Document:

ex_101.htm

Exhibit 10.1

Line of Credit Note Agreement between the Company and Donald W. Reeve dated December 1, 2014

 

LINE OF CREDIT NOTE AGREEMENT

 

Dated December 1, 2014

 

FOR VALUE RECEIVED, Infinite Group, Inc., a Delaware corporation whose address is 80 Office Park Way, Pittsford, NY 14534, ("Borrower") promises to pay to the order of Donald W. Reeve, an individual whose address is 7 Cross Meadow Lane, Pittsford, NY 14534 ("Lender"), the principal sum of up to Four Hundred Thousand Dollars ($400,000.00), or so much thereof as may be disbursed to, or for the benefit of the Borrower by Lender (“the “Note”). The Borrower and Lender hereunder create a line of credit agreement between Borrower and Lender whereby Borrower may borrow up to $400,000.00 from Lender; provided, however, that Lender must approve the use of proceeds at the time of each borrowing.

 

INTEREST AND PRINCIPAL: The unpaid principal of this line of credit shall bear simple interest at the annual rates as follows:

 

	
Line Amount Used by Borrower

	 	
Lifetime Index + Margin

	 	
Contract Annual Rate of Interest

	
$100,000 or more

	 	
Prime + 2.85%

	 	
6.10%

	
$50,000 to $99,999

	 	
Prime + 3.00%

	 	
6.25%

	
$25,000 to $49,999

	 	
Prime + 3.25%

	 	
6.50%

	
$5,000 to $24,999

	 	
Prime + 3.70%

	 	
6.95%

	
Current prime rate

	 	
3.25%

	 	  

 

Principal and interest shall be repaid monthly using an amortization schedule for a 15 year fully amortizing loan.  The following table illustrates the monthly payment of principal and interest required using a principal balance outstanding of $100,000.

 

	
Monthly Payment

	 	 	
Annual Interest Rate

	 	 	
Number of Days in Period (Month)

	 	 	
Number of Periods (Months)

	 	 	
Principal Outstanding

	 	 	
Interest for Corresponding Period

	 	 	
Principal for Corresponding Period

	 
	$	823.22	 	 	 	6.10	%	 	 	28	 	 	 	180	 	 	$	100,000	 	 	$	467.95	 	 	$	355.27	 
	$	833.09	 	 	 	6.10	%	 	 	29	 	 	 	180	 	 	$	100,000	 	 	$	484.66	 	 	$	348.43	 
	$	844.75	 	 	 	6.10	%	 	 	30	 	 	 	180	 	 	$	100,000	 	 	$	518.08	 	 	$	326.66	 
	$	855.62	 	 	 	6.10	%	 	 	31	 	 	 	180	 	 	$	100,000	 	 	$	501.37	 	 	$	354.25	 

 

Interest shall be calculated based on the principal balance as may be adjusted from time to time to reflect additional advances and payments of principal made hereunder and changes in the prime rate.  Interest on the unpaid balance of this Note shall accrue monthly.  Each payment shall be due to the Lender within ten calendar days from each month end.  Each monthly payment of principal and interest shall be adjusted based on the principal outstanding for the actual number of number of days in each period and applying the interest rate based on the prime rate and calculated as shown in the example table above.

 

The outstanding principal balance of this Note shall be due and payable on December 31, 2017.  Borrower shall have the right, at its option and without prior notice to Lender, and without penalty, to prepay all or any part of the outstanding principal amount and accrued interest of this Note at any time.

 

  

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DEFAULT: The Borrower shall be in default of this Note on the occurrence of any of the following events:

 

	
(i)  

	
failure of the Borrower to pay the principal amount of this Note together with accrued interest within twenty (20) business days following the Lender’s written notice of default and demand;

 

	
(ii)  

	
the Borrower shall be dissolved or liquidated;

 

	
(iii)  

	
the bankruptcy of Borrower or the filing by Borrower of a voluntary petition under any provision of the bankruptcy laws; the institution of bankruptcy proceedings in any form against Borrower which shall be consented to or permitted to remain undismissed or unstayed for ninety days; or the making by Borrower of an assignment for the benefit of creditors;

 

	
(iv)  

	
the Borrower shall commence any case, proceeding, or other action under any existing or future law of any jurisdiction relating to bankruptcy, insolvency, reorganization or relief of debtors, or any such action shall be commenced against the undersigned;

 

	
(v)  

	
the Borrower shall suffer a receiver to be appointed for it or for any of its property or shall suffer a garnishment, attachment, levy or execution; or

 

	
(vi)  

	
the taking of any judgment against Borrower, which judgment is not paid in accordance with its terms, satisfied, discharged, stayed or bonded within ninety (90) days from the entry thereof.

 

No failure on the part of Lender to exercise, and no delay in exercising, any of the rights provided for herein, shall operate as a waiver thereof, nor shall any single or partial exercise by Lender of any right preclude any other or future exercise thereof or the exercise of any other right.

 

Lender shall not, without the express prior written consent of Borrower, assign, sell, gift or otherwise transfer this Note to any third party, provided, however, that Lender may assign this Note to any person or entity that controls, is controlled by or is under common control with Lender with the prior consent of Borrower, which consent shall not be unreasonably withheld.

 

Borrower agrees to pay all costs and expenses incurred by Lender in enforcing this Note, including without limitation all reasonable attorney’s fees and expenses incurred by Lender.

 

This Note shall be governed by and construed in accordance with the laws of the State of New York.

 

REMEDIES: Upon default of this Note, Lender may declare the entire amount due and owing hereunder to be immediately due and payable.  Lender may also use all remedies in law and in equity to enforce and collect the amount owed under this Note.

 

Borrower hereby waives demand, presentment, notice of dishonor, diligence in collecting, grace and notice of protest.

 

INFORMATION FOR LENDER:  At the time of each borrowing request and prior to the origination of a borrowing, Borrower shall provide to Lender a report prepared by the Borrower for review and acceptance by Lender stating the use of proceeds for each borrowing request made under the terms and conditions of this Note.

 

AUTHORIZATION FOR BORROWINGS: Subject to the terms and conditions of this Note, Borrower is authorized to originate borrowings upon notification to Lender.  Such notification shall be in writing and signed by the President or the Chief Financial Officer of the Borrower and presented by first class mail, facsimile, e-mail with PDF attachment, or other written instructions.  Lender shall use his best efforts to make such funds available to Borrower without delay.

 

RECORDS:  Borrower shall maintain records in compliance with generally accepted accounting principles that provide sufficient details of each borrowing, payments of principal and interest, and computations of each monthly payment.  Upon Lender’s request, Borrower shall reconcile such records to those of Lender to assure each party is in agreement of the principal amount outstanding, principal paid, interest paid, and interest accrued under the terms of this Note.

 

 

  

2

  

 

IN WITNESS WHEREOF, Borrower and Lender have caused this Note to be executed and delivered as set forth above.

 

	 	Infinite Group, Inc.	 
	 	 	 	 
	
December 1, 2014

	
By: 

	/s/ James Villa	 
	 	 	James Villa	 
	 	 	President	 
	 	 	 	 

 

 

	 	 	 
	 	 	 	 
	
December 1, 2014

	
By: 

	/s/ Donald W. Reeve	 
	 	 	Donald W. Reeve	 
	 	 	 	 
	 	 	 	 

 

3ex_102.htm

Exhibit 10.2 

 

             Stock option agreement between the Company and Donald W. Reeve dated December 1, 2014

 

INFINITE GROUP, INC.

Stock Option Agreement

(This “Agreement”)

 

Dated: December 1, 2014

(“Grant Date”)

WHEREAS, Infinite Group, Inc., a Delaware corporation (the “Company”), hereby desires to compensate Donald W. Reeve (the “Optionee”) with an origination fee pursuant to the  Company’s and the Optionee’s $400,000 line of credit note agreement which extends through December 31, 2017 (“Financing”); and

WHEREAS, the Optionee desires to provide the Financing to the Company; and

WHEREAS, the Company and the Optionee desire that the Optionee be compensated for originating the Financing by the vesting of the options granted hereby.

NOW THEREFORE, the Company and the Optionee hereby agree as follows:

1.  Grant of Option.

The Company hereby grants to the Optionee a stock option to purchase a total of up to 600,000 shares of the Company's Common Stock, par value $.001 per share (the “Common Stock”), at $.05 (five cents) per share (the “Exercise Price”).  Such options shall become fully vested on the date of the closing of the Financing.

2.  Term.

This option shall expire ten (10) years from the date hereof or such earlier date as otherwise provided for herein (the “Termination Date”).

2.  Characterization of Options.

The option granted pursuant to this Agreement is intended to constitute a non-qualified option, subject to §83 of the Internal Revenue Code of 1986, as amended (the “Code”).

3.   Exercise of Options.

 

	 	(a)	Subject to earlier termination or cancellation as provided in this Agreement, this Option may be exercised at any time on or after the date hereof, in whole or in part.

    

  

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	 	(b)	To the extent vested prior to the Termination Date, this option shall be exercisable by written notice of such exercise, in the form prescribed by the Board of Directors of the Company (the “Board”), to the Secretary or Treasurer of the Company at its principal office.  The notice shall specify the number of shares of Common Stock for which the option is being exercised (which number, if less than all of the shares then subject to exercise, shall be 1,000 or a multiple thereof) and shall be accompanied by payment (i) in cash or by check in the amount equal to the Exercise Price multiplied by the number of shares to be purchased upon exercise, or (ii) in such other manner as the Board shall deem acceptable.  No shares shall be delivered upon exercise of any option until all laws, rules and regulations which the Board may deem applicable have been complied with.

 

	 	(c)	The Optionee shall not be considered a record holder of the Common Stock issuable pursuant to this Agreement for any purpose until the date on which the Optionee is actually recorded as the holder of such Common Stock in the records of the Company.

   

	 	(d)	In the event of death of the Optionee, this option may be exercised, to the extent vested on the date of death, at any time within twelve months following such date of death by the Optionee's estate or by a person who acquired the right to exercise this option by bequest or inheritance.

   

	 	(e)	In no event shall this option be exercisable after the Termination Date.

 

4. Anti-Dilution Provisions.

 

	 	(a)	 If there is any stock dividend, stock split, or combination of shares of Common Stock, the number and amount of shares then subject to this option shall be proportionately and appropriately adjusted; no change shall be made in the aggregate purchase price to be paid for all shares subject to this option, but the aggregate purchase price shall be allocated among all shares subject to this option after giving effect to the adjustment.

   

	 	(b)	 If there is any other change in the Common Stock, including recapitalization, reorganization, sale or exchange of assets, exchange of shares, offering of subscription rights, or a merger or consolidation in which the Company is the surviving corporation, an adjustment, if any, shall be made in the shares then subject to this option as the Board may deem equitable.  Failure of the Board to provide for an adjustment pursuant to this subparagraph prior to the effective date of any Company action referred to herein shall be conclusive evidence that no adjustment is required in consequence of such action.

 

	 	(c)	 If the Company is merged into or consolidated with any other corporation, or if it sells all or substantially all of its assets to any other corporation, then either (i) the Company shall cause provisions to be made for the continuance of this option after such event, or for the substitution for this option of an option covering the number and class of securities which the Optionee would have been entitled to receive in such merger or consolidation by virtue of such sale if the Optionee had been the holder of record of a number of shares of Common Stock equal to the number of shares covered by the unexercised portion of this option, or (ii) the Company shall give to the Optionee written notice of its election not to cause such provision to be made and this option shall become exercisable in full (or, at the election of the Optionee, in part) at any time during a period of 20 days, to be designated by the Company, ending not more than 10 days prior to the effective date of the merger, consolidation or sale, in which case this option shall not be exercisable to any extent after the expiration of such 20-day period.

  

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5.  Investment Representation; Legend on Certificates.

The Optionee agrees that until such time as a registration statement under the Securities Act of 1933, as amended (the “1933 Act”), becomes effective with respect to the option and/or the stock, the Optionee is taking this option and will take the stock underlying this option, for his own account, for investment and not with a view to the resale or distribution thereof.  The Company shall have the right to place upon the face of any stock certificate or certificates evidencing shares issuable upon the exercise of this option such legend as the Board may prescribe for the purpose of preventing disposition of such shares in violation of the 1933 Act, as now or hereafter provided.

6.  Non-Transferability.

This option shall not be transferable by the Optionee other than by will or by the laws of descent or distribution, and is exercisable during the lifetime of the Optionee only by the Optionee.

 

7.  Certain Rights Not Conferred by Option.

The Optionee shall not, by virtue of holding this option, be entitled to any rights of a stockholder in the Company.

8.  Expenses.

The Company shall pay all original issue and transfer taxes with respect to the issuance and transfer of shares of Common Stock pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith.

 

9.  Optionee’s Representation and Warranties.

 

	 	(a)	Other Agreements.  Optionee represents and warrants that he has the full right and authority to enter into this Agreement and fully perform his obligations hereunder, that he is not subject to any non-competition agreement, and that his past, present and anticipated future activities for the Company as contemplated by this Agreement will not infringe on the proprietary rights of others.  Optionee further represents and warrants that he is not obligated under any contract (including, but not limited to, licenses, covenants or commitments of any nature) or other agreement or subject to any judgment, decree or order of any court or administrative agency which would conflict with his obligation to use his best efforts to perform his duties hereunder or which would conflict with the Company’s business and operations as presently conducted or proposed to be conducted.  Neither the execution nor delivery of this Agreement, nor the carrying on of the Company’s business as a consultant by Optionee will conflict with or result in a breach of the terms, conditions or provisions of or constitute a default under any contract, covenant or instrument to which Optionee is currently a party or by which Optionee is currently bound.

 

  

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	 	(b)	Confidential Information; Trade Secrets.  Optionee represents and warrants that he has not, and will not, in connection with his provision of services hereunder, divulge any confidential information, trade secrets, or copyright-protected information of any prior employer or of any other third party.

 

10.  Miscellaneous.

 

	 	(a)	No Implied Rights. In no event shall this option be exercisable after the Termination Date.  Nothing herein shall be deemed to create any employment agreement or guaranty of the Optionee’s position with the Company or limit in any way the Company's right to terminate Optionee's position at any time.

 

	 	(b)	Notice.  All notices and other communications under this Agreement shall (a) be in writing (which shall include communications by telecopy), (b) be (i) sent by registered or certified mail, postage prepaid, return receipt requested, by facsimile, or (ii) delivered by hand, (c) be given at the following respective addresses and facsimile numbers and to the attention of the following persons:

 

	 	(i)	if to the Company at:
	 	 	 
	 	 	Infinite Group, Inc.
	 	 	80 Office Park Way
	 	 	Pittsford, NY  14534
	 	 	Telephone: (585) 385-0610
	 	 	Facsimile: (585) 385-0614
	 	 	 
	 	(ii)	if to Optionee, to it at the address set forth below Investor’s signature on the signature page hereof;

 

or at such other address or facsimile number or to the attention of such other person as the party to whom such information pertains may hereafter specify for the purpose in a notice to the other specifically captioned “Notice of Change of Address”, and (d) be effective or deemed delivered or furnished (i) if given by mail, on the fifth Business Day after such communication is deposited in the mail, addressed as above provided, (ii) if given by facsimile, when such communication is transmitted to the appropriate number determined as above provided in this Section and the appropriate answer back is received or receipt is otherwise acknowledged, and (iii) if given by hand delivery, when left at the address of the addressee addressed as above provided, except that notices of a change of address, facsimile or telephone number, shall not be deemed furnished, until received.

 

	 	(c)	Governing Law.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

  

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective duly authorized representatives.

 

	 	INFINITE GROUP, INC.	 
	 	 	 	 
	
December 1, 2014

	
By: 

	/s/ James Villa	 
	 	 	James Villa	 
	 	 	President	 
	 	 	 	 

Regarding: Option agreement dated December 1, 2014 for 600,000 shares of the Company’s Common Stock, par value $.001 per share, at the Exercise Price of $.05 per share. I accept the terms of this agreement.

	 	 	 
	 	 	 	 
	

December 1, 2014

	
By: 

	/s/ Donald W. Reeve	 
	 	 	Donald W. Reeve	 
	 	 	
Optionee’s Address:

7 Cross Meadow Lane

Pittsford, NY 14534

	 
	 	 	 	 

 

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