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Exhibit 10.22

Execution Copy

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NOTE AND WARRANT PURCHASE AGREEMENT

Dated as of February 22, 2005

between

FISCHER IMAGING CORPORATION
and
COMVEST INVESTMENT PARTNERS II LLC

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Execution Copy

TABLE OF CONTENTS

 
   
  Page

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ARTICLE 1   DEFINITIONS   1
ARTICLE 2
 
AGREEMENT TO PURCHASE; CLOSING
 
6
2.1
 
Purchase of Initial Note
 
6
2.2
 
Closing
 
6
2.3
 
Additional Notes
 
6
2.4
 
No Reborrowing
 
7
ARTICLE 3
 
REPRESENTATIONS AND WARRANTIES OF COMVEST
 
8
3.1
 
Organization
 
8
3.2
 
Accredited Investor
 
8
3.3
 
No Public Distribution
 
8
3.4
 
Subsequent Offers and Sales
 
8
3.5
 
Accuracy of ComVest's Representations and Warranties
 
8
3.6
 
Information
 
8
3.7
 
Capacity and Authority
 
8
3.8
 
Due Execution
 
8
3.9
 
Brokers
 
9
3.10
 
No General Solicitation
 
9
39.11
 
Domicile
 
9
ARTICLE 4
 
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
 
9
4.1
 
Organization
 
9
4.2
 
Capitalization
 
9
4.3
 
Issuance of the Securities and Warrant Shares
 
10
4.4
 
Legality
 
10
4.5
 
Due Execution
 
10
4.6
 
Non-Contravention
 
10
4.7
 
Approvals
 
11
4.8
 
SEC Filings; Financial Statements
 
11
4.9
 
Absence of Certain Changes
 
13
4.10
 
Insurance
 
15
4.11
 
Compliance with Law
 
15

4.12
 
Absence of Litigation
 
16
4.13
 
Private Offering; Trust Indenture Act
 
16
4.14
 
Brokerage Fees
 
16
4.15
 
Intellectual Property
 
16
4.16
 
Labor Relations
 
18
4.17
 
Benefit Plans and Agreements
 
18
4.18
 
Environmental, Health and Safety Matters
 
19
4.19
 
FDA and Regulatory Matters; Clinical Trials
 
19
4.20
 
List of Material Contracts and Other Data
 
20
4.21
 
Tax Matters
 
21
4.22
 
Real Property; Title to Assets
 
22
4.23
 
Rights Agreement Expired
 
22
4.24
 
Company Products
 
23
4.25
 
Certain Business Practices
 
23
4.26
 
Interested Party Transactions
 
23
ARTICLE 5
 
COVENANTS AND ACKNOWLEDGMENTS
 
23
5.1
 
Transfer Restrictions
 
23
5.2
 
Restrictive Legend
 
24
5.3
 
Disclosure of Transaction
 
24
5.4
 
Lock-Up of Executive Officer and Director Shares
 
25
5.5
 
Sales of Company Securities
 
25
5.6
 
Reporting Status
 
25
5.7
 
Use of Proceeds
 
25
5.8
 
Registration Rights
 
25
5.9
 
Reservation of Common Stock Issuable upon Exercise of Warrants
 
25
5.10
 
Covenant as to Common Stock
 
25
5.11
 
Affirmative Covenants
 
25
5.12
 
Negative Covenants
 
27
5.13
 
Board of Directors
 
28
5.14
 
Removal or Resignation of ComVest Director
 
29
5.15
 
Consulting Arrangement
 
29
ARTICLE 6
 
CLOSING
 
30
6.1
 
Execution and Delivery of Transaction Documents
 
30

6.2
 
Payment of Purchase Price
 
30
6.3
 
Payment of Financing Fee and Commitment Fee; Reimbursement of ComVest Expenses
 
30
6.4
 
Officers' Certificate
 
30
6.5
 
Secretary's Certificate
 
30
6.6
 
Certificate of Incorporation
 
30
6.7
 
Good Standing Certificates
 
30
6.8
 
Pay-Off of Silicon Valley Bank Credit Facility
 
30
6.9
 
Appointment of ComVest Director
 
31
ARTICLE 7
 
INDEMNIFICATION
 
31
7.1
 
Indemnification of ComVest by the Company
 
31
7.2
 
Indemnification of the Company by ComVest
 
31
7.3
 
Third Party Claims
 
31
7.4
 
Non-Exclusive Remedies
 
32
ARTICLE 8
 
EXPENSES
 
32
ARTICLE 9
 
SURVIVAL
 
32
ARTICLE 10
 
MISCELLANEOUS
 
33
10.1
 
Governing Law; Jurisdiction
 
33
10.2
 
Counterparts
 
33
10.3
 
Headings
 
33
10.4
 
Severability
 
33
10.5
 
Parties in Interest; Successors and Assigns
 
33
10.6
 
Remedies
 
33
10.7
 
Amendments
 
33
10.8
 
Merger
 
33
10.9
 
Notices
 
33
10.10
 
Waiver of Jury Trial
 
34

EXHIBITS

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Exhibit A
 
Senior Secured Note
Exhibit B
 
Warrant
Exhibit C
 
Registration Rights Agreement
Exhibit D
 
Security Agreement
Exhibit E
 
Lock-Up Agreement

NOTE AND WARRANT PURCHASE AGREEMENT

        THIS NOTE AND WARRANT PURCHASE AGREEMENT (this "Agreement"), dated as of
the 22nd day of February, 2005, is made by and between Fischer Imaging
Corporation a Delaware corporation (the "Company") and ComVest Investment
Partners II LLC, a Delaware limited liability company ("ComVest").

RECITALS

        WHEREAS, ComVest wishes to purchase, and the Company wishes to sell and
issue to ComVest, upon the terms and subject to the conditions stated in this
Agreement, a senior secured promissory note of the Company in the principal
amount of $5,000,000, in the form attached hereto as Exhibit A (the "Initial
Note"); and

        WHEREAS, upon the terms and subject to the conditions stated in this
Agreement, ComVest will commit to purchase additional senior secured promissory
notes of the Company (i) in the principal amount of $2,000,000 (the "Second
Note") upon the performance of certain conditions and (ii) subject to the
purchase of the Second Note and certain further conditions, up to an aggregate
principal amount of $3,000,000 (the "Additional Notes", and together with the
Initial Note and the Second Note, the "Notes"), each of which shall be in
substantially the form of the Initial Note and shall have the same maturity as
the Initial Note; and

        WHEREAS, in connection with the sale of the Initial Note, the Company
will also issue to ComVest warrants to purchase 2,000,000 shares of the
Company's Common Stock upon the terms and subject to the conditions of this
Agreement in the form attached hereto as Exhibit B (each a "Warrant" and
collectively, the "Warrants"); and

        WHEREAS, in connection with the consummation of the transactions
contemplated by this Agreement, the parties hereto are also entering into, of
even date herewith, a Registration Rights Agreement in the form attached hereto
as Exhibit C (the "Registration Rights Agreement") and a Security Agreement in
the form attached hereto as Exhibit D (the "Security Agreement").

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

AGREEMENTS:

ARTICLE 1
DEFINITIONS

        "Activities to Date" shall have the definition provided in
Section 4.19(b).

        "Additional Note Purchase Price" shall have the definition provided in
Section 2.3.

        "Additional Notes" shall have the definition provided in the second
paragraph of the Recitals.

        "Affiliate" of a specified person shall mean a person who, directly or
indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person.

        "Approvals" shall have the definition provided in Section 4.19(b).

        "Agreement" shall have the definition provided in the introductory
paragraph.

        "Balance Sheet" shall have the definition provided in Section 4.8(b).

        "Board of Directors" shall mean the Board of Directors of the Company.

        "Capital Expenditures" shall mean all expenditures of the Company and
its subsidiaries for tangible assets which are capitalized, and the fair value
of any tangible assets leased by the Company or any of its subsidiaries under
any lease which is or should be capitalized on the Company's consolidated
balance sheet in accordance with GAAP, consistently applied, including all
amounts paid or accrued in connection with the purchase (whether on a cash or
deferred payment bases) or lease (including capitalized lease obligations) of
any machinery, equipment, tooling, real property, improvements to real property
(including leasehold improvements) or any other tangible asset of the Borrower
or any of its subsidiaries which is required, in accordance with GAAP,
consistently applied, to be treated as a fixed asset on the consolidated balance
sheet of the Company and its subsidiaries.

        "Claim" shall have the definition provided in Section 7.3.

        "Closing" shall have the definition provided in Section 2.2.

        "Closing Date" shall have the definition provided in Section 2.2.

        "CMS" shall have the definition provided in Section 4.19(a).

        "Code" shall mean the Internal Revenue Code of 1986, as amended.

        "Commitment Fee" shall have the definition provided in Article 8.

        "Common Stock" shall have the definition provided in the first paragraph
of the Recitals.

        "Company" shall have the definition provided in the introductory
paragraph.

        "Company Indemnitees" shall have the definition provided in Section 7.2.

        "Company Products" shall have the definition provided in
Section 4.19(b).

        "ComVest" shall have the definition provided in the introductory
paragraph.

        "ComVest Director" shall have the definition provided in Section 5.13.

        "ComVest Expenses" shall have the definition provided in Article 8.

        "ComVest Indemnitees" shall have the definition provided in Section 7.1.

        "ComVest Observer" shall have the definition provided in Section 5.13.

        "Default" shall mean any act, event, condition or circumstance which,
with the giving of notice, the passage of time, or both, would constitute an
Event of Default.

        "Derivative Securities" shall have the definition provided in
Section 4.2.

        "Disclosure Schedules" shall have the definition provided in Article 4.

        "EBITDA" shall have the definition provided in the Initial Note.

        "Employee Plan" shall mean any plan, program, policy, practice,
contract, agreement or other arrangement providing for compensation, severance,
termination pay, deferred compensation, performance awards, stock or
stock-related awards, fringe benefits or other employee benefits or remuneration
of any kind, whether written, unwritten or otherwise, funded or unfunded,
including, without limitation, each "employee benefit plan," within the meaning
of Section 3(3) of ERISA (whether or not ERISA is applicable to such plan), that
is or has been maintained, contributed to, or required to be contributed to, by
the Company, any Affiliate or any predecessor of the Company for the benefit of
any employee of the Company, or with respect to which the Company or any
Affiliate has or may have any liability or obligation.

        "Environmental Law" shall mean any federal, state, local and foreign
statutes, regulations, ordinances and other provisions having the force or
effect of law, all judicial and administrative orders and determinations, all
contractual obligations and all common law concerning public health and safety,
worker health and safety, and pollution or protection of the environment,
including without limitation all those relating to (i) releases or threatened
releases of Hazardous Substances or materials containing Hazardous Substances;
(ii) the manufacture, handling, transport, use, treatment, storage or disposal
of Hazardous Substances or materials containing Hazardous Substances; or
(iii) pollution or protection of the environment, health, safety or natural
resources.

        "Environmental Permit" shall have the definition provided in
Section 4.18.

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

        "Event of Default" shall mean any of the events specified in Section 6
of the Initial Note or the corresponding section of any Additional Note,
provided that any requirement for the giving of notice, the passage of time, or
both, or any other condition, has been satisfied.

        "Exchange Act" shall have the definition provided in Section 3.2.

        "Executive Officers" shall mean Harris Ravine, the Company's President
and Chief Executive Officer, David Kirwan, the Company's Senior Vice President,
Finance, Chief Financial Officer and Secretary, Mary Beth Wallingford, the
Company's Controller, Scott Yarde, the Company's Vice President of Sales and
Marketing, and Steven Moseley, the Company's Vice President of Business
Development.

        "FDA" shall have the definition provided in Section 4.19(a).

        "FDA Certificate" shall have the definition provided in Section 2.3.

        "Financials" shall have the definition provided in Section 4.8(b).

        "Financing Fee" shall have the definition provided in Article 8.

        "Fischer Europe" shall have the definition provided in Section 6.5.

        "Fischer International" shall have the definition provided in
Section 6.5.

        "GAAP" shall have the definition provided in Section 4.8(b).

        "Hazardous Substances" means (i) those substances defined in or
regulated under the following United States federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act; (ii) petroleum and petroleum products, including
crude oil and any fractions thereof; (iii) natural gas, synthetic gas, and any
mixtures thereof; (iv) polychlorinated biphenyls, asbestos and radon; and
(v) any other contaminant, substance, material or waste regulated by any
governmental or regulatory authority pursuant to any Environmental Law.

        "HHS" shall have the definition provided in Section 4.19(a).

        "Indebtedness" shall mean, with respect to any person, (a) all
indebtedness of such person, whether or not contingent, for borrowed money,
(b) all obligations of such person for the deferred purchase price of property
or services, (c) all obligations of such person evidenced by notes, bonds,
debentures or other similar instruments, (d) all indebtedness created or arising
under any conditional sale or other title retention agreement with respect to
property acquired by such person (even though the rights and remedies of the
seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (e) all obligations of such person as
lessee under leases that have been or should be, in accordance with GAAP,
consistently applied, recorded as capital leases, (f) all obligations,
contingent or otherwise, of such person under acceptance, letter of credit or
similar facilities, (g) all obligations of such person to purchase, redeem,
retire, defease or otherwise acquire for value any capital stock of such person
or any warrants, rights or options to acquire such capital stock, valued, in the
case of redeemable preferred stock, at the greater of its voluntary or
involuntary liquidation preference plus accrued and unpaid dividends, (h) all
Indebtedness of others referred to in clauses (a) through (g) above guaranteed
directly or indirectly in any manner by such Person, or in effect guaranteed
directly or indirectly by such person through an agreement (i) to pay or
purchase such Indebtedness or to advance or supply funds for the payment or
purchase of such Indebtedness, (ii) to purchase, sell or lease (as lessee or
lessor) property, or to purchase or sell services, primarily for the purpose of
enabling the debtor to make payment of such Indebtedness or to assure the holder
of such Indebtedness against loss, (iii) to supply funds to or in any other
manner invest in the debtor (including any agreement to pay for property or
services irrespective of whether such property is received or such services are
rendered) or (iv) otherwise to assure a creditor against loss, and (i) all
Indebtedness referred to in clauses (a) through (g) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any lien or other encumbrance on property
(including accounts and contract rights) owned by such person, even though such
person has not assumed or become liable for the payment of such Indebtedness.

        "Indemnified Party" shall have the definition provided in Section 7.3.

        "Indemnifying Party" shall have the definition provided in Section 7.3.

        "Initial Note" shall have the definition provided in the first paragraph
of the Recitals.

        "Initial Note PurIchase Price" shall have the definition provided in
Section 2.1.

        "Intellectual Property" shall mean any: (a) patent, patent application,
trademark (whether registered or unregistered), trademark application, trade
name, fictitious business name, domain name, service mark (whether registered or
unregistered), service mark application, copyright or rights of copyright
(whether registered or unregistered), copyright application, mask work, mask
work application, trade secret, customer list, system, computer software
(including source code and object code), computer program, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset, confidential
information, ideas, and all other intellectual property or proprietary rights of
any kind, including without limitation writings of any kind, printed or graphic
matter (including all preparatory materials such as sketches, drafts, outtakes,
outlines and drawings), and any audiovisual works, artwork, designs,
photographs, video tapes, films, slides, tape recordings, music, and
mechanicals; or (b) right to use or exploit any of the foregoing.

        "knowledge of the Company" shall mean the actual knowledge of any
director of the Company or any Executive Officer and such knowledge that any
such individual would obtain after the exercise of reasonable investigation.

        "Lease Documents" shall have the definition provided in Section 4.22(b).

        "Licensed Intellectual Property" shall have the definition provided in
Section 4.15(b), and excludes any subscription or license to third party
commercial publications, online services, online applications, and software
applications, each of which are generally available for license or subscription
fees of $25,000 or less per year.

        "Losses" shall have the definition provided in Section 7.1.

        "Material Adverse Effect" shall mean, when used in connection with the
Company or any subsidiary of the Company, any event, circumstance, change or
effect that is or is reasonably likely to be materially adverse to the business,
condition (financial or otherwise), assets, liabilities or results of operations
of the Company and its subsidiaries taken as a whole.

        "Material Contracts" shall have the definition provided in Section 4.20.

        "Notes" shall have the definition provided in the second paragraph of
the Recitals.

        "OIG" shall have the definition provided in Section 4.19(a).

        "Option Plans" shall have the definition provided in Section 4.2.

        "Owned Intellectual Property" shall have the definition provided in
Section 4.15(a).

        "PBGC" shall have the definition provided in Section 4.17(a).

        "Permits" shall have the definition provided in Section 4.11.

        "Post-Closing Commitment" shall mean the commitment of ComVest to
purchase the Second Note and the Additional Notes subject to and in accordance
with Section 2.3.

        "Preferred Stock" shall have the definition provided in Section 4.2.

        "Registration Rights Agreement" shall have the definition provided in
the fourth paragraph of the Recitals.

        "Returns" shall have the definition provided in Section 4.21.

        "Rights Agreement" shall mean the Amended and Restated Rights Agreement
between the Company and Computershare Trust Company, Inc. (as Rights Agent),
dated as of November 9, 2001.

        "Rights" shall have the definition under the Rights Agreement.

        "Second Note" shall have the meaning provided in the first paragraph of
the Recitals.

        "Second Note Closing Date" shall have the meaning provided in
Section 2.3(a).

        "Second Note Purchase Price" shall have the meaning provided in
Section 2.3(a).

        "SEC Reports" shall have the definition provided in Section 4.8(a).

        "Securities" shall mean the collective reference to the Notes, the
Warrants and the Warrant Shares.

        "Securities Act" shall have the definition provided in Section 3.3.

        "Security Agreement" shall have the definition provided in the fourth
paragraph of the Recitals.

        "Tax" or collectively, "Taxes", shall mean any and all federal, state,
local and foreign taxes, assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and valued added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements or
arrangements with any other person with respect to such amounts and including
any liability for taxes of a predecessor entity.

        "Transaction Documents" shall mean this Agreement, the Notes, the
Warrants, the Registration Rights Agreement and the Security Agreement
(including collateral assignments of Intellectual Property pursuant thereto).

        "Warrant" and "Warrants" shall have the definition provided in the third
paragraph of the Recitals.

        "Warrant Shares" shall mean the shares of Common Stock issued or
issuable upon exercise of the Warrants.

ARTICLE 2
AGREEMENT TO PURCHASE; CLOSING

        2.1    Purchase of Initial Note.    Upon the terms and subject to the
conditions set forth herein, the Company hereby agrees to issue and sell to
ComVest and ComVest hereby agrees to purchase from the Company, at the Closing,
the Initial Note in the principal amount of $5,000,000. The purchase price (the
"Initial Note Purchase Price") for the Initial Note to be purchased hereunder is
$5,000,000. In connection with the purchase of the Initial Note by ComVest, the
Company shall issue the Warrants to ComVest at the Closing.

        2.2    Closing.    The closing (the "Closing") of the purchase and sale
of the Initial Note and the issuance of the Warrants will take place at the
offices of Davis Graham & Stubbs LLP (or such other place as the parties may
agree) on the date hereof. The date of the Closing is referred to herein as the
"Closing Date." At the Closing, the parties shall take such actions and make
such deliveries as are provided in Article 6 below.

        2.3    Additional Notes.    

        (a)    Second Note.    Within five (5) calendar days after the receipt
by ComVest of a certificate (the "FDA Certificate"), signed on behalf of the
Company by its President and Chief Executive Officer, to the effect that (i) the
FDA has completed its field audit at the Company and the Company has met with
the lead auditor and conducted an exit (or completion) interview to review the
results of the audit and to discuss with the lead auditor the findings,
recommendations, citations and requirements that are likely to be, or, if then
available, that are contained in the FDA's written report (including any
Form 483) to be issued in connection with the audit, (ii) based on the exit
interview, such written report (including any Form 483), if any, and taking into
account discussions with the FDA audit team during the course of the audit, to
the Company's knowledge, neither the FDA audit report, when issued, nor any
interim finding, order or requirement issued by the FDA in connection with the
audit contains or recommends any of the following: (A) any order requiring
closure of one or more of the Company's present or contemplated lines of
business; (B) any order requiring a product recall, which, if required to be
implemented in accordance with its terms, would reasonably be expected to have a
Material Adverse Effect; (C) the imposition of any fines that would reasonably
be expected to have a Material Adverse Effect; or (D) any requirement to change
the practices or business operations of the Company in a manner materially
inconsistent with its present method of operation (except for such matters which
the Company is then contesting in good faith) unless such changes are not
reasonably expected to have a Material Adverse Effect or to have a materially
adverse impact on its presently forecasted results of operations for 2005 and
2006 and (iii) the Company wishes to issue and sell the Second Note, ComVest
shall purchase the Second Note. The purchase price for the Second Note to be
purchased hereunder is $2,000,000 (the "Second Note Purchase Price"), which
shall be payable by wire transfer of immediately available funds to the Company
at the time of closing of such Second Note purchase (the "Second Note Closing
Date"). If the FDA Certificate is not received by ComVest by November 15, 2005,
then the Post-Closing Commitment shall automatically terminate and be of no
further force or effect.

        (b)    Subsequent Notes.    Within twenty (20) calendar days after
written request made by the Company at any time and from time to time subsequent
to the Second Note Closing and before November 15, 2005, ComVest shall purchase
one or more Additional Notes, provided that (a) each such request to purchase an
Additional Note shall be in the minimum amount of $750,000 (or such lesser
amount as shall constitute the remaining unfunded portion of the Post-Closing
Commitment), (b) ComVest shall not be required to purchase Additional Notes in
any amount in excess of (i) $750,000 in the aggregate pursuant to a request made
by the Company between the Second Note Closing Date and May 5, 2005,
(ii) $1,500,000 in the aggregate pursuant to a request made by the Company
between the Second Note Closing Date and August 5, 2005, (iii) $2,500,000 in the
aggregate pursuant to a request made by the Company between the Second Note
Closing Date and November 5, 2005 and (iv) $3,000,000 in the aggregate pursuant
to a request made by the Company between the Second Note Closing Date and
November 15, 2005, and (c) the aggregate principal amount of Additional Notes
required to be purchased hereunder shall in no event and under no circumstances
exceed $3,000,000. The purchase price for each Additional Note shall be an
amount equal to the principal amount of such Additional Note (the "Additional
Note Purchase Price"), which shall be payable by wire transfer of immediately
available funds to the Company at the time of closing of such Additional Note
purchase.

        (c)    Additional Conditions.    ComVest's obligation to purchase the
Second Note or any Additional Note(s) hereunder is expressly subject to and
conditioned upon the following: (A) the Closing shall have occurred and, with
respect to the Additional Notes, the Second Note shall have been issued, (B) no
Default or Event of Default shall exist at the time of the Company's delivery of
the FDA Certificate or request to ComVest under Section 2.3(b), as the case may
be, and at the time of the closing of such Second Note or Additional Note
purchase, (C) in the FDA Certificate or in the request for the purchase of the
Additional Note, as the case may be, the Company shall certify to ComVest that
no Default or Event of Default then exists, (D) immediately prior to ComVest's
payment for such Second Note or Additional Note, the Company shall certify in
writing to ComVest that no Default or Event of Default then exists, and (E) the
Company shall pay to ComVest, at the time of the Second Note purchase and each
Additional Note purchase, an additional financing fee in an amount equal to
1.25% of the subject Second Note Purchase Price or Additional Note Purchase
Price, as the case may be. In no event and under no circumstances shall ComVest
be required to purchase any Additional Notes based upon any request made by the
Company subsequent to November 15, 2005, and in the event that any of the Notes
shall be accelerated or shall be declared to be immediately due and payable in
either case by reason of any Event of Default, then the Post-Closing Commitment
(or the remaining portion thereof not theretofore funded) shall automatically
terminate and be of no further force or effect.

        2.4    No Reborrowing.    Any principal amounts repaid or prepaid under
any of the Notes may not be reborrowed.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMVEST

        ComVest hereby represents and warrants to the Company that the following
representations and warranties are true and correct as of the date of this
Agreement, except for representations and warranties that are made only as of a
specific date, which are true and correct as of such specific date.

        3.1    Organization.    ComVest is a limited liability company duly
organized and validly existing and in good standing under the laws of the State
of Delaware.

        3.2    Accredited Investor.    ComVest is: (i) experienced in making
investments of the kind contemplated by this Agreement; (ii) able, by reason of
its business and financial experience, to protect its own interests in
connection with the transactions contemplated by this Agreement; (iii) able to
afford the entire loss of its investment in the Securities; (iv) an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D of the
Securities Act; and (v) not a broker-dealer as such term is defined in the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (the "Exchange Act").

        3.3    No Public Distribution.    ComVest is acquiring the Securities
for its own account, for investment purposes only, and not with a present view
towards the public sale or distribution thereof, except pursuant to a sale or
sales that are registered under the Securities Act of 1933, as amended, and the
rules and regulations thereunder (the "Securities Act") or exempt from such
registration. ComVest has not been organized for the purpose of investing in
securities of the Company, although such investment is consistent with its
purposes.

        3.4    Subsequent Offers and Sales.    All subsequent offers and sales
of the Securities by ComVest shall be made pursuant to an effective registration
statement under the Securities Act or pursuant to an applicable exemption from
such registration; with any offers and sales which are being made pursuant to an
applicable exemption from registration being accompanied by a customary legal
opinion obtained by ComVest, which legal opinion shall be reasonably
satisfactory to the Company and the Company's legal counsel.

        3.5    Accuracy of ComVest's Representations and Warranties.    ComVest
understands that the Securities are being offered and sold to it in reliance
upon exemptions from the registration requirements of the United States federal
securities laws, and that the Company is relying upon the truth and accuracy of
ComVest's representations and warranties contained in the Transaction Documents
and any ancillary documents thereto, as applicable, and ComVest's compliance
with the Transaction Documents and any ancillary documents thereto, in order to
determine the availability of such exemptions and the eligibility of ComVest to
acquire the Securities in accordance with the terms and provisions of the
Transaction Documents.

        3.6    Information.    ComVest: (i) has been provided with and has
reviewed all requested information concerning the business of the Company,
including, without limitation, the Company's SEC Reports and (ii) has had all
requested access to the management of the Company and has had the opportunity to
ask questions of the management of the Company.

        3.7    Capacity and Authority.    ComVest has the requisite capacity and
authority to execute, deliver and perform each of the Transaction Documents and
any and all ancillary documents thereto and to consummate the transactions
contemplated thereby.

        3.8    Due Execution.    This Agreement and the other Transaction
Documents, and any ancillary documents thereto, have been duly and validly
authorized by ComVest and have been duly executed and delivered by ComVest, and
such agreements, when executed and delivered by each of the other parties
thereto, will each be a valid and binding agreement of ComVest, enforceable
against ComVest in accordance with its terms, except to the extent that
enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general principles of equity.

        3.9    Brokers.    ComVest has not employed, engaged or retained, or
otherwise incurred any liability to, any person as a broker, finder, agent or
other intermediary in connection with the transactions contemplated herein.

        3.10    No General Solicitation.    ComVest has not learned of the
investment in the Securities as a result of any public advertising or general
solicitation.

        3.11    Domicile.    ComVest has its principal place of business in the
jurisdiction set forth below ComVest's name in the notice provisions of this
Agreement.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        The Company hereby represents and warrants to ComVest that the following
representations and warranties are true and correct on and as of the date of
this Agreement, except for representations and warranties that are made only as
of a specific date, which are true and correct as of such specified date. The
disclosure schedules ("Disclosure Schedules") contemplated by this Article 4
have been arranged to correspond to the numbered and lettered sections of this
Article 4 and have been delivered concurrently with the execution of this
Agreement. Any items referenced in a section of such Disclosure Schedules will
be deemed to be included in the Disclosure Schedule sections of any reasonably
related representations.

        4.1    Organization.    The Company is a corporation duly incorporated
and validly existing under the laws of the State of Delaware. Each of the
Company's subsidiaries is a corporation duly incorporated and validly existing
under the laws of its respective jurisdiction of incorporation. Each of the
Company and its subsidiaries is duly qualified as a foreign corporation in all
jurisdictions in which the failure to so qualify would, individually or in the
aggregate, have a Material Adverse Effect. Except as set forth on Schedule 4.1
(which sets forth for each subsidiary of the Company the number of issued and
outstanding shares of each class of capital stock of each such subsidiary of the
Company and the record and beneficial owner of such outstanding shares), all of
the outstanding shares of capital stock of the Company's subsidiaries is owned,
beneficially and of record, either directly or indirectly (through another
subsidiary) by the Company, free and clear of all liens and other encumbrances.
Except as disclosed in Schedule 4.1, the Company does not directly or indirectly
own any equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.
Each of the Company and its subsidiaries has all requisite corporate power and
authority, and holds all licenses, permits and other required authorizations
from governmental authorities, necessary to conduct its business as it is now
being conducted or proposed to be conducted and to own or lease its properties
and assets as they are now owned or held under lease, except to the extent the
failure to hold such licenses, permits and other authorizations would not,
individually or in the aggregate, have a Material Adverse Effect. The
Certificates of Incorporation, By-laws or equivalent organizational documents of
the Company and each of its subsidiaries are in full force and effect and
(i) the Company is not in violation of any of the provisions of its Certificate
of Incorporation or Bylaws and (ii) none of its subsidiaries is in violation of
any of the provisions of its Certificate of Incorporation, By-laws or equivalent
organizational documents except for violations that would not, individually or
in the aggregate, have a Material Adverse Effect.

        4.2    Capitalization.    On the date hereof, the authorized capital of
the Company consists of 25,000,000 shares of Common Stock and 5,000,000 shares
of preferred stock, $.01 par value per share ("Preferred Stock"). On the date
hereof, there are 9,348,484 shares of Common Stock issued and outstanding and no
shares of Preferred Stock issued and outstanding. Except for grants of rights to
purchase shares of the Company's Common Stock under the Company's 1991 Stock
Option Plan, as amended, 1993 Non-Employee Director Stock Option Plan, as
amended, and the Company's 2004 Stock Incentive Plan and under other options
granted to officers, employees, and consultants as compensation (the "Option
Plans"), in each case as set forth on Schedule 4.2 (which sets forth (i) the
total number of options which have been granted by the Company, whether such
options were granted pursuant to the Option Plans or otherwise, (ii) the name of
each person who holds such an option, (iii) the particular plan pursuant to
which such option was granted, (iv) the number of shares of Company Common Stock
subject to such option, (v) the exercise or purchase price of such option,
(vi) the date on which such option was granted, (vii) the applicable vesting
schedule, (viii) the date on which such option expires, and (ix) whether the
exercisability of such option will be accelerated in any way by the transactions
contemplated by this Agreement), there are no options, warrants or convertible
securities of the Company or any other rights to acquire securities of the
Company (collectively, the "Derivative Securities"). All outstanding securities
of the Company are duly authorized, validly issued, fully paid and
nonassessable. No stockholder of the Company is entitled to any preemptive
rights with respect to the purchase of or sale of any securities by the Company.
Except (a) for the Warrant Shares as contemplated herein, (b) for 3,392,000
shares of Common Stock reserved for issuance under the Company's Option Plans,
or (c) as set forth in Schedule 4.2, none of the shares of capital stock of the
Company is reserved for any purpose, and the Company is neither subject to any
obligation (contingent or otherwise), nor has any option, to repurchase or
otherwise acquire or retire any shares of its capital stock. Except as set forth
in Schedule 4.2, all outstanding shares of Common Stock, all outstanding Company
stock options and all outstanding shares of capital stock of each subsidiary of
the Company have been issued and granted in compliance with all applicable
securities laws and other applicable laws, rules and regulations and all
material requirements set forth in applicable contracts, except for such
noncompliance that would not, individually or in the aggregate, have a Material
Adverse Effect.

        4.3    Issuance of the Securities and Warrant Shares.    The Notes and
the Warrants have been duly and validly authorized, issued and delivered, free
and clear of any liens or other encumbrances imposed by or through the Company,
and the Warrant Shares when issued in accordance with the terms of the Warrants,
will be duly authorized, validly issued, fully paid and nonassessable, will be
free and clear of any liens or other encumbrances imposed by or through the
Company, and will not be subject to preemptive rights. There are no preemptive
rights of any stockholder of the Company to acquire the Securities. The Company
has duly reserved from its authorized and unissued shares of Common Stock
2,000,000 shares of Common Stock for issuance upon exercise of the Warrants.

        4.4    Legality.    The Company has the requisite corporate power and
authority to enter into each of the Transaction Documents and to issue and
deliver the Securities.

        4.5    Due Execution.    This Agreement and the other Transaction
Documents, and any ancillary documents thereto, have been duly and validly
authorized by all necessary corporate action on the part of the Company, and no
other corporate proceedings on the part of the Company are necessary to
authorize this Agreement and the other Transaction Documents, and this Agreement
and the other Transaction Documents and any ancillary documents thereto have
been duly executed and delivered by the Company, and such agreements, when
executed and delivered by each of the other parties thereto, will be the legal,
valid and binding agreement and obligation of the Company, enforceable in
accordance with their respective terms, except to the extent that enforcement of
such agreement may be limited by bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or other similar laws now or hereafter in effect
relating to creditors' rights generally, and by general principles of equity.

        4.6    Non-Contravention.    The execution and delivery of the
Transaction Documents, and the performance by the Company of its obligations
thereunder, does not (i) constitute or result in a violation of either the
Certificate of Incorporation or By-laws of the Company, or (ii) constitute a
default under (or an event which with notice or lapse of time or both could
become a default) or give to others any rights of termination, amendment or
cancellation of, any agreement, indenture or instrument to which the Company is
a party unless the same shall have been waived or consented to by the other
party, or result in a violation of any law, rule, regulation, order, judgment or
decree (foreign or domestic and including federal and state securities laws and
regulations) applicable to the Company or by which any property or asset of the
Company is bound or affected other than any of the foregoing matters in this
clause (ii) which would not, individually or in the aggregate, have a Material
Adverse Effect. Except as set forth in Schedule 4.6, neither the filing of the
registration statement required to be filed by the Company pursuant to the
Registration Rights Agreement nor the offering or sale of the Notes, the
Warrants and the Warrant Shares as contemplated by this Agreement gives rise to
any rights, other than those which have been waived or satisfied on or prior to
the date hereof, for or relating to the registration of any shares of the Common
Stock.

        4.7    Approvals.    Other than the filing of a registration statement
with the SEC as contemplated by the Registration Rights Agreement, and the
receipt by the Company of approval from the SEC for such registration statement
to be declared effective, no authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, stock
exchange or market is required to be obtained by the Company for the entry into
or the performance of the Transaction Documents.

        4.8    SEC Filings; Financial Statements.    

        (a)   Except as set forth on Schedule 4.8(a), the Company has filed, and
as of the Closing will have filed, all registration statements, prospectuses,
reports, schedules, forms, statements and other documents (including exhibits
and all other information incorporated by reference) required to be filed by it
with the SEC since December 31, 2003, and the Company has made the same
available to ComVest in the form filed with the SEC. All such registration
statements, prospectuses, reports, schedules, forms, statements and other
documents filed since December 31, 2003 (including those that the Company may
file subsequent to the date of this Agreement), as amended, are referred to
herein as the "SEC Reports." As of their respective dates, the SEC Reports
(i) were prepared in accordance and complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such SEC Reports,
and (ii) did not at the time they were filed contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except to the extent
corrected prior to the date of this Agreement by a subsequently filed SEC
Report. None of the Company's subsidiaries is required to file any forms,
reports or other documents with the SEC.

        (b)   Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the SEC Reports (the "Financials")
(i) complied in all material respects as to form with the published rules and
regulations of the SEC with respect thereto, (ii) was prepared in accordance
with U.S. generally accepted accounting principles ("GAAP"), consistently
applied, during the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q, Form 8-K or any successor form under the
Exchange Act), and (iii) fairly presented in all material respects the
consolidated financial position of the Company and its consolidated subsidiaries
as at the respective dates thereof and the consolidated results of the Company's
operations and cash flows for the periods indicated. The balance sheet of the
Company as of September 30, 2004 contained in the SEC Reports is hereinafter
referred to as the "Balance Sheet."

        (c)   Except as disclosed in the Financials, since the date of the
Balance Sheet and through the date of this Agreement, neither the Company nor
any of its subsidiaries has any liabilities or obligations of any nature
(absolute, accrued, contingent or otherwise) required under GAAP to be set forth
on a consolidated balance sheet, except for (i) liabilities incurred since the
date of the Balance Sheet in the ordinary course of business consistent with
past practices which would not, individually or in the aggregate, have a
Material Adverse Effect, (ii) liabilities set forth on Schedule 4.8(c), and
(iii) liabilities incurred pursuant to this Agreement.

        (d)   The Company has heretofore furnished to ComVest complete and
correct copies of all material amendments and modifications that have not been
filed by the Company with the SEC to all agreements, documents and other
instruments that previously had been filed by the Company with the SEC and are
currently in effect.

        (e)   The Company has made available to ComVest all comment letters
received by the Company from the SEC or the staff thereof since December 31,
2003 and all responses to such comment letters filed by or on behalf of the
Company.

        (f)    To the Company's knowledge, each director and executive officer
of the Company has filed with the SEC all statements required by Section 16(a)
of the Exchange Act and the rules and regulations thereunder since December 31,
2003.

        (g)   The Company has timely filed and made available to ComVest all
certifications and statements required by (i) Rule 13a-14 or Rule 15d-14 under
the Exchange Act, or (ii) 18 U.S.C. Section 1350 (Section 906 of the
Sarbanes-Oxley Act of 2002) with respect to any SEC Report. Except as disclosed
in the SEC Reports or as set forth in Schedule 4.8(g), the Company maintains
disclosure controls and procedures required by Rule 13a-15 or Rule 15d-15 under
the Exchange Act and such controls and procedures are effective to ensure that
all material information concerning the Company and its subsidiaries is made
known on a timely basis to the individuals responsible for the preparation of
the Company's SEC filings and other public disclosure documents. As used in this
Section 4.8, the term "file" shall be broadly construed to include any manner in
which a document or information is furnished, supplied or otherwise made
available to the SEC.

        (h)   The Company maintains a standard system of accounting established
and administered in accordance with GAAP. Except as set forth in
Schedule 4.8(h), the Company and its subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (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 the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

        (i)    Since December 31, 2003, except as set forth in Schedule 4.8(i),
neither the Company nor any subsidiary nor, to the Company's knowledge, any
director, officer, employee, auditor, accountant or representative of the
Company or any subsidiary, has received or otherwise had or obtained knowledge
of any complaint, allegation, assertion or claim, whether written or oral,
regarding the accounting or auditing practices, procedures, methodologies or
methods of the Company or any subsidiary or their respective internal accounting
controls, including any complaint, allegation, assertion or claim that the
Company or any subsidiary has engaged in questionable accounting or auditing
practices. No attorney representing the Company or any subsidiary, whether or
not employed by the Company or any subsidiary, has reported evidence of a
material violation of securities laws, breach of fiduciary duty or similar
violation by the Company or any of its officers, directors, employees or agents
to the Board of Directors or any committee thereof or to any director or officer
of the Company. Except as set forth in the SEC Reports or in Schedule 4.8(i),
since December 31, 2003, there have been no internal investigations regarding
accounting or revenue recognition discussed with, reviewed by or initiated at
the direction of the chief executive officer, chief financial officer, general
counsel, the Board of Directors or any committee thereof.

        (j)    To the knowledge of the Company, except at set forth on
Schedule 4.8(j), no employee of the Company or any subsidiary has provided or is
providing information to any law enforcement agency regarding the commission or
possible commission of any crime or the violation or possible violation of any
applicable law, rule, regulation or order. Neither the Company nor any
subsidiary nor any officer, employee, contractor, subcontractor or agent of the
Company or any such subsidiary has discharged, demoted, suspended, threatened,
harassed or in any other manner discriminated against an employee of the Company
or any Subsidiary in the terms and conditions of employment because of any act
of such employee described in 18 U.S.C. § 1514A(a).

        (k)   All accounts receivable of the Company and its subsidiaries
reflected on the Balance Sheet or arising thereafter have arisen from bona fide
transactions in the ordinary course of business consistent with past practices
and in accordance with SEC regulations and GAAP applied on a consistent basis
and are not to the knowledge of the Company subject to valid defenses, set-offs
or counterclaims. To the knowledge of the Company, the Company's reserve for
contractual allowances and doubtful accounts is adequate and has been calculated
in a manner consistent with past practices. Since the date of the Balance Sheet,
neither the Company nor any of its subsidiaries has modified or changed in any
material respect its sales practices or methods including, without limitation,
such practices or methods in accordance with which the Company or any of its
subsidiaries sells goods, fills orders or records sales.

        (l)    Other than as set forth in Schedule 4.8(l), all accounts payable
of the Company and its subsidiaries reflected on the Balance Sheet or arising
thereafter are the result of bona fide transactions in the ordinary course of
business and have been paid or are not yet due or payable. Since the date of the
Balance Sheet, the Company and its subsidiaries have not altered in any material
respects their practices for the payment of such accounts payable, including the
timing of such payment.

        (m)  Other than as set forth in Schedule 4.8(m), as of the date hereof,
the Company and its subsidiaries have no Indebtedness except (i) pursuant to the
credit facility with Silicon Valley Bank (which is to be repaid in full at
Closing in accordance with Section 6.8, using proceeds of the Initial Note
Purchase Price), and (ii) accounts payable, trade payables and capital lease
obligations incurred by the Company and its subsidiaries in the ordinary course
of business, consistent with past practices.

        4.9    Absence of Certain Changes.    Since December 31, 2003, except as
set forth in Schedule 4.9, or as expressly contemplated by this Agreement, or
specifically disclosed in the SEC Reports filed since December 31, 2003 and
prior to the date of this Agreement, (a) the Company and its subsidiaries have
conducted their businesses only in the ordinary course and in a manner
consistent with past practice, (b) there has not been any event, circumstance,
change or effect that, individually or in the aggregate, would have a Material
Adverse Effect, and (c) in furtherance, and not in limitation, of the foregoing,
none of the Company or any subsidiary has, directly or indirectly:

(i)amended or otherwise changed its Certificate of Incorporation or By-laws or
equivalent organizational documents;

(ii)issued, sold, pledged, disposed of, granted or encumbered, or authorized the
issuance, sale, pledge, disposition, grant or encumbrance of, (A) any shares of
any class of capital stock of the Company or any subsidiary, or any options,
warrants, convertible securities or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest (including,
without limitation, any phantom interest), of the Company or any subsidiary, or
(B) any assets of the Company or any subsidiary, except in the ordinary course
of business and in a manner consistent with past practice;

(iii)declared, set aside, made or paid any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock;

(iv)reclassified, combined, split, subdivided or redeemed, or purchased or
otherwise acquired, directly or indirectly, any of its capital stock;

(v)(A) acquired (including, without limitation, by merger, consolidation, or
acquisition of stock or assets or any other business combination) any
corporation, partnership, other business organization or any division thereof or
any significant amount of assets; (B) incurred any material Indebtedness or
issued any debt securities or assumed, guaranteed or endorsed, or otherwise
become responsible for, the obligations of any person, or made any loans or
advances, or granted any security interest in any of its assets, except in the
ordinary course of business and consistent with past practice; (C) entered into
any material contract or agreement other than in the ordinary course of business
and consistent with past practice; (D) authorized, or made any commitment with
respect to, any single capital expenditure which is in excess of $100,000 or
capital expenditures which are, in the aggregate, in excess of $200,000 for the
Company and its subsidiaries taken as a whole; or (E) entered into or amended
any contract, agreement, commitment or arrangement with respect to any matter
set forth in this clause (v);

(vi)hired any executive officer or individual with an employment agreement,
increased the compensation payable or to become payable or the benefits provided
to its directors, officers or employees, except for increases in the ordinary
course of business and consistent with past practice in salaries, wages,
bonuses, incentives or benefits of employees of the Company or any subsidiary
who are not directors or officers of the Company or any subsidiary, or granted
any severance or termination pay to, or entered into any employment or severance
agreement with, any director, officer or other employee of the Company or of any
subsidiary, or established, adopted, entered into or amended any collective
bargaining, bonus, profit-sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;

(vii)taken any action, other than reasonable and usual actions in the ordinary
course of business and consistent with past practice, with respect to accounting
policies or procedures;

(viii)made any Tax election or settled or compromised any United States federal,
state, local or non-United States income Tax liability;

(ix)paid, discharged or satisfied any material claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction, in the ordinary course of business and
consistent with past practice, of liabilities reflected or reserved against in
the Balance Sheet or subsequently incurred in the ordinary course of business
and consistent with past practice;

(x)amended, modified or consented to the termination of any Material Contract,
or amended, waived, modified or consented to the termination of any material
rights of the Company or any subsidiary thereunder, other than in the ordinary
course of business and consistent with past practice;

(xi)commenced or settled any material litigation, suit, claim, action or
proceeding;

(xii)permitted any item of Owned Intellectual Property to lapse or to be
abandoned, dedicated, or disclaimed, failed to perform or make any material
filings, recordings or other similar actions or filings applicable to the Owned
Intellectual Property, or failed to pay all fees and Taxes required to maintain
and protect its interest in each and every item of Owned Intellectual Property;

(xiii)failed to make in a timely manner any filings with the SEC required under
the Securities Act or the Exchange Act or the rules and regulations promulgated
thereunder; or

(xiv)announced an intention, entered into any formal or informal agreement or
otherwise made a commitment, to do any of the foregoing.

        4.10    Insurance.    The Company and its subsidiaries maintain property
and casualty, general liability, personal injury and other similar types of
insurance that are reasonably adequate and consistent with industry standards
and historical claims experience. Except as set forth in Schedule 4.10, the
Company and its subsidiaries have not received notice from, and have no
knowledge of any threat by, any insurer (that has issued any insurance policy to
the Company or its subsidiaries) that such insurer intends to deny coverage
under or cancel, discontinue or not renew any insurance policy covering the
Company or any of its subsidiaries presently in force.

        4.11    Compliance with Law.    Except as set forth in Schedule 4.11,
the Company and its subsidiaries are in compliance in all material respects with
all statutes, laws, rules, regulations and orders of the United States and of
all states, municipalities and applicable agencies and foreign jurisdictions or
bodies which are applicable to the Company, any of its subsidiaries, any of
their assets or properties or any of their businesses or operations, and the
prior failure, if any, by the Company or its subsidiaries to have fully complied
with any such statute, law, rule, regulation or order has not resulted in and
would not, individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect. Each of the Company and its subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and orders
of any governmental or regulatory authority necessary for each of the Company or
its subsidiaries to own, lease and operate its properties or to carry on its
business as it is now being conducted, except as would not, individually or in
the aggregate, have a Material Adverse Effect (the "Permits"). As of the date of
this Agreement, no suspension or cancellation of any of the Permits is pending
or, to the knowledge of the Company, threatened.

        4.12    Absence of Litigation.    Except as disclosed in the SEC Reports
or as set forth in Schedule 4.12, there is no action, suit, formal inquiry or
investigation, or proceeding before or by any governmental or regulatory
authority, court, public board or body pending or, to the knowledge of the
Company or any of its subsidiaries, threatened, against or affecting the Company
or any of its subsidiaries, or any of their assets, properties, business or
operations, in which an unfavorable decision, ruling or finding would,
individually or in the aggregate, have a Material Adverse Effect or adversely
affect the transactions contemplated by the Transaction Documents or the
validity or enforceability of, or the authority or ability of the Company to
perform its obligations under, the Transaction Documents. Except as disclosed in
the SEC Reports or as set forth in Schedule 4.12, neither the Company nor any of
its subsidiaries nor any property, asset, business or operation of the Company
or any of its subsidiaries is subject to any continuing order of, consent
decree, settlement agreement or similar written agreement with, or, to the
knowledge of the Company, continuing investigation by, any governmental or
regulatory authority, or any order, writ, judgment, injunction, decree,
determination or award of any governmental or regulatory authority that would,
individually or in the aggregate, have a Material Adverse Effect.

        4.13    Private Offering; Trust Indenture Act.    Subject to the
accuracy of ComVest's representations and warranties set forth in Article 3
hereof, the offer, sale and issuance of the Securities, as contemplated by this
Agreement, are exempt from the registration requirements of the Securities Act
and the Company is not required to qualify an indenture relating to the Notes
under the Trust Indenture Act of 1939, as amended. Prior to the effectiveness of
the registration statement contemplated by the Registration Rights Agreement,
the Company agrees not to take any action that would render the issuance and
sale of such Securities subject to the registration requirements of the
Securities Act. The Company has not offered or sold the Securities by any form
of general solicitation or general advertising, as such terms are used in
Rule 502(c) under the Securities Act.

        4.14    Brokerage Fees.    The Company and its subsidiaries have not
incurred any liability for any consulting fees or agent's commissions in
connection with the offer and sale of the Securities and the transactions
contemplated by this Agreement, except that the Company shall, at Closing, pay
the Financing Fee and the Commitment Fee, and shall, at the time of the purchase
of the Second Note and any Additional Notes, pay the additional financing fee
described in Section 2.3(c).

        4.15    Intellectual Property.    

        (a)   Schedule 4.15(a) sets forth all material Intellectual Property
owned by the Company and its subsidiaries ("Owned Intellectual Property"),
including the name, if any, and a brief description thereof. Except as set forth
in Schedule 4.15(a), to the knowledge of the Company, either the Company or one
of its subsidiaries holds good, valid and indefeasible title to all Owned
Intellectual Property, free and clear of any liens or encumbrances of any kind,
except for: (i) any lien for current taxes not yet due and payable, and
(ii) liens that have arisen in the ordinary course of business and that do not
(individually or in the aggregate) materially detract from the value of such
assets subject thereto or materially impair the operations of the Company and
its subsidiaries.

        (b)   Schedule 4.15(b) further sets forth: (i) all material Intellectual
Property licensed by the Company or any of its subsidiaries from third parties
and used in the conduct of the business of the Company and its subsidiaries
("Licensed Intellectual Property"), including a brief description thereof;
(ii) with respect to any Owned Intellectual Property that is the subject of any
registration or pending application in any jurisdiction worldwide, the names of
the jurisdictions, any registration and/or application serial numbers, current
status, any action, filing, submission, or maintenance fee due, and the date by
which any of the foregoing are due; (iii) a brief description of all material
licenses, sublicenses, and other agreements pursuant to which the Company (or
any of its subsidiaries) or any sublicensee of the Company (or any of its
subsidiaries) has granted to any third party the right to use any of the Owned
Intellectual Property; (iv) all other material consents, indemnifications,
forbearances to sue, settlement agreements and licensing or cross-licensing
arrangements to which the Company or any of its subsidiaries is a party relating
to the Owned Intellectual Property; and (v) any ongoing royalty or payment
obligations with respect to the Licensed Intellectual Property.

        (c)   To the knowledge of the Company, the Company and its subsidiaries
have a valid right to use, license, and otherwise exploit all Licensed
Intellectual Property and any rights thereunder will not be affected by the
Company entering into this Agreement and the agreements and transactions
contemplated hereby. Except as set forth in Schedule 4.15(c), neither the
Company nor any of its subsidiaries is under any obligation to pay royalties or
other payments in connection with any license, sublicense, or other agreement,
nor restricted from assigning its rights under any sublicense or agreement
respecting the Licensed Intellectual Property, nor will the Company or any of
its subsidiaries otherwise be, as a result of the execution and delivery of this
Agreement or the performance of its obligations under this Agreement, in breach
of any license, sublicense or other agreement relating to the Licensed
Intellectual Property.

        (d)   To the knowledge of the Company, each of the Company's and its
subsidiaries' rights in all of the Owned Intellectual Property are valid,
subsisting, and enforceable. None of the Owned Intellectual Property or any
registrations therefor have been canceled or adjudicated invalid or
unenforceable, or are subject to any outstanding order, judgment, or decree
restricting its use or adversely affecting or reflecting the Company's or any of
it subsidiaries' rights thereto. All Owned Intellectual Property that is the
subject of a registration or pending application is valid, subsisting,
unexpired, in proper form and all renewal fees and other maintenance fees that
have fallen due on or prior to the Closing Date have been paid. Either the
Company or its applicable subsidiary has timely made all filings and payments
with the appropriate foreign and domestic intellectual property offices required
to maintain in subsistence all Owned Intellectual Property. No due dates for
filings or payments concerning any Owned Intellectual Property (including,
without limitation, office action responses, affidavits of use, affidavits of
continuing use, renewals, requests for extension of time, maintenance fees,
application fees and foreign convention priority filings) fall due within ninety
(90) days of the Closing Date, whether or not such due dates are extendable. All
documentation necessary to confirm and effect the Company's and its
subsidiaries' ownership of and rights in any Owned Intellectual Property that is
the subject of a registration or pending application acquired by the Company or
any of its subsidiaries from third parties has been filed in the United States
Patent and Trademark Office and the United States Copyright Office, and all
other relevant intellectual property offices and agencies in other
jurisdictions. Except as set forth in Schedule 4.15(d), no Owned Intellectual
Property is the subject of any legal or governmental proceeding before any
governmental, registration or other authority in any jurisdiction, including any
office action or other form of preliminary or final refusal of registration.

        (e)   The consummation of the transactions contemplated hereby will not
materially alter or impair any Owned Intellectual Property. To the knowledge of
the Company, no Owned Intellectual Property has been used, divulged, disclosed
or appropriated to the detriment of the Company or any of its subsidiaries for
the benefit of any third party; and, to the knowledge of the Company, no
employee or agent of the Company or any of its subsidiaries has misappropriated
any material trade secrets or other material confidential information of any
third party in the course of the performance of his or her duties as an employee
of the Company or any of its subsidiaries. To the knowledge of the Company and
except as set forth in Schedule 4.15(e): (i) none of the Owned Intellectual
Property infringes, misappropriates, or conflicts with any Intellectual Property
owned or used by any other third party; (ii) none of the products that are or
have been designed, created, developed, assembled, manufactured or sold by the
Company or any of its subsidiaries is infringing, misappropriating, or making
any unlawful or unauthorized use of any Intellectual Property owned or used by
any other third party, and the Company and its subsidiaries have all rights and
licenses reasonably necessary in order to make, have made, use or sell such
products; (iii) no third party is infringing, misappropriating or making any
unlawful or unauthorized use of, and no Intellectual Property owned or used by
any other third party infringes or conflicts with, any Owned Intellectual
Property; and (iv) except as set forth in Schedule 4.15, there is no claim,
suit, action or proceeding pending or threatened or asserted against the Company
or any of its subsidiaries: (A) alleging any conflict or infringement by the
Company or any of its subsidiaries of any third party's intellectual property or
proprietary rights; or (B) challenging the Company's or any of its subsidiaries'
ownership or use of, or the validity or enforceability of, any of the Owned
Intellectual Property or the Licensed Intellectual Property.

        4.16    Labor Relations.    Except as set forth on Schedule 4.16, there
are no complaints, charges or claims against the Company or any of its
subsidiaries pending or filed with any governmental authority, arbitrator or
court based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment of any individual by the Company or any
of its subsidiaries, which, if adversely determined, would, individually or in
the aggregate, have a Material Adverse Effect, and neither the Company nor any
of its subsidiaries has received any notice of such complaint, charge or claim.
Neither the Company nor any of its Affiliates has any liability for any failure
to comply with applicable legal requirements with respect to employment,
employment practices, terms and conditions of employment, wages and hours, tax
withholding, payment of wages and compensation, Company-owed employment taxes,
and/or classification of employees and independent contractors, except as would
not, individually or in the aggregate, have a Material Adverse Effect.

        4.17    Benefit Plans and Agreements.    Except as would not,
individually or in the aggregate, have a Material Adverse Effect:

        (a)   The Company and all Affiliates have substantially performed all
obligations required to be performed by them under, are not in default or
violation of, and have no knowledge of any default or violation by any other
party to, the terms of any Employee Plan, and each Employee Plan has been
established and maintained substantially in accordance with its terms and in
substantial compliance with all applicable legal requirements, including,
without limitation, ERISA and the Code.

        (b)   The Company has no liabilities under its Employee Plans, other
than (i) routine claims for benefits, (ii) funding obligations pursuant to the
terms of such Employee Plans, and (iii) taxes due in the normal course that may
be paid prior to their due date.

        (c)   The Company does not maintain, administer or contribute to, has
never maintained, administered or contributed to, and has no liability under any
employee benefit plan (i) that is subject to Title IV of ERISA; (ii) that is a
"multiemployer plan" as defined in Section 3(37) of ERISA; or (iii) that is not
subject to United States law or that covers or has covered employees of the
Company or of an Affiliate whose services are performed primarily outside of the
United States.

        (d)   Except as set forth on Schedule 4.17, with respect to any Employee
Plan, as of the Closing Date, there will have been no prohibited transactions
(as defined in Section 4975(c) of the Code and Section 406 of ERISA) that could
result in the imposition of a liability against the Company or reportable events
(as defined in Section 4043(b) of ERISA and regulations thereunder).

        (e)   The Company has no liability with respect to any Employee Plan
that is maintained or contributed to by an Affiliate.

        (f)    No Employee Plan provides (except at no cost to the Company or
any Affiliate), or represents any liability of the Company or any Affiliate to
provide, retiree life insurance, retiree health or other retiree employee
welfare benefits to any person for any reason, except as may be required by
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, or other
applicable legal requirements.

        4.18    Environmental, Health and Safety Matters.    Except as described
in Schedule 4.18 or as would not, individually or in the aggregate, have a
Material Adverse Effect (a) none of the Company nor any of its subsidiaries has
violated or is in violation of any Environmental Law; (b) none of the properties
currently or formerly leased or operated by the Company or any of its
subsidiaries (including, without limitation, soils and surface and ground
waters) are contaminated with any Hazardous Substance resulting from any act or
omission of the Company or any of its subsidiaries and none of the properties
formerly owned by the Company or any of its subsidiaries (including, without
limitation, soils and surface and ground waters) were, during the time of the
Company's or such subsidiaries' ownership thereof, contaminated with any
Hazardous Substance; (c) none of the Company or any of its subsidiaries is
actually, potentially or allegedly liable for any off-site contamination by
Hazardous Substances; (d) none of the Company or any of its subsidiaries is
actually, potentially or allegedly liable under any Environmental Law
(including, without limitation, pending or threatened liens); (e) each of the
Company and each of its subsidiaries has all permits, licenses and other
authorizations required under any Environmental Law ("Environmental Permits");
and (f) each of the Company and each of its subsidiaries is in compliance with
its Environmental Permits.

        4.19    FDA and Regulatory Matters; Clinical Trials.    

        (a)   Except as set forth in Schedule 4.19(a) or as would not,
individually or in the aggregate, have a Material Adverse Effect, the Company
and each of its subsidiaries is in compliance with all applicable laws,
regulations, rules, and policies of or administered by, as the case may be, the
United States Department of Health and Human Services ("HHS") and each of its
constituent agencies, including, but not limited to, the Food and Drug
Administration ("FDA"), the Centers for Medicare & Medicaid Services ("CMS"),
and the Office of Inspector General ("OIG"), and with all laws, regulations,
rules, and policies of or administered by their respective foreign counterparts,
and state and local governments. For purposes of applying this section, any
responsibility of the Company or any of its subsidiaries under any of the
aforementioned laws, rules, regulations or policies that has been transferred by
the Company or such subsidiary through contract to another person or entity,
shall for purposes of ascertaining compliance with this section, be deemed to be
the responsibility of the Company notwithstanding any contract to the contrary.

        (b)   Except as set forth in Schedule 4.19(b) or as would not,
individually or in the aggregate, have a Material Adverse Effect, the Company
and each of its subsidiaries has obtained all necessary and applicable
approvals, clearances, authorizations, licenses and registrations required by
United States or foreign governments or government agencies to permit the
design, development, pre-clinical and clinical testing, manufacture, labeling,
sale, distribution and promotion of the Company's products (the "Company
Products") in jurisdictions where it and they currently conduct such activities
(the "Activities to Date") with respect to each Company Product (collectively,
the "Approvals"). The Company and each of its subsidiaries is in compliance in
all material respects with the terms and conditions of each of the Approvals and
has no reason to believe that any governmental entity will seek to revoke or
otherwise cancel or amend the Approvals.

        (c)   The Company and each of its subsidiaries is in compliance with all
FDA and non-United States equivalent agencies and similar state and local laws,
rules or regulations applicable to the maintenance, compilation and filing of
reports, including medical device reports, with regard to the Company Products,
except for such noncompliance as would not, individually or in the aggregate,
have a Material Adverse Effect. Schedule 4.19(c) sets forth a list of all
applicable adverse event reports related to the Company Product, including any
Medical Device Reports (as defined in 21 CFR part 803). Set forth on
Schedule 4.19(c) are complaint review and analysis reports of the Company and
its subsidiaries in connection with the their business through the date hereof,
including information regarding complaints, categorized by product and root
cause analysis of closed complaints, which reports are correct in all material
respects.

        (d)   Except as set forth in Schedule 4.19(d), none of the Company nor
any of its subsidiaries has received any written notice or other written
communication from the FDA or any other governmental entity and has no reason to
believe that it will receive such notice for any act or omission antedating this
Agreement: (i) contesting the pre-market clearance or approval of, the uses of
or the labeling and promotion of any of the Company Products; or (ii) otherwise
alleging any violation of any laws, rules or regulations by the Company, any
such subsidiary or any of their employees or contractors.

        (e)   There have been no recalls, field notifications or seizures
ordered or adverse regulatory actions taken (or, to the knowledge of the
Company, threatened), including but not limited to FDA Form 483 and FDA Warning
Letters, or any other governmental entity with respect to any of the Company
Products, including any facilities where any such products are produced,
processed, packaged or stored, and neither the Company nor any of its
subsidiaries has, within the last three (3) years, either voluntarily or at the
request of any governmental entity, initiated or participated in a recall or
field upgrade of any such product, except as noted in Schedule 4.19(e).

        (f)    The Company has conducted all of its clinical trials with respect
to the Company Products with reasonable care and in accordance with all
applicable laws, rules, regulations and policies, and the stated protocols for
such clinical trials.

        (g)   All filings with and submissions to the HHS, FDA, CMS, OIG and any
similar regulatory entity in any other jurisdiction made by the Company or any
of its subsidiaries with regard to the Company Products, whether oral, written
or electronically delivered, were true, accurate and complete in all material
respects as of the date made, and, to the extent required to be updated, have
been updated to be true, accurate and complete in all material respects as of
the date of such update, and to the knowledge of the Company such filings,
submissions and updates comply with all regulations of the HHS, FDA, CMS, OIG or
such similar regulatory entity regarding material misstatements and omissions to
state material facts.

        4.20    List of Material Contracts and Other Data.    Set forth on
Schedule 4.20 is a complete list of the following contracts and agreements to
which the Company or any of its subsidiaries is a party or by which its or their
assets or business or operations may be bound or affected (collectively, the
"Material Contracts"): (i) all material contracts, as defined by Item 601 of
Regulation S-K, (ii) all material distribution and supply agreements and
(iii) all other contracts, agreements or arrangements which are material to the
Company and its subsidiaries, taken as a whole, or to the business or operations
of the Company and its subsidiaries, or the absence of which would, individually
or in the aggregate, have a Material Adverse Effect, and, in each case, which
are not directed sales agreements. Each of the Material Contracts is legal,
valid and binding and in full force and effect, and none of the Company, any of
its subsidiaries nor, to the knowledge of the Company, any other party to such
Material Contract is in violation of or in default in the performance,
observance or fulfillment of any material obligation, agreement, covenant or
condition contained therein, except as would not, individually in the aggregate,
have a Material Adverse Effect. Except as set forth in Schedule 4.20, the
Company has not received any notice from any party to any Material Contract
(i) stating that such party intends not to perform, observe or fulfill any of
its obligations, agreements, covenants or conditions under such Material
Contract, or (ii) claiming that the Company or any of its subsidiaries is in
violation or breach of, or default under, any Material Contract. Except as would
not, individually or in the aggregate, have a Material Adverse Effect, neither
the execution of the Transaction Documents nor the consummation of any
transaction contemplated thereby shall constitute a default under, give rise to
cancellation rights under, or otherwise adversely affect any of the rights of
the Company or any of its subsidiaries under any Material Contract. The Company
has furnished or made available to ComVest true and complete copies of all
Material Contracts, including any and all amendments thereto.

        4.21    Tax Matters.    Except as set forth in Schedule 4.21 or as would
not, individually or in the aggregate, have a Material Adverse Effect:

        (a)   The Company has prepared and timely filed or made a timely request
for extension for all required federal, state, local and foreign returns,
estimates, information statements and reports (collectively, the "Returns")
relating to any and all Taxes concerning or attributable to the Company, its
subsidiaries or its or their operations required to be filed by the Company or
any of its subsidiaries for the period prior to the date hereof, and such
Returns are true and correct in all material respects and have been completed in
accordance with applicable laws, rules and regulations.

        (b)   The Company (i) has paid or accrued all Taxes it is required to
pay or accrue, and (ii) will have withheld and timely remitted with respect to
its employees all federal and state income taxes, FICA, FUTA, and other Taxes
required to be withheld and remitted.

        (c)   Neither the Company nor any of its subsidiaries has been
delinquent in payment of any Tax, nor is there any Tax deficiency outstanding,
assessed or, to the Company's knowledge, proposed against the Company or any of
its subsidiaries in writing; nor has the Company or any of its subsidiaries
executed any waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.

        (d)   No audit or other examination of any Returns of the Company or any
of its subsidiaries is presently in progress; nor has the Company or any of its
subsidiaries been notified in writing of any request for such an audit or other
examination.

        (e)   None of the Company or any of its subsidiaries has any liabilities
for any unpaid federal, state, local or foreign Taxes which have not been
accrued or reserved against on the Company's balance sheets, whether asserted or
unasserted, contingent or otherwise.

        (f)    There are no liens, pledges, charges, claims, security interests
or other encumbrances of any sort on the assets of the Company or any of its
subsidiaries relating to or attributable to Taxes other than liens for taxes and
assessments which are not yet due and payable or which are being actively
contested in good faith with the appropriate taxing authority.

        (g)   The Company has no knowledge of any reasonable basis for the
assertion of any claim relating or attributable to Taxes, which, if adversely
determined, would result in any lien, pledge, charge, claim, security interest
or other encumbrances on any assets of the Company or any of its subsidiaries.

        (h)   None of the Company's or any of its subsidiaries' assets are
treated as "tax-exempt use property" within the meaning of Section 168 of the
Code.

        (i)    None of the Company or any of its subsidiaries has filed a
consent agreement under Section 341(f) of the Code concerning collapsible
corporations or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by the Company or any of its subsidiaries.

        (j)    None of the Company or any of its subsidiaries is a party to a
tax sharing or allocation agreement; nor does the Company or any of its
subsidiaries owe any amount under any such agreement.

        (k)   Within the past five calendar years, neither the Company nor any
subsidiary of the Company has distributed stock of a controlled corporation
pursuant to Section 355 of the Code nor had its stock distributed by another
corporation pursuant to Section 355 of the Code.

        (l)    None of the Company or any of its subsidiaries has liability for
the Taxes of any person under Treasury Regulation Section 1.1502-6 (or any
similar provision of state, local or foreign law), as transferee or successor,
by contract, or otherwise.

        4.22    Real Property; Title to Assets.    

        (a)   None of the Company or any of its subsidiaries owns, or has in the
past ten (10) years owned, any real property.

        (b)   Schedule 4.22(b) lists each parcel of real property currently
leased or subleased by the Company or any of its subsidiaries, with the name of
the lessor and the date of the lease, sublease, assignment of the lease, any
guaranty given or leasing commissions payable by the Company or any Subsidiary
in connection therewith and each amendment to any of the foregoing
(collectively, the "Lease Documents"). True, correct and complete copies of all
Lease Documents have been delivered to ComVest. Except as would not,
individually or in the aggregate, have a Material Adverse Effect, all such
current leases and subleases are in full force and effect and are valid and
effective in accordance with their respective terms, and there is not, under any
of such leases, any existing default or event of default (or event which, with
notice or lapse of time, or both, would constitute a default) by the Company or
any of its subsidiaries or, to the Company's knowledge, by the other party to
such lease or sublease, or person in the chain of title to such leased premises.

        (c)   There are no contractual or legal restrictions that preclude or
restrict the ability to use any real property owned or leased by the Company or
any of its subsidiaries for the purposes for which it is currently being used.
There are no material latent defects or material adverse physical conditions
affecting the real property, and improvements thereon, owned or leased by the
Company or any of its subsidiaries other than those that would not, individually
or in the aggregate, have a Material Adverse Effect.

        (d)   Except as set forth in Schedule 4.22(d) or as would not,
individually or in the aggregate, have a Material Adverse Effect, each of the
Company and its subsidiaries has good and valid title to, or, in the case of
leased properties and assets, valid leasehold or subleasehold interests in, all
of its properties and assets, tangible and intangible, real, personal and mixed,
used or held for use in its business, free and clear of any liens or other
encumbrances, except for such imperfections of title, if any, that do not
interfere with the present value of the subject property.

        4.23    Rights Agreement Expired.    The Rights Agreement has expired by
its terms, there are no longer any Rights issued or exercisable under the Rights
Agreement, and none of the execution or delivery of this Agreement or the other
Transaction Documents or the exercise of the Warrant to acquire the Warrant
Shares or the consummation of any other transaction contemplated by the
Transaction Documents will result in (i) the occurrence of the "flip-in event"
described under Section 11 of the Rights Agreement, (ii) the occurrence of the
"flip-over event" described in Section 13 of the Rights Agreement, or (iii) the
Rights under the Rights Agreement becoming evidenced by, and transferable
pursuant to, certificates separate from the certificates representing shares of
Common Stock.

        4.24    Company Products.    Except as disclosed in the SEC Reports or
as set forth in Schedule 4.24 and as would not, individually or in the
aggregate, have a Material Adverse Effect, each product manufactured, sold,
leased or delivered by the Company or any of its subsidiaries has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and to the Company's knowledge, neither the Company nor any
of its subsidiaries has any claims outstanding for the replacement or repair of
such products or other damages in connection therewith. Except as set forth in
the SEC Reports filed prior to the date of this Agreement or as would not,
individually or in the aggregate, have a Material Adverse Effect, neither the
Company nor any of its subsidiaries has any liabilities or obligations arising
out of any injury to persons or property as a result of the ownership,
possession or use of any product manufactured, sold, leased or delivered by the
Company or any of its subsidiaries.

        4.25    Certain Business Practices.    None of the Company, any of its
subsidiaries or, to the Company's knowledge, any directors or officers, agents
or employees of the Company or any of its subsidiaries, has (i) used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to political activity; (ii) made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic political
parties or campaigns or violated any provision of the Foreign Corrupt Practices
Act of 1977, as amended; or (iii) made any payment in the nature of criminal
bribery.

        4.26    Interested Party Transactions.    Except as set forth in
Schedule 4.26, no director, officer or other Affiliate of the Company or any of
its subsidiaries has or has had, directly or indirectly, (i) an economic
interest in any person that has furnished or sold, or furnishes or sells,
services or products that the Company or any of its subsidiaries furnishes or
sells, or proposes to furnish or sell; (ii) an economic interest in any person
that purchases from or sells or furnishes to, the Company or any of its
subsidiaries, any goods or services; (iii) a beneficial interest in any contract
or agreement disclosed in the Disclosure Schedules; or (iv) any contractual or
other arrangement with the Company or any of its subsidiaries; provided,
however, that ownership of no more than one percent (1%) of the outstanding
voting stock of a publicly traded corporation shall not be deemed an "economic
interest in any person" for purposes of this Section 4.26. The Company and its
subsidiaries have not, since December 31, 2003, (i) extended or maintained
credit, arranged for the extension of credit or renewed an extension of credit
in the form of a personal loan to or for any director or executive officer (or
equivalent thereof) of the Company, or (ii) materially modified any term of any
such extension or maintenance of credit.

ARTICLE 5
COVENANTS AND ACKNOWLEDGMENTS

        5.1    Transfer Restrictions.    

        (a)   ComVest acknowledges and agrees that until thirty (30) days after
the expiration of the Post-Closing Commitment, it may not assign or transfer any
Note or any rights or obligations thereunder. After such date, the Notes may
only be transferred in amounts of at least $1,000,000 and upon fifteen (15) days
prior written notice to the Company. Neither the Notes nor any interest or
participation therein may be assigned or transferred to Hologic, Inc., General
Electric Medical Systems, Philips Medical Systems, Ethicon Endo-Surgery, Inc. or
Siemens Medical Solutions; to any other business or entity which directly or
indirectly engages in the business of developing, designing, manufacturing,
supplying and/or distributing diagnostic medical imaging products competitive
with any of the Company's then current product lines; to Morgan Nields or any
business or entity in which he is employed or is otherwise involved or has a
greater than 5% ownership interest; or to any Affiliate of any of the foregoing.
Notwithstanding the foregoing, ComVest shall be entitled to transfer all or any
portion of the Notes to its Affiliates or to make a distribution of all or any
portion of the Notes to its members.

        (b)   ComVest acknowledges and agrees that, except as provided in the
Registration Rights Agreement, (i) none of the Securities has been, or is being,
registered under the Securities Act, and such Securities may not be transferred
unless (A) subsequently registered thereunder, or (B) they are transferred
pursuant to an exemption from such registration; and (ii) any sale of the
Securities made in reliance upon Rule 144 under the Securities Act may be made
only in accordance with the terms of said Rule, accompanied by a legal opinion
obtained by ComVest which is reasonably satisfactory to the Company's legal
counsel. Notwithstanding the foregoing or anything else contained herein to the
contrary, the Securities may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement. The provisions of Sections 5.1
and 5.2 hereof, together with the rights and obligations of ComVest under the
Transaction Documents, shall be binding upon any subsequent transferees of the
Securities.

        5.2    Restrictive Legend.    ComVest acknowledges and agrees that,
until such time as the Securities shall have been registered under the
Securities Act or ComVest demonstrates to the reasonable satisfaction of the
Company and its legal counsel that such registration shall no longer be
required, the Notes and certificates evidencing the Securities shall bear a
restrictive legend in substantially the following form:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). THEY MAY NOT BE SOLD,
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER THE ACT OR AN
OPINION OF COUNSEL (IN FORM AND FROM COUNSEL) OR OTHER EVIDENCE REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION SHALL NO LONGER BE REQUIRED.

The legend set forth above shall be removed and the Company shall issue a
certificate without such legend to the holder of any Security upon which it is
stamped, if, unless otherwise required by applicable state securities laws,
(a) such Security is registered for sale under an effective registration
statement filed under the Securities Act or otherwise may be sold pursuant to
Rule 144 without any restriction as to the number of securities as of a
particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary
for opinions of counsel in comparable transactions, to the effect that a public
sale or transfer of such Security may be made without registration under the
Securities Act and such sale or transfer is effected. ComVest agrees to sell all
Securities, including those represented by a certificate(s) from which the
legend has been removed, in compliance with applicable prospectus delivery
requirements, if any.

        5.3    Disclosure of Transaction.    The Company shall issue a press
release describing the material terms of the transactions contemplated hereby as
soon as practicable after the Closing but in no event later than one
(1) business day after Closing. The Company shall also file with the SEC a
Current Report on Form 8-K describing the material terms of the transactions
contemplated hereby (and attaching as exhibits thereto this Agreement, the
Registration Rights Agreement, the Initial Note, the Warrant and the Security
Agreement) as soon as practicable following the date of execution of this
Agreement but in no event more than four (4) business days following the date of
execution of this Agreement. The Company will provide ComVest and its counsel
sufficient opportunity to review and provide comments to such press release and
Form 8-K.

        5.4    Lock-Up of Executive Officer and Director Shares.    The Company
will use its best efforts to cause Harris Ravine and David Kirwan and each of
its directors to enter into the Lock-Up Agreement substantially in the form of
Exhibit E.

        5.5    Sales of Company Securities.    ComVest agrees that for the
shorter of (i) a period of three (3) years after Closing or (ii) until the
Post-Closing Commitment is no longer outstanding, the Warrant has been exercised
in full and all of the Warrant Shares have been sold, it will not, and will
cause its Affiliates not to, sell short, sell short against the box, engage in
other similar derivative transactions or otherwise effect any sales of
securities of the Company except for sales which are covered through the
delivery of the Warrant Shares.

        5.6    Reporting Status.    The Company's Common Stock is registered
under Section 12(g) of the Exchange Act. So long as ComVest beneficially owns
any of the Securities, the Company shall timely file all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination.

        5.7    Use of Proceeds.    The Company will use the net proceeds from
the sale of the Initial Note (a) first, to pay in full all outstanding
obligations of the Company to Silicon Valley Bank, in accordance with the payoff
and release letter contemplated by Section 6.8, and (b) second, for working
capital needs, and will use the proceeds from the sale of the Second Note and
any Additional Notes for general corporate purposes; provided, however, that
without the prior written consent of ComVest, no proceeds of the Notes shall be
used or applied to the payment of any judgment in or settlement of any
litigation, arbitration or other proceeding or legal dispute relating to the
Company.

        5.8    Registration Rights.    The Company acknowledges that with
respect to the Warrant Shares, it has provided ComVest with certain registration
rights under the Securities Act as set forth in the Registration Rights
Agreement.

        5.9    Reservation of Common Stock Issuable upon Exercise of
Warrants.    The Company hereby agrees at all times to reserve and keep
available out of its authorized but unissued shares of Common Stock, solely for
the purpose of providing for the full exercise of the Warrants, such number of
shares of Common Stock as shall from time to time equal the number of shares
sufficient to permit the full exercise of the Warrants.

        5.10    Covenant as to Common Stock.    The Company covenants that all
shares of Common Stock which may be issued upon exercise of the Warrants will,
upon issuance pursuant to the terms of the Warrants, be duly authorized, validly
issued, fully paid and nonassessable.

        5.11    Affirmative Covenants.    For so long as any of the Notes or the
Post-Closing Commitment is outstanding, the Company shall, and shall cause each
of its subsidiaries to:

        (a)   Do or cause to be done all things necessary to at all times
(i) preserve, renew and keep in full force and effect its corporate or other
legal existence and all material rights, permits and franchises, (ii) comply
with its covenants and agreements in this Agreement and the other Transaction
Documents, (iii) maintain, preserve and protect all of its material property
(including all Owned Intellectual Property) used or useful in the conduct of its
business and keep same in good repair, working order and condition (reasonable
wear and tear excepted), and from time to time make or cause to be made all
needed and proper repairs, renewals, replacements, betterments and improvements
thereto, (iv) maintain insurance of such types, in such amounts and against such
hazards as is legally required and/or as is reasonable, prudent and customary
for businesses of similar size and scope and similarly situated, and with
respect to all such insurance (other than workers' compensation insurance), name
ComVest as loss payee and/or additional insured as its interests appear, and
provide for ComVest to receive written notice thereof at least thirty (30) days
prior to any cancellation, modification or non-renewal of the subject policy,
and (v) comply in all material respects with all laws, rules, regulations and
other legal requirements applicable to its business operations, whether now in
effect or hereafter enacted, promulgated or issued;

        (b)   File, pay and discharge, or cause to be filed, paid and
discharged, all material taxes, assessments and governmental charges or levies
imposed upon it or its income and profits or any of its property or any part
thereof, before the same shall become in default, as well as all material lawful
claims for labor, materials, supplies and otherwise, which, if unpaid when due,
might become a lien or charge upon such property or any part thereof; provided,
that the Company and its subsidiaries shall not be required to pay or discharge
any such tax, assessment, charge, levy or claim so long as the validity thereof
is being contested in good faith by appropriate proceedings and adequate
reserves have been set aside on its books with respect thereto, and payment with
respect to such tax, assessment, charge, levy or claim shall be made before any
of the Company's or any of its subsidiaries' property is seized or sold in
satisfaction thereof;

        (c)   Give prompt written notice to ComVest of (i) any proceedings
instituted against the Company or any of its subsidiaries in any federal or
state court or before any commission or other regulatory body (whether federal,
state or local) which, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect, and (ii) the occurrence of any
Default or Event of Default, and the action taken or proposed to be taken with
respect thereto;

        (d)   Furnish to ComVest: (i) promptly after filing with the SEC, all
annual, quarterly and other periodic reports, and all current reports, relating
to the Company, with all financial information contained therein to be prepared
and presented in compliance with all applicable rules and regulations;
(ii) concurrently with the delivery of each annual report described in the
foregoing clause (i), a certificate from the independent certified public
accountants for the Company, in form and content reasonably satisfactory to
ComVest, certifying that, in connection with their audit, which was performed to
express an opinion on such financial statements, such accountants either do not
have knowledge of the existence of any Event of Default under Sections
5.11(i) and 5.12(l) or, to their knowledge, the extent of such Event of Default;
(iii) promptly after distribution to the Company's stockholders, copies of all
proxy materials, reports and other information provided by the Company to its
stockholders; (iv) within fifteen (15) days of the end of each calendar month, a
certificate signed on behalf of the Company by its Chief Financial Officer,
certifying that he has examined the provisions of this Agreement and the Notes,
and that to his knowledge, no Default or Event of Default has occurred or is
continuing; (v) promptly after receipt from the FDA, a copy of any Form 483
received by the Company in connection with the FDA audit; and (vi) promptly,
from time to time, such other non-confidential information regarding the Company
and/or its subsidiaries as ComVest may reasonably request;

        (e)   Maintain centralized books and records regarding all of the
Company's business operations at the Company's principal place of business, and
permit agents or representatives of ComVest to inspect, at any time during
normal business hours, upon reasonable notice, and without undue disruption of
the Company's business, all of the Company's and its subsidiaries' various books
and records, and to make copies, extracts, abstracts and/or reproductions
thereof;

        (f)    Maintain a standard system of accounting in order to permit the
preparation of financial statements in accordance with GAAP, consistently
applied;

        (g)   In the event of any discharge, spill, injection, escape, emission,
disposal, leak or other release of Hazardous Substances on any real property
owned or leased by the Company or any of its subsidiaries, which is not
authorized by an Environmental Permit, and which requires notification to or the
filing of any report with any federal, state or local governmental agency, the
Company shall promptly notify ComVest thereof, and shall comply with the notice
requirements of any applicable governmental agency, and take all steps necessary
to promptly clean up such discharge, spill, injection, escape, emission,
disposal, leak or other release in accordance with all applicable Environmental
Law;

        (h)   Cause Harris Ravine and David Kirwan to continue to be employed or
to function as the senior executive officers of the Company, unless a successor
to any of them is appointed within ninety (90) days of the termination of such
individual's employment, each such successor to be reasonably satisfactory to
ComVest; and

        (i)    Achieve EBITDA of not less than the amount set forth below for
each period indicated:

Quarter Ending

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

  Minimum EBITDA

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

  March 31, 2005   $ (2,000,000 ) June 30, 2005   $ (1,000,000 ) September 30,
2005   $ 750,000   December 31, 2005   $ 750,000   March 31, 2006, and each
quarter thereafter   $ 1,000,000  

        5.12    Negative Covenants.    For so long as any of the Notes or the
Post-Closing Commitment is outstanding, the Company hereby agrees that it will
not (and that no subsidiary of the Company will), without the prior written
consent of ComVest (which consent shall not be unreasonably withheld):

        (a)   Materially change the nature of the Company's business;

        (b)   Sell, assign, transfer, lease or otherwise convey all or any
substantial portion of the assets of the Company outside of the ordinary course
of business, or enter into any agreement of consolidation or merger or agree to
any share exchange;

        (c)   Incur any Indebtedness (exclusive of Indebtedness under the Notes)
in excess of $1,000,000 in the aggregate at any time outstanding, or become a
guarantor or otherwise liable (contingently or otherwise) for any Indebtedness
(other than endorsements of negotiable instruments for collection in the
ordinary course of business), except for (i) Indebtedness incurred to prepay the
Notes in full (provided that, in conjunction with such prepayment, the Company
shall affirmatively release ComVest from all further funding obligations in
respect of the Post-Closing Commitment), and (ii) current liabilities incurred
in the ordinary course of business consistent with past practices; or permit to
exist any lien or other encumbrance on any of its assets or properties except as
may be permitted pursuant to the Security Agreement;

        (d)   Become subject to (including, without limitation, by way of
amendment to or modification of), any agreement or instrument, which by its
terms would conflict with or materially restrict the Company's right to perform
the provisions of this Agreement or any other Transaction Document;

        (e)   Redeem or repurchase any securities of the Company (other than the
Notes) or set aside any funds therefor;

        (f)    Declare or pay any dividends or other distributions on the
capital stock of the Company, or set aside any funds therefor;

        (g)   Increase or agree to increase the compensation payable or to
become payable to Harris Ravine or David Kirwan other than reasonable increases
consistent with past practices;

        (h)   Enter into any non-ordinary course agreement, directly or
indirectly, with officers, employees, stockholders, directors or Affiliates of
the Company, other than employment agreements, compensation arrangements, stock
options or other service-related transactions that are approved or ratified by a
majority of the disinterested members of the Board of Directors;

        (i)    Make any investments in, or otherwise acquire or hold securities
of, or make loans or advances to, or enter into any arrangement for the purpose
of providing funds or credit to, any other person, except (i) existing
investments in the Company's subsidiaries, and loans by the Company to existing
subsidiaries, up to a maximum aggregate principal amount of $7,730,000 at any
time outstanding, (ii) advances to employees of the Company or its subsidiaries
for business expenses not to exceed at any time $25,000 in the aggregate,
(iii) recoverable draws not to exceed $100,000 in the aggregate to sales
representatives employed by the Company against commissions to be payable to
such representatives on sales completed but not yet collected, and
(iv) temporary short-term investments in obligations of the United States or
certificates of deposit of commercial banks reasonably satisfactory to ComVest,
having a maturity not more than one (1) year after the date of acquisition
thereof;

        (j)    Initiate the voluntary dissolution or winding up or
reorganization of the Company;

        (k)   Agree, consent, permit or otherwise undertake to amend any of the
terms or provisions of the Company's or any of its subsidiaries' certificate of
incorporation, by-laws or other organizational documents in a manner which may
impair in any respect any of ComVest's rights under any of the Transaction
Documents;

        (l)    Make aggregate Capital Expenditures (whether through cash
purchase, principal payments under capitalized leases or purchase money
financing, or otherwise) in any fiscal year of the Company in excess of
$1,250,000 in the aggregate for the Company and all of its subsidiaries; or

        (m)  Change its fiscal year.

        5.13    Board of Directors.    Until such time as (i) the Notes shall
have been paid off in full and (ii) either (A) all of the Warrant Shares shall
have been registered for resale by ComVest pursuant to either Section 2 or
Section 3 of the Registration Rights Agreement and shall be freely sellable by
ComVest or (B) the Registration Rights Agreement shall have been terminated
pursuant to clause (b) of Section 13 thereof):

        (a)   The Board of Directors shall consist of not more than six
(6) members (subject to the last sentence of this paragraph (a)) and ComVest
shall have the right to nominate one (1) individual for election to the Board of
Directors (the "ComVest Director"). The ComVest Director shall be entitled to
participate in all compensation plans available to nonmanagement directors and
shall be covered by any director insurance provided by the Company to the other
directors. The Company will cause the Class II slate of Directors presented to
the stockholders of the Company for election to the Board of Directors to
include the ComVest Director, and the Company shall recommend that the
stockholders of the Company vote their shares in favor of the election of the
ComVest Director. If the stockholders of the Company shall fail to elect the
named ComVest Director to the Board of Directors, then the Board of Directors
shall (i) fill such vacancy with another individual nominated by ComVest or
(ii) if there is no vacancy, immediately increase the number of Directors of the
Company by one (1) and appoint such other ComVest nominee to the Board of
Directors.

        (b)   In addition, ComVest shall have the right to appoint one
(1) individual as a nonvoting and nonparticipating observer representative (the
"ComVest Observer") at all meetings of the Board of Directors and committees
thereto. The Company shall provide the ComVest Observer, concurrently with the
members of the Board of Directors, and in the same manner, copies of all
notices, minutes, consents, materials and other information provided to or to
which the Company's directors have access; provided however, that the ComVest
Observer shall agree to hold in confidence any non-public confidential
information so provided; and provided further, that the Company shall have the
right to request that the ComVest Observer not participate in any portion of any
Board of Directors meeting in which the Board of Directors determines that
(a) the ComVest Observer's presence would threaten the Company's ability to
claim attorney-client privilege with respect to the matters being discussed,
(b) the subject matter to be discussed by the Board of Directors involves an
actual conflict of interest between the Company and the ComVest Observer, as
reasonably determined in good faith by the Board of Directors, or (c) the
ComVest Observer's presence would cause the Company to breach confidentiality
provisions to which the Company is bound. Meetings to be held by telephone
conference and actions to be taken by written consent shall not be prohibited,
provided that the ComVest Observer shall be given notice of such meeting or a
copy of each written consent at the same time as provided to the Company's
directors. The ComVest Observer shall receive no compensation, except that the
Company will reimburse out-of-pocket expenses of the ComVest Observer in the
same manner as the directors of the Company.

        5.14    Removal or Resignation of ComVest Director.    As long as
ComVest has any right to nominate a person for election to the Board of
Directors, as specified in Section 5.13(a), at any time at which a vacancy shall
be created on the Board of Directors as a result of the death, disability,
retirement, resignation, removal or otherwise of the ComVest Director, ComVest
shall be entitled to nominate another individual to fill the vacancy and the
Company will cause such individual to become a member of the Board of Directors
until the next succeeding annual meeting of the stockholders of the Company, at
which time the provisions of Section 5.13(a) shall apply.

        5.15    Consulting Arrangement.    ComVest will assist the Company in
identifying potential strategic partners, merger or acquisition candidates or
acquisition targets. In the event that ComVest introduces a joint venture
partner, a merger or acquisition partner or an acquisition target to the
Company, then, at the closing of such transaction, the Company shall pay to
ComVest a cash fee equal to 1% of the transaction value (which shall include not
only amounts paid for equity interests or for assets, but assumed Indebtedness
as well) less (i) an amount equal to the Financing Fee, Commitment Fee and
Additional Note financing fees theretofore paid (provided, this clause (i) shall
apply only until such time as an amount equal to such Financing Fee, Commitment
Fee and Additional Note financing fees shall have been fully deducted from the
fees contemplated by this Section 5.15) and (ii) an amount equal to any
investment banking fairness opinion fees necessary to complete such transaction,
provided that the fee payable to ComVest under this Section 5.15 shall be at
least $500,000 in connection with a Sale of the Company (as defined in the
Notes) or any transaction or series of related transactions in which any person
other than ComVest acquires from the Company, directly or indirectly, equity
interests in the Company possessing more than 30% of the voting power of all
outstanding equity interests in the Company.

ARTICLE 6
CLOSING

        The parties will take the following actions at Closing:

        6.1    Execution and Delivery of Transaction Documents.    Each of
ComVest and the Company shall execute each of the Transaction Documents to which
it is a party and any and all ancillary documents thereto and deliver the same
to the other party. In addition, the Company shall deliver to ComVest executed
copies of Lock-Up Agreements, substantially in the form of Exhibit E, as
executed by Harris Ravine and David Kirwan and each of the directors of the
Company.

        6.2    Payment of Purchase Price.    ComVest shall pay to the Company
the Initial Note Purchase Price, by wire transfer of immediately available funds
payable to the Company.

        6.3    Payment of Financing Fee and Commitment Fee; Reimbursement of
ComVest Expenses.    The Company shall pay to ComVest the Financing Fee, the
Commitment Fee and the ComVest Expenses, by wire transfer of immediately
available funds payable to ComVest.

        6.4    Officers' Certificate.    The Company shall deliver a certificate
executed by the President or the Chief Executive Officer of the Company and by
the Chief Financial Officer of the Company, stating that all of the
representations and warranties of the Company set forth in the Transaction
Documents are accurate as of the Closing Date and that the Company has performed
all of its covenants and agreements required to be performed under the
Transaction Documents on or before the Closing Date.

        6.5    Secretary's Certificate.    The Company shall deliver a
certificate of the Secretary of the Company, dated the Closing Date,
(i) certifying the continued and valid existence of the Company, Fischer Imaging
Europe SA, Société anonyme ("Fischer Europe") and Fischer Imaging Deutschland
GmbH ("Fischer International"), (ii) certifying that no amendments to the
Company's Certificate of Incorporation have been approved or adopted by the
Board of Directors or the stockholders of the Company since the date of the
certificate specified in Section 6.6 below, (iii) certifying the attached copy
of the By-laws of the Company as being a true, accurate and complete copy of the
By-laws of the Company, (iv) certifying the total number of outstanding shares
of Common Stock as of the Closing Date, (v) certifying the authorization of the
Company's execution, delivery and performance of the Transaction Documents, and
(vi) certifying the resolutions adopted by the Board of Directors authorizing
the actions to be taken by the Company contemplated by the Transaction
Documents.

        6.6    Certificate of Incorporation.    The Company shall deliver a copy
of the Certificate of Incorporation (or equivalent organizational document) of
the Company and each of its subsidiaries, certified by the Secretary of State
(or equivalent governmental authority) of the jurisdiction of formation of each
such entity as of a date not more than 10 business days prior to the Closing
Date.

        6.7    Good Standing Certificates.    The Company shall deliver good
standing certificates for the Company from Delaware and Colorado as of a date
not more than five business days prior to the Closing Date and tax certificates
of Fischer Europe and Fischer Deutschland from their respective jurisdictions of
organization.

        6.8    Pay-Off of Silicon Valley Bank Credit Facility.    The Company
shall obtain from Silicon Valley Bank, and shall deliver to ComVest, a payoff
and release letter, in form and substance reasonably satisfactory to ComVest,
stating (a) the amounts (principal, interest, fees and other charges) required
in order to pay in full all obligations of the Company to Silicon Valley Bank as
of the Closing Date, and (b) that, upon receipt by Silicon Valley Bank of such
stated payoff amount, all obligations of the Company to Silicon Valley Bank
(other than inchoate indemnification obligations) shall be deemed satisfied and
all liens and security interests securing the Company's obligations to Silicon
Valley Bank shall be deemed released (with express authority to the Company to
file or cause to be filed UCC termination statements and other releases in
respect of all filed financing statements, collateral assignments and/or other
filings with respect to such liens and security interests); and the Company
shall utilize or direct the payment of a portion of the Initial Note Purchase
Price to effect such full payoff of Silicon Valley Bank.

        6.9    Appointment of ComVest Director.    The Company shall cause its
Board of Directors to elect the ComVest Director to the Board of Directors as a
Class II Director.

ARTICLE 7
INDEMNIFICATION

        7.1    Indemnification of ComVest by the Company.    The Company hereby
agrees to indemnify and hold harmless each of ComVest, its Affiliates, their
investment advisors, their managing members, and each of their respective
officers, managers, members, directors, partners, shareholders, and employees
(collectively, the "ComVest Indemnitees"), from and against any and all losses,
claims, damages, judgments, penalties, liabilities and deficiencies (including
the reasonable fees and expenses of legal counsel) (collectively, "Losses"), to
the extent arising out of or in connection with:

(i)any misrepresentation, omission of fact or breach of any of the Company's
representations or warranties contained in this Agreement or the other
Transaction Documents, the annexes, schedules or exhibits hereto or any
instrument, agreement or certificate entered into or delivered by the Company
pursuant to this Agreement or the other Transaction Documents; or

(ii)any failure by the Company to perform any of its covenants, agreements,
undertakings or obligations set forth in this Agreement or the other Transaction
Documents, the annexes, schedules or exhibits hereto or any instrument,
agreement or certificate entered into or delivered by the Company pursuant to
this Agreement or the other Transaction Documents.

        7.2    Indemnification of the Company by ComVest.    ComVest hereby
agrees to indemnify and hold harmless the Company and its officers, directors
and employees (collectively, the "Company Indemnitees"), from and against any
and all Losses to the extent arising out of or in connection with any
misrepresentation, omission of fact or breach of any of ComVest's
representations, warranties or covenants contained in this Agreement or the
other Transaction Documents to which it is a party and any failure by ComVest to
perform any of its covenants, agreements, undertakings or obligations set forth
in this Agreement or the other Transaction Documents to which it is a party.

        7.3    Third Party Claims.    Promptly after receipt by either party
hereto seeking indemnification pursuant to this Article 7 (an "Indemnified
Party") of written notice of any investigation, claim, proceeding or other
action in respect of which indemnification is being sought (each, a "Claim"),
the Indemnified Party promptly shall notify the party against whom
indemnification pursuant to this Article 7 is being sought (the "Indemnifying
Party") of the commencement thereof; but the omission to so notify the
Indemnifying Party shall not relieve it from any liability that it otherwise may
have to the Indemnified Party, except to the extent that the Indemnifying Party
is materially prejudiced and forfeits substantive rights and defenses by reason
of such failure. In connection with any Claim, the Indemnifying Party shall be
entitled to assume the defense thereof. Notwithstanding the assumption of the
defense of any Claim by the Indemnifying Party, the Indemnified Party shall have
the right to employ separate legal counsel and to participate in the defense of
such Claim, and the Indemnifying Party shall bear the reasonable fees,
out-of-pocket costs and expenses of such separate legal counsel to the
Indemnified Party if (and only if): (x) the Indemnifying Party shall have agreed
to pay such fees, out-of-pocket costs and expenses, (y) the Indemnified Party
reasonably shall have concluded that representation of the Indemnified Party and
the Indemnifying Party by the same legal counsel would not be appropriate due to
actual or, as reasonably determined by legal counsel to the Indemnified Party,
potentially differing interests between such parties in the conduct of the
defense of such Claim, or if there may be legal defenses available to the
Indemnified Party that are in addition to or disparate from those available to
the Indemnifying Party, or (z) the Indemnifying Party shall have failed to
employ legal counsel reasonably satisfactory to the Indemnified Party within a
reasonable period of time after notice of the commencement of such Claim. If the
Indemnified Party employs separate legal counsel in circumstances other than as
described in clauses (x), (y) or (z) above, the fees, costs and expenses of such
legal counsel shall be borne exclusively by the Indemnified Party. Except as
provided above, the Indemnifying Party shall not, in connection with any Claim
in the same jurisdiction, be liable for the fees and expenses of more than one
firm of legal counsel for the Indemnified Party (together with appropriate local
counsel). The Indemnifying Party shall not, without the prior written consent of
the Indemnified Party (which consent shall not unreasonably be withheld) settle
or compromise any Claim or consent to the entry of any judgment that does not
include an unconditional release of the Indemnified Party from all liabilities
with respect to such Claim or judgment.

        7.4    Non-Exclusive Remedies.    The parties' rights to indemnification
under this Article 7 are in addition to, and not exclusive of, any and all other
rights and remedies granted to the parties in the Transaction Documents, all of
which may be exercised singly or concurrently.

ARTICLE 8
EXPENSES

        The Company covenants and agrees with ComVest that the Company shall pay
or cause to be paid the following: (i) all expenses in connection with
registration or qualification of the Warrant Shares for offering and sale under
federal securities laws and state securities laws; (ii) a financing fee in the
amount of $112,500 (the "Financing Fee"), which shall be fully earned by and
payable to ComVest at Closing; (iii) a commitment fee in the amount of $50,000
(the "Commitment Fee") in respect of the Post-Closing Commitment, which shall be
fully earned by and payable to ComVest at Closing; (iv) the additional financing
fee in respect of purchases of the Second Note and Additional Notes, which shall
be fully earned by and payable to ComVest in accordance with Section 2.3(c); and
(v) all reasonable costs and expenses incident to the performance of ComVest's
obligations hereunder which are not otherwise specifically provided for in this
Section, including the fees and disbursements of ComVest's counsel and due
diligence expenses, which payment or reimbursement shall not exceed $100,000
(the "ComVest Expenses"). Other than as set forth in this Article 8, each of the
parties hereto agrees that it shall each be responsible for and pay its own
expenses and fees, including all legal, accounting and other professional fees,
associated with the transactions contemplated by Transaction Documents.

ARTICLE 9
SURVIVAL

        The representations and warranties of the Company and ComVest shall
survive the Closing until eighteen (18) months following the Closing Date;
provided, that the representations and warranties set forth in Sections 3.1,
3.7, 3.8, 4.1, 4.2, 4.3, 4.4 and 4.5 shall survive indefinitely. The agreements
and covenants of the Company and ComVest, including the covenants and
acknowledgments under Article 5 and the indemnification obligations under
Article 7, shall survive the execution and delivery of this Agreement and the
delivery of the Securities hereunder until such time as is specified in the
applicable provision or, if no time is specified, indefinitely.

ARTICLE 10
MISCELLANEOUS

        10.1    Governing Law; Jurisdiction.    This Agreement shall be governed
by and interpreted in accordance with the internal laws of the State of New
York, without giving effect to conflicts of laws issues. Each of the parties
submits to the jurisdiction of the federal courts whose district encompass the
Borough of Manhattan, City of New York or the state courts of the State of New
York sitting in the Borough of Manhattan, City of New York in connection with
any dispute arising under this Agreement or any of the transactions contemplated
hereby, and hereby waives, to the maximum extent permitted by law, any
objection, including any objections based on forum non conveniens, to the
bringing of any such proceeding in such jurisdictions.

        10.2    Counterparts.    This Agreement may be signed in two or more
counterparts (and by facsimile), each of which shall be deemed an original.

        10.3    Headings.    The headings of this Agreement are for convenience
of reference only and shall not form part of, or affect the interpretation of,
this Agreement.

        10.4    Severability.    If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or unenforceability of this
Agreement in any other jurisdiction.

        10.5    Parties in Interest; Successors and Assigns.    This Agreement
shall be binding upon and inure solely to the benefit of each party hereto and
their successors and assigns, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement. Except in
connection with an assignment and transfer of the Notes in compliance with
Section 5.1 of this Agreement and the terms of the Notes, neither the Company
nor ComVest shall assign this Agreement or any rights or obligations hereunder
without the prior written consent of the other. Notwithstanding the foregoing,
ComVest may assign its rights hereunder to any of its Affiliates.

        10.6    Remedies.    The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to ComVest by vitiating the
intent and purpose of the transactions contemplated hereby. Accordingly, the
Company acknowledges that the remedy at law for a breach of its obligations
under this Agreement will be inadequate and agrees, in the event of a breach or
threatened breach by the Company of the provisions of this Agreement, that
ComVest shall be entitled, in addition to all other available remedies in law or
in equity, to an injunction or injunctions to prevent or cure any breaches of
the provisions of this Agreement and to enforce specifically the terms and
provisions of this Agreement, without the necessity of showing economic loss and
without any bond or other security being required.

        10.7    Amendments.    This Agreement, including without limitation the
Notes and Warrants, may be modified or amended in writing by the Company and
ComVest. No waiver hereunder shall be effective unless in writing signed by the
party to be charged therewith.

        10.8    Merger.    This Agreement, together with the other Transaction
Documents, supersedes all prior agreements and understandings among the parties
hereto with respect to the subject matter hereof, including, without limitation,
the Term Sheet dated December 29, 2004.

        10.9    Notices.    Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be effective upon
personal delivery, via facsimile (upon receipt of confirmation of error-free
transmission) or two business days following deposit of such notice with an
internationally recognized courier service, with postage prepaid and addressed
to each of the other parties thereunto entitled at the following addresses, or
at such other addresses as a party may designate by five days advance written
notice to each of the other parties hereto.

Company:   Fischer Imaging Corporation
12300 N. Grant Street
Denver, Colorado 80241
ATTENTION: Harris Ravine
 
 
Telephone: (303) 450-4370
Facsimile: (303) 252-4256
with a copy to:
 
Ronald R. Levine, II
Davis Graham & Stubbs LLP
1550 Seventeenth Street, Suite 500
Denver, Colorado 80202-1500
 
 
Telephone: (303) 892-9400
Facsimile: (303) 893-1379
ComVest:
 
ComVest Investment Partners II LLC
One North Clematis, Suite 300
West Palm Beach, Florida 33401
ATTENTION: Carl Kleidman
 
 
Telephone: (561) 868-6070
e-mail: Carlk@ComVest.com
with a copy to:
 
Greenberg Traurig, LLP
200 Park Avenue
New York, New York 10166
ATTENTION: Alan Annex and Kenneth A. Gerasimovich
 
 
Telephone: (212) 801-9200
Facsimile: (212) 801-6400

        10.10    Waiver of Jury Trial.    Each of the parties hereto hereby
waives to the fullest extent permitted by applicable law any right it may have
to a trial by jury with respect to any litigation directly or indirectly arising
out of, under or in connection with this Agreement, the 40 other Transaction
Documents or the transactions contemplated hereby and thereby. Each of the
parties hereto (a) certifies that no representative, agent or attorney of any
other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce that foregoing waiver and
(b) acknowledges that it and the other hereto have been induced to enter into
this Agreement, the other Transaction Documents and the transactions
contemplated hereby and thereby, as applicable, by, among other things, the
mutual waivers and certifications in this Section 10.10.

[REMAINDER OF PAGE BLANK]

        IN WITNESS WHEREOF, this Agreement has been duly executed by each of the
undersigned.

    COMPANY:
 
 
FISCHER IMAGING CORPORATION
 
 
By:
 

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

Name: Harris Ravine
Title: President and Chief Executive Officer
 
 
COMVEST INVESTMENT PARTNERS II LLC
 
 
By:
 

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Name:
Title:

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