<PAGE> 1
CUSIP No. 4569108 (Page 1 of 8 Pages)
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. _____)
Infinite Group, Inc.
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(Name of Issuer)
Common Stock, $.001 par value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
4569108
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(CUSIP Number)
President
Northeast Hampton Holdings, LLC
1895 Mt. Hope Avenue
Rochester, New York 14620
(716) 256-4600
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 23, 1998
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
<PAGE> 2
CUSIP No. 4569108 (Page 2 of 8 Pages)
13D
================================================================================
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS
Northeast Hampton Holdings, LLC, EIN#:
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
00
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER - 2,350,221
NUMBER OF
SHARES ----------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER - 0
OWNED BY
EACH ----------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER - 2,350,221
PERSON WITH
----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER - 0
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,350,221
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES* [ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.9%
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14 TYPE OF REPORTING PERSON*
00
================================================================================
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE> 3
CUSIP No. 4569108 (Page 3 of 8 Pages)
ITEM 1. SECURITY AND ISSUER.
Common Stock, $.001 par value
Infinite Group, Inc.
300 Metro Center Boulevard
Warwick, Rhode Island 02886
ITEM 2. IDENTITY AND BACKGROUND.
(i) Northeast Hampton Holdings, LLC
Northeast Hampton Holdings, LLC is a New York limited
liability company authorized to engage in any business in
which a limited liability company may engage and has its
principal office and principal place of business at 1895 Mt.
Hope Avenue, Rochester, New York 14620. Northeast Hampton
Holdings, LLC is controlled or under common control by James
A. Villa. All references to the Reporting Person also include
James A. Villa.
(d) During the last five years, the Reporting Person has
not been convicted in a criminal proceeding
(excluding traffic violations or similar
misdemeanors).
(e) During the last five years, the Reporting Person has
not been a party to a civil proceeding of a judicial
or administrative body.
(f) New York
(ii) James A. Villa
(a) James A. Villa
(b) 1895 Mt. Hope Avenue, Rochester, NY 14620
(c) President, H.J. Meyers & Co., Inc., a broker-dealer,
1895 Mt. Hope Avenue, Rochester, New York 14620.
(d) During the last five years, James A. Villa has not
been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) H.J. Meyers & Co. Inc., is currently under
investigation by the State of Massachusetts and the
Boston office of the Securities and Exchange
Commission relating to the dealings of its former
Boston office. In connection with such
investigation, on August 21, 1997, the Division
filed an Administrative Complaint naming James
Villa, among others, as a respondent.
<PAGE> 4
CUSIP No. 4569108 (Page 4 of 8 Pages)
(f) United States
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On February 23, 1998, the Reporting Person
acquired 104,258 shares of the Issuer's Common Stock
in a privately negotiated transaction from Cotter C.
Conway. The Reporting Person executed a Term Note in
Favor of Cotter C. Conway in the amount of $208,516
in order to acquire such Common Stock.
On February 23, 1998, the Reporting Person
acquired 104,258 shares of the Issuer's Common Stock
in a privately negotiated transaction from Carolyn C.
Conway. The Reporting Person executed a Term Note in
Favor of Carolyn C. Conway in the amount of $208,516
in order to acquire such Common Stock.
On February 23, 1998, the Reporting Person
acquired 66,489 shares of the Issuer's Common Stock
in a privately negotiated transaction from the Sibley
Family Trust. The Reporting Person executed a Term
Note in Favor of the Sibley Family Trust in the
amount of $132,978 in order to acquire such Common
Stock.
On February 23, 1998, the Reporting Person
acquired 1,526,022 shares of the Issuer's Common
Stock from Carle C. Conway and the Carle and Ann
Conway Family Trust. The Reporting Person executed a
Term Note in Favor of Carle C. Conway and the Carle
and Ann Conway Family Trust in the amount of
$3,052,649 in order to acquire such Common Stock.
On February 23, 1998, the Reporting Person
acquired 25 Notes of various dates and principal
amounts executed by the Issuer and held in varying
amounts by Cotter Conway, Carolyn C. Conway, the
Sibley Family Trust, Carle C. Conway and the Carle
and Ann Conway Family Trust in consideration of the
above described Term Notes executed by the Reporting
Person in favor of the above listed persons. The
Notes are convertible into an aggregate of 549,194
shares of the Issuer's Common Stock.
ITEM 4. PURPOSE OF TRANSACTION.
<PAGE> 5
CUSIP No. 4569108 (Page 5 of 8 Pages)
The Reporting Person engaged in the transactions as
an investment.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Amount beneficially owned: 2,350,221
Percent of class: 22.9%
(b) Number of shares as to which the Reporting Person
has:
(i) sole power to vote or to direct the vote:
2,350,221
(ii) shared power to vote or to direct the vote:
0
(iii) sole power to dispose or to direct the
disposition of: 2,350,221
(iv) shared power to dispose or to direct the
disposition of: 0
(c)
On February 23, 1998, the Reporting Person
acquired 104,258 shares of the Issuer's Common Stock
in a privately negotiated transaction from Cotter C.
Conway. The Reporting Person executed a Term Note in
Favor of Cotter C. Conway in the amount of $208,516
in order to acquire such Common Stock. The Reporting
Person paid $2.00 per share of Common Stock.
On February 23, 1998, the Reporting Person
acquired 104,258 shares of the Issuer's Common Stock
in a privately negotiated transaction from Carolyn C.
Conway. The Reporting Person executed a Term Note in
Favor of Carolyn C. Conway in the amount of $208,516
in order to acquire such Common Stock. The Reporting
Person paid $2.00 per share of Common Stock.
On February 23, 1998, the Reporting Person
acquired 66,489 shares of the Issuer's Common Stock
in a privately negotiated transaction from the Sibley
Family Trust. The Reporting Person executed a Term
Note in Favor of the Sibley Family Trust in the
amount of $132,978 in order to acquire such Common
Stock. The Reporting Person paid $2.00 per share of
Common Stock.
On February 23, 1998, the Reporting Person
acquired 1,526,022 shares of the Issuer's Common
Stock from Carle C. Conway and the Carle and Ann
Conway Family Trust. The Reporting Person executed a
Term Note in Favor of Carle C. Conway and the Carle
and Ann Conway Family Trust in the amount of
$3,052,649 in order to acquire
<PAGE> 6
CUSIP No. 4569108 (Page 6 of 8 Pages)
such Common Stock. The Reporting Person paid $1.95
per share of Common Stock.
On February 23, 1998, the Reporting Person
acquired 25 Notes of various dates and principal
amounts executed by the Issuer and held in varying
amounts by Cotter Conway, Carolyn C. Conway, the
Sibley Family Trust, Carle C. Conway and the Carle
and Ann Conway Family Trust in consideration of the
above described Term Notes executed by the Reporting
Person in favor of the above listed persons. The
Notes are convertible into an aggregate of 549,194
shares of the Issuer's Common Stock.
(d) No other person is known to have the right to receive
or the power to direct the receipt of dividends from,
or the proceeds from the sale of, such securities.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Cotter Conway, Carolyn C. Conway, the Sibley Family
Trust, Carle C. Conway and the Carle and Ann Conway Family
Trust and the Reporting Person have entered into a Pledge and
Security Agreement and an Escrow Agreement whereby the Notes
and Common Stock purchased by the Reporting Person have been
placed under the control of an Escrow Agent. The Reporting
Person has the right to exercise all of the rights and powers
which enure to the benefit of such Common Stock and Notes so
long as the Reporting Person is not in default on any of the
terms and conditions of the Term Notes, Pledge and Security
Agreement or the Personal Guarantee (described below). In the
event of such a default, the Escrow Agent shall convey the
Common Stock and Notes to Cotter Conway, Carolyn C. Conway,
the Sibley Family Trust, Carle C. Conway and the Carle and Ann
Conway Family Trust in proportion to the amounts originally
transferred to the Reporting Person and such persons shall
thereafter exercise such rights and powers.
James A. Villa has executed a Personal Guarantee
pursuant to which Mr. Villa has guaranteed the payment of the
Term Notes by the Reporting Person.
<PAGE> 7
CUSIP No. 4569108 (Page 7 of 8 Pages)
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 1 Note and Stock Purchase Agreement dated February 23, 1998 by
and among Carle C. Conway, Cotter C. Conway, Carolyn C.
Conway, Carle C. Conway, Carle C. and Ann Conway as
Co-Trustees of the Carle and Ann Conway Family Trust and
Cotter C. Conway, Trustee of the Sibley Family Trust and
Northeast hampton Holdings, LLC.
Exhibit 2 Term Note dated February 23, 1998 in the amount of
$3,592,649 executed by Northeast Hampton Holdings, LLC in
favor of Carle C. Conway and the Carle and Ann Conway Family
Trust.
Exhibit 3 Term Note dated February 23, 1998 in the amount of $208,516
executed by Northeast Hampton Holdings, LLC in favor of Cotter
C. Conway.
Exhibit 4 Term Note dated February 23, 1998 in the amount of $208,516
executed by Northeast Hampton Holdings, LLC in favor of
Carolyn C. Conway.
Exhibit 5 Term Note dated February 23, 1998 in the amount of $132,978
executed by Northeast Hampton Holdings, LLC in favor of the
Sibley Family Trust.
Exhibit 6 Guarantee of James A. Villa dated February 23, 1998.
Exhibit 7 Pledge and Security Agreement dated February 23, 1998 by and
between Northeast Hampton Holdings, LLC, Cotter C. Conway,
Carolyn C. Conway, the Sibley Family Trust and the Carle and
Ann Conway Family Trust.
Exhibit 8 Escrow Agreement dated February 23, 1998 made between Cotter
C. Conway, Carolyn C. Conway, the Sibley Family Trust, Carle
C. Conway and the Carle and Ann Conway Family Trust.
Exhibit 9 Assignment of Notes dated December 31, 1997 from Carle C.
Conway to Northeast Hampton Holdings, LLC.
Exhibit 10 Assignment of Notes dated February 23, 1998 from Northeast
Hampton Holdings, LLC to Carle C. Conway.
<PAGE> 8
CUSIP No. 4569108 (Page 8 of 8 Pages)
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Northeast Hampton Holdings, LLC
Dated: March 5, 1998 By: /s/ James A. Villa
--------------------------------
Name: James A. Villa
Title: President
<PAGE> 1
CUSIP No. 4569108
Exhibit 1
NOTE AND STOCK PURCHASE AGREEMENT
---------------------------------
This Agreement made this 23rd day of February, 1998 by and among Carle C.
Conway, Cotter C. Conway, Carolyn C. Conway, Cotter C. Conway, individually and
Carle C. and Ann Conway as Co-Trustees of the Carle and Ann Conway Family Trust
and Cotter C. Conway, as Trustee of the Sibley Family Trust, hereinafter
referred to collectively as "Sellers" and Northeast Hampton Holdings, LLC,
hereinafter referred to as "Buyer".
Whereas the Sellers are the owners of certain common stock ("Stock"), and Carle
C. Conway, individually, is the owner of certain notes ("Notes"), convertible
upon certain terms and conditions into Stock and certain vested options
("Options") to purchase Stock of Infinite Machines, Corp. ("Company") and the
Sellers desire to sell said Stock, exercise said Options and sell the common
stock thereby acquired, and sell said Notes upon the terms and conditions
hereinafter set forth and Buyer desires to purchase said Stock and Notes, also
upon the terms and conditions hereinafter set forth and the parties having
reached an agreement in principal regarding the transaction. It Is Now Therefore
Agreed As Follows:
(1) SALE OF STOCK OF COTTER C. CONWAY, CAROLYN C. CONWAY AND SIBLEY FAMILY
TRUST
(a) Seller, Cotter C. Conway, shall sell to the Buyer and the Buyer shall
purchase from him 104,258 shares of Stock of the Company for a total
purchase price of Two Hundred Eight Thousand Five Hundred Sixteen and
no/100 Dollars ($208,516.00), pursuant to the terms set forth in paragraph
5 (a), below.
(b) Seller, Carolyn C. Conway, shall sell to the Buyer and the Buyer shall
purchase from her 104,258 shares of stock of the Company for a total
purchase price of Two Hundred Eight Thousand Five Hundred Sixteen and
no/100 Dollars ($208,516.00), pursuant to the terms set forth in paragraph
5 (b), below.
(c) Seller, Sibley Family Trust, shall sell to Buyer and the Buyer shall
purchase from it 66,489 shares of stock of the Company for a total purchase
price of One Hundred Thirty-Two Thousand Nine Hundred Seventy-Eight and
no/100 Dollars ($132,978.00) pursuant to the terms set forth in paragraph 5
(c) below.
(2) SALE OF STOCK ISSUED AND HELD BY CARLE C. CONWAY AND THE CARLE AND ANN
CONWAY FAMILY TRUST
Sellers, Carle C. Conway and the Carle and Ann Conway Family Trust, shall
sell to the Buyer and the Buyer shall purchase from them 1,526,022 shares
of Stock of the Company now owned by them for a total purchase price of
Three Million Fifty-Two Thousand Forty-Four and no/100 Dollars
($3,052,044.00) upon the terms and conditions set forth in paragraph 5 (d),
below.
(3) SALE OF SHARES OF COMMON STOCK TO BE ACQUIRED BY EXERCISE OF CERTAIN
OPTIONS Seller, Carle C. Conway, is the holder of certain Options issued by
the Company. He hereby agrees to exercise his rights as contained therein,
and agrees to sell to the Buyer
<PAGE> 2
CUSIP No. 4569108
any and all shares of Stock acquired by such exercise at a purchase price
equal to his cost of exercise as set forth below:
Shares to be Acquired Option Price Total Cost
by Exercise
_____________________ ____________ ___________
177,905 $0.60 $106,743.00
The Buyer shall pay the Seller One Hundred Six Thousand Seven Hundred Forty
Three and 00/100 Dollars ($106,743.00) in immediately available funds on
date of closing. The purchase by the Buyer is specifically made subject to
the Seller obtaining from the Company its written permission to exercise
the Option and immediately transfer to the Buyer the shares thereby
acquired.
(4) SALE OF CONVERTIBLE NOTES HELD BY CARLE C. CONWAY
The Seller, Carle C. Conway, shall sell and the Buyer shall purchase 25
Notes of various dates and principal amounts from the Company now held by
the Seller (A complete list of said Notes is attached as Schedule I and
made a part hereof.), which Notes are convertible into Stock of the Company
on certain terms and conditions, for the purchase price of $900,605 on the
terms and conditions hereinafter set forth in paragraph 5 hereof and
further shall pay to seller accumulated interest on said Notes at the rate
of $247 per day from October 1, 1997 to day of closing, in immediately
available funds. The terms and conditions of the convertibility of said
Notes are set forth on Schedule II attached hereto and made a part hereof.
(5) PAYMENT BY BUYER
At closing the Buyer shall execute Four (4) Term Notes ("Term Notes"),
payable to the respective Sellers as follows:
(a) To Cotter C. Conway in the amount of $208,516.00 with interest
initially at 7% per annum payable quarterly, in arrears and principal,
payable in two equal annual installments of $104,258.00 each on the second
days of January 1999 and 2000, all due and payable January 2, 2000, all
such payments shall be made to the Escrow Agent as more fully set forth in
Exhibit AI attached hereto and made a part hereof.
(b) To Carolyn C. Conway in the amount of $208,516.00 with interest
initially at 7% per annum payable quarterly, in arrears and principal,
payable in two equal annual installments of $104,258.00 each on the second
days of January 1999 and 2000, all due and payable January 2, 2000, all
such payments shall be made to the Escrow Agent as more fully set forth in
Exhibit AII attached hereto and made a part hereof.
(c) To the Sibley Family Trust in the amount of $132,978.00 with interest
at 7% per annum payable quarterly, in arrears, and principal payable in two
equal annual installments of $66,489.00 each on the second days of January
1999 and 2000, all such payments shall be made to the Escrow Agent as more
fully set forth in Exhibit A III attached hereto and made a part hereof.
(d) To the Carle and Ann Conway Family Trust in the total amount of
$3,952,649.00 with interest at 7% per annum payable quarterly, in arrears
and principal payable in seven annual installments, first six of which
shall be in the amount of $560,000 each on the second days of January 2000,
2001, 2002, 2003, 2004, and 2005, and the
<PAGE> 3
CUSIP No. 4569108
seventh payment of $592,649.00 on June 30, 2006, all due and payable June
30, 2006, all such principal payments shall be made to the Escrow Agent and
shall be applied or allocated first to the payments due for the purchase of
the Notes, and second to the purchase of the Stock now standing in the name
of Carle C. Conway and the Carle and Ann Conway Family Trust, as more fully
set forth in Exhibit AIV attached hereto and made a part hereof.
(6) SECURITY
(a) PLEDGE AND SECURITY AGREEMENT; ESCROW AGREEMENT
The Buyer and the Sellers shall also execute a Pledge and Security
Agreement, in substantially the form set forth on Exhibit C attached hereto
and an Escrow Agreement, in substantially the form set forth on Exhibit D
attached hereto whereby INTER ALIA the Notes and Stock purchased by the
Buyer shall be placed in the control of an Escrow Agent and the Buyer shall
have the right to exercise all the rights and powers which enure to the
benefit of such Stock and Notes so long as the Buyer is not in default on
any terms or conditions of the Term Notes, the Security Agreement and
Pledge, the Personal Guarantee and if a default occurs then the Escrow
Agent shall convey the Stock and Notes to the Sellers and the Sellers shall
thereafter exercise such rights and powers.
In no event shall Sellers be entitled to receive any amount over and above
the amount necessary to pay the entire principal and any unpaid interest
owed pursuant to the Notes plus any expenses, commissions, legal fees or
other costs associated or related to the liquidation of such security, and
any amount over and above that necessary to so pay the amount of principal
and interest due on the Notes plus such expenses will be paid and/or
returned to the Buyer. Buyer shall have the option to be paid any such
amount over and above the amount due plus such expenses in cash or in kind.
Further, said Security and Pledge Agreement and Escrow Agreement shall
contain provisions INTER ALIA as follows:
1. That the Buyer shall have the right, so long as no default has occurred
or has occurred and been cured, to sell some or all of the Stock so long as
he places in escrow, subject to the agreement tangible or intangible assets
the value of which, as determined in the sole discretion of the Sellers, is
equal to or greater than 120% of the selling price or fair market value,
whichever is greater, of the Stock.
2. That in the event, after January 2, 1999, the fair market value of the
Stock and Notes, as determined in the sole discretion of the Sellers, or
other assets held by the Escrow Agent falls below 120% of the amount due on
the Term Note the Buyer shall forthwith convey other assets to the Escrow
Agent subject to the Guarantee, Pledge and Security Agreement to bring the
fair market value to 120% of the amount due.
(7) LIMITED WARRANTIES AND REPRESENTATIONS BY SELLERS
(A) The sole member of the Buyer has for several years last past acted as
the chief executive officer for the investment banking firm and financial
advisor of the Company, H.J. Meyers & Co., Inc. As such he is thoroughly
familiar with the financial and other affairs and conditions of the Company
and has not and will not rely in any manner whatsoever on any statements or
representations, oral or otherwise, of the
<PAGE> 4
CUSIP No. 4569108
Sellers or any of them or any of their agents, employees or attorneys in
regard to the condition, financial or otherwise, of the Company.
(B) Each Seller, individually, represents and warrants to the Buyer that:
1. Such Seller has good and marketable title to the Shares as represented
herein and to be transferred to the Buyer and that upon the consummation of
the purchase contemplated herein, subject to the security interests of the
Sellers, the Buyer will acquire good and marketable title to the Shares,
free and clear of all liens and encumbrances excepting such restrictions as
may be placed thereon by state or federal laws regarding securities
regulations and the said security interests of the Sellers.
2. Such Seller has the full right, power and authority to enter into,
execute and deliver this agreement and to transfer, convey and sell to the
Buyer at the Closing the Shares subject hereto.
3. Each Seller has taken all necessary actions to authorize and permit him,
her or it to enter into and perform this Agreement. This Agreement is and
it and each of the other agreements required hereby will be as of the
Closing Date legal, valid and binding obligations of each Seller,
enforceable in accordance with their respective terms.
4. None of the Sellers is a party to any litigation, subject to or bound by
any Law, Order, Rule, Regulation or other promulgation which would restrict
his or her ability to execute or deliver this Agreement or the performance
of any of his or her obligations hereunder.
5. None of the Sellers is subject to any agreement restricting the sale of
any of the Shares except as disclosed in the option agreements heretofore
made available to the Buyer and except a certain Escrow Agreement covering
certain Shares owned by Carle C. Conway and/or the Carle and Ann Conway
Family Trust of which H.J. Meyers & Co., Inc. is the Escrow Agent.
6. None of the Sellers is a party to any pending or threatened litigation
which would restrict or encumber his or her ability to execute or deliver
this Agreement or perform any of his or her obligations hereunder.
7. None of the Sellers has engaged the services of any Broker and is not
obligated to the payment of any commission on this transaction.
(8) CLOSING DATE
This transaction shall close and the Stock and Notes shall be transferred
to the Buyer, subject to the Escrow and Pledge Agreement, on the 23rd day
of February, 1998 at the offices of Harter, Secrest and Emery, 700 Midtown
Tower, Rochester, New York or at such other date and place as shall be
agreed upon among the parties.
(A) Transfer of Stock
1. Carle C. Conway and the Carle and Ann Conway Family Trust shall deliver
or cause to be delivered to the Buyer certificates for 1,526,022 shares of
Stock, duly endorsed for transfer, subject to the Obligations of the Buyer
to deposit the shares with the Escrow Agent in accord with the terms of the
Escrow Agreement and the Security and Pledge Agreement. In the event H.J.
Meyers & Co., Inc. has not delivered to Carle C. Conway and/or the Carle
and Ann Conway Family Trust certificates which it holds in escrow, and
Carle C. Conway has not received certificates now owned by him but held in
street name, Carle C. Conway and/or the Carle and Ann Conway Family
<PAGE> 5
CUSIP No. 4569108
Trust shall be given sufficient time to receive, endorse and deliver those
certificates to the Buyer but in no event shall such time exceed ten (10)
days from the date of the receipt by them of such certificates. Under no
circumstances shall the Sellers sell, give, transfer or otherwise dispose
of such shares except pursuant hereto.
2. Cotter C. Conway shall deliver to the Buyer certificates for 104,258
shares of Stock, duly endorsed for transfer, subject to the obligations of
the Buyer to deposit the Shares with the Escrow Agent in accord with the
terms of the Escrow Agreement and the Security and Pledge Agreement.
3. Carolyn C. Conway shall deliver to the Buyer certificates for 104,250
shares of Stock duly endorsed for transfer, subject to the obligations of
the Buyer to deposit the Shares with the Escrow Agent in accord with the
terms of the Escrow Agreement and the Security and Pledge Agreement.
4. The Sibley Family Trust shall deliver to the Buyer certificates for
66,489 shares of stock, duly endorsed for transfer, subject to the
obligation of the Buyer to deposit the Shares with the Escrow Agent in
accord with the terms of the Escrow Agreement and the Security and Pledge
Agreement.
5. Carle C. Conway shall, within ten (10) days of closing, exercise the
options as set forth in paragraph 3 and assign all right, title and
interest in the Stock to be derived from such exercise to the Buyer, the
certificates therefor to be delivered to the Escrow Agent within sixty (60)
days of closing.
6. Carle C. Conway shall assign all his right, title and interest in and to
the twenty-five (25) Notes to the Buyer.
(B) Payment by Buyer
The Buyer shall deliver or cause to be transferred to:
1. Carle C. Conway, within ten (10) days of closing, the amount of $106,743
and at closing an amount equal to the interest accumulated on the Notes at
the rate of $247 per day from October 1, 1997 to date of closing.
2. The executed Promissory Notes as set forth in paragraph 5 and Exhibits
AI, AII, AIII and AIV.
(C) Security Instruments from the Buyer
1. The Buyer shall execute and deliver to the Sellers the Pledge and
Security Agreement as set forth in Paragraph 6 and Exhibit C. 2. The Buyer
and the Sellers shall execute the Escrow Agreement as set forth in
paragraph 6 and Exhibit D and deliver to the Escrow Agent a certificate or
certificates for 1,978,933 shares of Stock registered in Buyer's name and
the 25 Notes as set forth in paragraph 4 and Schedule I. Carle C. Conway
shall in writing instruct the Company to issue the Stock acquired by him by
the exercise of the Options to the Buyer and deliver them to the Escrow
Agent. All the Stock and Notes together with a Stock Power executed by the
Buyer in proper form to transfer such Stock on the books of the Company and
the Notes, together with an assignment of said Notes by the Buyer to the
Sellers shall be held as Collateral by the Escrow Agent.
(D) Release of Escrow by H.J. Meyers & Co., Inc.
<PAGE> 6
CUSIP No. 4569108
The Buyer shall cause H.J. Meyers & Co., Inc. to release all stock held by
it to the Sellers, Carle C. Conway and the Carle and Ann Conway Family
Trust and/or provide documentary evidence of such release.
12. MISCELLANEOUS
(a) This Agreement shall be constructed in accord with the Laws of the
State of New York as a contract made and to be executed therein.
(b) This Agreement is personal to the Buyer and may not be assigned by him
and any attempted assignment shall be void and of no force or effect. This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective heirs, successors and the assigns of the Sellers.
(c) In the event of any dispute between the parties arising out of this
Agreement, the prevailing party shall be entitled to recover as part of the
award and/or judgment, reasonable attorney fees plus the costs and
disbursements of the suit including but not limited to travel and lodging
expenses of the Sellers, if any. In Witness Whereof the parties have
executed this Agreement the date first above set forth.
<PAGE> 7
Sellers
/s/ Carl C. Conway
----------------------------
Carle C. Conway
/s/ Cotter C. Conway
----------------------------
Cotter C. Conway
/s/ Carolyn C. Conway
----------------------------
Carolyn C. Conway
Carle and Ann Conway Family Trust
By: /s/ Carle C. Conway
----------------------------
Carle C. Conway, Trustee
Sibley Family Trust
By: /s/ Cotter C. Conway
----------------------------
Cotter C. Conway, Trustee
Buyer: Northeast Hampton
Holdings, LLC
By: /s/ James A. Villa
-------------------------
James A. Villa, Sole Member
<PAGE> 1
CUSIP No. 4569108
Exhibit 2
TERM NOTE
Rochester, New York February 23, 1998 $3,592,649.00
BORROWER: NORTHEAST HAMPTON HOLDINGS, LLC
Address: Mount Hope Avenue, Rochester, New York
CREDITOR: CARLE C. CONWAY AND CARLE AND ANN CONWAY FAMILY TRUST
Address: P.O. Box 8238 Incline Village, Nevada 89452
ESCROW AGENT: PAUL S. BOYLAN
Address: P.O. Box 307, 45 West Main Street, LeRoy, New York 14482-0307
PROMISE TO PAY. For value received, Borrower promises to pay to the order of
Creditor, on the dates set forth below, the principal sum of Three Million Nine
Hundred Fifty-Two Thousand Six Hundred Forty-Nine and no/100 Dollars
($3,592,649.00) (the "Principal") plus interest as agreed below and all fees and
costs (including without limitation attorney's fees and disbursements whether
for internal or outside counsel) the Creditor incurs in order to collect any
amount due under this Note, to negotiate or document a workout, or
restructuring, or to preserve his or its rights or realize upon any guaranty or
other security for the payment of this Note ("Expenses").
<PAGE> 2
CUSIP No. 4569108
INTEREST. The unpaid Principal balance of this Note shall earn interest
calculated on the basis of a 360-day year for the actual number of days or each
year (365 or 366) from and including the date this Note is executed, but not
including, the date all amounts hereunder are paid in full, at a rate per year
which shall on each day be: seven percent (7%) unless the prime rate of interest
as announced by the Chase Manhattan Bank, NA ("Chase") shall increase above 9%
and in that event the interest rate shall be 2% below the prime rate effective
on the date announced by Chase, but in no event shall the interest rate be less
than 7%.
DEFAULT RATE. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 3% per
year above the otherwise applicable rate per year.
REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be made in
immediately available United States funds at the office of the Escrow Agent.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay late charge
equal to 5% of the delinquent amount. Payments shall be applied first to past
due interest, Expenses,
<PAGE> 3
CUSIP No. 4569108
late charges and principal, then to current interest, Expenses, late charges and
principal, and last to remaining principal.
The Maturity Date of this Note is January 2, 2006.
Borrower shall pay the Principal in seven (7) consecutive annual payments
commencing on June 30, 2000. In addition, until the outstanding Principal is
paid in full, payments of all accrued and unpaid interest, in amounts which will
vary, will become due and payable as the 1st day of each quarter commencing on
April 1, 1998. The first six Principal payments will be in the amount of
$560,000.00 and the last Principal payment will be in the amount of $592,649.00
due on June 30, 2006 and will include all unpaid principal interest and all
other amounts then due.
REPRESENTATIONS AND WARRANTIES. Borrower represents to and agrees with the
Creditor that now and until this Note is paid in full: a. LEGALITY. The
execution, issuance, delivery to the Creditor and performance by Borrower of
this Note (i) are in furtherance of Borrower's purposes and within his power and
authority; (ii) do not (A) violate any statute, regulation or other law or any
<PAGE> 4
CUSIP No. 4569108
judgment, order or award of any court, agency or other governmental authority or
of any arbitrator or (B) constitute a default under any agreement binding on
Borrower, or result in a lien or encumbrance on any assets of Borrower.
b. TITLE TO ASSETS. Borrower has good and marketable title to each of its assets
constituting the collateral, free of security interests and mortgages and other
liens pursuant to the Creditor's prior written consent.
c. JUDGMENTS AND LITIGATION. There is no pending or threatened claim, audit,
investigation, action or other legal proceeding or judgment, order or award of
any court, agency or other governmental authority or arbitrator (each an
"Action") which involves Borrower or its assets and might have a material
adverse effect upon Borrower or threaten the validity of this Note or any
related document or transaction. Borrower will immediately notify the Creditor
in writing upon acquiring knowledge of any such Action.
d. NOTICE OF CHANGE OF ADDRESS AND OF DEFAULT. Borrower will immediately notify
the Creditor and Escrow Agent in writing (i) of any change in his address, (ii)
of the occurrence of any Event of Default defined below, and (iii) of any
material change in Borrower's ability to repay this Note.
<PAGE> 5
CUSIP No. 4569108
EVENTS OF DEFAULT; ACCELERATION. An event of default ("Event of Default") will
have occurred if (a) Borrower fails to pay when due any amount due under this
Note; (b) any of Borrower's debts or those of any endorser or guarantor of this
Note (a "Guarantor") is accelerated or an event occurs which after notice or
lapse of time would permit such acceleration; (c) Borrower or any Guarantor
breaches or is in default under any agreement with the Creditor; (d) Borrower is
dissolved, suspends his or its present business, agrees to a merger or other
absorption or transfer or otherwise dispose of substantially all of its assets,
makes or sends notice of a bulk sale, and the Borrower or any Guarantor becomes
insolvent, generally fails to pay his or its debts as they become due, fails to
pay, withhold or collect any tax as required by law, has served or filed against
his or its assets any lien or has entered against it or its assets any judgment,
order or award; (e) a receiver or similar trustee is appointed for Borrower or a
Guarantor or his or its assets (with or without its consent), or Borrower or any
Guarantor makes an assignment for the benefit of creditors or commences or has
commenced against him or it a proceeding pursuant to any bankruptcy law; (f) any
representation or warranty made in this Note or related document or other
statements provided by Borrower or any Guarantor proves to have
<PAGE> 6
CUSIP No. 4569108
been incorrect or misleading in any material respect; or (g) Borrower fails to
supply new or additional collateral within ten days of request by the Creditor
or as required by the Note and Stock Purchase Agreement and Escrow Agreement.
All amounts hereunder shall become immediately due and payable upon the
occurrence of (e) above and upon the occurrence of any other Event of Default.
MISCELLANEOUS. This Note, together with any related loan, pledge and security
agreements, note and stock purchase agreements and guaranties, contains the
entire agreement between the Creditor and Borrower with respect to the Note, and
supersede every course of dealing, other conduct, oral agreement and
representation previously made by the Creditor. All rights and remedies of the
Creditor under applicable law and this Note or amendment of any provision of
this note are cumulative and not exclusive. No single, partial or delayed
exercise by the Creditor of any right or remedy shall preclude the subsequent
exercise by the Creditor at any time of any right or remedy of the Creditor
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Creditor. This Note shall
be governed by the laws of the State of New York, without regard to its
principles of conflict of laws. This Note is a binding obligation enforceable
<PAGE> 7
CUSIP No. 4569108
against Borrower, his executors, administrators and assigns and shall inure to
the benefit of the Creditor and his or its successors, beneficiaries, trustees,
executors, administrators, personal representatives and assigns or to the Trust
and/or beneficiaries. If a court deems any provision of this Note invalid, the
remainder of the Note shall remain in effect. Section headings are for
convenience only. Singular number includes plural and neuter gender includes
masculine and feminine as appropriate. NOTICES. Notices to Borrower by the
Creditor or Escrow Agent may be delivered in person, in writing or by telephone
with subsequent confirmation by mail or teletrans- mission. Written notice shall
be deemed delivered when deposited in the United States mail or transmitted to
Borrower at the last address of Borrower shown on the Escrow Agent's or
Creditor's records. Notice to the Creditor by the Borrower must be in writing,
refer specifically to this Note and be delivered in person or by registered mail
directed to the Creditor and the Escrow Agent at the addresses stated on page
one. Notices shall be deemed delivered only when actually received by the
Creditor and Escrow Agent. Borrower will notify the Creditor and Escrow Agent
promptly of any change of address.
<PAGE> 8
CUSIP No. 4569108
JOINT AND SEVERAL. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this Note.
BORROWER'S CONSENTS. In any action or legal proceeding relating to this Note,
Borrower (a) consents to the personal jurisdiction of any State or federal court
located in the State of New York and (b) agrees that in any legal proceeding, a
copy of this Note kept in the Creditor's course of business may be admitted into
evidence as an original.
TRIAL BY JURY. BORROWER AND THE CREDITOR EACH WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION IN CONNECTION WITH
THIS NOTE.
Tax ID/SS#___________________
BORROWER
NORTHEAST HAMPTON HOLDINGS, LLC
/s/ James A. Villa
By:_________________________
James A. Villa, Sole Member
Signature of Witness
- ----------------------
Typed Name of Witness
<PAGE> 1
CUSIP No. 4569108
Exhibit 3
TERM NOTE
Rochester, New York February 23, 1998 $208,516.00
BORROWER: NORTHEAST HAMPTON HOLDINGS, LLC
Address: Mount Hope Avenue, Rochester, New York
CREDITOR: COTTER C. CONWAY
Address: 1430 Geary Street, Reno, Nevada 89503
ESCROW AGENT: PAUL S. BOYLAN
Address: P.O. Box 307, 45 West Main Street, LeRoy, New York 14482-0307
PROMISE TO PAY. For value received, Borrower promises to pay to the order of
Creditor, on the dates set forth below, the principal sum of Two Hundred Eight
Thousand Five Hundred Sixteen and no/100 Dollars ($208,516.00) (the "Principal")
plus interest as agreed below and all fees and costs (including without
limitation attorney's fees and disbursements whether for internal or outside
counsel) the Creditor incurs in order to collect any amount due under this Note,
to negotiate or document a workout, or restructuring, or to preserve his rights
or realize upon any guaranty or other security for the payment of this Note
("Expenses").
<PAGE> 2
CUSIP No. 4569108
INTEREST. The unpaid Principal balance of this Note shall earn interest
calculated on the basis of a 360-day year for the actual number of days or each
year (365 or 366) from and including the date this Note is executed, but not
including, the date all amounts hereunder are paid in full, at a rate per year
which shall on each day be: seven percent (7%) unless the prime rate of interest
as announced by the Chase Manhattan Bank, NA ("Chase") shall increase above 9%
and in that event the interest rate shall be 2% below the prime rate effective
on the date announced by Chase, but in no event shall the interest rate be less
than 7%.
DEFAULT RATE. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 3% per
year above the otherwise applicable rate per year.
REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be made in
immediately available United States funds at the office of the Escrow Agent.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay late charge
equal to 5% of the delinquent amount. Payments shall be applied first to past
due interest, Expenses,
<PAGE> 3
CUSIP No. 4569108
late charges and principal, then to current interest, Expenses, late charges and
principal, and last to remaining principal.
The Maturity Date of this Note is January 2, 2000.
Borrower shall pay the Principal in two (2) consecutive, equal annual payments
commencing on January 2, 1999. In addition, until the outstanding Principal is
paid in full, payments of all accrued and unpaid interest, in amounts which will
vary, will become due and payable as the 1st day of each quarter commencing on
April 1, 1998. Both of the Principal payments will be in the amount of
$104,258.00 and the last Principal payment will include all unpaid principal
interest and all other amounts then due.
REPRESENTATIONS AND WARRANTIES. Borrower represents to and agrees with the
Creditor that now and until this Note is paid in full:
a. LEGALITY. The execution, issuance, delivery to the Creditor and performance
by Borrower of this Note (i) are in furtherance of Borrower's purposes and
within its power and authority; (ii) do not (A) violate any statute, regulation
or other law or any
<PAGE> 4
CUSIP No. 4569108
judgment, order or award of any court, agency or other governmental authority or
of any arbitrator or (B) constitute a default under any agreement binding on
Borrower, or result in a lien or encumbrance on any assets of Borrower. b. TITLE
TO ASSETS. Borrower has good and marketable title to each of its assets
constituting the collateral, free of security interests and mortgages and other
liens pursuant to the Creditor's prior written consent.
c. JUDGMENTS AND LITIGATION. There is no pending or threatened claim, audit,
investigation, action or other legal proceeding or judgment, order or award of
any court, agency or other governmental authority or arbitrator (each an
"Action") which involves Borrower or its assets and might have a material
adverse effect upon Borrower or threaten the validity of this Note or any
related document or transaction. Borrower will immediately notify the Creditor
in writing upon acquiring knowledge of any such Action.
d. NOTICE OF CHANGE OF ADDRESS AND OF DEFAULT. Borrower will immediately notify
the Creditor and Escrow Agent in writing (i) of any change in its address, (ii)
of the occurrence of any Event of Default defined below, and (iii) of any
material change in Borrower's ability to repay this Note.
<PAGE> 5
CUSIP No. 4569108
EVENTS OF DEFAULT; ACCELERATION. An event of default ("Event of Default") will
have occurred if (a) Borrower fails to pay when due any amount due under this
Note; (b) any of Borrower's debts or those of any endorser or guarantor of this
Note (a "Guarantor") is accelerated or an event occurs which after notice or
lapse of time would permit such acceleration; (c) Borrower or any Guarantor
breaches or is in default under any agreement with the Creditor; (d) Borrower is
dissolved, suspends his or its present business, agrees to a merger or other
absorption or transfer or otherwise dispose of substantially all of its assets,
makes or sends notice of a bulk sale, and the Borrower or any Guarantor becomes
insolvent, generally fails to pay his or its debts as they become due, fails to
pay, withhold or collect any tax as required by law, has served or filed against
his or its assets any lien or has entered against it or its assets any judgment,
order or award; (e) a receiver or similar trustee is appointed for Borrower or a
Guarantor or his or its assets (with or without its consent), or Borrower or any
Guarantor makes an assignment for the benefit of creditors or commences or has
commenced against him or it a proceeding pursuant to any bankruptcy law; (f) any
representation or warranty made in this Note or related document or other
statements provided by Borrower or any Guarantor proves to have
<PAGE> 6
CUSIP No. 4569108
been incorrect or misleading in any material respect; or (g) Borrower fails to
supply new or additional collateral within ten days of request by the Creditor
or as required by the Note and Stock Purchase Agreement. All amounts hereunder
shall become immediately due and payable upon the occurrence of (e) above and
upon the occurrence of any other Event of Default.
MISCELLANEOUS. This Note, together with any related loan, pledge and security
agreements, note and stock purchase agreement and guaranties, contain the entire
agreement between the Creditor and Borrower with respect to the Note, and
supersede every course of dealing, other conduct, oral agreement and
representation previously made by the Creditor. All rights and remedies of the
Creditor under applicable law and this Note or amendment of any provision of
this note are cumulative and not exclusive. No single, partial or delayed
exercise by the Creditor of any right or remedy shall preclude the subsequent
exercise by the Creditor at any time of any right or remedy of the Creditor
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Creditor. This Note shall
be governed by the laws of the State of New York, without regard to its
principles of conflict of laws. This Note is a binding obligation enforceable
<PAGE> 7
CUSIP No. 4569108
against Borrower, his executors, administrators and assigns and shall inure to
the benefit of the Creditor and his executors, administrators, personal
representatives and assigns. If a court deems any provision of this Note
invalid, the remainder of the Note shall remain in effect. Section headings are
for convenience only. Singular number includes plural and neuter gender includes
masculine and feminine as appropriate.
NOTICES. Notices to Borrower by the Creditor or Escrow Agent may be delivered in
person, in writing or by telephone with subsequent confirmation by mail or
teletransmission. Written notice shall be deemed delivered when deposited in
the United States mail or transmitted to Borrower at the last address of
Borrower shown on the Escrow Agent's or Creditor's records. Notice to the
Creditor by the Borrower must be in writing, refer specifically to this Note and
be delivered in person or by registered mail directed to the Creditor and the
Escrow Agent at the addresses stated on page one. Notices shall be deemed
delivered only when actually received by the Creditor and Escrow Agent. Borrower
will notify the Creditor and Escrow Agent promptly of any change of address.
<PAGE> 8
CUSIP No. 4569108
JOINT AND SEVERAL. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this Note.
BORROWER'S CONSENTS. In any action or legal proceeding relating to this Note,
Borrower (a) consents to the personal jurisdiction of any State or federal court
located in the State of New York and (b) agrees that in any legal proceeding, a
copy of this Note kept in the Creditor's course of business may be admitted into
evidence as an original.
TRIAL BY JURY. BORROWER AND THE CREDITOR EACH WAIVE ANY RIGHT TO TRIAL BY JURY
IN ANY ACTION IN CONNECTION WITH THIS NOTE.
Tax ID/SS#___________________
NORTHEAST HAMPTON HOLDINGS, LLC
BORROWER
By: /s/ James A. Villa
------------------------
James A. Villa, Sole Member
- --------------------
Signature of Witness
- ----------------------
Typed Name of Witness
<PAGE> 1
CUSIP No. 4569108
Exhibit 4
TERM NOTE
Rochester, New York February 23, 1998 $208,516.00
BORROWER: NORTHEAST HAMPTON HOLDINGS, LLC
Address: 1895 Mount Hope Avenue, Rochester, New York 14620-4596
CREDITOR: CAROLYN C. CONWAY
Address: P.O. Box 8238, Incline Village, Nevada 89452
ESCROW AGENT: PAUL S. BOYLAN
Address: P.O. Box 307, 45 West Main Street, LeRoy, New York 14482-0307
PROMISE TO PAY. For value received, Borrower promises to pay to the order of
Creditor, on the dates set forth below, the principal sum of Two Hundred Eight
Thousand Five Hundred Sixteen and no/100 Dollars ($208,516.00) (the "Principal")
plus interest as agreed below and all fees and costs (including without
limitation attorney's fees and disbursements whether for internal or outside
counsel) the Creditor incurs in order to collect any amount due under this Note,
to negotiate or document a workout, or restructuring, or to preserve her rights
or realize upon any guaranty or other security for the payment of this Note
("Expenses").
<PAGE> 2
CUSIP No. 4569108
INTEREST. The unpaid Principal balance of this Note shall earn interest
calculated on the basis of a 360-day year for the actual number of days or each
year (365 or 366) from and including the date this Note is executed, but not
including, the date all amounts hereunder are paid in full, at a rate per year
which shall on each day be: seven percent (7%) unless the prime rate of interest
as announced by the Chase Manhattan Bank, NA ("Chase") shall increase above 9%
and in that event the interest rate be 2% below the prime rate effective on the
date announced by Chase, but in no event shall the interest rate be less than
7%.
DEFAULT RATE. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 3% per
year above the otherwise applicable rate per year.
REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be made in
immediately available United States funds at the office of the Escrow Agent.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay late charge
equal to 5% of the delinquent amount. Payments shall be applied first to past
due interest, Expenses,
<PAGE> 3
CUSIP No. 4569108
late charges and principal, then to current interest, Expenses, late charges and
principal, and last to remaining principal.
The Maturity Date of this Note is January 2, 2000.
Borrower shall pay the Principal in two (2) consecutive, equal annual payments
commencing on January 2, 1999. In addition, until the outstanding Principal is
paid in full, payments of all accrued and unpaid interest, in amounts which will
vary, will become due and payable as the 1st day of each quarter commencing on
April 1, 1998. Both of the Principal payments will be in the amount of
$104,258.00 and the last Principal payment will include all unpaid principal
interest and all other amounts then due.
REPRESENTATIONS AND WARRANTIES. Borrower represents to and agrees with the
Creditor that now and until this Note is paid in full:
a. LEGALITY. The execution, issuance, delivery to the Creditor and performance
by Borrower of this Note (i) are in furtherance of Borrower's purposes and
within his power and authority; (ii) do not (A) violate any statute, regulation
or other law or any
<PAGE> 4
CUSIP No. 4569108
judgment, order or award of any court, agency or other governmental authority or
of any arbitrator or (B) constitute a default under any agreement binding on
Borrower, or result in a lien or encumbrance on any assets of Borrower.
b. TITLE TO ASSETS. Borrower has good and marketable title to each of its assets
constituting the collateral, free of security interests and mortgages and other
liens pursuant to the Creditor's prior written consent.
c. JUDGMENTS AND LITIGATION. There is no pending or threatened claim, audit,
investigation, action or other legal proceeding or judgment, order or award of
any court, agency or other governmental authority or arbitrator (each an
"Action") which involves Borrower or its assets and might have a material
adverse effect upon Borrower or threaten the validity of this Note or any
related document or transaction. Borrower will immediately notify the Creditor
in writing upon acquiring knowledge of any such Action.
d. NOTICE OF CHANGE OF ADDRESS AND OF DEFAULT. Borrower will immediately notify
the Creditor in writing (i) of any change in his address, (ii) of the occurrence
of any Event of Default defined below, and (iii) of any material change in
Borrower's ability to repay this Note.
<PAGE> 5
CUSIP No. 4569108
EVENTS OF DEFAULT; ACCELERATION. An event of default ("Event of Default") will
have occurred if (a) Borrower fails to pay when due any amount due under this
Note; (b) any of Borrower's debts or those of any endorser or guarantor of this
Note (a "Guarantor") is accelerated or an event occurs which after notice or
lapse of time would permit such acceleration; (c) Borrower or any Guarantor
breaches or is in default under any agreement with the Creditor; (d) Borrower is
dissolved, suspends its present business, agrees to a merger or other absorption
or transfer or otherwise dispose of substantially all of its assets, makes or
sends notice of a bulk sale, and the Borrower or any Guarantor becomes
insolvent, generally fails to pay his or its debts as they become due, fails to
pay, withhold or collect any tax as required by law, has served or filed against
his or its assets any lien or has entered against it or its assets any judgment,
order or award; (e) a receiver or similar trustee is appointed for Borrower or a
Guarantor or his or its assets (with or without its consent), or Borrower or any
Guarantor makes an assignment for the benefit of creditors or commences or has
commenced against him or it a proceeding pursuant to any bankruptcy law; (f) any
representation or warranty made in this Note or related document or other
statements provided by Borrower or any Guarantor proves to have been incorrect
or
<PAGE> 6
CUSIP No. 4569108
misleading in any material respect; or (g) Borrower fails to supply new or
additional collateral within ten days of request by the Creditor or as required
by the Note and Stock Purchase Agreement and Escrow Agreement. All amounts
hereunder shall become immediately due and payable upon the occurrence of (e)
above and upon the occurrence of any other Event of Default.
MISCELLANEOUS. This Note, together with any related loan, pledge and security
agreements, note and stock purchase agreement and guaranties, contain the entire
agreement between the Creditor and Borrower with respect to the Note, and
supersedes every course of dealing, other conduct, oral agreement and
representation previously made by the Creditor. All rights and remedies of the
Creditor under applicable law and this Note or amendment of any provision of
this note are cumulative and not exclusive. No single, partial or delayed
exercise by the Creditor of any right or remedy shall preclude the subsequent
exercise by the Creditor at any time of any right or remedy of the Creditor
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Creditor. This Note shall
be governed by the laws of the State of New York, without regard to its
principles of conflict of laws. This Note is a binding obligation enforce-
<PAGE> 7
CUSIP No. 4569108
able against Borrower, his executors, administrators and assigns and shall inure
to the benefit of the Creditor and her executors, administrators, personal
representatives and assigns. If a court deems any provision of this Note
invalid, the remainder of the Note shall remain in effect. Section headings are
for convenience only. Singular number includes plural and neuter gender includes
masculine and feminine as appropriate.
NOTICES. Notices to Borrower by the Creditor or Escrow Agent may be delivered in
person, in writing or by telephone with subsequent confirmation by mail or
teletrans- mission. Written notice shall be deemed delivered when deposited in
the United States mail or transmitted to Borrower at the last address of
Borrower shown on the Escrow Agent's or Creditor's records. Notice to the
Creditor by the Borrower must be in writing, refer specifically to this Note and
be delivered in person or by registered mail directed to the Creditor and the
Escrow Agent at the addresses stated on page one. Notices shall be deemed
delivered only when actually received by the Creditor and Escrow Agent. Borrower
will notify the Creditor and Escrow Agent promptly of any change of address.
<PAGE> 8
CUSIP No. 4569108
JOINT AND SEVERAL. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this Note.
BORROWER'S CONSENTS. In any action or legal proceeding relating to this Note,
Borrower (a) consents to the personal jurisdiction of any State or federal court
located in the State of New York and (b) agrees that in any legal proceeding, a
copy of this Note kept in the Creditor's course of business may be admitted into
evidence as an original.
TRIAL BY JURY. BORROWER AND THE CREDITOR EACH WAIVE ANY
RIGHT TO TRIAL BY JURY IN ANY ACTION IN CONNECTION WITH
THIS NOTE.
Tax ID/SS#___________________
NORTHEAST HAMPTON HOLDINGS, LLC
BORROWER
By: /s/ James A. Villa
--------------------------
James A. Villa, Sole Member
- ----------------------
Signature of Witness
- ----------------------
Typed Name of Witness
<PAGE> 1
CUSIP No. 4569108
Exhibit 5
TERM NOTE
Rochester, New York February 23, 1998 $132,978.00
BORROWER: NORTHEAST HAMPTON HOLDINGS, LLC
Address: Mount Hope Avenue, Rochester, New York
CREDITOR: SIBLEY FAMILY TRUST
Address: c/o Cotter C. Conway, 1430 Geary Street, Reno, Nevada 89503
ESCROW AGENT: PAUL S. BOYLAN
Address: P.O. Box 307, 45 West Main Street, LeRoy, New York 14482-0307
PROMISE TO PAY. For value received, Borrower promises to pay to the order of
Creditor, on the dates set forth below, the principal sum of One Hundred
Thirty-Two Thousand Nine Hundred Seventy-Eight and no/100 Dollars ($132,978.00)
(the "Principal") plus interest as agreed below and all fees and costs
(including without limitation attorney's fees and disbursements whether for
internal or outside counsel) the Creditor incurs in order to collect any amount
due under this Note, to negotiate or document a workout, or restructuring, or to
preserve its rights or realize upon any guaranty or other security for the
payment of this Note ("Expenses").
<PAGE> 2
CUSIP No. 4569108
INTEREST. The unpaid Principal balance of this Note shall earn interest
calculated on the basis of a 360-day year for the actual number of days or each
year (365 or 366) from and including the date this Note is executed, but not
including, the date all amounts hereunder are paid in full, at a rate per year
which shall on each day be: seven percent (7%) unless the prime rate of interest
as announced by the Chase Manhattan Bank, NA ("Chase") shall increase above 9%
and in that event the interest rate shall be 2% below the prime rate effective
on the date announced by Chase, but in no event shall the interest rate be less
than 7%.
DEFAULT RATE. If an Event of Default (defined below) occurs, the interest rate
on the unpaid Principal shall immediately be automatically increased to 3% per
year above the otherwise applicable rate per year.
REPAYMENT OF PRINCIPAL AND INTEREST; LATE CHARGE. Payments shall be made in
immediately available United States funds at the office of the Escrow Agent.
Interest will continue to accrue until payment is actually received. If payment
is not received within five days of its due date, Borrower shall pay late charge
equal to 5% of the delinquent amount. Payments shall be applied first to past
due interest, Expenses,
<PAGE> 3
CUSIP No. 4569108
late charges and principal, then to current interest, Expenses, late charges and
principal, and last to remaining principal.
The Maturity Date of this Note is January 2, 2000.
Borrower shall pay the Principal in two (2) consecutive, equal annual payments
commencing on January 2, 1999. In addition, until the outstanding Principal is
paid in full, payments of all accrued and unpaid interest, in amounts which will
vary, will become due and payable as the 1st day of each quarter commencing on
April 1, 1998. Both of the Principal payments will be in the amount of
$66,489.00 and the last Principal payment will include all unpaid principal
interest and all other amounts then due.
REPRESENTATIONS AND WARRANTIES. Borrower represents to and agrees with the
Creditor that now and until this Note is paid in full:
a. LEGALITY. The execution, issuance, delivery to the Creditor and performance
by Borrower of this Note (i) are in furtherance of Borrower's purposes and
within his power and authority; (ii) do not (A) violate any statute, regulation
or other law or any
<PAGE> 4
CUSIP No. 4569108
judgment, order or award of any court, agency or other governmental authority or
of any arbitrator or (B) constitute a default under any agreement binding on
Borrower, or result in a lien or encumbrance on any assets of Borrower.
b. TITLE TO ASSETS. Borrower has good and marketable title to each of its assets
constituting the collateral, free of security interests and mortgages and other
liens pursuant to the Creditor's prior written consent.
c. JUDGMENTS AND LITIGATION. There is no pending or threatened claim, audit,
investigation, action or other legal proceeding or judgment, order or award of
any court, agency or other governmental authority or arbitrator (each an
"Action") which involves Borrower or its assets and might have a material
adverse effect upon Borrower or threaten the validity of this Note or any
related document or transaction. Borrower will immediately notify the Creditor
in writing upon acquiring knowledge of any such Action.
d. NOTICE OF CHANGE OF ADDRESS AND OF DEFAULT. Borrower will immediately notify
the Creditor and Escrow Agent in writing (i) of any change in his address, (ii)
of the occurrence of any Event of Default defined below, and (iii) of any
material change in Borrower's ability to repay this Note.
<PAGE> 5
CUSIP No. 4569108
EVENTS OF DEFAULT; ACCELERATION. An event of default ("Event of Default") will
have occurred if (a) Borrower fails to pay when due any amount due under this
Note; (b) any of Borrower's debts or those of any endorser or guarantor of this
Note (a "Guarantor") is accelerated or an event occurs which after notice or
lapse of time would permit such acceleration; (c) Borrower or any Guarantor
breaches or is in default under any agreement with the Creditor; (d) Borrower is
dissolved, suspends his or its present business, agrees to a merger or other
absorption or transfer or otherwise dispose of substantially all of its assets,
makes or sends notice of a bulk sale, and the Borrower or any Guarantor becomes
insolvent, generally fails to pay his or its debts as they become due, fails to
pay, withhold or collect any tax as required by law, has served or filed against
his or its assets any lien or has entered against it or its assets any judgment,
order or award; (e) a receiver or similar trustee is appointed for Borrower or a
Guarantor or his or its assets (with or without its consent), or Borrower or any
Guarantor makes an assignment for the benefit of creditors or commences or has
commenced against him or it a proceeding pursuant to any bankruptcy law; (f) any
representation or warranty made in this Note or related document or other
statements provided by Borrower or any Guarantor proves to have
<PAGE> 6
CUSIP No. 4569108
been incorrect or misleading in any material respect; or (g) Borrower fails to
supply new or additional collateral within ten days of request by the Creditor
or as required by the Note and Stock Purchase Agreement and Escrow Agreement.
All amounts hereunder shall become immediately due and payable upon the
occurrence of (e) above and upon the occurrence of any other Event of Default.
MISCELLANEOUS. This Note, together with any related loan, pledge and security
agreements, note and stock purchase agreement and guaranties, contain the entire
agreement between the Creditor and Borrower with respect to the Note, and
supersede every course of dealing, other conduct, oral agreement and
representation previously made by the Creditor. All rights and remedies of the
Creditor under applicable law and this Note or amendment of any provision of
this note are cumulative and not exclusive. No single, partial or delayed
exercise by the Creditor of any right or remedy shall preclude the subsequent
exercise by the Creditor at any time of any right or remedy of the Creditor
without notice. No waiver or amendment of any provision of this Note shall be
effective unless made specifically in writing by the Creditor. This Note shall
be governed by the laws of the State of New York, without regard to its
principles of conflict of laws. This Note is a binding obligation enforceable
<PAGE> 7
CUSIP No. 4569108
against Borrower, his executors, administrators and assigns and shall inure to
the benefit of the Creditor and its trustees and beneficiaries and the
executors, administrators, personal representatives and assigns of the Trust and
or beneficiaries. If a court deems any provision of this Note invalid, the
remainder of the Note shall remain in effect. Section headings are for
convenience only. Singular number includes plural and neuter gender includes
masculine and feminine as appropriate.
NOTICES. Notices to Borrower by the Creditor or Escrow Agent may be delivered in
person, in writing or by telephone with subsequent confirmation by mail or
teletrans- mission. Written notice shall be deemed delivered when deposited in
the United States mail or transmitted to Borrower at the last address of
Borrower shown on the Escrow Agent's or Creditor's records. Notice to the
Creditor by the Borrower must be in writing, refer specifically to this Note and
be delivered in person or by registered mail directed to the Escrow Agent and
Creditor at the addresses stated on page one. Notices shall be deemed delivered
only when actually received by the Creditor and Escrow Agent. Borrower will
notify the Creditor and Escrow Agent promptly of any change of address.
<PAGE> 8
CUSIP No. 4569108
JOINT AND SEVERAL. If Borrower is more than one person, each such person is
jointly and severally liable for all amounts which become due under this Note.
BORROWER'S CONSENTS. In any action or legal proceeding relating to this Note,
Borrower (a) consents to the personal jurisdiction of any State or federal court
located in the State of New York and (b) agrees that in any legal proceeding, a
copy of this Note kept in the Creditor's course of business may be admitted into
evidence as an original.
TRIAL BY JURY. BORROWER AND THE CREDITOR EACH WAIVE ANY RIGHT TO TRIAL BY JURY
IN ANY ACTION IN CONNECTION WITH THIS NOTE.
Tax ID/SS#___________________
NORTHEAST HAMPTON HOLDINGS, LLC
BORROWER
By: /s/ James A. Villa
---------------------------
James A. Villa, Sole Member
- -------------------------
Signature of Witness
- -------------------------
Typed Name of Witness
<PAGE> 1
CUSIP No. 4569108
Exhibit 6
GUARANTEE
I. GUARANTEE. In consideration of the financial accommodations given or to be
given or continued to Northeast Hampton Holdings, LLC (hereinafter called
"Borrower") by Carle C. Conway, Cotter C. Conway, Carolyn C. Conway, the Sibley
Family Trust and the Carle and Ann Conway Family Trust (hereinafter called
"Creditors"), and other good and valuable consideration, the receipt of which is
hereby acknowledged, the undersigned hereby guarantees the prompt payment when
due, by acceleration or otherwise, of any and all present and future obligations
of any nature of Borrower to the Creditors, their trustees, beneficiaries,
executor, heirs, legal representatives, and assigns, including without
limitation any interest thereon, attorney's fees, costs, and expenses of
collection and of realization on collateral incurred by the Creditors in
enforcing any such obligations (the "Obligations").
II. NOTICE. The undersigned hereby expressly waives presentment, demand for
payment, notice of nonpayment, protest, and notice of protest of any and all
obligations, and also waives notice of acceptance of this Guarantee.
<PAGE> 2
CUSIP No. 4569108
III. UNCONDITIONAL GUARANTEE. This Guarantee is absolute, unconditional and
continuing. Creditor may at any time and from time to time, without the consent
of or notice to the undersigned and without incurring responsibility to the
undersigned or impairing or releasing obligation of the undersigned hereunder,
upon or without any terms or conditions and in whole or in part, make any
arrangements with the Borrower, or with any other persons, or regarding any
property held or assigned as security for the debts and liabilities for the
Borrower, without affecting this Guarantee.
IV. CIRCUMSTANCES NOT AFFECTING GUARANTEE. Circumstances which will not change
or limit the undersigned's obligation on this Guarantee include without
limitation:
(a) dissolution, bankruptcy, or insolvency of the Borrower;
(b) death or disability or the undersigned;
(c) the renewal or alteration or change in any obligation or term thereof,
including without limitation the manner, place, or terms of payment of or any
change or extension in the time of payment of any obligations incurred directly
or indirectly in respect thereof, and this Guarantee shall apply to any and all
obligations of the Borrower as so changed, extended, renewed, or altered;
<PAGE> 3
CUSIP No. 4569108
(d) the sale, exchange, release, or surrender of, realization upon, or other
dealing with, in any manner and in any order, any property by whomsoever at any
time pledged, assigned, or mortgaged to secure in any manner the obligations
hereby guaranteed or any obligations (including those hereunder) incurred
directly or indirectly in respect thereof or hereof;
(e) the exercising or refraining from the exercise of any rights against the
Borrower or others including the undersigned;
(f) the release, settlement or compromise of any obligation hereby guaranteed,
or any security therefor;
(g) the unenforceability, invalidity, or irregularity of any obligation of the
Borrower;
(h) the failure by the Creditors to record, file, or otherwise perfect a
mortgage, security interest, assignment or other interest in any property held
or assigned as security for the obligations of the Borrower;
(i) the release by the Creditors of anyone responsible for the debts and
liabilities of the Borrower; or
(j) to the extent permitted by law, any other event, action, or circumstance
that would, in the absence of this section, result in the release or discharge
of the under-
<PAGE> 4
CUSIP No. 4569108
signed from the performance or observance of any obligation, covenant, or
agreement contained in this Guarantee or otherwise would constitute a legal or
equitable discharge of the undersigned as guarantors.
V. RELATED DOCUMENTS. The undersigned hereby expressly accepts and consents to
all the terms and conditions contained in the Note and Stock Purchase Agreement,
Pledge, and Security Agreement, Term Notes, Escrow Agreement and Guarantee, or
other evidence of indebtedness from Borrower to the Creditors.
VI. CONTINUITY. The undersigned acknowledges and agrees that this Guarantee is
binding upon the undersigned, and his legal representatives, heirs, executors,
administrators, and assigns.
VII. WAIVER. No delay on the part of the Creditors in exercising any of their
rights, or partial exercise thereof, shall constitute a waiver thereof. No
waiver of any of their rights hereunder or modification or amendment of this
Guarantee shall be deemed to be made by the Creditors unless the same shall be
in writing, duly signed by each Creditor and each such waiver, if any, shall
apply only with respect to the specific instances involved, and shall in no way
impair the rights of the Creditors or
<PAGE> 5
CUSIP No. 4569108
the obligations of the undersigned to the Creditors in any other respect at any
other time.
VIII. BANKRUPTCY OF BORROWER. Any liability of the undersigned which would
otherwise have been terminated by any payment by the Borrower shall be fully
revived and reinstated, and the Creditors' rights hereunder shall continue, with
respect to any obligations paid by Borrower which shall thereafter be required
to be restored or returned by the Creditors upon the reorganization, bankruptcy,
or insolvency of Borrower or for any other reason.
IX. COSTS OF COLLECTION. The undersigned agrees to pay any and all costs or
expens- es, including legal fees, of the Creditors in enforcing this Guarantee
or any related obligation.
X. SUBROGATION. Notwithstanding anything to the contrary stated herein, in the
event that Borrower is ever the subject of any voluntary or involuntary
bankruptcy or other similar insolvency proceeding pursuant to applicable state
or federal law, the under- signed hereby irrevocably waives any claims or
rights, including, without limitation, any right of subrogation, which the
undersigned may now possess or subsequently acquire against the Borrower or its
bankruptcy estate, arising form the undersigned's
<PAGE> 6
CUSIP No. 4569108
execution of, or payment under, this Guarantee, and the undersigned agrees that
in such instances it shall have no recourse, at law or in equity against
Borrower or its bankruptcy estate arising from any liability imposed upon, or
incurred by, the undersigned as a result of the undersigned's execution of this
Guarantee.
IN WITNESS WHEREOF, the undersigned has duly executed this Guarantee this 23rd
day of February, 1998.
/s/ James A. Villa
-------------------
James A. Villa
<PAGE> 1
CUSIP No. 4569108
Exhibit 7
Pledge and Security Agreement
This Security Agreement made this 23rd day of February, 1998 by and between
NORTHEAST HAMPTON HOLDINGS, LLC, hereinafter called "Debtor" and COTTER C.
CONWAY, CAROLYN C. CONWAY, THE SIBLEY FAMILY TRUST AND CARLE C. CONWAY AND
THE CARLE AND ANN CONWAY FAMILY TRUST, hereinafter called "Secured Parties."
Whereas, under the terms of a certain Note and Stock Purchase Agreement
("Agreement") dated the 23rd day of February, 1998 the Debtor has agreed to
purchase all the Stock and Notes of Infinite Machines, Inc. ("Company") owned
and to be acquired by the Secured Parties and whereas Debtor has issued his term
notes ("Term Notes"), as part of the consideration therefore, and the Guarantor
has executed a Guarantee ("Guarantee") and Debtor and Secured Parties have
executed an Escrow Agreement ("Escrow Agreement"), collectively the "Closing
Documents."
Now therefore in order to secure payment under the Term Notes and the
performance by the Debtor of the terms and conditions of said Closing Documents,
the parties agree as follows:
I. CREATION OF SECURITY INTEREST
The Debtor hereby grants to the Secured Parties a security interest in the
property described in Section II hereof and any additions thereto as may be
required by the terms and conditions set forth in this Agreement and the Closing
Documents.
II. PROPERTY
The property subject to the security interest ("Collateral") is as follows: A.
Twenty-five (25) Notes with a total face value of $900,605 and 1,978,933 Shares
of the Common Stock of Infinite Machines, Inc. acquired by the Debtor pursuant
to the Agreement and any stock splits, stock dividends, exchanges, conversions
or other actions affecting said shares or Notes to the effect that the value of
the collateral shall at all times after January 2, 1999 be at least 120% of the
principal owed on the Term Notes. B. Such other property, as by the Secured
Parties shall be deemed sufficient, in the event either the number of shares or
the fair market value thereof is reduced below the requirements of Section II(A)
hereof.
III. SECURED OBLIGATION
This Agreement is given to secure (1) payment of the principal and interest now
or hereafter owed by the Debtor to the Secured Parties as evidenced by the Term
Notes (2) performance by the Debtor of all the covenants, terms and conditions
of the Term Notes and the Closing Documents (3) performance by the Debtor of all
the covenants, terms and conditions hereof.
<PAGE> 2
CUSIP No. 4569108
IV. WARRANTIES AND COVENANTS OF DEBTOR
4.1 AUTHORITY. The execution, delivery, and performance of this Agreement are
within the authority of the Debtor and are not contrary to any law, indenture,
agreement, undertaking, court order, judgment or any other obligation to which
the Debtor is bound.
4.2 OWNERSHIP OF COLLATERAL. a. The Debtor is the sole owner of the Collateral
and will defend the collateral against any claims and demands of other entities
claiming any interest therein.
4.3 SALE OF COLLATERAL PROHIBITED. Except upon the explicit written consent of
the Secured Parties, the Debtor shall not sell, transfer, encumber, hypothecate
or otherwise dispose of any interest in the Collateral and if such consent is
given, Debtor shall fully and expeditiously comply with the terms and conditions
of paragraph 4.4 hereof.
4.4 REPLACEMENT COLLATERAL. In the event Debtor requests and the Secured Parties
gives his written consent to the sale or other disposition of the Collateral,
Debtor shall, prior to said sale or disposition, deposit with the Escrow Agent
additional Collateral, specifically subject to this Agreement, so as to fully
comply with the provisions of Section I and Section II hereof.
V. PLEDGE
To secure all amounts due now or later from the Debtor to the Secured Parties,
Debtor hereby pledges to Secured Party a security interest in the Collateral
subject to the following:
5.1 POSSESSION. The Debtor, contemporaneous with this Agreement, shall deliver
to the Escrow Agent certificates representing all shares acquired by him
pursuant to the Note and Stock Purchase Agreement together with a properly
executed Stock Power covering said certificates in sufficient form to allow the
transfer of such shares on the books of the Company and the Notes, together with
an assignment thereof to the Secured Parties. Such Stock and Notes shall be held
by the Escrow Agent pursuant to the terms and conditions of this Agreement, the
Note, the Escrow Agreement and Guarantee.
5.2 VOTING AND OTHER RIGHTS. Debtor shall have all voting rights and such other
rights as are part of the ownership of the Stock including the right to receive
cash dividends and interest on the Notes, so long as no default has occurred.
VI. EVENTS OF DEFAULT
The Debtor shall be in default under this Agreement upon the occurrence of any
of the following events:
6.1 Debtor is in material default under the terms of any of the Term Notes. A
default on any one of such Term Notes shall for all purposes be deemed a default
on all such Notes.
<PAGE> 3
CUSIP No. 4569108
6.2 Failure of the Debtor or the Guarantor to comply with any material term,
obligation, covenant, or condition contained in this Agreement or the Closing
Documents.
6.3 The filing of any petition in bankruptcy by or against the Debtor or
Guarantor or other action by or against the Debtor or Guarantor including
actions, proceedings, liens, judgments, assessments or any other action or
proceeding in or by which the Collateral is or may be levied upon, or otherwise
withheld from the Secured Party which remains undischarged for a period of 30
days.
6.4 Any event that results in the acceleration of the maturing of any
indebtedness of the Debtor or Guarantor in the outstanding principal amount of
$500,000 or more under any indenture, agreement or undertaking.
6.5 Any levy, seizure, attachment, lien, or encumbrance of or upon the
Collateral that is not discharged by the Debtor or Guarantor within 30 days or
the sale, transfer or disposition of any interest in the Collateral, without the
written consent of the Secured Party pursuant to Section 4.4 hereof.
VII. RIGHTS OF SECURED PARTY
7.1 DELIVERY OF COLLATERAL IN ESCROW. Upon default or at any time prior thereto
when the Secured Parties reasonably feel insecure, Secured Parties may require
the Escrow Agent to deliver to Secured Parties all the Collateral described in
Section IIA and IIB hereof pursuant to the procedure set forth in the Escrow
Agreement and thereafter the Secured Parties shall be the owner of the
Collateral and may vote or otherwise exercise all the rights of ownership in any
of the Stock, Notes or other collateral and may sell the same at public or
private sale and shall have the right to enforce the Guarantee but in no event
shall the Secured Parties be entitled to receive any amount over and above the
amount of principal and interest due on the Term Notes plus expenses as set
forth in the Note and Stock Purchase Agreement at Section 6A.
7.2 ACCELERATION. Upon an event of default under the Term Notes or at any time
thereafter, any one of the Secured Parties may declare the entire amount of
secured hereby immediately due and payable and shall have all the rights of a
Secured Creditor under the Uniform Commercial Code at law or in equity or
otherwise or may resort to any other legal remedy to enforce its rights
hereunder or pursuant to any of its rights under the Closing Documents.
VIII. NOTICES
All notices required to be sent pursuant to this Agreement shall be sent by
certified mail, return receipt requested or by courier, if such courier requires
and returns to sender a signed receipt of the recipient:
If to the Debtor:
Northeast Hampton Holdings, LLC
1895 Mount Hope Avenue
Rochester, New York 14620-4596
<PAGE> 4
CUSIP No. 4569108
with copy to:
James M. Jenkins, Esq.
Harter, Secrest and Emery LLP
700 Midtown Tower
Rochester, New York
If to the Secured Parties:
Carle C. Conway
P.O. Box 8238
Incline Village, Nevada 89452
with copy to:
Paul S. Boylan, Esq.
Boylan, Morton & Whiting, LLP
P.O. Box 307
45 West Main Street
LeRoy, New York 14482-0307
IX. GENERAL
9.1 Secured Parties shall not be deemed to have waived any rights under this
agreement or any other writing signed by Debtor unless such waiver be in writing
and signed by Secured Parties. No delay or omission on the part of any Secured
Parties shall operate as a waiver of such right or any other right. A waiver by
any party of a breach of a provision of this agreement shall not constitute a
waiver or prejudice the party's right otherwise to demand strict compliance with
that provision or any other provision. Election by Secured Parties to pursue any
remedy shall not exclude pursuit of any other remedy, and an election to make
expenditures or take action to perform
<PAGE> 5
CUSIP No. 4569108
an obligation of Debtor under this security agreement after failure of Debtor to
perform shall not affect Secured Parties' right to declare a default and
exercise its remedies under section 7.
9.2 All Secured Parties' rights and remedies, whether evidenced in this
agreement or by any other writing, shall be cumulative and may be exercised
singularly or concurrently.
9.3 Any demand upon or notice to Debtor that Secured Parties may give shall be
effective when deposited as registered or certified mail directed to Debtor's
address stated in this agreement. Either party may change the address for
notices by written notice to the other party.
9.4 This agreement, all rights and liabilities under this agreement, all
obligations secured under this agreement, and all Collateral shall inure to the
benefit of the Secured Parties and their executors, administrators, personal
representatives, trustees, beneficiaries, successors and assigns, and shall be
binding upon Debtor and its successors and assigns. Whenever there is no
outstanding obligation on the part of Debtor and no commitment on the part of
Secured Parties under any agreement that might give rise to an obligation,
Debtor may terminate this Agreement upon written
<PAGE> 6
CUSIP No. 4569108
notice to Secured Parties. Prior to such termination, this shall be a continuing
agreement in every respect.
9.5 Debtor shall pay the Secured Parties pursuant to the terms and conditions of
the Term Notes.
9.6 Secured Parties, at any time and at its option without further authorization
from Debtor, may file copies of this agreement as a financing statement.
9.7 Should any one or more provisions of this agreement be determined to be
illegal or unenforceable, all other provisions nevertheless shall be effective.
X. APPLICABLE LAW
This security agreement has been executed and delivered to Secured Parties in
the State of New York, and all transactions herein contemplated are to be
consummated in the State of New York. Except for filing requirements, Debtor
agrees that the law of the State of New York shall be applicable for the purpose
of construing this instrument, determining the validity of this agreement, and,
to the fullest extent permitted by applicable law of any state in which any of
the Collateral is located, the rights and remedies of Secured Party in the event
of default under this agreement.
Debtor
Northeast Hampton Holdings, LLC
By: /s/ James A. Villa
-------------------------
James A. Villa
<PAGE> 1
CUSIP No. 4569108
Exhibit 8
February 23, 1998
Paul S. Boylan
45 West Main Street
LeRoy, New York 14482
Dear Paul :
This escrow letter is given to you ("Escrow Agent") and is made in connection
with a Note and Stock Purchase Agreement between COTTER C. CONWAY, CAROLYN C.
CONWAY, THE SIBLEY FAMILY TRUST, CARLE C. CONWAY AND THE CARLE AND ANN CONWAY
FAMILY TRUST ("Sellers"), and NORTHEAST HAMPTON HOLDINGS, LLC ("Buyer") dated
February 23, 1998, relating to the purchase of Shares and Notes of Infinite
Machines, Inc. (the "Company"), a Security and Pledge Agreement dated February
23, 1998 given by Buyer in favor of Sellers and Term Notes dated February 23,
1998 given by Buyer payable to the Sellers (collectively the "Closing
Documents").
(a) The Sellers and the Buyer hereby deliver _______ of the Pledged Shares and
25 Notes as defined in the Closing Documents to you as Escrow Agent. The Seller
Carle C. Conway shall instruct the Company to deliver to you as Escrow Agent,
within sixty (60) days of closing, a certificate for 177,905 Shares to be
acquired by
<PAGE> 2
CUSIP No. 4569108
him by the exercise of a certain option and sold to the Buyer and cause to be
delivered within said time any shares held in Escrow by H.J. Meyers & Co., Inc.
together with certain shares held in street name by H.J. Meyers & Co., Inc. The
Pledged Shares shall then total 1,978,933. All of the Pledged Shares and Notes
are to be held by you in escrow, together with a Stock Power executed by the
Buyer in proper form to effect the transfer all of the Pledged Shares on the
books of the Company ("Stock Power") and an assignment of all of the 25 Notes
from the Buyer to the Sellers ("Assignment") also to be held by you in escrow,
and authorize you as the Escrow Agent to keep and preserve the certificates
evidencing the Pledged Shares and Notes together with the Stock Power and
Assignment in your possession subject to the terms of this letter.
(b) You, as the Escrow Agent, shall collect from the Buyer all payments due on
the Term Notes and disburse to each of the Sellers the amount due pursuant to
each of the said Term Notes. In the event the Escrow Agent does not receive said
payments in a timely manner he shall take all reasonable action to collect the
same but shall not institute any legal action except pursuant to paragraph (i)
below.
<PAGE> 3
CUSIP No. 4569108
(c) Upon the occurrence of an Event of Default under the Closing Documents, the
Sellers shall have the right to have all of the certificates, the Stock Power
and the Notes with the Assignment and any other Collateral then held by the
Escrow Agent delivered to them. The Escrow Agent shall, at the end of ten (10)
days after receipt of a written demand from the Sellers or any one of them,
together with evidence that notice of a demand has been given to the Buyer,
deliver to the Sellers the certificates for the Pledges Shares; the Stock Power;
the Notes and the Assignment then held by the Escrow Agent.
(c) Prior to an Event of Default under the Closing Documents, all cash dividends
declared on the Pledged Shares and interest on the Notes shall be paid to the
Buyer, and after such an Event of Default, to the Sellers. So long as there is
no such Event of Default, the Buyer shall have the right to vote the Pledged
Shares on deposit with the Escrow Agent and exercise any conversion rights of
the Notes, on the condition that he deposit with the Escrow Agent the shares
received by such conversion with appropriate Stock Powers.
(d) In the event that, during the term of this escrow, any share dividend,
reclassification, readjustment, or other change is declared or made in the
capital structure of the
<PAGE> 4
CUSIP No. 4569108
Corporation, all new, substituted, and additional shares, or other securities or
notes, issued by reason of any such change and which are attributable to the
Pledged Shares or Notes shall be held by the Escrow Agent under the terms of
this Agreement in the same manner as the original Shares and Notes are held by
the Escrow Agent.
(e) In the event that during the term of this Agreement, but after January 2,
1999, the fair market value of the Pledged Shares and Notes fall below 120% of
the amount due on the Note, Buyer shall deliver to the Escrow Agent additional
assets which shall be held by him subject and pursuant to the terms hereof and
the Security and Pledge Agreement.
(f) If satisfactory proof has been presented to the Escrow Agent that all
payments due to the Sellers under the Closing Documents have been paid, the
Escrow Agent shall deliver to the Buyer the Pledged Shares and Notes and all
further obligations of the Escrow Agent hereunder shall thereupon cease.
(g) The Escrow Agent may act or refrain from acting in respect of any manner
referred to herein in full reliance upon and by and with the advice of counsel
which may be selected by you and you shall be fully protected in so acting or in
refraining from acting upon the advice of such counsel.
<PAGE> 5
CUSIP No. 4569108
(h) The Escrow Agent may rely upon, and shall be protected in acting upon, any
paper or other document which may be submitted to you in connection with your
duties hereunder and which is believed by you to be genuine and to have been
signed or presented by the proper party or parties, and you shall have no
liability or responsibility with respect to the form, execution or validity
thereof.
(i) In the event of a default under the Closing Documents and the necessity of a
determination as to the value of the Notes and/or Shares to be returned to the
Sellers and/or turned over to the Buyer, the Escrow Agent shall have the right,
authority and power to bring an action in the nature of interpleader and seek
the judgment of a court of competent jurisdiction in regard thereto and all
expenses of the Escrow Agent related, directly or indirectly, to such an action
shall be paid one-half (1/2) by the Sellers and one-half (1/2) by the Buyer.
(j) The Escrow Agent shall not be required to institute or defend any action or
legal process involving any matter referred to herein which in any manner
affects your duties or liabilities hereunder, unless or until requested to do so
by one or more of the Sellers, and then only upon receiving full indemnity in an
amount, and of such
<PAGE> 6
CUSIP No. 4569108
character as you shall require, against any and all claims, liabilities,
judgments, attorney's fees and other expenses of every kind in relation thereto.
(k) The Sellers, jointly and severally, promise and agree to indemnify and hold
harmless the Escrow Agent from and against, and hereby release the Escrow Agent
from any liability arising out of, any and all claims, liabilities, judgments,
attorney's fees and other expenses of every kind and nature which may be
incurred by you by reason of its acceptance of, and its performance under, this
instrument, except in the case of the Escrow Agent's bad faith or gross
negligence as determined by a court of competent jurisdiction.
(l) All of the terms and conditions in connection with the Escrow Agent's duties
and responsibilities are contained in this Agreement, and the Escrow Agent is
not expected to be, nor required to be, familiar with the provisions of any
instrument or agreement, and shall not be charged with any responsibility or
liability in connection with the observance or nonobservance by any of the
provisions of any such agreement or instrument.
<PAGE> 7
CUSIP No. 4569108
/s/ Carle C. Conway
------------------------
Carle C. Conway
Carle and Ann Conway Family
Trust
/s/ Carle C. Conway
By:
---------------------
Carle C. Conway, Trustee
/s/ Cotter C. Conway
------------------------
Cotter C. Conway
/s/ Carolyn C. Conway
------------------------
Carolyn C. Conway
Sibley Family Trust
/s/ Cotter C. Conway
By:
---------------------
Cotter C. Conway, Trustee
Buyer: Northeast Hampton
Holdings, LLC
/s/ James A. Villa
By:
---------------------
James A. Villa
Accepted:
/s/ Paul S. Boylan
- -------------------
Paul S. Boylan
Dated:12/31/97
<PAGE> 1
CUSIP No. 4569108
Exhibit 9
ASSIGNMENT OF NOTES
KNOW ALL MEN BY THESE PRESENTS that CARLE C. CONWAY residing in Incline Village,
Nevada ("Assignor") for and in consideration of the sum of Nine Hundred Thousand
Six Hundred Five Dollars ($900,605) to be paid to him as set forth below, does
hereby sell, convey, assign, transfer and set over unto NORTHEAST HAMPTON
HOLDINGS, LLC a New York limited liability company, with offices and principal
place of business at 1895 Mount Hope Avenue, Rochester, New York, all his right,
title and interest in and to certain promissory notes from Infinite Machines
Corp. to the Assignor as fully set forth on Schedule A, attached hereto and made
a part hereof and all moneys due or to become due upon said note and any and all
rights to convert said notes into the capital stock of said Infinite Machines
Corp.
The original notes shall be delivered to Assignee under separate cover.
And the said Assignor, for the purpose of inducing the Assignee to accept this
Assignment does hereby represent as follows:
A) That Exhibit A sets forth a list of promissory notes executed by Infinite
Machines Corp. for value received by it and are legal binding obligations of it.
B) That no defense, offset or counterclaim thereto exists and that no agreement
has been made under which Infinite Machines Corp. may claim any discount or
deduction except as explicitly set forth in said Notes.
C) That he has full authority to assign the notes to the Assignee and that such
assignment will not violate any agreement, covenant or obligation of his and
that he is not subject to any restrictive law, rule, regulation, judgment,
order, directive or other governmental action affecting his right to make this
assignment.
D) That Infinite Machines Corp. will accept this assignment and pay the Assignee
according to the terms and conditions of the notes.
E) That in the event the Assignor receives any checks, drafts or moneys
applicable to the notes he will immediately endorse, transfer and deliver the
same to the Assignee. In Witness Whereof the Assignor has executed this
Assignment this 31st day of December, 1997.
By: /s/ Carle C. Conway
-----------------------
Carle C. Conway
<PAGE> 1
CUSIP No. 4569108
Exhibit 10
ASSIGNMENT OF NOTES
KNOW ALL MEN BY THESE PRESENTS that NORTHEAST HAMPTON HOLDINGS, LLC a New York
limited liability company, with offices and principal place of business at 1895
Mount Hope Avenue, Rochester, New York, ("Assignor") for and in consideration of
the sum of Nine Hundred Thousand Six Hundred Five Dollars ($900,605) to be paid
to him as set forth below, does hereby sell, convey, assign, transfer and set
over unto the CARLE AND ANN CONWAY FAMILY TRUST. P. O. Box 8238 Incline Village,
Nevada 89452, ("Assignee"), all its right, title and interest in and to certain
promissory notes from Infinite Machines Corp. to the Assignor as fully set forth
on Schedule A, attached hereto and made a part hereof and all moneys due or to
become due upon said note and any and all rights to convert said notes into the
capital stock of said Infinite Machines Corp.
The original notes shall be delivered to Assignee under separate cover. And the
said Assignor, for the purpose of inducing the Assignee to accept this
Assignment does hereby represent as follows:
A) That Exhibit A sets forth a list of promissory notes executed by Infinite
Machines Corp. for value received by it and are legal binding obligations of it.
B) That no defense, offset or counterclaim thereto exists and that no agreement
has been made under which Infinite Machines Corp. may claim any discount or
deduction except as explicitly set forth in said Notes.
C) That it has full authority to assign the notes to the Assignee and that such
assignment will not violate any agreement, covenant or obligation of it and that
it is not subject to any restrictive law, rule, regulation, judgment, order,
directive or other governmental action affecting its right to make this
assignment.
D) That Infinite Machines Corp. will accept this assignment and pay the Assignee
according to the terms and conditions of the notes.
E) That in the event the Assignor receives any checks, drafts or moneys
applicable to the notes it will immediately endorse, transfer and deliver the
same to the Assignee. In Witness Whereof the Assignor has executed this
Assignment this 23rd day of February, 1998.
NORTHEAST HAMPTON HOLDINGS, LLC
By: /s/ James A. Villa
-----------------------------
James A. Villa, Sole Member
