Unassociated Document


    MODIFICATION
AGREEMENT No. 1 TO

    PROMISSORY
NOTE

    


    This
MODIFICATION AGREEMENT No. 1 is made as of December 31, 2009 between Infinite
Group, Inc., a Delaware corporation with offices at 60 Office Park Way,
Pittsford, NY 14534 (“Borrower”) and Dan Cappa, an individual residing
at 150 Dozier Lane, Rochester, NY 14622 (the “Lender”).

    


    WHEREAS,
the Lender is the holder of a Promissory Note in the principal amount of
$200,000 dated June 13, 2008 issued by the Borrower to the Lender (the “Note”);
and

    


    WHEREAS,
the parties desire to modify the terms and conditions of the Note as
follows:

    


    NOW,
THEREFORE, the parties agree as follows:

    


    
      	
              1)  

            	
              The
      Note is modified to provide that the holder shall have the right in its
      sole discretion upon written notice to the Borrower at any time after that
      date which is 60 days after the Borrower, following the approval of the
      Borrower’s shareholders, authorizes a sufficient number of shares of
      common stock to permit such conversion, to convert all or part of the
      principal amount of the Note for common stock of the Borrower at the
      conversion rate of $.25 per share, as adjusted to reflect stock splits,
      distributions, recapitalizations,
etc.

            


    

    


    
      	
              2)  

            	
              The
      conversion of the principal amount of the Note thereon to common stock
      shall be limited such that the Borrower incurs no limitation of the use of
      its net operating loss carryforwards, which may be triggered by a change
      of control involving one or more 5% shareholders.  The Borrower
      shall provide Lender with sufficient information, including the opinion of
      an accountant or attorney, prior to completing the conversion to document
      that a change of control will not occur as a result of Lender’s request to
      convert all of part of the principal amount of the
  Note.

            


    

    


    If one or
more holders of convertible promissory notes exist with conversion rights that
may result in ownership of 5% or more of the common stock of Borrower, then
Borrower shall provide timely notification to all other such promissory note
holders of Lender’s request for conversion of promissory notes to common
stock.  Such notice shall provide the other such note holders an
opportunity to request a conversion within ten business days of
notification.  The Borrower shall include all such conversion requests
in aggregate and document that a change of control has not occurred prior to
completing each note holder’s conversion.  Lender agrees to adjust its
request for conversion on a pari passu basis with each other note holder’s
request so that a change of control does not occur when all notes
holder’s conversion requests are considered in aggregate.

    


    If the
Borrower closes a transaction with another third party or parties that results
in a change of control that triggers limitations of its net operating loss
carryforwards, then the provisions of this section 2) shall no longer be in
effect.

    


    
      	
              3)  

            	
              The
      principal amount of the Note shall be reduced from $200,000 to
      $175,000.

            


    

    


    
      	
              4)  

            	
              The
      principal amount of the Note including accrued interest shall be due on
      January 1, 2011.

            


    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
 

    
      	
              5)  

            	
              Except
      as modified by this Agreement, all of the terms, covenants and conditions
      of the Note shall remain the same.

            


    

    


    In
witness whereof, Borrower and the Lender have executed this Agreement under the
day and year first written above.

     

    


    
      
        
          	
                  INFINITE
      GROUP, INC.

                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                  /s/
      Michael S. Smith

                	 
      	 
      
	
                  By:
      Michael S. Smith, President

                	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                  /s/
      Dan Cappa

                	 
      	 
      
	
                  By:
      Dan Cappa