Re: Second Forbearance Agreement
EXHIBIT 10.8
AmegyBank
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
March 26, 2008
| Re: | Second Forbearance Agreement |
Ladies and Gentlemen:
This letter (this “Agreement”) sets forth the second forbearance agreement among INFINITY
ENERGY RESOURCES, INC. (“Borrower”), a Delaware corporation; INFINITY OIL AND GAS OF TEXAS,
INC., a Delaware corporation, and INFINITY OIL & GAS OF WYOMING, INC., a Wyoming corporation
(collectively “Guarantors”); and AMEGY BANK NATIONAL ASSOCIATION (“Lender”).
Borrower, Guarantors, and Lender previously entered into a Forbearance Agreement (the “First
Forbearance Agreement”) dated August 31, 2007. Capitalized terms below have the meanings
assigned in the Loan Agreement dated January 9, 2007, among Borrower, Guarantors, and Lender, as
amended (the “Loan Agreement”).
1. Forest Transactions. Borrower and Guarantors have consummated the following
transactions as contemplated by the First Forbearance Agreement:
(a) The sale of certain oil and gas properties of Infinity Oil & Gas of Wyoming, Inc.
(“IOGWy”), excluding, however, an undivided 20% interest retained in all undeveloped
leasehold acreage, pursuant to an Asset Purchase and Sale Agreement dated December 26, 2007, but
effective October 1, 2007, between IOGWy, as seller, and FOREST OIL CORPORATION (“Forest”),
a New York corporation, as buyer; and
(b) The farmout of certain undeveloped leasehold acreage of Infinity Oil and Gas of Texas,
Inc. (“IOGTx”), pursuant to a Farmout and Acquisition Agreement (the “Farmout
Agreement”) dated December 26, 2007, between IOGTx, as farmor, and Forest, as farmee.
2. Borrowing Base. Effective as of the date of this Agreement, Lender has reduced the
Borrowing Base to $3,806,000.00, until reset by Lender in connection with the next redetermination
of the Borrowing Base. Lender reserves the right to make the next redetermination of the Borrowing
Base at any time.
3. Borrowing Base Deficiency. The new Borrowing Base results in a Borrowing Base
deficiency in the amount of $7,097,468.29 (the “Deficiency”). On or before the end of the
Forbearance Period (as defined below), Borrower and Guarantors agree to cure the Deficiency by
selling assets, refinancing of the Revolving Loan, or raising capital on terms acceptable to
Lender.
4. Events of Default. Borrower and Guarantors acknowledge that the following Events
of Default have occurred and remain outstanding (the “Existing Defaults”):
(a) The Existing Defaults set forth in the First Forbearance Agreement;
(b) Borrower and Guarantors breached the financial covenants set forth in Subsection (a) — (h)
of Section 8 of the Loan Agreement for the periods ended September 30 and December 31, 2007; and
(c) Borrower and Guarantors breached the covenants set forth in Subsections (g), (h), (i), and
(m) of Section 7 of the Loan Agreement for the periods ended September 30, 2007 and December 31,
2007.
5. Forbearance. Lender, Borrower, and Guarantors agree to a forbearance period
commencing as of December 1, 2007, and continuing through May 31, 2008, unless terminated earlier
by Lender due to a Default, as defined below (the “Forbearance Period”). During the
Forbearance Period, but subject to a Default, Lender will forebear from exercising any remedies
under the Loan Agreement, the Revolving Note, the Security Documents, the Guaranties, and the other
Loan Documents. Borrower and Guarantors agree that all statutes of limitation with respect to
enforcement of the Revolving Note, the Guaranties, and the Security Documents will be tolled during
the Forbearance Period and for ninety (90) days thereafter.
6. Temporary Waiver. Borrower and Guarantors have requested that Lender temporarily
waive the Existing Defaults and additional defaults under the provisions covered by the Existing
Defaults, excluding, however, the following (the “Excluded Defaults”): (i) any additional
defaults under the additional debt prohibitions in Subsection (h) of Section 7 of the Loan
Agreement, and (ii) any additional defaults under the use of Free Operating Cash Flow prohibitions
in Subsection (h) of Section 8 of the Loan Agreement. Lender hereby waives the
Existing Defaults through the Forbearance Period only. This is a temporary and limited waiver, and
Lender reserves the right to require strict compliance with all covenants under the Loan Agreement,
including the covenants violated as set forth above, in the future. This waiver does not modify,
supplement, or alter any of the terms of the Loan Agreement or any other Loan Document. Further,
this waiver shall not be construed as a commitment by Lender to waive any future violation of the
same or any other term or condition of the Loan Agreement or any of the Loan Documents. Neither
the negotiation or execution of this Agreement will be an election of any right or remedy available
to Lender; and, except as specifically limited or postponed herein, Lender reserves all rights and
remedies.
7. Interest. Borrower and Lender hereby agree that during the Forbearance Period
(including the Forbearance Period under the First Forbearance Agreement), the entire unpaid
principal balance owed on the Revolving Note shall accrue interest at the sum of the Stated Rate,
plus the Applicable Margin as set forth in the Revolving Note; provided, however, that Lender
reserves the right to impose the default rate of Stated Rate, plus six percent (6.0%) (the
“Default Rate”), as set forth in the Revolving Note, at any time after the termination of
the Forbearance Period, in the event that an Event of Default remains uncured and outstanding.
Further, in lieu of the additional interest accrued and unpaid under the First Forbearance
Agreement, calculated as the difference between the Default Rate and the sum of the Stated Rate,
plus the Applicable Margin, Borrower shall pay the Forbearance/Waiver Fee set forth below.
8. Additional Collateral. In consideration of the forbearance under this Agreement,
Borrower agrees to sign and deliver a Commercial Security Agreement (the “Security
Agreement”) in Proper Form, granting a security interest in any future sale proceeds from the
sale of all or any part of the rights Borrower may have in the Tyra and Perlas Blocks, offshore
Nicaragua, as awarded to Borrower by the Republic of Nicaragua in 2003, as hereafter amended and
modified (the “Nicaragua Concessions”), and affected by Xxxxxxxxx Xx. 00, Xxxxxxxxxx Xx
000-00, rendered by the Supreme Court of Justice of the Republic of Nicaragua, Constitutional Hall,
dated May 2, 2006, in any future subsidiaries in which the rights with respect to the Nicaragua
Concessions are assigned, and in any proceeds or rights related to Borrower’s insurance policies
issued by the Overseas Private Investment Corporation (“OPIC”) related to the Nicaragua
Concessions (the “OPIC Policies”). Borrower and Guarantors agree to mortgage all oil and
gas properties and leasehold interests (excluding the Nicaragua Concessions) owned by Borrower or
Guarantors and not previously mortgaged to Lender as additional security for the Notes. Further,
Borrower and Guarantors agree to use their reasonable best efforts to obtain within thirty (30)
days of the date of this Agreement a waiver of the prohibition against liens from the lessors on
the Xxxxxx lease, Erath County, Texas, and thereafter to mortgage this lease. Lender agrees to
release without delay the Security Agreement in the event that the OPIC notifies Borrower of
payment of compensation for a claim made by Borrower under the OPIC Policies; provided, however
that if released the Security Agreement under such circumstances, Borrower agrees that the
compensation for a claim made by Borrower under the OPIC Policies shall still be paid to Lender for
application to the Revolving Loan.
9. Lockbox. Section 8 of the First Forbearance Agreement regarding payment of all
production proceeds to the Lockbox Account shall remain in effect until all amounts lawfully due
and owing on the Revolving Note and the Hedge Liabilities are paid in full, except Subsection (f)
of Section 8 of the First Forbearance Agreement is modified to read as follows:
“(f) Notwithstanding the provisions of Subsection (f) of Section 8 of the Loan
Agreement, beginning April 1, 2008, Borrower and Guarantors shall not permit cash general
and administrative expenses on a consolidated basis to exceed $75,000.00 per month during
term of this Agreement; provided, however, that general and administrative expenses in
excess of this monthly limit may be accrued and paid only after the Revolving Loan and
Hedge Liabilities have been paid in full.”
10. Sale of Oil and Gas Properties. In order to cure the Deficiency, Borrower and
Guarantors agree to take the following actions:
(a) Upon the written directive of Lender, to be exercised in Lender’s sole discretion, but
subject to shareholder approval to the extent required by applicable law, Borrower and Guarantors
shall proceed with (i) the sale and marketing of the interest retained in the oil and gas
properties of IOGWy (the “Rockies Properties”); and (ii) the sale and marketing of
interests in the Texas oil and gas properties of IOGTx (the “Texas Properties”). If
elected by Lender, Borrower and Guarantors shall devote their substantial efforts, time, talents,
and expertise to the sale and marketing of the Rockies Properties and the Texas Properties, will
take all lawful actions as will result in the prompt payment of the Deficiency, and will thereafter
accept any commercially reasonable offer to buy the Rockies Properties and the Texas Properties, or
any of them; provided no oil and gas property or leasehold interest which is mortgaged to Lender
shall be sold except on terms and price acceptable to Lender and with the prior written approval of
Lender.
(b) Upon Lender’s election to proceed with the sale of the Rockies Properties and the Texas
Properties, or any of them, Borrower and Guarantors shall thereafter use their best efforts to
(i) promptly open a data room on the properties to be sold, (ii) to promptly obtain firm proposals
for the sale of the properties, (iii) to execute a definitive agreement or agreements, subject to
stockholder approval if required, for the sale of properties with proceeds sufficient to repay the
Deficiency, and (iv) seek stockholder approval, if required, and consummate the sale of the
properties as soon as practicable thereafter, but in no event later than the end of the Forbearance
Period.
(c) Borrower and Guarantors shall promptly provide Lender with a copy of the agreement or
engagement letter with any oil and gas broker or consultant retained to assist with
sales under this Section; and thereafter Borrower and Guarantors shall provide a monthly report on
the first (1st) day of each month, to be prepared by the oil and gas broker or consultant engaged
by Borrower and Guarantors to facilitate the sale of the oil and gas properties and leasehold
interests, that includes any and all information pertaining to property bids, the current status of
any bids or sale discussions, and all marketing efforts employed to sell the Rockies Properties and
the Texas Properties. Notwithstanding any provision to the contrary, at least two business days
prior to the date on which Borrower proposes to pay such, Borrower shall deliver to Lender in usual
and customary form reasonably acceptable to Lender reasonable detail of all broker fees and other
transaction costs related to the sale of the properties proposed to be paid from proceeds in the
Lockbox Accounts, and thereafter Borrower may pay such fees and costs as are approved by Lender
(which approval shall not be unreasonably withheld, delayed, or denied).
(d) No sale of any of the Rockies Properties and the Texas Properties, or any of them, will be
permitted to an affiliate of Borrower or Guarantors, unless Lender consents in writing.
(e) Borrower and Guarantors will direct the net sale proceeds from the sale of any of the
Rockies Properties and the Texas Properties to be paid to Lender to be applied to the Revolving
Note and collection costs in such order as determined by Lender and shall take all lawful actions
to ensure that the proceeds of any such sales are contemporaneously with the closing thereof
applied to the Revolving Note and collection costs as herein provided.
11. Nicaragua Concessions. So long as the Deficiency remains uncured or there is any
outstanding Event of Default, Borrower and Guarantors agree that:
(a) They shall not sell, assign, transfer, or otherwise dispose of all or any interest in the
Nicaragua Concessions, without the prior written consent of Lender, except for (i) the sale of
hydrocarbons in the ordinary course of business, and (ii) the sale or transfer of equipment or
inventory in the ordinary course of business or that is no longer necessary for the business of
Borrower or that is obsolete or replaced by equipment of at least comparable value and use, and
(iii) the assignment or transfer required under Section 10.02 of the OPIC Policies after payment of
compensation for a claim made by Borrower under the OPIC Policies; and
(b) They shall not mortgage, assign, hypothecate, pledge, or encumber, and not create, incur,
or assume any lien or security interest on or in, the Nicaragua Concessions (or any interest in the
Nicaragua Concessions), without the prior written consent of Lender, except for any security
interest in favor of Lender and the Permitted Encumbrances.
12. Escrow Agreement. In connection with the Farmout Agreement with Forest, IOGTx,
Forest, Lender, and Amegy Bank National Association, as escrow agent, have entered into an Escrow
Agreement (the “Escrow Agreement”) dated December 27, 2007, providing for the payment of
certain liens and claims from funds held in escrow, in accordance with the terms therein.
13. Lease Operating Expense. By March 31, 2008, Borrower and IOGTx shall provide
evidence to Lender that the lease operating expense on the Texas properties of IOGTx does not
exceed an average of $2,500 per well per month; and thereafter Borrower and IOGTx shall not permit
the lease operating expense on the Texas properties of IOGTx to exceed an average of $2,500 per
well per month.
14. Hedge Transactions.
(a) In connection with the sale of the Rockies oil and gas properties to Forest, Borrower and
Guarantors terminated all outstanding Hedge Transactions. A hedge termination fee in the amount of
$56,085.00 is owed by Borrower to Lender in connection with the termination of those Hedge
Transactions, and this hedge termination fee shall be payable on or before the Deferral Date (as
defined below).
(b) Notwithstanding the terms of Section 4 of the Loan Agreement, Borrower and Guarantors
agree that during the Forbearance Period and so long thereafter as any Event of Default remains
outstanding and uncured, Borrower and Guarantors shall not enter into any Hedge Transaction without
the prior written consent of Lender. If Lender consents to any additional Hedge Transactions,
those Hedge Transactions must comply with the terms of Section 4 of the Loan Agreement.
15. Audit and Inspections. (a) Borrower and Guarantors agree that Lender and its
auditors or accountants may, during the term of this Agreement, conduct an audit at Borrower’s and
Guarantors’ offices and examine, audit, and make and take away copies or reproductions of
Borrower’s and Guarantors’ books and records reasonably required by Lender, relating to (i) the
sources and uses of all funds advanced by Lender under the Revolving Note, and (ii) the sources and
uses of all production proceeds attributable to Borrower’s and Guarantors’ oil and gas properties.
Lender will provide Borrower and Guarantors with one business day written notice of its intention
to commence the audit. Borrower and Guarantors agree to cooperate with Lender and comply with all
reasonable requests in connection with the audit, and Borrower and Guarantors hereby consent to the
review and use by Lender’s auditors of Borrower’s third-party audit of the books and records of
Borrower, Guarantors, and any other subsidiaries, including the supporting documentation and work
papers of such independent auditors.
16. Reporting Requirements. Until the Revolving Note and all other obligations and
liabilities of Borrower under the Revolving Note and the other loan documents are fully paid and
satisfied, Borrower and Guarantors will furnish to Lender the following in Proper Form:
(a) On or before March 31, 2008, a 180-day operating/cash flow forecast for Borrower and
Guarantors and a pro-forma working capital balance for Borrower and Guarantors as of February 29,
2008.
(b) Within ten (10) days of the end of each month, a pro-forma working capital balance for
Borrower and Guarantors as of the end of the prior month.
(c) On or before March 31, 2008, a written plan to pay-down the pro forma Accounts Payable
balance.
(d) As received and available, Borrower and Guarantors shall promptly provide to Lender all
information related in any way to their ability to raise additional capital.
(e) As received and available, Borrower and Guarantors shall promptly provide to Lender copies
of any agreement or engagement letter with an oil and gas broker or consultant, all written
purchase bids, purchase agreements, and farm-in proposals related in any way to the prospective
sale of any of the Rockies Properties and the Texas Properties and shall promptly inform Lender of
any unwritten offers or bids.
(f) As received and available, Borrower and Guarantors shall promptly provide to Lender copies
of any term sheets or financing proposals received that would result in the Deficiency being cured
or a refinance of the entire outstanding amount owed on the Revolving Note and Hedge Liabilities.
(g) Notwithstanding the provisions of Subsection (h) of Section 9 of the Loan Agreement,
within fifty (50) days of the end of each month, a production report, on a lease-by-lease or unit
basis, showing the gross proceeds from the sale of oil, gas, and associated hydrocarbons produced
from the Properties, the quantity of oil, gas, and associated hydrocarbons sold, the severance,
gross production, occupation, or gathering taxes deducted from or paid out of the proceeds,
settlements of any Hedge Transactions, the cash lease operating expenses, including non-recurring
cash operating expenses, intangible drilling costs, and capital expenditures, general and
administrative expenses, the number of xxxxx operated, drilled, or abandoned, the name, address,
telephone number, and contact of the first purchaser of production for all of the Properties, and
such other information as Lender may reasonably request;
(h) Within ten (10) days of the release of any funds under the Escrow Agreement, evidence of
the payments made under the Escrow Agreement and lien releases in recordable form acceptable to
Lender, releasing any lien claims made with respect to those amount paid under the Escrow
Agreement;
(i) On or before March 31, 2008, Borrower will provide Lender with a proposed budget of
recurring operating expenses, non-recurring operating expenses, general and administrative
expenses, and any capital expenditures for the oil and gas properties expected to be paid during
the Forbearance Period and supporting documentation for those expenses and expenditures; and
(j) Such other information respecting the condition and the operations, financial or
otherwise, of Borrower, Guarantors, and the Properties as Lender may from time to time reasonably
request.
17. Forbearance Fee. In consideration of the forbearance by Lender under this
Agreement and the waiver of the Existing Defaults and for other valuable consideration, the receipt
and sufficiency of which are acknowledged, Borrower agrees to pay to Lender a Forbearance/Waiver
Fee calculated as follows, and due on or before the earlier of the following (the “Deferral
Date”): (i) the termination of the Forbearance Period, (ii) the cure of the Deficiency, or
(iii) the refinance of the Revolving Note by another lender:
(a) Forbearance/Waiver Fee under the First Forbearance Agreement in the amount of $220,000.00;
plus
(b) Forbearance/Waiver Fee due because of the failure to pay the additional interest and the
original Forbearance/Waiver Fee under the First Forbearance Agreement in the amount of $333,666.67;
plus
(c) Forbearance/Waiver Fee for December 2007 in the amount of $223,666.67; plus
(d) Forbearance/Waiver Fee for each month from January 2008 through May 2008, inclusive,
calculated as one percent (1.0%) of the average daily outstanding principal balance on the
Revolving Note for the month as of the last day of each of those months (or as of the Deferral Date
if such occurs during any month).
The Forbearance/Waiver Fees and all other fees are non-refundable and earned by Lender upon
execution of this Agreement.
18. Conditions Precedent. The obligation of Lender to enter into this Agreement and
to forbear with respect to the Existing Defaults is subject to Borrower’s satisfaction, in Lender’s
sole discretion, of the following conditions precedent:
(a) Except for the Deficiency and the Existing Defaults, all representations and warranties
set forth in Section 6 of the Loan Agreement must be true as of the date of this Agreement, except
for Subsection (d) of Section 6 which is qualified by the lawsuits set forth in Schedule A
attached.
(b) the negotiation, execution, and delivery of Loan Documents in Proper Form, including, but
not limited to, the following:
| (i) | this Agreement; | ||
| (ii) | the Security Agreement; and | ||
| (iii) | Borrower and Guarantors Resolutions. |
(c) there shall not have occurred a material adverse change in the business, assets,
liabilities (actual and contingent), operations, or financial condition of Borrower or in the facts
and information regarding such entities as represented to date.
19. Default and Remedies.
(a) As used in this Agreement, “Default” means (i) any breach by Borrower or
Guarantors of their obligations under this Agreement, (ii) any misrepresentation by Borrower or
Guarantors of the representations or warranties set forth in this Agreement, or (iii) any further
Event of Default under the Loan Agreement, other than additional defaults under the provisions
covered by the Existing Defaults, excluding the Excluded Defaults.
(b) Upon a Default, Lender may terminate the Forbearance Period and exercise any and all
rights and remedies available to it, including, without limitation, those under the Loan Agreement,
the Revolving Note, the Security Documents, the Guaranties, the Loan Documents, this Agreement, and
any other instrument or agreement relating hereto, or any one or more of them. All rights and
remedies of Lender shall be cumulative and concurrent and, after a Default, may be pursued
separately, successively, or together as often as occasion therefore shall arise, at the sole
discretion of the Lender.
20. Other Representations. Borrower and Guarantors hereby represent to Lender as
follows:
(a) The execution, delivery, and performance of this Agreement by Borrower and Guarantors have
been duly authorized by Borrower’s and Guarantors’ respective boards of directors and this
Agreement constitutes their legal, valid, and binding obligations, enforceable in accordance with
their respective terms; and
(b) Except as set forth on Schedule A hereto, there are no actions, suits, or
proceedings pending or threatened against or affecting Borrower, Guarantors, or the Properties,
before any court or governmental department, commission, or board, which, if determined adversely,
would have a material adverse effect on any of the Properties or the operations or financial
condition of any of Borrower or Guarantors.
21. Confirmations.
(a) Borrower and Guarantors agree that the following amounts are due and outstanding with
respect to the Revolving Note as of March 12, 2008:
Principal |
$ | 10,903,468.29 | ||
Interest |
$ | 21,655.50 | ||
Total |
$ | 10,925,123.79 | ||
Borrower and Guarantors agree that there is no set off or defense to payment of the Revolving Note
or the Hedge Liabilities.
(b) As security for the Notes, Borrower and Guarantors previously executed the Security
Documents. Borrower and Guarantors ratify and confirm the Security Documents, acknowledge that
they are valid, subsisting, and binding, and agree that the Security Documents secure payment of
the Notes (including the Revolving Note) and the Loans (including the Revolving Loan).
(c) In connection with the Revolving Note, Guarantors executed the Guaranties. Guarantors
ratify and confirm the Guaranties, acknowledge that the Guaranties are valid, subsisting, and
binding upon Guarantors, and agree that the Guaranties guarantee payment of the Revolving Note.
Guarantors agree that there is no defense to payment under the Guaranties.
(d) Borrower and Guarantors hereby represent to Lender that all representations and warranties
set forth in Section 6 of the Loan Agreement are true and correct
as of the date of execution of this Agreement, except for Subsection (d) of Section 6 which is
qualified by the lawsuits set forth in Schedule A attached; and that, except for the
Existing Defaults, Borrower and Guarantors are in compliance as of the date of execution of this
Agreement with all covenants set forth in Section 7 of the Loan Agreement, all financial covenants
set forth in Section 8 of the Loan Agreement, and all reporting requirements set forth in Section 9
of the Loan Agreement.
22. Validity and Defaults. The Loan Agreement remains in full force and effect.
Borrower and Guarantors acknowledge that the Loan Agreement, the Revolving Note, the Security
Documents, the Guaranties, and the other Loan Documents are valid, subsisting, and binding upon
Borrower and Guarantors; no uncured breaches or defaults exist under the Loan Agreement, except for
the Existing Defaults; and no other event has occurred or circumstance exists which, with the
passing of time or giving of notice, will constitute a default or breach under the Loan Agreement.
Borrower and Guarantors ratify the Loan Agreement.
23. Release. For valuable consideration, the receipt and sufficiency of which are
acknowledged, Borrower and Guarantors hereby RELEASE AND FOREVER DISCHARGE Lender and its officers,
directors, employees, agents, representatives, attorneys, subsidiaries, and affiliates
(collectively “Released Parties”), from any and all claims, counterclaims, demands,
damages, debts, suits, obligations, liabilities, offsets, rights, actions, and causes of action of
any nature whatsoever (collectively “Claims”), caused by, because of, as a result of,
arising from, or related in any way to the Loan Agreement, the Revolving Note, the Security
Documents, the Loan Documents, this Agreement, any other transaction between Lender and Borrower,
or any act, omission, communication, transaction, occurrence, representation, promise, breach,
fraud, violation of any statute or law, or any other matter whatsoever or thing done, omitted, or
suffered by any of the Released Parties, whether those Claims are now or hereafter accrued or
possessed, whether known or unknown, direct or indirect, liquidated or unliquidated, absolute or
contingent, foreseen or unforeseen, at law or in equity, and now or hereafter asserted, including,
without limitation, claims for contribution or indemnity, claims of control, fraud, duress,
mistake, tortuous interference, usury, negligence, or violations of the Texas Consumer Protection
and Deceptive Trade Practices Act.
24. Advice from Counsel. Borrower and Guarantors understand that this Agreement is
legally binding and represent to Lender that each has obtained independent legal counsel from the
attorney of their choice regarding the meaning and legal significance of this Agreement. The
parties agree that no provision of this Agreement shall be interpreted or construed against a party
because that party prepared the provision, it being agreed that all parties have participated in
the drafting of this Agreement and have had legal counsel of their choice.
25. Governing Law and Venue. THIS AGREEMENT, THE LOAN AGREEMENT, THE REVOLVING NOTE,
AND ALL LOAN DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS AND SHALL BE PERFORMED IN DALLAS COUNTY, TEXAS. BORROWER, GUARANTORS, AND LENDER
IRREVOCABLY AGREE THAT VENUE FOR ANY ACTION OR CLAIM RELATED TO THIS AGREEMENT, THE LOAN AGREEMENT,
THE REVOLVING NOTE, OR ANY LOAN DOCUMENTS SHALL BE IN DALLAS COUNTY, TEXAS.
26. Savings Clause. Regardless of any provision contained in the Loan Agreement, the
Revolving Note, the Security Documents, the other Loan Documents, or this Agreement, it is the
express intent of the parties that at no time shall Borrower or Guarantors pay interest in excess
of the maximum lawful rate (or any other interest amount which might in any way be deemed
usurious), and Lender will never be considered to have contracted for or to be entitled to charge,
receive, collect, or apply as interest on the Revolving Note, any amount in excess of the maximum
lawful rate (or any other interest amount which might in any way be deemed usurious), and, in the
event that Lender ever receives, collects, or applies as interest any such excess, the amount which
would be excessive interest will be applied to the reduction of the principal balance of the
Revolving Note, and, if the principal balance of the Revolving Note is paid in full, any remaining
excess shall forthwith be paid to Borrower. In determining whether the interest paid or payable
exceeds the maximum lawful rate (or any other interest amount which might in any way be deemed
usurious), Borrower and Lender shall, to the maximum extent permitted under applicable law, spread
the total amount of interest throughout the entire contemplated term of the Revolving Note so that
the interest rate is uniform throughout the term.
27. Fax Provision. This Agreement and the related Loan Documents may be executed in
counterparts, and Lender is authorized to attach the signature pages from the counterparts to
copies for Lender and Borrower. At Lender’s option, this Agreement and the related Loan Documents
may also be executed by Borrower and Guarantors in remote locations with signature pages faxed to
Lender. Borrower and Guarantors agree that the faxed signatures are binding upon Borrower and
Guarantors, and Borrower and Guarantors further agree to promptly deliver the original signatures
for this Agreement and the related Loan Documents by overnight mail or expedited delivery. It will
be an Event of Default if Borrower or Guarantors fail to promptly deliver all required original
signatures.
28. Captions. Captions are for convenience only and should not be used in
interpreting this Agreement.
29. Final Agreement.
(a) In connection with the Loans, Borrower, Guarantors, and Lender have executed and delivered
this Agreement, the Loan Agreement, and the Loan Documents (collectively the “Written Loan
Agreement”).
(b) It is the intention of Borrower, Guarantors, and Lender that this paragraph be
incorporated by reference into each of the Loan Documents. Borrower, Guarantors, and Lender each
warrant and represent that their entire agreement with respect to the Loans is contained within the
Written Loan Agreement, and that no agreements or promises have been made by, or exist by or among,
Borrower, Guarantors, and Lender that are not reflected in the Written Loan Agreement.
(c) THE LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES.
If the foregoing correctly sets forth your understanding of our agreement, please sign and return
one copy of this letter. Notwithstanding any provision to the contrary, this Agreement shall only
be effective if Borrower and Guarantors sign and return to Lender by 3 p.m., Houston, Texas time,
on Thursday, March 27, 2008.
| Yours very truly, AMEGY BANK NATIONAL ASSOCIATION |
||||
| By: | /s/ A. Xxxxxxx Xxxxxxx | |||
| A. Xxxxxxx Xxxxxxx, | ||||
| Senior Vice President/ Manager - Energy Group |
||||
Accepted and agreed to
this 27th day of March, 2008:
this 27th day of March, 2008:
BORROWER:
| INFINITY ENERGY RESOURCES, INC. | ||||
By:
|
/s/ Xxxxxxx X. Xxxx
|
|||
| and Chief Executive Officer | ||||
| GUARANTORS: | ||||
| INFINITY OIL AND GAS OF TEXAS, INC. | ||||
By:
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/s/ Xxxxxxx X. Xxxx
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| INFINITY OIL & GAS OF WYOMING, INC. | ||||
By:
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/s/ Xxxxxxx X. Xxxx
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Exhibits and Schedules:
Schedule A – Lawsuits
Schedule A – Lawsuits
