OCTOBER 2006 WAIVER AND AMENDMENT AGREEMENT
EXHIBIT
10.1
OCTOBER 2006 WAIVER AND AMENDMENT AGREEMENT
THIS OCTOBER 2006 WAIVER AND AMENDMENT AGREEMENT (this “Agreement”) is made as of October 2,
2006, among Infinity Energy Resources, Inc., a Delaware corporation (including as successor to
Infinity, Inc., “Infinity” or the “Company”), Consolidated Oil Well Services, Inc., a Kansas
corporation and wholly-owned subsidiary of Infinity (“Consolidated”), CIS-Oklahoma, Inc., a Kansas
corporation and wholly-owned subsidiary of Infinity (“CIS”), Infinity Oil & Gas of Wyoming, Inc., a
Wyoming corporation and wholly-owned subsidiary of Infinity (“Infinity-Wyoming”), Infinity Oil &
Gas of Kansas, Inc., a Kansas corporation and wholly-owned subsidiary of Infinity
(“Infinity-Kansas”), and Infinity Oil and Gas of Texas, Inc., a Delaware corporation and
wholly-owned subsidiary of Infinity (“Infinity-Texas,” and together with Consolidated, CIS,
Infinity-Wyoming and Infinity-Kansas, the “Subsidiaries”), HFTP Investment L.L.C. (“HFTP”), Gaia
Offshore Master Fund, Ltd. (“Gaia”), AG Offshore Convertibles, Ltd. (“AG Offshore”), ▇▇▇▇▇▇▇▇, L.P.
(“▇▇▇▇▇▇▇▇”) and Portside Growth & Opportunity Fund (“Portside” and collectively with HFTP, Gaia,
AG Offshore and ▇▇▇▇▇▇▇▇, the “Buyers”). Unless otherwise indicated or defined herein, capitalized
terms used herein shall have the meanings ascribed to them in the Securities Purchase Agreement (as
defined below).
WITNESSETH:
WHEREAS, Infinity, HFTP, AG Offshore and AG Domestic Convertibles, L.P. (“AG Domestic”)
entered into that certain Securities Purchase Agreement, dated as of January 13, 2005 (as amended,
restated, supplemented or otherwise modified and in effect from time to time, the “Securities
Purchase Agreement”);
WHEREAS, pursuant to the Securities Purchase Agreement, Infinity issued to HFTP, AG Domestic
and AG Offshore senior secured notes (such notes, together with any promissory notes issued in
exchange or substitution therefor or replacement thereof, and as any of the same may be amended,
restated, modified, supplemented or otherwise modified and in effect from time to time, the
“January 2005 Notes”), dated January 13, 2005, in an initial aggregate principal amount of
$30,000,000 and warrants (such warrants, together with any warrants or other securities issued in
exchange or substitution thereof or replacement thereof and as any of the same may be amended,
restated, supplemented or otherwise modified and in effect from time to time, the “January 2005
Warrants”), dated January 13, 2005, to purchase shares of the common stock, par value $0.0001 per
share of the Company (the “Common Stock”);
WHEREAS, AG Domestic subsequently assigned to AG Offshore the January 2005 Notes and January
2005 Warrants held by AG Domestic and AG Domestic’s rights and obligations with respect to any and
all future sales of Additional Notes and Additional Warrants by the Company pursuant to the
Securities Purchase Agreement;
WHEREAS, Infinity, HFTP, Gaia, AG Offshore, the Subsidiaries and Promethean Asset Management
L.L.C., as collateral agent (the “Agent”), entered into that certain First Additional Closing
Agreement, dated as of September 7, 2005 (the “First Additional Closing
Agreement”), pursuant to which, among things, the January 2005 Notes were amended and Gaia was
made a Buyer under the Securities Purchase Agreement;
WHEREAS, pursuant to the Securities Purchase Agreement and the First Closing Agreement, the
Company issued to HFTP, Gaia and AG Offshore senior secured notes (such notes, together with any
promissory notes issued in exchange or substitution therefor or replacement thereof, and as any of
the same may be amended, restated, modified, supplemented or otherwise modified and in effect from
time to time, the “September 2005 Notes”), dated September 7, 2005, in an initial aggregate
principal amount of $9,500,000 and warrants (such warrants, together with any warrants or other
securities issued in exchange or substitution thereof or replacement thereof and as any of the same
may be amended, restated, supplemented or otherwise modified and in effect from time to time, the
“September 2005 Warrants”), dated September 7, 2005, to purchase shares of Common Stock;
WHEREAS, Infinity, HFTP, Gaia, AG Offshore, the Subsidiaries and Agent entered into that
certain Master Assumption and Reaffirmation of Transaction Documents, dated as of September 9,
2005, pursuant to which, among other things, Infinity assumed all of the obligations of Infinity,
Inc. under the Securities Purchase Agreement, the January 2005 Notes, the January 2005 Warrants,
the September 2005 Notes, the September 2005 Warrants and the other Transaction Documents;
WHEREAS, pursuant to the Securities Purchase Agreement, the Company issued to HFTP, Gaia and
AG Offshore senior secured notes (such notes, together with any promissory notes issued in exchange
or substitution therefor or replacement thereof, and as any of the same may be amended, restated,
modified, supplemented or otherwise modified and in effect from time to time, the “December 2005
Notes”), dated December 9, 2005, in an initial aggregate principal amount of $5,500,000 and
warrants (such warrants, together with any warrants or other securities issued in exchange or
substitution thereof or replacement thereof and as any of the same may be amended, restated,
supplemented or otherwise modified and in effect from time to time, the “December 2005 Warrants”),
dated December 9, 2005, to purchase shares of Common Stock;
WHEREAS, Infinity, HFTP, Gaia, AG Offshore, ▇▇▇▇▇▇▇▇ the Subsidiaries and Agent entered into
that certain Third Additional Closing Agreement, dated as of March 17, 2006, (the “Third Additional
Closing Agreement”), pursuant to which, among other things, ▇▇▇▇▇▇▇▇ was made a Buyer under the
Securities Purchase Agreement;
WHEREAS, pursuant to the Securities Purchase Agreement and the Third Additional Closing
Agreement, the Company issued to Gaia and ▇▇▇▇▇▇▇▇ senior secured notes (such notes, together with
any promissory notes issued in exchange or substitution therefor or replacement thereof, and as any
of the same may be amended, restated, modified, supplemented or otherwise modified and in effect
from time to time, the “March 2006 Notes” and, collectively with the January 2005 Notes, the
September 2005 Notes and the December 2005 Notes, the “Notes”), dated March 17, 2006, in an initial
aggregate principal amount of $8,000,000 and warrants (such warrants, together with any warrants or
other securities issued in exchange or substitution thereof or replacement thereof and as any of
the same may be amended, restated, supplemented or otherwise modified and in effect from time to
time, the “March 2006 Warrants” and,
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collectively with the January 2005 Warrants, the September 2005 Warrants and the December 2005
Warrants, the “Warrants”), dated March 17, 2006, to purchase shares of Common Stock;
WHEREAS, Portside currently holds a portion of the Notes and the Warrants;
WHEREAS, the Company, the Subsidiaries and the Buyers entered into the Waiver and Amendment,
dated as of August 9, 2006 (the “August 2006 Waiver and Amendment”), pursuant to which certain
defaults of the Company and the Subsidiaries were waived (subject to the conditions specified
therein) and each of the Notes and Warrants was amended;
WHEREAS, Infinity issued a notice to each of the Buyers on September 7, 2006 (the “September 7
Infinity Notice”), pursuant to which Infinity set forth its intention to redeem each of the Notes
on September 14, 2006, subject to conditions specified therein, which conditions were not
satisfied;
WHEREAS, the Company has breached Section 4(n) of the Securities Purchase Agreement, Section
12 of each of the Notes and the August 2006 Waiver and Amendment, resulting in a Triggering Event
(as defined in the Notes) under Sections 3(b)(vii) and 3(b)(viii) of each of the Notes and an Event
of Default (as defined in the Notes) under Section 11(a)(iii) of each of the Notes, which, but for
the limited waiver set forth in Section 4(a) of the August 2006 Waiver and Amendment, as the
parties desire be modified hereby, would (among other things) entitle each of the holders of the
Notes to require the Company to redeem all or a portion of the Principal of each of the Notes held
by such Buyer at a price equal to the sum of (i) 120% of such Principal, (a “Triggering Event
Redemption Amount”) and (ii) the Interest Amount with respect to such Principal;
WHEREAS, the Company failed to file with the SEC a Registration Statement (as defined in the
Registration Rights Agreement) by August 24, 2006 to register for resale by the Buyers Registrable
Securities consisting of at least that number of shares of Common Stock equal to 110% of the number
of Warrant Shares issuable upon exercise of all of the outstanding Warrants as of August 9, 2006
(the “August 2006 Required Registration Statement”), resulting in a breach of the Registration
Rights Agreement, an obligation of the Company to make Registration Delay Payments (as defined in
the Registration Rights Agreement) to each of the Buyers and the occurrence of a Triggering Event
(as defined in the Notes) under Section 3(b)(vii) of each of the Notes, which, but for the limited
waivers set forth in Section 6(b) hereof, would (among other things) entitle each of the holders of
the Notes to require the Company to redeem all or a portion of the Principal of each of the Notes
held by such Buyer at a price equal to the sum of (i) the applicable Triggering Event Redemption
Amount and (ii) the Interest Amount with respect to the Principal included therein; and
WHEREAS, as of the date hereof, after giving effect to this Agreement, the aggregate
outstanding principal amount under all of the Notes is $55,357,027.40, and the exercise of all
outstanding Warrants as of such date would entitle the holders thereof to purchase 5,829,726 shares
of Common Stock.
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NOW, THEREFORE, in consideration of the agreements, provisions and covenants contained 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. No October Interest Payment; Increase in Principal and Amendment of Notes.
a. Each of the Buyers, severally and not jointly, hereby agrees with the Company that (i) the
Company shall not pay any Interest on any of the Notes held by such Buyer on the date hereof (which
date is an Interest Payment Date (as defined in the Notes)), as would be required by Section 6 of
each such Note, and the amount that would otherwise be payable as Interest on such Note on the date
hereof (as set forth in the fourth column of Schedule A attached hereto) (such Note’s
“October 2006 Interest Amount”), shall instead be added to the Principal of such Note, in
accordance with clause (ii) of this Section 1(a), and (ii) as of the date hereof, the Principal of
each of the Notes held by such Buyer shall increase to an amount equal to the sum of (A) 120% of
the Principal of such Note (equal to the Triggering Event Redemption Amount with respect thereto)
as of the end of the day on October 1, 2006 (as set forth in the third column of Schedule A
attached hereto) and (B) such Note’s October 2006 Interest Amount. For avoidance of doubt, each of
the Buyers, severally and not jointly, hereby agrees with the Company that, as a result of the
preceding sentence, as of the date hereof, the Principal of each of the Notes held by such Buyer
shall be the amount set forth for such Note in the fifth column of Schedule A attached
hereto.
b. Each of the Buyers, severally and not jointly, hereby agrees with the Company that (i) the
Company shall not be obligated to make any payment of Interest on any of the Notes held by such
Buyer on January 2, 2007, but such Interest shall accrue until, and be payable on, the Fixed
Maturity Date; and (ii) in the event that all amounts owing under the Notes (including all
principal thereof and interest and premium thereon) are not paid in full on the Fixed Maturity
Date, the Interest that would otherwise have been payable in respect of such Notes on January 2,
2007, as well as all interest accruing under such Notes from January 2, 2007 through January 15,
2007 shall be paid in full by the Company on January 15, 2007 (without limiting such Buyer’s rights
and remedies under the Transaction Documents, including those resulting from such failure to pay
all such amounts’ constituting a Triggering Event (as defined in the Notes)).
c. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, the definition of “Company Alternative Redemption Rate” set forth in Section
2(a)(viii) of each of the Notes held by such Buyer shall be amended to add at the end thereof the
following:
“; notwithstanding the foregoing, if all amounts owing under the Notes are paid in
full on or prior to the Fixed Maturity Date pursuant to a Company Alternative
Redemption, the Company Alternative Redemption Rate shall be 100%.”
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d. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, the definition of “Fixed Maturity Date” set forth in Section 2(a)(xiii) of each of
the Notes held by such Buyer shall be amended to read in its entirety as follows:
“Fixed Maturity Date” means January 15, 2007.
e. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, the first sentence of Section 4(b) of each of the Notes held by such Buyer shall
be amended by changing “105%” to “100%” and that such sentence shall not otherwise be changed.
f. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, the definition of Triggering Event set forth in Section 3(b) of each of the Notes
shall be amended by deleting the period (.) at the end of paragraph (viii) of such Section 3(b) and
adding the following at the end of such paragraph (viii):
“or of that certain Waiver and Amendment, dated as of October 2, 2006, by and among
the Company, its Subsidiaries and the Buyers; or”
g. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, the definition of Triggering Event set forth in Section 3(b) of each of the Notes
shall be amended by adding a new paragraph (ix) immediately after paragraph (viii) thereof, such
paragraph (ix) to read in its entirety as follows:
“(viii) any failure of the Company to pay any Principal of this Note, when and as
due.”
h. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, each of the Notes held by such Buyer shall be amended by deleting Section 6.1
thereof in its entirety.
2. Company Alternative Conversions.
a. For purposes of this Section 2, each capitalized term used herein, and not otherwise
defined, shall have the meaning ascribed thereto in the Notes.
b. Notwithstanding anything to the contrary contained in the August 2006 Waiver and Amendment,
the Company hereby elects to cause the conversion of an aggregate of $3,357,027.40 (the “Aggregate
October 2006 Conversion Amount”) of Principal of the Notes (together with the aggregate Interest
Amount with respect thereto), as if the Company had delivered a Company Alternative Conversion
Notice pursuant to each of the Notes with respect thereto, and this Section 2(b) shall be deemed a
Company Alternative Conversion Notice pursuant to Section 8(a) of each of the Notes (which, for the
avoidance of doubt, means each Note of each Series), and the conversion elected by the foregoing
shall be deemed a Company Alternative Conversion pursuant to Section 8 of each of the Notes (the
“October 2006 Company Conversion”). The October 2006 Company Conversion elected by the Company
pursuant to this Section 1(b) shall be irrevocable by the Company. With respect to each Buyer,
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its aggregate Pro Rata Conversion Amount of the Aggregate Conversion Amount shall be as set
forth across from such Buyer’s name in the second column of Schedule B attached hereto
(such Buyer’s “Aggregate October 2006 Pro Rata Conversion Amount”), and such Aggregate October 2006
Pro Rata Conversion Amount shall apply on an aggregate basis to the Notes held by such Buyer. Each
of the Buyers shall be entitled to convert its Aggregate October 2006 Pro Rata Conversion Amount
with respect to the Notes held by such Buyer, together with the Interest Amount with respect to the
allocable portion of the principal represented by such Aggregate October 2006 Pro Rata Conversion
Amount accruing through and including the applicable Conversion Date, in accordance with Section 8
of each such Note. Each of the Buyers, severally and not jointly, hereby waives, solely with
respect to the October 2006 Company Conversion, the requirement that the Company Alternative
Conversion Notice deemed to be delivered pursuant to Section 2(b) be delivered at least five (5)
Business Days prior to the first Trading Day of the Company Alternative Conversion Period.
Notwithstanding anything to the contrary in the Notes, each of the Buyers, severally and not
jointly, hereby agrees with the Company that the Company Alternative Conversion Period with respect
to the October 2006 Company Conversion shall be the period commencing on and including October 3,
2006 through but not including the Fixed Maturity Date.
c. In addition to (and without in any way affecting the rights of each of the Buyers with
respect to) the October 2006 Company Conversion and notwithstanding anything to the contrary
contained in the August 2006 Waiver and Amendment, the Company hereby elects to cause the
conversion of an aggregate of $2,000,000, subject to reduction as provided in Section 2(g) (the
“Aggregate November 2006 Conversion Amount”), of Principal of the Notes (together with the
aggregate Interest Amount with respect thereto), as if the Company had delivered a Company
Alternative Conversion Notice pursuant to each of the Notes with respect thereto, and this Section
2(c) shall be deemed a Company Alternative Conversion Notice pursuant to Section 8(a) of each of
the Notes (which, for the avoidance of doubt, means each Note of each Series), and the conversion
elected by the foregoing shall be deemed a Company Alternative Conversion pursuant to Section 8 of
each of the Notes (the “November 2006 Company Conversion”). The November 2006 Company Conversion
elected by the Company pursuant to this Section 2(c) shall be irrevocable by the Company. With
respect to each Buyer, its aggregate Pro Rata Conversion Amount of the Aggregate Conversion Amount
shall be as set forth across from such Buyer’s name in the third column of Schedule B
attached hereto, subject to reduction as provided in Section 2(g) (such Buyer’s “Aggregate November
2006 Pro Rata Conversion Amount”), and such Aggregate November 2006 Pro Rata Conversion Amount
shall apply on an aggregate basis to the Notes held by such Buyer. Each of the Buyers shall be
entitled to convert its Aggregate November 2006 Pro Rata Conversion Amount with respect to the
Notes held by such Buyer, together with the Interest Amount with respect to the allocable portion
of the principal represented by such Aggregate November 2006 Pro Rata Conversion Amount accruing
through and including the applicable Conversion Date, in accordance with Section 8 of each such
Note. Notwithstanding anything to the contrary in the Notes, each of the Buyers, severally and not
jointly, hereby agrees with the Company that the Company Alternative Conversion Period with respect
to the November 2006 Company Conversion shall be the period commencing on and including November 1,
2006 through but not including the Fixed Maturity Date.
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d. In addition to (and without in any way affecting the rights of each of the Buyers with
respect to) the October 2006 Company Conversion and the November 2006 Company Conversion and
notwithstanding anything to the contrary contained in the August 2006 Waiver and Amendment, the
Company hereby elects to cause the conversion of an aggregate of $2,000,000, subject to reduction
as provided in Section 2(g) (the “Aggregate December 2006 Conversion Amount,” and each of the
Aggregate October 2006 Conversion Amount, the Aggregate November 2006 Conversion Amount and the
Aggregate December 2006 Conversion Amount being referred to herein as an “Aggregate Special
Conversion Amount”), of Principal of the Notes (together with the aggregate Interest Amount with
respect thereto), as if the Company had delivered a Company Alternative Conversion Notice pursuant
to each of the Notes with respect thereto, and this Section 2(d) shall be deemed a Company
Alternative Conversion Notice pursuant to Section 8(a) of each of the Notes (which, for the
avoidance of doubt, means each Note of each Series), and the conversion elected by the foregoing
shall be deemed a Company Alternative Conversion pursuant to Section 8 of each of the Notes (the
“December 2006 Company Conversion,” and each of the October 2006 Company Conversion, the November
2006 Company Conversion and the December 2006 Company Conversion being referred to herein as a
“Special Company Conversion”). The December 2006 Company Conversion elected by the Company
pursuant to this Section 2(d) shall be irrevocable by the Company. With respect to each Buyer, its
aggregate Pro Rata Conversion Amount of the Aggregate Conversion Amount shall be as set forth
across from such Buyer’s name in the fourth column of Schedule B attached hereto, subject
to reduction as provided in Section 2(g) (such Buyer’s “Aggregate December 2006 Pro Rata Conversion
Amount,” and such Buyer’s Aggregate October 2006 Pro Rata Conversion Amount, Aggregate November
2006 Pro Rata Conversion Amount and Aggregate December 2006 Pro Rata Conversion Amount being
collectively referred to herein as such Buyer’s “Aggregate Special Pro Rata Conversion Amounts”),
and such Aggregate December 2006 Pro Rata Conversion Amount shall apply on an aggregate basis to
the Notes held by such Buyer. Each of the Buyers shall be entitled to convert its Aggregate
December 2006 Pro Rata Conversion Amount with respect to the Notes held by such Buyer, together
with the Interest Amount with respect to the allocable portion of the principal represented by such
Aggregate December 2006 Pro Rata Conversion Amount accruing through and including the applicable
Conversion Date, in accordance with Section 8 of each such Note. Notwithstanding anything to the
contrary in the Notes, each of the Buyers, severally and not jointly, hereby agrees with the
Company that the Company Alternative Conversion Period with respect to the December 2006 Company
Conversion shall be the period commencing on and including December 1, 2006 through but not
including the Fixed Maturity Date.
e. Notwithstanding anything to the contrary in the Notes, each of the Buyers, severally and
not jointly, hereby agrees with the Company that such Buyer may, but shall not be required to,
convert all or any portion of any of such Buyer’s Aggregate Special Pro Rata Conversion Amounts
(and the applicable Additional Amount with respect thereto) with respect to the Notes held by such
Investor, and that any such conversion shall be at the sole election of such Buyer. In the event
that any of such Buyer’s Special Pro Rata Conversion Amounts has not been converted by such prior
to the Fixed Maturity Date (by delivering a Conversion Notice (as defined in the Notes) at any time
prior to the Fixed Maturity Date), then, notwithstanding anything to the contrary in the Notes, the
Special Company Conversions shall be null and void with respect to any of such Buyer’s Special Pro
Rata Conversion Amounts as to which such Buyer has not delivered a Conversion Notice prior to the
Fixed Maturity Date, in accordance
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with the Notes, and such Buyer shall be entitled to all the rights of a holder of such Notes
with respect to such aggregate amount of such Buyer’s Special Pro Rata Conversion Amounts, and,
accordingly, shall be subject to all the other provisions of such Notes, including that the Company
shall redeem the Principal represented by such amount in accordance with Section 2(d)(vii) of such
Notes.
f. Each of the Buyers, severally and not jointly, hereby waives the obligation of the Company
to comply with the Conditions to Company Alternative Conversion (as defined in the Notes) with
respect to each of the Special Company Conversions. Each of the Buyers, severally and not jointly,
and the Company hereby agree that neither the Volume Conversion Restriction Amount (i.e., the
volume limitation set forth in Section 8(b) of each of the Notes held by such Buyer) nor any of the
provisions of Sections 8(d) and 8(e) of each of the Notes held by such Buyer shall apply, nor shall
be of any force or effect with respect, to any of the Special Company Conversions.
g. In the event that at any time prior to November 1, 2006 the Company consummates a private
placement or public offering of equity securities (which, for avoidance of doubt, shall not include
any securities that constitute, represent or are convertible into or exercisable or exchangeable
for any Indebtedness), (i) the Aggregate November 2006 Company Conversion Amount shall be reduced
(provided that the Aggregate November 2006 Company Conversion Amount shall not be reduced to below
zero (0)) by an amount (an “October Offering Amount”) equal to the net proceeds to the Company from
such offering (i.e., after deducting all commissions, fees and expenses associated with such
offering), and each Buyer’s Aggregate November 2006 Pro Rata Conversion Amount shall be reduced by
an amount equal to the product of such October Offering Amount, multiplied by the percentage set
forth across from such Buyer’s name in the fifth column of Schedule B attached hereto (such
Buyer’s “Conversion Amount Reduction Allocation Percentage”), and (ii) if the Aggregate November
2006 Company Conversion Amount has been reduced to zero (0), the Aggregate December 2006 Company
Conversion Amount shall be reduced (provided that the Aggregate December 2006 Company Conversion
Amount shall not be reduced to below zero (0)) by an amount equal to the amount (an “Excess October
Offering Amount”) of such October Offering Amount that has not been applied to reduction of the
Aggregate November 2006 Company Conversion Amount, and each Buyer’s Aggregate December 2006 Pro
Rata Conversion Amount shall be reduced by an amount equal to such Excess October Offering Amount,
multiplied by such Buyer’s Conversion Amount Reduction Allocation Percentage. In the event that at
any time on or after November 1, 2006 and prior to December 1, 2006, the Company consummates a
private placement or public offering of equity securities (which, for avoidance of doubt, shall not
include any securities that constitute, represent or are convertible into or exercisable or
exchangeable for any Indebtedness), the Aggregate December 2006 Company Conversion Amount shall be
reduced (provided that the Aggregate December 2006 Company Conversion Amount shall not be reduced
to below zero (0)) by an amount (a “Post-October Offering Amount”) equal to the net proceeds to the
Company from such offering (i.e., after deducting all commissions, fees and expenses associated
with such offering), and each Buyer’s Aggregate December 2006 Pro Rata Conversion Amount shall be
reduced by an amount equal to the product of such Post-October Offering Amount, multiplied by such
Buyer’s Conversion Amount Reduction Allocation Percentage.
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3. Termination of Liens and Security Interest Documents. Each of the Buyers, severally
and not jointly, hereby agrees that, on the first date on which no Notes are outstanding (i.e.,
because there are no outstanding Liabilities (as defined in the Security Agreement) under any
Notes), (i) all security interests and Liens that such Buyer and/or the Agent, as collateral agent
for such Buyer, may have on any real or personal property of the Company and the Subsidiaries under
the Security Agreement, the Mortgages, the Pledge Agreement, the Account Control Agreements and the
Guarantee (collectively, the “Security Interest Documents”) or other agreements pursuant to which
the Company or any of the Subsidiaries granted Liens in favor of Agent as collateral security for
such Person’s obligations under the Transaction Documents shall terminate and be of no further
force or effect; (ii) such Buyer will thereafter reassign, and hereby authorizes and directs the
Agent (as collateral agent for such Buyer) to thereafter reassign, to the Company and the
Subsidiaries, as applicable, all rights and interests in the property and assets of the Company and
the Subsidiaries which, pursuant to the Security Interest Documents or other agreements pursuant to
which Company or any Subsidiary granted Liens in favor of Agent as collateral security for such
Person’s obligations under the Transaction Documents, were previously assigned or granted as
collateral security to the Agent (as collateral agent for such Buyer) by the Company and the
Subsidiaries; (iii) the Security Interest Documents shall terminate, and the Company and the
Subsidiaries shall have no further liabilities or obligations thereunder (other than
indemnification and expense reimbursement obligations that expressly survive the termination of the
Security Interest Documents, which shall so survive as unsecured claims); provided, however, that
Section 5.12 of the Security Agreement shall survive any such termination; and (iv) such Buyer, at
the Company’s expense, shall thereafter deliver, and hereby authorizes and directs the Agent, as
collateral agent for such Buyer, to thereafter deliver, at Company’s expense, to the Company such
termination statements, releases, cancellations, discharges and other agreements as may be
reasonably requested by the Company in connection with the termination and release of all security
interests and Liens of such Buyer and Agent as contemplated hereby (the “Termination Documents”);
provided, however, that (i) the Company shall supply each of the Buyers and the Agent with the
forms of any such Termination Documents to be executed or authorized by such Buyer or the Agent, as
applicable, and (ii) in no event shall Agent be required to execute or deliver any such Termination
Document until it has been assured to its reasonable satisfaction that no Notes (nor any
Obligations thereunder) are outstanding.
4. Amendment of Warrants.
a. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, Section 9 of each of the Warrants held by such Buyer shall be amended by adding a
new subsection (c) thereto, to read in its entirety as follows:
“(c) In the event that an Acquiring Entity is not a publicly traded corporation
whose common stock is listed on the NASDAQ Global Market, the NASDAQ Global Select
Market or the New York Stock Exchange (excluding a sale by the Company, directly or
indirectly, of all or substantially all of the equity or assets of Consolidated
prior to January 15, 2007, a “Private Company Organic Change”), the holder of this
Warrant shall have the right (in addition to all other rights hereunder) to require
the Company to redeem this Warrant for a cash payment equal to the Private Company
Redemption Amount (as defined below).
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Such right may be exercised as to all or any portion of this Warrant and shall be
exercised, if at all, by a notice (or notices) specifying the number of Warrant
Shares as to which this Warrant is to be redeemed (each, a “Warrant Redemption Right
Exercise Notice” and the date of delivery thereof, the “Warrant Redemption Right
Exercise Notice Date”), which shall be irrevocable provided that the Company
complies with its obligations hereunder and except as expressly provided in this
Section 9, given to the Company at any time during the period (i) beginning on and
including the earlier of (A) the date written notice of a Private Company Organic
Change is delivered to the holder of this Warrant, which written notice the Company
shall deliver not less than twenty (20) Trading Days prior to such Private Company
Organic Change (provided that the Company shall provide such notice
contemporaneously with (but not earlier than) the first public disclosure of the
information contained therein and simultaneously to the holders of all outstanding
Warrants), and (B) the date that is twenty (20) Trading Days prior to the
consummation of such Private Company Organic Change (the earlier of (A) and (B), the
“Warrant Redemption Right Exercise Period Commencement Date”), and (ii) ending on
and including the date that is three (3) Trading Days prior to the consummation of
such Private Company Organic Change. Following the delivery by the holder of this
Warrant of a Warrant Redemption Right Exercise Notice, the Company and the holder of
this Warrant shall each promptly determine the applicable Private Company Redemption
Value (as defined below) and notify in writing the other of the Private Company
Redemption Value so determined. If the holder and the Company are unable to agree
on the calculation of the applicable Private Company Redemption Value, such dispute
regarding the calculation of the applicable Private Company Redemption Value shall
be resolved in accordance with the procedures set forth in Section 8(b)(iii) of this
Warrant. The applicable “Private Company Redemption Value” shall be the
Black-Scholes Value of this Warrant as to one (1) Warrant Share, except that in
calculating such Black-Scholes Value, (x) the Valuation Date shall be the applicable
Warrant Redemption Right Exercise Notice Date, (y) the “option striking price” shall
be the Warrant Exercise Price on such Valuation Date, and (z) the “current stock
price” shall be the Weighted Average Price of the Common Stock on such Valuation
Date. The Company shall pay the Private Company Redemption Amount to the holder of
this Warrant simultaneously with the consummation of the Private Company Organic
Change. To the extent permitted by applicable law, the Company shall not enter into
any binding agreement or other arrangement with respect to a Private Company Organic
Change (other than a sale of all or substantially all of the Company’s assets)
unless the Company provides that the payments provided for in this Section 9 shall
have priority to payments to stockholders in connection with such Private Company
Organic Change and the Company complies with such provision. The applicable
“Private Company Redemption Amount” shall be the product of (I) the result of (X)
the Private Company Redemption Value, minus (Y) if all of the Conditions to
Redemption Amount Reduction (as defined below) have been satisfied as of the date of
consummation of the Private Company Organic Change, the amount, if any, by
10
which the Weighted Average Price of the Common Stock on the applicable Warrant
Redemption Right Exercise Notice Date exceeds the Warrant Exercise Price on such
Warrant Redemption Right Exercise Notice Date, or if one of more of the Conditions
to Private Company Redemption Reduction have not been satisfied as of the date of
consummation of the Private Company Organic Change, zero (0), multiplied by (II) the
number of Warrant Shares as to which the holder has demanded this Warrant be
redeemed, as set forth in the applicable Warrant Redemption Right Exercise Notice
(the date of delivery thereof by the holder being referred to as the “Applicable
Redemption Notice Date”), and has not revoked such demand as provided in this
Section 9; provided, however, that such number shall not exceed the number of
Warrant Shares for which this Warrant could be exercised on the applicable Warrant
Redemption Right Exercise Period Commencement Date, minus (a) the number of Warrant
Shares as to which this Warrant has been exercised since the Warrant Redemption
Right Exercise Period Commencement Date and (b) the number of Warrant Shares as to
which the holder has demanded this Warrant be redeemed, as set forth in any
Redemption Right Exercise Notices delivered on dates prior to the Applicable
Redemption Notice Date, and has not revoked such demand as provided in this Section
9. Notwithstanding anything to the contrary contained in this Section 9, a Warrant
Redemption Exercise Notice shall be deemed revoked in full, and shall be of no
further force and effect, on an applicable Termination Date (as defined below).”
b. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, Section 9 of each of the Warrants held by such Buyer shall be amended by adding a
new subsection (d) thereto, to read in its entirety as follows:
“(d) For purposes of this Section 9, “Conditions to Redemption Amount Reduction”
means the following conditions: (i) during the period beginning on the Warrant Date
and ending on and including the date of consummation of the Private Company Organic
Change (the applicable “Transaction Consummation Date”), the Company shall have
delivered Warrant Shares upon exercise of the Warrants on a timely basis as set
forth Section 2(a) of each of the Warrant; (ii) on each day during the period (the
“Redemption Amount Reduction Condition Period”) beginning on and including the
Warrant Redemption Right Exercise Period Commencement Date relating to such
Transaction Consummation Date and ending on and including such Transaction
Consummation Date, the Common Stock is listed on the NASDAQ Global Market, the
NASDAQ Global Select Market or the New York Stock Exchange and the Common Stock has
not been suspended from trading on the NASDAQ Global Market, the NASDAQ Global
Select Market or the New York Stock Exchange; (iii) on each day during the
Redemption Amount Reduction Condition Period, a Registration Statement (as defined
in the Registration Rights Agreement) shall be effective and available for the sale
of all of the Registrable Securities issuable upon exercise of the Warrants, in
accordance with the Registration Rights Agreement, and there shall not have been any
Grace Period (as defined in the Registration Rights Agreement) applicable to such
Registration Statement; and (iv) the Company shall have
11
obtained all requisite approvals of its stockholders for the issuance of all of the
Warrant Shares issuable upon exercise of the Warrants.”
c. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, Section 9 of each of the Warrants held by such Buyer shall be amended by adding a
new subsection (e) thereto, to read in its entirety as follows:
“(e) If at any time during a period (a “Compensated Exercise Period”) beginning on a
Warrant Redemption Right Exercise Period Commencement Date and ending on the earlier
of (i) the Trading Day immediately preceding the applicable Transaction Consummation
Date and (ii) the termination or abandonment of the Private Company Organic Change
as to which such Warrant Redemption Right Exercise Period Commencement Date relates
and the public disclosure thereof, which public disclosure the Company shall make no
later than the first Business Day following such termination or abandonment (a date
of such public disclosure, a “Termination Date”), the holder of this Warrant
exercises this Warrant as to any Warrant Shares (any such exercise being referred to
as a “Compensated Exercise”), and if the holder has delivered a Warrant Redemption
Right Exercise Notice on or after such Warrant Redemption Right Exercise Period
Commencement Date and prior to the date of such exercise (the “Exercise Date”), the
holder shall designate in the applicable Exercise Notice whether such exercise
revokes such Warrant Redemption Right Exercise Notice as to the Warrant Shares
subject to such exercise. With respect to any Compensated Exercise, but without
limiting or otherwise affecting the Company’s obligations under Section 2 of this
Warrant with respect thereto, the Company shall pay to the holder an amount equal to
the product (a “Warrant Exercise Additional Compensation Amount”) of (I) the result
of (A) the Black-Scholes Value of this Warrant as to one (1) Warrant Share, except
that in calculating such Black-Scholes Value, (x) the Valuation Date shall be the
applicable Exercise Date, (y) the “option striking price” shall be the Warrant
Exercise Price on such Valuation Date, and (z) the “current stock price” shall be
the Weighted Average Price of the Common Stock on such Valuation Date (with any
dispute regarding the calculation of such Black-Scholes Value being resolved in
accordance with the procedures set forth in Section 8(b)(iii) of this Warrant),
minus (B) the amount, if any, by which the Weighted Average Price of the Common
Stock on the applicable Exercise Date exceeds the Warrant Exercise Price on such
Exercise Date. The Company shall pay the Warrant Exercise Additional Compensation
Amount to the holder of this Warrant no later than the earliest to occur of (1) a
Transaction Consummation Date, (2) a Termination Date, and (3) the thirtieth
(30th) day after such Exercise Date.
d. Each of the Buyers, severally and not jointly, hereby agrees with the Company that, as of
the date hereof, Section 9 of each of the Warrants held by such Buyer shall be amended by adding a
new subsection (f) thereto, to read in its entirety as follows:
“(f) Upon any Warrant Redemption Right Exercise Period Commencement Date relating to
a Private Company Organic Change, the Warrant Exercise Price
12
then in effect shall be reduced, effective as of such Warrant Exercise Period
Commencement Date, to the Weighted Average Price of the Common Stock on the Trading
Day immediately preceding such Warrant Redemption Right Exercise Period Commencement
Date; provided that, in the case of a Warrant Redemption Right Exercise Period
Commencement Date relating to a Private Company Organic Change that is not a sale of
all or substantially all of the assets of the Company, the Warrant Exercise Price
then in effect shall instead be reduced to a price equal to the value, as determined
jointly by the Company and the holder of this Warrant, of the consideration to be
received per share of Common Stock by stockholders of the Company in such Private
Company Organic Change if such value is less than such Weighted Average Price. In
no event shall the Warrant Exercise Price be increased pursuant to this Section
9(f).”
5. Amendment of Securities Purchase Agreement. Each of the Buyers, severally and not
jointly, hereby agrees with the Company that, as of the date hereof, Section 4(l) of the Securities
Purchase Agreement shall be amended by deleting the first sentence thereof. Each of the Buyers,
severally and not jointly, hereby agrees with the Company that, on the first date on which no Notes
are outstanding, the Securities Purchase Agreement shall be amended by deleting Sections 4(l) and
4(w) thereof in their entirety. Each of the Buyers, severally and not jointly, hereby agrees with
the Company that, upon the consummation of a Private Company Organic Change and provided that the
Company complies with its obligations under the Notes and the other Transaction Documents in
connection therewith, the Securities Purchase Agreement shall be amended by deleting Sections 4(c)
and 4(g) thereof in their entirety.
6. Modification of August 2006 Waiver and Amendment; Additional Limited Waiver.
a. Subject to Section 6(c), each of the Buyers, severally and not jointly, hereby agrees with
the Company that, as of the date hereof, the reference to “$5,000,000” in clause (W) of the limited
waiver contained in Section 4(a) of the August 2006 Waiver and Amendment shall be changed to
“$6,000,000,” and the reference to “$1,500,000” in clause (X) of the limited waiver contained in
Section 4(a) of the August 2006 Waiver and Amendment shall be changed to “$7,500,000.”
b. Subject to Section 6(c), each of the Buyers, severally and not jointly, hereby waives the
occurrence of a Triggering Event under Section 3(b)(vii) of each of the Notes, the breach of the
Registration Rights Agreement and such Buyer’s right to receive Registration Delay Payments from
the Company resulting solely from the Company’s failure to file the August 2006 Required
Registration Statement with the SEC by August 24, 2006 (but for the avoidance of doubt, not from
any failure of the August 2006 Required Registration Statement to be declared effective); provided
that such waivers are subject to, and conditioned upon, the Company’s filing of the August 2006
Registration Statement with the SEC by no later than October 6, 2006; and provided,
further, that, in the event that the Company does not file the August 2006 Required
Registration Statement with the SEC by October 6, 2006, the waivers contained in this Section 4(b)
shall be null and void and of no force or effect, and there shall be an immediate breach of the
Registration Rights Agreement and a Triggering Event under each of the Notes and the Company shall
be obligated to make Registration Delay Payments to each of
13
the Buyers in accordance with the Registration Rights Agreement (including, with respect to
all days since August 24, 2006), as if these waivers had never been granted.
c. The limited waivers set forth in Section 4(a) of the August 2006 Waiver and Amendment (as
modified hereby) and in Section 6(b) hereof are conditioned upon, and subject to, the validity and
enforceability of, and the Company’s performance of, the Company’s commitments and obligations
under this Agreement (including the Company’s obligation to pay the Principal of each of the Notes
as increased pursuant to Section 1(a)), the voiding, setting aside, determination of invalidity or
unenforceability, breach or non-performance of which shall render such waivers null and void and of
no force and effect, each Buyer being entitled thereafter to exercise all remedies at law or in
equity under this Agreement, the August 2006 Waiver and Amendment and the other Transaction
Documents as if Section 4(a) of the 2006 Waiver and Amendment had not been part of the 2006 Waiver
and Amendment, as executed, and this Section 6(b) had not been part of this Agreement, as executed.
Neither the limited waivers set forth in Section 4(a) of the August 2006 Waiver and Amendment (as
modified hereby) nor the limited waivers set forth in Section 6(b) hereof is, nor shall be deemed
to be, a waiver under any other circumstance or a waiver of any other condition, requirement,
provision or breach of any of the Transaction Documents or any other agreement or instrument.
7. Termination of Registration Obligations. Each of the Buyers, severally and not
jointly, hereby agrees with the Company that, after the consummation of a Private Company Organic
Change and provided that the Company complies with its obligations under the Notes and the other
Transaction Documents in connection therewith, the Company shall have no further obligations under
Section 2, 3 (other than Section 3(j)) or 8 of the Registration Rights Agreement, and no Investor
(as defined in the Registration Rights Agreement) shall have any further obligations under Section
4 of the Registration Rights Agreement.
8. Continuation of Transaction Documents. The Company and the Subsidiaries agree and
acknowledge that all of the terms and provisions of each Note (as amended hereby), the Warrant (as
amended hereby), the Securities Purchase Agreement (as amended hereby), the August 2006 Waiver and
Amendment (as modified hereby) and the other Transaction Documents remain in full force in
accordance with their terms, subject to the terms and conditions of this Agreement.
9. Company Alternative Conversion Limitation. The Company hereby agrees with each of
the Buyers, severally and not jointly, that as of and after the date of this Amendment, (a) the
Company shall not have the right to effect any Company Alternative Conversion pursuant to Section 8
of the Notes other than pursuant to Special Company Conversions in accordance with this Agreement,
and (b) any Company Alternative Conversion Notice delivered pursuant to any of the Notes (other
than a Company Alternative Conversion Notice with respect to a Special Company Conversion deemed
delivered pursuant to Section 2 of this Agreement) as of and after the date of this Agreement shall
be null and void and of no force or effect.
10. September 7 Infinity Notice Null and Void. The Company hereby agrees with each of
the Buyers, severally and not jointly, that the September 7 Infinity Notice is null and void and of
no force or effect.
14
11. Covenants.
a. Prior to 9:00 a.m., New York time, on October 3, 2006, the Company shall (a) file a Form
8-K (the “8-K”) with the Securities and Exchange Commission (the “SEC”) describing the terms of
this Agreement, any information reasonably requested to be disclosed therein by any Buyer and any
material non-public information previously provided by the Company, any of its Subsidiaries or any
of their respective officers, directors, employees or agents to any of the Buyers and not
subsequently disclosed on a Form 8-K or other publicly-available filing with the SEC prior to the
filing of the 8-K, and including this Agreement as an exhibit to the 8-K, all in the form required
by the 1934 Act, and (b) publicly issue on a widely disseminated basis a press release (the “Press
Release”) in the form agreed to by the Company and each of the Buyers prior to the date hereof;
provided that the Press Release shall not be issued prior to the filing of the 8-K. The Company
shall provide each Buyer with a reasonable opportunity to review and comment upon the 8-K prior to
the filing thereof with the SEC.
b. Within two (2) Business Days following the date hereof, the Company shall promptly
reimburse each Buyer for all of the out-of-pocket fees, costs and expenses (including, but not
limited to, attorneys’ fees, costs and expenses) incurred by such Buyer in connection with the
negotiation and documentation of this Agreement.
12. Representations and Warranties of the Company. The Company represents and
warrants to each of the Buyers that:
a. Authorization; Enforcement; Validity. Each of the Company and its Subsidiaries has
the requisite corporate power and authority to enter into and perform its obligations under this
Agreement, the Notes (as amended hereby), Warrants (as amended hereby), the Securities Purchase
Agreement (as amended hereby), the August 2006 Waiver and Amendment (as modified hereby) and the
other Transaction Documents. The execution and delivery of this Agreement by each of the Company
and its Subsidiaries and the consummation of the transactions contemplated hereby (including the
issuance of Conversion Shares upon conversion of the Notes (as amended hereby) and the issuance of
Warrant Shares upon the exercise of the Warrants (as amended hereby)) have been duly authorized by
the respective boards of directors of the Company and its Subsidiaries, and no further consent or
authorization is required of any of the Company, its Subsidiaries or their respective Boards of
Directors or shareholders (under applicable law, the rules and regulations of the Principal Market
or otherwise). This Agreement has been duly executed and delivered by each of the Company and its
Subsidiaries, and each of this Agreement, the Notes (as amended hereby), the Warrants (as amended
hereby), the Securities Purchase Agreement (as amended hereby), the August 2006 Waiver and
Amendment (as modified hereby) and the other Transaction Documents constitutes a valid and binding
obligation of each of the Company and its Subsidiaries, enforceable against each of the Company and
its Subsidiaries in accordance with its terms.
b. Issuance of Securities. Upon issuance in accordance with the Notes (as amended
hereby) and the Warrants (as amended hereby), the Conversion Shares and the Warrant Shares,
respectively, will be validly issued, fully paid and nonassessable and free from all taxes and
Liens with respect to the issue thereof, with the holders being entitled to all rights accorded to
a holder of the Common Stock.
15
c. No Conflicts. The execution and delivery of this Agreement by each of the Company
and its Subsidiaries, the performance by each of the Company and its Subsidiaries of its
obligations hereunder and the consummation by each of the Company and its Subsidiaries of the
transactions contemplated hereby and by the Notes (as amended hereby), the Warrants (as amended
hereby), the Securities Purchase Agreement (as amended hereby), the August 2006 Waiver and
Amendment (as modified hereby) and the other Transaction Documents will not (i) result in a
violation of the Articles of Incorporation or the Bylaws or the organizational documents of any
Subsidiary; (ii) conflict with, or constitute a breach or default (or an event which, with the
giving of notice or lapse of time or both, constitutes or would constitute a breach or default)
under, or give to others any right of termination, amendment, acceleration or cancellation of, or
other remedy with respect to, any agreement, indenture or instrument to which the Company or any of
its Subsidiaries is a party; or (iii) result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations and the rules and
regulations of the Principal Market) applicable to the Company or any of its Subsidiaries or by
which any property or asset of the Company or any of its Subsidiaries is bound or affected. Except
as provided in Section 11(a) hereof, neither the Company nor any of its Subsidiaries is required to
obtain any consent, authorization or order of, or make any filing or registration with, any court
or governmental agency, the Principal Market or any other regulatory or self-regulatory authority
in order for it to execute, deliver or perform any of its obligations under or contemplated by this
Agreement in accordance with the terms hereof, or under the Notes (as amended hereby), the Warrants
(as amended hereby), the Securities Purchase Agreement (as amended hereby), the August 2006 Waiver
and Amendment (as modified hereby) and the other Transaction Documents, including, the issuance of
Conversion Shares and Warrant Shares in accordance with the terms of the Notes (as amended hereby)
and the Warrants (as amended hereby), respectively.
d. No Default. As of the date hereof, there exists no Triggering Event or Event of
Default (each as defined in the Notes).
13. Representation and Warranties of the Buyers. Each of the Buyers represents and
warrants to the Company that (a) such Buyer is a validly existing corporation, partnership, limited
liability company or other entity and has the requisite corporate, partnership, limited liability
or other organizational power and authority to enter into and perform its obligations under this
Agreement, and (b) this Agreement has been duly and validly authorized, executed and delivered on
behalf of such Buyer and is a valid and binding agreement of such Buyer, enforceable against such
Buyer in accordance with its terms.
14. Avoidance of Doubt. The parties hereto hereby agree, for the avoidance of doubt,
that (a) the terms “Notes” and “Warrants” as used in the Transaction Documents shall mean the Notes
and Warrants, in each case as, and to the extent, amended by this Agreement, and (b) the terms
“Liabilities” and “Obligations” as used in the Transaction Documents and “Indebtedness” as used in
the Mortgages shall include all liabilities and obligations of the Company under this Agreement,
under each of the Notes (as amended hereby, including the increase in Principal thereof as provided
hereunder), under each of the Warrants (as amended hereby) and under the other Transaction
Documents (in each case as, and to the extent, amended or modified hereby), and each of the parties
hereto agrees not to take any contrary positions.
16
15. Independent Nature of the Buyers. The obligations of each of the Buyers hereunder
are several and not joint with the obligations of the other Buyers, and none of the Buyers shall be
responsible in any way for the performance of the obligations of any of the other Buyers hereunder
or under any of the other Transaction Documents. Each of the Buyers shall be responsible only for
its own agreements and covenants hereunder and under the other Transaction Documents. The decision
of each of the Buyers to enter into this Agreement has been made by such party independently of any
of the other Buyers 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 the Company or any of its Subsidiaries which may
have been made or given by any of the other Buyers or by any agent or employee of any of the other
Buyers, and none of the Buyers nor any of their respective agents or employees shall have any
liability to any of the other Buyers (or any other person or entity) relating to or arising from
any such information, materials, statements or opinions. Nothing contained herein or in any of the
other Transaction Documents, and no action taken by any of the Buyers pursuant hereto or thereto,
shall be deemed to constitute any of the Buyers as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that any of the Buyers are in any way acting
in concert or as a group with respect to such obligations or the transactions contemplated hereby
or thereby. Each of the Buyers shall be entitled to independently protect and enforce its rights,
including the rights arising out of this Agreement, the Notes, the Warrants, the August 2006 Waiver
and Amendment, the Security Interest Documents and the other Transaction Documents, and it shall
not be necessary for any of the other Buyers to be joined as an additional party in any proceeding
for such purpose.
16. Successors and Assigns. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted assigns. The
successors and assigns of such entities shall include their respective receivers, trustees or
debtors-in-possession.
17. Further Assurances. The Company hereby agrees from time to time, as and when
requested by any Buyer, to execute and deliver or cause to be executed and delivered, all such
documents, instruments and agreements, including secretary’s certificates, stock powers and
irrevocable transfer agent instructions, and to take or cause to be taken such further or other
action, as such Buyer may reasonably deem necessary or desirable in order to carry out the intent
and purposes of this Agreement and the other Transaction Documents.
18. Rules of Construction. 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.
19. Governing Law; Jurisdiction; Jury Trial. 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. Each party
hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in
the City of New York, borough of Manhattan, for the adjudication of any dispute
17
hereunder or in connection herewith or with any transaction contemplated hereby or discussed
herein, 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 a copy thereof
to such party at the address for such notices to it under 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.
20. 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. In
the event that any signature to this Agreement or any amendment hereto is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a
valid and binding obligation of the party executing (or on whose behalf such signature is executed)
with the same force and effect as if such facsimile or “.pdf” signature page were an original
thereof. No party hereto shall raise the use of a facsimile machine or e-mail delivery of a “.pdf”
format data file to deliver a signature to this Agreement or any amendment hereto or the fact that
such signature was transmitted or communicated through the use of a facsimile machine or e-mail
delivery of a “.pdf” format data file as a defense to the formation or enforceability of a
contract, and each party hereto forever waives any such defense.
21. 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.
22. 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.
23. Merger. This Agreement and the other Transaction Documents, as amended hereby,
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.
24. Ratification by Guarantors. By execution hereof, each of the Subsidiaries hereby
acknowledges and agrees that it has reviewed this Agreement and hereby ratifies and confirms its
respective obligations under the Transaction Documents, in each case as amended hereby.
25. Release Under Security Interest Documents. The Company and each of the
Subsidiaries hereby agrees that, as of the first date on which no Notes are outstanding, each of
Company and the Subsidiaries releases such Buyers and the Agent and their respective affiliates
18
and subsidiaries and their respective officers, directors, partners, members, managers,
employees, shareholders, agents and representatives, as well as their respective successors and
assigns, from any and all claims, obligations, rights, causes of action and liabilities, of
whatever kind or nature, whether known or unknown, whether foreseen or unforeseen, arising on or
before such date, which any such Person ever had, now has or hereafter can, shall or may have for,
upon or by reason of any matter, cause or thing whatsoever, which are based upon, arise under or
are related to the Notes or the Security Interest Documents, other than with respect to the Agent’s
and each of the Buyers’ obligations under this Agreement.
[Remainder of page intentionally left blank; Signature page follows]
19
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by each of the
undersigned as of the date first above written.
| INFINITY ENERGY RESOURCES, INC. | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Vice President and Chief Financial Officer | |||
| CONSOLIDATED OIL WELL SERVICES, INC. | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Vice President and Chief Financial Officer | |||
| CIS-OKLAHOMA, INC. | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ | |||
| Title: | Chief Executive Officer | |||
| INFINITY OIL & GAS OF WYOMING, INC. | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Vice President and Chief Financial Officer | |||
| INFINITY OIL & GAS OF KANSAS, INC. | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Vice President and Chief Financial Officer | |||
| INFINITY OIL AND GAS OF TEXAS, INC. | ||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | Vice President and Chief Financial Officer | |||
| HFTP INVESTMENT L.L.C. | ||||||
| By: | Promethean Asset Management L.L.C. | |||||
| Its: | Investment Manager | |||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||
| Title: | Partner and Authorized Signatory | |||||
| GAIA OFFSHORE MASTER FUND, LTD. | ||||||
| By: | Promethean Asset Management L.L.C. | |||||
| Its: | Investment Manager | |||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||
| Title: | Partner and Authorized Signatory | |||||
| AG OFFSHORE CONVERTIBLES, LTD. | ||||||||
| By: | ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co. L.P. | |||||||
| Its: | Director | |||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| Title: | Chief Operating Officer | |||||||
| ▇▇▇▇▇▇▇▇, L.P. | ||||||||
| By: | ▇▇▇▇▇▇▇▇ Capital Management, Inc. | |||||||
| Its: | General Partner | |||||||
| By: | ▇▇▇▇▇▇, ▇▇▇▇▇▇ & Co., L.P. | |||||||
| Its: | Director | |||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||||||
| Title: | Chief Operating Officer | |||||||
| PORTSIDE GROWTH & OPPORTUNITY FUND | ||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | |||||
| Title: | Authorized Signatory | |||||