts or a judge thereof may be served inside or
outside the State of New York or the Southern District of New York by generally
recognized overnight courier or certified or registered mail, return receipt
requested, directed to such party at its or his address set forth below (and
service so made shall be deemed “personal service”) or by personal service or in
such other manner as may be permissible under the rules of said courts. THE
COMPANY AND THE HOLDER EACH HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LITIGATION PURSUANT TO THIS AGREEMENT.

 

Section 9. Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party; provided that a facsimile signature shall be
considered due execution and shall be binding upon the signatory thereto with
the same force and effect as if the signature were an original, not a facsimile
signature.

 

Section 10. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.

 

Section 11. Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction.

 

Section 12. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.

 

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Section 13. Entire Agreement; Amendments. This Agreement supersedes all other
prior oral or written agreements between the Holder, the Company, their
affiliates and persons acting on their behalf with respect to the matters
discussed herein, and this Agreement and the instruments referenced herein
contain the entire understanding of the parties with respect to the matters
covered herein and therein. No provision of this Agreement may be amended other
than by an instrument in writing signed by the Company and the Holder. No
provision hereof may be waived other than by an instrument in writing signed by
the party against whom enforcement is sought.

 

Section 14. Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Agreement must be in
writing and will be deemed to have been delivered: (a) upon receipt, when
delivered personally; (b) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (c) one calendar day (excluding
Saturdays, Sundays, and national banking holidays) after deposit with an
overnight courier service, in each case properly addressed to the party to
receive the same.

 

The addresses and facsimile numbers for such communications shall be:

 

If to the Company:

 

Infinity Energy Resources, Inc.

Attn: Stanton E. Ross, Chief Executive Officer

11900 College Blvd., Suite 310

Overland Park, KS 66210

 

If to the Holder:

 

to the address set forth on its signature page attached hereto.

 

or to such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.

 

Section 15. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and assigns,
including any purchasers of the Exchange Securities. Subject to its compliance
with applicable federal and state securities laws, the Holder may assign some or
all of its rights hereunder without the consent of the Company, in which event
such assignee shall be deemed to be the Holder hereunder with respect to such
assigned rights.

 

Section 16. No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

 

Section 17. Survival of Representations. The representations and warranties of
the Company and the Holder contained in Sections 2 and 3, respectively, will
survive the closing of the transactions contemplated by this Agreement, until
such time as no Rights remain outstanding.

 

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Section 18. Disclosure of Transaction. The Company shall, on or before 8:30
a.m., New York City time, on or prior to the first (1st) business day after the
date of this Agreement, file a Current Report on Form 8-K describing the terms
of the transactions contemplated hereby in the form required by the 1934 Act and
attaching the Exchange Documents, to the extent they are required to be filed
under the 1934 Act, that have not previously been filed with the Securities and
Exchange Commission by the Company (including, without limitation, the Side
Letter and this Agreement) as exhibits to such filing (including all
attachments, the “8-K Filing”). From and after the filing of the 8-K Filing, the
Company shall have disclosed all material, non-public information (if any)
provided up to such time to the Holder by the Company or any of its Subsidiaries
or any of their respective officers, directors, employees or agents. In
addition, effective upon the filing of the 8-K Filing, the Company acknowledges
and agrees that any and all confidentiality or similar obligations under any
agreement with respect to the transactions contemplated by the Exchange
Documents or as otherwise disclosed in the 8-K Filing, whether written or oral,
between the Company, any of its Subsidiaries or any of their respective
officers, directors, affiliates, employees or agents, on the one hand, and any
of the Holder or any of their affiliates, on the other hand, shall terminate.
Neither the Company, its Subsidiaries nor the Holder shall issue any press
releases or any other public statements with respect to the transactions
contemplated hereby; provided, however, the Company shall be entitled, without
the prior approval of the Holder, to make a press release or other public
disclosure with respect to such transactions (i) in substantial conformity with
the 8-K Filing and contemporaneously therewith or (ii) as is required by
applicable law and regulations (provided that in the case of clause (i) the
Holder shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release). Without the prior
written consent of the Holder (which may be granted or withheld in the Holder’s
sole discretion), except as required by applicable law, the Company shall not
(and shall cause each of its Subsidiaries and affiliates to not) disclose the
name of the Holder in any filing, announcement, release or otherwise.

 

Section 19. Fees. The Company shall reimburse Kelley Drye & Warren, LLP (counsel
to the lead investor), on demand, for all reasonable, documented costs and
expenses incurred by it in connection with preparing and delivering this
Agreement (including, without limitation, all reasonable, documented legal fees
and disbursements in connection therewith, and due diligence in connection with
the transactions contemplated thereby) in an aggregate amount not to exceed
$15,000. In addition to, but not in limitation of, any other rights of the
Holder hereunder, if (a) this Agreement or any of the Exchange Securities are
placed in the hands of an attorney for collection of any indemnification or
other obligation hereunder or thereunder then outstanding or enforcement or any
such obligation is collected or enforced through any legal proceeding or the
Holder otherwise takes action to collect amounts due under this Agreement or any
of the Exchange Securities or to enforce the provisions of this Agreement or any
of the Exchange Securities or (b) there occurs any bankruptcy, reorganization,
receivership of the Company or other proceedings affecting Company creditors’
rights and involving a claim under this Agreement or any of the Exchange
Securities, then the Company shall pay the costs incurred by the Holder for such
collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, without limitation,
reasonable attorneys’ fees and disbursements.

 

 21 

   

 

Section 20. Listing. The Company shall promptly secure the listing or
designation for quotation (as the case may be) of all of the Exchange Shares,
Rights Shares and New Warrant Shares (collectively, the “Applicable Securities”)
upon each national securities exchange and automated quotation system, if any,
upon which the Common Stock is then listed or designated for quotation (as the
case may be) (subject to official notice of issuance) and shall maintain such
listing or designation for quotation (as the case may be) of all Applicable
Securities from time to time issuable under the terms of the Exchange Documents
on such national securities exchange or automated quotation system. The Company
shall pay all fees and expenses in connection with satisfying its obligations
under this Section 20.

 

Section 21. Further Assurances. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as
any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.

 

[Signature Pages Follow]

 

 22 

   

 

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

 

Infinity Energy Resources, Inc.         By:     Name: Stanton Ross   Title:
Chief Executive Officer  

 

[Company signature page to the Exchange Agreement]

 

   

   

 

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

 

Hudson Bay Master Fund Ltd         By:     Name:     Title:    

 

Address for notice purposes:

 

[Holder signature page to the Exchange Agreement]

 

   

   

 

Exhibit A

 

Holder Original Securities

 

Holder   Security   Date   Amount

Hudson Bay

MASTER FUND Ltd

  Senior Secured Convertible Note   May 7, 2015   $2,197,231              

Hudson Bay

MASTER FUND LTD

 

  Warrant to purchase Common Stock   May 7, 2015   1,800,000 shares (post-split)

 

   

   

 

EXHIBIT B

 

Side Letter

 

[See attached]

 

   

   

 

EXHIBIT C

 

(HOLDERS’ RELEASE TO INFINITY)

 

GENERAL RELEASE

 

TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT:

 

Hudson Bay Master Fund, Ltd. on behalf of itself and its past, present and
future heirs, executors, administrators, successors and assigns, shareholders,
partners, directors, officers, employees, agents, members, controlling persons,
representatives, affiliates, subsidiaries or other entities controlled by them
(hereinafter, collectively referred to as “RELEASOR”), in consideration of the
consummation of the transactions contemplated by that certain Exchange
Agreement, dated May 23, 2019 (the “Exchange Agreement”), by and between Hudson
Bay Master Fund, Ltd. and Infinity Energy Resources, Inc., a Delaware
corporation (the “Company”) and other Exchange Documents (as defined in the
Exchange Agreement) related thereto, and other good and valuable consideration
received from the Company (hereinafter, referred to as “RELEASEE”), receipt
whereof is hereby acknowledged, release and discharge the RELEASEE, and the
RELEASEE’S past, present and future heirs, executors, administrators,
successors, assigns, shareholders, partners, directors, officers, employees,
agents, members, controlling persons, representatives, affiliates, subsidiaries
or other entities controlled by them, from all actions, causes of action, suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims and demands solely
with respect to the Original Securities, in law, admiralty, or equity, which
against the RELEASEE the RELEASOR ever had, now have or hereafter can, shall or
may have, for, upon, or by reason of any matter, cause or thing with respect to
the Original Securities from the beginning of the world until, and including,
the date of this RELEASE, except for the obligations set forth in the Exchange
Agreement and the other Exchange Documents.

 

The words “RELEASOR” and “RELEASEE” include all releasors and all releasees
under this RELEASE.

 

This RELEASE may not be changed orally but only by a writing signed by all the
parties.

 

IN WITNESS WHEREOF, the RELEASOR have caused this RELEASE to be executed on the
23rd day of May, 2019.

 

  HUDSON BAY MASTER FUND, LTD.         By:     Name:     Title:  

 

WITNESS

 

 

 

Name:

 

   

   

 

EXHIBIT D

 

(INFINITY’S RELEASE TO HOLDERS)

 

GENERAL RELEASE

 

TO ALL TO WHOM THESE PRESENTS SHALL COME OR MAY CONCERN, KNOW THAT:

 

Infinity Energy Resources, Inc., a Delaware corporation (the “Company”), on
behalf of itself and its past, present and future heirs, executors,
administrators, successors and assigns, shareholders, partners, directors,
officers, employees, agents, members, controlling persons, representatives,
affiliates, subsidiaries or other entities controlled by them (hereinafter,
collectively referred to as “RELEASOR”), in consideration of the consummation of
the transactions contemplated by that certain Exchange Agreement, dated May 23,
2019 (the “Exchange Agreement”), by and between Hudson Bay Master Fund, Ltd.
(the “Holder”) and the Company) and the other Exchange Documents (as defined in
the Exchange Agreement) related thereto, and other good and valuable
consideration received from the Holder (hereinafter, referred to as “RELEASEE”),
receipt whereof is hereby acknowledged, release and discharge the RELEASEE, and
the RELEASEE’S past, present and future heirs, executors, administrators,
successors, assigns, shareholders, partners, directors, officers, employees,
agents, members, controlling persons, representatives, affiliates, subsidiaries
or other entities controlled by them, from all actions, causes of action, suits,
debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,
covenants, contracts, controversies, agreements, promises, variances,
trespasses, damages, judgments, extents, executions, claims and demands solely
with respect to the Original Securities, in law, admiralty, or equity, which
against the RELEASEE the RELEASOR ever had, now have or hereafter can, shall or
may have, for, upon, or by reason of any matter, cause or thing with respect to
the Original Securities from the beginning of the world until, and including,
the date of this RELEASE, except for the obligations set forth in the Exchange
Agreement and the other Exchange Documents.

 

The words “RELEASOR” and “RELEASEE” include all releasors and all releasees
under this RELEASE.

 

This RELEASE may not be changed orally but only by a writing signed by all the
parties.

 

IN WITNESS WHEREOF, the RELEASOR has caused this RELEASE to be executed on the
23rd day of May, 2019.

  

  INFINITY ENERGY RESOURCES, INC.         By:     Name: Stanton E. Ross   Title:
Chief Executive Officer

 

WITNESS

 

 

 

Name:

 

   

   

 

EXHIBIT E

 

NOTICE OF ISSUANCE

 

The undersigned holder hereby exercises the rights (the “Rights”) to receive
_________________ of the shares of Common Stock (the “Rights Shares”) of
Infinity Energy Resources, Inc., a Delaware corporation with offices located at
[           ] (the “Company”), established pursuant to that certain Exchange
Agreement, dated May __, 2019, by and between the Company and the investor
signatory thereto (the “Exchange Agreement”). Capitalized terms used herein and
not otherwise defined shall have the respective meanings set forth in the
Exchange Agreement.

 

The Company shall deliver to Holder, or its designee or agent as specified
below, __________ Rights Shares in accordance with the terms of the Rights.
Delivery shall be made to Holder, or for its benefit, as follows:

 

[  ] Check here if requesting delivery as a certificate to the following name
and to the following address:

 

  Issue to:              

 

[  ] Check here if requesting delivery by Deposit/Withdrawal at Custodian as
follows:

 

  DTC Participant:     DTC Number:     Account Number:  

 

Date: _____________ __,

 

Name of Registered Holder

 

By:     Name:     Title:    

 

Tax ID:____________________________

 

Facsimile:__________________________

 

E-mail Address:_____________________

 

   

   

 

SCHEDULE 2.1

 

Organization and Qualification

 

Entity   State of organization & good standing infinity energy resources, inc.  
Delaware infinity energy resources, inc.   Kansas as a Foreign Corporation
infinity energy resources, inc. has no subsidiaries   n/a

 

 

   

   

 

SCHEDULE 2.11

 

Filings, Consents and Approvals

 

The Company has not completed the filing of Federal and State tax returns for
the tax years 2012 through 2018. Therefore, all such tax returns are open to
examination by the Internal Revenue Service and State Revenue Departments.

 

   

   

 

SCHEDULE 2.12

 

Capitalization

 

Entity   Capital Stock Authorized and Outstanding

infinity energy

resources, inc.

              Preferred stock; par value $.0001 per share, 10,000,000 shares
authorized;
no shares issued or outstanding       Common stock, par value $.0001 per share,
authorized 75,000,000 shares,
issued and outstanding 7,712,569 shares

 

   Common stock Equivalents Outstanding

infinity energy

resources, inc.

  Number outstanding   Weighted average exercise price per share   Weighted
average remaining contractual term              Stock options   338,200  
$41.24   2.9 years                Common stock
purchase warrants   2,365,563   $5.01   2.7 years