Document:

EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT  AGREEMENT (the  "Agreement") is made as of the 5th day of
May, 2003, by and among INFINITE GROUP, INC., a Delaware  corporation having its
principal place of business at 595 Blossom Road, Suite 309, Rochester,  New York
14610 (the  "Company"),  and  MICHAEL S.  SMITH,  an  individual  residing at 10
Milford Road, Rochester, New York 14625 (the "Executive").

                               W I T N E S S E T H

      WHEREAS,  the Executive is currently employed by the Company and serves as
the Company's interim President and Chief Executive Officer; and

      WHEREAS,  the Company,  recognizing the unique skills and abilities of the
Executive,  wishes to insure that the Executive  will continue to be employed by
the Company; and

      WHEREAS,  the  Executive  desires to  continue  in the  employment  of the
Company as President and Chief Executive Officer of the Company; and

      WHEREAS,  the parties  desire by this Agreement to set forth the terms and
conditions of the employment relationship between the Company and the Executive.

      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
in this Agreement, the Company and the Executive agree as follows:

      1.  Employment  and Duties.  The Company  hereby  employs the Executive as
President and Chief  Executive  Officer on the terms and conditions  provided in
this  Agreement and Executive  agrees to accept such  employment  subject to the
terms and conditions of this  Agreement.  The Executive shall be responsible for
the overall  management and operations of the Company,  shall perform the duties
and  responsibilities  as are customary for the officer of a corporation in such
positions,  and shall  perform  such other  duties and  responsibilities  as are
reasonably determined from time to time by the Company's Board of Directors (the
"Board").  The Executive  shall report to and be  supervised  by the Board.  The
Executive shall be based at the Company's offices in Rochester, New York or such
other  place  which  shall be within a twenty  mile  radius  thereof  that shall
constitute the Company's  headquarters  and, except for business travel incident
to his employment  under this Agreement,  the Company agrees the Executive shall
not be required to relocate.  The Executive agrees to devote  substantially  all
his attention and time during normal  business hours to the business and affairs
of the Company and to use his reasonable best efforts to perform  faithfully and
efficiently the duties and  responsibilities  of his positions and to accomplish
the goals and  objectives  of the  Company as may be  established  by the Board.
Notwithstanding  the  foregoing,  the  Executive  may  engage  in the  following
activities  (and shall be  entitled  to retain  all  economic  benefits  thereof

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including fees paid in connection therewith) as long as they do not interfere in
any  material  respect  with  the  performance  of the  Executive's  duties  and
responsibilities  hereunder and, with respect to subsections (i) and (ii) below,
that such activity is pre-approved by the Company's  Chairman of the Board:  (i)
serve on corporate,  civic,  religious,  educational and/or charitable boards or
committees,  provided  that  the  Executive  shall  not  serve  on any  board or
committee of any  corporation or other business which competes with the Business
(as defined in Section 10(a) below);  (ii) deliver  lectures,  fulfill  speaking
engagements or teach on a part-time basis at educational institutions; and (iii)
make   investments  in  businesses  or  enterprises   and  manage  his  personal
investments;  provided  that with  respect to such  activities  Executive  shall
comply with any business  conduct and ethics  policy  applicable to employees of
the  Company.  The  Executive  shall  serve as a member of the Board  during the
Employment Term (as defined below).

      2. Term.  The term of this  Agreement  shall  commence on May 5, 2003 (the
"Commencement  Date"),  and shall  terminate on May 2, 2008,  unless extended or
earlier  terminated  in  accordance  with  the  terms  of  this  Agreement  (the
"Termination  Date"). Such term of employment is herein sometimes referred to as
the "Employment  Term". The Employment Term shall be extended for successive one
year periods unless either party notifies the other in writing at least 180 days
before the Termination  Date, or any anniversary of the Termination Date, as the
case may be, that he or it chooses not to extend the Employment Term.

      3.  Compensation.  As compensation for performing the services required by
this Agreement,  and during the term of this  Agreement,  the Executive shall be
compensated as follows:

            (a) Base  Compensation.  The Company  shall pay to the  Executive an
annual  salary  ("Base   Compensation")   of   $150,000.00,   payable  in  equal
installments  pursuant to the Company's  customary payroll  procedures in effect
for its  executive  personnel  at the  time of  payment,  but in no  event  less
frequently than monthly,  subject to withholding for applicable federal,  state,
and local income and employment  related taxes. The Executive may be entitled to
such  increases in Base  Compensation  with respect to each calendar year during

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the term of this Agreement, as shall be determined by the Company's Compensation
Committee (the "Committee"),  in its sole and absolute  discretion,  based on an
annual review of the Executive's performance .

            (b) Incentive  Compensation.  In addition to Base Compensation,  the
Executive  may  be  entitled  to  receive  additional  compensation  ("Incentive
Compensation")  in the discretion of the Committee.  The Incentive  Compensation
shall be pursuant to short-term and/or long-term  incentive  compensation and/or
bonus programs which currently  exist or may be established by the Company.  The
minimum   executive   annual  bonus  program  is  established  at  30%  of  base
Compensation  and paid  annually  (assuming  performance  criteria and goals are
met).  For  purposes  of this  Agreement,  the  Executive's  "Pro Rata Share" of
Incentive  Compensation for any calendar year of the Company shall be a fraction
whose  numerator  shall be equal to the  number of months  (or parts of  months)
during which the Executive was actually  employed by the Company during any such
calendar year and whose  denominator shall be the total number of months in such
calendar year.

            (c) Stock and Stock  Options.  The Executive  shall receive upon the
signing of this  Agreement:  (i) 500,000  shares of Common Stock of the Company;
and (ii) 500,000 options granted pursuant to the Company's Employee Stock Option
Plan.

      4.  Employee  Benefits.  During  the  Employment  Term and  subject to the
limitations  set  forth  in this  Section  4,  the  Executive  and his  eligible
dependents  shall  have  the  right  to  participate  in  any  retirement  plans
(qualified and non-qualified),  stock option plan, pension,  insurance,  health,
disability  or other  benefit  plan or  program  that  has been or is  hereafter
adopted by the Company (or in which the Company participates),  according to the
terms  of such  plan or  program,  on  terms  no less  favorable  than  the most
favorable terms granted to senior executives of the Company.

      5. Vacation and Leaves of Absence.  The Executive shall be entitled to the
normal  and  customary  amount of paid  vacation  provided  to senior  executive
officers of the Company,  but in no event less than 20 days during each 12 month
period,  beginning on the Commencement Date of this Agreement. The Executive may
carry over a maximum of 5 unused  vacation  days,  out of the  allotted 20 days,
from one year to the next. If during any 12-month  period the executive  uses 20
days of vacation,  then any unused  vacation shall not accrue and not carry over
to the following  year.  Upon any  termination  of this Agreement for any reason
whatsoever,  accrued and unused  vacation  for the year in which this  Agreement
terminates  will be paid to the  Executive  within  10 days of such  termination

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based on his  annual  rate of Base  Compensation  in  effect on the date of such
termination. In addition, the Executive may be granted leaves of absence with or
without pay for such valid and legitimate reasons as the Company in its sole and
absolute  discretion may determine,  and the Executive  shall be entitled to the
same sick leave and holidays provided to other senior executives of the Company.

      6.    Expenses.

            (a) Business  Expenses.  The Executive shall be promptly  reimbursed
against  presentation  of vouchers or receipts for all  reasonable and necessary
expenses  incurred  by him in  connection  with the  performance  of his  duties
hereunder.

            (b)  Automobile  Expense.  During the  Employment  Term, in order to
facilitate the performance of the Executive's  duties  hereunder,  and otherwise
for the convenience of the Company, the Company shall provide the Executive with
an  automobile,  or shall  reimburse  the  Executive  for the cost of leasing an
automobile  (provided  that the lease  payments with respect to such  automobile
shall not  exceed  $500 per month) and shall pay or  reimburse  Executive  (upon
presentation   of  vouchers  or  receipts)  for  the  reasonable   cost  of  all
maintenance,  insurance,  repairs, and other reasonable expenses related to such
automobile.  If the Executive decides to utilize his own personal  vehicle,  the
company shall reimburse the Executive $700 per month. The Executive will then be
responsible  for all costs  associated with the daily operation of said vehicle,
including but not limited to: fuel costs, maintenance, insurance, etc.

            (c) Life  Insurance.  During the Employment  Term, the Company shall
pay the premiums on a $1 million  term life  insurance  policy on the  Executive
with the  beneficiary  of such policy  designated by the  Executive.  This is in
addition to whatever  Insurance is required by the lending  institutions  on the
life of the Executive.

      7.    Indemnification.

            (a)  General.  The Company  agrees that if the  Executive  is made a
party or is  threatened  to be made a party to any action,  suit or  proceeding,
whether civil,  criminal,  administrative or investigative (a "Proceeding"),  by
reason of the fact that he is or was a director  or officer of the  Corporation,
or the  Company,  is or was serving at the request of the Company as a director,
officer,  member,  employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including, without limitation, service
with  respect  to  employee  benefit  plans,  whether  or not the  basis of such
Proceeding  is alleged  action in an official  capacity as a director,  officer,

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member, employee or agent while serving as a director, officer, member, employee
or agent, the Executive shall be indemnified and held harmless by the Company to
the  fullest  extent  authorized  by  applicable  law (in  accordance  with  the
certificate of incorporation  and/or bylaws of the Company),  as the same exists
or may hereafter be amended, against all Expenses (as defined below) incurred or
suffered by the  Executive in  connection  therewith,  and such  indemnification
shall  continue as to the  Executive  even if the  Executive has ceased to be an
officer,  director or agent,  or is no longer  employed by the Company and shall
inure to the benefit of his heirs, executors and administrators.

            (b) Expenses.  As used in this Agreement,  the term "Expenses" shall
include, without limitation,  damages, losses,  judgments,  liabilities,  fines,
penalties,  excise taxes,  settlements and costs,  attorneys' fees, accountants'
fees,   and   disbursements   and  costs  of   attachment   or  similar   bonds,
investigations,  and any  expenses of  establishing  a right to  indemnification
under this Agreement.

            (c)  Enforcement.  If a claim or request under this Agreement is not
paid by the Company,  or on their  behalf,  within  fifteen days after a written
claim or request has been received by the Company, the Executive may at any time
thereafter  bring suit  against the Company to recover the unpaid  amount of the
claim or request and if successful in whole or in part,  the Executive  shall be
entitled to be paid also the expenses of  prosecuting  such suit.  The burden of
proving that the  Executive is not  entitled to  indemnification  for any reason
shall be upon the Company.

            (d) Subrogation.  In the event of payment under this Agreement,  the
Company  shall be  subrogated to the extent of such payment to all of the rights
of recovery of the Executive.

            (e) Partial Indemnification.  If the Executive is entitled under any
provision  of this  Agreement  to  indemnification  by the Company for some or a
portion of any Expenses,  but not,  however,  for the total amount thereof,  the
Company  shall  nevertheless  indemnify  the  Executive  for the portion of such
Expenses to which the Executive is entitled.

            (f)  Advances of  Expenses.  Expenses  incurred by the  Executive in
connection  with any  Proceeding  shall be paid by the  Company in advance  upon
request of the Executive that the Company pay such Expenses.

            (g) Notice of Claim.  The Executive shall give to the Company notice
of any claim made against his for which  indemnity will or could be sought under

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this  Agreement.  In  addition,  the  Executive  shall  give  the  Company  such
information and cooperation as it may reasonably  require and as shall be within
the  Executive's  power and at such times and places as are  convenient  for the
Executive.

            (h) Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof: (i) the Company will
be  entitled  to  participate  therein at its own  expense;  and (ii)  except as
otherwise  provided  below,  to the extent that it may wish, the Company jointly
with any other  indemnifying party similarly notified will be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the Executive.  The
Company  shall not be  entitled  to assume the  defense of any  action,  suit or
proceeding  brought by or on behalf of the Company or as to which the  Executive
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Executive in the conduct of the defense of such action.

                  The Company  shall not be liable to  indemnify  the  Executive
under this  Agreement  for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any  manner  which  would  impose  any  penalty  or  limitation  on the
Executive  without  Executive's  written  consent.  Neither  the Company nor the
Executive  shall  unreasonably  withhold or delay their  consent to any proposed
settlement.

            (i) Non-exclusivity. The right to indemnification and the payment of
expenses  incurred in defending a Proceeding in advance of its final disposition
conferred  in this Section 7 shall not be exclusive of any other right which the
Executive may have or hereafter may acquire under any statute,  provision of the
certificate  of  incorporation  or by-laws of the  Company,  agreement,  vote of
stockholders or disinterested directors or otherwise.

            (j) Directors and Officers  Liability Policy.  The Company agrees to
use reasonable efforts to maintain  directors and officers  liability  insurance
covering the  Executive in a reasonable  and adequate  amount  determined by the
Company.

      8.    Termination and Termination Benefits.

            (a) Termination For Cause.  Notwithstanding  any provision contained
herein,  the  Company  may  terminate  this  Agreement  at any time  during  the
Employment Term for "Cause".  For purposes of this subsection  8(a)(i),  "Cause"
shall mean (1) the continuing  willful failure by the Executive to substantially
perform  his  duties  hereunder  for any  reason  other  than  total or  partial

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incapacity due to physical or mental illness,  or (2) gross  negligence or gross
malfeasance  on the  part of the  Executive  in the  performance  of his  duties
hereunder that causes material harm to the Company. Termination pursuant to this
subsection  8(a)(i)  shall be effective  immediately  upon giving the  Executive
written  notice thereof  stating the reason or reasons  therefor with respect to
clause (2) above,  and 15 days after written  notice thereof from the Company to
the  Executive  specifying  the acts or omissions  constituting  the failure and
requesting  that they be remedied with respect to clause (1) above,  but only if
the Executive has not cured such failure within such 15 day period. In the event
of a termination  pursuant to this  subsection  8(a)(i),  the Executive shall be
entitled  to payment  of his Base  Compensation  and the  benefits  pursuant  to
Section 4 hereof up to the effective date of such termination and it is also the
intention and agreement of the Company that  Executive  shall not be deprived by
reason of termination for Cause of any payments,  options or benefits which have
been  vested or have been  earned or to which  Executive  is  entitled as of the
effective date of such termination.

            (b)  Termination due to Disability.  If due to illness,  physical or
mental disability, or other incapacity, the Executive shall fail, for a total of
any  six  consecutive  months  ("Disability"),   to  substantially  perform  the
principal  duties  required by this  Agreement,  the Company may terminate  this
Agreement  upon 30 days' written  notice to the  Executive.  In such event,  the
Executive shall be (1) paid his Base Compensation until the Termination Date and
his Pro Rata  Share of any  Incentive  Compensation  to which he would have been
entitled for the year in which such  termination  occurs,  and (2) provided with
employee benefits  pursuant to Section 4, until the Termination Date,  provided,
however,  that any  compensation  to be paid to the  Executive  pursuant to this
subsection  8(a)(ii)  shall be  offset  against  any  payments  received  by the
Executive  pursuant to any policy of disability  insurance the premiums of which
are paid for by the  Company.  The  Executive  shall  also be paid any  deferred
compensation  (including,  without limitation,  interest or other credits on the
deferred amounts) and any accrued / unused vacation pay.

            (c)  Termination.  If at the end of the Employment Term, the Company
elects for reasons other than those  outlined in paragraphs a and b above not to
extend the Employment Term as provided for in Section 2 hereof, in consideration
for the  post-employment  covenant  against  competition set forth in Section 10
hereof,  the  Executive  shall be paid:.  (i) a  lump-sum  payment  equal to the
product  of twelve  times the  Monthly  Salary  Amount in  addition  to his Base
Compensation  at the rate in  effect  at the time of  termination,  through  the

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Termination Date; provided, however, that at the sole discretion of the Company,
the  Company  may  extend  the  Executive's   post-employment  covenant  against
competition  for an additional  one-year period upon notice to the Executive and
the payment of a second lump sum  payment  equal to the product of twelve  times
the  Monthly  Salary  Amount.  ;  (ii)  his  Pro  Rata  Share  of any  Incentive
Compensation  to which he would  have been  entitled  for the year in which such
termination  occurs;  (iii)  any  deferred  compensation   (including,   without
limitation, interest or other credits on the deferred amounts) and any accrued /
unused  vacation pay; (iv)  continuation  until the expiration of the Employment
Term and for twelve months thereafter, of the health and welfare benefits of the
Executive and any long-term  disability  insurance  generally provided to senior
executives of the Company (as provided for by Section 4 of this  Agreement)  (or
the Company shall provide the economic equivalent thereof);  provided,  however,
if the Executive  obtains new employment and such employment makes the Executive
eligible for health and welfare or long-term disability benefits which are equal
to or greater in scope then the benefits then being offered by the Company, then
the  Company  shall no  longer be  required  to  provide  such  benefits  to the
Executive;  and (v) any other  compensation  and  benefits as may be provided in
accordance with the terms and provisions of any applicable  plans or programs of
the Company. As used in this Section 8(c), "Monthly Salary Amount" shall mean an
amount  equal to  one-twelfth  of the sum of (y) the  Executive's  then  current
annual Base Salary plus (z) the average cash incentive  compensation paid to the
Executive during the three years immediately preceding the termination date.

            (d)  Non-exclusivity  of  Rights.  Nothing in this  Agreement  shall
prevent  or limit the  Executive's  continuing  or future  participation  in any
benefit, bonus, incentive or other plan or program provided or maintained by the
Company and for which the Executive may qualify, nor shall anything herein limit
or otherwise  prejudice  such rights as the  Executive  may have under any other
existing or future  agreements with the Company.  Except as otherwise  expressly
provided for in this  Agreement,  amounts which are vested benefits or which the
Executive  is otherwise  entitled to receive  under any plans or programs of the
Company  at or  subsequent  to the  date of  termination  shall  be  payable  in
accordance with such plans or programs.

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            (e) Vesting of Stock Grants and Stock  Options.  In the event of any
termination  of this  Agreement,  Executive's  rights  with  regard to any stock
grants, loan agreements or stock options shall be as set forth in the respective
agreement   containing   the   terms   and   conditions    pertaining   thereto.
Notwithstanding the foregoing, in the event that the Executive is terminated for
reasons  other than for  "Cause," any stock  options then held by the  Executive
shall  immediately  vest in the Executive and shall remain  exercisable  for the
period specified in the grant agreement notwithstanding any provision therein to
the contrary..

            (f) Certain  Additional  Payments by the  Company.  Anything in this
Agreement  to the  contrary  notwithstanding,  in the  event  that it  shall  be
determined that any payment or distribution by the Company to or for the benefit
of the  Executive,  whether  paid or payable  or  distributed  or  distributable
pursuant to the terms of this  Agreement or otherwise  (a  "Payment"),  would be
subject to the excise tax imposed by Section 4999 of the  Internal  Revenue Code
of 1986 or any  interest  or  penalties  with  respect to such  excise tax (such
excise tax,  together  with any such  interest and  penalties,  are  hereinafter
collectively  referred  to as the "Excise  Tax"),  then the  Executive  shall be
entitled to receive an additional  payment (an "Excise Gross-Up  Payment") in an
amount such that after  payment by the  Executive  of all taxes  (including  any
interest or penalties imposed with respect to such taxes),  including any Excise
Tax imposed upon the Excise Gross-Up  Payment and any ordinary income tax on the
Excise Gross-Up  Payment in order to put the Executive in the same net after-tax
position  as if the payment  were not subject to any Excise Tax.  Subject to the
provisions  of  this  Section  8(e),  all  determinations  required  to be  made
hereunder,  including  whether an Excise  Gross-Up  Payment is required  and the
amount  of such  Excise  Gross-Up  Payment,  shall  be made by  Freed,  Maxick &
Battaglia,  PC or such  other  accounting  firm  which  at the time  audits  the
financial  statements of the Company (the "Accounting Firm") at the sole expense
of the Company, which shall provide detailed supporting calculations both to the
Company and the Executive  within 15 business days of the date of termination of
the Executive's employment under this Agreement, if applicable,  or such earlier
time as is requested by the Company.

      If the  Accounting  Firm  determines  that no Excise Tax is payable by the
Executive,  the  Company  shall use its  reasonable  best  efforts  to cause the
Accounting Firm to furnish the Executive with an opinion that he has substantial
authority  not to report any Excise Tax on his federal  income tax  return.  Any
determination  by the Accounting  Firm shall be binding upon the Company and the
Executive.  As a result of the uncertainty in the application of Section 4999 of
the  Code at the  time  of the  initial  determination  by the  Accounting  Firm

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hereunder,  it is possible that Excise  Gross-Up  Payments,  which will not have
been made by the Company,  should have been made (an "Underpayment")  consistent
with the calculations required to be made hereunder. If the Company exhausts its
remedies  pursuant  hereto and the  Executive  thereafter  is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment  shall be promptly paid
by the Company to or for the benefit of the Executive.

      The  Executive  shall  notify  the  Company in writing of any claim by the
Internal  Revenue Service that, if successful,  would require the payment by the
Company of the Excise Gross-Up Payment. Such notification shall be given as soon
as practicable  but no later than ten business days after the Executive knows of
such  claim and shall  apprise  the  Company of the nature of such claim and the
date on which such claim is requested to be paid.  The  Executive  shall not pay
such claim prior to the  expiration of the 30-day  period  following the date on
which it gives such notice to the Company (or such shorter  period ending on the
date that any  payment  of taxes  with  respect  to such  claim is due).  If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall: (i) give the Company
any information reasonably requested by the Company relating to such claim; (ii)
take such action in connection  with  contesting such claim as the Company shall
reasonably request in writing from time to time,  including (without limitation)
accepting  legal  representation  with  respect  to such  claim  by an  attorney
reasonably  selected by the Company;  (iii)  cooperate  with the Company in good
faith to  contest  effectively  such  claim;  and (iv)  permit  the  Company  to
participate in any proceedings relating to such claim; provided that the Company
shall  bear and pay  directly  all  costs  and  expenses  (including  additional
interest  and  penalties)  incurred in  connection  with such  contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax,  including  interest  and  penalties  with  respect  thereto,
imposed as a result of such  representation  and payment of costs and  expenses.
Without limitation on the foregoing  provisions hereof the Company shall control
all  proceedings  taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative  appeals,  proceedings,  hearings
and conferences  with the taxing  authority in respect of such claim and may, at
its sole option,  either direct the Executive to pay the tax claimed and sue for
a refund or  contest  the claim in any  permissible  manner,  and the  Executive

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agrees to prosecute such contest to a  determination  before any  administrative
tribunal,  in a court  of  initial  jurisdiction  and in one or  more  appellate
courts, as the Company shall determine, provided that if the Company directs the
Executive to pay such claim and sue for a refund,  the Company shall advance the
amount of such payment to the  Executive,  on an  interest-free  basis and shall
indemnify  and hold the  Executive  harmless,  on an after-tax  basis,  from any
Excise Tax or income tax,  including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed  income with
respect to such advance,  and further provided that any extension of the statute
of  limitations  relating  to  payment  of  taxes  for the  taxable  year of the
Executive  with respect to which such  contested  amount is claimed to be due is
limited solely to such contested amount.  Furthermore,  the Company's control of
the contest shall be limited to issues with respect to which an Excise  Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest,  as the case may be, any other issue raised by the Internal  Revenue
Service or any other taxing authority.

      If,  after the  receipt  by the  Executive  of an amount  advanced  by the
Company  pursuant hereto,  the Executive  becomes entitled to receive any refund
with  respect to such claim,  the  Executive  shall  (subject  to the  Company's
complying with the  requirements  hereof) promptly pay to the Company the amount
of such refund  (together with any interest paid or credited thereon after taxes
applicable  thereto).  If,  after  the  receipt  by the  Executive  of an amount
advanced  by the  Company  pursuant  hereto,  a  determination  is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company  does not notify the  Executive in writing of its intent to contest such
denial of refund prior to the  expiration  of 30 days after such  determination,
then such  advance  shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset,  to the extent  thereof,  the amount of
Excise Gross-Up Payment required to be paid.

            (g)  Death  Benefit.  Notwithstanding  any other  provision  of this
Agreement,  this Agreement shall terminate on the date of the Executive's death.
In such event the Company shall continue to pay Executive's Base Compensation to
his wife,  if she survives  him, or, if she does not survive him, to his estate,
through the Termination Date. In addition,  the Company shall pay to Executive's
wife, if she survives  him, or, if she does not survive him, to his estate,  the
Pro Rata Share of any Incentive  Compensation to which Executive would have been
entitled for the year in which such death occurs. In addition, the Company shall

                                       11
<PAGE>

provide the  Executive's  wife and/or  eligible  family  members with health and
medical  benefits  pursuant to Section 4, to the extent  available,  through the
Termination Date.

             (h) Payment..  Except as otherwise provided in this Agreement,  any
payments  to which  the  Executive  shall be  entitled  under  this  Section  8,
including,  without limitation, any economic equivalent of any benefit, shall be
made as promptly as possible following the date of termination. If the amount of
any payment due to the  Executive  cannot be finally  determined  within 90 days
after the Date of  Termination,  such amount  shall be estimated on a good faith
basis by the Company  and the  estimated  amount  shall be paid no later than 90
days after such Date of Termination. As soon as practicable hereafter, the final
determination  of the amount due shall be made and any  adjustment  requiring  a
payment to or from the Executive shall be made as promptly as practicable.

            (i) No Mitigation.  The Executive  shall not be required to mitigate
the amount of any payments provided for by this Agreement by seeking  employment
or  otherwise,  nor shall the amount of any payment or benefit  provided in this
Agreement  be reduced by any  compensation  or benefit  earned by the  Executive
after termination of his employment.

      9. Company  Property.  All  advertising,  promotional,  sales,  suppliers,
manufacturers and other materials or articles or information,  including without
limitation data  processing  reports,  customer lists,  customer sales analyses,
invoices,  product  lists,  price lists or  information,  samples,  or any other
materials  or data of any kind  furnished  to the  Executive  by the  Company or
developed  by the  Executive  on  behalf  of  the  Company  or at the  Company's
direction  or for  the  Company's  use  or  otherwise  in  connection  with  the
Executive's employment hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials at
any time during or at or after the  termination of the  Executive's  employment,
the Executive shall immediately deliver the same to the Company.

      10.   Covenant Not To Compete.

             (a) Covenants Against Competition.  The Executive acknowledges that
as of the execution of this  Employment  Agreement (i) the Company is engaged in
the business  described in its current  filings with the Securities and Exchange
Commission (the "Business");  (ii) the Company's Business is conducted currently
throughout the United States and may be expanded to other  locations;  (iii) his

                                       12
<PAGE>

employment  with  the  Company  will  have  given  him  access  to  confidential
information  concerning  the  Company;  and (iv) the  agreements  and  covenants
contained in this  Agreement  are essential to protect the business and goodwill
of the Company. Accordingly, the Executive covenants and agrees as follows:

                  (i)  Non-Compete.  Without  the prior  written  consent of the
Board of the Company,  the Executive shall not during the Restricted  Period (as
defined  below) within the  Restricted  Area (as defined  below)  (except in the
Executive's capacity as an officer of the Company or any of its affiliates), (a)
engage or  participate  in the Business  (or any Business  which the Company may
become  engaged  in during  the  Employment  Term);  (b) enter the employ of, or
render any  services  (whether or not for a fee or other  compensation)  to, any
person  engaged in the Business;  or (c) acquire an equity  interest in any such
person; provided, that the foregoing restrictions shall not apply at any time if
the  Executive's  employment is terminated  during the Term by the Company other
than for  "Cause";  provided,  further,  that during the  Restricted  Period the
Executive  may own,  directly  or  indirectly,  solely as a passive  investment,
securities of any company traded on any national  securities  exchange or on the
National Association of Securities Dealers Automated Quotation System.

                  As used  herein,  "Restricted  Period"  shall  mean the period
commencing  on the  Effective  Date and ending on the first  anniversary  of the
Executive's  termination of employment;  provided,  however, that the Restricted
Period may be extended by the Company in its sole  discretion  for an additional
year upon notice to the  Executive  and the payment to the Executive of a second
lump sum payment as provided in Section 8(c) above.

                  "Restricted  Area"  shall  mean any place  within  the  United
States and any other country in which the Company is then  actively  considering
conducting Business.

            (b) Confidential Information;  Personal Relationships. The Executive
acknowledges  that the  Company  has a  legitimate  and  continuing  proprietary
interest in the  protection  of its  confidential  information  and has invested
substantial  sums and will  continue  to  invest  substantial  sums to  develop,
maintain and protect confidential information. The Executive agrees that, during
and after the Restricted Period, without the prior written consent of the Board,
the Executive  shall keep secret and retain in strictest  confidence,  and shall
not knowingly use for the benefit of himself or others all confidential  matters

                                       13
<PAGE>

relating to the Company's Business including,  without  limitation,  operational
methods,  marketing or  development  plans or strategies,  business  acquisition
plans,  joint venture proposals or plans, and new personnel  acquisition  plans,
learned by the Executive  heretofore  or hereafter  (such  information  shall be
referred to herein collectively as "Confidential  Information");  provided, that
nothing in this Agreement  shall prohibit the Executive from disclosing or using
any Confidential Information (A) in the performance of his duties hereunder, (B)
as required by applicable  law, (C) in connection  with the  enforcement  of his
rights under this Agreement or any other  agreement with the Company,  or (D) in
connection  with the defense or settlement of any claim,  suit or action brought
or  threatened  against  the  Executive  by or in  the  right  of  the  Company.
Notwithstanding  any  provision  contained  herein  to the  contrary,  the  term
Confidential  Information shall not be deemed to include any general  knowledge,
skills or experience  acquired by the Executive or any knowledge or  information
known or available to the public in general.  Moreover,  the Executive  shall be
permitted  to  retain  copies  of,  or have  access  to,  all such  Confidential
Information  relating to any  disagreement,  dispute or  litigation  (pending or
threatened) involving the Executive.

            (c)  Employees  of  the  Company  and  its  Affiliates.  During  the
Restricted  Period,  without  the  prior  written  consent  of the  Board of the
Company,  the Executive shall not, directly or indirectly,  hire or solicit,  or
cause  others to hire or solicit,  for  employment  by any person other than the
Company or any  affiliate  or  successor  thereof,  any  employee  of, or person
employed within the two years  preceding the Executive's  hiring or solicitation
of such person by, the Company and its affiliates or successors or encourage any
such  employee  to leave his  employment.  For this  purpose,  any person  whose
employment has been  terminated  involuntarily  by the Company shall be excluded
from those persons protected by this Section for the benefit of the Company.

            (d)  Business  Relationships.  During  the  Restricted  Period,  the
Executive shall not, directly or indirectly, request or advise a person that has
a business  relationship  with the  Company to curtail or cancel  such  person's
business relationship with the Company.

            (e) Rights and Remedies  Upon  Breach.  If the  Executive  breaches,
threatens to commit a breach of, any of the  provisions  contained in Section 10
of this  Agreement  (the  "Restrictive  Covenants"),  the Company shall have the
following  rights  and  remedies,  each of which  rights and  remedies  shall be

                                       14
<PAGE>

independent  of the others and  severally  enforceable,  and each of which is in
addition to, and not in lieu of, any other rights and remedies  available to the
Company under law or in equity.

                  (i)  Specific  Performance.  The right and  remedy to have the
Restrictive   Covenants   specifically   enforced  by  any  court  of  competent
jurisdiction,  it being  agreed  that any  breach  or  threatened  breach of the
Restrictive  Covenants  would cause  irreparable  injury to the Company and that
money damages would not provide an adequate remedy to the Company.

                  (ii) Accounting. The right and remedy to require the Executive
to account for and pay over to the Company all  compensation,  profits,  monies,
accruals,  increments or other benefits  derived or received by the Executive as
the result of any action constituting a breach of Restrictive Covenants.

            (f) Severability of Covenants. The Executive acknowledges and agrees
that  the  Restrictive  Covenants  are  reasonable  and  valid in  duration  and
geographical  scope and in all other respects.  If any court determines that any
of the Restrictive Covenants,  or any part thereof, is invalid or unenforceable,
the  remainder of the  Restrictive  Covenants  shall not thereby be affected and
shall  be  given  full  effect  without  regard  to the  invalid  portions.  The
provisions  set forth in  Section  10 above  shall be in  addition  to any other
provisions of the business conduct and ethics policy  applicable to employees of
the Company and its subsidiaries during the term of Executive's employment.

            (g) Saving  Clause.  If the period of time or the area  specified in
subsection (a) above should be adjudged unreasonable in any proceeding, then the
period of time shall be  reduced  by such  number of months or the area shall be
reduced  by the  elimination  of such  portion  thereof  or  both  so that  such
restrictions may be enforced in such area and for such time as is adjudged to be
reasonable.  If the Executive violates any of the restrictions  contained in the
foregoing  subsection (a), the restrictive  period shall not run in favor of the
Executive from the time of the  commencement  of any such  violation  until such
time as such violation  shall be cured by the Executive to the  satisfaction  of
Company.

      11. Executive's  Representation and Warranties.  Executive  represents and
warrants that he has the full right and  authority to enter into this  Agreement
and fully  perform  his  obligations  hereunder,  that he is not  subject to any
non-competition  agreement  other  than  with the  Company,  and that his  past,
present and anticipated  future activities have not and will not infringe on the
proprietary rights of others.  Executive further represents and warrants that he

                                       15
<PAGE>

is not obligated under any contract  (including,  but not limited to,  licenses,
covenants  or  commitments  of any nature) or other  agreement or subject to any
judgment,  decree or order of any court or  administrative  agency  which  would
conflict  with his  obligation  to use his best  efforts to  perform  his duties
hereunder or which would conflict with the Company's  business and operations as
presently  conducted  or proposed to be  conducted.  Neither the  execution  nor
delivery of this  Agreement,  nor the carrying on of the  Company's  business as
officer and employee by Executive  will  conflict  with or result in a breach of
the  terms,  conditions  or  provisions  of or  constitute  a default  under any
contract, covenant or instrument to which Executive is currently a party.

      12.   Miscellaneous.

            (a) Integration;  Amendment.  This Agreement  constitutes the entire
agreement  between  the  parties  hereto  with  respect to the matters set forth
herein  and   supersedes   and   renders  of  no  force  and  effect  all  prior
understandings  and  agreements  between the parties with respect to the matters
set forth herein.  No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties.

            (b)  Severability.  If any part of this  Agreement  is contrary  to,
prohibited  by, or deemed  invalid under  applicable  law or  regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,
prohibited, or invalid, but the remainder of this Agreement shall not be invalid
and shall be given full force and effect so far as possible.

            (c)  Waivers.  The  failure  or  delay  of any  party at any time to
require performance by the other party of any provision of this Agreement,  even
if known,  shall not affect the right of such  party to require  performance  of
that provision or to exercise any right,  power,  or remedy  hereunder,  and any
waiver by any party of any breach of any provision of this  Agreement  shall not
be  construed  as a  waiver  of any  continuing  or  succeeding  breach  of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy  under  this  Agreement.  No notice to or demand on any party in any case
shall,  of itself,  entitle  such party to other or further  notice or demand in
similar or other circumstances.

            (d) Power and Authority.  The Company represents and warrants to the
Executive that it has the requisite corporate power to enter into this Agreement
and perform the terms hereof;  that the execution,  delivery and  performance of
this  Agreement  by it has been duly  authorized  by all  appropriate  corporate

                                       16
<PAGE>

action;  and that  this  Agreement  represents  the valid  and  legally  binding
obligation of the Company and is enforceable  against it in accordance  with its
terms.

            (e) Burden and Benefit;  Survival.  This Agreement  shall be binding
upon and inure to the benefit of the parties hereto and their respective  heirs,
executors,  personal  and legal  representatives,  successors  and  assigns.  In
addition to, and not in limitation of, anything contained in this Agreement,  it
is  expressly  understood  and  agreed  that  the  Company's  obligation  to pay
Termination  Compensation  as set forth herein shall survive any  termination of
this Agreement.

            (f) Governing Law;  Headings.  This Agreement and its  construction,
performance,   and  enforceability  shall  be  governed  by,  and  construed  in
accordance  with, the laws of the State of New York.  Headings and titles herein
are  included  solely  for  convenience  and  shall  not  affect,  or be used in
connection with, the interpretation of this Agreement.

            (g) Arbitration;  Remedies. Any dispute or controversy arising under
this Agreement or as a result of or in connection  with  Executive's  employment
(other than disputes  arising under Section 10) shall be arbitrated  and settled
pursuant to the National Rules for the Resolution of Employment  Disputes of the
American  Arbitration  Association which are then in effect in a proceeding held
in Rochester,  New York.  This provision  shall also apply to any and all claims
that may be brought under any federal or state anti-discrimination or employment
statute,  rule or regulation,  including,  but not limited to, claims under: the
National Labor  Relations Act; Title VII of the Civil Rights Act;  Sections 1981
through  1988 of Title 42 of the United  States Code;  the  Employee  Retirement
Income Security Act; the Immigration  Reform and Control Act; the Americans With
Disabilities  Act;  the Age  Discrimination  in  Employment  Act; the Fair Labor
Standards  Act; the  Occupational  Safety and Health Act; the Family and Medical
Leave Act; and the Equal Pay Act. The decision of the arbitrator  and award,  if
any, is final and binding on the parties and the  judgment may be entered in any
court having  jurisdiction  thereof.  The parties will agree upon an  arbitrator
from  the  list  of  labor  arbitrators  supplied  by the  American  Arbitration
Association.  The parties understand and agree,  however,  that disputes arising
under  Section 10 of this  Agreement  may be brought in a court of law or equity
without submission to arbitration.

            (h) Jurisdiction.  Except as otherwise provided for herein,  each of
the parties (a) submits to the exclusive jurisdiction of any state court sitting
in New York or federal  court  sitting  in New York in any action or  proceeding
arising  out of or  relating  to this  Agreement,  (b) agrees that all claims in
respect  of the action or  proceeding  may be heard and  determined  in any such

                                       17
<PAGE>

court,  (c)  agrees  not to bring any  action or  proceeding  arising  out of or
relating  to this  Agreement  in any other  court and (d)  waives any right such
party  may have to a trial by jury with  respect  to any  action  or  proceeding
arising  out of or relating to this  Agreement.  Each of the parties  waives any
defense of inconvenient  forum to the maintenance of any action or proceeding so
brought and waives any bond,  surety or other security that might be required of
any other  party with  respect  thereto.  Any party may make  service on another
party by sending or  delivering  a copy of the process to the party to be served
at the  address  and in the  manner  provided  for  giving of notices in Section
12(i). Nothing in this Section,  however, shall affect the right of any party to
serve legal process in any other manner permitted by law.

            (i) Notices. All notices called for under this Agreement shall be in
writing and shall be deemed  given upon receipt if  delivered  personally  or by
confirmed  facsimile  transmission  and followed  promptly by mail, or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at their  respective  addresses (or at such other address for a party as
shall be specified by like notice;  provided that notices of a change of address
shall be effective  only upon  receipt  thereof) as set forth in the preamble to
this  Agreement or to any other  address or  addressee as any party  entitled to
receive  notice under this  Agreement  shall  designate,  from time to time,  to
others in the  manner  provided  in this  subsection  12(i) for the  service  of
notices.

            Any notice  delivered  to the party  hereto to whom it is  addressed
shall be deemed to have been  given  and  received  on the day it was  received;
provided,  however, that if such day is not a business day then the notice shall
be deemed to have been given and  received on the  business  day next  following
such day. Any notice sent by facsimile transmission shall be deemed to have been
given and received on the business day next following the day of transmission.

            (j) Number of Days.  In computing the number of days for purposes of
this  Agreement,  all days shall be counted,  including  Saturdays,  Sundays and
holidays; provided, however, that if the final day of any time period falls on a
Saturday,  Sunday  or  holiday  on which  federal  banks  are or may elect to be
closed,  then the  final  day  shall be deemed to be the next day which is not a
Saturday, Sunday or such holiday.

                                       18
<PAGE>

      IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement as of
the date first above written.

-----------------------------
MICHAEL S. SMITH

INFINITE GROUP, INC.

By:
   -----------------------------

                                       19EMPLOYMENT AGREEMENT

      THIS EMPLOYMENT  AGREEMENT (the  "Agreement") is made as of the 5th day of
May, 2003, by and among INFINITE GROUP, INC., a Delaware  corporation having its
principal place of business at 595 Blossom Road, Suite 309, Rochester,  New York
14610 (the "Company"),  and JAMES D. FROST, an individual residing at 141 Rogers
Ridge Road, Kingston, Tennessee 37763 (the "Executive").

                               W I T N E S S E T H

      WHEREAS, the Executive wishes to be employed by the Company; and

      WHEREAS,  the Company,  recognizing  the unique  skills and abilities of
the Executive,  wishes to employ the Executive as its Chief Technology Officer
and Director of Delivery; and

      WHEREAS,  the parties  desire by this Agreement to set forth the terms and
conditions of the employment relationship between the Company and the Executive.

      NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
in this Agreement, the Company and the Executive agree as follows:

      1.  Employment  and Duties.  The Company  hereby  employs the Executive as
Chief  Technology  Officer and Director of Delivery on the terms and  conditions
provided  in this  Agreement  and  Executive  agrees to accept  such  employment
subject to the terms and  conditions  of this  Agreement.  The  Executive  shall
perform the duties and  responsibilities  as are  customary for the officer of a
corporation  in  such  positions,  and  shall  perform  such  other  duties  and
responsibilities as are reasonably determined from time to time by the Company's
Board  of  Directors  (the  "Board").  The  Executive  shall  report  to  and be
supervised  by the  President and Chief  Executive  Officer of the Company.  The
Executive  agrees to devote  substantially  all his  attention  and time  during
normal  business hours to the business and affairs of the Company and to use his
reasonable  best efforts to perform  faithfully and  efficiently  the duties and
responsibilities  of his positions and to accomplish the goals and objectives of
the Company as may be established by the Board.  Notwithstanding  the foregoing,
the Executive may engage in the following  activities  (and shall be entitled to
retain  all  economic   benefits  thereof  including  fees  paid  in  connection
therewith)  as long as they do not  interfere in any  material  respect with the
performance of the Executive's duties and  responsibilities  hereunder and, with

<PAGE>

respect to subsections (i) and (ii) below, that such activity is pre-approved by
the Company's  President and Chief  Executive  Officer:  (i) serve on corporate,
civic, religious,  educational and/or charitable boards or committees,  provided
that the Executive  shall not serve on any board or committee of any corporation
or other  business which competes with the Business (as defined in Section 10(a)
below);  (ii)  deliver  lectures,  fulfill  speaking  engagements  or teach on a
part-time  basis at  educational  institutions;  and (iii) make  investments  in
businesses or  enterprises  and manage his personal  investments;  provided that
with respect to such activities Executive shall comply with any business conduct
and ethics policy applicable to employees of the Company.

      2. Term.  The term of this  Agreement  shall  commence on May 5, 2003 (the
"Commencement  Date"),  and shall  terminate on May 2, 2008,  unless extended or
earlier  terminated  in  accordance  with  the  terms  of  this  Agreement  (the
"Termination  Date"). Such term of employment is herein sometimes referred to as
the "Employment  Term". The Employment Term shall be extended for successive one
year periods unless either party notifies the other in writing at least 180 days
before the Termination  Date, or any anniversary of the Termination Date, as the
case may be, that he or it chooses not to extend the Employment Term.

      3.  Compensation.  As compensation for performing the services required by
this Agreement,  and during the term of this  Agreement,  the Executive shall be
compensated as follows:

            (a) Base  Compensation.  The Company  shall pay to the  Executive an
annual  salary  ("Base   Compensation")   of   $150,000.00,   payable  in  equal
installments  pursuant to the Company's  customary payroll  procedures in effect
for its  executive  personnel  at the  time of  payment,  but in no  event  less
frequently than monthly,  subject to withholding for applicable federal,  state,
and local income and employment  related taxes. The Executive may be entitled to
such  increases in Base  Compensation  with respect to each calendar year during
the term of this Agreement, as shall be determined by the Company's Compensation
Committee (the "Committee"),  in its sole and absolute  discretion,  based on an
annual review of the Executive's performance .

            (b) Incentive  Compensation.  In addition to Base Compensation,  the
Executive  may  be  entitled  to  receive  additional  compensation  ("Incentive
Compensation")  in the discretion of the Committee.  The Incentive  Compensation
shall be pursuant to short-term and/or long-term  incentive  compensation and/or
bonus programs which currently  exist or may be established by the Company.  The
minimum   executive   annual  bonus  program  is  established  at  30%  of  base
Compensation  and paid  annually  (assuming  performance  criteria and goals are
met).  For  purposes  of this  Agreement,  the  Executive's  "Pro Rata Share" of

                                       2
<PAGE>

Incentive  Compensation for any calendar year of the Company shall be a fraction
whose  numerator  shall be equal to the  number of months  (or parts of  months)
during which the Executive was actually  employed by the Company during any such
calendar year and whose  denominator shall be the total number of months in such
calendar year.

            (c) Stock and Stock  Options.  The Executive  shall receive upon the
signing of this Agreement (i) 500,000 shares of Common Stock of the Company; and
(ii) 500,000  options  granted  pursuant to the Company's  Employee Stock Option
Plan.

      4.  Employee  Benefits.  During  the  Employment  Term and  subject to the
limitations  set  forth  in this  Section  4,  the  Executive  and his  eligible
dependents  shall  have  the  right  to  participate  in  any  retirement  plans
(qualified and non-qualified),  stock option plan, pension,  insurance,  health,
disability  or other  benefit  plan or  program  that  has been or is  hereafter
adopted by the Company (or in which the Company participates),  according to the
terms  of such  plan or  program,  on  terms  no less  favorable  than  the most
favorable terms granted to senior executives of the Company.

      5. Vacation and Leaves of Absence.  The Executive shall be entitled to the
normal  and  customary  amount of paid  vacation  provided  to senior  executive
officers of the Company,  but in no event less than 20 days during each 12 month
period,  beginning on the Commencement Date of this Agreement. The Executive may
carry over a maximum of 5 unused  vacation  days,  out of the  allotted 20 days,
from one year to the next. If during any 12-month  period the executive  uses 20
days of vacation,  then any unused  vacation shall not accrue and not carry over
to the following  year.  Upon any  termination  of this Agreement for any reason
whatsoever,  accrued and unused  vacation  for the year in which this  Agreement
terminates  will be paid to the  Executive  within  10 days of such  termination
based on his  annual  rate of Base  Compensation  in  effect on the date of such
termination. In addition, the Executive may be granted leaves of absence with or
without pay for such valid and legitimate reasons as the Company in its sole and
absolute  discretion may determine,  and the Executive  shall be entitled to the
same sick leave and holidays provided to other senior executives of the Company.

      6.    Expenses.

            (a) Business  Expenses.  The Executive shall be promptly  reimbursed
against  presentation  of vouchers or receipts for all  reasonable and necessary
expenses  incurred  by him in  connection  with the  performance  of his  duties
hereunder.

                                       3
<PAGE>

            (b)  Automobile  Expense.  During the  Employment  Term, in order to
facilitate the performance of the Executive's  duties  hereunder,  and otherwise
for the convenience of the Company, the Company shall provide the Executive with
an insured automobile,  or shall reimburse the Executive for the cost of leasing
an automobile  (provided that the lease payments with respect to such automobile
shall not  exceed  $500 per month) and shall pay or  reimburse  Executive  (upon
presentation   of  vouchers  or  receipts)  for  the  reasonable   cost  of  all
maintenance,  insurance,  repairs, and other reasonable expenses related to such
automobile.  If the Executive decides to utilize his own personal  vehicle,  the
company shall reimburse the Executive $700 per month. The Executive will then be
responsible  for all costs  associated with the daily operation of said vehicle,
including but not limited to: fuel costs, maintenance, insurance, etc.

            (c) Life  Insurance.  During the Employment  Term, the Company shall
pay the premiums on a $1 million  term life  insurance  policy on the  Executive
with the  beneficiary  of such policy  designated by the  Executive.  This is in
addition to whatever  Insurance is required by the lending  institutions  on the
life of the Executive.

      7.    Indemnification.

            (a)  General.  The Company  agrees that if the  Executive  is made a
party or is  threatened  to be made a party to any action,  suit or  proceeding,
whether civil,  criminal,  administrative or investigative (a "Proceeding"),  by
reason of the fact that he is or was a director  or officer of the  Corporation,
or the  Company,  is or was serving at the request of the Company as a director,
officer,  member,  employee or agent of another corporation or of a partnership,
joint venture, trust or other enterprise, including, without limitation, service
with  respect  to  employee  benefit  plans,  whether  or not the  basis of such
Proceeding  is alleged  action in an official  capacity as a director,  officer,
member, employee or agent while serving as a director, officer, member, employee
or agent, the Executive shall be indemnified and held harmless by the Company to
the  fullest  extent  authorized  by  applicable  law (in  accordance  with  the
certificate of incorporation  and/or bylaws of the Company),  as the same exists
or may hereafter be amended, against all Expenses (as defined below) incurred or
suffered by the  Executive in  connection  therewith,  and such  indemnification
shall  continue as to the  Executive  even if the  Executive has ceased to be an
officer,  director or agent,  or is no longer  employed by the Company and shall
inure to the benefit of his heirs, executors and administrators.

                                       4
<PAGE>

            (b) Expenses.  As used in this Agreement,  the term "Expenses" shall
include, without limitation,  damages, losses,  judgments,  liabilities,  fines,
penalties,  excise taxes,  settlements and costs,  attorneys' fees, accountants'
fees,   and   disbursements   and  costs  of   attachment   or  similar   bonds,
investigations,  and any  expenses of  establishing  a right to  indemnification
under this Agreement.

            (c)  Enforcement.  If a claim or request under this Agreement is not
paid by the Company,  or on their  behalf,  within  fifteen days after a written
claim or request has been received by the Company, the Executive may at any time
thereafter  bring suit  against the Company to recover the unpaid  amount of the
claim or request and if successful in whole or in part,  the Executive  shall be
entitled to be paid also the expenses of  prosecuting  such suit.  The burden of
proving that the  Executive is not  entitled to  indemnification  for any reason
shall be upon the Company.

            (d) Subrogation.  In the event of payment under this Agreement,  the
Company  shall be  subrogated to the extent of such payment to all of the rights
of recovery of the Executive.

            (e) Partial Indemnification.  If the Executive is entitled under any
provision  of this  Agreement  to  indemnification  by the Company for some or a
portion of any Expenses,  but not,  however,  for the total amount thereof,  the
Company  shall  nevertheless  indemnify  the  Executive  for the portion of such
Expenses to which the Executive is entitled.

            (f)  Advances of  Expenses.  Expenses  incurred by the  Executive in
connection  with any  Proceeding  shall be paid by the  Company in advance  upon
request of the Executive that the Company pay such Expenses.

            (g) Notice of Claim.  The Executive shall give to the Company notice
of any claim made against his for which  indemnity will or could be sought under
this  Agreement.  In  addition,  the  Executive  shall  give  the  Company  such
information and cooperation as it may reasonably  require and as shall be within
the  Executive's  power and at such times and places as are  convenient  for the
Executive.

            (h) Defense of Claim. With respect to any Proceeding as to which the
Executive notifies the Company of the commencement thereof: (i) the Company will
be  entitled  to  participate  therein at its own  expense;  and (ii)  except as
otherwise  provided  below,  to the extent that it may wish, the Company jointly
with any other  indemnifying party similarly notified will be entitled to assume
the defense thereof, with counsel reasonably satisfactory to the Executive.  The

                                       5
<PAGE>

Company  shall not be  entitled  to assume the  defense of any  action,  suit or
proceeding  brought by or on behalf of the Company or as to which the  Executive
shall have reasonably concluded that there may be a conflict of interest between
the Company and the Executive in the conduct of the defense of such action.

                  The Company  shall not be liable to  indemnify  the  Executive
under this  Agreement  for any amounts paid in settlement of any action or claim
effected without its written consent. The Company shall not settle any action or
claim in any  manner  which  would  impose  any  penalty  or  limitation  on the
Executive  without  Executive's  written  consent.  Neither  the Company nor the
Executive  shall  unreasonably  withhold or delay their  consent to any proposed
settlement.

            (i) Non-exclusivity. The right to indemnification and the payment of
expenses  incurred in defending a Proceeding in advance of its final disposition
conferred  in this Section 7 shall not be exclusive of any other right which the
Executive may have or hereafter may acquire under any statute,  provision of the
certificate  of  incorporation  or by-laws of the  Company,  agreement,  vote of
stockholders or disinterested directors or otherwise.

            (j) Directors and Officers  Liability Policy.  The Company agrees to
use reasonable efforts to maintain  directors and officers  liability  insurance
covering the  Executive in a reasonable  and adequate  amount  determined by the
Company.

      8.    Termination and Termination Benefits.

            (a) Termination For Cause.  Notwithstanding  any provision contained
herein,  the  Company  may  terminate  this  Agreement  at any time  during  the
Employment Term for "Cause".  For purposes of this subsection  8(a)(i),  "Cause"
shall mean (1) the continuing  willful failure by the Executive to substantially
perform  his  duties  hereunder  for any  reason  other  than  total or  partial
incapacity due to physical or mental illness,  or (2) gross  negligence or gross
malfeasance  on the  part of the  Executive  in the  performance  of his  duties
hereunder that causes material harm to the Company. Termination pursuant to this
subsection  8(a)(i)  shall be effective  immediately  upon giving the  Executive
written  notice thereof  stating the reason or reasons  therefor with respect to
clause (2) above,  and 15 days after written  notice thereof from the Company to
the  Executive  specifying  the acts or omissions  constituting  the failure and
requesting  that they be remedied with respect to clause (1) above,  but only if
the Executive has not cured such failure within such 15 day period. In the event
of a termination  pursuant to this  subsection  8(a)(i),  the Executive shall be

                                       6
<PAGE>

entitled  to payment  of his Base  Compensation  and the  benefits  pursuant  to
Section 4 hereof up to the effective date of such termination and it is also the
intention and agreement of the Company that  Executive  shall not be deprived by
reason of termination for Cause of any payments,  options or benefits which have
been  vested or have been  earned or to which  Executive  is  entitled as of the
effective date of such termination.

            (b)  Termination due to Disability.  If due to illness,  physical or
mental disability, or other incapacity, the Executive shall fail, for a total of
any  six  consecutive  months  ("Disability"),   to  substantially  perform  the
principal  duties  required by this  Agreement,  the Company may terminate  this
Agreement  upon 30 days' written  notice to the  Executive.  In such event,  the
Executive shall be (1) paid his Base Compensation until the Termination Date and
his Pro Rata  Share of any  Incentive  Compensation  to which he would have been
entitled for the year in which such  termination  occurs,  and (2) provided with
employee benefits  pursuant to Section 4, until the Termination Date,  provided,
however,  that any  compensation  to be paid to the  Executive  pursuant to this
subsection  8(a)(ii)  shall be  offset  against  any  payments  received  by the
Executive  pursuant to any policy of disability  insurance the premiums of which
are paid for by the  Company.  The  Executive  shall  also be paid any  deferred
compensation  (including,  without limitation,  interest or other credits on the
deferred amounts) and any accrued / unused vacation pay.

            (c)  Termination  In the event  Company does not elect to extend the
Employment  Term,  for reasons  not  outlined in  paragraphs  a and b above,  as
provided  for in  Section 2 hereof,  in  consideration  for the  post-employment
covenant against competition set forth in Section 10 hereof, the Executive shall
be paid:. (i) a lump-sum  payment equal to the product of twenty-four  times the
Monthly Salary Amount in addition to his Base Compensation at the rate in effect
at the time of  termination,  through the Termination  Date..  (ii) his Pro Rata
Share of any Incentive Compensation to which he would have been entitled for the
year  in  which  such  termination  occurs;  (iii)  any  deferred   compensation
(including,  without  limitation,  interest  or other  credits  on the  deferred
amounts) and any accrued / unused  vacation  pay;  (iv)  continuation  until the
expiration  of the  Employment  Term and for twelve  months  thereafter,  of the
health and  welfare  benefits  of the  Executive  and any  long-term  disability
insurance  generally  provided to senior  executives of the Company (as provided
for by Section 4 of this  Agreement)  (or the Company shall provide the economic

                                       7
<PAGE>

equivalent thereof);  provided, however, if the Executive obtains new employment
and such  employment  makes the  Executive  eligible  for health and  welfare or
long-term  disability  benefits  which are equal to or greater in scope then the
benefits then being offered by the Company,  then the Company shall no longer be
required  to  provide  such  benefits  to  the  Executive;  and  (v)  any  other
compensation  and benefits as may be provided in  accordance  with the terms and
provisions of any applicable plans or programs of the Company.

            (d)  Non-exclusivity  of  Rights.  Nothing in this  Agreement  shall
prevent  or limit the  Executive's  continuing  or future  participation  in any
benefit, bonus, incentive or other plan or program provided or maintained by the
Company and for which the Executive may qualify, nor shall anything herein limit
or otherwise  prejudice  such rights as the  Executive  may have under any other
existing or future  agreements with the Company.  Except as otherwise  expressly
provided for in this  Agreement,  amounts which are vested benefits or which the
Executive  is otherwise  entitled to receive  under any plans or programs of the
Company  at or  subsequent  to the  date of  termination  shall  be  payable  in
accordance with such plans or programs.

            (e) Vesting of Stock Grants and Stock  Options.  In the event of any
termination  of this  Agreement,  Executive's  rights  with  regard to any stock
grants, loan agreements or stock options shall be as set forth in the respective
agreement   containing   the   terms   and   conditions    pertaining   thereto.
Notwithstanding the foregoing, in the event that the Executive is terminated for
reasons  other than for  "Cause," any stock  options then held by the  Executive
shall  immediately  vest in the Executive and shall remain  exercisable  for the
period specified in the grant agreement notwithstanding any provision therein to
the contrary..

            (f) Certain  Additional  Payments by the  Company.  Anything in this
Agreement  to the  contrary  notwithstanding,  in the  event  that it  shall  be
determined that any payment or distribution by the Company to or for the benefit
of the  Executive,  whether  paid or payable  or  distributed  or  distributable
pursuant to the terms of this  Agreement or otherwise  (a  "Payment"),  would be
subject to the excise tax imposed by Section 4999 of the  Internal  Revenue Code
of 1986 or any  interest  or  penalties  with  respect to such  excise tax (such
excise tax,  together  with any such  interest and  penalties,  are  hereinafter
collectively  referred  to as the "Excise  Tax"),  then the  Executive  shall be
entitled to receive an additional  payment (an "Excise Gross-Up  Payment") in an
amount such that after  payment by the  Executive  of all taxes  (including  any
interest or penalties imposed with respect to such taxes),  including any Excise
Tax imposed upon the Excise Gross-Up  Payment and any ordinary income tax on the
Excise Gross-Up  Payment in order to put the Executive in the same net after-tax
position  as if the payment  were not subject to any Excise Tax.  Subject to the

                                       8
<PAGE>

provisions  of  this  Section  8(e),  all  determinations  required  to be  made
hereunder,  including  whether an Excise  Gross-Up  Payment is required  and the
amount  of such  Excise  Gross-Up  Payment,  shall  be made by  Freed,  Maxick &
Battaglia,  PC or such  other  accounting  firm  which  at the time  audits  the
financial  statements of the Company (the "Accounting Firm") at the sole expense
of the Company, which shall provide detailed supporting calculations both to the
Company and the Executive  within 15 business days of the date of termination of
the Executive's employment under this Agreement, if applicable,  or such earlier
time as is requested by the Company.

      If the  Accounting  Firm  determines  that no Excise Tax is payable by the
Executive,  the  Company  shall use its  reasonable  best  efforts  to cause the
Accounting Firm to furnish the Executive with an opinion that he has substantial
authority  not to report any Excise Tax on his federal  income tax  return.  Any
determination  by the Accounting  Firm shall be binding upon the Company and the
Executive.  As a result of the uncertainty in the application of Section 4999 of
the  Code at the  time  of the  initial  determination  by the  Accounting  Firm
hereunder,  it is possible that Excise  Gross-Up  Payments,  which will not have
been made by the Company,  should have been made (an "Underpayment")  consistent
with the calculations required to be made hereunder. If the Company exhausts its
remedies  pursuant  hereto and the  Executive  thereafter  is required to make a
payment of any Excise Tax, the Accounting Firm shall determine the amount of the
Underpayment that has occurred and any such Underpayment  shall be promptly paid
by the Company to or for the benefit of the Executive.

      The  Executive  shall  notify  the  Company in writing of any claim by the
Internal  Revenue Service that, if successful,  would require the payment by the
Company of the Excise Gross-Up Payment. Such notification shall be given as soon
as practicable  but no later than ten business days after the Executive knows of
such  claim and shall  apprise  the  Company of the nature of such claim and the
date on which such claim is requested to be paid.  The  Executive  shall not pay
such claim prior to the  expiration of the 30-day  period  following the date on
which it gives such notice to the Company (or such shorter  period ending on the
date that any  payment  of taxes  with  respect  to such  claim is due).  If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall: (i) give the Company
any information reasonably requested by the Company relating to such claim; (ii)
take such action in connection  with  contesting such claim as the Company shall
reasonably request in writing from time to time,  including (without limitation)
accepting  legal  representation  with  respect  to such  claim  by an  attorney
reasonably  selected by the Company;  (iii)  cooperate  with the Company in good
faith to  contest  effectively  such  claim;  and (iv)  permit  the  Company  to

                                       9
<PAGE>

participate in any proceedings relating to such claim; provided that the Company
shall  bear and pay  directly  all  costs  and  expenses  (including  additional
interest  and  penalties)  incurred in  connection  with such  contest and shall
indemnify and hold the Executive harmless, on an after-tax basis, for any Excise
Tax or income tax,  including  interest  and  penalties  with  respect  thereto,
imposed as a result of such  representation  and payment of costs and  expenses.
Without limitation on the foregoing  provisions hereof the Company shall control
all  proceedings  taken in connection with such contest and, at its sole option,
may pursue or forgo any and all administrative  appeals,  proceedings,  hearings
and conferences  with the taxing  authority in respect of such claim and may, at
its sole option,  either direct the Executive to pay the tax claimed and sue for
a refund or  contest  the claim in any  permissible  manner,  and the  Executive
agrees to prosecute such contest to a  determination  before any  administrative
tribunal,  in a court  of  initial  jurisdiction  and in one or  more  appellate
courts, as the Company shall determine, provided that if the Company directs the
Executive to pay such claim and sue for a refund,  the Company shall advance the
amount of such payment to the  Executive,  on an  interest-free  basis and shall
indemnify  and hold the  Executive  harmless,  on an after-tax  basis,  from any
Excise Tax or income tax,  including interest or penalties with respect thereto,
imposed with respect to such advance or with respect to any imputed  income with
respect to such advance,  and further provided that any extension of the statute
of  limitations  relating  to  payment  of  taxes  for the  taxable  year of the
Executive  with respect to which such  contested  amount is claimed to be due is
limited solely to such contested amount.  Furthermore,  the Company's control of
the contest shall be limited to issues with respect to which an Excise  Gross-Up
Payment would be payable hereunder and the Executive shall be entitled to settle
or contest,  as the case may be, any other issue raised by the Internal  Revenue
Service or any other taxing authority.

      If,  after the  receipt  by the  Executive  of an amount  advanced  by the
Company  pursuant hereto,  the Executive  becomes entitled to receive any refund
with  respect to such claim,  the  Executive  shall  (subject  to the  Company's
complying with the  requirements  hereof) promptly pay to the Company the amount
of such refund  (together with any interest paid or credited thereon after taxes
applicable  thereto).  If,  after  the  receipt  by the  Executive  of an amount

                                       10
<PAGE>

advanced  by the  Company  pursuant  hereto,  a  determination  is made that the
Executive shall not be entitled to any refund with respect to such claim and the
Company  does not notify the  Executive in writing of its intent to contest such
denial of refund prior to the  expiration  of 30 days after such  determination,
then such  advance  shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset,  to the extent  thereof,  the amount of
Excise Gross-Up Payment required to be paid.

            (g)  Death  Benefit.  Notwithstanding  any other  provision  of this
Agreement,  this Agreement shall terminate on the date of the Executive's death.
In such event the Company shall continue to pay Executive's Base Compensation to
his wife,  if she survives  him, or, if she does not survive him, to his estate,
through the Termination Date. In addition,  the Company shall pay to Executive's
wife, if she survives  him, or, if she does not survive him, to his estate,  the
Pro Rata Share of any Incentive  Compensation to which Executive would have been
entitled for the year in which such death occurs. In addition, the Company shall
provide the  Executive's  wife and/or  eligible  family  members with health and
medical  benefits  pursuant to Section 4, to the extent  available,  through the
Termination Date.

            (h) Payment..  Except as otherwise  provided in this Agreement,  any
payments  to which  the  Executive  shall be  entitled  under  this  Section  8,
including,  without limitation, any economic equivalent of any benefit, shall be
made as promptly as possible following the date of termination. If the amount of
any payment due to the  Executive  cannot be finally  determined  within 90 days
after the Date of  Termination,  such amount  shall be estimated on a good faith
basis by the Company  and the  estimated  amount  shall be paid no later than 90
days after such Date of Termination. As soon as practicable hereafter, the final
determination  of the amount due shall be made and any  adjustment  requiring  a
payment to or from the Executive shall be made as promptly as practicable.

            (i) No Mitigation.  The Executive  shall not be required to mitigate
the amount of any payments provided for by this Agreement by seeking  employment
or  otherwise,  nor shall the amount of any payment or benefit  provided in this
Agreement  be reduced by any  compensation  or benefit  earned by the  Executive
after termination of his employment.

                                       11
<PAGE>

      9. Company  Property.  All  advertising,  promotional,  sales,  suppliers,
manufacturers and other materials or articles or information,  including without
limitation data  processing  reports,  customer lists,  customer sales analyses,
invoices,  product  lists,  price lists or  information,  samples,  or any other
materials  or data of any kind  furnished  to the  Executive  by the  Company or
developed  by the  Executive  on  behalf  of  the  Company  or at the  Company's
direction  or for  the  Company's  use  or  otherwise  in  connection  with  the
Executive's employment hereunder, are and shall remain the sole and confidential
property of the Company; if the Company requests the return of such materials at
any time during or at or after the  termination of the  Executive's  employment,
the Executive shall immediately deliver the same to the Company.

      10.   Covenant Not To Compete.

             (a) Covenants Against Competition.  The Executive acknowledges that
as of the execution of this  Employment  Agreement (i) the Company is engaged in
the business  described in its current  filings with the Securities and Exchange
Commission (the "Business");  (ii) the Company's Business is conducted currently
throughout the United States and may be expanded to other  locations;  (iii) his
employment  with  the  Company  will  have  given  him  access  to  confidential
information  concerning  the  Company;  and (iv) the  agreements  and  covenants
contained in this  Agreement  are essential to protect the business and goodwill
of the Company. Accordingly, the Executive covenants and agrees as follows:

                  (i)  Non-Compete.  Without  the prior  written  consent of the
Board of the Company,  the Executive shall not during the Restricted  Period (as
defined  below) within the  Restricted  Area (as defined  below)  (except in the
Executive's capacity as an officer of the Company or any of its affiliates), (a)
engage or  participate  in the Business  (or any Business  which the Company may
become  engaged  in during the  Employment  Term  which,  for  purposes  of this
Agreement, shall be included in the definition of the "Business"); (b) enter the
employ  of,  or  render  any  services  (whether  or  not  for  a fee  or  other
compensation)  to, any person engaged in the Business;  or (c) acquire an equity
interest in any such person; provided, that the foregoing restrictions shall not
apply at any time if the Executive's employment is terminated during the Term by
the  Executive  for Good  Reason (as  defined in Section  8(b)  below) or by the

                                       12
<PAGE>

Company other than for "Cause";  provided,  further,  that during the Restricted
Period  the  Executive  may own,  directly  or  indirectly,  solely as a passive
investment, securities of any company traded on any national securities exchange
or on the National Association of Securities Dealers Automated Quotation System.

                  As used  herein,  "Restricted  Period"  shall  mean the period
commencing on the  Effective  Date and ending on the second  anniversary  of the
Executive's termination of employment.

                  "Restricted  Area"  shall  mean any place  within  the  United
States and any other country in which the Company is then  actively  considering
conducting Business.

            (b) Confidential Information;  Personal Relationships. The Executive
acknowledges  that the  Company  has a  legitimate  and  continuing  proprietary
interest in the  protection  of its  confidential  information  and has invested
substantial  sums and will  continue  to  invest  substantial  sums to  develop,
maintain and protect confidential information. The Executive agrees that, during
and after the Restricted Period, without the prior written consent of the Board,
the Executive  shall keep secret and retain in strictest  confidence,  and shall
not knowingly use for the benefit of himself or others all confidential  matters
relating to the Company's Business including,  without  limitation,  operational
methods,  marketing or  development  plans or strategies,  business  acquisition
plans,  joint venture proposals or plans, and new personnel  acquisition  plans,
learned by the Executive  heretofore  or hereafter  (such  information  shall be
referred to herein collectively as "Confidential  Information");  provided, that
nothing in this Agreement  shall prohibit the Executive from disclosing or using
any Confidential Information (A) in the performance of his duties hereunder, (B)
as required by applicable  law, (C) in connection  with the  enforcement  of his
rights under this Agreement or any other  agreement with the Company,  or (D) in
connection  with the defense or settlement of any claim,  suit or action brought
or  threatened  against  the  Executive  by or in  the  right  of  the  Company.
Notwithstanding  any  provision  contained  herein  to the  contrary,  the  term
Confidential  Information shall not be deemed to include any general  knowledge,
skills or experience  acquired by the Executive or any knowledge or  information
known or available to the public in general.  Moreover,  the Executive  shall be
permitted  to  retain  copies  of,  or have  access  to,  all such  Confidential
Information  relating to any  disagreement,  dispute or  litigation  (pending or
threatened) involving the Executive.

            (c)  Employees  of  the  Company  and  its  Affiliates.  During  the
Restricted  Period,  without  the  prior  written  consent  of the  Board of the
Company,  the Executive shall not, directly or indirectly,  hire or solicit,  or
cause  others to hire or solicit,  for  employment  by any person other than the

                                       13
<PAGE>

Company or any  affiliate  or  successor  thereof,  any  employee  of, or person
employed within the two years  preceding the Executive's  hiring or solicitation
of such person by, the Company and its affiliates or successors or encourage any
such  employee  to leave his  employment.  For this  purpose,  any person  whose
employment has been  terminated  involuntarily  by the Company shall be excluded
from those persons protected by this Section for the benefit of the Company.

            (d)  Business  Relationships.  During  the  Restricted  Period,  the
Executive shall not, directly or indirectly, request or advise a person that has
a business  relationship  with the  Company to curtail or cancel  such  person's
business relationship with the Company.

            (e) Rights and Remedies  Upon  Breach.  If the  Executive  breaches,
threatens to commit a breach of, any of the  provisions  contained in Section 10
of this  Agreement  (the  "Restrictive  Covenants"),  the Company shall have the
following  rights  and  remedies,  each of which  rights and  remedies  shall be
independent  of the others and  severally  enforceable,  and each of which is in
addition to, and not in lieu of, any other rights and remedies  available to the
Company under law or in equity.

                  (i)  Specific  Performance.  The right and  remedy to have the
Restrictive   Covenants   specifically   enforced  by  any  court  of  competent
jurisdiction,  it being  agreed  that any  breach  or  threatened  breach of the
Restrictive  Covenants  would cause  irreparable  injury to the Company and that
money damages would not provide an adequate remedy to the Company.

                  (ii) Accounting. The right and remedy to require the Executive
to account for and pay over to the Company all  compensation,  profits,  monies,
accruals,  increments or other benefits  derived or received by the Executive as
the result of any action constituting a breach of Restrictive Covenants.

            (f) Severability of Covenants. The Executive acknowledges and agrees
that  the  Restrictive  Covenants  are  reasonable  and  valid in  duration  and
geographical  scope and in all other respects.  If any court determines that any
of the Restrictive Covenants,  or any part thereof, is invalid or unenforceable,
the  remainder of the  Restrictive  Covenants  shall not thereby be affected and
shall  be  given  full  effect  without  regard  to the  invalid  portions.  The
provisions  set forth in  Section  10 above  shall be in  addition  to any other
provisions of the business conduct and ethics policy  applicable to employees of
the Company and its subsidiaries during the term of Executive's employment.

                                       14
<PAGE>

            (g) Saving  Clause.  If the period of time or the area  specified in
subsection (a) above should be adjudged unreasonable in any proceeding, then the
period of time shall be  reduced  by such  number of months or the area shall be
reduced  by the  elimination  of such  portion  thereof  or  both  so that  such
restrictions may be enforced in such area and for such time as is adjudged to be
reasonable.  If the Executive violates any of the restrictions  contained in the
foregoing  subsection (a), the restrictive  period shall not run in favor of the
Executive from the time of the  commencement  of any such  violation  until such
time as such violation  shall be cured by the Executive to the  satisfaction  of
Company.

      11. Executive's  Representation and Warranties.  Executive  represents and
warrants that he has the full right and  authority to enter into this  Agreement
and fully  perform  his  obligations  hereunder,  that he is not  subject to any
non-competition  agreement  other  than  with the  Company,  and that his  past,
present and anticipated  future activities have not and will not infringe on the
proprietary rights of others.  Executive further represents and warrants that he
is not obligated under any contract  (including,  but not limited to,  licenses,
covenants  or  commitments  of any nature) or other  agreement or subject to any
judgment,  decree or order of any court or  administrative  agency  which  would
conflict  with his  obligation  to use his best  efforts to  perform  his duties
hereunder or which would conflict with the Company's  business and operations as
presently  conducted  or proposed to be  conducted.  Neither the  execution  nor
delivery of this  Agreement,  nor the carrying on of the  Company's  business as
officer and employee by Executive  will  conflict  with or result in a breach of
the  terms,  conditions  or  provisions  of or  constitute  a default  under any
contract, covenant or instrument to which Executive is currently a party.

      12.   Miscellaneous.

            (a) Integration;  Amendment.  This Agreement  constitutes the entire
agreement  between  the  parties  hereto  with  respect to the matters set forth
herein  and   supersedes   and   renders  of  no  force  and  effect  all  prior
understandings  and  agreements  between the parties with respect to the matters
set forth herein.  No amendments or additions to this Agreement shall be binding
unless in writing and signed by both parties.

            (b)  Severability.  If any part of this  Agreement  is contrary  to,
prohibited  by, or deemed  invalid under  applicable  law or  regulations,  such
provision  shall be  inapplicable  and deemed omitted to the extent so contrary,

                                       15
<PAGE>

prohibited, or invalid, but the remainder of this Agreement shall not be invalid
and shall be given full force and effect so far as possible.

            (c)  Waivers.  The  failure  or  delay  of any  party at any time to
require performance by the other party of any provision of this Agreement,  even
if known,  shall not affect the right of such  party to require  performance  of
that provision or to exercise any right,  power,  or remedy  hereunder,  and any
waiver by any party of any breach of any provision of this  Agreement  shall not
be  construed  as a  waiver  of any  continuing  or  succeeding  breach  of such
provision, a waiver of the provision itself, or a waiver of any right, power, or
remedy  under  this  Agreement.  No notice to or demand on any party in any case
shall,  of itself,  entitle  such party to other or further  notice or demand in
similar or other circumstances.

            (d) Power and Authority.  The Company represents and warrants to the
Executive that it has the requisite corporate power to enter into this Agreement
and perform the terms hereof;  that the execution,  delivery and  performance of
this  Agreement  by it has been duly  authorized  by all  appropriate  corporate
action;  and that  this  Agreement  represents  the valid  and  legally  binding
obligation of the Company and is enforceable  against it in accordance  with its
terms.

            (e) Burden and Benefit;  Survival.  This Agreement  shall be binding
upon and inure to the benefit of the parties hereto and their respective  heirs,
executors,  personal  and legal  representatives,  successors  and  assigns.  In
addition to, and not in limitation of, anything contained in this Agreement,  it
is  expressly  understood  and  agreed  that  the  Company's  obligation  to pay
Termination  Compensation  as set forth herein shall survive any  termination of
this Agreement.

            (f) Governing Law;  Headings.  This Agreement and its  construction,
performance,   and  enforceability  shall  be  governed  by,  and  construed  in
accordance  with, the laws of the State of New York.  Headings and titles herein
are  included  solely  for  convenience  and  shall  not  affect,  or be used in
connection with, the interpretation of this Agreement.

            (g) Arbitration;  Remedies. Any dispute or controversy arising under
this Agreement or as a result of or in connection  with  Executive's  employment
(other than disputes  arising under Section 10) shall be arbitrated  and settled
pursuant to the National Rules for the Resolution of Employment  Disputes of the
American  Arbitration  Association which are then in effect in a proceeding held
in Rochester,  New York.  This provision  shall also apply to any and all claims
that may be brought under any federal or state anti-discrimination or employment
statute,  rule or regulation,  including,  but not limited to, claims under: the
National Labor  Relations Act; Title VII of the Civil Rights Act;  Sections 1981

                                       16
<PAGE>

through  1988 of Title 42 of the United  States Code;  the  Employee  Retirement
Income Security Act; the Immigration  Reform and Control Act; the Americans With
Disabilities  Act;  the Age  Discrimination  in  Employment  Act; the Fair Labor
Standards  Act; the  Occupational  Safety and Health Act; the Family and Medical
Leave Act; and the Equal Pay Act. The decision of the arbitrator  and award,  if
any, is final and binding on the parties and the  judgment may be entered in any
court having  jurisdiction  thereof.  The parties will agree upon an  arbitrator
from  the  list  of  labor  arbitrators  supplied  by the  American  Arbitration
Association.  The parties understand and agree,  however,  that disputes arising
under  Section 10 of this  Agreement  may be brought in a court of law or equity
without submission to arbitration.

            (h) Jurisdiction.  Except as otherwise provided for herein,  each of
the parties (a) submits to the exclusive jurisdiction of any state court sitting
in New York or federal  court  sitting  in New York in any action or  proceeding
arising  out of or  relating  to this  Agreement,  (b) agrees that all claims in
respect  of the action or  proceeding  may be heard and  determined  in any such
court,  (c)  agrees  not to bring any  action or  proceeding  arising  out of or
relating  to this  Agreement  in any other  court and (d)  waives any right such
party  may have to a trial by jury with  respect  to any  action  or  proceeding
arising  out of or relating to this  Agreement.  Each of the parties  waives any
defense of inconvenient  forum to the maintenance of any action or proceeding so
brought and waives any bond,  surety or other security that might be required of
any other  party with  respect  thereto.  Any party may make  service on another
party by sending or  delivering  a copy of the process to the party to be served
at the  address  and in the  manner  provided  for  giving of notices in Section
12(i). Nothing in this Section,  however, shall affect the right of any party to
serve legal process in any other manner permitted by law.

            (i) Notices. All notices called for under this Agreement shall be in
writing and shall be deemed  given upon receipt if  delivered  personally  or by
confirmed  facsimile  transmission  and followed  promptly by mail, or mailed by
registered or certified mail (return receipt requested), postage prepaid, to the
parties at their  respective  addresses (or at such other address for a party as
shall be specified by like notice;  provided that notices of a change of address
shall be effective  only upon  receipt  thereof) as set forth in the preamble to

                                       17
<PAGE>

this  Agreement or to any other  address or  addressee as any party  entitled to
receive  notice under this  Agreement  shall  designate,  from time to time,  to
others in the  manner  provided  in this  subsection  12(i) for the  service  of
notices.

            Any notice  delivered  to the party  hereto to whom it is  addressed
shall be deemed to have been  given  and  received  on the day it was  received;
provided,  however, that if such day is not a business day then the notice shall
be deemed to have been given and  received on the  business  day next  following
such day. Any notice sent by facsimile transmission shall be deemed to have been
given and received on the business day next following the day of transmission.

            (j) Number of Days.  In computing the number of days for purposes of
this  Agreement,  all days shall be counted,  including  Saturdays,  Sundays and
holidays; provided, however, that if the final day of any time period falls on a
Saturday,  Sunday  or  holiday  on which  federal  banks  are or may elect to be
closed,  then the  final  day  shall be deemed to be the next day which is not a
Saturday, Sunday or such holiday.

      IN WITNESS  WHEREOF,  the parties have duly executed this  Agreement as of
the date first above written.

-----------------------------
JAMES D. FROST

INFINITE GROUP, INC.

By:
    -------------------------------------
    Michael S. Smith
    President and Chief Executive Officer

                                       18

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