June 27, 2002
Mr. J. Terence Feeley 40
Charlotte Avenue
Saunderstown, Rhode Island
02864
Dear Terry:
This
letter will
acknowledge that you
have requested
that the Board
of
Directors of Infinite Group,
Inc. (the "Company") agree to the early termination
of your employment agreement with the Company dated July 1, 1999 (the
"Employment Agreement") in
connection with your desire to retire and that you be
retained by the Company as a
consultant in
connection with its
business. The
Board of Directors of the
Company hereby agrees to acknowledge your retirement
request and to retain you as
a consultant in
consideration of your
obligations
hereunder and in exchange for
your execution of the
Release annexed
hereto as
Exhibit A (the "Release"), on
the following terms and conditions.
1. The
Employment Agreement
is hereby terminated
and of no further force
or effect.
2. You
hereby resign from all offices which you may hold with the
Company.
3. You
hereby resign as a director of the Company.
4. You
hereby resign as an officer and director of each subsidiary of the
Company.
5. The
Company hereby retains you as a Special Consultant to its
President
and Board of Directors and you agree to provide consulting services to the
Company during the period
commencing on the date
hereof and terminating on June
30, 2004 (the "Consulting
Period"). In performing such services, you will report
to the President and Chief
Executive Officer and/or Chairman of the Board of the
Company. Such services shall be consistent with the services which you have
previously provided to the
Company and shall include providing the President and
Chief Executive Officer
and/or Chairman with analysis and advice with respect to
those matters for which you
previously had responsibility. During the Consulting
Period you shall provide such services at times and locations mutually
acceptable to you and the
Company.
During the Consulting Period,
the Company shall compensate you as follows:
<PAGE>
(a) you
shall receive a
semi-monthly payment
commencing on June 1,
2002
and terminating on May 15,
2003 in the amount of $5,700.00. These payments will
be made to you in your capacity as an independent consultant (and not an
employee) to the Company and
will not reflect any tax or FICA withholding;
(b) the
Company shall provide you with group health benefits through June
30, 2003 covering you and
your family, on such
terms as they are generally made
available to executive
officers of the Company during such period;
(c)
the Company shall reimburse you for all pre-approved expenses
reasonably incurred by you in connection
with your performance of consulting
services
hereunder.
6. (a) The
Company hereby acknowledges that it currently owes Donna
Feeley, your wife, the sum of $10,000.
The Company hereby
agrees to repay this
amount to her in two equal
installments
with interest at the rate of 10% per
annum on or before July 15,
2002, and December
31, 2002, respectively. This
amount represents all amounts,
absolute or
contingent, owed by
the Company to
Donna Feeley.
(b) The Company hereby acknowledges that there are no loans
currently outstanding from
the Company to you.
7. The
Company hereby
acknowledges that you
have been granted options to
purchase shares of Company Common Stock
under the Company's Stock Option Plans.
The Company covenants and agrees that you shall have
ninety (90) days from the
end of the Consulting Period (until September 30, 2004, except as otherwise
provided for herein) to
exercise your options with respect to these shares. All
such options shall,
as a matter of law, be
deemed non-qualified
stock
options
and, upon exercise, shall be
subject to applicable tax withholding obligations.
8. The
Company and you
acknowledge
that there is
presently a bona
fide
dispute with respect to whether you entered
into a contract on the
Company's
behalf with the University of Rhode Island ("URI") with respect to a
certain
Optimec Laser Engineered Net
Shape machine known as an Optimec 750. URI contends
that you entered into a
contract with it on
the Company's
behalf and you
have
contended that no such
contract exists.
In the event that the
Company does not
receive documentation from
URI on or before December 1, 2002, confirming that no
contract exists and/or that the Company has
no liability to URI,
then, in such
event, upon notice to you, the Company
may terminate the Consulting Period and
its related obligations to
you hereunder.
9. (a) In
consideration of the Company's execution of this Agreement,
you
hereby agree with the Company that during the period
commencing
on the date
hereof and terminating on June 30, 2005, you
will not (1) solicit
proxies with
respect to any voting
securities
of the Company in
opposition to the
slate of
directors proposed by the board of directors of the Company; (ii) become a
<PAGE>
"participant" in any
"election contest" relating to the election of directors
of
the Company (as such terms
are used in Rule 14(a)11 of Regulation 14A under the
Securities Act of 1934); or
(iii) lend your support to or authorize your name to
be used in connection with
any "election contest" (whether or not the lending of
your support or the use of
your name would cause you to be a "participant"). In
addition, during the period commencing on the date hereof and
terminating
on
June 30, 2005, you will not disparage or denigrate in any
manner the Company,
any or its subsidiaries or affiliates, or any of its or their respective
officers or
directors.
(b) In
consideration
of the Company's
execution of this
Agreement,
you
hereby agree that in
connection with the
sale by you or any of your affiliates
of shares of Company Common
Stock, now owned or hereafter acquired ("Shares"),
except as otherwise agreed to
in writing by the Company, (i) the maximum number
of Shares which may be sold on the
NASDAQ Small Cap Market or a subsequent
market or exchange on which
the shares are listed
and/or traded (the "NSCM") on
any day shall be equal to
twenty percent
(20%) of the average
of the number of
shares of Common Stock traded
on the NSCM for the seven trading days preceding
such sale.
10. You
hereby acknowledge
and agree that your
breach of any
provision
contained in paragraph 9
hereof would cause
irreparable
damage to the
Company
which would not be
measurable; and that the Company's remedy at law for any
such
breach would be inadequate
and the Company shall be entitled, in addition to any
other remedy available to the Company, to temporary or permanent
injunctive
relief to enjoin any actual
or threatened breach of such provision.
11. In
consideration
of your execution of this Agreement, the Company
hereby agrees with you that
during the period
commencing on the date hereof and
terminating on June 30, 2005,
the Company will not disparage or denigrate you in
any manner.
12. The
Company hereby acknowledges and agrees that its breach of the
provisions contained in paragraph 10 hereof
would cause
irreparable damage
to
you which would not be measurable; and that your remedy at law for any
such
breach would be inadequate
and you shall be
entitled, in addition
to any other
remedy available to you, to
temporary or permanent
injunctive relief to
enjoin
any actual or threatened
breach of such provision.
13. It is
specifically
acknowledged and
agreed to b
