ASSET PURCHASE AGREEMENT

      ASSET PURCHASE  AGREEMENT ("this  Agreement") is made as of December 31,
2003 among LASER FARE, INC., a Rhode Island corporation  ("Seller"),  INFINITE
GROUP,  INC., a Delaware  corporation  (the  "Shareholder");  and LFI, INC., a
Rhode Island corporation ("Buyer").

                                    RECITALS:

      A.  Seller is  engaged  in the  business  of (a) laser  engraving  and (b)
manufacturing and assembling medical products (collectively, the "Business"), as
well as other business activities.

      B. The Shareholder owns all of the issued and outstanding capital stock of
Seller; and

      C. Buyer desires to purchase  substantially all of the business and assets
of Seller relating to the Business,  and Seller and the Shareholder  desire that
Seller sell such business and assets relating to the Business to Buyer under the
terms of this Agreement.

      NOW THEREFORE,  in consideration of the mutual promises  contained in this
Agreement,  and for other  good and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby acknowledged, the parties agree as follows:

                                    ARTICLE I

                           PURCHASE AND SALE OF ASSETS

      1.1 Assets to be Purchased  and Sold.  At the Closing  (defined in Section
4.1),  Seller  shall  sell and convey to Buyer,  and Buyer  shall  purchase  and
acquire from Seller,  all of the business and tangible and intangible  assets of
Seller relating to the Business existing and owned by Seller on the Closing Date
other than the Excluded Assets (defined in Section 1.2). The assets of Seller to
be purchased  hereunder  (which exclude the Excluded  Assets) are referred to as
the "Purchased  Assets".  The Purchased Assets shall include without  limitation
all goodwill relating to the Business and the following assets and property, and
all  additions  thereto  relating  to the  Business,  less  dispositions  in the
ordinary  course of business  and  permitted  under this  Agreement,  before the
Closing Date (defined in Section 4.1):

            (a)  all  furniture  and  equipment  and  other  tangible   personal
property,  (the  "Equipment"),  including,  without  limitation,  the  items  of
Equipment described in Exhibit 1.1(a);

            (b)  all  inventory,   including  raw  materials,   work-in-process,
finished goods and packaging materials (the "Inventory");

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            (c) all rights under the contracts,  leases and agreements described
or referred to in Exhibit 1.1(c) hereto (the "Operating  Agreements"),  true and
correct  copies of which are being  delivered  to Buyer  concurrently  with this
Agreement;

            (d) all  intellectual  properties,  including,  without  limitation,
trade  secrets,   trademarks,  trade  names,  copyrights  and  other  rights  or
registrations, (collectively, the "Intellectual Property");

            (e) all executory or continuing  agreements  and other  contracts or
commitments for the procurement of products  entered into in the ordinary course
of the Business ("Customer Orders"), listed in Exhibit 1.1(d) hereto;

            (f) all lists and records relating to the Business,  including lists
and records of Seller's present and former customers,  vendors,  suppliers,  and
customers (the "Business Records");

            (g) all Licenses (as defined below); and

            (h) all accounts  receivable,  deposits,  pre-paid  rent and similar
property, and all payments thereunder (collectively, "Accounts Receivable").

      1.2 Excluded Assets.  The Purchased Assets shall not include any assets or
properties  of Seller  existing on the Closing  Date that are not related to the
Business  or cash,  the name  "Laser  Fare" or any  Internet  domain  name  (the
"Excluded Assets").

                                   ARTICLE II
                        LIMITED ASSUMPTION OF LIABILITIES

      2.1 Assumption of Liabilities.  At the Closing,  Buyer shall assume and be
responsible  for  performance  of the executory  obligations of Seller under the
Operating Agreements and Customer Orders, but only such obligations which are in
existence  on the Closing  Date and under which Seller is not in default at that
time (the "Assumed  Orders").  On the Payment Date (defined below),  Buyer shall
assume and be responsible for performance of the obligations of Seller listed in
Exhibit 2.1 (the "Assumed Payables").  The obligations assumed by Buyer pursuant
to the Section 2.1 are called the "Assumed Liabilities".

      2.2 Excluded Liabilities.  Apart from the Assumed Liabilities,  Buyer will
neither assume nor have any responsibility  for any obligations,  liabilities or
indebtedness  of Seller  of any  kind.  All such  obligations,  liabilities  and
indebtedness of Seller,  except the Assumed Liabilities,  are referred to as the
"Excluded Liabilities".


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<PAGE>

                                   ARTICLE III
                           PURCHASE PRICE AND PAYMENT

      3.1 Purchase  Price. In addition to the Assumed  Liabilities,  Buyer shall
pay Seller,  by wire  transfer or bank check on the Payment Date an amount equal
to (a) the  principal  amount and  current  month's  accrued  interest  thereon,
payable  as of  the  Closing  Date  under  Seller's  promissory  note  to  First
International  Bank (the "Bank")  dated March 9, 1998 in the original  principal
amount of $525,000,  as amended and restated  November 7, 2001 plus (b) the fair
market  value as of the Closing  Date of the  Equipment  listed in Exhibit  3.1,
securing  promissory  notes of Seller  to the Bank  dated  June 29,  1999 in the
original  principal  amount of  $1,260,000  and dated  February  13, 1996 in the
original principal amount of $1,250,000 respectively  (identified by the Bank as
# 001-0001-3001181-0001 and # 001-0001-30011-0002,  respectively) (the "Purchase
Price").  Seller  agrees  that it will not  modify or  amend,  or  increase  any
borrowing under, any of such promissory notes.

      3.2  Allocation of Purchase  Price.  The  consideration  for the Purchased
Assets will be allocated  between  Seller and among the Purchased  Assets as set
forth on Exhibit 3.2, which  allocation shall be within classes or categories as
provided in Section 1060 of the Internal Revenue Code of 1986, as amended.  Each
of Buyer and  Seller  agrees  that it will  adopt and  utilize  the  amounts  so
allocated  for purposes of all federal,  state and other tax returns filed by it
and it will  not  voluntarily  take any  position  inconsistent  therewith  upon
examination of any such tax return, in any claim, in any litigation or otherwise
with  respect to such tax  returns.  The  provisions  of this  Section 3.2 shall
survive the Closing Date without limitation.

      3.3  Payment  Date.  The  Payment  Date  shall be the  date on  which  the
conditions set forth in Sections 8.1 (b) and (h) shall have been satisfied.

                                   ARTICLE IV
                                     CLOSING

      4.1  Closing;  Closing  Date.  The Closing of the purchase and sale of the
Purchased  Assets provided in this Agreement (the "Closing") shall take place at
the offices of Cameron & Mittleman  LLP at 10:00 a.m. on December 31, 2003 or at
such earlier  time and place as the parties may agree.  The time and the date of
Closing are referred to as the "Closing Date".

                                    ARTICLE V
           REPRESENTATIONS AND WARRANTIES OF SELLER AND SHAREHOLDER

      To induce Buyer to enter into this Agreement and to purchase the Purchased
Assets, Seller and the Shareholder, jointly and severally, represent and warrant
to Buyer that,  except as otherwise  known by Clifford G.  Brockmyre  ("CGB") or
Roland Benjamin (together, "Buyer's Principals"):


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<PAGE>

      5.1   Corporate Organization and Authority.

            (a) Seller is a corporation  duly organized and validly  existing in
good  standing  under the laws of Rhode  Island  with full  corporate  power and
authority to conduct its business as now conducted,  to own its assets and enter
into and perform  its  obligations  under this  Agreement.  Seller's  execution,
delivery  and  performance  of this  Agreement  and the  sale  to  Buyer  of the
Purchased Assets have been duly authorized by all requisite  corporate action on
the  part of  Seller.  This  Agreement  constitutes,  and  all  bills  of  sale,
assignments,  agreements and other  instruments and documents to be executed and
delivered by Seller hereunder will constitute, Seller's legal, valid and binding
obligations,  enforceable  against  Seller in accordance  with their  respective
terms.

            (b) The  Shareholder  is a  corporation  duly  organized and validly
existing in good standing under the laws of Delaware with full  corporate  power
and  authority to conduct its business as now  conducted,  to own its assets and
enter into and perform its obligations  under this Agreement.  The Shareholder's
execution  and  delivery  and  performance  of this  Agreement  have  been  duly
authorized by all  requisite  corporate  action on the part of the  Shareholder.
This Agreement constitutes, and all documents and instruments to be executed and
delivered by the Shareholder hereunder will constitute, the Shareholder's legal,
valid and binding obligations, enforceable against the Shareholder in accordance
with their respective terms.

      5.2   Subsidiaries, Foreign Qualification and Ownership.

            (a) Seller has no  subsidiaries  and no other equity  investments in
any other  corporation,  partnership  or other  business  entity.  Seller is not
required  to  qualify  to  transact  business  as a foreign  corporation  in any
jurisdiction.

            (b) Seller's authorized capital stock consists of 2,000 shares of no
par value  common  stock,  of which 1,173 shares have been duly  authorized  for
issuance,  have been  validly  issued  and are  outstanding,  are fully paid and
non-assessable, and are owned of record and beneficially by the Shareholder.

      5.3   Absence of Conflicts and Consent Requirements.

            (a)  Seller's   execution   and  delivery  of  this   Agreement  and
performance of its obligations  hereunder will not (i) conflict with, violate or
result in any breach or default or, with  notice or lapse of time  constitute  a
default,  under (A) Seller's  Articles of  Incorporation  or Bylaws,  or (B) any
mortgage, indenture,  agreement, instrument or other contract to which Seller is
a party or by which Seller or its property is bound, (ii) result in the creation
of any  mortgage,  pledge,  lien,  encumbrance  or  charge  upon any  assets  or
properties  of Seller,  or (iii)  violate  any  judgment,  order,  decree,  law,
statute,  regulation  or other  judicial or  governmental  restriction  to which
Seller or any of its assets is  subject  or by which it is bound.  Except as set


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<PAGE>

forth in Exhibit 5.3 hereto,  Seller's  execution and delivery of this Agreement
and  performance  of  its  obligations  hereunder,  including  the  sale  of the
Purchased  Assets,  will not require the consent of, or any prior filing with or
notice to, any governmental authority, lender or other third party, and any such
consent,  filing or notice will be received or delivered, as the case may be, on
or prior to the Closing Date.

            (b) The  Shareholder's  execution and delivery of this Agreement and
performance of its obligations  hereunder will not (i) conflict with, violate or
result in any breach or default or, with  notice or lapse of time  constitute  a
default, under (A) the Shareholder's  Certificate of Incorporation or Bylaws, or
(B) any mortgage,  indenture,  agreement,  instrument or other contract to which
the Shareholder is a party or by which the Shareholder or its property is bound,
(ii) result in the creation of any mortgage, pledge, lien, encumbrance or charge
upon any of the purchased assets, or (iii) violate any judgment,  order, decree,
law, statute,  regulation or other judicial or governmental restriction to which
the Shareholder or any of its assets is subject or by which it is bound.  Except
as set forth in Exhibit 5.3 hereto, the Shareholder's  execution and delivery of
this Agreement and  performance of its obligations  hereunder,  will not require
the  consent  of,  or any  prior  filing  with or notice  to,  any  governmental
authority,  lender or other third party, and any such consent,  filing or notice
will be  received or  delivered,  as the case may be, on or prior to the Closing
Date.

      5.4 Financial  Statements.  Seller has delivered to Buyer true and correct
copies of the  unaudited  balance sheet for the period ended  ___________,  2003
(the "Current Balance Sheet") and its related  statements of income and retained
earnings and cash flows (the "Financial  Statements").  The Financial Statements
(a) present  fairly the  financial  position of Seller at the periods then ended
and the results of its operations and cash flows for the periods then ended, (b)
have been prepared in accordance with GAAP  consistently  applied,  (c) show all
material liabilities, absolute and contingent, of Seller required to be shown by
generally   accepted   accounting   principles   ("GAAP")  and  (d)  contain  no
misrepresentations, misstatements or omissions of material facts.

      5.5  Absence of Certain  Changes.  Since the date of the  Current  Balance
Sheet,  there has not been any material adverse change in the financial position
of Seller or in the results of its  operations  or to its assets,  properties or
business.

      5.6   Title to Assets.

            (a)  Contract  Rights.  The  rights  of Seller  under the  Operating
Agreements and the Customer Orders are valid and enforceable by Seller and will,
at the Closing,  be validly  assigned to and thereupon  enforceable by Buyer, in
each case in accordance with their respective  terms.  Neither Seller nor any of
the other  parties  thereto is in default in any material  respect (nor does any


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<PAGE>

circumstance  exist  which,  with notice or the  passage of time or both,  would
result in such a default)  under any of the  Operating  Agreements  or  Customer
Orders,  and the assignment by Seller of its rights thereunder to Buyer will not
violate the terms thereof.

            (b) Purchased  Assets.  Except for security  interests  described in
Exhibit 5.6 (the "UPS Security Interests") which UPS Security Interests shall be
released  and  terminated  prior  to the  Payment  Date,  Seller  has  good  and
marketable title to the Purchased Assets,  free and clear of all liens,  claims,
security  interests and  encumbrances  and has the right to convey the Purchased
Assets to Buyer.  At the Closing,  Seller shall have  conveyed to Buyer good and
marketable  title to the Purchased  Assets free and clear of all liens,  claims,
security interests and encumbrances except the UPS Security Interest, and Seller
will warrant and defend the title to the  Purchased  Assets in Buyer against the
lawful  claims of all persons  whomsoever.  The  Purchased  Assets  described in
Exhibit 8.1(b) are owned free and clear of any lien or security interest granted
by the  Shareholder,  and the  representations  in this  sentence  shall  not be
limited by any knowledge of the Principals.

      5.7 Loss  Contingencies.  There  are no  claims,  actions,  suits or other
proceedings pending, or to the knowledge of Seller threatened, against Seller or
any of the  Purchased  Assets  before  any  court,  agency  or  other  judicial,
administrative  or  other  governmental  body  or  arbitrator,  and to  Seller's
knowledge,  no state of facts  exists  which would be likely to give rise to any
such claim, action, suit or other proceeding.

      5.8  Compliance  With Law.  Seller has complied with, and is in compliance
with,  all laws,  statutes,  regulations,  rules and other  requirements  of any
governmental  authority  applicable to Seller, its assets and properties and the
conduct of its  business.  The permits and licenses (the  "Licenses")  listed in
Exhibit 5.8 are the only licenses, permits or authorizations of any governmental
authority required in connection with Seller's business. All of the Licenses are
in full force and effect.

      5.9   Taxes.

            (a)  Returns  and  Payment of Taxes.  All  Federal,  state and local
income,  excise or franchise tax returns,  real estate and personal property tax
returns,  sales and use tax  returns  and all other tax  returns  required to be
filed on or prior to the Payment Date by Seller with all taxing authorities have
been or prior to the Payment Date will have been filed.  All amounts shown to be
due and payable on such returns,  all other taxes, duties and other governmental
charges  payable by Seller or imposed upon any of the  Purchased  Assets and for
the  payment of which  there may arise any lien upon the  Purchased  Assets sold
hereunder subsequent to such sale, and all deficiencies,  assessments, penalties
and interest with respect thereto, in each case due and payable on or before the
Closing Date, have been or prior to the Closing Date will have been paid.

            (b) Sales,  Use and Excise  Taxes.  All sales,  use and excise taxes
collectible  with respect to all transactions  connected with Seller's  business


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<PAGE>

through  the  Closing  Date have been or will be  collected,  all amounts due in
connection therewith to state and local revenue authorities have been or will be
remitted  to the  appropriate  authorities,  and no lien or claim  with  respect
thereto will be asserted by such authorities before or after the Closing Date.

            (c) Withholding of Taxes.  There has been withheld or collected from
each payment made to each employee of Seller the amount of all taxes  (including
without  limitation  federal income taxes,  Federal Insurance  Contributions Act
taxes,  and state and local  income,  payroll  and wage  taxes)  required  to be
withheld or collected  therefrom prior to the date hereof and the same have been
paid to the proper tax  depositories  or  collecting  authorities.  Seller shall
withhold,  collect and pay all such amounts  required  during the period between
the date hereof and the Payment Date.

      5.10  Employee  Benefit  Plans.  Buyer,  by  reason  of  the  transactions
contemplated  by this  Agreement,  will not incur any claims,  losses,  damages,
costs, and expenses with respect to or in connection with any pension,  welfare,
fringe, or other employee benefit plan maintained or contributed to by Seller or
any  predecessor  that  provides or  provided  benefits to any current or former
employees  or  other  parties  who  performed  services  for  Seller  (or  their
beneficiaries or dependents).

      5.11 Employee Relations.  To Seller's knowledge, no officer or employee of
Seller  is  subject  to any  agreement  with any other  person  or entity  which
requires  such  officer or  employee  to keep  confidential  any trade  secrets,
proprietary  data,  customer  lists  or  other  business  information  or  which
restricts  such officer or employee from engaging in  competitive  activities or
solicitation of customers.

      5.12  Prospective  Changes.  Except as  described  in Exhibit 5.12 hereto,
neither Seller nor the Shareholder knows of any impending changes in its assets,
liabilities,  relations with employees,  competitive situation or relations with
its  suppliers  or  customers,  or in any  governmental  actions or  regulations
affecting  the Business,  which,  if they occur,  could have a material  adverse
effect on the Business.

      5.13  Products.  There are no orders,  decrees,  statements,  citations or
decisions  by any court or  governmental  or  regulatory  body,  or other  claim
pending or threatened that any product,  procured, sold or distributed by Seller
within  the last five (5) years is  defective  or fails to meet in any  material
respect any standards  promulgated by any such  governmental or regulatory body.
There have been no recalls  ordered by any such  governmental or regulatory body
with respect to any such product.

      5.14 No Material  Misstatements  or  Omissions.  The  representations  and
warranties of Seller in this Agreement do not contain any untrue  statement of a
material  fact or  omit  to  state  any  material  fact  necessary  to make  the
statements made therein not misleading.


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      5.15 Continued Representations. Each of the representations and warranties
contained in this Article V or in any certificate or document delivered pursuant
to the  provisions of this  Agreement,  shall be true and correct upon and as of
the  Closing  Date and the  Payment  Date as  though  such  representations  and
warranties  were made at and as of the Closing Date and the Payment Date, all of
which  shall be deemed to be  restated  and  fully  applicable  on and as of the
Closing Date.

                                   ARTICLE VI
                   REPRESENTATIONS AND WARRANTIES OF BUYER

      To induce  Seller to enter into this  Agreement  and to sell the Purchased
Assets, Buyer hereby represents and warrants to the Seller that:

      6.1 Corporate  Organization  and  Authority.  Buyer is a corporation  duly
organized and validly  existing in good standing under the laws of Rhode Island,
with full corporate power and authority to conduct its business as now conducted
and to enter into and  perform its  obligations  under this  Agreement.  Buyer's
execution, delivery and performance of this Agreement and its acquisition of and
payment for the  Purchased  Assets have been duly  authorized  by all  requisite
corporate  action on the part of Buyer and this Agreement  constitutes,  and all
agreements and other  instruments  and documents to be executed and delivered by
Buyer hereunder will constitute,  Buyer's legal, valid and binding  obligations,
enforceable against Buyer in accordance with its terms.

      6.2 Absence of Conflicts and Consent  Requirements.  Buyer's execution and
deliver  of  this  Agreement  and  performance  of  its  obligations  hereunder,
including the purchase of and payment for the Assets hereunder,  do not and will
not conflict with, violate or result in any breach or default or, with notice or
lapse  of time,  or both,  constitute  a  default,  under  Buyer's  Articles  of
Incorporation  or Bylaws or any mortgage,  indenture,  agreement,  instrument or
other contract to which Buyer is a party or any judgment,  order,  decree,  law,
statute, regulation or other judicial or governmental restriction to which Buyer
is subject.  Buyer's execution and delivery of this Agreement and performance of
its  obligations  hereunder,  including  the  purchase  of and  payment  for the
Purchased  Assets,  do not and will not  require  the  consent  of, or any prior
filing with or notice to, any governmental authority or other third party.

      6.3 Continued  Representations.  Each of the foregoing representations and
warranties  contained in Article VI or in any certificate or document  delivered
by Buyer pursuant to the provisions of this Agreement, shall be true and correct
upon  and  as  of  the  Closing  Date  and  the  Payment  Date  as  though  such
representations  and warranties  were made at and as of the Closing Date and the
Payment Date,  all of which shall be deemed to be restated and fully  applicable
on and as of the Closing Date and the Payment Date.


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                                   ARTICLE VII
                        CERTAIN COVENANTS AND AGREEMENTS

      7.1   Conduct Prior to Closing.

            (a) Ordinary  Course of Business.  Through the Closing Date,  unless
Buyer otherwise,  consents in writing,  Seller will not and the Shareholder will
not permit Seller to, conduct the Business,  except in the ordinary course, will
not dispose of any of the  Equipment,  will not enter into any contract,  lease,
agreement,  transaction  or arrangement  which,  if existing on the date hereof,
would  be  required  to  be   disclosed   herein  in  response  to  any  of  the
representations  or warranties set forth in Article V hereof,  and will not take
any other  action  which would  cause any  representation  or  warranty  made in
Article V hereof to be incorrect in any material respect if such  representation
or warranty were made on any date through the Closing Date.

            (b) Access.  Through the Closing  Date,  Seller and the  Shareholder
shall give Buyer and its agents,  lenders,  attorneys and  representatives  full
access to such of its  properties,  books,  records and  documents  as Buyer may
reasonably request.

            (c) Press  Releases  and  Announcements.  Through the Payment  Date,
Buyer and Seller will  cooperate in the  preparation  and  dissemination  of any
press releases,  announcements  and other  disclosures to others relating to the
transactions  contemplated  hereby,  and neither party shall make any such press
releases,  announcements or other disclosures, without the prior written consent
of the other party;  provided,  however,  that this  section  shall not preclude
either  party from making any  disclosure  as to the  transactions  contemplated
hereby which the disclosing party reasonably  believes is required by applicable
law or is  necessary in order to obtain any  third-party  consent or approval to
the transactions contemplated by this Agreement.

            (d) Buyer's  Conduct of the  Business.  Through  the  Payment  Date,
unless Seller and the Shareholder  otherwise consent in writing,  Buyer will not
conduct the Business except in the ordinary  course,  will not dispose of any of
the Equipment, will not enter into any contract,  lease, agreement,  transaction
or  arrangement  not in the ordinary  course of Business,  and will not take any
other action which would cause any representation or warranty made in Article VI
hereof  to be  incorrect  in any  material  respect  if such  representation  or
warranty  were made on any date through the Closing  Date and the Payment  Date.
Through the Payment  Date,  Buyer will not declare any  dividends on its capital
stock  or  any  cash  bonuses  or  other   distributions   to  any  employee  or
representative  of  Buyer  except  in the  ordinary  course  of  Business  or as
otherwise expressly authorized in writing by Seller and Shareholder.

      7.2 Seller's Employees.  Concurrently with or prior to the Closing,  Buyer
may offer  employment to Seller's  employees  currently  engaged in the Business
(and  only  such  employees)  on such  terms  and  conditions  as Buyer may deem
appropriate in its sole discretion.  In no event shall Buyer be or become liable


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to Seller or its  employees on account of wages,  vacation pay,  severance  pay,
benefit or any other  matter  relating  to or arising  in  connection  with such
employees' employment by Seller or the Shareholder, except as expressly included
in the Assumed Liabilities.

      7.3 Further  Assurances.  Each of Seller and Buyer agrees that at any time
and from time to time it will  promptly  execute  and  deliver to the other such
further  assurances,  instruments  and documents and take such further action as
the other may  reasonably  request  in order to carry  out the full  intent  and
purpose of this Agreement.

      7.4  Fees,  Expenses  and Sales  Taxes.  Whether  or not the  transactions
contemplated  by  this  Agreement  are  consummated,   Seller,  Buyer,  and  the
Shareholder  shall  each  pay its or his own fees and  other  costs or  expenses
incident to the negotiation, preparation and execution of this Agreement and the
transactions  contemplated hereby, including the fees and expenses of its or her
own counsel, accountants, appraisers and other experts.

      7.5 No  Brokers.  Each of Seller  and Buyer  represents  that no broker or
finder has been  involved or engaged by it in connection  with the  transactions
contemplated hereby.

                                  ARTICLE VIII
                              CONDITIONS TO CLOSING

      8.1  Conditions  to  Buyer's  Obligations.  The  obligations  of  Buyer to
complete  the  Closing  are  contingent  upon  the  fulfillment  of  each of the
following  conditions  on or before the Closing Date or the Payment Date, as the
case may be,  except to the extent that Buyer may, in its  absolute  discretion,
waive in writing any one or more thereof, in whole or in part:

            (a) Bringdown.  The representations and warranties of Seller and the
Shareholder  set  forth  in this  Agreement  shall be true  and  correct  in all
material  respects on the Closing  Date and the Payment Date with the same force
and  effect as though  made on the  Effective  Date;  all terms,  covenants  and
conditions to be complied with and performed by Seller and the Shareholder under
this  Agreement on or before the Closing Date and/or the Payment Date shall have
been duly complied with and duly performed; and Seller and the Shareholder shall
have delivered to Buyer at Closing a certificate,  dated the Closing Date or the
Payment Date as the case may be, to such effect;

            (b)  The  Shareholder  shall  have  delivered  written  confirmation
acceptable to Buyer that the equipment  described in Exhibit 8.1(b), is, and has
been at least since December,  31, 2001, owned by Seller,  free and clear of all
liens,  claims and  encumbrances of every kind,  whatsoever  except UPS Security
Interests,  but free and clear of security  interests  granted to Laurus  Master


                                       10
<PAGE>

Fund, Ltd. by the Shareholder.  The parties expressly agree and acknowledge that
such  equipment  is  included  in the  Purchased  Assets  to be  sold  to  Buyer
hereunder;

            (c)  Instruments  of Transfer.  Seller shall have delivered to Buyer
such assignments, bills of sale, certificates of title, and other instruments of
transfer,  all in form  reasonably  satisfactory  to Buyer,  as are necessary to
fully and effectively  convey to Buyer all of the Purchased Assets in accordance
with the terms hereof;

            (d)  Consents;  Estoppel  Certificates.  The  consents  described in
Exhibit 5.3 hereto,  and all other  consents  required for Seller to perform its
obligations hereunder, shall have been obtained in form and substance reasonably
satisfactory to Buyer.  Buyer shall have received estoppel  certificates in form
and substance  reasonably  satisfactory to Buyer from each of the parties to the
Operating Agreements and Customer Orders;

            (e) No Adverse Proceedings. No action, suit or proceeding before any
court or  governmental or regulatory  authority  shall have been  commenced,  no
investigation  by any  governmental  or  regulatory  authority  shall  have been
commenced,  and no action,  suit or proceeding by any governmental or regulatory
authority  shall  have  been  threatened,  against  any of the  parties  to this
Agreement,  or any of the  principals,  officers or directors of any of them, or
any of  the  Purchased  Assets  seeking  to  restrain,  prevent  or  change  the
transactions  contemplated hereby or questioning the validity or legality of any
of  such  transactions  or  seeking  damages  in  connection  with  any of  such
transactions.

            (f) Seller Closing  Deliveries.  Seller shall have provided to Buyer
on or before the Closing Date or the Payment Date, as applicable, the following:

                  (i) a good  standing  certificate  issued by the  Secretary of
      State of Rhode Island;

                  (ii) certified  copies of resolutions of the  Shareholder  and
      board of  directors  of Seller  authorizing  the  execution,  delivery and
      performance by Seller of this  Agreement,  the conveyance of the Purchased
      Assets and the transactions contemplated hereby;

                  (iii)  UCC-11   Information   Statements   from  all  relevant
      jurisdictions  relating to the  existence of any Uniform  Commercial  Code
      financing statements and any statements of assignment thereof with respect
      to the Purchased Assets and shall cause its counsel to provide a report of
      such search to Buyer at the Closing;

                  (iv)  copies of all  required  notices to  appropriate  taxing
      authorities  with respect to the sale of the Purchased Assets and evidence
      of payment of all  required  taxes,  together  with tax lien  releases  or


                                       11
<PAGE>

      waivers to enable the Purchased  Assets to be sold  hereunder to the Buyer
      free and clear of all liens and encumbrances; and

                  (iv) all information reasonably requested by Buyer;

            (g) Indemnification Agreement. Seller and the Shareholder shall have
delivered to CGB an Indemnification Agreement in form and substance satisfactory
to him,  under which  Seller and the  Shareholder  agree to  indemnify  and hold
harmless CGB against and from all  liability  of CGB to Rhode Island  Industrial
Facilities  Corporation,  UPS Capital Business Credit (f/k/a First International
Bank) or any of their respective successors or assigns.

            (h) UCC Termination Statements. Seller shall have delivered to Buyer
written evidence  satisfactory to Buyer that all security interests in and liens
against the Purchased Assets,  including the UPS Security  Interests,  have been
released and terminated.

            (i) Other Assurances.  Each of Seller and the Shareholder shall have
delivered to Buyer such other and further certificates, assurances and documents
as Buyer may  reasonably  request in order to evidence  the accuracy of Seller's
and the  Shareholder's  representations  and warranties,  the performance of its
covenants  and  agreements  to be performed at or prior to the Closing,  and the
fulfillment of the conditions to Buyer's obligations.

      8.2  Conditions  to Seller's  Obligations.  The  obligations  of Seller to
complete  the  Closing  are  contingent  upon  the  fulfillment  of  each of the
following  conditions  on or before the Closing  Date or the Payment Date as the
case may be,  except to the extent that Seller may, in its absolute  discretion,
waive any one or more thereof in whole or in part:

            (a) Bringdown. The representations and warranties of Buyer set forth
in the  Agreement  shall be true and  correct in all  material  respects  on the
Closing Date or the Payment Date, as applicable,  with the same force and effect
as though  made on the Closing  Date or the Payment  Date,  as  applicable;  all
terms, covenants and conditions to be complied with and performed by Buyer under
this  Agreement on or before the Closing Date or Payment  Date,  as  applicable,
shall have been duly  complied  with and duly  performed;  and Buyer  shall have
delivered to Seller at Closing a certificate,  dated the Closing Date or Payment
Date, as applicable, to such effect.

            (b) Corporate Approval.  Buyer shall have delivered to Seller copies
of any resolutions  approving the  transactions  contemplated by this Agreement,
certified by the Secretary of the Buyer.

            (c) No Adverse Proceedings. No action, suit or proceeding before any
court or  governmental or regulatory  authority  shall have been  commenced,  no
investigation  by any  governmental  or  regulatory  authority  shall  have been


                                       12
<PAGE>

commenced,  and no action,  suit or proceeding by any governmental or regulatory
authority  shall  have  been  threatened,  against  any of the  parties  to this
Agreement,  or any of the  principals,  officers or directors of any of them, or
any of  the  Purchased  Assets  seeking  to  restrain,  prevent  or  change  the
transactions  contemplated hereby or questioning the validity or legality of any
of  such  transactions  or  seeking  damages  in  connection  with  any of  such
transactions.

            (d) CGB Agreement. By written agreement, effective as of the Payment
Date, CGB shall have (i)  acknowledged and approved in writing the assumption by
Buyer of the agreements and  obligations of Seller and/or the Shareholder to CGB
listed in Exhibit 8.2(d) and (ii) released Seller and the Shareholder on account
of all liability under such agreements and obligations.

            (e) Other  Assurances.  Buyer  shall have  delivered  to Seller such
other  and  further  certificates,   assurances  and  documents  as  Seller  may
reasonably request in order to evidence the accuracy of Buyer's  representations
and warranties,  the performance of its covenants and agreements to be performed
at or prior to the Closing,  and the  fulfillment  of the conditions to Seller's
obligations.

      8.3   Payment of Purchase  Price and Assumption of  Obligations.  On the
Payment Date,  Buyer shall pay the Purchase Price to Seller,  and shall assume
the Assumed Liabilities.

                                   ARTICLE IX
                         TERMINATION; RIGHTS TO PROCEED

      9.1   Termination.  At any time prior to the  Closing,  this  Agreement
may be terminated as follows:

            (a) by mutual written  consent of all the parties to this Agreement;
or

            (b) at the election of the affected party,  whether Buyer or Seller,
subject to the  limitations  contained in Section 11.5, if any of the conditions
to its  obligations  set forth in Article  VIII of this  Agreement  has not been
satisfied at or prior to the Closing,  by written  notice given to the other and
setting forth such conditions which have not been so satisfied.

      9.2 Effect of Termination.  All obligations of the parties hereunder shall
cease upon any  termination  pursuant to Section  9.1;  provided,  however  that
nothing herein shall relieve any party from any liability or a material error or
omission  in any of its  representations  or  warranties  contained  herein or a
material  failure to comply with any of its covenants,  conditions or agreements
contained herein.


                                       13
<PAGE>

                                    ARTICLE X
                RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING

      10.1 Survival of  Representations  and  Warranties.  All  representations,
warranties,  agreements,  covenants and  obligations  herein or in any schedule,
exhibit,  certificate or financial statement delivered by any party or the other
party incident to the  transaction  contemplated  hereby are material,  shall be
deemed to have been relied upon by the other party and shall survive the Closing
regardless of any  investigation  and shall not merge in the  performance of any
obligation by either party hereto.

      10.2 Collection of Assets. Seller agrees that it will promptly transfer or
deliver to Buyer from time to time,  any cash or other  property that Seller may
receive with respect to any claims, contracts,  licenses,  leases,  commitments,
sales orders,  purchase orders,  receivables of any character or any other items
included in the Purchased Assets.

      10.3 Payment of Obligations.  Seller shall pay, and the Shareholder  shall
cause Seller to pay, all of the Excluded  Liabilities in the ordinary  course of
business as they become due.

                                   ARTICLE XI
                                 INDEMNIFICATION

      11.1  Indemnification  of Buyer by Seller and the Shareholder.  Seller and
the Shareholder,  jointly and severally, shall indemnify and hold Buyer, Buyer's
Principals and its and their  attorneys,  affiliates,  representatives,  agents,
officers,  directors,  successors  or  assigns  harmless  from and  against  any
liability,  loss,  cost,  expense,  judgment,  order,  settlement,  obligations,
deficiency, claim, suit, proceeding (whether formal or informal), investigation,
Lien or other damage, including, without limitation,  reasonable attorneys' fees
and  expenses  (collectively,  "Damages"),  resulting  from,  arising  out of or
incurred with respect to:

            (a) a breach of any representation,  warranty, covenant or agreement
of Seller or the Shareholder  contained herein,  including,  without limitation,
agreements under Article XIII hereof; or

            (b)   the Excluded Liabilities.

      11.2  Indemnification of Seller. Buyer shall indemnify and hold Seller and
its  attorneys,  affiliates,   representatives,   agents,  officers,  directors,
successors  or assigns,  harmless from and against any Damages  resulting  from,
arising out of, or incurred with respect to:


                                       14
<PAGE>

            (a) a breach of any representation,  warranty, covenant or agreement
by Buyer contained herein; or

            (b)   the Assumed Liabilities.

                                   ARTICLE XII
                                 NON-COMPETITION

      12.1  In  consideration   of  Buyer's   consummation  of  the  transaction
contemplated by this Agreement,  and as a material  inducement to Buyer to enter
into this Agreement, Seller and the Shareholder covenant and agree as follows:

            (a) During the period  beginning  on the Closing  Date and ending on
the second  anniversary of the Closing Date (the "Noncompete  Period"),  neither
Seller  nor the  Shareholder  will at any time,  in any  capacity,  directly  or
indirectly,  do any of the following: (i) be a Competing Organization or provide
any management,  consulting,  financial,  administrative or other service to any
Competing Organization, including, without limitation, participating directly or
indirectly  as an  officer,  director,  stockholder  (excluding  a less  than 1%
stockholder in a publicly held corporation),  member, operator, sole proprietor,
independent contractor,  consultant,  franchisor,  franchisee,  owner, employee,
agent,  representative or partner of, or having any direct or indirect financial
interest  (including,  without  limitation,  the interest of a creditor) in, any
Competing Organization,  or (ii) knowingly allow Seller's name or any derivation
thereof to be used by any Competing Organization.  "Competing Organization" will
include  any  individual,  corporation,   partnership,  joint  venture,  limited
liability  company,  organization,  business or other  enterprise (A) located or
doing business  anywhere in the United States (the "Geographic  Area"),  and (B)
then  engaged  in or about to become  engaged  in, a  business  identical  to or
similar to the Business.

             (b)  During  the   Noncompete   Period,   neither  Seller  nor  the
Shareholder will at any time in any capacity, directly or indirectly, (i) induce
or attempt to induce any employee  (including  leased employees) of Buyer or any
of its Affiliates to leave their employ,  or otherwise solicit the employment of
any such employee of Buyer or any of its  Affiliates,  hire any such employee or
in  any  way  interfere  with  the  relationship  between  Buyer  or  any of its
Affiliates  and any of such  employees,  (ii) induce or  attempted to induce any
customer, supplier,  licensee, licensor,  franchisee, or other business relation
of either Buyer or any of its Affiliates to cease doing business with them or in
any way interfere with the  relationship  between Buyer or any of its Affiliates
and any of their respective  customers or business  relations,  or (iii) solicit
the  business of any then  existing  customer of Buyer or any of its  Affiliates
relating to the Business.

            (c) If, at the time of  enforcement of any of the provisions of this
Article  XII, a court of  competent  jurisdiction  holds  that the  restrictions
stated in Article XII are unreasonable  under the circumstance  then existing or
are otherwise illegal,  invalid or unenforceable in any respect by reason of its


                                       15
<PAGE>

duration,  definition  of  Geographic  Area or scope of  activity,  or any other
reason,  the parties agree that the maximum period,  scope or geographical  area
reasonable or otherwise enforceable under such circumstances will be substituted
for the state period, scope or area.

            (d) Without limiting any of Buyer's rights under this Agreement, the
parties  hereto  acknowledge  that Buyer will be  entitled to enforce its rights
under this Article XII  specifically,  to recover  damages and costs  (including
reasonable  attorney's  fees)  caused by any  breach of any  provisions  of this
Article XII and to exercise all other rights existing in its favor.  The parties
acknowledge  and agree that the breach of any term or  provision of this Article
XII by Seller or the Shareholder  will  materially and  irreparably  harm Buyer,
that money damages will  accordingly not be an adequate remedy for any breach of
the provisions of this Article XII by Seller or the  Shareholder  and that Buyer
in its sole  discretion and in addition to any other remedies it may have at law
or in equity may apply to any court of law or equity of  competent  jurisdiction
(without  posting any bond or deposit)  for  specific  performance  and/or other
injunctive  relief  in  order  to  enforce  or  prevent  any  violations  of the
provisions of this Article XII.

      12.2  In  consideration  of  Seller's   consummation  of  the  transaction
contemplated by this Agreement,  and as a material inducement to Seller to enter
into this Agreement, Buyer and the Principals covenant and agree as follows:

            (a) During the Non-Compete Period,  neither Buyer nor the Principals
will  at any  time,  in any  capacity,  directly  or  indirectly,  do any of the
following:  (i) be a Seller  Competing  Organization  or provide any management,
consulting,  financial,  administrative or other service to any Seller Competing
Organization,   including,   without  limitation,   participating   directly  or
indirectly  as an  officer,  director,  stockholder  (excluding  a less  than 1%
stockholder in a publicly held corporation),  member, operator, sole proprietor,
independent contractor,  consultant,  franchisor,  franchisee,  owner, employee,
agent,  representative or partner of, or having any direct or indirect financial
interest  (including,  without  limitation,  the interest of a creditor) in, any
Seller  Competing  Organization,  or (ii)  knowingly  allow Seller's name or any
derivation  thereof to be used by any  Seller  Competing  Organization.  "Seller
Competing Organization" will include any individual,  corporation,  partnership,
joint  venture,  limited  liability  company,  organization,  business  or other
enterprise  (A) located or doing  business  anywhere  in the United  States (the
"Geographic  Area"),  and (B) then engaged in or about to become engaged in, the
business now conducted by Seller, other than the Business.

             (b) During the  Noncompete  Period except as  contemplated  by this
Agreement,  neither Buyer nor the  Principals  will at any time in any capacity,
directly or indirectly,  (i) induce or attempt to induce any employee (including
leased  employees) of Seller or any of its Affiliates to leave their employ,  or
otherwise  solicit the  employment  of any such employee of Seller or any of its
Affiliates, hire any such employee or in any way interfere with the relationship
between Seller or any of its Affiliates and any of such  employees,  (ii) induce
or attempted to induce any customer, supplier,  licensee, licensor,  franchisee,


                                       16
<PAGE>

or other  business  relation of either Seller or any of its  Affiliates to cease
doing business with them or in any way interfere with the  relationship  between
Seller  or any of its  Affiliates  and  any of  their  respective  customers  or
business relations,  or (iii) solicit the business of any then existing customer
of Seller or any of its Affiliates  relating to Seller's business other than the
Business.

            (c) If, at the time of  enforcement of any of the provisions of this
Article  XII, a court of  competent  jurisdiction  holds  that the  restrictions
stated in Article XII are unreasonable  under the circumstance  then existing or
are otherwise illegal,  invalid or unenforceable in any respect by reason of its
duration,  definition  of  Geographic  Area or scope of  activity,  or any other
reason,  the parties agree that the maximum period,  scope or geographical  area
reasonable or otherwise enforceable under such circumstances will be substituted
for the state period, scope or area.

            (d) Without  limiting any of Seller's  rights under this  Agreement,
the  parties  hereto  acknowledge  that  Seller  will be entitled to enforce its
rights  under  this  Article  XII  specifically,  to recover  damages  and costs
(including reasonable attorney's fees) caused by any breach of any provisions of
this  Article XII and to exercise all other  rights  existing in its favor.  The
parties  acknowledge  and agree that the breach of any term or provision of this
Article XII by Buyer or the  Principals  will  materially and  irreparably  harm
Seller,  that money damages will  accordingly  not be an adequate remedy for any
breach of the provisions of this Article XII by Buyer or the Principals and that
Seller in its sole  discretion and in addition to any other remedies it may have
at law or in  equity  may  apply to any  court  of law or  equity  of  competent
jurisdiction  (without  posting any bond or deposit)  for  specific  performance
and/or other injunctive  relief in order to enforce or prevent any violations of
the provisions of this Article XII.

                                  ARTICLE XIII
                            PAYMENT DATE TERMINATION

      13.1  Termination.  In the event the Payment  Date has not  occurred on or
before  February 15, 2004, or such later date, not later then March 15, 2004, as
Buyer may designate (the "Termination Date"), the parties agree that any and all
obligations  of  Buyer,   CGB  and/or  Roland  Benjamin  to  Seller  and/or  the
Shareholder  under or in connection  with this  Agreement  and the  transactions
contemplated hereby (collectively, "Buyer's Obligations") shall terminate and be
of no force or  effect  in the same  manner  as if this  Agreement  had not been
executed and delivered.  The  Shareholder and Seller  expressly  acknowledge and
agree  that in no  event  shall  Buyer,  CGB  and/or  Roland  Benjamin  have any
liability on account of the Assumed  Liabilities  in the event of termination in
accordance with this Section 13.1.

      13.2  Reconveyance; Assumption.

            (a) On the  Termination  Date,  Buyer shall  transfer  and assign to
Seller: (i) the Purchased Assets, except those sold, transferred or converted to
cash in the  ordinary  course of  business  since  the  Closing  Date;  (ii) all
customer  orders in existence as of such date,  including all Assumed  Orders to


                                       17
<PAGE>

the extent not then completed;  and (iii) all accounts  receivable and inventory
of Buyer owned as of such date.  Such transfer and  assignment  shall be without
representation  or warranty of any kind  whatsoever  except Buyer shall  warrant
that title to such  property will be free of liens and  encumbrances  created by
Buyer.

            (b) Seller and the Shareholder,  jointly and severally, agree to (i)
pay Buyer on the  Termination  Date an amount equal to (A) all  liabilities  and
indebtedness  of every kind  whatsoever of Buyer arising in connection  with the
formation and  organization of Buyer and the conduct of Buyer's business and (B)
all  capital  contributions  made to Buyer  and (ii)  assume in  writing  on the
Termination Date all customer orders,  including all Assumed Order to the extent
not then completed and similar obligations of Buyer.

            (c) The  provisions  of  Sections  11.1 and 13.2 shall  survive  the
termination of this Agreement pursuant to Section 13.1.

                                   ARTICLE XIV
                                  MISCELLANEOUS

      14.1 Merger  Clause.  This  Agreement  contains  the final,  complete  and
exclusive  statement  of the  agreement  between the parties with respect to the
transactions  contemplated  herein and all prior or  contemporaneous  written or
oral agreements with respect to the subject matter hereof are merged herein.

      14.2  Amendments.  No change,  amendment,  qualification  or  cancellation
hereof shall be effective  unless in writing and executed by each of the parties
hereto by their duly authorized officers.

      14.3 Benefits and Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.  Buyer may form a wholly-owned  subsidiary or other business entity
for the purpose of assuming  all of Buyer's  rights and  obligations  under this
Agreement.

      14.4 Notices.  All notices,  requests and demands and other communications
hereunder  must be in  writing  and shall be deemed to have been duly given when
personally delivered,  or when place in the United States Mails and forwarded by
Registered or Certified Mail,  return receipt  requested,  postage  prepaid,  or
delivered pre-paid by a nationally recognized courier service,  addressed to the
party to whom such notice is being given at the following addresses:


                                       18
<PAGE>

            If to Seller or the Shareholder:

                  Infinite Group, Inc.
                  595 Blossom Road
                  Suite 309
                  Rochester, New York 14610

                  Attention:  Michael Smith, President

            If to Buyer:

                  LFI, Inc.
                  c/o Clifford G. Brockmyre
                  7 Industrial Drive South
                  Smithfield, Rhode Island 02917

Any party may change the  address(es)  to which  notices to it are to be sent by
giving  notice of such  change  to the other  parties  in  accordance  with this
Section.

      14.5  Captions.  The captions are for  convenience  of reference  only and
shall not be construed as a part of this Agreement.

      14.6  Governing  Law.  This  Agreement  shall be  construed,  interpreted,
enforced and governed by and under the laws of Rhode Island.

      14.7 Exhibits.  All of the Exhibits  hereto  referred to in this Agreement
are hereby incorporated herein by reference and shall be deemed and construed to
be a part of this Agreement for all purposes.

      14.8 Severability.  The invalidity or  unenforceability of any one or more
phrases, sentences, clauses or provisions of this Agreement shall not affect the
validity or  enforceability  of the remaining  portions of this Agreement or any
part thereof.

      14.9  Counterparts.  This  Agreement  may be  executed  in any  number  of
counterparts, all of which shall constitute one and the same instrument.

      14.10 Time.  Time is of the essence of this Agreement and all of its terms
and conditions.

                            [SIGNATURE PAGE FOLLOWS]


                                       19
<PAGE>

      IN WITNESS WHEREOF,  Seller,  the Shareholder and Buyer have each executed
this Agreement or caused this Agreement to be executed by their  respective duly
authorized officers as of the day and year first above written.

                                          LASER FARE, INC.


                                          By:
                                             -----------------------------
                                              President

                                          INFINITE GROUP, INC.


                                          By:
                                             -----------------------------
                                              President

                                          LFI, INC.


                                          By:
                                             -----------------------------
                                               President