Exhibit 10.4

REVENUE PURCHASE AGREEMENT

This REVENUE PURCHASE AGREEMENT (this “Agreement”), dated December 29, 2011, is
made by and between Deerfield Private Design Fund II, L.P., a Delaware limited
partnership (“Private Design Fund II”), Deerfield Special Situations Fund, L.P.,
a Delaware limited partnership (“DSS”), Horizon Santé TTNP SARL, a Luxembourg
limited company (“Horizon” and together with Private Design Fund II and DSS, the
“Purchasers”) and iCAD, Inc., a Delaware corporation (“iCAD”).

Background Statement

Whereas, for the purchase price set forth herein, the Purchasers are acquiring
the right to receive certain payments from iCAD as set forth herein.

Now, therefore, in consideration of the covenants and obligations expressed
herein, and intending to be legally bound, the Purchasers and iCAD agree as
follows:

Statement of Agreement

1. Definitions. Capitalized terms shall have the meaning set forth in this
section. Unless the context requires otherwise, words in the singular include
the plural, words in the plural include the singular, and words importing any
gender shall be applicable to all genders. If a term is defined as one part of
speech (such as a noun), it shall have a corresponding meaning when used as
another part of speech (such as a verb).

(a) “Agreement” has the meaning set forth in the introductory paragraph.

(b) “Applicable Annual Minimum” means $500,000 per calendar year.

(c) “Applicable Quarterly Minimum” means $125,000 per Quarter.

(d) “Applicable Percentage” means:

(i) for the calendar years 2012, 2013 and 2014, (A) 4.25% of Revenues up to $25
million in annual Revenues for such calendar year, (B) 2.75% of Revenues from
$25 million in annual Revenues up to $50 million in annual Revenues for such
calendar year, and (C) 1.0% of Revenues in excess of $50 million in annual
Revenues for such calendar year; and

(ii) for the calendar years 2015, 2016 and, if applicable, 2017, (A) 4.25% of
Revenues up to $25 million in annual Revenues for such calendar year, (B) 2.25%
of Revenues from $25 million in annual Revenues up to $50 million in annual
Revenues for such calendar year, and (C) 1.0% of Revenues in excess of $50
million in annual Revenues for such calendar year.

(e) “Asset Sale Amount” means:

--------------------------------------------------------------------------------

(i) if such sale occurs on or before June 30, 2012: (A) 15.0% of the gross
proceeds of any such asset sale up to $25 million, (B) 7.50% of the gross
proceeds of any such asset sale from $25 million up to $50 million, and (C) 3.5%
of the gross proceeds of any such asset sale in excess of $50 million;

(ii) if such sale occurs after June 30, 2012 but on or before June 30, 2013:
(A) 12.0% of the gross proceeds of any such asset sale up to $25 million,
(B) 6.0% of the gross proceeds of any such asset sale from $25 million up to $50
million, and (C) 2.5% of the gross proceeds of any such asset sale in excess of
$50 million;

(iii) if such sale occurs after June 30, 2013 but on or before June 30, 2014:
(A) 8.5% of the gross proceeds of any such asset sale up to $25 million,
(B) 4.5% of the gross proceeds of any such asset sale from $25 million up to $50
million, and (C) 2.0% of the gross proceeds of any such asset sale in excess of
$50 million;

(iv) if such sale occurs after June 30, 2014 but on or before June 30, 2015:
(A) 6.0% of the gross proceeds of any such asset sale up to $25 million,
(B) 3.0% of the gross proceeds of any such asset sale from $25 million up to $50
million, and (C) 1.75% of the gross proceeds of any such asset sale in excess of
$50 million; and

(v) if such sale occurs after June 30, 2015: (A) 4.0% of the gross proceeds of
any such asset sale up to $25 million, (B) 2.0% of the gross proceeds of any
such asset sale from $25 million up to $50 million, and (C) 1.25% of the gross
proceeds of any such asset sale in excess of $50 million.

(f) “Business Day” means any day other than Saturday, Sunday or a day on which
banks in the City of New York are authorized or required to be closed.

(g) “DSS” has the meaning set forth in the introductory paragraph.

(h) “Earnings Report” means, (i) during any period when iCAD is obligated to
file reports under the provisions of the Securities Exchange Act of 1934, the
Form 10-Q filed by iCAD following each of the first three Quarters of its fiscal
year and the Form 10-K filed by iCAD following the fourth Quarter of its fiscal
year, as long as such reports are timely filed (and if such reports are not
timely filed, then the “Earnings Report” means the press release, Form 8-K or
other form of public communication issued by iCAD whereby it reports revenue for
such period) and (ii) during any period when iCAD is not obligated to file
reports under the provisions of the Securities Exchange Act of 1934, the
internal financial statements prepared by iCAD showing Revenues for such
Quarter.

(i) “Excluded Taxes” means, with respect to any Purchaser, (a) income or
franchise Taxes imposed on (or measured by) such recipient’s net income by the
United States of America, or by the jurisdiction (or any political subdivision
thereof) under the laws of which such recipient is organized or incorporated or
in which its principal office is located or (b) any branch profits Taxes imposed
by the United States of America.

(j) “Facility Agreement” means that Facility Agreement, dated as of the date
hereof, between Private Design Fund II, DSS, Deerfield Special Situations Fund
International, Limited, Deerfield Private Design Fund International II, L.P. and
iCAD, as amended, supplemented and replaced from time to time.

 

2

--------------------------------------------------------------------------------

(k) “GAAP” means generally accepted accounting principles in the United States
of America as set forth in the Financial Accounting Standards Board Accounting
Standards Codification as of the date hereof (for purposes of clarification,
changes in accounting standards after the date hereof shall not be considered
GAAP for purposes of this Agreement unless the Parties mutually agree otherwise
in their sole discretion) and as consistently applied with the most recent
audited financial statements of iCAD as of the date hereof.

(l) “Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any municipal, local, city or county government,
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.

(m) “Horizon” has the meaning set forth in the introductory paragraph.

(n) “iCAD” has the meaning set forth in the introductory paragraph.

(o) “Indebtedness” means the following, whether direct or contingent:

(i) all indebtedness for borrowed money;

(ii) the deferred purchase price of assets or services which in accordance with
GAAP would be shown to be a liability (or on the liability side of a balance
sheet);

(iii) all guaranty obligations;

(iv) the maximum amount of all letters of credit issued or acceptance facilities
established for the account of iCAD and/or its subsidiaries and, without
duplication, all drafts drawn thereunder (other than letters of credit
supporting other indebtedness of iCAD and/or its subsidiaries and which are
otherwise permitted hereunder);

(v) all capitalized lease obligations;

(vi) all indebtedness of another Person secured by any Lien on any property of
iCAD and/or its subsidiaries, whether or not such indebtedness has been assumed
or is recourse;

(vii) all obligations under take-or-pay or similar arrangements or under any
interest rate swaps, caps, floors, collars and other interest hedge or
protection agreements, treasury locks, equity forward contracts, currency
agreements or commodity purchase or option agreements or other interest or
exchange rate or commodity price hedging agreements and any other derivative
instruments, in each case, whether iCAD and/or its subsidiaries is liable
contingently or otherwise, as obligor, guarantor or otherwise, or in respect of
which obligations iCAD and/or its subsidiaries otherwise assures a creditor
against loss;

(viii) indebtedness created or arising under any conditional sale or title
retention agreement; and

 

3

--------------------------------------------------------------------------------

(ix) obligations of iCAD and/or its subsidiaries with respect to withdrawal
liability to or on behalf of any “multi employer plan” as defined in
Section 4001(a) of ERISA.

(p) “Indemnified Taxes” means all Taxes including Other Taxes, other than
Excluded Taxes.

(q) “Intellectual Property” means (i) all patents, patent applications, patent
disclosures and inventions (whether patentable or unpatentable and whether or
not reduced to practice), (ii) all trademarks, service marks, trade dress, trade
names, slogans, logos, and corporate names and Internet domain names, together
with all of the goodwill associated with each of the foregoing,
(iii) copyrights, copyrightable works, and licenses, (iv) registrations and
applications for registration for any of the foregoing, (v) computer software
(including but not limited to source code and object code), data, databases, and
documentation thereof, (vi) trade secrets and other confidential information,
(vii) other intellectual property, and (viii) copies and tangible embodiments of
the foregoing (in whatever form and medium).

(r) “Legal Requirement” means any statute, law, treaty, rule, regulation,
guidance, approval, order, decree, writ, injunction or determination of any
Governmental Authority, court or arbitrator of competent jurisdiction; and, with
respect to any Person, includes all such Legal Requirements applicable or
binding upon such Person, its business or the ownership or use of any of its
assets.

(s) “Lien” means any lien, pledge, preferential arrangement, mortgage, security
interest, deed of trust, charge, assignment, hypothecation, title retention,
privilege or other encumbrance on or with respect to property or interest in
property having the practical effect of constituting a security interest, in
each case with respect to the payment of any obligation with, or from the
proceeds of, any asset or revenue of any kind.

(t) “Other Taxes” means any and all present or future stamp or documentary taxes
or any other excise or property taxes, duties, other charges or similar levies,
and all liabilities with respect thereto, together with any interest, fees,
additions to tax or penalties applicable thereto (including by reason of any
delay in payment) arising from any payment made hereunder or from the execution,
delivery, registration or enforcement of, or otherwise with respect to, this
Agreement.

(u) “Party” means either iCAD or the Purchasers, and “Parties” means both iCAD
and the Purchasers.

(v) “Permitted Liens” means: (i) Liens existing on the date hereof and set forth
on Exhibit A attached hereto; (ii) Liens in favor of the lenders under the
Facility Agreement; (iii) statutory Liens created by operation of applicable
law; (iv) Liens arising in the ordinary course of business and securing
obligations that are not overdue or are being contested in good faith by
appropriate proceedings; (v) Liens for taxes not yet due and payable or that are
being contested in good faith by appropriate proceedings; and (vi) Liens in
favor of financial institutions arising in connection with accounts maintained
in the ordinary course of business held at such institutions to secure standard
fees for services charged by, but not financing made available by, such
institutions.

 

4

--------------------------------------------------------------------------------

(w) “Person” means any natural person, corporation, limited liability company,
partnership, association, trust, organization, Governmental Authority or other
legal entity.

(x) “Private Design Fund II” has the meaning set forth in the introductory
paragraph.

(y) “Purchase Price” has the meaning set forth in Section 3.

(z) “Purchasers” has the meaning set forth in the introductory paragraph.

(aa) “Quarter” means a calendar quarter.

(bb) “Revenue Participation Payment” has the meaning set forth in Section 2(a).

(cc) “Revenue Participation Term” has the meaning set forth in Section 2(b).

(dd) “Revenues” mean total revenues of iCAD on a consolidated basis determined
in accordance with GAAP.

(ee) “Taxes” means all present or future taxes, levies, imposts, stamp or other
duties, fees, assessments, deductions, withholdings, all other governmental
charges, and all liabilities with respect thereto, together with any interest,
fees, additions to tax or penalties applicable thereto (including by reason of
any delay in payment).

(ff) “Termination Value” shall mean as of any date of determination, the amount
of Revenue Participation Payments that would be received from such date through
the end of the calendar year 2017 if the average monthly Revenues during such
period were equal to the product of (i) the average monthly Revenues during the
six-month period immediately preceding such date of determination and (ii) the
sum of 1 + (.02 x the number of months then remaining in the Revenue
Participation Term).

(gg) “Trigger Event” shall mean the occurrence of any one or more of the
following events:

(i) iCAD shall fail to pay when due any Revenue Participation Payment and such
failure shall continue for a period of five (5) Business Days after receipt of
written notice from the Purchasers;

(ii) iCAD is no longer obligated to file reports under the provisions of the
Securities Exchange Act of 1934; or

(iii) (A) iCAD or any of its subsidiaries shall generally be unable to pay its
debts as such debts become due, or shall admit in writing its inability to pay
its debts as they come due or shall make a general assignment for the benefit of
creditors; (B) iCAD or any of its subsidiaries shall declare a moratorium on the
payment of its debts; (C) the commencement by iCAD or any of its subsidiaries of
proceedings to be adjudicated bankrupt or insolvent, or the consent by it to the
commencement of bankruptcy or insolvency proceedings against it, or the filing
by it of a petition or answer or consent seeking reorganization, intervention or
other similar relief under any applicable law, or

 

5

--------------------------------------------------------------------------------

the consent by it to the filing of any such petition or to the appointment of an
intervenor, receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of all or substantially all of its assets; (D) the
commencement against iCAD or any of its subsidiaries of a proceeding in any
court of competent jurisdiction under any bankruptcy or other applicable law (as
now or hereafter in effect) seeking its liquidation, winding up, dissolution,
reorganization, arrangement, adjustment, or the appointment of an intervenor,
receiver, liquidator, assignee, trustee, sequestrator (or other similar
official), and any such proceeding shall continue undismissed, or any order,
judgment or decree approving or ordering any of the foregoing shall continue
unstayed or otherwise in effect, for a period of ninety (90) days; (E) the
making by iCAD or any of its subsidiaries of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to pay its debt
generally as they become due; or (F) any other event shall have occurred which
under any applicable law would have an effect analogous to any of those events
listed above in this subsection.

2. Revenue Purchase.

(a) Revenue Participation. In consideration of the payment of the Purchase Price
by the Purchasers, iCAD shall pay to the Purchasers on a Quarterly basis a
revenue participation payment (each a “Revenue Participation Payment”) as
follows:

(i) for the first three calendar quarters of each year during the Revenue
Participation Term, iCAD shall pay to the Purchasers an amount equal to the
greater of (x) the Applicable Percentage of Revenues for each such Quarter and
(y) the Applicable Quarterly Minimum for each such Quarter; and

(ii) for the final calendar quarter of each year during the Revenue
Participation Term, iCAD shall pay an amount equal to the difference between
(A) the greater of (i) the Applicable Percentage of Revenues for the entire
applicable calendar year and (ii) the Applicable Annual Minimum minus (B) the
aggregate Revenue Participation Payments made by iCAD during the first three
calendar Quarters of such calendar year.

For purposes of clarification, the various tiers of the Applicable Percentage
shall continue to apply to all Revenues for a Quarter unless and until aggregate
Revenues for the applicable calendar year reach the next threshold.

(b) Revenue Participation Term. iCAD shall make Revenue Participation Payments
for each Quarter of each of the calendar years 2012, 2013, 2014, 2015 and 2016;
provided, however, in the event that iCAD elects to extend the maturity of the
indebtedness due under the Facility Agreement for more than the original 5 year
maturity term or any obligations remain due and payable under the Facility
Agreement for any reason for more than 5 Business Days beyond the original 5
year maturity term, then iCAD shall continue to make Revenue Participation
Payments for each Quarter of 2017 (such period when Revenue Participation
payments are due, the “Revenue Participation Term”).

 

6

--------------------------------------------------------------------------------

(c) Sale of Assets. In the event that iCAD sells any assets in excess of
$500,000 in the aggregate during the Revenue Participation Term the proceeds of
which are not recorded as “Revenues” in accordance with GAAP, then in each such
case iCAD shall pay the Purchasers an aggregate amount equal to the Asset Sale
Amount, payable 37.28% to Private Design Fund II, 7.8% to DSS and 54.92% to
Horizon, in each case rounded to the nearest cent ($0.01).

(d) Payment of the Revenue Participation. No later than two Business Days
following the date iCAD files its Earnings Report (if a public filing) or has
prepared its Earnings Report (if not a public filing) for each Quarter (but in
no event later than sixty days following the last day of each of the first three
Quarters and one hundred twenty days following the fourth Quarter of each
calendar year), iCAD shall pay to the Purchasers the Revenue Participation
Payment for such Quarter. If the Earnings Report is not a public filing, on the
same day it makes a Revenue Participation Payment pursuant to this Section 2(d),
iCAD shall deliver to the Purchasers copies of the internal financial statements
showing all Revenues during such Quarter and iCAD’s computation of the Revenue
Participation Payment for such Quarter. All Revenue Participation Payments shall
be made by wire transfer of immediately available funds to the account
previously designated in writing to iCAD by the Purchasers for each of Horizon,
Private Design Fund II and DSS, or such new or additional account(s) as the
Purchasers shall designate in writing to iCAD at least five Business Days prior
to the date such Revenue Participation Payment shall be due. Unless otherwise
agreed by all Parties, each Revenue Participation Payment shall be paid 37.28%
to Private Design Fund II, 7.8% to DSS and 54.92% to Horizon, in each case
rounded to the nearest cent ($0.01).

(e) Revenue Participation Payments Following Termination. The termination of
this Agreement, including termination due to the expiration of the Revenue
Participation Term, shall not terminate the obligation of iCAD to pay any
Revenue Participation Payment accrued prior to termination. Upon termination of
this Agreement, the Purchasers shall have the right to retain any Revenue
Participation Payments already paid by iCAD under this Agreement.

(f) Delinquent Revenue Participation Payments. Any Revenue Participation Payment
not paid when due shall bear interest at a rate equal to the lower of (i) the
highest rate permitted by applicable law, and (ii) one and one-half percent
(1.5%) per month, compounded monthly.

(g) Audit Right. Upon not less than fourteen days’ written notice, the
Purchasers shall have the right to audit the books and records of iCAD relating
to sales or other transactions included in Revenues for the purposes of
determining the correctness of iCAD’s computation and payment of the Revenue
Participation Payment. Such audit may not be conducted more than once in any
calendar year and shall be conducted during normal business hours by a national
public accounting firm selected by the Purchasers at its cost and reasonably
acceptable to iCAD, provided that such accounting firm enters into a reasonable
confidentiality agreement prior to commencing any such audit. iCAD shall provide
such accounting firm with access to all pertinent books and records and shall
reasonably cooperate with such accounting firm’s efforts to conduct such audits.
If there has been an underpayment of the aggregate Revenue Participation
Payments due for the period being audited of more than $10,000, iCAD shall
reimburse the Purchasers for the reasonable out-of-pocket costs (including
accountants’ fees) incurred by the Purchasers in connection with such audit up
to a maximum of $25,000. In the event the Purchasers claim that any such audit
reveals an underpayment of the Revenue Participation Payments, the Purchasers
will make the audit papers for the relevant period available to iCAD.

 

7

--------------------------------------------------------------------------------

(h) Taxes.

(i) Any and all Revenue Participation Payments shall be made free and clear of
and without deduction for any and all present or future Indemnified Taxes except
as required by applicable law. If iCAD shall be required by law to deduct any
Indemnified Taxes from or in respect of any Revenue Participation Payments,
(i) the sum payable shall be increased by as much as shall be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2(h)) the Purchasers shall receive an
amount equal to the sum they would have received had no such deductions been
made, (ii) iCAD shall make such deductions, and (iii) iCAD shall pay the full
amount deducted to the relevant taxing or other authority in accordance with
applicable law. Within thirty (30) days after the date of any payment of such
taxes, iCAD shall furnish to the applicable Purchaser the original or a
certified copy of a receipt evidencing payment thereof or other evidence of such
payment reasonably satisfactory to such Purchaser.

(ii) If iCAD is required by applicable law to deduct any Excluded Taxes from or
in respect of any Revenue Participation Payments, the Parties shall cooperate to
provide the Internal Revenue Service or any relevant taxing or other authority
with any forms and/or other documentation necessary to mitigate or eliminate the
applicable withholding required to be made.

3. Purchase Price. As consideration for iCAD’s payment of the Revenue
Participation Payments, the Purchasers shall pay to iCAD a one-time purchase
price of $4,107,900 (the “Purchase Price”), which amount shall be paid in
immediately available funds on or before January 9, 2012 to an account specified
by iCAD.

4. Covenants of iCAD.

(a) Revenue Records. iCAD shall keep complete, true and accurate books and
records of all Revenues. iCAD shall keep such books and records of Revenues, or
cause them to be retained and available for purposes of this Agreement, for at
least three (3) years following the Quarter to which they pertain.

(b) Maintenance of Revenues. iCAD shall not take any action, or fail to take any
action or enforce any right, that is intended to, or would have the effect of,
shifting Revenues from a period included in the Revenue Participation Term to a
period after the Revenue Participation Term has expired.

(c) Change in Business Model. In the event that iCAD materially changes its
ordinary course method of operating its business such that its methods of
marketing, selling, distributing and/or licensing its products and/or services
is materially different from those methods utilized as of the date hereof, then
the Purchasers shall have the right to request by providing written notice that
iCAD negotiate in good faith to amend the Applicable Percentages to adjust for
the change in operations; provided that iCAD or any of its subsidiaries entering
into

 

8

--------------------------------------------------------------------------------

agreements with customers pursuant to which customers pay a fee, whether
monthly, quarterly, annually or for such other period, for the ongoing right to
use iCAD’s or any of its subsidiaries’ products shall not be a material change
in the method of operating its business. In such event, the parties agree to
negotiate such adjustment in good faith for a period of thirty days. In the
event that Purchasers and iCAD cannot agree on any adjustment to the Applicable
Percentages during such period, then Purchasers shall have the right to commence
a binding arbitration proceeding and each of the Parties shall prepare a written
submission of their proposal for adjusting the Applicable Percentages and shall
submit such proposal to binding arbitration under the following terms:

(i) Any arbitration commenced hereunder by Purchasers shall be administered by
the International Institute for Conflict Prevention (CPR) in accordance with its
Resolution Rules for Non-Administered Arbitration by a sole arbitrator,
provided, however, that unless further limited by the arbitrator, pre-hearing
discovery shall be limited to written discovery and shall not include
pre-hearing deposition discovery.

(ii) The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C.
§§ 1 et seq., and judgment upon the award rendered by the arbitrator may be
entered by any court having jurisdiction thereof. The laws of the State of New
York shall govern any claim asserted in arbitration pursuant to this Section.
The place of the arbitration shall be New York, New York.

(iii) The arbitrator shall only have the power to pick between the two written
proposals for adjusting the Applicable Percentages or to leave the Agreement in
place without adjustment or amendment.

(iv) The parties shall bear equally the fees and expenses of the arbitrator and
other expenses necessary to conduct the arbitration. Each party shall bear its
own costs and attorneys’ fees.

(d) Termination Payment. Upon and at any time after the occurrence of any
Trigger Event, (x) an amount equal to the Termination Value (together with any
applicable interest accrued thereon) shall automatically become immediately due
and payable without presentment, demand, protest, notice of intent to accelerate
or other notice or legal process of any kind, all of which are hereby knowingly
and expressly waived by iCAD, and (y) the Purchasers may exercise any and all
other rights and remedies available to it under this Agreement and applicable
law.

5. Representations and Warranties of iCAD. iCAD represents and warrants to the
Purchasers, as of the date hereof, that:

(a) Organization. iCAD is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware. iCAD has all requisite
corporate power and authority to own, lease and operate its properties and to
carry on its business as is now being conducted.

 

9

--------------------------------------------------------------------------------

(b) Authority; Execution; Enforceability. (i) iCAD has all requisite corporate
power and authority to execute, deliver and perform its obligations under this
Agreement, (ii) no consent of any party is required for iCAD to execute, deliver
and perform its obligations under this Agreement, and (iii) the execution and
delivery of this Agreement and the performance of all of its obligations
hereunder have been duly authorized by iCAD. This Agreement has been duly
executed and delivered by iCAD and constitutes the legal, valid and binding
obligation of iCAD, enforceable against iCAD in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or other laws of general application relating to or
affecting creditors’ rights generally.

(c) No Violation. The execution, delivery and performance of this Agreement by
iCAD, and iCAD’s compliance with the terms and conditions hereof, is not
prohibited or limited by, and do not and will not conflict with or result in the
breach of or a default under, any provision of the certificate of incorporation,
bylaws or other formation documents of iCAD, any contract, agreement or
instrument binding on or affecting iCAD, or any Legal Requirement applicable to
iCAD.

(d) Liens. No Lien exists on the assets of iCAD or any of its subsidiaries,
except for Permitted Liens.

(e) Indebtedness. No Indebtedness of the Borrower exists other than Permitted
Indebtedness.

(f) Governmental Authorizations. Each of iCAD and each of its subsidiaries
holds, and is operating in compliance in all material respects with, all
franchises, grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any Governmental Authority (collectively, “Necessary
Documents”) required for the conduct of its business and all Necessary Documents
are valid and in full force and effect; and neither iCAD nor any of its
subsidiaries has received written notice of any revocation or modification of
any of the Necessary Documents; and each of iCAD and each of its subsidiaries is
in compliance in all material respects with all applicable federal, state, local
and foreign laws, regulations, orders and decrees applicable to the conduct of
its business.

(g) Intellectual Property. Each of iCAD and its subsidiaries owns or has the
right to use pursuant to a valid and enforceable written license, implied
license or other legally enforceable right, all of the Intellectual Property
that is necessary for the conduct of its business as currently conducted (the
“IP”). To the knowledge of iCAD, no person has infringed, or misappropriated any
IP and all of the IP that is registered with or issued by a Governmental
Authority is valid and enforceable. There is no outstanding, pending, or, to the
knowledge of the iCAD, threatened action, suit, other proceeding or claim by any
third person challenging or contesting the validity, scope, use, ownership,
enforceability, or other rights of iCAD or its subsidiaries in or to any IP and
iCAD and its subsidiaries have not received any written notice regarding, any
such action, suit, or other proceeding. To iCAD’s knowledge, neither iCAD nor
any of its subsidiaries has infringed or misappropriated any material
Intellectual Property rights of others.

 

10

--------------------------------------------------------------------------------

(h) Third Party Rights. Except in the ordinary course of business, neither iCAD
nor any subsidiary has granted rights to develop, manufacture, produce,
assemble, distribute, license, market or sell its products to any other Person
and is not bound by any agreement that affects the exclusive right of iCAD or
its subsidiaries to develop, manufacture, produce, assemble, distribute,
license, market or sell its products.

(i) Financial Statements. The consolidated financial statements of iCAD annexed
hereto as Schedule 1 together with the related notes fairly present the
financial condition of iCAD and its consolidated subsidiaries as of the dates
indicated and the results of operations and changes in cash flows for the
periods therein specified in conformity with GAAP consistently applied
throughout the periods involved; and, except as disclosed in such Schedule,
there are no material off-balance sheet arrangements or any other relationships
with unconsolidated entities or other persons, that may have a material current
or, to the iCAD’s knowledge, material future effect on the iCAD’s financial
condition, results of operations, liquidity, capital expenditures, capital
resources or significant components of revenue or expenses.

(j) Internal Controls. iCAD maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are executed
in accordance with management’s general or specific authorization;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets;
(iii) access to assets is permitted only in accordance with management’s general
or specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.

(k) Financial Condition. iCAD and each of its subsidiaries (i) is capable of
paying its debts as they fall due, is not unable and has not admitted its
inability to pay debts as they fall due, (ii) is not bankrupt or insolvent and
(iii) has not taken action, and no such action has been taken by a third party,
for their winding up, dissolution, or liquidation or similar executory or
judicial proceeding or for the appointment of a liquidator, custodian, receiver,
trustee, administrator or other similar officer or any or all of its assets or
revenues.

6. Termination. This Agreement shall terminate upon expiration of the Revenue
Participation Term. Section 2(e) and Section 7 shall survive the termination of
this Agreement.

7. General Provisions.

(a) Independent Contracting Parties. The Parties are not joint venturers,
partners, principal and agent, master and servant, or employer and employee, and
have no relationship other than as independent contracting parties. Neither
Party shall be a legal representative of the other or have the power to bind or
obligate the other in any manner.

(b) Amendment and Modification. This Agreement may be amended, modified or
supplemented only by an instrument in writing signed by the Party against whom
such amendment, modification or supplement is sought to be enforced.

(c) Waiver of Compliance; Consents. The rights and remedies of the Parties are
cumulative and not alternative and may be exercised concurrently or separately.
No failure or

 

11

--------------------------------------------------------------------------------

delay by any Party in exercising any right, power or privilege under this
Agreement shall operate as a waiver of such right, power or privilege, and no
single or partial exercise of any such right, power or privilege shall preclude
any other or further exercise of such right, power or privilege or the exercise
of any other right, power or privilege. To the maximum extent permitted by
applicable law, (i) no waiver that may be given by a Party shall be applicable
except in the specific instance for which it is given, and (ii) no notice to or
demand on one Party shall be deemed to be a waiver of any obligation of such
Party or of the right of the Party giving such notice or demand to take further
action without notice or demand as provided in this Agreement. Any consent
required or permitted by this Agreement is binding only if in writing.

(d) Notices. All notices, consents, waivers, acceptances, rejections and other
communications hereunder shall be in writing and shall be (i) delivered by hand,
(ii) sent by facsimile transmission, or (iii) sent certified mail or by a
nationally recognized overnight delivery service, charges prepaid, to the
address set forth below (or such other address for a Party as shall be specified
by like notice):

 

If to Private Design Fund II or

DSS, to:

  Deerfield Management   780 Third Avenue, 37th Floor   New York, New York 10017
  Attention: Structured Products   Facsimile: (646) 536-5662

Copy to:

  Robinson, Bradshaw & Hinson, P.A.   101 North Tryon Street, Suite 1900  
Charlotte, North Carolina 28246   Attention: Mark O. Henry   Facsimile: (704)
339-3428

If to Horizon, to:

  Horizon Santé TTNP SARL   7A Rue Robert Stümper  

L – 2557 Luxembourg

  Attention: Alexis Cazé   Facsimile: (+352) 48 18 28 3461

If to iCAD, to:

  iCAD, Inc.   98 Spit Brook Road, Suite 100   Nashua, NH 03062   Attention:
Chief Executive Officer   Facsimile: (603) 886-3798

Copy to:

  Blank Rome LLP   The Chrysler Building, 405 Lexington Avenue, 24th Floor   New
York, NY 10017   Attention: Robert Mittman   Facsimile: (212) 885-5001

 

12

--------------------------------------------------------------------------------

Each such notice or other communication shall be deemed to have been duly given
and to be effective (x) if delivered by hand, immediately upon delivery if
delivered on a Business Day during normal business hours and, if otherwise, on
the next Business Day; (y) if sent by facsimile transmission, immediately upon
confirmation that such transmission has been successfully transmitted on a
Business Day before or during normal business hours and, if otherwise, on the
Business Day following such confirmation, or (z) if sent by certified mail or a
nationally recognized overnight delivery service, on the day of delivery if
delivered during normal business hours on a Business Day and, if otherwise, on
the first Business Day after delivery. Notices and other communications sent via
facsimile must be followed by notice delivered by hand or by certified mail or
overnight delivery service as set forth herein within five Business Days.

(e) Publicity. No Party shall issue any press release or any other form of
public disclosure regarding the existence of this Agreement or the terms hereof,
or use the name of another Party hereto in any press release or other public
disclosure, without the prior written consent of the other Party, except (i) for
a press release announcing the execution of this Agreement, which will be
mutually approved by the Parties, (ii) for those disclosures and notifications
contemplated by this Agreement or containing information previously approved for
disclosure by the other Party, (iii) as required by any Legal Requirement and
solely to the extent necessary to satisfy such Legal Requirement and (iv) as
required by the rules of any securities exchange on which any securities of a
Party are traded.

(f) No Assignment. This Agreement shall be binding upon and inure to the benefit
of the Parties and their respective successors and permitted assigns. Neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned or delegated by iCAD without the Purchasers’ prior written consent.

(g) Governing Law. The execution, interpretation and performance of this
Agreement, and any disputes with respect to the transactions contemplated by
this Agreement, shall be governed by the internal laws and judicial decisions of
the State of New York applicable to contracts made and to be performed entirely
within the State of New York.

(h) Severability. If any provision contained in this Agreement shall for any
reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement, and this Agreement shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein, unless the
invalidity of any such provision substantially deprives either Party of the
practical benefits intended to be conferred by this Agreement. Notwithstanding
the foregoing, any provision of this Agreement held invalid, illegal or
unenforceable only in part or degree shall remain in full force and effect to
the extent not held invalid or unenforceable, and the determination that any
provision of this Agreement is invalid, illegal or unenforceable as applied to
particular circumstances shall not affect the application of such provision to
circumstances other than those as to which it is held invalid, illegal or
unenforceable.

(i) Construction. Each Party acknowledges that it and its attorneys have been
given an equal opportunity to negotiate the terms and conditions of this
Agreement and that any rule of construction to the effect that ambiguities are
to be resolved against the drafting party or any similar rule operating against
the drafter of an agreement shall not be applicable to the construction or
interpretation of this Agreement.

 

13

--------------------------------------------------------------------------------

(j) Counterparts. This Agreement may be executed in multiple counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This Agreement may be executed on signature pages
exchanged by facsimile, in which event each Party shall promptly deliver to the
other such number of original executed copies as the other Party may reasonably
request.

(k) Entire Agreement. This Agreement constitutes the entire agreement and
understanding of the Parties hereto in respect of the subject matter hereof.
This Agreement supersedes all prior agreements, understandings, promises,
representations and statements between the Parties and their representatives
with respect to the revenue participation contemplated by this Agreement.

[Signature Page Follows]

 

14

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have caused this Revenue Purchase Agreement to
be executed by their duly authorized representatives as of the date first set
forth above.

 

DEERFIELD PRIVATE DESIGN FUND II, L.P. By:   Deerfield Capital, L.P., General
Partner By:   J. E. Flynn Capital LLC, General Partner By:   /s/ David J. Clark
Name:   David Clark Title:   Authorized Signatory
DEERFIELD SPECIAL SITUATIONS FUND, L.P. By:   Deerfield Capital, L.P., General
Partner By:   J.E. Flynn Capital LLC, General Partner By:   /s/ David J. Clark
Name:   David J. Clark Title:   Authorized Signatory HORIZON SANTÉ TTNP SARL By:
  /s/ Alexis Caze          Name:   Alexis Cazé Title:   Manager By:   /s/
Florence Gerardy          Name:   Florence Gerardy Title:   Manager ICAD, INC.
By:   /s/ Ken Ferry          Name:   Ken Ferry Title:   President & CEO

--------------------------------------------------------------------------------

Schedule 1

Financial Statements

See Attached.