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                                                                    EXHIBIT 4(a)

                          SECURITIES PURCHASE AGREEMENT

      This Securities Purchase Agreement (this "Agreement") is dated as of April
12, 2005, among Integral Vision, Inc., a Michigan corporation (the "Company"),
and each purchaser identified on the signature pages hereto (each, including its
successors and assigns, a "Purchaser" and collectively the "Purchasers"); and

      WHEREAS, subject to the terms and conditions set forth in this Agreement
and pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"Securities Act") and Rule 506 promulgated thereunder, the Company desires to
issue and sell to each Purchaser, and each Purchaser, severally and not jointly,
desires to purchase from the Company, securities of the Company as more fully
described in this Agreement.

      NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this
Agreement, and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the Company and each Purchaser agree
as follows:

                                    ARTICLE I
                                   DEFINITIONS

      1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement: (a) capitalized terms that are not otherwise defined herein have the
meanings given to such terms in the Certificate of Designations (as defined
herein) or the Registration Rights Agreement (as defined herein), as applicable,
and (b) the following terms have the meanings indicated in this Section 1.1:

            "Action" shall have the meaning ascribed to such term in Section
      3.1(j).

            "Affiliate" means any Person that, directly or indirectly through
      one or more intermediaries, controls or is controlled by or is under
      common control with a Person, as such terms are used in and construed
      under Rule 144. With respect to a Purchaser, any investment fund or
      managed account that is managed on a discretionary basis by the same
      investment manager as such Purchaser will be deemed to be an Affiliate of
      such Purchaser.

            "Certificate of Designations" means the Certificate of Designations
      to be filed prior to the Closing by the Company with the Secretary of
      State of Michigan, in the form of Exhibit D attached hereto.

            "Closing" means the closing of the purchase and sale of the
      Preferred Stock and the Warrants pursuant to Section 2.1.

            "Closing Date" means the Trading Day when all of the Transaction
      Documents have been executed and delivered by the applicable parties
      thereto, and all conditions precedent to (i) the Purchasers' obligations
      to pay the Subscription Amount and (ii) the Company's obligations to
      deliver the Securities have been satisfied or waived.

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            "Closing Price" means on any particular date (a) the last reported
      closing bid price per share of Common Stock on such date on the Trading
      Market (as reported by Bloomberg L.P. at 4:15 PM (New York time) as the
      last reported closing bid price for regular session trading on such day),
      or (b) if there is no such price on such date, then the closing bid price
      on the Trading Market on the date nearest preceding such date (as reported
      by Bloomberg L.P. at 4:15 PM (New York time) as the closing bid price for
      regular session trading on such day), or (c) if the Common Stock is not
      then listed or quoted on the Trading Market and if prices for the Common
      Stock are then reported in the "pink sheets" published by the National
      Quotation Bureau Incorporated (or a similar organization or agency
      succeeding to its functions of reporting prices), the most recent bid
      price per share of the Common Stock so reported, or (d) if the shares of
      Common Stock are not then publicly traded the fair market value of a share
      of Common Stock as determined by an appraiser selected in good faith by
      the Purchasers of a majority in interest of the Securities then
      outstanding.

            "Commission" means the Securities and Exchange Commission.

            "Common Stock" means the common stock of the Company, no par value
      per share, and any securities into which such common stock may hereafter
      be reclassified.

            "Common Stock Equivalents" means any securities of the Company or
      the Subsidiaries which would entitle the holder thereof to acquire at any
      time Common Stock, including without limitation, any debt, preferred
      stock, rights, options, warrants or other instrument that is at any time
      convertible into or exchangeable for, or otherwise entitles the holder
      thereof to receive, Common Stock.

            "Company Counsel" means Warren Cameron Asciutto & Blackmer, P.C.

            "Conversion Price" shall have the meaning ascribed to such term in
      the Certificate of Designations.

            "Conversion Shares" means the shares of Common Stock issuable upon
      conversion of the Preferred Stock.

            "Disclosure Schedules" means the Disclosure Schedules of the Company
      delivered concurrently herewith.

            "Effective Date" means the date that the initial Registration
      Statement filed by the Company pursuant to the Registration Rights
      Agreement is first declared effective by the Commission.

            "Evaluation Date" shall have the meaning ascribed to such term in
      Section 3.1(r).

            "Exchange Act" means the Securities Exchange Act of 1934, as
      amended.

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<PAGE>

            "Exempt Issuance" means the issuance of (a) shares of Common Stock
      or options to employees, officers or directors of the Company pursuant to
      any stock or option plan duly adopted by a majority of the non-employee
      members of the Board of Directors of the Company or a majority of the
      members of a committee of non-employee directors established for such
      purpose, (b) securities upon the exercise of or conversion of any
      Securities issued hereunder, convertible securities, options or warrants
      issued and outstanding on the date of this Agreement (or commitments and
      agreements outstanding as of the date hereof to issue any such securities,
      options or warrants), provided that such securities, commitments and
      agreements have not been amended since the date of this Agreement to
      increase the number of such securities or to decrease the exercise or
      conversion price of any such securities, and (c) securities issued
      pursuant to acquisitions or strategic transactions, provided any such
      issuance shall only be to a Person which is, itself or through its
      subsidiaries, an operating company in a business synergistic with the
      business of the Company and in which the Company receives benefits in
      addition to the investment of funds, but shall not include a transaction
      in which the Company is issuing securities primarily for the purpose of
      raising capital or to an entity whose primary business is investing in
      securities.

            "FW" means Feldman Weinstein LLP with offices located at 420
      Lexington Avenue, Suite 2620, New York, New York 10170-0002.

            "GAAP" shall have the meaning ascribed to such term in Section
      3.1(h).

            "Intellectual Property Rights" shall have the meaning ascribed to
      such term in Section 3.1(o).

            "Legend Removal Date" shall have the meaning ascribed to such term
      in Section 4.1(c).

            "Liens" means a lien, charge, security interest, encumbrance, right
      of first refusal, preemptive right or other restriction.

            "Material Adverse Effect" shall have the meaning ascribed to such
      term in Section 3.1(b).

            "Material Permits" shall have the meaning ascribed to such term in
      Section 3.1(m).

            "Maximum Rate" shall have the meaning ascribed to such term in
      Section 5.17.

            "Participation Maximum" shall have the meaning ascribed to such term
      in Section 4.13.

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<PAGE>

            "Person" means an individual or corporation, partnership, trust,
      incorporated or unincorporated association, joint venture, limited
      liability company, joint stock company, government (or an agency or
      subdivision thereof) or other entity of any kind.

            "Preferred Stock" means the up to 7,000 shares of the Company's
      Series A Convertible Preferred Stock issued hereunder having the rights,
      preferences and privileges set forth in the Certificate of Designations.

            "Pre-Notice" shall have the meaning ascribed to such term in Section
      4.13.

            "Proceeding" means an action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Purchaser Party" shall have the meaning ascribed to such term in
      Section 4.11.

            "Registration Rights Agreement" means the Registration Rights
      Agreement, dated as of the date of this Agreement, among the Company and
      each Purchaser, in the form of Exhibit A attached hereto.

            "Registration Statement" means a registration statement meeting the
      requirements set forth in the Registration Rights Agreement and covering
      the resale by the Purchasers of the Preferred Stock and the Warrant
      Shares.

            "Required Approvals" shall have the meaning ascribed to such term in
      Section 3.1(e).

            "Rule 144" means Rule 144 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same effect as such Rule.

            "SEC Reports" shall have the meaning ascribed to such term in
      Section 3.1(h).

            "Securities" means the Preferred Stock, the Warrants and the
      Underlying Shares.

            "Securities Act" means the Securities Act of 1933, as amended.

            "Shareholder Approval" means the approval from the shareholders of
      an amendment to the Company's certificate of incorporation to increase the
      number of authorized shares of Common Stock to an amount equal to at least
      the number required to permit the conversion and exercise in full of all
      shares of Preferred Stock and Warrants issued hereunder.

            "Shareholder Approval Date" shall have the meaning set forth in
      Section 4.12.

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<PAGE>

            "Short Sales" include, without limitation, all "short sales" as
      defined in Rule 200 promulgated under Regulation SHO under the Exchange
      Act and all types of direct and indirect stock pledges, forward sale
      contracts, options, puts, calls, short sales, swaps and similar
      arrangements (including on a total return basis), and sales and other
      transactions through non-US broker dealers or foreign regulated brokers.

            "Stated Value" means $1,000 per share of Preferred Stock.

            "Subscription Amount" means, as to each Purchaser, the amounts set
      forth below such Purchaser's signature block on the signature page hereto,
      in United States dollars and in immediately available funds.

            "Subsequent Financing" shall have the meaning ascribed to such term
      in Section 4.13.

            "Subsequent Financing Notice" shall have the meaning ascribed to
      such term in Section 4.13.

            "Subsidiary" shall mean the subsidiaries of the Company, if any, set
      forth on Schedule 3.1(a).

            "Trading Day" means a day on which the Common Stock is traded on a
      Trading Market.

            "Trading Market" means the following markets or exchanges on which
      the Common Stock is listed or quoted for trading on the date in question:
      the Nasdaq SmallCap Market, the American Stock Exchange, the New York
      Stock Exchange, the Nasdaq National Market or the OTC Bulletin Board.

            "Transaction Documents" means this Agreement, the Certificate of
      Designations, the Warrants, the Registration Rights Agreement and any
      other documents or agreements executed in connection with the transactions
      contemplated hereunder.

            "Underlying Shares" means the Conversion Shares and the Warrant
      Shares.

            "Warrants" means the Common Stock Purchase Warrants, in the form of
      Exhibit B delivered to the Purchasers at the Closing in accordance with
      Section 2.2(a)(iii) hereof, which warrants shall be exercisable
      immediately upon issuance for a term of five years and have an exercise
      price equal to $1.60, subject to adjustment as provided therein.

            "Warrant Shares" means the shares of Common Stock issuable upon
      exercise of the Warrants.

                                       5
<PAGE>

                                   ARTICLE II
                                PURCHASE AND SALE

      2.1 Closing. On the Closing Date, each Purchaser shall purchase from the
Company, severally and not jointly with the other Purchasers, and the Company
shall issue and sell to each Purchaser: (a) a number of shares of Preferred
Stock equal to such Purchaser's Subscription Amount divided by the Stated Value
and (b) the Warrants as determined pursuant to Section 2.2(a)(iii). The
aggregate number of shares of Preferred Stock sold hereunder shall be up to
7,000. The aggregate Subscription Amounts for the Preferred Stock sold hereunder
shall be up to $7,000,000. Upon satisfaction of the conditions set forth in
Sections 2.2 and 2.3, the Closing shall occur at the offices of FW, or such
other location as the parties shall mutually agree.

      2.2 Deliveries.

            a)    On the Closing Date, the Company shall deliver or cause to be
                  delivered to each Purchaser the following:

                  (i)   this Agreement duly executed by the Company;

                  (ii)  within 5 Trading Days of the Closing Date, as to each
                        Purchaser, a certificate evidencing a number of shares
                        of Preferred Stock equal to such Purchaser's
                        Subscription Amount divided by the Stated Value,
                        registered in the name of such Purchaser;

                  (iii) within 5 Trading Days of the Closing Date, as to each
                        Purchaser, a Warrant, registered in the name of such
                        Purchaser, pursuant to which such Purchaser shall have
                        the right to acquire up to the number of shares of
                        Common Stock equal to 50% of the shares of Common Stock
                        underlying the Preferred Stock to be issued to such
                        Purchaser;

                  (iv)  the written voting agreement, in the form of Exhibit E
                        attached hereto, of all of the officers, directors and
                        shareholders holding more than 10% of the issued and
                        outstanding shares of Common Stock on the date hereof
                        (owning not less than 51% of the issued and outstanding
                        Common Stock) agreeing vote all shares of Common Stock
                        held by them to amend the Company's certificate of
                        incorporation to increase the number of authorized
                        shares of Common Stock pursuant to Section 4.12;

                  (v)   as to John R. Kiely III and J.A. Hunter, the written
                        lock-up agreement in the form of Exhibit F attached
                        hereto, agreeing not to dispose of any such shares until
                        after the Effective Date;

                  (vi)  the Registration Rights Agreement duly executed by the
                        Company; and

                  (vii) a legal opinion of Company Counsel, in the form of
                        Exhibit C attached hereto.

                                       6
<PAGE>

            b)    On the Closing Date, each Purchaser shall deliver or cause to
                  be delivered to the Company the following:

                  (i)   this Agreement duly executed by such Purchaser;

                  (ii)  such Purchaser's Subscription Amount by wire transfer to
                        the account as specified in writing by the Company; and

                  (iii) the Registration Rights Agreement duly executed such
                        Purchaser.

      2.3 Closing Conditions.

            a)    The obligations of the Company hereunder in connection with
                  the Closing are subject to the following conditions being met:

                  (i)   the accuracy in all material respects when made and on
                        the Closing Date of the representations and warranties
                        of the Purchasers contained herein;

                  (ii)  all obligations, covenants and agreements of the
                        Purchasers required to be performed at or prior to the
                        Closing Date shall have been performed; and

                  (iii) the delivery by the Purchasers of the items set forth in
                        Section 2.2(b) of this Agreement.

            b)    The respective obligations of the Purchasers hereunder in
                  connection with the Closing are subject to the following
                  conditions being met:

                  (i)   the accuracy in all material respects on the Closing
                        Date of the representations and warranties of the
                        Company contained herein;

                  (ii)  all obligations, covenants and agreements of the Company
                        required to be performed at or prior to the Closing Date
                        shall have been performed;

                  (iii) the delivery by the Company of the items set forth in
                        Section 2.2(a) of this Agreement;

                  (iv)  there shall have been no Material Adverse Effect with
                        respect to the Company since the date hereof; and

                  (v)   From the date hereof to the Closing Date, trading in the
                        Common Stock shall not have been suspended by the
                        Commission (except for any suspension of trading of
                        limited duration agreed to by the Company, which
                        suspension shall be terminated prior to the Closing),
                        and, at any time prior to the Closing Date, trading in

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<PAGE>

                        securities generally as reported by Bloomberg Financial
                        Markets shall not have been suspended or limited, or
                        minimum prices shall not have been established on
                        securities whose trades are reported by such service, or
                        on any Trading Market, nor shall a banking moratorium
                        have been declared either by the United States or New
                        York State authorities nor shall there have occurred any
                        material outbreak or escalation of hostilities or other
                        national or international calamity of such magnitude in
                        its effect on, or any material adverse change in, any
                        financial market which, in each case, in the reasonable
                        judgment of each Purchaser, makes it impracticable or
                        inadvisable to purchase the Preferred Stock at the
                        Closing.

                                   ARTICLE III
                         REPRESENTATIONS AND WARRANTIES

      3.1 Representations and Warranties of the Company. Except as set forth
under the corresponding section of the Disclosure Schedules which Disclosure
Schedules shall be deemed a part hereof, the Company hereby makes the
representations and warranties set forth below to each Purchaser.

            (a) Subsidiaries. All of the direct and indirect subsidiaries of the
      Company are set forth on Schedule 3.1(a). The Company owns, directly or
      indirectly, all of the capital stock or other equity interests of each
      Subsidiary free and clear of any Liens, and all the issued and outstanding
      shares of capital stock of each Subsidiary are validly issued and are
      fully paid, non-assessable and free of preemptive and similar rights to
      subscribe for or purchase securities. If the Company has no subsidiaries,
      then references in the Transaction Documents to the Subsidiaries will be
      disregarded.

            (b) Organization and Qualification. The Company and each of the
      Subsidiaries is an entity duly incorporated or otherwise organized,
      validly existing and in good standing under the laws of the jurisdiction
      of its incorporation or organization (as applicable), with the requisite
      power and authority to own and use its properties and assets and to carry
      on its business as currently conducted. Neither the Company nor any
      Subsidiary is in violation or default of any of the provisions of its
      respective certificate or articles of incorporation, bylaws or other
      organizational or charter documents. Each of the Company and the
      Subsidiaries is duly qualified to conduct business and is in good standing
      as a foreign corporation or other entity in each jurisdiction in which the
      nature of the business conducted or property owned by it makes such
      qualification necessary, except where the failure to be so qualified or in
      good standing, as the case may be, could not have or reasonably be
      expected to result in (i) a material adverse effect on the legality,
      validity or enforceability of any Transaction Document, (ii) a material
      adverse effect on the results of operations, assets, business, prospects
      or financial condition of the Company and the Subsidiaries, taken as a
      whole, or (iii) a material adverse effect on the

                                       8
<PAGE>

Company's ability to perform in any material respect on a timely basis its
obligations under any Transaction Document (any of (i), (ii) or (iii), a
"Material Adverse Effect") and no Proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or
curtail such power and authority or qualification.

            (c) Authorization; Enforcement. The Company has the requisite
      corporate power and authority to enter into and to consummate the
      transactions contemplated by each of the Transaction Documents and
      otherwise to carry out its obligations thereunder. The execution and
      delivery of each of the Transaction Documents by the Company and the
      consummation by it of the transactions contemplated thereby have been duly
      authorized by all necessary action on the part of the Company and no
      further action is required by the Company in connection therewith other
      than in connection with the Required Approvals. Each Transaction Documents
      has been (or upon delivery will have been) duly executed by the Company
      and, when delivered in accordance with the terms hereof, will constitute
      the valid and binding obligation of the Company enforceable against the
      Company in accordance with its terms except (i) as limited by applicable
      bankruptcy, insolvency, reorganization, moratorium and other laws of
      general application affecting enforcement of creditors' rights generally
      and (ii) as limited by laws relating to the availability of specific
      performance, injunctive relief or other equitable remedies.

            (d) No Conflicts. The execution, delivery and performance of the
      Transaction Documents by the Company and the consummation by the Company
      of the other transactions contemplated thereby do not and will not: (i)
      conflict with or violate any provision of the Company's or any
      Subsidiary's certificate or articles of incorporation, bylaws or other
      organizational or charter documents, or (ii) conflict with, or constitute
      a default (or an event that with notice or lapse of time or both would
      become a default) under, result in the creation of any Lien upon any of
      the properties or assets of the Company or any Subsidiary, or give to
      others any rights of termination, amendment, acceleration or cancellation
      (with or without notice, lapse of time or both) of, any agreement, credit
      facility, debt or other instrument (evidencing a Company or Subsidiary
      debt or otherwise) or other understanding to which the Company or any
      Subsidiary is a party or by which any property or asset of the Company or
      any Subsidiary is bound or affected, or (iii) subject to the Required
      Approvals, conflict with or result in a violation of any law, rule,
      regulation, order, judgment, injunction, decree or other restriction of
      any court or governmental authority to which the Company or a Subsidiary
      is subject (including federal and state securities laws and regulations),
      or by which any property or asset of the Company or a Subsidiary is bound
      or affected; except in the case of each of clauses (ii) and (iii), such as
      could not have or reasonably be expected to result in a Material Adverse
      Effect.

            (e) Filings, Consents and Approvals. The Company is not required to
      obtain any consent, waiver, authorization or order of, give any notice to,
      or make any filing or registration with, any court or other federal,
      state, local or other governmental authority or other Person in connection
      with the execution, delivery and performance by the Company of the
      Transaction Documents, other than (i) filings required pursuant to Section
      4.5 of this Agreement, (ii) the filing with the Commission of the
      Registration

                                       9
<PAGE>

      Statement, (iii) the filing of the Certificate of Designations, (iv)
      following Shareholder Approval, the filing of a Certificate of Amendment
      increasing the Company's authorized Common Stock, and (v) the filing of
      Form D with the Commission and such filings as are required to be made
      under applicable state securities laws (collectively, the "Required
      Approvals").

            (f) Issuance of the Securities. The Securities are duly authorized
      and, when issued and paid for in accordance with the applicable
      Transaction Documents, will be duly and validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company other
      than restrictions on transfer provided for in the Transaction Documents.
      The Underlying Shares, when issued in accordance with the terms of the
      Transaction Documents, will be validly issued, fully paid and
      nonassessable, free and clear of all Liens imposed by the Company. The
      Company has reserved from its duly authorized capital stock all authorized
      but unissued and unreserved shares of Common Stock currently available for
      issuance of the Underlying Shares.

            (g) Capitalization. The capitalization of the Company is as set
      forth on Schedule 3.1(g). The Company has not issued any capital stock
      since its most recently filed periodic report under the Exchange Act,
      other than pursuant to the exercise of employee stock options under the
      Company's stock option plans, the issuance of shares of Common Stock to
      employees pursuant to the Company's employee stock purchase plan and
      pursuant to the conversion or exercise of outstanding Common Stock
      Equivalents. No Person has any right of first refusal, preemptive right,
      right of participation, or any similar right to participate in the
      transactions contemplated by the Transaction Documents. Except as a result
      of the purchase and sale of the Securities, there are no outstanding
      options, warrants, script rights to subscribe to, calls or commitments of
      any character whatsoever relating to, or securities, rights or obligations
      convertible into or exchangeable for, or giving any Person any right to
      subscribe for or acquire, any shares of Common Stock, or contracts,
      commitments, understandings or arrangements by which the Company or any
      Subsidiary is or may become bound to issue additional shares of Common
      Stock or Common Stock Equivalents. The issuance and sale of the Securities
      will not obligate the Company to issue shares of Common Stock or other
      securities to any Person (other than the Purchasers) and will not result
      in a right of any holder of Company securities to adjust the exercise,
      conversion, exchange or reset price under such securities. All of the
      outstanding shares of capital stock of the Company are validly issued,
      fully paid and nonassessable, have been issued in compliance with all
      federal and state securities laws, and none of such outstanding shares was
      issued in violation of any preemptive rights or similar rights to
      subscribe for or purchase securities. No further approval or authorization
      of any stockholder, the Board of Directors of the Company or others is
      required for the issuance and sale of the shares of Preferred Stock. There
      are no stockholders agreements, voting agreements or other similar
      agreements with respect to the Company's capital stock to which the
      Company is a party or, to the knowledge of the Company, between or among
      any of the Company's stockholders.

            (h) SEC Reports; Financial Statements. The Company has filed all
      reports, schedules, forms, statements and other documents required to be
      filed by it under the

                                       10
<PAGE>

      Securities Act and the Exchange Act, including pursuant to Section 13(a)
      or 15(d) thereof, for the two years preceding the date hereof (or such
      shorter period as the Company was required by law to file such material)
      (the foregoing materials, including the exhibits thereto and documents
      incorporated by reference therein, being collectively referred to herein
      as the "SEC Reports") on a timely basis or has received a valid extension
      of such time of filing and has filed any such SEC Reports prior to the
      expiration of any such extension. As of their respective dates, the SEC
      Reports complied in all material respects with the requirements of the
      Securities Act and the Exchange Act and the rules and regulations of the
      Commission promulgated thereunder, and none of the SEC Reports, when
      filed, contained any untrue statement of a material fact or omitted to
      state a material fact required to be stated therein or necessary in order
      to make the statements therein, in light of the circumstances under which
      they were made, not misleading. The financial statements of the Company
      included in the SEC Reports comply in all material respects with
      applicable accounting requirements and the rules and regulations of the
      Commission with respect thereto as in effect at the time of filing. Such
      financial statements have been prepared in accordance with United States
      generally accepted accounting principles applied on a consistent basis
      during the periods involved ("GAAP"), except as may be otherwise specified
      in such financial statements or the notes thereto and except that
      unaudited financial statements may not contain all footnotes required by
      GAAP, and fairly present in all material respects the financial position
      of the Company and its consolidated subsidiaries as of and for the dates
      thereof and the results of operations and cash flows for the periods then
      ended, subject, in the case of unaudited statements, to normal,
      immaterial, year-end audit adjustments.

            (i) Material Changes. Since the date of the latest audited financial
      statements included within the SEC Reports, except as specifically
      disclosed in the SEC Reports, (i) there has been no event, occurrence or
      development that has had or that could reasonably be expected to result in
      a Material Adverse Effect, (ii) the Company has not incurred any
      liabilities (contingent or otherwise) other than (A) trade payables and
      accrued expenses incurred in the ordinary course of business consistent
      with past practice and (B) liabilities not required to be reflected in the
      Company's financial statements pursuant to GAAP or required to be
      disclosed in filings made with the Commission, (iii) the Company has not
      altered its method of accounting, (iv) the Company has not declared or
      made any dividend or distribution of cash or other property to its
      stockholders or purchased, redeemed or made any agreements to purchase or
      redeem any shares of its capital stock and (v) the Company has not issued
      any equity securities to any officer, director or Affiliate, except
      pursuant to existing Company stock option plans. The Company does not have
      pending before the Commission any request for confidential treatment of
      information.

            (j) Litigation. There is no action, suit, inquiry, notice of
      violation, proceeding or investigation pending or, to the knowledge of the
      Company, threatened against or affecting the Company, any Subsidiary or
      any of their respective properties before or by any court, arbitrator,
      governmental or administrative agency or regulatory authority (federal,
      state, county, local or foreign) (collectively, an "Action") which (i)
      adversely affects or challenges the legality, validity or enforceability
      of any of the Transaction

                                       11
<PAGE>

      Documents or the Securities or (ii) could, if there were an unfavorable
      decision, have or reasonably be expected to result in a Material Adverse
      Effect. Neither the Company nor any Subsidiary, nor any director or
      officer thereof, is or has been the subject of any Action involving a
      claim of violation of or liability under federal or state securities laws
      or a claim of breach of fiduciary duty. There has not been, and to the
      knowledge of the Company, there is not pending or contemplated, any
      investigation by the Commission involving the Company or any current or
      former director or officer of the Company. The Commission has not issued
      any stop order or other order suspending the effectiveness of any
      registration statement filed by the Company or any Subsidiary under the
      Exchange Act or the Securities Act.

            (k) Labor Relations. No material labor dispute exists or, to the
      knowledge of the Company, is imminent with respect to any of the employees
      of the Company which could reasonably be expected to result in a Material
      Adverse Effect.

            (l) Compliance. Neither the Company nor any Subsidiary (i) is in
      default under or in violation of (and no event has occurred that has not
      been waived that, with notice or lapse of time or both, would result in a
      default by the Company or any Subsidiary under), nor has the Company or
      any Subsidiary received notice of a claim that it is in default under or
      that it is in violation of, any indenture, loan or credit agreement or any
      other agreement or instrument to which it is a party or by which it or any
      of its properties is bound (whether or not such default or violation has
      been waived), (ii) is in violation of any order of any court, arbitrator
      or governmental body, or (iii) is or has been in violation of any statute,
      rule or regulation of any governmental authority, including without
      limitation all foreign, federal, state and local laws applicable to its
      business except in each case as could not have a Material Adverse Effect.

            (m) Regulatory Permits. The Company and the Subsidiaries possess all
      certificates, authorizations and permits issued by the appropriate
      federal, state, local or foreign regulatory authorities necessary to
      conduct their respective businesses as described in the SEC Reports,
      except where the failure to possess such permits could not have or
      reasonably be expected to result in a Material Adverse Effect ("Material
      Permits"), and neither the Company nor any Subsidiary has received any
      notice of proceedings relating to the revocation or modification of any
      Material Permit.

            (n) Title to Assets. The Company and the Subsidiaries have good and
      marketable title in fee simple to all real property owned by them that is
      material to the business of the Company and the Subsidiaries and good and
      marketable title in all personal property owned by them that is material
      to the business of the Company and the Subsidiaries, in each case free and
      clear of all Liens, except for Liens as do not materially affect the value
      of such property and do not materially interfere with the use made and
      proposed to be made of such property by the Company and the Subsidiaries
      and Liens for the payment of federal, state or other taxes, the payment of
      which is neither delinquent nor subject to penalties. Any real property
      and facilities held under lease by the Company and the Subsidiaries are
      held by them under valid, subsisting and enforceable leases of which the
      Company and the Subsidiaries are in compliance.

                                       12
<PAGE>

            (o) Patents and Trademarks. The Company and the Subsidiaries have,
      or have rights to use, all patents, patent applications, trademarks,
      trademark applications, service marks, trade names, copyrights, licenses
      and other similar rights necessary or material for use in connection with
      their respective businesses as described in the SEC Reports and which the
      failure to so have could have a Material Adverse Effect (collectively, the
      "Intellectual Property Rights"). Neither the Company nor any Subsidiary
      has received a written notice that the Intellectual Property Rights used
      by the Company or any Subsidiary violates or infringes upon the rights of
      any Person. To the knowledge of the Company, all such Intellectual
      Property Rights are enforceable.

            (p) Insurance. The Company and the Subsidiaries are insured by
      insurers of recognized financial responsibility against such losses and
      risks and in such amounts as are prudent and customary in the businesses
      in which the Company and the Subsidiaries are engaged, including, but not
      limited to, directors and officers insurance coverage at least equal to
      the aggregate Subscription Amount. To the best of Company's knowledge,
      such insurance contracts and policies are accurate and complete. Neither
      the Company nor any Subsidiary has any reason to believe that it will not
      be able to renew its existing insurance coverage as and when such coverage
      expires or to obtain similar coverage from similar insurers as may be
      necessary to continue its business without a significant increase in cost.

            (q) Transactions With Affiliates and Employees. Except as set forth
      in the SEC Reports, none of the officers or directors of the Company and,
      to the knowledge of the Company, none of the employees of the Company is
      presently a party to any transaction with the Company or any Subsidiary
      (other than for services as employees, officers and directors), including
      any contract, agreement or other arrangement providing for the furnishing
      of services to or by, providing for rental of real or personal property to
      or from, or otherwise requiring payments to or from any officer, director
      or such employee or, to the knowledge of the Company, any entity in which
      any officer, director, or any such employee has a substantial interest or
      is an officer, director, trustee or partner, in each case in excess of
      $60,000 other than (i) for payment of salary or consulting fees for
      services rendered, (ii) reimbursement for expenses incurred on behalf of
      the Company and (iii) for other employee benefits, including stock option
      agreements under any stock option plan of the Company.

            (r) Sarbanes-Oxley; Internal Accounting Controls. The Company is in
      material compliance with all provisions of the Sarbanes-Oxley Act of 2002
      which are applicable to it as of the Closing Date. The Company and the
      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. The
      Company has established disclosure controls and procedures (as defined

                                       13
<PAGE>

      in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
      designed such disclosure controls and procedures to ensure that material
      information relating to the Company, including its Subsidiaries, is made
      known to the certifying officers by others within those entities,
      particularly during the period in which the Company's most recently filed
      periodic report under the Exchange Act, as the case may be, is being
      prepared. The Company's certifying officers have evaluated the
      effectiveness of the Company's controls and procedures as of the date
      prior to the filing date of the most recently filed periodic report under
      the Exchange Act (such date, the "Evaluation Date"). The Company presented
      in its most recently filed periodic report under the Exchange Act the
      conclusions of the certifying officers about the effectiveness of the
      disclosure controls and procedures based on their evaluations as of the
      Evaluation Date. Since the Evaluation Date, there have been no significant
      changes in the Company's internal controls (as such term is defined in
      Item 307(b) of Regulation S-K under the Exchange Act) or, to the Company's
      knowledge, in other factors that could significantly affect the Company's
      internal controls.

            (s) Certain Fees. No brokerage or finder's fees or commissions are
      or will be payable by the Company to any broker, financial advisor or
      consultant, finder, placement agent, investment banker, bank or other
      Person with respect to the transactions contemplated by this Agreement.
      The Purchasers shall have no obligation with respect to any fees or with
      respect to any claims made by or on behalf of other Persons for fees of a
      type contemplated in this Section that may be due in connection with the
      transactions contemplated by this Agreement.

            (t) Private Placement. Assuming the accuracy of the Purchasers
      representations and warranties set forth in Section 3.2, no registration
      under the Securities Act is required for the offer and sale of the
      Securities by the Company to the Purchasers as contemplated hereby. The
      issuance and sale of the Securities hereunder does not contravene the
      rules and regulations of the Trading Market.

            (u) Investment Company. The Company is not, and is not an Affiliate
      of, and immediately after receipt of payment for the shares of Preferred
      Stock, will not be or be an Affiliate of, an "investment company" within
      the meaning of the Investment Company Act of 1940, as amended. The Company
      shall conduct its business in a manner so that it will not become subject
      to the Investment Company Act.

            (v) Registration Rights. Other than the Purchasers, no Person has
      any right to cause the Company to effect the registration under the
      Securities Act of any securities of the Company.

            (w) Listing and Maintenance Requirements. The Company's Common Stock
      is registered pursuant to Section 12(g) of the Exchange Act, and the
      Company has taken no action designed to, or which to its knowledge is
      likely to have the effect of, terminating the registration of the Common
      Stock under the Exchange Act nor has the Company received any notification
      that the Commission is contemplating terminating such registration. The
      Company has not, in the 12 months preceding the date hereof,

                                       14
<PAGE>

      received notice from any Trading Market on which the Common Stock is or
      has been listed or quoted to the effect that the Company is not in
      compliance with the listing or maintenance requirements of such Trading
      Market. The Company is, and has no reason to believe that it will not in
      the foreseeable future continue to be, in compliance with all such listing
      and maintenance requirements.

            (x) Application of Takeover Protections. The Company and its Board
      of Directors have taken all necessary action, if any, in order to render
      inapplicable any control share acquisition, business combination, poison
      pill (including any distribution under a rights agreement) or other
      similar anti-takeover provision under the Company's Certificate of
      Incorporation (or similar charter documents) or the laws of its state of
      incorporation that is or could become applicable to the Purchasers as a
      result of the Purchasers and the Company fulfilling their obligations or
      exercising their rights under the Transaction Documents, including without
      limitation the Company's issuance of the Securities and the Purchasers'
      ownership of the Securities.

            (y) Disclosure. All disclosure provided to the Purchasers regarding
      the Company, its business and the transactions contemplated hereby,
      including the Disclosure Schedules to this Agreement, furnished by or on
      behalf of the Company with respect to the representations and warranties
      made herein are true and correct with respect to such representations and
      warranties and do not contain any untrue statement of a material fact or
      omit to state any material fact necessary in order to make the statements
      made therein, in light of the circumstances under which they were made,
      not misleading. The Company acknowledges and agrees that no Purchaser
      makes or has made any representations or warranties with respect to the
      transactions contemplated hereby other than those specifically set forth
      in Section 3.2 hereof.

            (z) No Integrated Offering. Assuming the accuracy of the Purchasers'
      representations and warranties set forth in Section 3.2, neither the
      Company, nor any of its affiliates, nor any Person acting on its or their
      behalf has, directly or indirectly, made any offers or sales of any
      security or solicited any offers to buy any security, under circumstances
      that would cause this offering of the Securities to be integrated with
      prior offerings by the Company for purposes of the Securities Act or any
      applicable shareholder approval provisions, including, without limitation,
      under the rules and regulations of any Trading Market on which any of the
      securities of the Company are listed or designated.

            (aa) Solvency. Based on the financial condition of the Company as of
      the Closing Date after giving effect to the receipt by the Company of the
      proceeds from the sale of the Securities hereunder, (i) the Company's fair
      saleable value of its assets exceeds the amount that will be required to
      be paid on or in respect of the Company's existing debts and other
      liabilities (including known contingent liabilities) as they mature; (ii)
      the Company's assets do not constitute unreasonably small capital to carry
      on its business for the current fiscal year as now conducted and as
      proposed to be conducted including its capital needs taking into account
      the particular capital requirements of the business conducted by the
      Company, and projected capital requirements and capital

                                       15
<PAGE>

      availability thereof; and (iii) the current cash flow of the Company,
      together with the proceeds the Company would receive, were it to liquidate
      all of its assets, after taking into account all anticipated uses of the
      cash, would be sufficient to pay all amounts on or in respect of its debt
      when such amounts are required to be paid. The Company does not intend to
      incur debts beyond its ability to pay such debts as they mature (taking
      into account the timing and amounts of cash to be payable on or in respect
      of its debt). The Company has no knowledge of any facts or circumstances
      which lead it to believe that it will file for reorganization or
      liquidation under the bankruptcy or reorganization laws of any
      jurisdiction within one year from the Closing Date. The SEC Reports set
      forth as of the dates thereof all outstanding secured and unsecured
      Indebtedness of the Company or any Subsidiary, or for which the Company or
      any Subsidiary has commitments. For the purposes of this Agreement,
      "Indebtedness" shall mean (a) any liabilities for borrowed money or
      amounts owed in excess of $50,000 (other than trade accounts payable
      incurred in the ordinary course of business), (b) all guaranties,
      endorsements and other contingent obligations in respect of Indebtedness
      of others, whether or not the same are or should be reflected in the
      Company's balance sheet (or the notes thereto), except guaranties by
      endorsement of negotiable instruments for deposit or collection or similar
      transactions in the ordinary course of business; and (c) the present value
      of any lease payments in excess of $50,000 due under leases required to be
      capitalized in accordance with GAAP. Neither the Company nor any
      Subsidiary is in default with respect to any Indebtedness.

            (bb) Reserved.

            (cc) Taxes. Except for matters that would not, individually or in
      the aggregate, have or reasonably be expected to result in a Material
      Adverse Effect, the Company and each Subsidiary has filed all necessary
      federal, state and foreign income and franchise tax returns and has paid
      or accrued all taxes shown as due thereon, and the Company has no
      knowledge of a tax deficiency which has been asserted or threatened
      against the Company or any Subsidiary.

            (dd) General Solicitation. Neither the Company nor any person acting
      on behalf of the Company has offered or sold any of the Securities by any
      form of general solicitation or general advertising. The Company has
      offered the Securities for sale only to the Purchasers and certain other
      "accredited investors" within the meaning of Rule 501 under the Securities
      Act.

            (ee) Foreign Corrupt Practices. Neither the Company, nor to the
      knowledge of the Company, any agent or other person acting on behalf of
      the Company, has (i) directly or indirectly, used any funds for unlawful
      contributions, gifts, entertainment or other unlawful expenses related to
      foreign or domestic political activity, (ii) made any unlawful payment to
      foreign or domestic government officials or employees or to any foreign or
      domestic political parties or campaigns from corporate funds, (iii) failed
      to disclose fully any contribution made by the Company (or made by any
      person acting on its behalf of which the Company is aware) which is in
      violation of law, or (iv) violated in any material respect any provision
      of the Foreign Corrupt Practices Act of 1977, as amended.

                                       16
<PAGE>

            (ff) Accountants. The Company's accountants are set forth on
      Schedule 3.1(ff) of the Disclosure Schedule. To the Company's knowledge,
      such accountants, who the Company expects will express their opinion with
      respect to the financial statements to be included in the Company's Annual
      Report on Form 10-K for the year ending December 31, 2004 are a registered
      public accounting firm as required by the Securities Act.

            (gg) Seniority. As of the Closing Date, no indebtedness or other
      equity of the Company is senior to the Preferred Stock in right of
      payment, whether with respect to interest or upon liquidation or
      dissolution, or otherwise, other than indebtedness secured by purchase
      money security interests (which is senior only as to underlying assets
      covered thereby) and capital lease obligations (which is senior only as to
      the property covered thereby).

            (hh) Acknowledgment Regarding Purchasers' Purchase of Securities.
      The Company acknowledges and agrees that each of the Purchasers is acting
      solely in the capacity of an arm's length purchaser with respect to the
      Transaction Documents and the transactions contemplated hereby. The
      Company further acknowledges that no Purchaser is acting as a financial
      advisor or fiduciary of the Company (or in any similar capacity) with
      respect to this Agreement and the transactions contemplated hereby and any
      advice given by any Purchaser or any of their respective representatives
      or agents in connection with this Agreement and the transactions
      contemplated hereby is merely incidental to the Purchasers' purchase of
      the Securities. The Company further represents to each Purchaser that the
      Company's decision to enter into this Agreement has been based solely on
      the independent evaluation of the transactions contemplated hereby by the
      Company and its representatives.

            (ii) Acknowledgement Regarding Purchasers' Trading Activity.
      Anything in this Agreement or elsewhere herein to the contrary
      notwithstanding (except for Section 4.16 hereof), it is understood and
      agreed by the Company (i) that none of the Purchasers have been asked by
      the Company to agree, nor has any Purchaser agreed with the Company, to
      desist from purchasing or selling, long and/or short, securities of the
      Company, or "derivative" securities based on securities issued by the
      Company or to hold the Securities for any specified term; (ii) that past
      or future open market or other transactions by any Purchaser, including
      Short Sales, and specifically including, without limitation, Short Sales
      or "derivative" transactions, before or after the closing of this or
      future private placement transactions, may negatively impact the market
      price of the Company's publicly-traded securities; (iii) that any
      Purchaser, and counter parties in "derivative" transactions to which any
      such Purchaser is a party, directly or indirectly, presently may have a
      "short" position in the Common Stock, and (iv) that each Purchaser shall
      not be deemed to have any affiliation with or control over any arm's
      length counter-party in any "derivative" transaction.

The Purchaser acknowledges and agrees that the Company does not make or has not
made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.1.

                                       17
<PAGE>

      3.2 Representations and Warranties of the Purchasers. Each Purchaser
hereby, for itself and for no other Purchaser, represents and warrants as of the
date hereof and as of the Closing Date to the Company as follows:

            (a) Organization; Authority. Such Purchaser is an entity duly
      organized, validly existing and in good standing under the laws of the
      jurisdiction of its organization with full right, corporate or partnership
      power and authority to enter into and to consummate the transactions
      contemplated by the Transaction Documents and otherwise to carry out its
      obligations thereunder. The execution, delivery and performance by such
      Purchaser of the transactions contemplated by this Agreement have been
      duly authorized by all necessary corporate or similar action on the part
      of such Purchaser. Each Transaction Documents to which it is a party has
      been duly executed by such Purchaser, and when delivered by such Purchaser
      in accordance with the terms hereof, will constitute the valid and legally
      binding obligation of such Purchaser, enforceable against it in accordance
      with its terms, except (i) as limited by general equitable principles and
      applicable bankruptcy, insolvency, reorganization, moratorium and other
      laws of general application affecting enforcement of creditors' rights
      generally, (ii) as limited by laws relating to the availability of
      specific performance, injunctive relief or other equitable remedies and
      (iii) insofar as indemnification and contribution provisions may be
      limited by applicable law.

            (b) Own Account. Such Purchaser understands that the Securities are
      "restricted securities" and have not been registered under the Securities
      Act or any applicable state securities law and is acquiring the Securities
      as principal for its own account and not with a view to or for
      distributing or reselling such Securities or any part thereof, has no
      present intention of distributing any of such Securities and has no
      arrangement or understanding with any other persons regarding the
      distribution of such Securities (this representation and warranty not
      limiting such Purchaser's right to sell the Securities pursuant to the
      Registration Statement or otherwise in compliance with applicable federal
      and state securities laws). Such Purchaser is acquiring the Securities
      hereunder in the ordinary course of its business. Such Purchaser does not
      have any agreement or understanding, directly or indirectly, with any
      Person to distribute any of the Securities.

            (c) Purchaser Status. At the time such Purchaser was offered the
      Securities, it was, and at the date hereof it is, and on each date on
      which it exercises any Warrants, it will be either: (i) an "accredited
      investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8)
      under the Securities Act or (ii) a "qualified institutional buyer" as
      defined in Rule 144A(a) under the Securities Act. Such Purchaser is not
      required to be registered as a broker-dealer under Section 15 of the
      Exchange Act.

            (d) Experience of Such Purchaser. Such Purchaser, either alone or
      together with its representatives, has such knowledge, sophistication and
      experience in business and financial matters so as to be capable of
      evaluating the merits and risks of the prospective investment in the
      Securities, and has so evaluated the merits and risks of such

                                       18
<PAGE>

      investment. Such Purchaser is able to bear the economic risk of an
      investment in the Securities and, at the present time, is able to afford a
      complete loss of such investment.

            (e) General Solicitation. Such Purchaser is not purchasing the
      Securities as a result of any advertisement, article, notice or other
      communication regarding the Securities published in any newspaper,
      magazine or similar media or broadcast over television or radio or
      presented at any seminar or any other general solicitation or general
      advertisement.

            (f) Short Sales. Such Purchaser has not directly or indirectly, nor
      has any Person acting on behalf of or pursuant to any understanding with
      such Purchaser, engaged in any transactions in the securities of the
      Company (including, without limitations, any Short Sales involving the
      Company's securities) since the earlier to occur of (1) the time that such
      Purchaser was first contacted by the Company, Roth Capital Partners, LLC
      or any other Person regarding an investment in the Company and (2) the
      30th day prior to the date of this Agreement ("Discussion Time"). Such
      Purchaser covenants that neither it nor any Person acting on its behalf or
      pursuant to any understanding with it will engage in any transactions in
      the securities of the Company (including Short Sales) prior to the time
      that the transactions contemplated by this Agreement are publicly
      disclosed.

            (g) Independent Investment Decision. Such Purchaser has
      independently evaluated the merits of its decision to purchase Securities
      pursuant to the Transaction Documents, and such Purchaser confirms that it
      has not relied on the advice of any other Purchaser's business and/or
      legal counsel in making such decision. Such Purchaser has not relied on
      the business or legal advice of Roth Capital Partners, LLC or any of its
      agents, counsel or Affiliates in making its investment decision hereunder,
      and confirms that none of such Persons has made any representations or
      warranties to such Investor in connection with the transactions
      contemplated by the Transaction Documents.

      The Company acknowledges and agrees that each Purchaser does not make or
has not made any representations or warranties with respect to the transactions
contemplated hereby other than those specifically set forth in this Section 3.2.

                                   ARTICLE IV
                         OTHER AGREEMENTS OF THE PARTIES

      4.1 Transfer Restrictions.

            (a) The Securities may only be disposed of in compliance with state
      and federal securities laws. In connection with any transfer of Securities
      other than pursuant to an effective registration statement or Rule 144, to
      the Company or to an affiliate of a Purchaser or in connection with a
      pledge as contemplated in Section 4.1(b), the Company may require the
      transferor thereof to provide to the Company an opinion of counsel

                                       19
<PAGE>

      selected by the transferor and reasonably acceptable to the Company, the
      form and substance of which opinion shall be reasonably satisfactory to
      the Company, to the effect that such transfer does not require
      registration of such transferred Securities under the Securities Act. As a
      condition of transfer, any such transferee shall agree in writing to be
      bound by the terms of this Agreement and shall have the rights of a
      Purchaser under this Agreement and the Registration Rights Agreement.

            (b) The Purchasers agree to the imprinting, so long as is required
      by this Section 4.1(b), of a legend on any of the Securities in the
      following form:

      [NEITHER] THESE SECURITIES [NOR THE SECURITIES INTO WHICH THESE SECURITIES
      ARE [EXERCISABLE] [CONVERTIBLE]] HAVE BEEN REGISTERED WITH THE SECURITIES
      AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN
      RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF
      1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
      OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN
      A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
      SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS
      EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT,
      THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.
      THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
      SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT
      WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION
      THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) UNDER THE
      SECURITIES ACT.

            The Company acknowledges and agrees that a Purchaser may from time
      to time pledge pursuant to a bona fide margin agreement with a registered
      broker-dealer or grant a security interest in some or all of the
      Securities to a financial institution that is an "accredited investor" as
      defined in Rule 501(a) under the Securities Act and who agrees to be bound
      by the provisions of this Agreement and the Registration Rights Agreement
      and, if required under the terms of such arrangement, such Purchaser may
      transfer pledged or secured Securities to the pledgees or secured parties.
      Such a pledge or transfer would not be subject to approval of the Company
      and no legal opinion of legal counsel of the pledgee, secured party or
      pledgor shall be required in connection therewith. Further, no notice
      shall be required of such pledge. At the appropriate Purchaser's expense,
      the Company will execute and deliver such reasonable documentation as a
      pledgee or secured party of Securities may reasonably request in
      connection with a pledge or transfer of the Securities, including, if the
      Securities are subject to registration pursuant to the Registration Rights
      Agreement, the preparation and filing of any required prospectus
      supplement under Rule 424(b)(3) under the Securities

                                       20
<PAGE>

      Act or other applicable provision of the Securities Act to appropriately
      amend the list of Selling Stockholders thereunder.

            (c) Certificates evidencing the Underlying Shares shall not contain
      any legend (including the legend set forth in Section 4.1(b)): (i) while a
      registration statement (including the Registration Statement) covering the
      resale of such securities is effective under the Securities Act, or (ii)
      following any sale of such Underlying Shares pursuant to Rule 144, or
      (iii) if such Underlying Shares are eligible for sale under Rule 144(k),
      or (iv) if such legend is not required under applicable requirements of
      the Securities Act (including judicial interpretations and pronouncements
      issued by the Staff of the Commission). The Company shall cause its
      counsel to issue a legal opinion to the Company's transfer agent promptly
      after the Effective Date if required by the Company's transfer agent to
      effect the removal of the legend hereunder. If all or any shares of
      Preferred Stock or any portion of a Warrant is converted or exercised (as
      applicable) at a time when there is an effective registration statement to
      cover the resale of the Underlying Shares, or if such Underlying Shares
      may be sold under Rule 144(k) or if such legend is not otherwise required
      under applicable requirements of the Securities Act (including judicial
      interpretations thereof) then such Underlying Shares shall be issued free
      of all legends. The Company agrees that following the Effective Date or at
      such time as such legend is no longer required under this Section 4.1(c),
      it will, no later than three Trading Days following the delivery by a
      Purchaser to the Company or the Company's transfer agent of a certificate
      representing Underlying Shares issued with a restrictive legend (such
      date, the "Legend Removal Date"), deliver or cause to be delivered to such
      Purchaser a certificate representing such Securities that is free from all
      restrictive and other legends. The Company may not make any notation on
      its records or give instructions to any transfer agent of the Company that
      enlarge the restrictions on transfer set forth in this Section.
      Certificates for Underlying Shares subject to legend removal hereunder
      shall be transmitted by the transfer agent of the Company to the
      Purchasers by crediting the account of the Purchaser's prime broker with
      the Depository Trust Company System.

            (d) In addition to such Purchaser's other available remedies, the
      Company shall pay to a Purchaser, in cash, as partial liquidated damages
      and not as a penalty, for each $1,000 of Underlying Shares (based on the
      Closing Price of the Common Stock on the date such Securities are
      submitted to the Company's transfer agent) subject to Section 4.1(c), $10
      per Trading Day (increasing to $20 per Trading Day seven (7) Trading Days
      after such damages have begun to accrue) for each Trading Day after the
      Legend Removal Date until such certificate is delivered. Nothing herein
      shall limit such Purchaser's right to pursue actual damages for the
      Company's failure to deliver certificates representing any Securities as
      required by the Transaction Documents, and such Purchaser shall have the
      right to pursue all remedies available to it at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief.

            (e) Each Purchaser, severally and not jointly with the other
      Purchasers, agrees that the removal of the restrictive legend from
      certificates representing Securities

                                       21
<PAGE>

      as set forth in this Section 4.1 is predicated upon the Company's reliance
      that the Purchaser will sell any Securities pursuant to either the
      registration requirements of the Securities Act, including any applicable
      prospectus delivery requirements, or an exemption therefrom.

            (f) Until the date that each Purchaser holds less than 20% of the
      Preferred Stock (or, if converted, Conversion Shares) initially purchased
      hereunder by such Purchaser, the Company shall not undertake a reverse or
      forward stock split or reclassification of the Common Stock without the
      prior written consent of the Purchasers holding a majority in interest of
      the shares of Preferred Stock (or, if converted, Conversion Shares), which
      consent shall not be unreasonably withheld.

      4.2 Acknowledgment of Dilution. The Company acknowledges that the issuance
of the Securities may result in dilution of the outstanding shares of Common
Stock, which dilution may be substantial under certain market conditions. The
Company further acknowledges that its obligations under the Transaction
Documents, including without limitation its obligation to issue the Underlying
Shares pursuant to the Transaction Documents, are unconditional and absolute and
not subject to any right of set off, counterclaim, delay or reduction,
regardless of the effect of any such dilution or any claim the Company may have
against any Purchaser and regardless of the dilutive effect that such issuance
may have on the ownership of the other stockholders of the Company.

      4.3 Furnishing of Information. As long as any Purchaser owns Securities,
the Company covenants to timely file (or obtain extensions in respect thereof
and file within the applicable grace period) all reports required to be filed by
the Company after the date hereof pursuant to the Exchange Act. As long as any
Purchaser owns Securities, if the Company is not required to file reports
pursuant to the Exchange Act, it will prepare and furnish to the Purchasers and
make publicly available in accordance with Rule 144(c) such information as is
required for the Purchasers to sell the Securities under Rule 144. The Company
further covenants that it will take such further action as any holder of
Securities may reasonably request, all to the extent required from time to time
to enable such Person to sell such Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rule 144.

      4.4 Integration. The Company shall not sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
Section 2 of the Securities Act) that would be integrated with the offer or sale
of the Securities in a manner that would require the registration under the
Securities Act of the sale of the Securities to the Purchasers or that would be
integrated with the offer or sale of the Securities for purposes of the rules
and regulations of any Trading Market such that it would require shareholder
approval prior to the closing of such other transaction unless shareholder
approval is obtained before the closing of such subsequent transaction.

      4.5 Securities Laws Disclosure; Publicity. The Company shall, by 8:30 a.m.
Eastern time on the Trading Day following the date hereof, issue a Current
Report on Form 8-K, reasonably acceptable to each Purchaser disclosing the
material terms of the transactions

                                       22
<PAGE>

contemplated hereby, and shall attach the Transaction Documents thereto. The
Company and each Purchaser shall consult with each other in issuing any other
press releases with respect to the transactions contemplated hereby, and neither
the Company nor any Purchaser shall issue any such press release or otherwise
make any such public statement without the prior consent of the Company, with
respect to any press release of any Purchaser, or without the prior consent of
each Purchaser, with respect to any press release of the Company, which consent
shall not unreasonably be withheld, except if such disclosure is required by
law, in which case the disclosing party shall promptly provide the other party
with prior notice of such public statement or communication. Notwithstanding the
foregoing, the Company shall not publicly disclose the name of any Purchaser, or
include the name of any Purchaser in any filing with the Commission or any
regulatory agency or Trading Market, without the prior written consent of such
Purchaser, except (i) as required by federal securities law in connection with
the registration statement contemplated by the Registration Rights Agreement and
(ii) to the extent such disclosure is required by law or Trading Market
regulations, in which case the Company shall provide the Purchasers with prior
notice of such disclosure permitted under subclause (i) or (ii).

      4.7 Shareholder Rights Plan. No claim will be made or enforced by the
Company or, to the knowledge of the Company, any other Person that any Purchaser
is an "Acquiring Person" under any shareholder rights plan or similar plan or
arrangement in effect or hereafter adopted by the Company, or that any Purchaser
could be deemed to trigger the provisions of any such plan or arrangement, by
virtue of receiving Securities under the Transaction Documents or under any
other agreement between the Company and the Purchasers. The Company shall
conduct its business in a manner so that it will not become subject to the
Investment Company Act.

      4.8 Non-Public Information. The Company covenants and agrees that neither
it nor any other Person acting on its behalf will provide any Purchaser or its
agents or counsel with any information that the Company believes constitutes
material non-public information, unless prior thereto such Purchaser shall have
executed a written agreement regarding the confidentiality and use of such
information. The Company understands and confirms that each Purchaser shall be
relying on the foregoing representations in effecting transactions in securities
of the Company.

      4.9 Use of Proceeds. Except as set forth on Schedule 4.9 attached hereto,
the Company shall use the net proceeds from the sale of the Securities hereunder
for working capital purposes and not for the satisfaction of any portion of the
Company's debt (other than payment of trade payables in the ordinary course of
the Company's business and prior practices), to redeem Common Stock or Common
Stock Equivalents or to settle any outstanding litigation. Prior to the receipt
of Shareholder Approval, the Company shall not declare or pay any cash dividend
on its shares of Common Stock while any shares of Preferred Stock remain
outstanding.

      4.10 Reimbursement. If any Purchaser becomes involved in any capacity in
any Proceeding by or against any Person who is a stockholder of the Company
(except as a result of sales, pledges, margin sales and similar transactions by
such Purchaser to or with any current stockholder), solely as a result of such
Purchaser's acquisition of the Securities under this Agreement, the Company will
reimburse such Purchaser for its reasonable legal and other expenses (including
the cost of any investigation preparation and travel in connection therewith)
incurred in connection therewith, as such expenses are incurred. The
reimbursement obligations

                                       23
<PAGE>

of the Company under this paragraph shall be in addition to any liability which
the Company may otherwise have, shall extend upon the same terms and conditions
to any Affiliates of the Purchasers who are actually named in such action,
proceeding or investigation, and partners, directors, agents, employees and
controlling persons (if any), as the case may be, of the Purchasers and any such
Affiliate, and shall be binding upon and inure to the benefit of any successors,
assigns, heirs and personal representatives of the Company, the Purchasers and
any such Affiliate and any such Person. The Company also agrees that neither the
Purchasers nor any such Affiliates, partners, directors, agents, employees or
controlling persons shall have any liability to the Company or any Person
asserting claims on behalf of or in right of the Company solely as a result of
acquiring the Securities under this Agreement.

      4.11 Indemnification of Purchasers. Subject to the provisions of this
Section 4.11, the Company will indemnify and hold the Purchasers and their
directors, officers, shareholders, partners, employees and agents (each, a
"Purchaser Party") harmless from any and all losses, liabilities, obligations,
claims, contingencies, damages, costs and expenses, including all judgments,
amounts paid in settlements, court costs and reasonable attorneys' fees and
costs of investigation that any such Purchaser Party may suffer or incur as a
result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in
the other Transaction Documents or (b) any action instituted against a
Purchaser, or any of them or their respective Affiliates, by any stockholder of
the Company who is not an Affiliate of such Purchaser, with respect to any of
the transactions contemplated by the Transaction Documents (unless such action
is based upon a breach of such Purchaser's representation, warranties or
covenants under the Transaction Documents or any agreements or understandings
such Purchaser may have with any such stockholder or any violations by the
Purchaser of state or federal securities laws or any conduct by such Purchaser
which constitutes fraud, gross negligence, willful misconduct or malfeasance).
If any action shall be brought against any Purchaser Party in respect of which
indemnity may be sought pursuant to this Agreement, such Purchaser Party shall
promptly notify the Company in writing, and the Company shall have the right to
assume the defense thereof with counsel of its own choosing. Any Purchaser Party
shall have the right to employ separate counsel in any such action and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Purchaser Party except to the extent that (i)
the employment thereof has been specifically authorized by the Company in
writing, (ii) the Company has failed after a reasonable period of time to assume
such defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the Company and the position of such Purchaser
Party. The Company will not be liable to any Purchaser Party under this
Agreement (i) for any settlement by a Purchaser Party effected without the
Company's prior written consent, which shall not be unreasonably withheld or
delayed; or (ii) to the extent, but only to the extent that a loss, claim,
damage or liability is attributable to any Purchaser Party's breach of any of
the representations, warranties, covenants or agreements made by the Purchasers
in this Agreement or in the other Transaction Documents.

                                       24
<PAGE>

      4.12 Reservation and Listing of Securities.

      (a) The Company hereby agrees to use best efforts to maintain the listing
of the Common Stock on a Trading Market, and as soon as reasonably practicable
following the Closing (but not later than the earlier of the Effective Date and
the first anniversary of the Closing Date) to list all of the Underlying Shares
on such Trading Market. The Company further agrees, if the Company applies to
have the Common Stock traded on any other Trading Market, it will include in
such application all of the Underlying Shares and will take such other action as
is necessary to cause all of the Underlying Shares to be listed on such other
Trading Market as promptly as possible. The Company will take all action
reasonably necessary to continue the listing and trading of its Common Stock on
a Trading Market and will comply in all respects with the Company's reporting,
filing and other obligations under the bylaws or rules of the Trading Market.
The Company shall maintain all available authorized, unissued and unreserved
shares of Common Stock from its duly authorized shares of Common Stock for
issuance pursuant to the Transaction Documents and after the Shareholder
Meeting, a reserve from its duly authorized shares of Common Stock for issuance
pursuant to the Transaction Documents in such amount as may be required to
fulfill its obligations in full under the Transaction Documents.

            (b) The Company shall file a proxy on or before the 30th calendar
day after the date hereof notifying the shareholders of a special meeting of
shareholders (which may also be the annual meeting of shareholders) for the
purpose of obtaining Shareholder Approval. The Company shall hold such
shareholder meeting on or before the 60th calendar day after the date hereof
(the "Shareholder Meeting" and the date of such approval the "Shareholder
Approval Date"). The Company will comply with Section 14(a) of the Exchange Act
and the rules promulgated thereunder in relation to any proxy statement (as
amended or supplemented, the "Proxy Statement") and any form of proxy to be sent
to the stockholders of the Company in connection with the Shareholder Meeting,
and the Proxy Statement shall not, on the date that the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to stockholders or at
the time of the Shareholder Meeting, contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein not false or misleading, or omit to state any material
fact necessary to correct any statement in any earlier communication with
respect to the solicitation of proxies or the stockholders meeting which has
become false or misleading. If the Company should discover at any time prior to
the Shareholder Meeting, any event relating to the Company or any of its
Subsidiaries or any of their respective affiliates, officers or directors that
is required to be set forth in a supplement or amendment to the Proxy Statement,
in addition to the Company's obligations under the Exchange Act, the Company
will promptly inform the Purchasers thereof. Such amendment to the Company's
certificate of incorporation shall provide for an increased number of authorized
shares at least sufficient to issue all Conversion Shares and all Warrant
Shares. If the Company does not obtain approval of the shareholders at the first
meeting, the Company shall call a meeting every fiscal quarter thereafter to
seek approval of the shareholders until the earlier of the date such approval is
obtained or the Preferred Stock is no longer outstanding. The Company shall send
each Purchaser written notice by 9:30 AM (NY Time) on the Trading Day following
each Shareholder Meeting held pursuant to this subsection indicating whether or
not Shareholder Approval has been obtained at such meeting; and if the Company
has obtained such Shareholder Approval, shall file a Certificate of Amendment to
the Company's Articles of Incorporation on the next business day.

                                       25
<PAGE>

      4.13 Participation in Future Financing.

            (a) From the date hereof until the date that is the 6 month
      anniversary after the Effective Date, upon any financing by the Company of
      its Common Stock or Common Stock Equivalents (a "Subsequent Financing"),
      each Purchaser shall have the right to participate in up to an amount of
      such Subsequent Financing equal to the lesser of (i) the aggregate
      Subscription Amount of all shares of Common Stock then outstanding and
      (ii) 50% of the Subsequent Financing (the "Participation Maximum").

            (b) At least 5 Trading Days prior to the closing of the Subsequent
      Financing, the Company shall deliver to each Purchaser a written notice of
      its intention to effect a Subsequent Financing ("Pre-Notice"), which
      Pre-Notice shall ask such Purchaser if it wants to review the details of
      such financing (such additional notice, a "Subsequent Financing Notice").
      Upon the request of a Purchaser, and only upon a request by such
      Purchaser, for a Subsequent Financing Notice, the Company shall promptly,
      but no later than 1 Trading Day after such request, deliver a Subsequent
      Financing Notice to such Purchaser. The Subsequent Financing Notice shall
      describe in reasonable detail the proposed terms of such Subsequent
      Financing, the amount of proceeds intended to be raised thereunder, the
      Person with whom such Subsequent Financing is proposed to be effected, and
      attached to which shall be a term sheet or similar document relating
      thereto.

            (c) Any Purchaser desiring to participate in such Subsequent
      Financing must provide written notice to the Company by not later than
      5:30 p.m. (New York City time) on the 5th Trading Day after all of the
      Purchasers have received the Pre-Notice that the Purchaser is willing to
      participate in the Subsequent Financing, the amount of the Purchaser's
      participation, and that the Purchaser has such funds ready, willing, and
      available for investment on the terms set forth in the Subsequent
      Financing Notice. If the Company receives no notice from a Purchaser as of
      such fifth Trading Day, such Purchaser shall be deemed to have notified
      the Company that it does not elect to participate.

            (d) If by 5:30 p.m. (New York City time) on the fifth Trading Day
      after all of the Purchasers have received the Pre-Notice, notifications by
      the Purchasers of their willingness to participate in the Subsequent
      Financing (or to cause their designees to participate) is, in the
      aggregate, less than the total amount of the Subsequent Financing, then
      the Company may effect the remaining portion of such Subsequent Financing
      on the terms and to the Persons set forth in the Subsequent Financing
      Notice.

            (e) If by 5:30 p.m. (New York City time) on the fifth Trading Day
      after all of the Purchasers have received the Pre-Notice, the Company
      receives responses to a Subsequent Financing Notice from Purchasers
      seeking to purchase more than the aggregate amount of the Participation
      Maximum, each such Purchaser shall have the right to purchase the greater
      of (a) their Pro Rata Portion (as defined below) of the Participation
      Maximum and (b) the difference between the Participation Maximum and the
      aggregate amount of participation by all other Purchasers. "Pro Rata
      Portion" is the

                                       26
<PAGE>

      ratio of (x) the Subscription Amount of Securities purchased by a
      participating Purchaser and (y) the sum of the aggregate Subscription
      Amount of all participating Purchasers.

            (f) The Company must provide the Purchasers with a second Subsequent
      Financing Notice, and the Purchasers will again have the right of
      participation set forth above in this Section 4.13, if the Subsequent
      Financing subject to the initial Subsequent Financing Notice is not
      consummated for any reason on the terms set forth in such Subsequent
      Financing Notice within 60 Trading Days after the date of the initial
      Subsequent Financing Notice.

            (g) Notwithstanding the foregoing, this Section 4.13 shall not apply
      in respect of an Exempt Issuance.

      4.14 Subsequent Equity Sales.

            (a) From the date hereof until 60 days after the Effective Date,
      neither the Company nor any Subsidiary shall issue shares of Common Stock
      or Common Stock Equivalents; provided, however, the 60 day period set
      forth in this Section 4.14 shall be extended for the number of Trading
      Days during such period in which (i) trading in the Common Stock is
      suspended by any Trading Market, or (ii) following the Effective Date, the
      Registration Statement is not effective or the prospectus included in the
      Registration Statement may not be used by the Purchasers for the resale of
      the Underlying Shares, or (iii) Shareholder Approval has not been
      obtained.

            (b) From the date hereof until such time as no Purchaser holds any
      of the Securities, the Company shall be prohibited from effecting or
      entering into an agreement to effect any Subsequent Financing involving a
      "Variable Rate Transaction" or an "MFN Transaction" (each as defined
      below). The term "Variable Rate Transaction" shall mean a transaction in
      which the Company issues or sells (i) any debt or equity securities that
      are convertible into, exchangeable or exercisable for, or include the
      right to receive additional shares of Common Stock either (A) at a
      conversion, exercise or exchange rate or other price that is based upon
      and/or varies with the trading prices of or quotations for the shares of
      Common Stock at any time after the initial issuance of such debt or equity
      securities, or (B) with a conversion, exercise or exchange price that is
      subject to being reset at some future date after the initial issuance of
      such debt or equity security or upon the occurrence of specified or
      contingent events directly or indirectly related to the business of the
      Company or the market for the Common Stock or (ii) enters into any
      agreement, including, but not limited to, an equity line of credit,
      whereby the Company may sell securities at a future determined price. The
      term "MFN Transaction" shall mean a transaction in which the Company
      issues or sells any securities in a capital raising transaction or series
      of related transactions which grants to an investor the right to receive
      additional shares based upon future transactions of the Company on terms
      more favorable than those granted to such investor in such offering. Any
      Purchaser shall be entitled to obtain injunctive relief against the
      Company to preclude any such issuance, which remedy shall be in addition
      to any right to collect damages.

                                       27
<PAGE>

            (c) Notwithstanding the foregoing, this Section 4.14 shall not apply
      in respect of an Exempt Issuance, except that no Variable Rate Transaction
      or MFN Transaction shall be an Exempt Issuance.

      4.15 Equal Treatment of Purchasers. No consideration shall be offered or
paid to any person to amend or consent to a waiver or modification of any
provision of any of the Transaction Documents unless the same consideration is
also offered to all of the parties to the Transaction Documents. For
clarification purposes, this provision constitutes a separate right granted to
each Purchaser by the Company and negotiated separately by each Purchaser, and
is intended to treat for the Company the Purchasers as a class and shall not in
any way be construed as the Purchasers acting in concert or as a group with
respect to the purchase, disposition or voting of Securities or otherwise.

      4.16 Short Sales.

            (a) Each Purchaser severally and not jointly with the other
      Purchasers covenants that neither it nor any affiliates acting on its
      behalf or pursuant to any understanding with it will execute any Short
      Sales during the period after the Discussion Time and ending at the time
      that the transactions contemplated by this Agreement are first publicly
      announced as described in Section 4.5.

            (b) In addition, each Purchaser severally and not jointly with the
      other Purchasers covenants that neither it nor any affiliates acting on
      its behalf or pursuant to any understanding with it will execute any Short
      Sales to the extent that the number of shares sold short exceeds the
      number of Conversion Shares (converted or unconverted) and Warrant Shares
      (exercised or unexercised) held by such Purchaser at such time during the
      period from the Closing Date until the 12 month anniversary of the Closing
      Date.

      4.17 Most Favored Nation Provision. After the date hereof, anytime the
Company effects a Subsequent Financing, each Purchaser may elect, in its sole
discretion, to exchange all or some of the shares of Preferred Stock and
Conversion Shares then held by it for any securities issued in a Subsequent
Financing based on the Conversion Price for the Conversion Shares and the
effective price at which such securities were sold in such Subsequent Financing,
provided, however, that this right shall terminate as to each Purchaser on the
date that such Purchaser no longer owns any shares of Preferred Stock or
Conversion Shares.

      4.18 Price Protection. As to each Purchaser, from the date hereof until
the 12 month anniversary of the Effective Date, if the Company or any Subsidiary
thereof shall issue any Common Stock or Common Stock Equivalents entitling any
person or entity to acquire shares of Common Stock at an effective price per
share less than the Conversion Price (the "Discounted Purchase Price", as
further defined below), within 5 Trading Days of the date thereof the Company
shall issue to such Purchaser that number of additional shares of Common Stock
equal to (a) the Subscription Amount paid by such Purchaser at the Closing
divided by the Discounted Purchase Price, less (b) the Conversion Shares
previously issued to such Purchaser pursuant to this Agreement (assuming for
such purpose all shares of Preferred Stock have been converted).

                                       28
<PAGE>

The term "Discounted Purchase Price" shall mean the amount actually paid by
third parties for a share of Common Stock. The sale of Common Stock Equivalents
shall be deemed to have occurred at the time of the issuance of the Common Stock
Equivalents and the Discounted Purchase Price covered thereby shall also include
the actual exercise or conversion price thereof at the time of the conversion or
exercise (in addition to the consideration per share of Common Stock underlying
the Common Stock Equivalents received by the Company upon such sale or issuance
of the Common Stock Equivalents). If shares are issued for a consideration other
than cash, the per share conversion price shall be the fair value of such
consideration as determined in good faith by the Board of Directors of the
Company. The Company may not refuse to issue a Purchaser additional Conversion
Shares hereunder based on any claim that such Purchaser or any one associated or
affiliated with such Purchaser has been engaged in any violation of law,
agreement or for any other reason, unless, an injunction from a court, on
notice, restraining and or enjoining an issuance hereunder shall have been
sought and obtained and the Company posts a surety bond for the benefit of such
Purchaser in the amount of 150% of the market value of such Conversion Shares
(based on the Closing Price of the Common Stock on the date of the event giving
rise to the Company's obligation hereunder), which is subject to the injunction,
which bond shall remain in effect until the completion of litigation of the
dispute and the proceeds of which shall be payable to the Purchaser to the
extent it obtains judgment. Nothing herein shall limit a Purchaser's right to
pursue actual damages for the Company's failure to deliver Conversion Shares
hereunder and such Purchaser shall have the right to pursue all remedies
available to it at law or in equity including, without limitation, a decree of
specific performance and/or injunctive relief. On the date of closing of any
transaction pursuant to which securities are issued for a Discounted Purchase
Price, the Company shall give the Purchasers written notice thereof.
Notwithstanding anything to the contrary herein, this Section 4.18 shall not
apply to an Exempt Issuance.

                                    ARTICLE V
                                  MISCELLANEOUS

      5.1 Termination. This Agreement may be terminated by any Purchaser, by
written notice to the other parties, if the Closing has not been consummated on
or before March ___, 2005; provided, that no such termination will affect the
right of any party to sue for any breach by the other party (or parties).

      5.2 Fees and Expenses. The Company shall reimburse Bonanza Master Fund
("Bonanza") the sum of $20,000 for its legal fees and expenses. Except as
otherwise set forth in this Agreement, each party shall pay the fees and
expenses of its advisers, counsel, accountants and other experts, if any, and
all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company
shall pay all stamp and other taxes and duties levied in connection with the
delivery of the Securities.

      5.3 Entire Agreement. The Transaction Documents, together with the
exhibits and schedules thereto, contain the entire understanding of the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, oral or written, with respect to such matters, which the parties
acknowledge have been merged into such documents, exhibits and schedules.

                                       29
<PAGE>

      5.4 Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number set forth on the signature pages attached hereto on a day that
is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading
Day, (c) the second Trading Day following the date of mailing, if sent by U.S.
nationally recognized overnight courier service, or (d) upon actual receipt by
the party to whom such notice is required to be given. The address for such
notices and communications shall be as set forth on the signature pages attached
hereto.

      5.5 Amendments; Waivers. No provision of this Agreement may be waived or
amended except in a written instrument signed, in the case of an amendment, by
the Company and each Purchaser or, in the case of a waiver, by the party against
whom enforcement of any such waiver is sought. No waiver of any default with
respect to any provision, condition or requirement of this Agreement shall be
deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor
shall any delay or omission of either party to exercise any right hereunder in
any manner impair the exercise of any such right.

      5.6 Headings. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof. The language used in this Agreement will be deemed
to be the language chosen by the parties to express their mutual intent, and no
rules of strict construction will be applied against any party.

      5.7 Successors and Assigns. This Agreement shall be binding upon and inure
to the benefit of the parties and their successors and permitted assigns. The
Company may not assign this Agreement or any rights or obligations hereunder
without the prior written consent of each Purchaser. Any Purchaser may assign
any or all of its rights under this Agreement to any Person to whom such
Purchaser assigns or transfers any Securities, provided such transferee agrees
in writing to be bound, with respect to the transferred Securities, by the
provisions hereof that apply to the "Purchasers".

      5.8 No Third-Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective successors and permitted
assigns and is not for the benefit of, nor may any provision hereof be enforced
by, any other Person, except as otherwise set forth in Section 4.11.

      5.9 Governing Law. All questions concerning the construction, validity,
enforcement and interpretation of the Transaction Documents shall be governed by
and construed and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflicts of law thereof. Each
party agrees that all legal proceedings concerning the interpretations,
enforcement and defense of the transactions contemplated by this Agreement and

                                       30
<PAGE>

any other Transaction Documents (whether brought against a party hereto or its
respective affiliates, directors, officers, shareholders, employees or agents)
shall be commenced exclusively in the state and federal courts sitting in the
City of New York. Each party hereby irrevocably submits to the exclusive
jurisdiction of the state and federal courts sitting in the City of New York,
borough of Manhattan for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein (including with respect to the enforcement of any of the Transaction
Documents), and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is improper
or inconvenient venue for such proceeding. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof via registered or certified
mail or overnight delivery (with evidence of delivery) to such party at the
address in effect for notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. The parties hereby waive all
rights to a trial by jury. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys' fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.

      5.10 Survival. The representations and warranties herein shall survive the
Closing and delivery of the Preferred Stock and Warrant Shares for the
applicable statue of limitations.

      5.11 Execution. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart. In the event that any signature is
delivered by facsimile transmission, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such facsimile signature page
were an original thereof.

      5.12 Severability. If any provision of this Agreement is held to be
invalid or unenforceable in any respect, the validity and enforceability of the
remaining terms and provisions of this Agreement shall not in any way be
affected or impaired thereby and the parties will attempt to agree upon a valid
and enforceable provision that is a reasonable substitute therefor, and upon so
agreeing, shall incorporate such substitute provision in this Agreement.

      5.13 Rescission and Withdrawal Right. Notwithstanding anything to the
contrary contained in (and without limiting any similar provisions of) the
Transaction Documents, whenever any Purchaser exercises a right, election,
demand or option under a Transaction Documents and the Company does not timely
perform its related obligations within the periods therein provided, then such
Purchaser may rescind or withdraw, in its sole discretion from time to time upon
written notice to the Company, any relevant notice, demand or election in whole
or in part without prejudice to its future actions and rights.

                                       31
<PAGE>

      5.14 Replacement of Securities. If any certificate or instrument
evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon
cancellation thereof, or in lieu of and substitution therefor, a new certificate
or instrument, but only upon receipt of evidence reasonably satisfactory to the
Company of such loss, theft or destruction and customary and reasonable
indemnity, if requested. The applicants for a new certificate or instrument
under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

      5.15 Remedies. In addition to being entitled to exercise all rights
provided herein or granted by law, including recovery of damages, each of the
Purchasers and the Company will be entitled to specific performance under the
Transaction Documents. The parties agree that monetary damages may not be
adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in
any action for specific performance of any such obligation the defense that a
remedy at law would be adequate.

      5.16 Payment Set Aside. To the extent that the Company makes a payment or
payments to any Purchaser pursuant to any Transaction Document or a Purchaser
enforces or exercises its rights thereunder, and such payment or payments or the
proceeds of such enforcement or exercise or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside, recovered
from, disgorged by or are required to be refunded, repaid or otherwise restored
to the Company, a trustee, receiver or any other person under any law
(including, without limitation, any bankruptcy law, state or federal law, common
law or equitable cause of action), then to the extent of any such restoration
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or setoff had not occurred.

      5.17 Usury. To the extent it may lawfully do so, the Company hereby agrees
not to insist upon or plead or in any manner whatsoever claim, and will resist
any and all efforts to be compelled to take the benefit or advantage of, usury
laws wherever enacted, now or at any time hereafter in force, in connection with
any claim, action or proceeding that may be brought by any Purchaser in order to
enforce any right or remedy under any Transaction Document. Notwithstanding any
provision to the contrary contained in any Transaction Document, it is expressly
agreed and provided that the total liability of the Company under the
Transaction Documents for payments in the nature of interest shall not exceed
the maximum lawful rate authorized under applicable law (the "Maximum Rate"),
and, without limiting the foregoing, in no event shall any rate of interest or
default interest, or both of them, when aggregated with any other sums in the
nature of interest that the Company may be obligated to pay under the
Transaction Documents exceed such Maximum Rate. It is agreed that if the maximum
contract rate of interest allowed by law and applicable to the Transaction
Documents is increased or decreased by statute or any official governmental
action subsequent to the date hereof, the new maximum contract rate of interest
allowed by law will be the Maximum Rate applicable to the Transaction Documents
from the effective date forward, unless such application is precluded by
applicable law. If under any circumstances whatsoever, interest in excess of the
Maximum Rate is paid by the Company to any Purchaser with respect to
indebtedness evidenced by the

                                       32
<PAGE>

Transaction Documents, such excess shall be applied by such Purchaser to the
unpaid principal balance of any such indebtedness or be refunded to the Company,
the manner of handling such excess to be at such Purchaser's election.

      5.18 Independent Nature of Purchasers' Obligations and Rights. The
obligations of each Purchaser under any Transaction Document are several and not
joint with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser under any Transaction Document. Nothing contained herein or in any
Transaction Document, and no action taken by any Purchaser pursuant thereto,
shall be deemed to constitute the Purchasers as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Purchasers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents. Each
Purchaser shall be entitled to independently protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other Transaction Documents, and it shall not be necessary for any other
Purchaser to be joined as an additional party in any proceeding for such
purpose. Each Purchaser has been represented by its own separate legal counsel
in their review and negotiation of the Transaction Documents. For reasons of
administrative convenience only, Purchasers and their respective counsel have
chosen to communicate with the Company through FW. FW does not represent all of
the Purchasers but only Bonanza. The Company has elected to provide all
Purchasers with the same terms and Transaction Documents for the convenience of
the Company and not because it was required or requested to do so by the
Purchasers.

      5.19 Liquidated Damages. The Company's obligations to pay any partial
liquidated damages or other amounts owing under the Transaction Documents is a
continuing obligation of the Company and shall not terminate until all unpaid
partial liquidated damages and other amounts have been paid notwithstanding the
fact that the instrument or security pursuant to which such partial liquidated
damages or other amounts are due and payable shall have been canceled.

      5.20 Construction. The parties agree that each of them and/or their
respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any
ambiguities are to be resolved against the drafting party shall not be employed
in the interpretation of the Transaction Documents or any amendments hereto.

                            [SIGNATURE PAGE FOLLOWS]

                                       33
<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized
signatories as of the date first indicated above.

INTEGRAL VISION, INC.                                       Address for Notice:

By: __________________________________________
    Name:
    Title:

With a copy to (which shall not constitute notice):

         [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR
                               PURCHASERS FOLLOW]

                                       34
<PAGE>

        [PURCHASER SIGNATURE PAGES TO INVI SECURITIES PURCHASE AGREEMENT]

      IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase
Agreement to be duly executed by their respective authorized signatories as of
the date first indicated above.

Name of Purchaser: __________________________
Signature of Authorized Signatory of Purchaser: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________
Email Address of Purchaser:________________________________

Address for Notice of Purchaser:

Address for Delivery of Securities for Purchaser (if not same as above):

Subscription Amount:
Shares of Preferred Stock:
Warrant Shares:

DO YOU WISH TO RETAIN SECTION 2(d) OF THE FORM OF WARRANT IN YOUR WARRANT (4.99%
BENEFICIAL OWNERSHIP BLOCKER)? ____ YES       ____ NO

EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]

                           [SIGNATURE PAGES CONTINUE]

                                       35
<PAGE>

                                                                       EXHIBIT A

                          REGISTRATION RIGHTS AGREEMENT

            This Registration Rights Agreement (this "Agreement") is made and
entered into as of April 12, 2005, by and among Integral Vision, Inc., a
Michigan corporation (the "Company"), and the purchasers signatory hereto (each
such purchaser, a "Purchaser" and collectively, the "Purchasers").

            This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of the date hereof among the Company and the Purchasers (the
"Purchase Agreement").

            The Company and the Purchasers hereby agree as follows:

      1. Definitions. Capitalized terms used and not otherwise defined herein
that are defined in the Purchase Agreement shall have the meanings given such
terms in the Purchase Agreement. As used in this Agreement, the following terms
shall have the following meanings:

            "Advice" shall have the meaning set forth in Section 6(d).

            "Effectiveness Date" means, with respect to the Registration
      Statement required to be filed hereunder, the 120th calendar day following
      the date of the Purchase Agreement (150th calendar day in the event of a
      full review by the Commission), and with respect to any additional
      Registration Statements which may be required pursuant to Section 3(c),
      the 90th calendar day following the date on which the Company first knows,
      or reasonably should have known, that such additional Registration
      Statement is required hereunder; provided, however, in the event the
      Company is notified by the Commission that one of the above Registration
      Statements will not be reviewed or is no longer subject to further review
      and comments, the Effectiveness Date as to such Registration Statement
      shall be the fifth Trading Day following the date on which the Company is
      so notified if such date precedes the dates required above.

            "Effectiveness Period" shall have the meaning set forth in Section
      2(a).

            "Event" shall have the meaning set forth in Section 2(b).

            "Event Date" shall have the meaning set forth in Section 2(b).

            "Filing Date" means, with respect to the Registration Statement
      required to be filed hereunder, the 60th calendar day following the date
      of the Purchase Agreement and, with respect to any additional Registration
      Statements which may be required pursuant to Section 3(c), the 30th day
      following the date on which the Company first knows, or reasonably should
      have known that such additional Registration Statement is required
      hereunder.

                                        1

<PAGE>

            "Holder" or "Holders" means the holder or holders, as the case may
      be, from time to time of Registrable Securities.

            "Indemnified Party" shall have the meaning set forth in Section
      5(c).

            "Indemnifying Party" shall have the meaning set forth in Section
      5(c).

            "Losses" shall have the meaning set forth in Section 5(a).

            "Plan of Distribution" shall have the meaning set forth in Section
      2(a).

            "Proceeding" means an action, claim, suit, investigation or
      proceeding (including, without limitation, an investigation or partial
      proceeding, such as a deposition), whether commenced or threatened.

            "Prospectus" means the prospectus included in the Registration
      Statement (including, without limitation, a prospectus that includes any
      information previously omitted from a prospectus filed as part of an
      effective registration statement in reliance upon Rule 430A promulgated
      under the Securities Act), as amended or supplemented by any prospectus
      supplement, with respect to the terms of the offering of any portion of
      the Registrable Securities covered by the Registration Statement, and all
      other amendments and supplements to the Prospectus, including
      post-effective amendments, and all material incorporated by reference or
      deemed to be incorporated by reference in such Prospectus.

            "Registrable Securities" means all of the shares of Common Stock
      issuable upon conversion in full of the shares of Preferred Stock and the
      Warrant Shares issuable, and shares issuable in lieu of cash payments of
      liquidated damages pursuant to Section 2(b), together with any shares of
      Common Stock issued or issuable upon any stock split, dividend or other
      distribution, recapitalization or similar event with respect to the
      foregoing.

            "Registration Statement" means the registration statements required
      to be filed hereunder and any additional registration statements
      contemplated by Section 3(c), including (in each case) the Prospectus,
      amendments and supplements to the registration statement or Prospectus,
      including pre- and post-effective amendments, all exhibits thereto, and
      all material incorporated by reference or deemed to be incorporated by
      reference in the registration statement.

            "Rule 415" means Rule 415 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

            "Rule 424" means Rule 424 promulgated by the Commission pursuant to
      the Securities Act, as such Rule may be amended from time to time, or any
      similar rule or regulation hereafter adopted by the Commission having
      substantially the same purpose and effect as such Rule.

            "Selling Shareholder Questionnaire" shall have the meaning set forth
      in Section 3(a).

                                        2

<PAGE>

      2. Registration.

            (a) On or prior to the Filing Date, the Company shall prepare and
      file with the Commission the Registration Statement covering the resale of
      all of the Registrable Securities for an offering to be made on a
      continuous basis pursuant to Rule 415. The Registration Statement required
      hereunder shall be on Form S-3 (except if the Company is not then eligible
      to register for resale the Registrable Securities on Form S-3, in which
      case the Registration shall be on another appropriate form in accordance
      herewith). The Registration Statement required hereunder shall contain
      (except if otherwise directed by the Holders) substantially the "Plan of
      Distribution" attached hereto as Annex A. Subject to the terms of this
      Agreement, the Company shall use its best efforts to cause the
      Registration Statement to be declared effective under the Securities Act
      as promptly as possible after the filing thereof, but in any event not
      later than the Effectiveness Date, and shall use its best efforts to keep
      the Registration Statement continuously effective under the Securities Act
      until the date when all Registrable Securities covered by the Registration
      Statement have been sold or may be sold without volume restrictions
      pursuant to Rule 144(k) as determined by the counsel to the Company
      pursuant to a written opinion letter to such effect, addressed and
      acceptable to the Company's transfer agent and the affected Holders (the
      "Effectiveness Period"). The Company shall immediately notify the Holders
      via facsimile of the effectiveness of the Registration Statement on the
      same day that the Company receives notification of the effectiveness from
      the Commission. Failure to so notify the Holder within 1 Trading Day of
      such notification shall be deemed an Event under Section 2(b). The Company
      shall, within 1 Trading Day of the day that the Company receives
      notification of the effectiveness from the Commission, file a Form
      424(b)(5) with the Commission.

            (b) If: (i) a Registration Statement is not filed on or prior to the
      Filing Date (if the Company files a Registration Statement without
      affording the Holder the opportunity to review and comment on the same as
      required by Section 3(a), the Company shall not be deemed to have
      satisfied this clause (i)), or (ii) the Company fails to file with the
      Commission a request for acceleration in accordance with Rule 461
      promulgated under the Securities Act, within five Trading Days of the date
      that the Company is notified (orally or in writing, whichever is earlier)
      by the Commission that a Registration Statement will not be "reviewed," or
      is not subject to further review, or (iii) prior to the date when such
      Registration Statement is first declared effective by the Commission, the
      Company fails to file a pre-effective amendment and otherwise respond in
      writing to comments made by the Commission in respect of such Registration
      Statement within 10 calendar days after the receipt of comments by or
      notice from the Commission that such amendment is required in order for a
      Registration Statement to be declared effective, or

                                        3

<PAGE>

      (iv) a Registration Statement filed or required to be filed hereunder is
      not declared effective by the Commission on or before the Effectiveness
      Date, or (v) after a Registration Statement is first declared effective by
      the Commission, it ceases for any reason to remain continuously effective
      as to all Registrable Securities for which it is required to be effective,
      or the Holders are not permitted to utilize the Prospectus therein to
      resell such Registrable Securities, for in any such case 10 consecutive
      calendar days but no more than an aggregate of 15 calendar days during any
      12 month period (which need not be consecutive Trading Days)(any such
      failure or breach being referred to as an "Event," and for purposes of
      clause (i) or (iv) the date on which such Event occurs, or for purposes of
      clause (ii) the date on which such five Trading Day period is exceeded, or
      for purposes of clause (iii) the date which such 10 calendar day period is
      exceeded, or for purposes of clause (v) the date on which such 10 or 15
      calendar day period, as applicable, is exceeded being referred to as
      "Event Date"), then in addition to any other rights the Holders may have
      hereunder or under applicable law, then, on each such Event Date and on
      each monthly anniversary of each such Event Date (if the applicable Event
      shall not have been cured by such date) until the applicable Event is
      cured, the Company shall pay to each Holder an amount in cash, as partial
      liquidated damages and not as a penalty, equal to 1.0% of the aggregate
      purchase price paid by such Holder pursuant to the Purchase Agreement for
      any Registrable Securities then held by such Holder. If the Company fails
      to pay any partial liquidated damages pursuant to this Section in full
      within seven days after the date payable, the Company will pay interest
      thereon at a rate of 18% per annum (or such lesser maximum amount that is
      permitted to be paid by applicable law) to the Holder, accruing daily from
      the date such partial liquidated damages are due until such amounts, plus
      all such interest thereon, are paid in full. The partial liquidated
      damages pursuant to the terms hereof shall apply on a daily pro-rata basis
      for any portion of a month prior to the cure of an Event.

      3. Registration Procedures

            In connection with the Company's registration obligations hereunder,
the Company shall:

            (a) Not less than five Trading Days prior to the filing of the
      Registration Statement or any related Prospectus or any amendment or
      supplement thereto, the Company shall, (i) furnish to the Holders copies
      of all such documents proposed to be filed (including documents
      incorporated or deemed incorporated by reference to the extent requested
      by such Person) which documents will be subject to the review of such
      Holders, and (ii) cause its officers and directors, counsel and
      independent certified public accountants to respond to such inquiries as
      shall be necessary, in the reasonable opinion of respective counsel to
      conduct a reasonable investigation within the meaning of the Securities
      Act. The Company shall not file the Registration Statement or any such
      Prospectus or any amendments or supplements thereto to which the Holders
      of a majority of the Registrable Securities shall reasonably object in
      good faith, provided that the Company is notified of such objection in
      writing no later than 5 Trading Days after the Holders have been so
      furnished copies of such documents, provided, however, in the

                                        4

<PAGE>

      event of such an objection by a majority of the Holders, the obligation to
      file such Registration Statement or any such Prospectus or any amendments
      or supplements thereto shall toll for purposes of Section 2(b) until a
      majority of the Holders no longer object to such filing. Each Holder
      agrees to furnish to the Company a completed Questionnaire in the form
      attached to this Agreement as Annex B (a "Selling Shareholder
      Questionnaire") not less than two Trading Days prior to the Filing Date or
      by the end of the fourth Trading Day following the date on which such
      Holder receives draft materials in accordance with this Section.

            (b) (i) Prepare and file with the Commission such amendments,
      including post-effective amendments, to the Registration Statement and the
      Prospectus used in connection therewith as may be necessary to keep the
      Registration Statement continuously effective as to the applicable
      Registrable Securities for the Effectiveness Period and prepare and file
      with the Commission such additional Registration Statements in order to
      register for resale under the Securities Act all of the Registrable
      Securities; (ii) cause the related Prospectus to be amended or
      supplemented by any required Prospectus supplement, and as so supplemented
      or amended to be filed pursuant to Rule 424; (iii) respond as promptly as
      reasonably possible to any comments received from the Commission with
      respect to the Registration Statement or any amendment thereto and, as
      promptly as reasonably possible, upon request, provide the Holders true
      and complete copies of all correspondence from and to the Commission
      relating to the Registration Statement; and (iv) comply in all material
      respects with the provisions of the Securities Act and the Exchange Act
      with respect to the disposition of all Registrable Securities covered by
      the Registration Statement during the applicable period in accordance with
      the intended methods of disposition by the Holders thereof set forth in
      the Registration Statement as so amended or in such Prospectus as so
      supplemented. In addition, promptly following the date (the "Qualification
      Date") upon which the Company becomes eligible to use a registration
      statement on Form S-3 to register the Registrable Securities for resale,
      but in no event more than fifteen (15) Trading Days after the
      Qualification Date (the "Qualification Deadline"), the Company shall file
      a registration statement on Form S-3 covering the Registrable Securities
      (or a post-effective amendment on Form S-3 to an existing registration
      statement) (a "Shelf Registration Statement") and shall use commercially
      reasonable efforts to cause such Shelf Registration Statement to be
      declared effective as promptly as practicable thereafter.

            (c) If during the Effectiveness Period, the number of Registrable
      Securities at any time exceeds 85% of the number of shares of Common Stock
      then registered in a Registration Statement, then the Company shall file
      as soon as reasonably practicable but in any case prior to the applicable
      Filing Date, an additional Registration Statement covering the resale by
      the Holders of not less than 130% of the number of such Registrable
      Securities.

            (d) Notify the Holders of Registrable Securities to be sold as
      promptly as reasonably possible and (if requested by any such Person)
      confirm such notice in writing promptly following the day (i)(A) when a
      Prospectus or any Prospectus supplement or

                                        5

<PAGE>

      post-effective amendment to the Registration Statement is proposed to be
      filed; (B) when the Commission notifies the Company whether there will be
      a "review" of the Registration Statement and whenever the Commission
      comments in writing on the Registration Statement (the Company shall upon
      request provide true and complete copies thereof and all written responses
      thereto to each of the Holders); and (C) with respect to the Registration
      Statement or any post-effective amendment, when the same has become
      effective; (ii) of any request by the Commission or any other Federal or
      state governmental authority during the period of effectiveness of the
      Registration Statement for amendments or supplements to the Registration
      Statement or Prospectus or for additional information; (iii) of the
      issuance by the Commission or any other federal or state governmental
      authority of any stop order suspending the effectiveness of the
      Registration Statement covering any or all of the Registrable Securities
      or the initiation of any Proceedings for that purpose; (iv) of the receipt
      by the Company of any notification with respect to the suspension of the
      qualification or exemption from qualification of any of the Registrable
      Securities for sale in any jurisdiction, or the initiation or threatening
      of any Proceeding for such purpose; and (v) of the occurrence of any event
      or passage of time that makes the financial statements included in the
      Registration Statement ineligible for inclusion therein or any statement
      made in the Registration Statement or Prospectus or any document
      incorporated or deemed to be incorporated therein by reference untrue in
      any material respect or that requires any revisions to the Registration
      Statement, Prospectus or other documents so that, in the case of the
      Registration Statement or the Prospectus, as the case may be, it will not
      contain any untrue statement of a material fact or omit to state any
      material fact required to be stated therein or necessary to make the
      statements therein, in light of the circumstances under which they were
      made, not misleading.

            (e) Use best efforts to avoid the issuance of, or, if issued, obtain
      the withdrawal of (i) any order suspending the effectiveness of the
      Registration Statement, or (ii) any suspension of the qualification (or
      exemption from qualification) of any of the Registrable Securities for
      sale in any jurisdiction, at the earliest practicable moment.

            (f) Furnish to each Holder, without charge, at least one conformed
      copy of the Registration Statement and each amendment thereto, including
      financial statements and schedules, all documents incorporated or deemed
      to be incorporated therein by reference to the extent requested by such
      Person, and all exhibits to the extent requested by such Person (including
      those previously furnished or incorporated by reference) promptly after
      the filing of such documents with the Commission.

            (g) Promptly deliver to each Holder, without charge, as many copies
      of the Prospectus or Prospectuses (including each form of prospectus) and
      each amendment or supplement thereto as such Persons may reasonably
      request in connection with resales by the Holder of Registrable
      Securities. Subject to the terms of this Agreement, the Company hereby
      consents to the use of such Prospectus and each amendment or supplement
      thereto by each of the selling Holders in connection with the offering and
      sale

                                        6

<PAGE>

      of the Registrable Securities covered by such Prospectus and any amendment
      or supplement thereto, except after the giving on any notice pursuant to
      Section 3(d).

            (h) Prior to any resale of Registrable Securities by a Holder, use
      its commercially reasonable efforts to register or qualify or cooperate
      with the selling Holders in connection with the registration or
      qualification (or exemption from the Registration or qualification) of
      such Registrable Securities for the resale by the Holder under the
      securities or Blue Sky laws of such jurisdictions within the United States
      as any Holder reasonably requests in writing, to keep the Registration or
      qualification (or exemption therefrom) effective during the Effectiveness
      Period and to do any and all other acts or things reasonably necessary to
      enable the disposition in such jurisdictions of the Registrable Securities
      covered by the Registration Statement; provided, that the Company shall
      not be required to qualify generally to do business in any jurisdiction
      where it is not then so qualified, subject the Company to any material tax
      in any such jurisdiction where it is not then so subject or file a general
      consent to service of process in any such jurisdiction.

            (i) If proposed amendments to NASDR Rule 2710 are adopted which
      require any broker-dealer to make a filing prior to executing a sale by a
      Holder, make an Issuer Filing with the NASDR, Inc. Corporate Financing
      Department pursuant to NASDR Rule 2710(b)(10)(A)(i) and respond within
      five Trading Days to any comments received from NASDR in connection
      therewith, and pay the filing fee required in connection therewith.

            (j) If requested by the Holders, cooperate with the Holders to
      facilitate the timely preparation and delivery of certificates
      representing Registrable Securities to be delivered to a transferee
      pursuant to the Registration Statement, which certificates shall be free,
      to the extent permitted by the Purchase Agreement, of all restrictive
      legends, and to enable such Registrable Securities to be in such
      denominations and registered in such names as any such Holders may
      request.

            (k) Upon the occurrence of any event contemplated by Section
      3(d)(v), as promptly as reasonably possible, prepare a supplement or
      amendment, including a post-effective amendment, to the Registration
      Statement or a supplement to the related Prospectus or any document
      incorporated or deemed to be incorporated therein by reference, and file
      any other required document so that, as thereafter delivered, neither the
      Registration Statement nor such Prospectus will contain an untrue
      statement of a material fact or omit to state a material fact required to
      be stated therein or necessary to make the statements therein, in light of
      the circumstances under which they were made, not misleading. If the
      Company notifies the Holders in accordance with clauses (ii) through (v)
      of Section 3(d) above to suspend the use of any Prospectus until the
      requisite changes to such Prospectus have been made, then the Holders
      shall suspend use of such Prospectus. The Company will use its best
      efforts to ensure that the use of the Prospectus may be resumed as
      promptly as is practicable. The Company shall be entitled to exercise its
      right under this Section 3(k) to suspend the availability of a
      Registration Statement and Prospectus, subject to the payment of partial
      liquidated damages pursuant to Section

                                        7

<PAGE>

      2(b), for a period not to exceed 60 days (which need not be consecutive
      days) in any 12 month period.

            (l) Comply with all applicable rules and regulations of the
      Commission.

            (m) The Company may require each selling Holder to furnish to the
      Company a certified statement as to the number of shares of Common Stock
      beneficially owned by such Holder and, if required by the Commission, the
      person thereof that has voting and dispositive control over the Shares.
      During any periods that the Company is unable to meet its obligations
      hereunder with respect to the registration of the Registrable Securities
      solely because any Holder fails to furnish such information within three
      Trading Days of the Company's request, any liquidated damages that are
      accruing at such time as to such Holder only shall be tolled and any Event
      that may otherwise occur solely because of such delay shall be suspended
      as to such Holder only, until such information is delivered to the
      Company.

      4. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not any Registrable Securities are sold pursuant to
the Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the Trading Market on which the Common Stock is then
listed for trading, (B) in compliance with applicable state securities or Blue
Sky laws reasonably agreed to by the Company in writing (including, without
limitation, fees and disbursements of counsel for the Company in connection with
Blue Sky qualifications or exemptions of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as requested by the Holders) and (C) if not
previously paid by the Company in connection with an Issuer Filing, with respect
to any filing that may be required to be made by any broker through which a
Holder intends to make sales of Registrable Securities with NASD Regulation,
Inc. pursuant to the NASD Rule 2710, so long as the broker is receiving no more
than a customary brokerage commission in connection with such sale, (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is reasonably requested by the holders of a majority of
the Registrable Securities included in the Registration Statement), (iii)
messenger, telephone and delivery expenses, (iv) fees and disbursements of
counsel for the Company, (v) Securities Act liability insurance, if the Company
so desires such insurance, and (vi) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions
contemplated by this Agreement. In addition, the Company shall be responsible
for all of its internal expenses incurred in connection with the consummation of
the transactions contemplated by this Agreement (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. In no event shall the Company be
responsible for any broker or similar commissions or, except to the extent
provided for in the Transaction Documents, any legal fees or other costs of the
Holders.

                                        8

<PAGE>

      5. Indemnification

            (a) Indemnification by the Company. The Company shall,
      notwithstanding any termination of this Agreement, indemnify and hold
      harmless each Holder, the officers, directors, agents, brokers (including
      brokers who offer and sell Registrable Securities as principal as a result
      of a pledge or any failure to perform under a margin call of Common
      Stock), investment advisors and employees of each of them, each Person who
      controls any such Holder (within the meaning of Section 15 of the
      Securities Act or Section 20 of the Exchange Act) and the officers,
      directors, agents and employees of each such controlling Person, to the
      fullest extent permitted by applicable law, from and against any and all
      losses, claims, damages, liabilities, costs (including, without
      limitation, reasonable attorneys' fees) and expenses (collectively,
      "Losses"), as incurred, arising out of or relating to any untrue or
      alleged untrue statement of a material fact contained in the Registration
      Statement, any Prospectus or any form of prospectus or in any amendment or
      supplement thereto or in any preliminary prospectus, or arising out of or
      relating to any omission or alleged omission of a material fact required
      to be stated therein or necessary to make the statements therein (in the
      case of any Prospectus or form of prospectus or supplement thereto, in
      light of the circumstances under which they were made) not misleading,
      except to the extent, but only to the extent, that (i) such untrue
      statements or omissions are based solely upon information regarding such
      Holder furnished in writing to the Company by such Holder expressly for
      use therein, or to the extent that such information relates to such Holder
      or such Holder's proposed method of distribution of Registrable Securities
      and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement, such Prospectus or such
      form of Prospectus or in any amendment or supplement thereto (it being
      understood that the Holder has approved Annex A hereto for this purpose)
      or (ii) in the case of an occurrence of an event of the type specified in
      Section 3(c)(ii)-(v), the use by such Holder of an outdated or defective
      Prospectus after the Company has notified such Holder in writing that the
      Prospectus is outdated or defective and prior to the receipt by such
      Holder of the Advice contemplated in Section 6(d). The Company shall
      notify the Holders promptly of the institution, threat or assertion of any
      Proceeding of which the Company is aware in connection with the
      transactions contemplated by this Agreement.

            (b) Indemnification by Holders. Each Holder shall, severally and not
      jointly, indemnify and hold harmless the Company, its directors, officers,
      agents and employees, each Person who controls the Company (within the
      meaning of Section 15 of the Securities Act and Section 20 of the Exchange
      Act), and the directors, officers, agents or employees of such controlling
      Persons, to the fullest extent permitted by applicable law, from and
      against all Losses, as incurred, to the extent arising out of or based
      solely upon: (x) such Holder's failure to comply with the prospectus
      delivery requirements of the Securities Act or (y) any untrue or alleged
      untrue statement of a material fact contained in any Registration
      Statement, any Prospectus, or any form of prospectus, or in any amendment
      or supplement thereto or in any preliminary prospectus, or arising out of
      or relating to any omission or alleged omission of a material fact
      required to be stated therein or necessary to make the statements therein
      not misleading (i) to the extent, but

                                        9

<PAGE>

      only to the extent, that such untrue statement or omission is contained in
      any information so furnished in writing by such Holder to the Company
      specifically for inclusion in the Registration Statement or such
      Prospectus or (ii) to the extent that (1) such untrue statements or
      omissions are based solely upon information regarding such Holder
      furnished in writing to the Company by such Holder expressly for use
      therein, or to the extent that such information relates to such Holder or
      such Holder's proposed method of distribution of Registrable Securities
      and was reviewed and expressly approved in writing by such Holder
      expressly for use in the Registration Statement (it being understood that
      the Holder has approved Annex A hereto for this purpose), such Prospectus
      or such form of Prospectus or in any amendment or supplement thereto or
      (2) in the case of an occurrence of an event of the type specified in
      Section 3(d)(ii)-(v), the use by such Holder of an outdated or defective
      Prospectus after the Company has notified such Holder in writing that the
      Prospectus is outdated or defective and prior to the receipt by such
      Holder of the Advice contemplated in Section 6(d). In no event shall the
      liability of any selling Holder be greater in amount than the dollar
      amount of the proceeds (net of all expense paid by such Holder in
      connection with any claim relating to this Section 5(b) and the amount of
      any damages such Holder has otherwise been required to pay by reason of
      such untrue statement or omission) received by such Holder upon the sale
      of the Registrable Securities included in the Registration Statement
      giving rise to such indemnification obligation.

            (c) Conduct of Indemnification Proceedings. If any Proceeding shall
      be brought or asserted against any Person entitled to indemnity hereunder
      (an "Indemnified Party"), such Indemnified Party shall promptly notify the
      Person from whom indemnity is sought (the "Indemnifying Party") in
      writing, and the Indemnifying Party shall have the right to assume the
      defense thereof, including the employment of counsel reasonably
      satisfactory to the Indemnified Party and the payment of all fees and
      expenses incurred in connection with defense thereof; provided, that the
      failure of any Indemnified Party to give such notice shall not relieve the
      Indemnifying Party of its obligations or liabilities pursuant to this
      Agreement, except (and only) to the extent that it shall be finally
      determined by a court of competent jurisdiction (which determination is
      not subject to appeal or further review) that such failure shall have
      prejudiced the Indemnifying Party.

            An Indemnified Party shall have the right to employ separate counsel
      in any such Proceeding and to participate in the defense thereof, but the
      fees and expenses of such counsel shall be at the expense of such
      Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed
      in writing to pay such fees and expenses; (2) the Indemnifying Party shall
      have failed promptly to assume the defense of such Proceeding and to
      employ counsel reasonably satisfactory to such Indemnified Party in any
      such Proceeding; or (3) the named parties to any such Proceeding
      (including any impleaded parties) include both such Indemnified Party and
      the Indemnifying Party, and such Indemnified Party shall reasonably
      believe that a material conflict of interest is likely to exist if the
      same counsel were to represent such Indemnified Party and the Indemnifying
      Party (in which case, if such Indemnified Party notifies the Indemnifying
      Party in writing that it elects to employ separate counsel at the expense
      of the Indemnifying Party, the

                                       10

<PAGE>

      Indemnifying Party shall not have the right to assume the defense thereof
      and the reasonable fees and expenses of one separate counsel shall be at
      the expense of the Indemnifying Party). The Indemnifying Party shall not
      be liable for any settlement of any such Proceeding effected without its
      written consent, which consent shall not be unreasonably withheld. No
      Indemnifying Party shall, without the prior written consent of the
      Indemnified Party, effect any settlement of any pending Proceeding in
      respect of which any Indemnified Party is a party, unless such settlement
      includes an unconditional release of such Indemnified Party from all
      liability on claims that are the subject matter of such Proceeding.

            Subject to the terms of this Agreement, all reasonable fees and
      expenses of the Indemnified Party (including reasonable fees and expenses
      to the extent incurred in connection with investigating or preparing to
      defend such Proceeding in a manner not inconsistent with this Section)
      shall be paid to the Indemnified Party, as incurred, within ten Trading
      Days of written notice thereof to the Indemnifying Party; provided, that
      the Indemnified Party shall promptly reimburse the Indemnifying Party for
      that portion of such fees and expenses applicable to such actions for
      which such Indemnified Party is not entitled to indemnification hereunder,
      determined based upon the relative faults of the parties.

            (d) Contribution. If the indemnification under Section 5(a) or 5(b)
      is unavailable to an Indemnified Party or insufficient to hold an
      Indemnified Party harmless for any Losses, then each Indemnifying Party
      shall contribute to the amount paid or payable by such Indemnified Party,
      in such proportion as is appropriate to reflect the relative fault of the
      Indemnifying Party and Indemnified Party in connection with the actions,
      statements or omissions that resulted in such Losses as well as any other
      relevant equitable considerations. The relative fault of such Indemnifying
      Party and Indemnified Party shall be determined by reference to, among
      other things, whether any action in question, including any untrue or
      alleged untrue statement of a material fact or omission or alleged
      omission of a material fact, has been taken or made by, or relates to
      information supplied by, such Indemnifying Party or Indemnified Party, and
      the parties' relative intent, knowledge, access to information and
      opportunity to correct or prevent such action, statement or omission. The
      amount paid or payable by a party as a result of any Losses shall be
      deemed to include, subject to the limitations set forth in this Agreement,
      any reasonable attorneys' or other reasonable fees or expenses incurred by
      such party in connection with any Proceeding to the extent such party
      would have been indemnified for such fees or expenses if the
      indemnification provided for in this Section was available to such party
      in accordance with its terms.

            The parties hereto agree that it would not be just and equitable if
      contribution pursuant to this Section 5(d) were determined by pro rata
      allocation or by any other method of allocation that does not take into
      account the equitable considerations referred to in the immediately
      preceding paragraph. Notwithstanding the provisions of this Section 5(d),
      no Holder shall be required to contribute, in the aggregate, any amount in
      excess of the amount by which the proceeds actually received by such
      Holder from the

                                       11

<PAGE>

      sale of the Registrable Securities subject to the Proceeding exceeds the
      amount of any damages that such Holder has otherwise been required to pay
      by reason of such untrue or alleged untrue statement or omission or
      alleged omission, except in the case of fraud by such Holder.

            The indemnity and contribution agreements contained in this Section
      are in addition to any liability that the Indemnifying Parties may have to
      the Indemnified Parties.

      6. Miscellaneous

            (a) Remedies. In the event of a breach by the Company or by a
      Holder, of any of their obligations under this Agreement, each Holder or
      the Company, as the case may be, in addition to being entitled to exercise
      all rights granted by law and under this Agreement, including recovery of
      damages, will be entitled to specific performance of its rights under this
      Agreement. The Company and each Holder agree that monetary damages would
      not provide adequate compensation for any losses incurred by reason of a
      breach by it of any of the provisions of this Agreement and hereby further
      agrees that, in the event of any action for specific performance in
      respect of such breach, it shall waive the defense that a remedy at law
      would be adequate.

            (b) No Piggyback on Registrations. Except as set forth on Schedule
      6(b) attached hereto, neither the Company nor any of its security holders
      (other than the Holders in such capacity pursuant hereto) may include
      securities of the Company in a Registration Statement other than the
      Registrable Securities. No Person has any right to cause the Company to
      effect the registration under the Securities Act of any securities of the
      Company. The Company shall not file any other registration statements
      until the Registration Statement required hereunder is declared effective
      by the Commission, provided that this Section 6(b) shall not prohibit the
      Company from filing amendments to registration statements already filed.

            (c) Compliance. Each Holder covenants and agrees that it will comply
      with the prospectus delivery requirements of the Securities Act as
      applicable to it in connection with sales of Registrable Securities
      pursuant to the Registration Statement.

            (d) Discontinued Disposition. Each Holder agrees by its acquisition
      of such Registrable Securities that, upon receipt of a notice from the
      Company of the occurrence of any event of the kind described in Section
      3(d), such Holder will forthwith discontinue disposition of such
      Registrable Securities under the Registration Statement until such
      Holder's receipt of the copies of the supplemented Prospectus and/or
      amended Registration Statement or until it is advised in writing (the
      "Advice") by the Company that the use of the applicable Prospectus may be
      resumed, and, in either case, has received copies of any additional or
      supplemental filings that are incorporated or deemed to be incorporated by
      reference in such Prospectus or Registration Statement. The Company will
      use its best efforts to ensure that the use of the Prospectus may be
      resumed

                                       12

<PAGE>

      as promptly as it practicable. The Company agrees and acknowledges that
      any periods during which the Holder is required to discontinue the
      disposition of the Registrable Securities hereunder shall be subject to
      the provisions of Section 2(b).

            (e) Piggy-Back Registrations. If at any time during the
      Effectiveness Period there is not an effective Registration Statement
      covering all of the Registrable Securities and the Company shall determine
      to prepare and file with the Commission a registration statement relating
      to an offering for its own account or the account of others under the
      Securities Act of any of its equity securities, other than on Form S-4 or
      Form S-8 (each as promulgated under the Securities Act) or their then
      equivalents relating to equity securities to be issued solely in
      connection with any acquisition of any entity or business or equity
      securities issuable in connection with the stock option or other employee
      benefit plans, then the Company shall send to each Holder a written notice
      of such determination and, if within fifteen days after the date of such
      notice, any such Holder shall so request in writing, the Company shall
      include in such registration statement all or any part of such Registrable
      Securities such Holder requests to be registered, subject to customary
      underwriter cutbacks applicable to all holders of registration rights.

            (f) Amendments and Waivers. The provisions of this Agreement,
      including the provisions of this sentence, may not be amended, modified or
      supplemented, and waivers or consents to departures from the provisions
      hereof may not be given, unless the same shall be in writing and signed by
      the Company and each Holder of the then outstanding Registrable
      Securities. Notwithstanding the foregoing, a waiver or consent to depart
      from the provisions hereof with respect to a matter that relates
      exclusively to the rights of Holders and that does not directly or
      indirectly affect the rights of other Holders may be given by Holders of
      all of the Registrable Securities to which such waiver or consent relates;
      provided, however, that the provisions of this sentence may not be
      amended, modified, or supplemented except in accordance with the
      provisions of the immediately preceding sentence.

            (g) Notices. Any and all notices or other communications or
      deliveries required or permitted to be provided hereunder shall be
      delivered as set forth in the Purchase Agreement.

            (h) Successors and Assigns. This Agreement shall inure to the
      benefit of and be binding upon the successors and permitted assigns of
      each of the parties and shall inure to the benefit of each Holder. The
      Company may not assign its rights or obligations hereunder without the
      prior written consent of all of the Holders of the then-outstanding
      Registrable Securities. Each Holder may assign their respective rights
      hereunder in the manner and to the Persons as permitted under the Purchase
      Agreement.

            (i) No Inconsistent Agreements. Neither the Company nor any of its
      subsidiaries has entered, as of the date hereof, nor shall the Company or
      any of its subsidiaries, on or after the date of this Agreement, enter
      into any agreement with respect to its securities, that would have the
      effect of impairing the rights granted to the Holders

                                       13

<PAGE>

      in this Agreement or otherwise conflicts with the provisions hereof.
      Except as set forth on Schedule 6(i), neither the Company nor any of its
      subsidiaries has previously entered into any agreement granting any
      registration rights with respect to any of its securities to any Person
      that have not been satisfied in full.

            (j) Execution and Counterparts. This Agreement may be executed in
      any number of counterparts, each of which when so executed shall be deemed
      to be an original and, all of which taken together shall constitute one
      and the same Agreement. In the event that any signature is delivered by
      facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile
      signature were the original thereof.

            (k) Governing Law. All questions concerning the construction,
      validity, enforcement and interpretation of this Agreement shall be
      determined with the provisions of the Purchase Agreement.

            (l) Cumulative Remedies. The remedies provided herein are cumulative
      and not exclusive of any remedies provided by law.

            (m) Severability. If any term, provision, covenant or restriction of
      this Agreement is held by a court of competent jurisdiction to be invalid,
      illegal, void or unenforceable, the remainder of the terms, provisions,
      covenants and restrictions set forth herein shall remain in full force and
      effect and shall in no way be affected, impaired or invalidated, and the
      parties hereto shall use their commercially reasonable efforts to find and
      employ an alternative means to achieve the same or substantially the same
      result as that contemplated by such term, provision, covenant or
      restriction. It is hereby stipulated and declared to be the intention of
      the parties that they would have executed the remaining terms, provisions,
      covenants and restrictions without including any of such that may be
      hereafter declared invalid, illegal, void or unenforceable.

            (n) Headings. The headings in this Agreement are for convenience of
      reference only and shall not limit or otherwise affect the meaning hereof.

            (o) Independent Nature of Holders' Obligations and Rights. The
      obligations of each Holder hereunder are several and not joint with the
      obligations of any other Holder hereunder, and no Holder shall be
      responsible in any way for the performance of the obligations of any other
      Holder hereunder. Nothing contained herein or in any other agreement or
      document delivered at any closing, and no action taken by any Holder
      pursuant hereto or thereto, shall be deemed to constitute the Holders as a
      partnership, an association, a joint venture or any other kind of entity,
      or create a presumption that the Holders are in any way acting in concert
      with respect to such obligations or the transactions contemplated by this
      Agreement. Each Holder shall be entitled to protect and enforce its
      rights, including without limitation the rights arising out of this
      Agreement, and it shall not be necessary for any other Holder to be joined
      as an additional party in any proceeding for such purpose.

                            *************************

                                       14

<PAGE>

                                       15

<PAGE>

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

                                    INTEGRAL VISION, INC.

                                    By:___________________________________
                                       Name:
                                       Title:

                       [SIGNATURE PAGE OF HOLDERS FOLLOWS]

                                       16

<PAGE>

                      [HOLDER'S SIGNATURE PAGE TO INVI RRA]

Name of Holder: __________________________
Signature of Authorized Signatory of Holder: __________________________
Name of Authorized Signatory: _________________________
Title of Authorized Signatory: __________________________

                           [SIGNATURE PAGES CONTINUE]

                                       17

<PAGE>

                                     ANNEX A

                              Plan of Distribution

      The Selling Stockholders (the "Selling Stockholders") of the common stock
("Common Stock") of Integral Vision, Inc., a Michigan corporation (the
"Company") and any of their pledgees, assignees and successors-in-interest may,
from time to time, sell any or all of their shares of Common Stock on any stock
exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
Selling Stockholders may use any one or more of the following methods when
selling shares:

            -     ordinary brokerage transactions and transactions in which the
                  broker-dealer solicits purchasers;

            -     block trades in which the broker-dealer will attempt to sell
                  the shares as agent but may position and resell a portion of
                  the block as principal to facilitate the transaction;

            -     purchases by a broker-dealer as principal and resale by the
                  broker-dealer for its account;

            -     an exchange distribution in accordance with the rules of the
                  applicable exchange;

            -     privately negotiated transactions;

            -     settlement of short sales entered into after the effective
                  date of the registration statement of which this prospectus is
                  a part;

            -     broker-dealers may agree with the Selling Stockholders to sell
                  a specified number of such shares at a stipulated price per
                  share;

            -     a combination of any such methods of sale;

            -     through the writing or settlement of options or other hedging
                  transactions, whether through an options exchange or
                  otherwise; or

            -     any other method permitted pursuant to applicable law.

      The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), if available, rather
than under this prospectus.

      Broker-dealers engaged by the Selling Stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the Selling Stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated, but, except as set forth in a supplement to this Prospectus, in the
case of an agency transaction not in excess of a customary brokerage

                                       18

<PAGE>

commission in compliance with NASDR Rule 2440; and in the case of a principal
transaction a markup or markdown in compliance with NASDR IM-2440.

      In connection with the sale of the Common Stock or interests therein, the
Selling Stockholders may enter into hedging transactions with broker-dealers or
other financial institutions, which may in turn engage in short sales of the
Common Stock in the course of hedging the positions they assume. The Selling
Stockholders may also sell shares of the Common Stock short and deliver these
securities to close out their short positions, or loan or pledge the Common
Stock to broker-dealers that in turn may sell these securities. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).

      The Selling Stockholders and any broker[]dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker~dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholder has
informed the Company that it does not have any written or oral agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock. In no event shall any broker-dealer receive fees, commissions and markups
which, in the aggregate, would exceed eight percent (8%).

      The Company is required to pay certain fees and expenses incurred by the
Company incident to the registration of the shares. The Company has agreed to
indemnify the Selling Stockholders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.

      Because Selling Stockholders may be deemed to be "underwriters" within the
meaning of the Securities Act, they will be subject to the prospectus delivery
requirements of the Securities Act. In addition, any securities covered by this
prospectus which qualify for sale pursuant to Rule 144 under the Securities Act
may be sold under Rule 144 rather than under this prospectus. Each Selling
Stockholder has advised us that they have not entered into any written or oral
agreements, understandings or arrangements with any underwriter or broker-dealer
regarding the sale of the resale shares. There is no underwriter or coordinating
broker acting in connection with the proposed sale of the resale shares by the
Selling Stockholders.

      We agreed to keep this prospectus effective until the earlier of (i) the
date on which the shares may be resold by the Selling Stockholders without
registration and without regard to any volume limitations by reason of Rule
144(e) under the Securities Act or any other rule of similar effect or (ii) all
of the shares have been sold pursuant to the prospectus or Rule 144 under the
Securities Act or any other rule of similar effect. The resale shares will be
sold only through registered or licensed brokers or dealers if required under
applicable state securities laws. In

                                       19

<PAGE>

addition, in certain states, the resale shares may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available and is complied
with.

      Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the resale shares may not simultaneously engage
in market making activities with respect to the Common Stock for a period of two
business days prior to the commencement of the distribution. In addition, the
Selling Stockholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including Regulation M, which may
limit the timing of purchases and sales of shares of the Common Stock by the
Selling Stockholders or any other person. We will make copies of this prospectus
available to the Selling Stockholders and have informed them of the need to
deliver a copy of this prospectus to each purchaser at or prior to the time of
the sale.

                                       20

<PAGE>

                                                                         ANNEX B

                              INTEGRAL VISION, INC.

                 SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE

      The undersigned beneficial owner of common stock, no par value per share
(the "Common Stock"), of Integral Vision, Inc., a Michigan corporation (the
"Company"), (the "Registrable Securities") understands that the Company has
filed or intends to file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (the "Registration
Statement") for the registration and resale under Rule 415 of the Securities Act
of 1933, as amended (the "Securities Act"), of the Registrable Securities, in
accordance with the terms of the Registration Rights Agreement, dated as of
April _, 2005 (the "Registration Rights Agreement"), among the Company and the
Purchasers named therein. A copy of the Registration Rights Agreement is
available from the Company upon request at the address set forth below. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Registration Rights Agreement.

      Certain legal consequences arise from being named as a selling
securityholder in the Registration Statement and the related prospectus.
Accordingly, holders and beneficial owners of Registrable Securities are advised
to consult their own securities law counsel regarding the consequences of being
named or not being named as a selling securityholder in the Registration
Statement and the related prospectus.

                                     NOTICE

      The undersigned beneficial owner (the "Selling Securityholder") of
Registrable Securities hereby elects to include the Registrable Securities owned
by it and listed below in Item 3 (unless otherwise specified under such Item 3)
in the Registration Statement.

                                       21

<PAGE>

The undersigned hereby provides the following information to the Company and
represents and warrants that such information is accurate:

                                  QUESTIONNAIRE

1.    NAME.

      (a)   Full Legal Name of Selling Securityholder

            ____________________________________________________________________

      (b)   Full Legal Name of Registered Holder (if not the same as (a) above)
            through which Registrable Securities Listed in Item 3 below are
            held:

            ____________________________________________________________________

      (c)   Full Legal Name of Natural Control Person (which means a natural
            person who directly or indirectly alone or with others has power to
            vote or dispose of the securities covered by the questionnaire):

            ____________________________________________________________________

2. ADDRESS FOR NOTICES TO SELLING SECURITYHOLDER:

________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone:______________________________________________________________________
Fax:____________________________________________________________________________
Contact Person:_________________________________________________________________

3. BENEFICIAL OWNERSHIP OF REGISTRABLE SECURITIES:

      (a)   Type and Number of Registrable Securities beneficially owned:

            ____________________________________________________________________
            ____________________________________________________________________
            ____________________________________________________________________

                                       22

<PAGE>

4. BROKER-DEALER STATUS:

      (a)   Are you a broker-dealer?

                                   Yes [ ]   No [ ]

      Note: If yes, the Commission's staff has indicated that you should be
            identified as an underwriter in the Registration Statement.

      (b)   Are you an affiliate of a broker-dealer?

                                   Yes [ ]   No [ ]

      (c)   If you are an affiliate of a broker-dealer, do you certify that you
            bought the Registrable Securities in the ordinary course of
            business, and at the time of the purchase of the Registrable
            Securities to be resold, you had no agreements or understandings,
            directly or indirectly, with any person to distribute the
            Registrable Securities?

                                   Yes [ ]   No [ ]

      Note: If no, the Commission's staff has indicated that you should be
            identified as an underwriter in the Registration Statement.

5. BENEFICIAL OWNERSHIP OF OTHER SECURITIES OF THE COMPANY OWNED BY THE SELLING
              SECURITYHOLDER.

      Except as set forth below in this Item 5, the undersigned is not the
      beneficial or registered owner of any securities of the Company other than
      the Registrable Securities listed above in Item 3.

      (a)   Type and Amount of Other Securities beneficially owned by the
            Selling Securityholder:

            ____________________________________________________________________
            ____________________________________________________________________

                                       23

<PAGE>

6. RELATIONSHIPS WITH THE COMPANY:

      Except as set forth below, neither the undersigned nor any of its
      affiliates, officers, directors or principal equity holders (owners of 5%
      of more of the equity securities of the undersigned) has held any position
      or office or has had any other material relationship with the Company (or
      its predecessors or affiliates) during the past three years.

      State any exceptions here:

      __________________________________________________________________________
      __________________________________________________________________________

      The undersigned agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein that may occur subsequent to the
date hereof at any time prior to the time the Registration Statement becomes
effective.

      By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to Items 1 through 6 and the
inclusion of such information in the Registration Statement and the related
prospectus and any amendments or supplements thereto. The undersigned
understands that such information will be relied upon by the Company in
connection with the preparation or amendment of the Registration Statement and
the related prospectus.

      IN WITNESS WHEREOF the undersigned, by authority duly given, has caused
this Notice and Questionnaire to be executed and delivered either in person or
by its duly authorized agent.

Dated:_________________________          Beneficial Owner:_____________________

                                         By:____________________________________
                                            Name:
                                            Title:

PLEASE FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND
RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:

                                       24
<PAGE>

                                                                       EXHIBIT B

NEITHER THIS SECURITY NOR THE SECURITIES INTO WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY. THIS SECURITY AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS
SECURITY MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN SECURED BY SUCH SECURITIES.

                          COMMON STOCK PURCHASE WARRANT

                To Purchase __________ Shares of Common Stock of

                              INTEGRAL VISION, INC.

      THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for
value received, _____________ (the "Holder"), is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the date hereof (the "Initial Exercise Date") and on or
prior to the close of business on the fifth anniversary of the Initial Exercise
Date (the "Termination Date") but not thereafter, to subscribe for and purchase
from Integral Vision, Inc., a Michigan corporation (the "Company"), up to ______
shares (the "Warrant Shares") of Common Stock, no par value per share, of the
Company (the "Common Stock"). The purchase price of one share of Common Stock
under this Warrant shall be equal to the Exercise Price, as defined in Section
2(b).

      Section 1. Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain Securities Purchase
Agreement (the "Purchase Agreement"), dated April _, 2005, among the Company and
the purchasers signatory thereto.

      Section 2. Exercise.

            a) Exercise of Warrant. Exercise of the purchase rights represented
      by this Warrant may be made, in whole or in part, at any time or times on
      or after the Initial Exercise Date and on or before the Termination Date
      by delivery to the Company of a duly executed facsimile copy of the Notice
      of Exercise Form annexed hereto (or such other office or agency of the
      Company as it may designate by notice in writing to the registered Holder
      at the address of such Holder appearing on the books of the Company);

                                                                               1
<PAGE>

provided, however, within 5 Trading Days of the date said Notice of Exercise is
delivered to the Company, the Holder shall have surrendered this Warrant to the
Company and the Company shall have received payment of the aggregate Exercise
Price of the shares thereby purchased by wire transfer or cashier's check drawn
on a United States bank.

      b) Exercise Price. The exercise price of the Common Stock under this
Warrant shall be $1.60, subject to adjustment hereunder (the "Exercise Price").

      c) Cashless Exercise. If at any time after one year from the date of
issuance of this Warrant there is no effective Registration Statement
registering, or no current prospectus available for, the resale of the Warrant
Shares by the Holder, then this Warrant may also be exercised at such time by
means of a "cashless exercise" in which the Holder shall be entitled to receive
a certificate for the number of Warrant Shares equal to the quotient obtained by
dividing [(A-B) (X)] by (A), where:

      (A) = the VWAP on the Trading Day immediately preceding the date of such
            election;

      (B) = the Exercise Price of this Warrant, as adjusted; and

      (X) = the number of Warrant Shares issuable upon exercise of this Warrant
            in accordance with the terms of this Warrant by means of a cash
            exercise rather than a cashless exercise.

      Notwithstanding anything herein to the contrary, on the Termination Date,
this Warrant shall be automatically exercised via cashless exercise pursuant to
this Section 2(c).

      d)    Exercise Limitations.

            i. Holder's Restrictions. [The following provision shall be omitted
      at the request of any Purchaser made to the Company prior to issuance of
      the Warrant] The Holder shall not have the right to exercise any portion
      of this Warrant, pursuant to Section 2(c) or otherwise, to the extent that
      after giving effect to such issuance after exercise, the Holder (together
      with the Holder's affiliates), as set forth on the applicable Notice of
      Exercise, would beneficially own in excess of 4.99% of the number of
      shares of the Common Stock outstanding immediately after giving effect to
      such issuance. For purposes of the foregoing sentence, the number of
      shares of Common Stock beneficially owned by the Holder and its affiliates
      shall include the number of shares of Common Stock issuable upon exercise
      of this Warrant with respect to which the determination of such sentence
      is being made, but shall exclude the number of shares of Common Stock
      which would be issuable upon (A) exercise of the remaining, nonexercised
      portion of this Warrant beneficially owned by the Holder or any of its
      affiliates and (B) exercise or conversion of the unexercised or
      nonconverted portion of any other securities of the

                                        2
<PAGE>

      Company (including, without limitation, any other Shares or Warrants)
      subject to a limitation on conversion or exercise analogous to the
      limitation contained herein beneficially owned by the Holder or any of its
      affiliates. Except as set forth in the preceding sentence, for purposes of
      this Section 2(d), beneficial ownership shall be calculated in accordance
      with Section 13(d) of the Exchange Act, it being acknowledged by Holder
      that the Company is not representing to Holder that such calculation is in
      compliance with Section 13(d) of the Exchange Act and Holder is solely
      responsible for any schedules required to be filed in accordance
      therewith. To the extent that the limitation contained in this Section
      2(d) applies, the determination of whether this Warrant is exercisable (in
      relation to other securities owned by the Holder) and of which a portion
      of this Warrant is exercisable shall be in the sole discretion of such
      Holder, and the submission of a Notice of Exercise shall be deemed to be
      such Holder's determination of whether this Warrant is exercisable (in
      relation to other securities owned by such Holder) and of which portion of
      this Warrant is exercisable, in each case subject to such aggregate
      percentage limitation, and the Company shall have no obligation to verify
      or confirm the accuracy of such determination. For purposes of this
      Section 2(d), in determining the number of outstanding shares of Common
      Stock, the Holder may rely on the number of outstanding shares of Common
      Stock as reflected in (x) the Company's most recent Form 10-Q or Form
      10-K, as the case may be, (y) a more recent public announcement by the
      Company or (z) any other notice by the Company or the Company's Transfer
      Agent setting forth the number of shares of Common Stock outstanding. Upon
      the written or oral request of the Holder, the Company shall within two
      Trading Days confirm orally and in writing to the Holder the number of
      shares of Common Stock then outstanding. In any case, the number of
      outstanding shares of Common Stock shall be determined after giving effect
      to the conversion or exercise of securities of the Company, including this
      Warrant, by the Holder or its affiliates since the date as of which such
      number of outstanding shares of Common Stock was reported. The provisions
      of this Section 2(d) may be waived by the Holder, at the election of the
      Holder, upon not less than 61 days' prior notice to the Company, and the
      provisions of this Section 2(d) shall continue to apply until such 61st
      day (or such later date, as determined by the Holder, as may be specified
      in such notice of waiver).

e)    Mechanics of Exercise.

            i. Authorization of Warrant Shares. The Company covenants that all
      Warrant Shares which may be issued upon the exercise of the purchase
      rights represented by this Warrant will, upon exercise of the purchase
      rights represented by this Warrant, be duly authorized, validly issued,
      fully paid and nonassessable and free from all taxes, liens and charges in
      respect of the issue thereof (other than taxes in respect of any transfer
      occurring contemporaneously with such issue).

                                        3
<PAGE>

            ii. Delivery of Certificates Upon Exercise. Certificates for shares
      purchased hereunder shall be transmitted by the transfer agent of the
      Company to the Holder by crediting the account of the Holder's prime
      broker with the Depository Trust Company through its Deposit Withdrawal
      Agent Commission ("DWAC") system if the Company is a participant in such
      system, and otherwise by physical delivery to the address specified by the
      Holder in the Notice of Exercise within 3 Trading Days from the delivery
      to the Company of the Notice of Exercise Form, surrender of this Warrant
      and payment of the aggregate Exercise Price as set forth above ("Warrant
      Share Delivery Date"). This Warrant shall be deemed to have been exercised
      on the date the Exercise Price is received by the Company. The Warrant
      Shares shall be deemed to have been issued, and Holder or any other person
      so designated to be named therein shall be deemed to have become a holder
      of record of such shares for all purposes, as of the date the Warrant has
      been exercised by payment to the Company of the Exercise Price and all
      taxes required to be paid by the Holder, if any, pursuant to Section
      2(e)(vii) prior to the issuance of such shares, have been paid.

            iii. Delivery of New Warrants Upon Exercise. If this Warrant shall
      have been exercised in part, the Company shall, at the time of delivery of
      the certificate or certificates representing Warrant Shares, deliver to
      Holder a new Warrant evidencing the rights of Holder to purchase the
      unpurchased Warrant Shares called for by this Warrant, which new Warrant
      shall in all other respects be identical with this Warrant.

            iv. Rescission Rights. If the Company fails to cause its transfer
      agent to transmit to the Holder a certificate or certificates representing
      the Warrant Shares pursuant to this Section 2(e)(iv) by the Warrant Share
      Delivery Date, then the Holder will have the right to rescind such
      exercise.

            v. Compensation for Buy-In on Failure to Timely Deliver Certificates
      Upon Exercise. In addition to any other rights available to the Holder, if
      the Company fails to cause its transfer agent to transmit to the Holder a
      certificate or certificates representing the Warrant Shares pursuant to an
      exercise on or before the Warrant Share Delivery Date, and if after such
      date the Holder is required by its broker to purchase (in an open market
      transaction or otherwise) shares of Common Stock to deliver in
      satisfaction of a sale by the Holder of the Warrant Shares which the
      Holder anticipated receiving upon such exercise (a "Buy-In"), then the
      Company shall (1) pay in cash to the Holder the amount by which (x) the
      Holder's total purchase price (including brokerage commissions, if any)
      for the shares of Common Stock so purchased exceeds (y) the amount
      obtained by multiplying (A) the number of Warrant Shares that the Company
      was required to deliver to the Holder in connection with the exercise at
      issue times (B) the price at which the sell order giving rise to

                                       4
<PAGE>

      such purchase obligation was executed, and (2) at the option of the
      Holder, either reinstate the portion of the Warrant and equivalent number
      of Warrant Shares for which such exercise was not honored or deliver to
      the Holder the number of shares of Common Stock that would have been
      issued had the Company timely complied with its exercise and delivery
      obligations hereunder. For example, if the Holder purchases Common Stock
      having a total purchase price of $11,000 to cover a Buy-In with respect to
      an attempted exercise of shares of Common Stock with an aggregate sale
      price giving rise to such purchase obligation of $10,000, under clause (1)
      of the immediately preceding sentence the Company shall be required to pay
      the Holder $1,000. The Holder shall provide the Company written notice
      indicating the amounts payable to the Holder in respect of the Buy-In,
      together with applicable confirmations and other evidence reasonably
      requested by the Company. Nothing herein shall limit a Holder's right to
      pursue any other remedies available to it hereunder, at law or in equity
      including, without limitation, a decree of specific performance and/or
      injunctive relief with respect to the Company's failure to timely deliver
      certificates representing shares of Common Stock upon exercise of the
      Warrant as required pursuant to the terms hereof.

            vi. No Fractional Shares or Scrip. No fractional shares or scrip
      representing fractional shares shall be issued upon the exercise of this
      Warrant. As to any fraction of a share which Holder would otherwise be
      entitled to purchase upon such exercise, the Company shall pay a cash
      adjustment in respect of such final fraction in an amount equal to such
      fraction multiplied by the Exercise Price.

            vii. Charges, Taxes and Expenses. Issuance of certificates for
      Warrant Shares shall be made without charge to the Holder for any issue or
      transfer tax or other incidental expense in respect of the issuance of
      such certificate, all of which taxes and expenses shall be paid by the
      Company, and such certificates shall be issued in the name of the Holder
      or in such name or names as may be directed by the Holder; provided,
      however, that in the event certificates for Warrant Shares are to be
      issued in a name other than the name of the Holder, this Warrant when
      surrendered for exercise shall be accompanied by the Assignment Form
      attached hereto duly executed by the Holder; and the Company may require,
      as a condition thereto, the payment of a sum sufficient to reimburse it
      for any transfer tax incidental thereto.

            viii. Closing of Books. The Company will not close its stockholder
      books or records in any manner which prevents the timely exercise of this
      Warrant, pursuant to the terms hereof.

                                        5
<PAGE>

      Section 3. Certain Adjustments.

            a) Stock Dividends and Splits. If the Company, at any time while
      this Warrant is outstanding: (A) pays a stock dividend or otherwise make a
      distribution or distributions on shares of its Common Stock or any other
      equity or equity equivalent securities payable in shares of Common Stock
      (which, for avoidance of doubt, shall not include any shares of Common
      Stock issued by the Company pursuant to this Warrant), (B) subdivides
      outstanding shares of Common Stock into a larger number of shares, (C)
      combines (including by way of reverse stock split) outstanding shares of
      Common Stock into a smaller number of shares, or (D) issues by
      reclassification of shares of the Common Stock any shares of capital stock
      of the Company, then in each case the Exercise Price shall be multiplied
      by a fraction of which the numerator shall be the number of shares of
      Common Stock (excluding treasury shares, if any) outstanding immediately
      before such event and of which the denominator shall be the number of
      shares of Common Stock outstanding immediately after such event and the
      number of shares issuable upon exercise of this Warrant shall be
      proportionately adjusted. Any adjustment made pursuant to this Section
      3(a) shall become effective immediately after the record date for the
      determination of stockholders entitled to receive such dividend or
      distribution and shall become effective immediately after the effective
      date in the case of a subdivision, combination or re-classification.

            b) Subsequent Equity Sales. If the Company or any Subsidiary
      thereof, as applicable, at any time while this Warrant is outstanding,
      shall sell, grant any option to purchase or sell or grant any right to
      reprice its securities, or otherwise dispose of or issue (or announce any
      sale, grant or any option to purchase or other disposition) any Common
      Stock or Common Stock Equivalents entitling any Person to acquire shares
      of Common Stock, at an effective price per share less than the then
      Exercise Price (such lower price, the "Base Share Price" and such
      issuances collectively, a "Dilutive Issuance"), as adjusted hereunder (if
      the holder of the Common Stock or Common Stock Equivalents so issued shall
      at any time, whether by operation of purchase price adjustments, reset
      provisions, floating conversion, exercise or exchange prices or otherwise,
      or due to warrants, options or rights per share which is issued in
      connection with such issuance, be entitled to receive shares of Common
      Stock at an effective price per share which is less than the Exercise
      Price, such issuance shall be deemed to have occurred for less than the
      Exercise Price), then, the Exercise Price shall be reduced to equal the
      Base Share Price and the number of Warrant Shares issuable hereunder shall
      be increased such that the aggregate Exercise Price payable hereunder,
      after taking into account the decrease in the Exercise Price, shall be
      equal to the aggregate Exercise Price prior to such adjustment. Such
      adjustment shall be made whenever such Common Stock or Common Stock
      Equivalents are issued. The Company shall notify the Holder in writing, no
      later than the Trading Day following the issuance of any Common Stock or
      Common Stock Equivalents subject to this section, indicating therein the
      applicable issuance price, or of applicable reset price, exchange price,
      conversion price and other pricing terms (such notice the "Dilutive
      Issuance Notice"). For purposes of clarification, whether or not the
      Company provides a Dilutive Issuance Notice pursuant to this Section 3(b),
      upon the occurrence of any Dilutive Issuance, after the date of such
      Dilutive Issuance the Holder is entitled to receive a number of Warrant
      Shares based upon the Base Share Price regardless of whether the Holder
      accurately refers to the Base Share Price in the Notice of Exercise.

                                       6
<PAGE>

            c) Pro Rata Distributions. If the Company, at any time prior to the
      Termination Date, shall distribute to all holders of Common Stock (and not
      to Holders of the Warrants) evidences of its indebtedness or assets
      (including cash and cash dividends) or rights or warrants to subscribe for
      or purchase any security other than the Common Stock (which shall be
      subject to Section 3(b)), then in each such case the Exercise Price shall
      be adjusted by multiplying the Exercise Price in effect immediately prior
      to the record date fixed for determination of stockholders entitled to
      receive such distribution by a fraction of which the denominator shall be
      the VWAP determined as of the record date mentioned above, and of which
      the numerator shall be such VWAP on such record date less the then per
      share fair market value at such record date of the portion of such assets
      or evidence of indebtedness so distributed applicable to one outstanding
      share of the Common Stock as determined by the Board of Directors in good
      faith. In either case the adjustments shall be described in a statement
      provided to the Holder of the portion of assets or evidences of
      indebtedness so distributed or such subscription rights applicable to one
      share of Common Stock. Such adjustment shall be made whenever any such
      distribution is made (prior to the Termination Date) and shall become
      effective immediately after the record date mentioned above.

            d) Fundamental Transaction. If, at any time while this Warrant is
      outstanding, (A) the Company effects any merger or consolidation of the
      Company with or into another Person, (B) the Company effects any sale of
      all or substantially all of its assets in one or a series of related
      transactions, (C) any tender offer or exchange offer (whether by the
      Company or another Person) is completed pursuant to which holders of
      Common Stock are permitted to tender or exchange their shares for other
      securities, cash or property, or (D) the Company effects any
      reclassification of the Common Stock or any compulsory share exchange
      pursuant to which the Common Stock is effectively converted into or
      exchanged for other securities, cash or property (in any such case, a
      "Fundamental Transaction"), then, upon any subsequent exercise of this
      Warrant, the Holder shall have the right to receive, for each Warrant
      Share that would have been issuable upon such exercise immediately prior
      to the occurrence of such Fundamental Transaction, at the option of the
      Holder, (a) upon exercise of this Warrant, the number of shares of Common
      Stock of the successor or acquiring corporation or of the Company, if it
      is the surviving corporation, and any additional consideration (the
      "Alternate Consideration") receivable upon or as a result of such
      reorganization, reclassification, merger, consolidation or disposition of
      assets by a Holder of the number of shares of Common Stock for which this
      Warrant is exercisable immediately prior to such event or (b) if the
      Company is acquired in an all cash transaction, cash equal to the value of
      this Warrant as determined in accordance with the Black-Scholes option
      pricing formula. For purposes of any such exercise, the determination of
      the Exercise Price shall be appropriately adjusted to apply to such
      Alternate Consideration based on the amount of Alternate Consideration
      issuable in respect of one share of Common Stock in such Fundamental
      Transaction, and the Company shall apportion the Exercise Price among the
      Alternate Consideration in a reasonable manner reflecting the relative
      value of any different components of the Alternate Consideration. If
      holders of Common Stock are

                                       7
<PAGE>

      given any choice as to the securities, cash or property to be received in
      a Fundamental Transaction, then the Holder shall be given the same choice
      as to the Alternate Consideration it receives upon any exercise of this
      Warrant following such Fundamental Transaction. To the extent necessary to
      effectuate the foregoing provisions, any successor to the Company or
      surviving entity in such Fundamental Transaction shall issue to the Holder
      a new warrant consistent with the foregoing provisions and evidencing the
      Holder's right to exercise such warrant into Alternate Consideration. The
      terms of any agreement pursuant to which a Fundamental Transaction is
      effected shall include terms requiring any such successor or surviving
      entity to comply with the provisions of this Section 3(d) and insuring
      that this Warrant (or any such replacement security) will be similarly
      adjusted upon any subsequent transaction analogous to a Fundamental
      Transaction.

            e) Exempt Issuance. Notwithstanding the foregoing, no adjustments,
      Alternate Consideration nor notices shall be made, paid or issued under
      this Section 3 in respect of an Exempt Issuance.

            f) Calculations. All calculations under this Section 3 shall be made
      to the nearest cent or the nearest 1/100th of a share, as the case may be.
      For purposes of this Section 3, the number of shares of Common Stock
      deemed to be issued and outstanding as of a given date shall be the sum of
      the number of shares of Common Stock (excluding treasury shares, if any)
      issued and outstanding.

            g) Voluntary Adjustment By Company. The Company may at any time
      during the term of this Warrant reduce the then current Exercise Price to
      any amount and for any period of time deemed appropriate by the Board of
      Directors of the Company.

            h)    Notice to Holders.

                  i. Adjustment to Exercise Price. Whenever the Exercise Price
            is adjusted pursuant to this Section 3, the Company shall promptly
            mail to each Holder a notice setting forth the Exercise Price after
            such adjustment and setting forth a brief statement of the facts
            requiring such adjustment. If the Company issues a variable rate
            security, despite the prohibition thereon in the Purchase Agreement,
            the Company shall be deemed to have issued Common Stock or Common
            Stock Equivalents at the lowest possible conversion or exercise
            price at which such securities may be converted or exercised in the
            case of a Variable Rate Transaction (as defined in the Purchase
            Agreement).

                  ii. Notice to Allow Exercise by Holder. If (A) the Company
            shall declare a dividend (or any other distribution) on the Common
            Stock; (B) the Company shall declare a special nonrecurring cash
            dividend on or a redemption of the Common Stock; (C) the Company
            shall authorize the granting to all holders of the Common Stock
            rights or warrants to subscribe for or purchase any shares of
            capital stock of any class or of any rights; (D) the approval of any
            stockholders of the Company shall be

                                       8
<PAGE>

            required in connection with any reclassification of the Common
            Stock, any consolidation or merger to which the Company is a party,
            any sale or transfer of all or substantially all of the assets of
            the Company, of any compulsory share exchange whereby the Common
            Stock is converted into other securities, cash or property; (E) the
            Company shall authorize the voluntary or involuntary dissolution,
            liquidation or winding up of the affairs of the Company; then, in
            each case, the Company shall cause to be mailed to the Holder at its
            last address as it shall appear upon the Warrant Register of the
            Company, at least 20 calendar days prior to the applicable record or
            effective date hereinafter specified, a notice stating (x) the date
            on which a record is to be taken for the purpose of such dividend,
            distribution, redemption, rights or warrants, or if a record is not
            to be taken, the date as of which the holders of the Common Stock of
            record to be entitled to such dividend, distributions, redemption,
            rights or warrants are to be determined or (y) the date on which
            such reclassification, consolidation, merger, sale, transfer or
            share exchange is expected to become effective or close, and the
            date as of which it is expected that holders of the Common Stock of
            record shall be entitled to exchange their shares of the Common
            Stock for securities, cash or other property deliverable upon such
            reclassification, consolidation, merger, sale, transfer or share
            exchange; provided, that the failure to mail such notice or any
            defect therein or in the mailing thereof shall not affect the
            validity of the corporate action required to be specified in such
            notice. The Holder is entitled to exercise this Warrant during the
            20-day period commencing on the date of such notice to the effective
            date of the event triggering such notice.

Section 4. Transfer of Warrant.

      a) Transferability. Subject to compliance with any applicable securities
laws and the conditions set forth in Sections 5(a) and 4(d) hereof and to the
provisions of Section 4.1 of the Purchase Agreement, this Warrant and all rights
hereunder are transferable, in whole or in part, upon surrender of this Warrant
at the principal office of the Company, together with a written assignment of
this Warrant substantially in the form attached hereto duly executed by the
Holder or its agent or attorney and funds sufficient to pay any transfer taxes
payable upon the making of such transfer. Upon such surrender and, if required,
such payment, the Company shall execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denomination or denominations
specified in such instrument of assignment, and shall issue to the assignor a
new Warrant evidencing the portion of this Warrant not so assigned, and this
Warrant shall promptly be cancelled. A Warrant, if properly assigned, may be
exercised by a new holder for the purchase of Warrant Shares without having a
new Warrant issued.

      b) New Warrants. This Warrant may be divided or combined with other
Warrants upon presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and denominations in which
new Warrants are to be issued, signed by the Holder or its agent or attorney.
Subject to compliance with Section

                                       9
<PAGE>

4(a), as to any transfer which may be involved in such division or combination,
the Company shall execute and deliver a new Warrant or Warrants in exchange for
the Warrant or Warrants to be divided or combined in accordance with such
notice.

      c) Warrant Register. The Company shall register this Warrant, upon records
to be maintained by the Company for that purpose (the "Warrant Register"), in
the name of the record Holder hereof from time to time. The Company may deem and
treat the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.

      d) Transfer Restrictions. If, at the time of the surrender of this Warrant
in connection with any transfer of this Warrant, the transfer of this Warrant
shall not be registered pursuant to an effective registration statement under
the Securities Act and under applicable state securities or blue sky laws, the
Company may require, as a condition of allowing such transfer (i) that the
Holder or transferee of this Warrant, as the case may be, furnish to the Company
a written opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions) to the
effect that such transfer may be made without registration under the Securities
Act and under applicable state securities or blue sky laws, (ii) that the holder
or transferee execute and deliver to the Company an investment letter in form
and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7), or
(a)(8) promulgated under the Securities Act or a qualified institutional buyer
as defined in Rule 144A(a) under the Securities Act.

Section 5. Miscellaneous.

      a) Title to Warrant. Prior to the Termination Date and subject to
compliance with applicable laws and Section 4 of this Warrant, this Warrant and
all rights hereunder are transferable, in whole or in part, at the office or
agency of the Company by the Holder in person or by duly authorized attorney,
upon surrender of this Warrant together with the Assignment Form annexed hereto
properly endorsed. The transferee shall sign an investment letter in form and
substance reasonably satisfactory to the Company.

      b) No Rights as Shareholder Until Exercise. This Warrant does not entitle
the Holder to any voting rights or other rights as a shareholder of the Company
prior to the exercise hereof. Upon the surrender of this Warrant and the payment
of the aggregate Exercise Price (or by means of a cashless exercise), the
Warrant Shares so purchased shall be and be deemed to be issued to such Holder
as the record owner of such shares as of the close of business on the later of
the date of such surrender or payment.

      c) Loss, Theft, Destruction or Mutilation of Warrant. The Company
covenants that upon receipt by the Company of evidence reasonably satisfactory
to it of the loss, theft, destruction or mutilation of this Warrant or any stock
certificate relating to the Warrant Shares, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it (which, in
the case of the Warrant, shall not include the posting of any bond), and upon
surrender and cancellation of such Warrant or stock

                                       10
<PAGE>

certificate, if mutilated, the Company will make and deliver a new Warrant or
stock certificate of like tenor and dated as of such cancellation, in lieu of
such Warrant or stock certificate.

      d) Saturdays, Sundays, Holidays, etc. If the last or appointed day for the
taking of any action or the expiration of any right required or granted herein
shall be a Saturday, Sunday or a legal holiday, then such action may be taken or
such right may be exercised on the next succeeding day not a Saturday, Sunday or
legal holiday.

      e)    Authorized Shares.

            The Company covenants that during the period the Warrant is
      outstanding, it will reserve from its authorized and unissued Common Stock
      a sufficient number of shares to provide for the issuance of the Warrant
      Shares upon the exercise of any purchase rights under this Warrant. The
      Company further covenants that its issuance of this Warrant shall
      constitute full authority to its officers who are charged with the duty of
      executing stock certificates to execute and issue the necessary
      certificates for the Warrant Shares upon the exercise of the purchase
      rights under this Warrant. The Company will take all such reasonable
      action as may be necessary to assure that such Warrant Shares may be
      issued as provided herein without violation of any applicable law or
      regulation, or of any requirements of the Trading Market upon which the
      Common Stock may be listed.

            Except and to the extent as waived or consented to by the Holder,
      the Company shall not by any action, including, without limitation,
      amending its certificate of incorporation or through any reorganization,
      transfer of assets, consolidation, merger, dissolution, issue or sale of
      securities or any other voluntary action, avoid or seek to avoid the
      observance or performance of any of the terms of this Warrant, but will at
      all times in good faith assist in the carrying out of all such terms and
      in the taking of all such actions as may be necessary or appropriate to
      protect the rights of Holder as set forth in this Warrant against
      impairment. Without limiting the generality of the foregoing, the Company
      will (a) not increase the par value of any Warrant Shares above the amount
      payable therefor upon such exercise immediately prior to such increase in
      par value, (b) take all such action as may be necessary or appropriate in
      order that the Company may validly and legally issue fully paid and
      nonassessable Warrant Shares upon the exercise of this Warrant, and (c)
      use commercially reasonable efforts to obtain all such authorizations,
      exemptions or consents from any public regulatory body having jurisdiction
      thereof as may be necessary to enable the Company to perform its
      obligations under this Warrant.

            Before taking any action which would result in an adjustment in the
      number of Warrant Shares for which this Warrant is exercisable or in the
      Exercise Price, the Company shall obtain all such authorizations or
      exemptions thereof, or consents thereto, as may be necessary from any
      public regulatory body or bodies having jurisdiction thereof.

                                       11
<PAGE>

            f) Jurisdiction. All questions concerning the construction,
      validity, enforcement and interpretation of this Warrant shall be
      determined in accordance with the provisions of the Purchase Agreement.

            g) Restrictions. The Holder acknowledges that the Warrant Shares
      acquired upon the exercise of this Warrant, if not registered, will have
      restrictions upon resale imposed by state and federal securities laws.

            h) Nonwaiver and Expenses. No course of dealing or any delay or
      failure to exercise any right hereunder on the part of Holder shall
      operate as a waiver of such right or otherwise prejudice Holder's rights,
      powers or remedies, notwithstanding the fact that all rights hereunder
      terminate on the Termination Date. If the Company willfully and knowingly
      fails to comply with any provision of this Warrant, which results in any
      material damages to the Holder, the Company shall pay to Holder such
      amounts as shall be sufficient to cover any costs and expenses including,
      but not limited to, reasonable attorneys' fees, including those of
      appellate proceedings, incurred by Holder in collecting any amounts due
      pursuant hereto or in otherwise enforcing any of its rights, powers or
      remedies hereunder, provided, however, that the Company shall not be
      obligated to pay such amounts if the Holder is unsuccessful in any such
      action for material damages against the Company.

            i) Notices. Any notice, request or other document required or
      permitted to be given or delivered to the Holder by the Company shall be
      delivered in accordance with the notice provisions of the Purchase
      Agreement.

            j) Limitation of Liability. No provision hereof, in the absence of
      any affirmative action by Holder to exercise this Warrant or purchase
      Warrant Shares, and no enumeration herein of the rights or privileges of
      Holder, shall give rise to any liability of Holder for the purchase price
      of any Common Stock or as a stockholder of the Company, whether such
      liability is asserted by the Company or by creditors of the Company.

            k) Remedies. Holder, in addition to being entitled to exercise all
      rights granted by law, including recovery of damages, will be entitled to
      specific performance of its rights under this Warrant. The Company agrees
      that monetary damages would not be adequate compensation for any loss
      incurred by reason of a breach by it of the provisions of this Warrant and
      hereby agrees to waive the defense in any action for specific performance
      that a remedy at law would be adequate.

            l) Successors and Assigns. Subject to applicable securities laws,
      this Warrant and the rights and obligations evidenced hereby shall inure
      to the benefit of and be binding upon the successors of the Company and
      the successors and permitted assigns of Holder. The provisions of this
      Warrant are intended to be for the benefit of all Holders from time to
      time of this Warrant and shall be enforceable by any such Holder or holder
      of Warrant Shares.

            m) Amendment. This Warrant may be modified or amended or the
      provisions hereof waived with the written consent of the Company and the
      Holder.

                                       12
<PAGE>

            n) Severability. Wherever possible, each provision of this Warrant
      shall be interpreted in such manner as to be effective and valid under
      applicable law, but if any provision of this Warrant shall be prohibited
      by or invalid under applicable law, such provision shall be ineffective to
      the extent of such prohibition or invalidity, without invalidating the
      remainder of such provisions or the remaining provisions of this Warrant.

            o) Headings. The headings used in this Warrant are for the
      convenience of reference only and shall not, for any purpose, be deemed a
      part of this Warrant.

                              ********************

                                       13
<PAGE>

            IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its officer thereunto duly authorized.

Dated:  April  __, 2005

                               INTEGRAL VISION, INC.

                                By: __________________________________________
                                    Name:
                                    Title:

                                       14
<PAGE>

                               NOTICE OF EXERCISE

TO: INTEGRAL VISION, INC.

            (1) The undersigned hereby elects to purchase ________ Warrant
Shares of the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise price in full,
together with all applicable transfer taxes, if any.

            (2) Payment shall take the form of (check applicable box):

                [ ] in lawful money of the United States; or

                [ ] the cancellation of such number of Warrant Shares as is
                necessary, in accordance with the formula set forth in
                subsection 2(c), to exercise this Warrant with respect to the
                maximum number of Warrant Shares purchasable pursuant to the
                cashless exercise procedure set forth in subsection 2(c).

            (3) Please issue a certificate or certificates representing said
Warrant Shares in the name of the undersigned or in such other name as is
specified below:

                  ____________________________________

The Warrant Shares shall be delivered to the following:

                  ____________________________________

                  ____________________________________

                  ____________________________________

            (4) Accredited Investor. The undersigned is an "accredited investor"
as defined in Regulation D promulgated under the Securities Act of 1933, as
amended.

[SIGNATURE OF HOLDER]

Name of Investing Entity: ______________________________________________________
Signature of Authorized Signatory of Investing Entity: _________________________
Name of Authorized Signatory: __________________________________________________
Title of Authorized Signatory: _________________________________________________
Date: __________________________________________________________________________

<PAGE>

                                 ASSIGNMENT FORM

                    (To assign the foregoing warrant, execute
                   this form and supply required information.
                 Do not use this form to exercise the warrant.)

            FOR VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

_______________________________________________ whose address is

_________________________________________________________________

_________________________________________________________________

                                            Dated: ______________, _______

            Holder's Signature: _____________________________

            Holder's Address:   _____________________________

                                _____________________________

Signature Guaranteed: ___________________________________________

NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of the Warrant, without alteration or enlargement or any
change whatsoever, and must be guaranteed by a bank or trust company. Officers
of corporations and those acting in a fiduciary or other representative capacity
should file proper evidence of authority to assign the foregoing Warrant.

<PAGE>

                                                                       EXHIBIT E

TO: The Purchasers of Integral Vision, Inc. Preferred Stock and Warrants

      This letter will confirm my agreement to vote all shares of the Common
Stock of Integral Vision, Inc. ("INVI" or the "Company") over which I have
voting control, to amend the Company's certificate of incorporation to increase
the number of authorized shares of Common Stock, no par value, of the Company,
such that the Company may reserve and issue all of the Conversion Shares (as
defined in the Purchase Agreement) and the Warrant Shares (as defined in the
Purchase Agreement), which securities are issuable pursuant to the Securities
Purchase Agreement, dated as of April ___, 2005, among the Company and the
purchasers signatory thereto (the "Purchase Agreement").

      I further agree that I may not make any disposition of the shares over
which I have voting control until and unless Shareholder Approval has been
obtained. I acknowledge that the Company will deliver "stop transfer"
instructions to the Company's transfer agent to enforce this provision.

      This agreement is given in consideration of, and as a condition to the
Purchasers' agreement to enter into such Purchase Agreement and is not revocable
by me. This agreement shall terminate upon adoption by the shareholders of the
Company of the aforesaid amendment to the Articles of Incorporation.

                                        By: ____________________________________
                                            Name of Shareholder:
                                            Number of Shares over which I have
                                            Voting control:

<PAGE>

                                                                       EXHIBIT F

                                LOCK-UP AGREEMENT

April 11, 2005

To: The Purchasers of Integral Vision, Inc. Preferred Stock and Warrants

      Re:   Securities Purchase Agreement dated April 11, 2005 (the "Purchase
            Agreement") by and among, Integral Vision, Inc.(the "Company") and
            the purchasers signatory thereto (each, a "Purchaser" and
            collectively referred to as the "Purchasers")

Ladies and Gentlemen:

      Defined terms not otherwise defined herein shall have the meanings set
forth in the Purchase Agreement. Pursuant to Section 2.2(a)(v) of the Purchase
Agreement and in satisfaction of a condition of the Purchasers' obligations
under the Purchase Agreement, the undersigned agrees with the Purchasers that,
from the date hereof until the Effective Date (such period, the "Restriction
Period"), the undersigned will not sell, offer, pledge, contract to sell, grant
any option for the sale of, transfer or otherwise dispose of any of the
Company's common stock beneficially owned by, or issuable to, the undersigned
(the "Securities").

      The Company hereby agrees to notify its transfer agent of the provisions
of this letter. The undersigned acknowledges and agrees that the Company will be
permitted to require that the Company's transfer agent place a stop transfer
instruction on all Securities beneficially owned by the undersigned, reflecting
this Letter Agreement, until the end of the Restriction Period.

                                                       Very truly yours,

                                                       By:______________________
                                                       Name:

Acknowledged and agreed to
as of the first date written above:

INTEGRAL VISION, INC.

By: _________________
Name:
Title: