EXHIBIT 10-C
AMENDMENT NO. 1 TO THE SECURITIES PURCHASE AGREEMENT
This Amendment No. 1 to the Securities Purchase Agreement dated
February 5, 2002 (the "Original Agreement") by and among Infinite Group, Inc., a
Delaware corporation (the "Company"), and Laurus Master Fund, Ltd. (the
"Purchaser") is made and entered into as of June 21, 2002.
The Company and the Purchaser hereby amend the Original Agreement
pursuant to Section 12.6 of the Original Agreement, as follows:
1. The introductory paragraph of Section 6.12 is hereby
amended and restated in its entirety to read as follows:
For so long as at least 20% of the aggregate principal amount
of this Note and any other notes from the Company to the Purchaser
are outstanding, the Company, without the prior written consent of
the Purchaser, shall not:
2. Section 9.1(d) is hereby amended and restated in its
entirety to read as follows:
The Company shall use its reasonable commercial efforts to cause to
be declared effective a Form S-3 registration statement (or such
other form that it is eligible to use) within 75 days of June __,
2002 (the "Effective Date") in order to register the Conversion
Shares and the Warrant Shares issued or issuable with respect to all
Notes and Warrants to be issued hereunder (the "Registrable
Securities") for resale and distribution under the Securities Act.
The holder thereof shall provide the Company with such information
as the Company reasonably requests. The Company will register not
less than a number of shares of Common Stock in the aforedescribed
registration statement that is equal to the Warrant Shares and 125%
of the Conversion Shares issuable at the Conversion Prices set forth
in the Notes, that would be in effect on the Closing Date or the
date of filing of such registration statement (employing the
conversion price which would result in the greater number of
Shares). The Registrable Securities shall be reserved and set aside
exclusively for the benefit of the Purchaser and the holders of the
Warrants, as the case may be, and not issued, employed or reserved
for anyone other than the Purchaser and the holders of the Warrants.
Such registration statement will be promptly amended or additional
registration statements will be promptly filed by the Company as
necessary to register additional Company Shares to allow the public
resale of all Common Stock included in and issuable by virtue of the
Registrable Securities.
3. Section 9.4 is hereby amended and restated in its entirety to
read as follows:
Non-Registration Events. The Company and the Purchaser agree
that the Seller will suffer damages if any registration statement
required under Section 9.1(d) above is not declared effective by the
SEC on or before the Effective Date, and maintained in the manner
and within the time periods contemplated by Section 9 hereof, and it
would not be feasible to ascertain the extent of such damages with
precision. Accordingly, if the registration statement on Form S-3 or
such other form as described in Section 9.1(d) is not declared
effective on or before the sooner of the Effective Date, or within
five days of receipt by the Company of a communication from the SEC
that the registration statement described in Section 9.1(d) will not
be reviewed, or (ii) any registration statement described in Section
9.1(d) is filed and declared effective but shall thereafter cease to
be effective (without being succeeded immediately by an additional
registration statement filed and declared effective) for a period of
time which shall exceed 30 days in the aggregate per year but not
more than 20 consecutive calendar days (defined as a period of 365
days commencing on the date the Registration Statement is declared
effective) (each such event referred to in this Section 9.4 is
referred to herein as a "Non-Registration Event"), then, for so long
as such Non-Registration Event shall continue, (i) the Company shall
pay in cash as Liquidated Damages to each holder of any Registrable
Securities an amount equal to two percent (2%) per month or part
thereof during the pendency of such Non-Registration Event of the
principal of the Notes issued in connection with the Offering,
whether or not converted, then owned of record by such holder or
issuable as of or subsequent to the occurrence of such
Non-Registration Event and (ii) the Conversion Price as defined in
Section 2.1 of the Notes shall be reduced by 10% for each 30-day
period following the Effective Date that the Registration Statement
is not declared effective by the SEC. Payments to be made pursuant
to this Section shall be due and payable immediately upon demand in
immediately available funds. In the event a Mandatory Redemption
Payment is demanded from the Company by the holder pursuant to
Section 8.2 of this Agreement, then the Liquidated Damages described
in this Section 9.4 shall no longer accrue on the portion of the
purchase price underlying the Mandatory Redemption Payment, from and
after the date the holder receives the Mandatory Redemption Payment.
It shall be deemed a Non-Registration Event to the extent that all
the Common Stock included in the Registrable Securities and
underlying the Securities is not included in an effective
registration statement as of and after the Effective Date at the
conversion prices in effect from and after the Effective Date.
4. Section 12.8 is hereby amended and restated in its entirety to
read as follows:
All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed
telex or facsimile if sent during normal business hours of the
recipient, if not, then on the next business day, (c) five days
after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (d) one day after deposit
with
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a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications
shall be sent to the Company at the address as set forth on the
signature page hereof, with a copy to Xxxxxxx X. Xxxx, Esq., Morse,
Zelnick, Rose & Lander, Esq., 000 Xxxx Xxxxxx, Xxxxx 000, Xxx Xxxx,
Xxx Xxxx, facsimile number (000) 000-0000 and to the Purchaser at
the address set forth on the signature page hereto for such
Purchaser, with a copy in the case of the Purchaser to Xxxxxx X.
Xxxxxx, Esq., 000 Xxxx 00xx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, XX 00000,
facsimile number (000) 000-0000, or at such other address as the
Company or the Purchaser may designate by ten days advance written
notice to the other parties hereto.
5. Except as otherwise provided herein, the Original Agreement shall
in all other respects remain in full force and effect.
6. This Agreement may be executed in more than one counterpart with
the same effect as if the parties executing the several counterparts
had all executed one document.
7. This amendment shall be effective as of June 21, 2002.
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IN WITNESS WHEREOF, the undersigned hereby execute this Amendment as
a deed as of the date set forth above.
Infinite Group, Inc.
/s/ Xxxxxxxx X. Xxxxxxxxx XX
-------------------------------
Name: Xxxxxxxx X. Xxxxxxxxx XX
Title: Chairman
Laurus Master Fund, Ltd.
/s/ Xxxxx Grin
-------------------------------
Name: Xxxxx Grin
Title: Director
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ALLONGE TO PROMISSORY NOTE DATED FEBRUARY 5, 2002
Reference is hereby made to the Note dated February 5, 2002 in the amount
of $1,000,000 (the "Note") by and between Infinite Group, Inc., a Delaware
corporation (the "Maker"), with principal offices located at 0000 Xxxx Xxxx,
Xxxxxxx, Xxxxx Xxxxxx 00000, and LAURUS MASTER FUND, LTD. (the "Payee"),
residing at c/o Ironshore Corporate Services Ltd., X.X. Xxx 0000 G.T.,
Queensgate House, South Church Street, Grand Cayman, Cayman Islands.
Maker and Payee hereby agree to amend the Note in accordance with
the following terms:
1. The Maximum Base Price, as defined in Section 2.1(b) shall be $2.00;
2. The introductory paragraph to Article II is hereby amended in its
entirety to read as follows:
At any time during the term of this Note, the Borrower may deliver a
written notification (the "Optional Conversion Notification") to the
Holder setting forth the portion of the principal amount of the Note
and/or interest due and payable (the "Investment Amount") that the
Borrower authorizes the Holder to exercise its conversion rights
with respect thereto, subject to the terms and provisions set forth
below. Except (i) upon the occurrence of an Event of Default
hereunder or (ii) in the event that the market price of the
Borrower's Common Stock is greater than 125% of the Maximum Base
Price (as defined below) for the three consecutive trading days
prior to conversion, unless the Borrower delivers an Optional
Conversion Notification to the Holder, the Holder will not be
permitted to exercise its rights to convert any portion of the Note
to Common Stock.
3. Section 1.3 is hereby amended in its entirety to read as follows:
(a) Interest payable on this Note shall accrue at the annual rate of
five percent (5%) and be payable in arrears commencing June 30, 2002
and on the last day of each month thereafter (with the payment on
June 30, 2002 to cover the period from April 1, 2002 through June
30, 2002), and on the Maturity Date, accelerated or otherwise, when
the principal and remaining accrued but unpaid interest shall be due
and payable, or sooner as described below.
(b) In addition to the interest rate set forth above in Section 1.3(a),
an additional fee on this Note shall accrue at the annual rate of
ten percent (10%) and be payable in arrears commencing June 30, 2002
and on the last day of each month thereafter (with the payment on
June 30, 2002 to cover the period from April 1, 2002 through June
30, 2002), and on the Maturity Date, accelerated or otherwise, when
the principal and accrued but unpaid interest shall be due and
payable, or sooner as described below. Notwithstanding the
foregoing, for every $100,000 in principal amount of the Note that
the Holder actually converts into Common Stock, the annual rate of
the additional fees payable as set forth in this subsection shall be
reduced by 1% and shall be deemed the rate retroactive to the date
hereof. In such
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event, any amounts already received by the Holder with respect to
such additional fees shall be rebated to the Borrower.
4. There are no other modifications to the Note.
INFINITE GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx XX
-------------------------------------------
Name/Title: Xxxxxxxx X. Xxxxxxxxx XX/Chairman
Dated: June 21, 2002
AGREED AND ACCEPTED:
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Xxxxx
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ALLONGE TO WARRANT DATED FEBRUARY 5, 2002
Reference is hereby made to the Common Stock Purchase Warrant dated
February 5, 2002 (the "Warrant") granting Laurus Master Fund, Ltd. ("Laurus")
the right to purchase of 50,000 shares of common stock of Infinite Group, Inc.,
a Delaware corporation (the "Company"), with principal offices located at 0000
Xxxx Xxxx, Xxxxxxx, Xxxxx Xxxxxx 00000.
The Company and Laurus hereby agree to amend the Warrant in
accordance with the following terms:
1. The Purchase Price, as defined in the Warrant, shall be $2.40;
2. There are no other modifications to the Warrant.
INFINITE GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxxx XX
-----------------------------------------
Name/Title: Xxxxxxxx X. Xxxxxxxxx XX/Chairman
Dated: June 21, 2002
AGREED AND ACCEPTED:
LAURUS MASTER FUND, LTD.
By: /s/ Xxxxx Xxxxx
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