exv10w01



 







Exhibit 10.1




THIRD ADDITIONAL CLOSING AGREEMENT




     THIS THIRD ADDITIONAL CLOSING AGREEMENT (this “Agreement”) is made as of March 17, 2006, among
(i) Infinity Energy Resources, Inc., a Delaware corporation (“Infinity”), (ii) HFTP Investment
L.L.C. (“HFTP”) and AG Offshore Convertibles, Ltd. (“AG Offshore”), (iii) Gaia Offshore Master
Fund, Ltd. (“Gaia”) and Leonardo, L.P. (“Leonardo”) and (iv) Consolidated Oil Well Services, Inc.,
a Kansas corporation (“Consolidated”), CIS-Oklahoma, Inc., a Kansas corporation (“CIS”), Infinity
Oil & Gas of Wyoming, Inc., a Wyoming corporation (“Infinity-Wyoming”), Infinity Oil & Gas of
Kansas, a Kansas corporation (“Infinity-Kansas”) and Infinity Oil and Gas of Texas, Inc., a
Delaware corporation (“Infinity-Texas,” and together with Consolidated, CIS, Infinity-Wyoming,
Infinity-Kansas and Infinity-Delaware, the “Subsidiaries”). Unless otherwise defined herein,
capitalized terms used herein shall have the meanings ascribed to them in the Securities Purchase
Agreement (as defined below).



W I T N E S S E T H:




     WHEREAS, Infinity (successor by merger to Infinity, Inc.), HFTP, AG Offshore and AG Domestic
Convertibles, L.P. (“AG Domestic”) entered into that certain Securities Purchase Agreement (as
further amended, restated, supplemented or otherwise modified from time to time, the “Securities
Purchase Agreement”) dated as of January 13, 2005;



     WHEREAS, pursuant to Section 1(b) of the Securities Purchase Agreement, Infinity has the
right, subject to the satisfaction of certain conditions, to sell Additional Notes and Additional
Warrants to the Buyers thereunder;



     WHEREAS, pursuant to the First Additional Closing Agreement, dated as of September 7, 2005,
among HFTP, Gaia, AG Offshore, the Subsidiaries and the other parties named therein (the “First
Additional Closing Agreement”), AG Offshore acquired the right and obligations of AG Domestic
existing under the Transaction Documents with respect to any and all future sales of Additional
Notes and Additional Warrants by Infinity pursuant to the Securities Purchase Agreement;



     WHEREAS, on March 14, 2006, Infinity delivered an Additional Sale Election Notice with respect
to the sale of Additional Notes and Additional Warrants to HFTP and AG Offshore under the
Securities Purchase Agreement (the “Additional Sale Election Notice”);



     WHEREAS, pursuant to the Additional Sale Election Notice, Infinity has separately requested
from HFTP, Gaia, AG Offshore and Leonardo certain waivers of conditions in connection with the
Additional Note Issuance (as defined below);



     WHEREAS, each of HFTP and AG Offshore separately desires to assign its rights to purchase the
Additional Notes and Additional Warrants referenced in the Additional Sale
Election Notice to Gaia and Leonardo, respectively, and each of Gaia and Leonardo, severally
and not jointly, desires to assume such rights; and



1









 





     WHEREAS, Infinity desires to sell, and Gaia and Leonardo, severally and not jointly, desire to
purchase, Additional Notes in an original aggregate principal amount of $8,000,000 and related
Additional Warrants upon the terms and conditions set forth herein and in the Securities Purchase
Agreement (the “Additional Note Issuance”), in accordance with the Schedule of Buyers set forth on
Exhibit A hereto (the “Additional Schedule of Buyers”).



     NOW, THEREFORE, in consideration of the premises set forth herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each of the
undersigned agrees as follows:



     1. Additional Issuance.



          (a) The Additional Closing Date with respect to the Additional Note Issuance shall be the date
hereof. On such Additional Closing Date, subject to the satisfaction (or waiver) of all of the
conditions set forth herein and in Sections 1(b), 1(d), 6(b) and 7(b) of the Securities Purchase
Agreement, Infinity shall issue and sell to each of Gaia and Leonardo, and each of Gaia and
Leonardo severally agrees to purchase from Infinity, (I) Additional Notes in the principal amount
set forth opposite its name on the Additional Schedule of Buyers, along with (II) the related
Additional 115% Warrants with respect to the number of Additional Warrant Shares equal to the
quotient (rounded to the nearest whole number, with 0.5 rounded up) of (A) 28% of the original
principal amount of the Additional Notes purchased thereby at the Additional Closing, divided by
(B) the Warrant Exercise Price (as defined in the Additional 115% Warrants) on the Additional
Closing Date, and (III) the related Additional 140% Warrants with respect to the number of
Additional Warrant Shares equal to the quotient (rounded to the nearest whole number, with 0.5
rounded up) of (X) 27% of the original principal amount of the Additional Notes purchased thereby
at the Additional Closing, divided by (Y) the Warrant Exercise Price (as defined in the Additional
140% Warrants) on the Additional Closing Date (the “Third Additional Closing”). Infinity hereby
acknowledges and agrees that such purchase by each of Gaia and Leonardo of such Additional Notes
and related Additional Warrants shall satisfy in full any obligations of any of Gaia, Leonardo,
HFTP and AG Offshore under the Securities Purchase Agreement and the other Transaction Documents
with respect to the Additional Sale Election Notice.




          (b) For purposes of Section 4(h) of the Securities Purchase Agreement in connection with the
Third Additional Closing, each Buyer’s Reimbursement Allocation Percentage shall be as set forth on
the Additional Schedule of Buyers, rather than the Schedule of Buyers attached to the Securities
Purchase Agreement.




     2. Assignment of Additional Note Issuance Rights and Obligations.



          (a) AG Offshore hereby transfers and assigns to Leonardo, and Leonardo hereby accepts and
assumes, and agrees to be bound by, all of the rights and obligations of AG Offshore now or
hereafter existing under the Transaction Documents, with respect to the Additional Note Issuance
and any and all future sales of Additional Notes and Additional Warrants by Infinity pursuant to the Securities Purchase Agreement, as if Leonardo had originally
been party to the Transaction Documents in place of AG Offshore (as such rights and obligations
were assigned to and assumed by AG Offshore pursuant to the First Additional




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Closing Agreement). Infinity and the Subsidiaries hereby acknowledge and consent to the assignment by AG Offshore to
Leonardo set forth and described in this Section 2(a), and agree that, accordingly, AG Offshore
shall have no rights or obligations with respect to the Additional Note Issuance or any future
sales of Additional Notes and Additional Warrants by Infinity pursuant to the Securities Purchase
Agreement. The parties hereto agree that Leonardo shall be deemed a “Buyer” under the Securities
Purchase Agreement, an “Investor” under the Registration Rights Agreement, and a “Lender” under
each of the Security Agreement, the Guaranty and the Pledge Agreement and shall be entitled to all
of the rights, and subject to all of the obligations, thereof thereunder with respect to the
Additional Note Issuance and any future sales of Additional Notes and Additional Warrants by
Infinity pursuant to the Securities Purchase Agreement. In connection with being deemed a Lender
for purposes of the Security Agreement, Leonardo consents and agrees to be bound by the provisions
of Section 5.12 of the Security Agreement applicable to each Lender thereunder and affirms the
appointment of Promethean Asset Management L.L.C. as collateral agent for the Buyers on its behalf
pursuant to the terms thereof.




          (b) HFTP hereby transfers and assigns to Gaia, and Gaia hereby accepts and assumes, and agrees
to be bound by, each of the Transaction Documents to which HFTP is a party and all of the rights
and obligations of HFTP now or hereafter existing under the Transaction Documents with respect to
the Additional Notes and related Additional Warrants to be purchased by Gaia as provided in Section
1(a) hereof, as if Gaia had originally been party to the Transaction Documents in place of HFTP.
Infinity and the Subsidiaries hereby acknowledge and consent to the assignment by HFTP to Gaia set
forth and described in this Section 2(b), and agree that, accordingly, HFTP shall have no rights or
obligations with respect to the Additional Note Issuance. The parties hereto agree that Gaia shall
be deemed a “Buyer” under the Securities Purchase Agreement, an “Investor” under the Registration
Rights Agreement, and a “Lender” under each of the Security Agreement, the Guaranty and the Pledge
Agreement and shall be entitled to all of the rights, and subject to all of the obligations,
thereof thereunder with respect to the Additional Note Issuance.




     3. Limited Waiver of Conditions. For purposes of the Additional Note Issuance and
Third Additional Closing described in Section 1(a) only, each of Gaia and Leonardo hereby
separately and not jointly waive (i) the conditions to the Additional Closing set forth in Section
1(b)(A) of the Securities Purchase Agreement; provided, however, that in no event
shall such waiver serve to except the aggregate principal amount of the Additional Note Issuance
described in Section 1(a) hereof from the conditions set forth in Section 1(b)(A) of the Securities
Purchase Agreement with respect to any proposed sale of Additional Notes by Infinity following the
date hereof, and (ii) the requirement in Section 1(d) of the Securities Purchase Agreement that the
Additional Closing Date occur on the tenth Business Day following delivery of the Additional Sale
Election Notice. The limited waiver set forth in this Section 3(a) is not, and shall not be deemed
to be, a waiver of such conditions with respect to any other Additional Closing or under any other
circumstance or a waiver of any other condition, requirement, provision or breach of the Securities
Purchase Agreement or any other Transaction Document.



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     4. Revisions to Series of Additional Notes.



          (a) Each of Infinity, Gaia and Leonardo agree that, for purposes of the Additional Note
Issuance and Third Additional Closing described in Section 1(a) only, certain definitions of each
of the Notes comprising the Series of Notes to be issued at the Third Additional Closing (the
“Third Additional Closing Notes”) shall be revised from that contained in the form of Additional
Note attached to the Securities Purchase Agreement as Exhibit B thereto, as amended by the First
Additional Closing Agreement (the “Form Additional Note”). Accordingly:




               (1) the definition of Fixed Maturity Date set forth in Section 2(a)(xiii) of the Third
Additional Closing Notes shall be revised by substituting the following definition for the
definition therefor set forth in the Form Additional Note:





““Fixed Maturity Date” means September 17, 2007; provided, however,
in the event that the principal amount of Notes of this or any other Series is, in
one or a series of transactions, reduced by at least $5,000,000 during the period
beginning on March 18, 2006 and ending on September 17, 2006, pursuant to (A)
redemption by the Company pursuant to a Company Alternative Redemption (as defined
in Section 7(a)) (other than pursuant to a Mandatory Compliance Redemption (as
defined in Section 13)) with a Company Alternative Redemption Date (as defined in
Section 7(a)) on or prior to September 17, 2006, or (B) conversion by the holders of
the Notes pursuant to a Company Alternative Conversion (as defined in Section 8(a))
(other than pursuant to a Mandatory Compliance Conversion (as defined in Section
13)) for which the Company Alternative Conversion Period (as defined in Section
8(a)) ends on or prior to September 17, 2006 (such reduction described in clauses
(A) and (B) immediately above being referred to as a “Six-Month
Redemption/Conversion”), then the “Fixed Maturity Date” shall mean September 17,
2009; provided, further, that if a Six-Month Redemption/Conversion
occurs and there has been a Maturity Date Extension, then the “Fixed Maturity Date”
shall mean September 17, 2010.”; and



               (2) the definition of Maturity Date Extension set forth in Section 2(a)(xxiv) of the Third
Additional Closing Notes shall be revised by substituting the following definition for the
definition therefor set forth in the Form Additional Note:





““Maturity Date Extension” means the holders of Notes representing at least
two-thirds (2/3) of the aggregate principal amount of the then outstanding Notes
that are of the same Series as this Note, have (A) received a notice from the
Company no earlier than sixty (60) days, and no later than thirty (30) days prior to
September 17, 2008 (which notice the Company may deliver on only one occasion with
respect to such Series of Notes), requesting the holders of such Series of Notes to
extend the Fixed Maturity Date by twelve (12) months and (B) within ten (10)
Business Days of receipt of the notice described in clause (A) (such 10-Business-Day Period, the “Response Period”), agreed in writing to



4









 







extend the Maturity Date of all the Notes of such Series by twelve (12) months, (provided
that, for the avoidance of doubt, if the Company does not receive such written
agreement within the Response Period from the requisite holders of the Notes of such
Series, such requested extension shall be deemed denied and the Fixed Maturity Date
shall not be extended); provided, however, that the Company shall
not have the right to request a Maturity Date Extension, and the holders of Notes
shall not grant or be deemed to have granted a Maturity Date Extension, and the
Fixed Maturity Date shall not be or be deemed to be extended unless and until a Six
Month Redemption/Conversion shall have occurred.”



               (b) Other than as set forth in this Section 4, the Third Additional Closing Notes shall remain
identical to the Form Additional Note. In the event of any conflict between the terms and
provisions of the Form Additional Note and the terms and provisions of this Section 4, the terms
and provisions of this Section 4 shall prevail.




     5. Independent Nature of Gaia and Leonardo. The obligations of each of Gaia and
Leonardo hereunder are several and not joint with the obligations of the other, and neither of Gaia
nor Leonardo shall be responsible in any way for the performance of the obligations of the other
hereunder. Each of Gaia and Leonardo shall be responsible only for its own agreements and
covenants hereunder. The decision of each of Gaia and Leonardo to purchase the Third Additional
Closing Notes and the Additional Warrants to be issued at the Third Additional Closing (the “Third
Additional Closing Warrants”) pursuant to this Agreement has been made by such party independently
of the other and independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of Infinity or any of the Subsidiaries which may have been
made or given by the other or by any agent or employee of the other, and neither of Gaia or
Leonardo nor any of its respective agents or employees shall have any liability to the other (or
any other person or entity) relating to or arising from any such information, materials, statements
or opinions. Nothing contained herein, and no action taken by Gaia or Leonardo pursuant hereto or
thereto, shall be deemed to constitute Gaia and Leonardo as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that Gaia and Leonardo are in any way
acting in concert or as a group with respect to such obligations or the transactions contemplated
hereby. Each of Gaia and Leonardo shall be entitled to independently protect and enforce its
rights, including the rights arising out of this Agreement, Third Additional Closing Notes or the
Third Additional Closing Warrants, and it shall not be necessary for the other to be joined as an
additional party in any proceeding for such purpose.



     6. Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns. The successors and
assigns of such entities shall include, without limitation, their respective receivers, trustees or
debtors-in-possession.



     7. Further Assurances. Infinity hereby agrees from time to time, as and when
requested by HFTP, Gaia, AG Offshore or Leonardo, to execute and deliver or cause to be executed
and delivered, all such documents, instruments and agreements, including financing
statements, secretary’s certificates, stock powers and irrevocable transfer agent
instructions, and



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to take or cause to be taken such further or other action as HFTP, Gaia, AG
Offshore or Leonardo may reasonably deem necessary or desirable in order to carry out the intent
and purposes of this Agreement and the Transaction Documents.



     8. Definitions. All words in the singular or plural include the singular and plural
and pronouns stated in either the masculine, the feminine or neuter gender shall include the
masculine, feminine and neuter, and the use of the word “including” in this Agreement shall be by
way of example rather than limitation.



     9. Governing Law. All questions concerning the construction, validity, enforcement
and interpretation of this Agreement shall be governed by the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law provision or rule (whether of
the State of New York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.



     10. Severability. Wherever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be prohibited by or invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidity without invalidating the remainder of
such provision or the remaining provisions of this Agreement.



     11. Merger. This Agreement and the Transaction Documents represent the final
agreement of each of the parties hereto with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or prior or subsequent oral
agreements, among any of the parties hereto.



     12. Execution in 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 each 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.



     13. Section Headings. The section headings herein are for convenience of reference
only, and shall not affect in any way the interpretation of any of the provisions hereof.



[Remainder of page intentionally left blank; Signature page follows]




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     IN WITNESS WHEREOF, this Agreement has been duly executed by each of the undersigned as of the
day and year first set forth above.



	 	 	 	 	 
	INFINITY ENERGY RESOURCES, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President and CEO
	 

	 	 
	 
	 	 
	CONSOLIDATED OIL WELL SERVICES, INC.
	 	 

	 
	 	 
	By:

	 	/s/ Timothy A. Ficker
	 

	 	 
	Name:

	 	Timothy A. Ficker
	 

	 	 
	Title:

	 	VP, CFO, and Secretary
	 

	 	 
	 
	 	 
	CIS-OKLAHOMA, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	CEO and President
	 

	 	 
	 
	 	 
	INFINITY OIL & GAS OF WYOMING, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President
	 

	 	 
	 
	 	 
	INFINITY OIL & GAS OF KANSAS, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President
	 

	 	 
	 
	 	 
	INFINITY OIL AND GAS OF TEXAS, INC.
	 	 

	 
	 	 
	By:

	 	/s/ James A. Tuell
	 

	 	 
	Name:

	 	James A. Tuell
	 

	 	 
	Title:

	 	President
	 

	 	 





 









 






	 	 	 	 	 
	HFTP INVESTMENT L.L.C.
	 	 

	 
	 	 
	By: Promethean Asset Management L.L.C.
Its: Investment Manager
	 	 

	 
	 	 
	By:

	 	/s/ Robert J. Brantman
	 

	 	 
	Name:

Title:

	 	Robert J. Brantman

Partner and Authorized Signatory
	 
	 	 
	GAIA OFFSHORE MASTER FUND, LTD.
	 	 

	 
	 	 
	By: Promethean Asset Management L.L.C.
Its: Investment Manager
	 	 

	 
	 	 
	By:

	 	/s/Robert J. Brantman
	 

	 	 
	Name:

	 	Robert J. Brantman
	Title:

	 	Partner and Authorized Signatory






 









 






	 	 	 	 	 
	AG OFFSHORE CONVERTIBLES, LTD.
	 	 

	 
	 	 
	By: Angelo, Gordon & Co., L.P.
Its: Director
	 	 

	 
	 	 
	By:
	 	/s/ Michael L. Gordon
	 

	 	 
	Name:
	 	Michael L. Gordon 
	 

	 	 
	Title:
	 	Authorized signatory 
	 

	 	 
	 
	 	 
	LEONARDO,

	 	L.P.
	 
	 	 
	By: Leonardo
Capital Management, Inc.
Its: General Partner

	 
	 	 
	 
	 	By:     Angelo, Gordon & Co., L.P.
Its:     Director
	 
	 	 
	By:
	 	/s/ Michael L. Gordon
	 

	 	 
	Name:
	 	Michael L. Gordon
	 

	 	 
	Title:
	 	Authorized Signature
	 

	 	 





 









 






EXHIBIT A




ADDITIONAL SCHEDULE OF BUYERS




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Principal	 	 	 	 	 	 	 	 	 	Investor’s Legal
	 	 	 	 	Amount of	 	 	 	 	 	Reimbursement	 	Representative’s
	 	 	Buyer Address	 	Additional	 	Allocation	 	Allocation	 	Address and Facsimile
	Buyer’s Name	 	and Facsimile Number	 	Notes	 	Percentage	 	Percentage	 	Number
	 
	Gaia Offshore
Master Fund, Ltd.

	 	Promethean Asset
Management
L.L.C.
17th
Floor

55 Fifth Avenue

New York, New York 10003

Attention: Robert J. Brantman

Telephone: (212) 702-5200

Facsimile: (212) 758-9620

Residence: Cayman Islands
	 	$	4,000,000	 	 	 	50	%	 	 	1.17	%	 	Katten Muchin Rosenman LLP

525 W. Monroe Street

Chicago, Illinois 60661-3693

Attention: Mark D. Wood

Telephone: (312) 902-5200

Facsimile: (312) 902-1061
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Leonardo, L.P.

	 	c/o Angelo, Gordon & Co.

245 Park Avenue

New York, New York 10167

Attention: Gary I. Wolf

Telephone: (212) 692-2058

Facsimile: (212) 867-6449

Residence:
	 	$	4,000,000	 	 	 	50	%	 	 	0.33	%	 	Paul, Weiss, Rifkind, Wharton
 & Garrison LLP

1285 Avenue of the Americas

New York, New York 10019

Attention: Douglas A. Cifu

Telephone: (212) 373-3000

Facsimile: (212) 759-3990