PURCHASE AND SALE AGREEMENT
THIS
PURCHASE AND SALE AGREEMENT (the "Agreement") is made as of May 21, 2004 by
and
between Infinite Group Inc. whose address is 000 Xxxxxxx Xx.. Xxx. 000.
Xxxxxxxxx. XX 00000 ("Client") and Amerisource Funding, Inc., a Texas
corporation ("Amerisource") (each a "Party" and, collectively herein, the
"Parties").
1.
Definitions.
The
following terms used herein shall have the following meaning. All capitalized
terms not herein defined shall have the meaning set forth in the Uniform
Commercial Code:
1.1.
"Closed" - A Purchased Account is closed upon the first to occur of: (i) receipt
of full payment by Amerisource or (ii) the unpaid Face Amount has been charged
to the Reserve Account by Amerisource pursuant to the terms hereof.
1.2.
"Face Amount" - The face amount due on an Account at the time of purchase of
such Account.
1.3.
"Invoice" - The document that evidences or is intended to evidence an Account.
Where the context so requires, reference to an Invoice shall be deemed to refer
to the Account to which it relates.
1.4.
"Invoice Transmittal" - A form supplied by Amerisource from time to time wherein
Client lists such of its Accounts as it requests that Amerisource purchase
under
the terms of this Agreement.
1.5.
"Obligations" - All present and future obligations owing by Client to
Amerisource arising hereunder or otherwise, whether arising before, during
or
after the commencement of any Bankruptcy Case in which Client is a
Debtor.
1.6.
"Purchase Date" - The date on which Amerisource has purchased an Account from
Client.
1.7.
"Purchased Accounts" - Accounts purchased hereunder which have not been
Closed.
1.8.
"Repurchased" - An Account has been repurchased when Client has paid to
Amerisource the then unpaid Face Amount.
1.9.
"Required Reserve Amount" - The Reserve Percentage multiplied by the unpaid
balance of Purchased Accounts.
1.10.
"Reserve Account" - A bookkeeping account on the books of Amerisource
representing an unpaid portion of the Face Amount of all Purchased Account,
maintained by Amerisource to ensure Client's performance with the provisions
hereof.
1.11.
"Reserve Percentage" - Twenty percent (20%).
1.12.
"Reserve Shortfall" - The amount by which the Reserve Account is less than
the
Required Reserve Amount.
2.
Sale;
Purchase Price; Reserve.
2.1.
Assignment
and Sale.
2.1.1.
At
its election from time to time during the term of this Agreement, Client agrees
to offer for sale to Amerisource such of Client's Accounts as are listed from
time to time on Invoice Transmittals.
2.1.2.
Each Invoice Transmittal shall be accompanied by such documentation supporting
and evidencing the Accounts listed thereon as Amerisource shall from time to
time request.
2.1.3.
Amerisource may in its sole discretion purchase from Client such Accounts deemed
acceptable by Amerisource in the exercise of its reasonable sole credit or
business judgment.
2.1.4.
Amerisource shall pay to Client the Face Amount as the purchase price of any
Purchased Account, less any amounts due to Amerisource from Client including,
without limitation, any amounts due under Section 2.2.1 hereof.
2.2.
Reserve
Account.
2.2.1.
Client shall pay to Amerisource on demand the amount of any Reserve
Shortfall.
2.2.2.
Amerisource shall pay to Client on a weekly basis any amount by which the
Reserve Account exceeds the Required Reserve Amount.
2.2.3.
Amerisource may charge the Reserve Account with any Obligation.
2.2.4.
Amerisource may pay any amounts due Client hereunder by a credit to the Reserve
Account.
2.2.5.
Upon termination of this Agreement Amerisource may retain the Reserve Account
(i) sufficient to cover any Obligations that were either known or unknown to
Amerisource at the time of termination, and (ii) unless and until Client has
executed and delivered to Amerisource a general release in a form acceptable
to
Amerisource.
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3.
Authorization
for Purchases.
Subject
to the terms and conditions of this Agreement, Amerisource is authorized to
purchase Accounts upon telephonic, facsimile or other instructions received
from
anyone purporting to be an officer, employee or representative of
Client.
4.
Discount.
Client
shall pay to Amerisource a discount/fee of ninety five one-hundredths percent
(0.9S%) of the Face Amount of a Purchased Account for the first ten (10) days
such Purchased Account remains outstanding at Amerisource; plus nine
one-hundredths percent (0.09%) of the Face Amount of such Purchased Account
for
every day thereafter such Purchased Account remains outstanding at Amerisource,
computed from the Purchase Date through the date on which a Purchased Account
is
Closed.
5.
Repurchase
Of Accounts.
Amerisource may require that Client repurchase, by payment of the then unpaid
Face Amount thereof, together with any unpaid fees or other amounts relating
to
the Purchased Account on demand, or, at Amerisource's option, by Amerisource's
charge to the Reserve Account:
5.1.
Any
Purchased Account, the payment of which has been disputed by the Account Debtor
obligated thereon, Amerisource, being under no obligation to determine the
bona
fides of such dispute.
5.2.
Any
Purchased Account for which Client has breached its obligation under Section
10
hereunder.
5.3.
Any
Purchased Account owing from an Account Debtor which in Amerisource's reasonable
credit judgment has become insolvent
5.4.
All
or any Purchased Accounts upon the occurrence of an Event of Default, or upon
the termination date of this Agreement.
5.5.
Any
Purchased Account which remains unpaid beyond ninety (90) days from the original
invoice date of the Account.
Any
such
repurchase by Client shall not constitute reassignment of such Purchased
Account.
6.
Delinquency.
As
inducement to Client to repurchase Accounts promptly when required to do so
and
to sell only the Accounts from which prompt payments can be expected, Client
agrees to pay Amerisource a penalty of 0.2 percent (0.2%) of the Face Amount
of
a Purchased Account for every day beyond ninety five (95) days that such Account
or portion thereof remains outstanding and unpaid at Amerisource (the
"Delinquency Charge"). The Delinquency Charge shall also be assessed and is
payable on demand on any Obligation not paid when due, including any Reserve
Shortfall.
7.
Security
Interest.
7.1.
As
collateral securing the Obligations, Client grants and assigns to Amerisource
a
continuing first priority security interest in and to all of its now owned
and
hereafter acquired personal property and fixtures, and all direct and indirect
proceeds thereof (including proceeds of proceeds), including without limitation
Accounts, Chattel Paper, Goods (including Inventory and Equipment), Instruments,
Investment Property, Documents, and General Intangibles (the
"Collateral").
7.2.
Notwithstanding the creation of the above security interest, the relationship
of
the Parties shall be that of purchaser and seller of accounts, and not that
of
lender and borrower.
8.
Authorization
to Amerisource.
Client
hereby irrevocably authorizes Amerisource at Client's expense, to exercise
at
any time any of the following powers until all of the Obligations have been
paid
in full: (a) receive, take, endorse, assign, deliver, accept and deposit, in
the
name of Amerisource or Client, any and all cash, checks, commercial paper,
drafts, remittances and other instruments and documents relating to the
Collateral or the proceeds thereof, (b) take or bring, in the name of
Amerisource or Client, all steps, actions, suits or proceedings deemed by
Amerisource necessary or desirable to effect collection of or other realization
upon the Accounts and other Collateral, (c) after an Event of Default, change
the address for delivery of mail to Client and to receive and open mail
addressed to Client, (d) after an Event of Default, extend the time of payment
of, compromise or settle for cash, credit, return of merchandise, and upon
any
terms or conditions, any and all Accounts or other Collateral which includes
a
monetary obligation and discharge or release any account debtor or other obligor
(including filing of any public record releasing any lien or security interest
granted to Client by such account debtor), without affecting any of the
Obligations, (e) pay any sums necessary to discharge any lien, security interest
or encumbrance which is senior to Amerisource's security interest in the
Collateral, which sums shall be included as Obligations hereunder, and in
connection with which sums the Delinquency Charge shall accrue and shall be
due
and payable, (f) in order to satisfy any of the Obligations, initiate electronic
debit or credit entries through the Automated Clearinghouse system to any
deposit account maintained by Client wherever located, (g) file in the name
of
Client or Amerisource, or both, mechanics liens or related notices, or claims
under any payment bond, in connection with goods or services sold by Client
in
connection with the improvement of realty, (h) notify any Account Debtor
obligated with respect to any Account that the underlying Account has been
assigned to Amerisource by Client and that payment thereof is to be made to
the
order of and directly and solely to Amerisource, and (i) communicate directly
with Client's Account Debtors to verify the amount and validity of any Account
created by Client.
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9.
Covenants
By Client.
9.1.
After written notice by Amerisource to Client, and automatically, without
notice, after an Event of Default, Client shall not, without the prior written
consent of Amerisource in each instance, (a) grant any extension of time for
payment of any of the Accounts, (b) compromise or settle any of the Accounts
for
less than the full amount thereof, (c) release in whole or in part any Account
Debtor, or (d) grant any credits, discounts, allowances, deductions, return
authorizations or the like with respect to any of the Accounts.
9.2.
From
time to time as requested by Amerisource, at the sole expense of Client,
Amerisource or its designees shall have access, during reasonable business
hours
if prior to an Event of Default and at any time if after an Event of Default,
to
all premises where Collateral is located for the purposes of inspecting (and
removing, if after the occurrence of an Event of Default) any of the Collateral,
including Client's books and records, and Client shall permit Amerisource or
its
designees to make copies of such books and records or extracts there from as
Amerisource may request.
9.3.
If
Client chooses to sell Accounts to Amerisource from a particular Account Debtor,
then Client shall xxxx any and all Invoices to such Account Debtor with a notice
of assignment as may be required by Amerisource before sending any Invoices
to
such Account Debtor.
9.4.
Client shall reimburse Amerisource for any out-of-pocket expenses directly
incurred by Amerisource in the administration of this Agreement, including
fees
for periodic field exams.
9.5.
Client shall pay when due all payroll and other taxes, and shall provide proof
thereof to Amerisource in such form as Amerisource shall reasonably
require.
9.6.
Client shall not create, incur, assume or permit to exist any lien or security
interest upon or with respect to any Collateral now owned or hereafter acquired
by Client.
9.7.
Client shall deliver in kind to Amerisource, on the next banking day following
the date of receipt by Client, the amount of any payment on account of a
Purchased Account. Client shall pay to Amerisource fifteen percent (15%) of
the
amount of any payment on account of a Purchased Account which has been received
by Client and not delivered in kind to Amerisource on the next banking day
following the day of receipt by Client.
9.8.
Avoidance Claims.
9.8.1.
Client shall indemnify Amerisource from any loss arising out of the assertion
of
any claim that any payment received by Amerisource from or for the account
of an
Account Debtor is avoidable under the Bankruptcy Code or any other debtor relief
statute ("Avoidance Claim").
9.8.2.
Client shall notify Amerisource within two business days of it becoming aware
of
the assertion of any Avoidance Claim.
9.8.3.
This provision shall survive termination of this Agreement.
10.
Account
Disputes.
Client
shall notify Amerisource promptly of and, if requested by Amerisource, will
settle all disputes concerning any Purchased Account, at Client's sole cost
and
expense.
11.
Representation
and Warranty.
Client
represents and warrants that:
11.1.
Client is fully authorized to enter into this Agreement and to perform
hereunder.
11.2.
This Agreement constitutes its legal, valid and binding obligation.
11.3.
Client is solvent and in good standing in the State of its
organization.
11.4.
The
Purchased Accounts are and will remain:
11.4.1.
Bona fide existing obligations created by the sale and delivery of goods or
the
rendition of services in the ordinary course of Client's business.
11.4.2.
Unconditionally owed and will be paid to Amerisource without defenses, disputes,
offsets, counterclaims, or rights of return or cancellation.
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.4.3.
Not sales to any entity which is affiliated with Client or in any way not an
"arms length" transaction.
11.5.
Client has not received notice nor does Client have knowledge of actual or
imminent bankruptcy, insolvency, or material impairment of the financial
condition of any applicable account debtor regarding Purchased
Accounts.
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12.
Default.
12.1.
Events
of Default.
Any of
the following events will constitute an Event of Default hereunder: (a) Client
defaults in the payment of any Obligations or in the performance of any
provision hereof or of any other agreement now or hereafter entered into with
Amerisource, or any warranty or representation contained herein proves to be
false in any way, howsoever minor, (b) Client or any guarantor of all or any
part of the Obligations becomes subject to any debtor-relief proceedings, (c)
any such guarantor fails to perform or observe any of such guarantor's
obligations to Amerisource or shall notify Amerisource of its intention to
rescind, modify, terminate or revoke any guaranty of the Obligations, or any
such guaranty shall cease to be in full force and effect for any reason
whatever, (d) Amerisource for any reason, in good faith, deems itself insecure
with respect to the prospect of repayment or performance of all or any part
of
the Obligations.
12.2.
Waiver
of Notice.
Client
waives any requirement that Amerisource inform Client by affirmative act or
otherwise of any Event of Default hereunder. Further, Amerisource's failure
to
charge or accrue interest or fees at any "Default", "Delinquency" or "Past
Due"
rate shall not be deemed a waiver by Amerisource of its claim
thereto.
12.3.
Effect
of Default.
Upon the
occurrence of any Event of Default, in addition to any rights Amerisource has
under this Agreement or applicable law, Amerisource may immediately terminate
this Agreement without notice, at which time all Obligations shall immediately
become due and payable without notice.
13.
Account
Stated.
Amerisource shall render to Client a statement setting forth the transactions
arising hereunder. Each statement shall be considered correct and binding upon
Client as an account stated, except to the extent that Amerisource receives,
within sixty (60) days after the mailing of such statement, written notice
from
Client of any specific exceptions by Client to that statement., and then it
shall be binding against Client as to any items to which it has not
objected.
14.
Waiver.
No
failure to exercise and no delay in exercising any right, power, or remedy
hereunder shall impair any right, power, or remedy which Amerisource may have,
nor shall any such delay be construed to be a waiver of any of such rights,
powers, or remedies, or any acquiescence in any breach or default hereunder;
nor
shall any waiver by Amerisource of any breach or default by Client hereunder
be
deemed a waiver of any default or breach subsequently occurring. All rights
and
remedies granted to Amerisource hereunder shall remain in full force and effect
notwithstanding any single or partial exercise of, or any discontinuance of
action begun to enforce, any such right or remedy. The rights and remedies
specified herein are cumulative and not exclusive of each other or of any rights
or remedies that Amerisource would otherwise have. Any waiver, permit, consent
or approval by Amerisource of any breach or default hereunder must be in writing
and shall be effective only to the extent set forth in such writing and only
as
to that specific instance.
15.
Termination.
Client
may terminate this Agreement at any time by giving Amerisource written notice
of
termination. Upon termination, Client shall pay the Obligations to
Amerisource.
16.
Amendment.
Neither
this Agreement nor any provisions hereof may be changed, waived, discharged
or
terminated, nor may any consent to the departure from the terms hereof be given
orally (even if supported by new consideration), but only by an instrument
in
writing signed by all parties to this Agreement. Any waiver or consent so given
shall be effective only in the specific instance and for the specific purpose
for which given.
17.
Lien
Termination.
In
recognition of Amerisource's right to have its legal fees and other expenses
incurred in connection with this Agreement secured by the Collateral,
notwithstanding satisfaction in full of all other Obligations by Client,
Amerisource shall not be required to record any terminations or satisfactions
of
any of Amerisource's liens or security interests on the Collateral unless and
until Client has executed and delivered to Amerisource a general release in
a
form acceptable to Amerisource. Client understands that this provision
constitutes a waiver of its rights under §9-5 13 of the UCC.
18.
Conflict.
Unless
otherwise expressly stated in any other agreement between Amerisource and
Client, if a conflict exists between the provisions of this Agreement and the
provisions of such other agreement, the provisions of this Agreement shall
control.
19.
Severability.
In the
event any one or more of the provisions contained in this Agreement is held
to
be invalid, illegal or unenforceable in any respect, then such provision shall
be ineffective only to the extent of such prohibition or invalidity, and the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby.
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20.
Relationship
of Parties.
The
relationship of the Parties hereto shall be that of seller and purchaser of
Accounts, and Amerisource shall not be a fiduciary of the Client, although
Client may be a fiduciary of Amerisource.
21.
Legal
Fees.
Client
agrees to reimburse Amerisource on demand for the actual amount of all costs
and
expenses, including attorneys' fees and other legal fees, which Amerisource
has
incurred or may incur in: (a) negotiating, preparing, or administering this
Agreement and any documents prepared in connection herewith or in any way
arising out of this Agreement; (b) protecting, preserving or enforcing any
lien,
security interest or other right granted by Client to Amerisource or arising
under applicable law, whether or not suit is brought, including but not limited
to the defense of any Avoidance Claims; (c) complying with any subpoena or
ether
legal process attendant to any litigation in which Client is a party; including
photocopying, travel, and attorneys' fees and expenses; (d) the actual amount
of
all costs and expenses, including attorneys' fees, which Amerisource may incur
in enforcing this Agreement and any documents prepared in connection herewith,
or in connection with any federal or state insolvency proceeding commenced
by or
against Client, including those (i) arising out the automatic stay, (ii) seeking
dismissal or conversion of the bankruptcy proceeding, or (ii) opposing
confirmation of Client's plan thereunder.
22.
Entire
Agreement.
This
Agreement supersedes all other agreements and understandings between the Parties
hereto, verbal or written, express or implied, relating to the subject matter
hereof. No promises of any kind have been made by Amerisource or any third
party
to induce Client to execute this Agreement. No course of dealing, course of
performance or trade usage, and no parole evidence of any nature, shall be
used
to supplement or modify any terms of this Agreement.
23.
Choice
of Law.
This
Agreement and all transactions contemplated hereunder and/or evidenced hereby
shall be governed by, construed under, and enforced in accordance with the
internal laws of the State of Texas.
24.
Jury
Trial "Waiver.
In
recognition of the higher costs and delay which may result from a jury trial,
the Parties hereto waive any right to trial by jury of any claim, demand, action
or cause of action (a) arising hereunder, or (b) in any way connected with
or
related or incidental to the dealings of the Parties hereto or any of them
with
respect hereto, in each case whether now existing or hereafter arising, and
whether sounding in contract or tort or otherwise; and each Party further waives
any right to consolidate any such action in which a jury trial has been waived
with any other action in which a jury trial cannot be or has not been waived;
and each Party hereby agrees and consents that any such claim, demand, action
or
cause of action shall be decided by court trial without a jury, and that any
Party hereto may file an original counterpart or a copy of this section with
any
court as written evidence of the consent of the Parties hereto to the waiver
of
their right to trial by jury.
25.
Venue;
Jurisdiction.
The
Parties agree that any suit, action or proceeding arising out of the subject
matter hereof, or the interpretation, performance or breach of this Agreement,
shall, if Amerisource so elects, be instituted in any court sitting in the
State
of Texas (the "Acceptable Forums"). Each party agrees that the Acceptable Forums
are convenient to it, and each party irrevocably submits to the jurisdiction
of
the Acceptable Forums, irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Agreement, and waives any and all objections
to
jurisdiction or venue that it may have under the laws of the State of Texas
or
otherwise in those courts in any such suit, action or proceeding. Should such
proceeding be initiated in any other forum, Client waives any right to oppose
any motion or application made by Amerisource as a consequence of such
proceeding having been commenced in a forum other than an Acceptable
Forum.
26.
Notice.
All
notices to Amerisource hereunder shall be deemed given upon actual receipt
by a
responsible officer of Amerisource.
27.
Counterparts.
This
Agreement may be signed in any number of counterparts, each of which shall
be an
original, with the same effect as if all signatures were upon the same
instrument. Delivery of an executed counterpart of the signature page to this
Agreement by facsimile shall be effective as delivery of a manually executed
counterpart of this Agreement, and any Party delivering such an executed
counterpart of the signature page to this Agreement by facsimile to any other
Party shall thereafter also promptly deliver a manually executed counterpart
of
this Agreement to such other Party, provided that the failure to deliver such
manually executed counterpart shall not affect the validity, enforceability,
or
binding effect of this Agreement.
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IN
WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.
| CLIENT: | AMERISOURCE: | ||
| Infinite Group, Inc. | Amerisource Funding, Inc. | ||
| /s/ Xxxxxxx X. Xxxxx | /s/ Xxxxx Xxxxx | ||
|
Name: Xxxxxxx X. Xxxxx |
Name: Xxxxx Xxxxx |
||
| Title: President | Title: Managing Director |
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