ASSET PURCHASE AGREEMENT

      ASSET  PURCHASE  AGREEMENT  ("this  Agreement") is made as of December 31,
2004 among LASER FARE,  INC., a Rhode Island  corporation  ("Seller"),  INFINITE
GROUP, INC., a Delaware corporation (the "Shareholder");  and ROLBEN ACQUISITION
COMPANY, a Rhode Island corporation ("Buyer").

                                    RECITALS:

      A. Seller is engaged in the business of laser manufacturing.

      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,  and Seller and the Shareholder desire that Seller sell such business
and assets 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.  Effective  the date hereof,  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
existing  and owned by  Seller as of the date  hereof  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 and the
following assets and property:

            (a) all personal  property such as (without  limitation)  machinery,
equipment, tools, dies, molds, drawings, furniture and fixtures, inventories and
raw materials and supplies, work-in-progress and finished goods, customer lists,
customer purchase orders, and goodwill;

            (b) all rights,  title and interest in and to Seller's  intellectual
properties,  such as (without limitation) know-how,  trade secrets,  trademarks,
trade names,  copyrights,  patents and other rights or  registrations,  internet
domain names and the name "Laser Fare";

            (c) all accounts receivable of Seller;

<PAGE>

            (d) all rights of Seller in, to and under a certain Lease  Agreement
dated as of June 1, 1992 (the "RIIFC  Lease")  between  Seller and Rhode  Island
Industrial Facilities Corporation ("RIIFC");

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

            (f) 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"),  including those, if any, listed in Exhibit
B hereto;

            (g) all books and records of Seller,  including  operating  records,
property records, purchasing and sale records and any computer software relating
thereto; and

            (h) all cash.

      1.2  Excluded  Assets.  The  Purchased  Assets  shall not  include (a) any
intercompany  credits  due to  Seller  from  Shareholder,  (b) any  intellectual
property  relating to the  Grating  Coupled  Surface  Emitting  Laser  ("GCSEL")
technology or (c) any property of Infinite  Photonics,  Inc. located at Seller's
facilities (the "Excluded Assets").

                                   ARTICLE II
                        LIMITED ASSUMPTION OF LIABILITIES

      2.1 Assumption of Liabilities.  Concurrently herewith,  Buyer shall assume
and be responsible for the following  liabilities of Seller and Shareholder (the
"Assumed Liabilities"):

            (a)  obligations  under the RIIFC Lease and the  related  Industrial
Revenue Bond due June 2012 (the "RIIFC  Obligations") to Rhode Island Industrial
Facilities  Corporation ("RIIFC") to the extent provided in a certain Assignment
of even date by Seller to Buyer;

            (b)  obligations   with  respect  to  accounts   payable,   Employee
Obligations  (defined  below)  and other  related  obligations  incurred  in the
ordinary  course of  Seller's  business  consistent  with  prior  practices  and
obligations,  if any, for payments in lieu of taxes to the Town of Smithfield as
required under the RIIFC Lease ("Smithfield Taxes");

            (c) obligations under the Operating Agreements and Customer Orders;

            (d) obligations, if any, to University of Rhode Island ("URI"); and


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<PAGE>

            (e)  obligations,  if any,  to  National  Center  for  Manufacturing
Sciences ("NCMS") for certain royalties pursuant to letter agreement dated March
23, 2000 (the "NCMS Obligations")

      The term  "Employee  Obligations"  shall mean to the extent  unpaid in the
ordinary course of business (i) regular  payroll  obligations for the pay period
from January 1, 2004 through the closing date and (ii)  vacation  pay,  sick pay
and 401(k) contributions for the period from January 1, 2004 through the closing
date to the extent not previously paid.

      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".  The parties  expressly  acknowledge and agree that the
Excluded  Liabilities  include (a)  intercompany  liabilities due to Shareholder
from  Seller,  (b)  obligations,  if any, to Messrs.  Landi,  Feeley,  McDonald,
Garreau or  Steinman  or other  current  or former  employees  of Seller  and/or
Shareholder  (including obligations on account of withholding and similar taxes)
except  Employee  Obligations,   (c)  income  taxes,  if  any,  of  Seller,  (d)
obligations,  if any, of Seller and/or  Shareholder  to Spectra  Science and (e)
fees of  lawyers  and  accountants  of  Infinite  or Seller  other than those to
Aubrey,  Dixon & Riley,  Bulkley,  Richardson  & Gelinas and Cameron & Mittleman
LLP.

                                   ARTICLE III
                           PURCHASE PRICE AND PAYMENT

      3.1 Purchase Price.  The  consideration  for the Purchased Assets shall be
the  Assumed  Liabilities  and  the  execution  and  delivery  by  Buyer  of its
promissory notes of even date in the original  principal  amounts of $50,207.37,
$697,990.11, $974,109.99 and $415,000.

      3.2  Allocation of Purchase  Price.  The  consideration  for the Purchased
Assets  will be  allocated  between  Seller  and among the  Purchased  Assets 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.

                                   ARTICLE IV
           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


                                       3
<PAGE>

to Buyer that,  except as otherwise  known by Clifford G.  Brockmyre  ("CGB") or
Roland Benjamin (together, "Buyer's Principals"):

      4.1   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.

      4.2   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.

      4.3   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) subject
to consent by First  International  Bank and/or UPS Capital Business Credit (the
"Bank")  and RIIFC  any  mortgage,  indenture,  agreement,  instrument  or other
contract to which Seller is a party or by which Seller or its property is bound,


                                       4
<PAGE>

(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.

            (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.  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.

      4.4 Financial  Statements.  Seller has delivered to Buyer true and correct
copies of the unaudited  balance sheets for recent periods (the "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.

      4.5 Absence of Certain Changes. Since the date of the 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.

      4.6   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
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.


                                       5
<PAGE>

            (b) Purchased Assets.  Except for security  interests granted to the
Bank (the "UPS Security Interests") and except for rights of RIIFC and others in
connection  with the RIIFC  Obligations  and rights of URI,  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.

      4.7 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.

      4.8  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.

      4.9   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 date hereof by Seller with all taxing  authorities have
been or prior to the date hereof will have been filed.  Except Smithfield Taxes,
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 date  hereof or by reason of the sale of the  Purchased
Assets have been paid by Seller.

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

            (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.


                                       6
<PAGE>

      4.10 Employee Benefit Plans.  Except as provided herein,  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).

      4.11 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.

      4.12 Continued Representations. Each of the representations and warranties
contained  in  this  Article  IV or in any  certificate  or  document  delivered
pursuant to the provisions of this Agreement, shall survive the delivery of this
Agreement and all documents relating hereto.

                                    ARTICLE V
                   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:

      5.1 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.

      5.2 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.

      5.3 Continued Representations.  Each of the representations and warranties
contained  in  this  Article  IV or in any  certificate  or  document  delivered
pursuant to the provisions of this Agreement, shall survive the delivery of this
Agreement and all documents relating hereto.


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<PAGE>

                                   ARTICLE VI

                        CERTAIN COVENANTS AND AGREEMENTS

      6.1 Seller's  Employees.  Buyer may offer employment to Seller's employees
on such  terms  and  conditions  as  Buyer  may  deem  appropriate  in its  sole
discretion.  In no event  shall  Buyer be or  become  liable  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.

      6.2 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.

      6.3 Fees,  Expenses and Sales Taxes.  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.

      6.4 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 VII
                                 INDEMNIFICATION

      7.1 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; or


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<PAGE>

            (b)   the Excluded Liabilities.

      7.2  Indemnification of Seller.  Buyer shall indemnify and hold Seller and
Shareholder and their 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:

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

(b) the Assumed Liabilities.

                                  ARTICLE VIII
                                  MISCELLANEOUS

      8.1  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.

      8.2 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.

      8.3 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.

      8.4 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:

            If to Seller or the Shareholder:

                  Infinite Group, Inc.
                  595 Blossom Road
                  Suite 309
                  Rochester, New York 14610
                  Attention:  Michael Smith, President


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<PAGE>

            With a copy to:

                   Kenneth S. Rose, Esq.
                   Morse, Zelnick, Rose & Lander, LLP
                   405 Park Avenue
                   Suite 1401
                   New York, New York 10022-4405

            If to Buyer:

                  Rolben Acquisition Company
                  One Industrial Drive South
                  Smithfield, Rhode Island 02917

            With a copy to:

                  Joseph F. Whinery, Jr.
                  Cameron & Mittleman LLP
                  56 Exchange Terrace
                  Providence, Rhode Island 02903

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.

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

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

      8.7 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.

      8.8 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.

      8.9 Counterparts.  This Agreement may be executed in several  counterparts
and on separate signature pages, each of which shall be deemed an original,  but
all of which  shall  constitute  one and the  same  instrument.  Delivery  of an
executed  counterpart  of this  Agreement  by  telecopier  shall be effective as
delivery of an original executed  counterpart.  Any party delivering such a copy
by telecopier shall also deliver an original counterpart,  but the failure to do
so shall not  affect the  validity,  enforceability  or  binding  effect of this
Agreement.


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<PAGE>

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

                            [SIGNATURE PAGE FOLLOWS]


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<PAGE>

                 [SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT]

      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


                                          ROLBEN ACQUISITION COMPANY


                                          By:_____________________________
                                               Vice President