Exhibit 10.44

 

REVENUE SHARING AGREEMENT

 

This Revenue Sharing Agreement (“Agreement”) is made and entered into this 30th
day of May, 2014 (the “Effective Date”) by and between Infinity Energy
Resources, Inc., a Delaware corporation (hereinafter, the “Company”), and SKM
Partnership, Ltd., a Texas limited partnership (hereinafter, the “Holder”).

 

W I T N E S S E T H:

 

WHEREAS, the Company and the Holder are parties to that certain 8% Promissory
Note, dated December 27, 2013, as amended by that certain First Amendment to
Promissory Note, dated March 7, 2014, and that certain Second Amendment to
Promissory Note, dated May 9, 2014 (the “Note”); and

 

WHEREAS, effective as of May 9, 2014, the Company and the Holder amended the
Note to extend the maturity date thereof as set forth therein until December 7,
2014, in accordance with that certain Second Amendment to Promissory Note (such
extension, the “Second Extension”); and

 

WHEREAS, as a material inducement to granting the Second Extension, the Company
offered to the Holder, and the Holder agreed to accept, the Revenue Sharing
Payment (as defined herein) contemplated herein on the terms and conditions set
forth below.

 

A G R E E M E N T:

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, it
is hereby agreed by each party hereto as follows:

 

1. For purposes of this Agreement, the following definitions shall apply:

 

1.1 “Affiliate” means any Person that, directly or indirectly, through one or
more intermediaries, controls, is controlled by or is under common control with,
the first mentioned Person. A Person shall be deemed to control another Person
if such first Person possesses, directly or indirectly, the power to direct, or
cause the direction of, the management and policies of the second Person,
whether through the ownership of voting securities, by contract or otherwise.
For the avoidance of doubt, each and every subsidiary of the Company or of an
Affiliate thereof shall also constitute an Affiliate hereunder. Without limiting
the foregoing, the term “Affiliate” shall also include the meaning ascribed to
that term in the Securities and Exchange Act of 1934, as amended and the rules
and regulations promulgated thereunder. Without limiting the foregoing, the term
“Affiliate” shall also expressly include Stanton E. Ross.

 

1.2 “Agreement” has the meaning set forth in the Preamble.

 

 

 

 

1.3 “Claims” has the meaning set forth in Section 14.

 

1.4 “Code” means the United States Internal Revenue Code of 1986, as amended.

 

1.5 “Company” has the meaning set forth in the Preamble.

 

1.6 “Concessions” means the Nicaraguan Concessions and any other similar
concessions, rights, or interests in Nicaragua or any other sovereign country
which produce Petroleum Substances and which are exploited by or on behalf of
the Company or any of its Affiliates.

 

1.7 “Dispute” has the meaning set forth in Section 21.

 

1.8 “Effective Date” shall have the meaning set forth in the Preamble.

 

1.9 “Gas” means and refers to all natural gas produced from the Concessions
(including, without limitation, casinghead gas) and all of its constituent
elements, including, but not limited to, sulphur contained in the gas, and
natural gasoline, condensate, distillate, butanes, propanes, and other
hydrocarbons condensed, absorbed, or separated out of or from the gas after it
leaves the Concessions, including, without limitation, casinghead gas and flared
or vented gas.

 

1.10 “Gross Revenues” means the total aggregate undiscounted, untaxed revenue,
income, and consideration received by the Company in respect of, in exchange
for, on account of, or in consideration for Petroleum Substances, in any form
and from whatever source derived.

 

1.11 “Holder” has the meaning set forth in the Preamble.

 

1.12 “Indebtedness” means, without duplication, with respect to any Person, (a)
all obligations of such Person (i) in respect of borrowed money (whether or not
the recourse of the lender is to the whole of the assets of such Person or only
to a portion thereof, or whether or not the lender has any resource to any
assets of such Person); (ii) evidenced by bonds, notes, debentures or similar
instruments; (iii) representing the balance deferred and unpaid of the purchase
price of any property or services (other than accounts payable or other
obligations arising in the ordinary course of business); (iv) evidenced by
bankers' acceptances or similar instruments issued or accepted by banks, (v) for
the payment of money relating to a capitalized lease obligation under generally
accepted accounting principles; or (vi) evidenced by a letter of credit or a
reimbursement obligation of such Person with respect to any letter of credit;
(b) all net obligations of such Person under interest rate swap obligations and
foreign currency hedges; (c) all liabilities of others of the kind described in
the preceding clauses (a) or (b) that such Person has guaranteed or that are
otherwise its legal liability; (d) Indebtedness (as otherwise defined in this
definition) of another Person secured by lien on any asset of such Person,
whether or not such Indebtedness is assumed by such Person, the amount of such
obligations being deemed to be the lesser of (1) the full amount of such
obligations so secured, and (2) the fair market value of such asset, as
determined in good faith by the board of directors of such Person, which
determination shall be evidenced by a board resolution; and (e) any and all
deferrals, renewals, extensions, refinancings and refundings (whether direct or
indirect) of, or amendments, modifications or supplements to, any liability of
the kind described in any of the preceding clauses (a), (b), (c), (d) or this
clause (e), whether or not between or among the same parties. “Indebtedness”
shall expressly include, without limitation, the loan and other obligations for
repayment of borrowed money contemplated by the Note.

 

 

 

 

1.13 “Indemnified Parties” has the meaning set forth in Section 14.

 

1.14 “Laws” has the meaning set forth in Section 8.2.

 

1.15 “Liabilities” has the meaning set forth in Section 8.4.

 

1.16 “Losses” has the meaning set forth in Section 14.

 

1.17 “Nicaraguan Concessions” means the Perlas and Tyra concession blocks
offshore Nicaragua in the Caribbean Sea as more particularly described in the
following exhibits to Amendments to the Form 10 the Company filed with the
Securities and Exchange Commission on May 13, 2011: (a) Exhibit 10.8, Nicaraguan
Concession – Perlas Prospect; and (b) Exhibit 10.9, Nicaraguan Concession – Tyra
Prospect, both filed as exhibits to Amendment No. 2 to Form 10 by the Company on
April 5, 2012; and (c) Exhibit 10.27, Map: Nicaraguan Concessions filed as an
exhibit to Amendment No. 1 to Form 10 by the Company on July 1, 2011, and any
and all other rights, assets, property, permits, consents, or authorizations
necessary or convenient to exploit the foregoing, together with all goodwill
associated therewith.

 

1.18 “Note” has the meaning set forth in the Preamble.

 

1.19 “Notice of Transfer” has the meaning set forth in Section 11.2.

 

1.20 “Oil” means and refers to any and all hydrocarbons produced from the
Concessions, regardless of gravity, capable of being produced in liquid form at
the well by ordinary production methods including, without limitation,
condensate, distillate and other liquid hydrocarbons recovered from oil or gas,
run through a separator or other equipment at the Concessions.

 

1.21 “Permits” has the meaning set forth in Section 8.2.

 

1.22 “Person” means an individual, corporation, trust, partnership, joint
venture, unincorporated organization, governmental entity, government agency or
any agency or political subdivision thereof, or other entity.

 

1.23 “Petroleum Substances” means all Oil, petroleum and natural Gas and related
hydrocarbons, all other gases and all minerals and substances (whether
condensate, liquid or solid and whether hydrocarbons or not) in association with
any of the foregoing or found in any water contained in an Oil and/or Gas
reservoir produced, extracted, removed or derived from the Concessions.

 

 

 

 

1.24 “Proceeding” has the meaning set forth in Section 8.6.

 

1.25 “Property” has the meaning set forth in Section 11.2.

 

1.26 “Purchase Price” has the meaning set forth in Section 11.2.

 

1.27 “Revenue Sharing Payment” has the meaning set forth in Section 2.

 

1.28 “Second Extension” has the meaning set forth in the Preamble.

 

1.29 “Tax” or “Taxes” has the meaning set forth in Section 8.7.1.

 

1.30 “Tax Return” or “Tax Returns” has the meaning set forth in Section 8.7.3.

 

1.31 “Transfer” means any direct or indirect transfer, donation, sale,
assignment, pledge, hypothecation, disposition, conveyance, grant of a security
interest in or other disposal of all or any portion of a Concession, any rights,
title, interest or control in a Concession, or any pecuniary interest therein.
“Transferred” means the accomplishment of a Transfer; “Transferor” means the
Person making a Transfer, and “Transferee” means the recipient of a Transfer.

 

2. Gross Revenue Royalties. In consideration of, and as a material inducement
for, granting the Second Extension, Company hereby reserves out, grants, sets
over and conveys to the Holder a royalty of ONE HALF OF ONE PERCENT (1/2%) of
all Gross Revenues in accordance with the terms and conditions set forth in this
Agreement (the “Revenue Sharing Payment”). The Revenue Sharing Payment shall be
computed and paid to the Holder or its designee on a monthly basis as further
set forth below.

 

3. Royalty Adjustment. In the event that the Company does not repay all amounts
owing under the Note in full on or prior to August 7, 2014, then the royalty
percentage payable to the Holder under the Revenue Sharing Payment as set forth
above shall automatically, without the need for any further action of the
parties, be increased from ONE HALF OF ONE PERCENT (1/2%) to ONE PERCENT (1%).
At any time requested by the Holder, the Company shall promptly acknowledge in
writing such increase in the Revenue Sharing Payment.

 

4. No Netting. For the avoidance of doubt, the Revenue Sharing Payment shall be
paid free and clear of any and all Taxes, costs or expenses of every kind and
nature whatsoever incurred, including, but not limited to, maintaining, renewing
and extending, exploring, drilling, re-completing, side-tracking, producing,
co-mingling of wells and reservoirs, and processing, treatment and compressing
and operating costs of the Concessions and any Petroleum Substances,
Liabilities, Losses, Claims, and Taxes.

 

 

 

 

5. Payments. The Revenue Sharing Payment shall be paid to the Holder or its
designee on a monthly basis. The Revenue Sharing Payment shall be payable in
each and every calendar month in which the Company generates any revenue,
income, and consideration in respect of, in exchange for, on account of, or in
consideration for Petroleum Substances, in any form and from whatever source
derived. The Revenue Sharing Payment shall be payable in cash in United States
Dollars, unless the Holder elects to receive payment in kind as specified in
Section 13 of this Agreement. All monthly payments to Holder in respect of the
Revenue Sharing Payment shall be paid by the tenth (10th) calendar day of each
month in respect of the Company’s Gross Revenues obtained during the preceding
calendar month, and shall be submitted, together with any reports or statements
required under Section 6 of this Agreement, to the Holder at the address
provided in Section 16 of this Agreement. Any payment or report not actually
received by the Holder on or before such date shall be deemed overdue. If any
payment or any portion of any payment is overdue, the Company shall pay the
Holder, in addition to the overdue amount, interest on such overdue amount from
the date it was due until payment is received by the Holder at the rate of
eighteen percent (18%) per annum, or the maximum rate permitted by governing
law, whichever is less. Payment of the Revenue Sharing Payment shall be made in
any manner reasonably directed by the Holder from time to time, including,
without limitation, through wire transfer, certified or cashier’s check. All
conversions from foreign currencies to United States Dollars shall be converted
using the middle-market spot exchange rate on the last business day of each
month as published in the New York edition of the Wall Street Journal.

 

6. Gross Revenue Reports. On or before the tenth (10th) calendar day of each
month, the Company shall deliver to the Holder a written report, signed by an
authorized representative of the Company, showing the amount of any revenue,
income, and consideration received by the Company or any Affiliates thereof,
directly or indirectly, in respect of, in exchange for, on account of, or in
consideration for, Petroleum Substances, in any form and from whatever source
derived, at any time during the preceding calendar month. The report shall
compute the total dollar amount due to the Holder in respect of the Revenue
Sharing Payment in such monthly period which shall be the mathematical product
of the Company’s Gross Revenues received in the preceding monthly period,
multiplied by the percentage royalty then in effect pursuant to Sections 2 and
3, as applicable. With each such report, the Company shall remit to the Holder
the total amount of the Revenue Sharing Payment indicated thereby to be due, in
accordance with the provisions of Section 5 of this Agreement.

 

7. Accounting and Records.

 

7.1 Monthly Reporting. The Company shall maintain during the term of this
Agreement, and shall preserve until the later of: (a) at least five (5) years
from the dates of their preparation; or (b) for at least five (5) years after
the termination of this Agreement, full, complete, and accurate books, records,
and accounts prepared in accordance with generally accepted accounting
principles and in sufficient detail to document the calculation of Gross
Revenues and the Revenue Sharing Payment hereunder. Without limiting the
foregoing, the Company shall maintain in its principal office complete and
accurate records of the Petroleum Substances produced and of all consideration
received therefrom or in respect thereof in accordance with local government and
other authorities’ requirements, and with the provisions of this Agreement, and
shall furnish to the Holder with each payment made hereunder, a statement
(verified by statutory declaration if requested by the Holder) giving sufficient
detail for the Holder to ascertain the accuracy of the payment of any Revenue
Sharing Payment made hereunder, including copies of the monthly production
reports filed with the relevant local authorities.

 

 

 

 

7.2 Monthly Reports. The Company shall submit to the Holder no later than the
tenth (10th) calendar day of each month during the term of this Agreement, a
remittance report accurately reflecting all Gross Revenues computed during the
preceding calendar month and such other data or information as the Holder may
reasonably request. In addition, and without limiting the foregoing, The Company
shall submit a monthly and fiscal year-to-date profit and loss statement (which
may be unaudited) for the Company, and shall submit copies of all Tax Returns
reflecting Taxes incurred in respect of Petroleum Substances for the Company.

 

7.3 Quarterly Reports. The Company shall submit to the Holder a quarterly
balance sheet (which may be unaudited) within thirty (30) calendar days after
the end of each quarter of the fiscal year of the Company. Each such statement
shall be signed by the Company’s president or treasurer or chief financial
officer attesting that it is true and correct.

 

7.4 Annual Reports. The Company shall submit to the Holder complete audited
annual financial statements of the Company prepared by an independent certified
public accountant satisfactory to the Holder, within ninety (90) calendar days
after the end of each fiscal year of the Company, showing the results of
operations of the Company during said fiscal year. Such statements shall
include, at a minimum, a balance sheet, profit and loss statement and statement
of sources and uses of funds.

 

7.5 Additional Reports. The Company shall submit to the Holder, for review or
auditing, such other forms, reports, records, information, and data as the
Holder may reasonably request in order to verify the calculation of the Revenue
Sharing Payments payable pursuant to this Agreement.

 

7.6 Inspection Rights. The Holder or its designated agents shall have the right
at all reasonable times to examine and copy, at the Holder’s expense, the books,
records, and Tax Returns of the Company. The Holder shall also have the right,
at any time, to have an independent audit made of the books of the Company,
including, without any limitation, any documents or records supporting or
pertaining to the reports due hereunder and any and all Revenue Sharing Payments
made hereunder. If an inspection reveals that any payments required pursuant to
this Agreement, including, without limitation, any Revenue Sharing Payments,
have been understated in any report to the Holder, then the Company shall
immediately pay to the Holder the amount understated upon demand, in addition to
interest from the date such amount was originally due until payment is received
by the Holder, at the rate of ten percent (10%) per annum, or the maximum rate
permitted by law, whichever is less. If an inspection discloses an
understatement in any report required to be submitted under this Agreement of
five percent (5%) or more, the Company shall pay interest at the rate of
eighteen percent (18%) per annum on any such amount or the maximum rate
permitted by governing law, whichever is less, and in addition, shall reimburse
the Holder for any and all costs and expenses connected with the inspection
(including, without limitation, travel, lodging and wages expenses and
reasonable accounting and legal costs). The foregoing remedies shall be in
addition to any other remedies the Holder may have.

 

 

 

 

7.7 Expenses. All reports, forms and other information required by this Section
7.7 shall be prepared at the Company’s expense and shall be submitted to the
Holder at the address indicated in Section 16 hereof.

 

8. Representations and Warranties. In order to induce the Holder to enter into
this Agreement and to consummate the transactions contemplated hereby, the
Company hereby makes to the Holder the following representations and warranties:

 

8.1 Organization and Corporate Power. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. The Company has all requisite corporate power and authority to own its
properties, to carry on its business as presently conducted, to enter into and
perform this Agreement and the agreements, documents and instruments
contemplated hereby, as applicable, and to carry out the transactions
contemplated hereby. The Company is duly licensed or qualified to do business as
a foreign corporation and is in good standing in each jurisdiction, including,
without limitation, Nicaragua, wherein the character of its property, or the
nature of the activities presently conducted by it, makes such qualification
necessary.

 

8.2 Authorization and Non-Contravention. This Agreement has been duly executed
and delivered by the Company and constitutes the legal, valid and binding
obligations of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by: (i) applicable bankruptcy, insolvency,
moratorium, reorganization or similar Laws, from time to time in effect, which
affect enforcement of creditors’ rights generally; and (ii) Laws relating to the
availability of specific performance, injunctive relief, or other equitable
remedies. The execution, delivery and performance of this Agreement has been
duly authorized by all necessary corporate action of the Company and its
stockholders. The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not: (i)
violate or result in a violation of, conflict with or constitute a violation of
or a default (whether after the giving of notice, lapse of time or both) or loss
of material benefit under any material contract or obligation to which the
Company or any Affiliate is a party or by which the Company’s or Affiliate’s
assets are bound or affected, or any provision of the Company’s governing
documents, or result in or cause the creation of any lien, charge, security
interest or encumbrance upon any of the assets of the Company; (ii) violate or
conflict with in any way, or result in a breach or violation of, or constitute a
default (whether after the giving of notice, lapse of time or both) under, any
provision of any law, statute, ordinance, regulation, rule, judgment, order,
injunction, decree, declaration, arbitration award, agency requirement, license
or permit of any governmental entity (in any territory in the world) applicable
to the Company, any Affiliate, or any of their respective properties
(collectively, “Laws”); (iii) require from the Company or Affiliate any notice
to, declaration or filing with, or consent, approval, authorization or order of
any governmental entity or other third party; or (iv) violate or result in a
violation of, or constitute a default or breach (whether after the giving of
notice, lapse of time or both) under, accelerate any obligation under, or give
rise to a right of termination, amendment or cancellation of, any permits,
authorizations, approvals, licenses, orders, consents, franchises and other
rights and privileges (collectively, “Permits”) to which the Company is a party
or by which it or its property or assets are bound or affected.

 

 

 

 

8.3 Affiliates. Any and all Affiliates of the Company are duly organized,
validly existing and in good standing under the Laws of their respective
jurisdictions of formation. All such Affiliates have all requisite power and
authority to own their properties and to carry on their respective businesses as
from time to time conducted. All Affiliates are duly licensed or qualified to do
business as a foreign entity and are in good standing in each jurisdiction
wherein the character of their property, or the nature of the activities
presently conducted by them, makes such qualification necessary, including,
without limitation, Nicaragua.

 

8.4 Absence of Undisclosed Liabilities. Other than the Note, the Company and its
Affiliates do not have any debt, liability or obligation of any nature, whether
known or unknown, asserted or unasserted, determined or determinable, whether
accrued, absolute, contingent or otherwise, and whether due or to become due
(“Liabilities”), which, individually or in the aggregate, are material to the
financial condition, operating results or cash flows of the Company. As of
immediately prior to the consummation of the transactions to be effected on the
Effective Date, neither the Company nor any Affiliate has assumed, guaranteed,
endorsed or otherwise become directly or contingently liable on or for any
indebtedness for borrowed money or other obligations of any other Person.

 

8.5 Absence of Certain Developments. Since the original issuance date of the
Note until immediately prior to the consummation of the transactions to be
effected on the Effective Date, the Company has conducted the business only in
the ordinary course consistent with past practice, the Company has not incurred,
other than in the ordinary course of business, any material Liabilities that
would be required under generally accepted accounting principles to be set forth
on the Company’s balance sheet, except for legal and accounting costs incurred
in connection with the negotiation, execution and delivery by the Company of
this Agreement and there have been: (i) no events, occurrences or circumstances
that, individually or in the aggregate, have had or would reasonably be expected
to have a material adverse effect on or constitute a material adverse event in
the business or affairs of the company; (ii) no declaration, setting aside or
payment of any dividend or other distribution with respect to, or any direct or
indirect redemption or acquisition of, any of the capital stock of the Company;
(iii) no waiver of any material right of the Company or any Affiliate or
cancellation of any material debt or claim held by the Company or any Affiliate;
(iv) no increase in the compensation paid or payable to any officer, director,
employee or agent of the Company or any Affiliate; (v) no material loss or
interference with the business or material loss, destruction or damage to any
property of the Company or any Affiliate, whether or not insured; (vi) no labor
dispute involving the Company or any Affiliate, no collective bargaining
agreement entered into by the Company or any Affiliate and no change in the
personnel of the Company or any Affiliate or the terms and conditions of their
employment; (vii) no acquisition, encumbering or disposition of any assets of
the Company or any Affiliate (or any contract or arrangement therefor), except
in the ordinary course of business, nor any other transaction by the Company or
any Affiliate other than for fair value in the ordinary course of business;
(viii) no change in accounting methods or practices or tax elections of the
Company or any Affiliate; (ix) no liability for Taxes other than in the ordinary
course of business; (x) no settlement or compromise of any Tax liability, no
amended Tax Return, no “closing agreement” (as described in Code section 7121 or
any corresponding provision of state, local or foreign law), no extension or
waiver of the limitation period applicable to any Tax claim or assessment, or
any other similar action relating to the filing of any Tax Return or the payment
or refund of any Tax; (xi) no loss, or any development that is expected to
result in a loss, of any significant vendor or account of the Company; (xii) no
amendment or termination of any material contract to which the Company or any
Affiliate is a party or by which they or their respective properties are bound;
(xiii) no change in the capital stock of the Company or any Affiliate; (xiv) no
entry into, adoption, amendment, modification or termination of any bonus,
profit-sharing, incentive, retention, severance, or other plan, contract, or
commitment for the benefit of any directors, officers and employees of the
Company or any Affiliate outside the ordinary course of business, and (xv) no
commitment (contingent or otherwise) to do any of the foregoing.

 

 

 

 

8.6 Litigation. There is no action, suit, claim, litigation, proceeding or
investigation (each, a “Proceeding”) pending or, to the knowledge of the
Company, threatened, by or against the Company or any Affiliate or affecting any
of the Company’s or any Affiliate’s properties or assets, or against any
officer, key employee or stockholder of the Company or any Affiliate in his or
her capacity as such nor, to the knowledge of the Company, has there occurred
any event nor does there exist any condition on the basis of which any
Proceeding might properly be instituted. Neither the Company nor any Affiliate,
nor any of their properties or assets nor any officer, key employee or
stockholder of the Company or any Affiliate in such Person’s capacity as such is
a party to, subject to or in default or violation with respect to any order,
writ, injunction, decree, ruling or decision of any governmental entity.

 

8.7 Tax Matters.

 

8.7.1 The Company has paid all U.S. federal, state, local, foreign or other
taxes, including, without limitation, income taxes, estimated taxes, excise
taxes, sales taxes, use taxes, gross receipts taxes, franchise taxes, employment
and payroll related taxes, withholding taxes, stamp taxes, transfer and property
taxes, or other tax of any kind whatsoever, whether or not measured in whole or
in part by net income, including, without limitation, any interest, penalty, or
addition thereto, whether disputed or not (each, a “Tax” and collectively,
“Taxes”) required to be paid by it through the date hereof, whether or not shown
on a Tax Return.

 

8.7.2 All Taxes and other assessments and levies that the Company was required
to withhold or collect with respect to any employee, independent contractor,
shareholder or other third party have been withheld, collected and paid over to
the proper governmental authorities when due.

 

8.7.3 The Company has, in accordance with applicable law, timely and properly
filed all U.S. federal, state, local and foreign tax returns, declarations,
reports, claims for refund, information returns or statements relating to Taxes
(each, a “Tax Return” and collectively, “Tax Returns”) required to be filed by
it through the date hereof. All such Tax Returns were true, correct and complete
in all material respects.

 

 

 

 

8.7.4 Neither the Internal Revenue Service nor any other governmental authority
is now asserting or, to the knowledge of the Company, threatening to assert
against the Company any deficiency or claim for additional Taxes.

 

8.7.5 No claim has ever been made in writing by an authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to taxation by that jurisdiction.

 

8.7.6 The Company has not waived any statute of limitations in respect of Taxes
or agreed to any extension of time with respect to a Tax assessment or
deficiency.

 

8.7.7 There are no liens, encumbrances, or other security interests encumbering
any of the assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Taxes (except where such security interests arise as
a matter of law prior to the due date for paying the related Taxes).

 

8.7.8 There has never been any audit of any Tax Return filed by the Company, no
such audit is in progress and the Company has not been notified by any Tax
authority that any such audit is contemplated or pending.

 

8.8 Title to Properties. The Company and its Affiliates has good and marketable
title of record to all of its owned real property used in or necessary to the
conduct of the Company’s or its Affiliates’ business and a valid and enforceable
leasehold interest in all of its leased real property, free and clear of all
encumbrances of any kind. The Company and each Affiliate has good, valid and
marketable title to or, in the case of leased assets, a valid, binding and
enforceable leasehold interest in all personal property and tangible assets used
in or necessary to the business of the Company and the Affiliates, free and
clear of all encumbrances of any kind, and the same is in good condition and
repair in all material respects (ordinary wear and tear excepted). Neither the
Company nor any Affiliate is in violation of any zoning, building or safety Law
applicable to the operation of any property used in its business, nor has the
Company or any Affiliate received written notice of any violation with which it
has not complied in all material respects. The Company and each Affiliate own or
have a contractual right to use all of the assets and properties of any kind or
nature used or necessary to operate the business.

 

8.9 Governmental Approvals; Compliance with Laws.

 

8.9.1 Each of the Company and its Affiliates has been and is in compliance in
all material respects with all Laws binding on or applicable to it or on any of
its assets or properties, and neither the Company nor any Affiliate has received
any written notices or orders of noncompliance issued to the Company or any
Affiliate under or in respect of any such Law.

 

8.9.2 Each of the Company and its Affiliates has all of the Permits of all
governmental entities necessary for the Company and each Affiliate to conduct
its business as conducted from time to time. All such Permits are in full force
and effect and, to the knowledge of the Company, no suspension or cancellation
of any of such Permits is threatened, and none of such Permits will be affected
by the execution and delivery of the Agreement or the consummation of the
transactions contemplated hereby.

 

8.9.3 Neither the Company nor any Affiliate has ever entered into or been
subject to any judgment, consent decree, compliance order or administrative
order with respect to any aspect of the business, affairs, properties or assets
of the Company or the Affiliates.

 

 

 

 

8.10 Transactions with Affiliates. There are no loans, leases or other
continuing arrangements between the Company or any Affiliate, on the one hand,
and any current or former officer, director, employee, contractor or stockholder
of the Company or any Affiliate or any respective family member or Affiliate of
such officer, director, employee, contractor or stockholder, on the other hand.

 

8.11 Environmental Matters. No hazardous waste, substances or materials
including, without limitation, any Oil or Gas or Petroleum Substances have been
generated, transported, used, disposed of, stored or treated by the Company or
any Affiliate, except in compliance with all applicable environmental Laws. The
Company and each Affiliate have not released, discharged, disposed of, or
otherwise caused to enter the soil, air or water in, under or upon any real
property owned, leased or operated by the Company and each Affiliate any
hazardous wastes, substances or materials including, without limitation, any Oil
or Gas or Petroleum Substances, except in compliance with applicable
environmental Laws. The Company and each Affiliate are in compliance in all
material respects with all applicable environmental, health and safety Laws.

 

8.12 Disclosures. To the Company’s knowledge, neither this Agreement, document
or written statement made by the Company and furnished by the Company or
otherwise made available to the Holder in connection with the transactions
contemplated hereby or by this Agreement contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements contained herein or therein not misleading in light of the
circumstances in which they were made.

 

8.13 Survival of Representations and Warranties. All representations, warranties
and covenants made or given by the parties in this Agreement shall survive the
consummation of all transactions contemplated herein, and shall continue in
force throughout the term of this Agreement.

 

9. Covenants. In order to induce the Holder to enter into this Agreement and to
consummate the transactions contemplated hereby, the Company hereby covenants
and agrees with the Holder as follows:

 

9.1 Development of Concessions. Company shall use its best efforts to
expeditiously and successfully promote and develop the Concessions, and any
other similar assets which may come into its possession from time to time.

 

 

 

 

9.2 Compliance with Laws. The Company shall conduct any and all operations upon
the Concessions in accordance with all applicable Laws and regulations, best
industry practices, and good Oil and Gas field practices.

 

9.3 Compliance with Agreement. The Company shall conduct any and all operations
upon the Concessions in accordance with this Agreement, and shall at all times
comply with all of the terms and conditions of this Agreement.

 

9.4 Preservation of Concessions. The Company shall not allow the Nicaraguan
Concessions or any other property or assets to become subject to forfeiture and
shall not surrender the Nicaraguan Concessions or other interests included
therein or any part thereof or any other property or assets.

 

9.5 Payment of Royalties. The Company shall use its best efforts to maximize the
revenues derived from the Concessions and shall promptly pay or cause to be paid
to Holder the Net Revenue Payment provided for in Section 2.

 

9.6 Obligations Related to Concessions. The Company shall fully perform all
obligations of the Company arising pursuant to or relating to the Nicaraguan
Concessions and other Concessions, including, without limitation, any and all
requirements arising under Nicaraguan law, and Company shall hold the Holder
harmless from all such obligations of Company. Company shall at all times remain
in good standing with the Nicaraguan government.

 

9.7 Representations and Warranties. The Company shall utilize best efforts and
take all actions necessary to ensure that all of the representations and
warranties set forth in Section 8 remain true and correct at all times and shall
promptly notify the Holder of any noncompliance therewith.

 

9.8 Permits, Consents and Authorizations. The Company shall maintain its and its
Affiliates’ and subsidiaries’ existence, rights, and privileges, and obtain,
maintain, and preserve any permits, consents, and authorizations that are
necessary in the proper conduct of its or its Affiliates’ or subsidiaries’
business.

 

9.9 No Senior or Secured Indebtedness. The Company shall not incur any
Indebtedness or other obligations senior to or ranking in priority to the
Indebtedness or obligations of the Company represented by this Agreement or the
Note, including, without limitation secured indebtedness, without the prior
written consent of Holder.

 

9.10 Cure of Defects. The Company shall promptly cure any and all defects in the
execution and delivery of this Agreement and immediately execute and deliver to
Holder all such other and further instruments as may be reasonably required by
Holder from time to time in order to satisfy or comply with the covenants and
agreements, and the spirit and intent of the covenants and agreements, of
Company made in this Agreement.

 

 

 

 

10. Liability for Taxes. For the avoidance of doubt, the Revenue Sharing Payment
shall be computed and paid without any deductions, discounts, or netting for
capital taxes of any kind. Any and all transfer, documentary, sales, use, stamp,
income, capital gains, registration, value-added, and all other such taxes and
fees (including any penalties and interests) incurred in connection with the
Revenue Sharing Payment other than income taxes assessed on Holder’s income
thereon shall be the sole and exclusive liability of the Company. In the event
the Holder is assessed for and pays any such taxes, the Company shall gross-up
the next-occurring Revenue Sharing Payment in an amount appropriate to reimburse
the Holder for all such Tax amounts incurred.

 

11. Conditions to Transfer of the Concessions. Any purported Transfer of any
Concessions by the Company shall be subject to the following terms and
conditions:

 

11.1 Restrictions. The Company hereby covenants and agrees that the Company
shall not, directly or indirectly, in any manner whatsoever, Transfer or offer
to Transfer Concessions except in accordance with the provisions of this Section
11.1. Any purported Transfer, no matter how effected, which does not comply with
the terms, conditions and procedures of this Section 11 shall be null and void
and shall transfer no interest in Concessions. The covenant set forth herein
constitutes a material inducement to the Holder to enter into this Agreement,
without which the Holder would not have entered into this Agreement or granted
the Second Extension.

 

11.2 Prior Notice. In the event the Company desires to Transfer all or any
portion of the Concessions or a majority of the vote or value of the capital
stock of the Company to any Person or entity, the Transferor shall, prior to any
such Transfer, give the Holder written notice of such desire (“Notice of
Transfer”), at least ninety (90) calendar days prior to the date on which such
Transfer is to occur, which such notice shall specify the property to be
transferred (“Property”), the identity of the proposed transferee, and the
purchase price, including payment terms and the treatment of Liabilities related
to the Property (“Purchase Price”). Any purported Notice of Transfer that does
not comply with the requirements of this Section 11.2 shall be null and void and
of no effect hereunder.

 

11.3 Conditions to Effectiveness of Transfer. Prior to the effectiveness of any
Transfer, the Company shall ensure that the Person to whom such Property is
transferred shall, as a condition to such transfer, unconditionally and
irrevocably agree in writing to be bound by all terms, conditions and provisions
of this Agreement. Without limiting the foregoing, prior to the occurrence and
effectiveness of any such Transfer, as a condition precedent to such Transfer,
the Transferee shall agree to unconditionally and irrevocably assume all of the
Company’s duties, obligations, and liabilities under this Agreement. If either
the Company or the Transferee does not provide written evidence satisfactory to
the Holder in its sole discretion that the Transferee is fully bound to all of
such terms and conditions of this Agreement as specified in the preceding
sentences, as if the Transferee were an original signatory hereto, then the
Transfer shall be deemed to be void ab initio and of no effect. Without limiting
the foregoing, in any such event the Holder shall be permitted to obtain an
order of injunctive relief prohibiting and restraining such Transfer, and the
Company hereby forever and irrevocably waives any and all rights it may have
under law or equity to contest that the Holder is entitled to obtain injunctive
relief as contemplated in this Section 11.3. Furthermore, in the event that the
Holder pursue injunctive relief seeking to prevent or restrain the occurrence of
such Transfer as contemplated herein, the Company shall cooperate with the
Holder in obtaining such injunctive relief. For the avoidance of doubt, the
obligations imposed pursuant to this Section 11.3 shall apply to the undersigned
Company, its Affiliates, and any Transferees thereof, and any and all of its and
their respective Transferees, Affiliates, successors, heirs, and assigns.

 

 

 

 

11.4 Effect of Transfer. Notwithstanding any Transfer of any of the Concessions
or any portion thereof, unless the Holder otherwise agrees in writing in
advance, no Transfer shall relieve the Company, its Affiliates, or any other
Transferor from any obligation and liability to pay the Revenue Sharing Payment
pursuant to this Agreement, which liabilities and obligations shall be joint and
several as to all such parties; and, unless otherwise so agreed by the Holder,
all Transferees of the Concessions shall be and remain jointly and severally
liable for the payment of such Revenue Sharing Payment and the performance of
such liabilities and obligations hereunder.

 

12. Lien to Secure Revenue Sharing Payment. The Holder shall be entitled to and
shall have a lien upon the Holder’s percentage share of all Gross Revenues on
all sales of Petroleum Substances to secure the payment of the Revenue Sharing
Payment granted to the Holder under this Agreement. Such lien shall not operate
to release the Company its Affiliates or any other Person from its obligations
and liability for monies due to the Holder pursuant to this Agreement. Such lien
shall attach to the Holder’s (and any Affiliate’s) percentage share of the Gross
Revenues on sales of Petroleum Substances sold or otherwise disposed of by the
Company. Upon default occurring in payment by the Company of any amounts payable
to the Holder pursuant to this Agreement, the Holder shall notify the Company of
same and request the default to be remedied within ten (10) days. If the default
is not remedied within the said ten (10) days, such lien shall operate as an
assignment to the Holder in respect of the consideration thereafter payable to
the Holder for Holder’s share of the Gross Revenues on sales of Petroleum
Substances sold or disposed up to the amount owed to the Holder, along with any
additional fees or other expenses incurred in accordance with this Agreement,
and not so paid by the Company.

 

13. Right to Take in Kind. The Holder shall have the option, but not the
obligation, to elect from time to time upon not less than ten (10) days’ prior
written notice to the Company to take the Revenue Sharing Payment in the form of
an equivalent value of Petroleum Substances in kind, in respect of any one or
more of the Petroleum Substances. Any such election may be changed from time to
time by the Holder. If the Holder exercises its right to take Revenue Sharing
Payment production in kind, the Company shall, at no cost to the Holder, remove
all basic sediment or other impurities and water from the applicable Petroleum
Substances so as to render the same fit for acceptance by pipelines or rail or
rail tankers in accordance with good industry practice, and shall also, at no
cost to the Holder, provide up to thirty (30) calendar days’ storage of such
Petroleum Substances.

 

14. Indemnification. The Company hereby covenants and agrees to indemnify,
defend, hold harmless, and reimburse the Holder, and any and all of its members,
owners, agents, directors, managers, employees, consultants, contractors,
representatives, servants, insurers, and attorneys (the “Indemnified Parties”)
from and against any and all liabilities, obligations, losses, claims, demands,
awards, diminution in value, damages (including, without limitation, punitive
damages or treble damages), costs, interest, expenses (including, without
limitation, attorneys’ fees or travel expenses), charges, disbursements,
insurance payments, judgments, fines, fees, penalties, bonds, or the like
(collectively, “Losses”) the Indemnified Parties have incurred, do or may incur,
individually or jointly, directly or indirectly, because of, arising from, or in
connection with, any threatened, actual, pending, existing, or future
allegation, accusation, assertion, argument, complaint, claim, counterclaim,
cross-claim, causes of action, petition, proceeding, review, hearing,
investigation, inquisition, inquiry, deposition, interrogation, interrogatory,
document production, lawsuit, trial, dispute resolution, mediation, arbitration,
litigation, appeal, and any and all other costs of defense (collectively,
“Claims”) because of, arising from, or related to, this Agreement, or the
Holder’s investment or involvement with the Company.

 

 

 

 

15. Delay and Waiver by the Holder. No delay in the exercise of, or failure to
exercise, any right, power or remedy accruing upon any default or failure of the
Holder in the performance of any obligation under this Agreement shall impair
any such right, power or remedy or shall be construed to be a waiver thereof,
but any such right, power or remedy may be exercised from time to time and as
often as the Holder deems expedient. No waiver, amendment, release or
modification of this Agreement shall be established by conduct, custom or course
of dealing, but solely by an instrument in writing executed by a duly authorized
officer of the Holder.

 

16. Notices. Any request, demand, authorization, direction, notice, consent,
waiver or other document provided or permitted by this Agreement to be made
upon, given or furnished to, or filed with, the parties hereunder, must (except
as otherwise expressly provided in this Agreement) be in writing and be
delivered by one of the following methods: (1) by personal delivery at the hand
delivery address specified below, or (2) by first-class, registered or certified
mail, postage prepaid, addressed as specified below.

 

The hand delivery address, mailing address and (if applicable) facsimile
transmission number for receipt of notice or other documents by such parties are
as follows:

 

  (1) The Holder:               By hand/mail: 5621 Tupper Lake Dr.      
Houston, TX 77056       Attention: Scott D. Martin           (2) The Company:  
            By hand/mail: 11900 College Blvd.       Suite 310       Overland
Park, KS 66210

 

Any of such parties may change the address or number for receiving any such
notice or other document by giving notice of the change to the other parties
named in this Section 16.

 

 

 

 

17. Governing Law; Jurisdiction; Jury Trial. This Agreement, once executed and
delivered by the parties, is not an “agreement to agree” and no party or its
representatives shall at any time take or advocate such a position for any
reason. All questions concerning the construction, validity, enforcement and
interpretation of this Agreement shall be governed by the internal Laws of the
State of Texas, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of Texas or any other jurisdictions)
that would cause the application of the Laws of any jurisdictions other than the
State of Texas. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in Houston, Texas for the
adjudication of any dispute hereunder or in connection herewith or therewith, or
with any transaction contemplated hereby or discussed herein, or in any manner
arising in connection with or related to the transactions contemplated hereby or
involving the parties hereto whether at law or equity and under any contract,
tort or any other claim whatsoever and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of any such court, that such suit, action or
proceeding is brought in an inconvenient forum or that the venue of such suit,
action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action
or proceeding by mailing or faxing a copy thereof to such party at the address
for such notices as listed in this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT
IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY
DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR
ANY TRANSACTION CONTEMPLATED HEREBY. Should any claim be filed to enforce rights
under this Agreement or any other instrument or agreement contemplated hereby,
the prevailing party as determined by the court shall be entitled to recover its
legal costs including, without limitation, reasonable attorney’s fees and
associated litigation costs including, but not limited to, expert witness fees,
deposition costs, and court costs.

 

18. Successors and Assigns. All covenants and agreements set forth in this
Agreement shall bind the parties and their respective heirs, successors,
assigns, and Trasnferees, and shall inure to the benefit of, and be enforceable
by, the parties and their respective heirs, successors and assigns. The Company
may not assign its rights or delegate its duties under this Agreement without
the prior written consent of the Holder, which such consent shall not be
unreasonably withheld, conditioned or delayed.

 

19. Entire Agreement. This Agreement is the final expression of the agreement
between the parties hereto, and this Agreement may not be contradicted by
evidence of any prior oral or written agreement.

 

20. Miscellaneous. This Agreement is a legally binding and enforceable
agreement, enforceable in accordance with its terms. Neither this Agreement nor
any provision hereof may be amended, supplemented, waived, released or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the amendment, supplement, waiver, release or modification is
sought (or a duly authorized officer of such party, if a corporation). If any
provision of this Agreement or any obligation hereunder shall be held to be
invalid, illegal or unenforceable, the remainder of this Agreement and any other
application of such provision shall not be affected thereby. The section
headings of this Agreement are for convenience only, and shall not modify,
define, limit or expand the express provisions hereof. This Agreement may be
executed in several counterparts, each of which shall be deemed an original but
all of which together shall constitute one instrument, and it shall not be
necessary in making proof hereof to produce or account for more than one such
counterpart. Each of the parties will bear and pay all of the costs and expenses
(including without limitation attorneys' fees) incurred by it or on its behalf
in connection with the negotiation and preparation of this Agreement. Unless the
context otherwise requires, the use of terms in singular and masculine form
shall include in all instances singular and plural number and masculine,
feminine and neuter gender.

 

 

 

 

21. Dispute Resolution. Any controversy, claim, or dispute between the parties
arising out of or relating to (a) this Agreement, (b) the performance, breach,
validity or enforceability of any provision hereto, or (c) the relationship of
the parties hereto or their obligations hereunder (collectively, a “Dispute”),
shall be resolved as specified in this Section 21. Upon receipt of a written
notice from the other party that a Dispute has arisen, the parties shall
negotiate in good faith for a period of at least thirty (30) days in an effort
to resolve the Dispute without the necessity of any formal proceeding. If the
parties cannot resolve the Dispute during such period and the Holder thereafter
files suit to enforce its rights under this Agreement, then, if the Holder
prevails on its claims in whole or in part, it shall be entitled to recover from
the Company its reasonable attorney’s fees incurred in connection with such
suit.

 

22. Specific Performance. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with its specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and
provisions hereof in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which they are
entitled at law or in equity.

 

23. Further Assurances. Each party agrees to perform any further acts and
execute and deliver any documents that may be reasonably necessary to carry out
the intent and provisions of this Agreement. Each party shall use its
commercially reasonable efforts to take all actions necessary or appropriate to
consummate the transactions contemplated in this Agreement, and to correct any
defects in the drafting of this Agreement at the request of the other party.

 

24. No Draftsman; No Duress; Knowing and Voluntary Agreement. Neither party
shall be considered the draftsman of this Agreement for any purpose, including,
without limitation, for purposes of interpretation of any ambiguity, and in the
event that any party is for any reason considered to be the draftsman, no
ambiguity or disputed provision shall be construed against the party that is
deemed to be the draftsman. Both parties have had consulted legal counsel with
respect to the drafting, negotiation, and execution of this Agreement. Neither
party is under any duress or compulsion or other obligation to enter into this
Agreement. Each party enters into this Agreement knowingly, willingly, and
voluntarily. The parties agree and acknowledge that this Agreement was created
at the request of the Company, who has requested that the Holder enter into this
Agreement. The parties agree and acknowledge that the Holder is entering into
this Agreement at the request of the Company. The Company represents and
warrants to the Holder that in the best business judgment of the Company and its
directors and officers, execution and delivery of this Agreement is in the best
interests of the Company and its stockholders and other creditors other than the
Holder.

 

[Signature Page Next Page]

 

 

 

 

IN WITNESS WHEREOF, intending to be legally bound, the parties hereto have
caused this Agreement to be signed by their duly authorized officers.

 

Dated: May 30th, 2014

 

INFINITY ENERGY RESOURCES, INC. ACKNOWLEDGES THAT IT HAS BEEN ADVISED TO CONSULT
WITH COUNSEL, THAT IT HAS EITHER CONSULTED WITH COUNSEL OR WAIVED ITS RIGHT TO
CONSULT WITH COUNSEL PRIOR TO EXECUTING THIS DOCUMENT, THAT IT HAS HAD
SUFFICIENT TIME TO CONSULT WITH COUNSEL PRIOR TO EXECUTING THIS DOCUMENT, AND
THAT IT IS NOT EXECUTING THIS DOCUMENT UNDER DURESS.

 

INFINITY ENERGY RESOURCES, INC.         By: /s/ Stanton E. Ross   Name: Stanton
E. Ross   Its: President and Chief Executive Officer         SKM PARTNERSHIP,
LTD.         BY SKM MANAGEMENT, LLC   ITS GENERAL PARTNER         By: /s/ Scott
D. Martin   Name: Scott D. Martin   Its: Manager of its General Partner