INFINITE GROUP, INC.
 
2020 STOCK OPTION PLAN
 
1.           
PURPOSES.                                
The purposes of this Stock Option Plan (the “Plan”) are to attract and retain
the best qualified personnel for positions of substantial responsibility, to
provide additional incentive to the Employees of the Company or its
Subsidiaries, if any (as defined in Section 2 below), as well as other
individuals who perform services for the Company or its Subsidiaries, and to
promote the success of the Company’s business.
 
Options granted hereunder may be either “incentive stock options” as defined in
Section 422A of the Internal Revenue Code, or “non-qualified stock options,” at
the discretion of the Board and as reflected in the terms of the written
instrument evidencing an Option.
 
2.
DEFINITIONS. As used herein, the following definitions shall apply:
 
(a)           “Board” shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
 
(b)           “Common Stock” shall mean the Common Stock of the Company, par
value $.001 per share.
 
(c)           “Company” shall mean Infinite Group, Inc., a Delaware corporation.
 
(d)           “Committee” shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
 
(e)           “Continuous Status as an Employee” shall mean the absence of any
interruption or termination of service as an Employee. Continuous Status as an
Employee shall not be considered interrupted in the case of sick leave, military
leave, or any other leave of absence approved by the Board.
 
(f)           “Employee” shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the Company.
The payment of a director’s fee by the Company shall not be sufficient to
constitute “employment” by the Company.
 
(g)           “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended.
 
(h)           “Incentive Stock Option” shall mean a stock option intended to
qualify as an incentive stock option within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended.
 
(i)           “Non-qualified Stock Option” shall mean a stock option not
intended to qualify as an Incentive Stock Option.
 
(j)
“Option” shall mean a stock option granted pursuant to the Plan.
 
(k)           “Optioned Stock” shall mean the Common Stock subject to an Option.
 
(l)           “Optionee” shall mean an Employee or other person who receives an
Option.
 
(m)           “Parent” shall mean a “parent corporation”, whether now or
hereafter existing, as defined in Section 425(e) of the Internal Revenue Code of
1986, as amended.
 
(n)           “Securities Act” shall mean the Securities Act of 1933, as
amended.
 
(o)           “SEC” shall mean the Securities and Exchange Commission.
 
(p)           "Share” shall mean a share of Common Stock, as adjusted in
accordance with Section 11 of the Plan.
 
(q)           "Subsidiary” shall mean a “subsidiary corporation”, whether now or
hereafter existing, as defined in Section 425(f) of the Internal Revenue Code of
1986, as amended.
 
 
3.
STOCK.
 
Subject to the provisions of Section 11 of the Plan, the maximum aggregate
number of shares which may be optioned and sold under the Plan is one million
five hundred thousand (1,500,000) shares of authorized, but unissued, or
reacquired $.001 par value Common Stock. If an Option should expire or become
unexercisable for any reason without having been exercised in full, the
unpurchased Shares which were subject thereto shall, unless the Plan shall have
been terminated, shall become available for further grant under the Plan.
 
 

 
4.
ADMINISTRATION.
 
(a)           Procedure.                                The Company’s Board of
Directors may appoint a Committee to administer the Plan. The Committee shall
consist of not less than two members of the Board of Directors who shall
administer the Plan on behalf of the Board of Directors, subject to such terms
and conditions as the Board of Directors may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors. From time to time the Board of Directors may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefore, fill
vacancies however caused, or remove all members of the Committee and thereafter
directly administer the Plan.
 
If a majority of the Board of Directors is eligible to be granted Options or has
been eligible at any time within the preceding year, a Committee must be
appointed to administer the Plan. The Committee must consist of not less than
two members of the Board of Directors, all of whom are “non-employee directors”
as defined in Rule 16b-3 of the General Rules and Regulations promulgated under
the Exchange Act.
 
(b)           Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Incentive Stock
Options, in accordance with Section 422A of the Internal Revenue Code of 1986,
as amended, or to grant Non-Qualified Stock Options; (ii) to determine, upon
review of relevant information and in accordance with Section 8(a) of the Plan,
the fair market value of the Common Stock; (iii) to determine the exercise price
per share of Options to be granted, which exercise price shall be determined in
accordance with Section 8(a) of the Plan; (iv) to determine the persons to whom,
and the time or times at which, Options shall be granted and the number of
shares to be represented by each Option; (v) to interpret the Plan; (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
Option; (viii) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
 
(c)           Effect of the Board’s Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
 
5.           
ELIGIBILITY.                                           
Incentive Stock Options may be granted only to Employees. Nonqualified Stock
Options may be granted to Employees as well as directors (subject to the
limitations set forth in Section 4), independent contractors and agents, as
determined by the Board. Any person who has been granted an Option may, if he is
otherwise eligible, be granted an additional Option or Options.
 
No Incentive Stock Option may be granted to an Employee if, as the result of
such grant, the aggregate fair market value (determined at the time each Option
was granted) of the Shares with respect to which such Incentive Stock Options
are exercisable for the first time by such Employee during any calendar year
(under all such plans of the Company and any Parent and Subsidiary) shall exceed
One Hundred Thousand Dollars ($100,000).
 
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment by the Company, nor shall it interfere in any way
with his right or the Company’s right to terminate his employment at any time.
 
6.           
TERM OF PLAN.                                           
The Plan shall become effective upon the earlier to occur of (i) its adoption by
the Board of Directors, or (ii) its approval by vote of a majority of the
outstanding shares of the Company entitled to vote on the adoption of the Plan.
The Plan shall continue in effect for a period of ten (10) years from the
effective date of the Plan, unless sooner terminated pursuant to Section 13 of
the Plan.
 
7.           
TERM OF OPTION. The term of each Option shall be ten (10) years from the date of
the grant thereof, or such shorter term as may be provided in the instrument
evidencing the Option. However, in the case of an Incentive Stock Option granted
to an Employee who, immediately before the Incentive Stock Option is granted,
owns stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option shall be five (5) years from the date of grant thereof or
such shorter time as may be provided in the instrument evidencing the Option.
 
8.
EXERCISE PRICE AND CONSIDERATION.
 
(a)           The per Share exercise price for the Shares to be issued pursuant
to the exercise of an Option shall be such price as is determined by the Board,
but shall be subject to the following:
 
(i) In the case of an Incentive Stock Option
 
(A) granted to an Employee who, immediately before the grant of such Incentive
Stock Option, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the
per Share exercise price shall be no less than 110% of the fair market value per
Share on the date of the grant; or, as the case may be
 
(B) granted to an Employee not subject to the provisions of Section 8(a)(i)(A),
the per Share exercise price shall be no less than one hundred percent (100%) of
the fair market value per Share on the date of the grant.
 
(ii) In the case of a Non-qualified Stock Option, the per Share exercise price
shall be no less than one hundred percent (100%) of the fair market value per
Share on the date of the grant.
 
(b)           
The fair market value shall be determined by the Board in its discretion;
provided, however, that where there is a public market for the Common Stock, the
fair market value per Share shall be the mean of the bid and asked prices or, if
applicable, the closing price of the Common Stock on the date of the grant, as
reported by the National Association of Securities Dealers Automated Quotation
(NASDAQ) System or, in the event the Common Stock is listed on a stock exchange,
the fair market value per Share shall be the closing price on the exchange on
the date of the grant of the Option, as reported in the Wall Street Journal.
 
(c)           
The consideration to be paid for the Shares to be issued upon the exercise of an
Option or in payment of any withholding taxes thereon, including the method of
payment, shall be determined by the Board and may consist entirely of (i) cash,
check or promissory note; (ii) other Shares of Common Stock owned by the
Employee that has a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said Option shall be
exercised; (iii) an assignment by the Employee of the net proceeds to be
received from a registered broker upon the sale of the Shares or the proceeds of
a loan from such broker in such amount; or (iv) any combination of such methods
of payment, or such other consideration and method of payment for the issuance
of Shares to the extent permitted under Delaware law and meeting rules and
regulations of the SEC to plans meeting the requirements of Section 16(b)(3) of
the Exchange Act.
 
9.
EXERCISE OF OPTION.
 
(a)           Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times and subject to such
conditions as may be determined by the Board, including performance criteria
with respect to the Company and/or the Optionee, as shall be permissible under
the terms of the Plan.
 
An Option may not be exercised for a fraction of a Share.
 
An Option shall be deemed to be exercised when written notice of such exercise
has been given to the Company in accordance with the terms of the instrument
evidencing the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Board, consist
of any consideration and method of payment allowable under Section 8(c)of the
Plan; it being understood that the Company shall take such action as may be
reasonably required to permit use of an approved payment method. Until the
issuance, which in no event will be delayed more than thirty (3) days from the
date of the exercise of the Option, (as evidenced by the appropriate entry on
the books of the Company or of a duly authorized transfer agent of the Company)
of the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. No adjustment will
be made for a dividend or other right for which the record date is prior to the
date the sock certificate is issued, except as provided in the Plan.
 
Exercise of an Option in any manner shall result in a decrease in the number of
Shares which thereafter may be available, both for purposes of the Plan and for
the sale under the Option, by the number of Shares as to which the Option is
exercised.
(b)           Termination of Status as an Employee. If an Employee ceases to
serve as an Employee, he may, but only within thirty (30) days (or such other
period of time not exceeding three (3) months as is determined by the Board)
after the date he ceases to be an Employee of the Company, exercise his Option
to the extent that he was entitled to exercise it as of the date of such
termination. To the extent that he was not entitled to exercise the Option at
the date of such termination, or if he does not exercise such option (which he
was entitled to exercise) within the time period specified herein, the Option
shall terminate. Notwithstanding the provisions of this Section 9(b), in the
event that the Employee’s employment is terminated “for cause,” as such term is
defined and interpreted by the courts of the State of New York, the Employee’s
right to exercise his Option shall expire on the date of his termination.
 
(c)           Notwithstanding the provisions of Section 9(b) above, in the event
an Employee is unable to continue his employment with the Company as a result of
his total and permanent disability (as defined in Section 105(d)(4) of the
Internal Revenue Code of 1986, as amended), he may, but only with three (3)
months (or such other period of time not exceeding twelve (12) months as is
determined by the Board) from the date of disability, exercise his Option to the
extent he was entitled to exercise it at the date of such disability. To the
extent that he was not entitled to exercise the Option at the date of
disability, or if he does not exercise such Option (which he was entitled to
exercise) within the time specified herein, the Option shall terminate.
 
(d)           Death of Optionee. In the event of the death of an Optionee:
 
(i) during the term of the Option who is at the time of his death an Employee of
the Company and who shall have been in Continuous Status as an Employee since
the date of the grant of the Option, the Option may be exercised, at any time
within twelve (12) months following the date of death, by the Optionee’s estate
or by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that would have
accrued had the Optionee continued living one (1) month after the date of death;
or
 
(ii) within thirty (30) days (or such other period of time not exceeding three
(3) months as is determined by the Board) after the termination Continuous
Status as an Employee, the Option may be exercised, at any time within three (3)
months following the date of death, by the Optionee’s estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, but only to
the extent of the right to exercise that had accrued at the date of termination.
 
10.           
NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged, assigned,
hypothecated or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.
 
11.           
ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any required
action by the stockholders of the Company, the number of shares of Common Stock
covered by each outstanding Option, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
Options have yet been granted or which have been returned to the Plan upon
cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split or the payment of a stock dividend with
respect to the Common Stock or any other increase or decrease in the number of
issued shares of Common Stock effected without receipt of consideration by the
Company; provided, however, that conversion of any convertible securities of the
Company shall not be deemed to have been “effected without receipt of
consideration.” Such adjustment shall be made by the Board, whose determination
in that respect shall be final, binding and conclusive. Except as expressly
provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to an Option.
 
In the event of the proposed dissolution or liquidation of the Company, or in
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Board of Directors of the Company shall, as to outstanding Options, either (i)
make appropriate provision for the protection of any such outstanding Options by
the substitution on an equitable basis of appropriate stock of the Company or of
the merged, consolidated or otherwise reorganized corporation which will be
issuable in respect to one share of Common Stock of the Company; provided, only
that the excess of the aggregate fair market value of the shares subject to the
Options immediately after such substitution over the market price thereof is not
more than the excess of the aggregate fair market value of the shares subject to
such Options immediately before such substitution over the purchase price
thereof, or (ii) upon written notice to an Optionee, provide that all
unexercised Options must be exercised within a specified number of days of the
date of such notice or they will be terminated. In any case, the Board of
Directors may, in its discretion, advance the lapse of any waiting or
installment period and exercise dates.
 
12.           
TIME FOR GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each person to whom an
Option is so granted within a reasonable time after the date of such grant.
 
13.           
AMENDMENT AND TERMINATION OF THE PLAN.
 
(a)           
The Board may amend or terminate the Plan from time to time in such respects as
the Board may deem advisable; provided, however, that the following revisions or
amendments shall require the approval of the holders of a majority of the
outstanding shares of the Company entitled to vote:
 
(i) any increase in the number of Shares subject to the Plan, other than in
connection with an adjustment under Section 11 of the Plan;
 
(ii) any change in the designation of the class of persons eligible to be
granted Options; or
 
(iii) any material increase in the benefits accruing to participants under the
Plan.
 
(b)           
Stockholder Approval. If any amendment requiring stockholder approval under
Section 13(a) of the Plan is made, such stockholder approval shall be solicited
as described in Section 17(a) of the Plan.
 
(c)           
Effect of Amendment or Termination. Any such amendment or termination of the
Plan shall not affect Options already granted and such Options shall remain in
full force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Company.
 
14.           
CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act, the
Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance.
 
As a condition to the exercise of an Option, the Company may require the person
exercising such Option to represent and warrant at the time of any such exercise
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by, or appropriate under, any of
the aforementioned relevant provisions of law.
 
15.           
RESERVATION OF
SHARES.                                                                           
The Company shall be under no obligation to reserve shares of capital stock to
fill Options. The grant of Options to Employees hereunder shall not be construed
to constitute the establishment of a trust of such shares and no particular
shares shall be identified as optioned and reserved for Employees hereunder. The
Company shall be deemed to have complied with the terms of the Plan if, at the
time of issuance and delivery pursuant to the exercise of an Option, it has a
sufficient number of shares authorized and unissued or in its treasury which may
then be appropriated and issued for purposes of the Plan, irrespective of the
date when such shares were authorized.
 
16.           
OPTION
AGREEMENT.                                                                
Options shall be evidenced by written option agreements in such form as the
Board shall approve.
 
17.           
STOCKHOLDER
APPROVAL.                                                                           
Continuation of the Plan shall be subject to approval by the stockholders of the
Company within twelve (12) months before or after the date the Plan is adopted.
If such stockholder approval is obtained at a duly held stockholders’ meeting,
it may be obtained by the affirmative vote of the holders of a majority of the
outstanding shares of the Company present or represented and entitled to vote
thereon. The approval of such stockholders of the Company shall be (1) solicited
substantially in accordance with Section 14(a) of the Exchange Act and the rules
and regulations promulgated thereunder, or (2) solicited after the Company has
furnished in writing to the holders entitled to vote substantially the same
information concerning the Plan as that which would be required by the rules and
regulations in effect under Section 14(a) of the Exchange Act at the time such
information is furnished.
 
18.           
OTHER PROVISIONS. The Stock Option Agreement authorized under the Plan shall
contain such other provisions, including without limitation restrictions upon
the exercise of the Option, as the Board of Directors of the Company shall deem
advisable. Any Incentive Stock Option Agreement shall contain such limitations
and restrictions upon the exercise of the Incentive Stock Options as shall be
necessary in order that such Option will be an Incentive Stock Option as defined
in Section 422A of the Internal Revenue Code of 1986, as amended.
 
19.           
INDEMNFICATION OF BOARD. In addition to such other rights of indemnification as
they may have as directors or as members of the Board, the members of the Board
shall be indemnified by the Company against the reasonable expenses, including
attorneys fees actually and necessarily incurred in connection with the defense
of any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Option granted
thereunder, and against all amounts paid by them in settlement thereof (provided
such settlement is approved by independent legal counsel selected by the
Company) or paid by them in satisfaction of a judgment in any such action, suit
or proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that such Board member is liable for negligence
or misconduct in the performance of his duties, provided that within 60 days
after the institution of any such action, suit or proceeding a Board member
shall, in writing, offer the Company the opportunity, at its own expense, to
handle and defend the same.
 
20.           
OTHER COMPENSATION PLANS. The adoption of the Plan shall not affect any other
stock option or incentive or other compensation plans in effect for the Company
or any Subsidiary, nor shall the Plan preclude the Company from establishing any
other forms of incentive or other compensation for employees and directors of
the Company or any Subsidiary.
 
21.           
SINGULAR, PLURAL; GENDER. Whenever used herein, nouns in the singular shall
include the plural, and masculine pronoun shall include the feminine gender.
 
22.           
HEADINGS, ETC., NO PART OF PLAN. Headings of Articles and Sections hereof are
inserted for convenience and reference; they constitute no part of the Plan.
 
 
Adopted by the Board of Directors: April 15, 2020