<PAGE>

     WHEREAS, pursuant to that certain Assignment without recourse of Loan
Documents dated April 3, 1998, Imperial Bank has assigned all of its rights
with respect to that certain Loan Agreement dated as of December 12, 1997
between Imperial Bank and Image Guided Technologies, Inc. (the "Original Loan
Agreement") and all notes and other documents executed in connection therewith,
to BankBoston, N.A.  Image Guided Technologies, Inc. and BankBoston, N.A.
desire to restate and amend the provisions of the Original Loan Agreement, as
set forth herein.

     NOW, THEREFORE, the parties agree that the Original Loan Agreement is
hereby amended and stated in its entirety as follows:


                      AMENDED AND RESTATED LOAN AGREEMENT

     THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement") is made as of
April 3, 1998, between IMAGE GUIDED TECHNOLOGIES, INC., a Colorado corporation
with its principal place of business at 5710-B Flatiron Parkway, Boulder,
Colorado (the "Borrower"), and BANKBOSTON, N.A. (the "Bank"), a national
banking institution having its head office at 100 Federal Street, Boston,
Massachusetts.

                           SECTION I

                          DEFINITIONS

     1.1.  GENERAL.

     All capitalized terms used in this Agreement or in any certificate, report
or other document made or delivered pursuant to this Agreement (unless
otherwise defined therein) shall have the meanings assigned to them below:

     AGREEMENT.  This Agreement (including all exhibits, schedules, annexes and
the like referred to herein) as originally executed, or if amended, varied or
supplemented from time to time, as so amended, varied or supplemented.

     BPI.  Brimfield Precision, Inc.

     BASE RATE.  The rate of interest announced from time to time by the Bank
at its head office at 100 Federal Street, Boston, Massachusetts as its "Base
Rate," which Base Rate is not necessarily the lowest or best rate available at
the Bank or charged to its customers.

     BUSINESS DAY.  Any day other than a Saturday, Sunday or legal holiday on
which banks in Boston, Massachusetts are open for the conduct of a substantial
part of their commercial lending business.

<PAGE>

     CAPITAL EXPENDITURES.  All acquisitions of machinery, equipment, land,
leaseholds, buildings, leasehold improvements and all other property considered
to be fixed assets under generally accepted accounting principles consistently
applied.  Where a fixed asset is acquired by a lease which is required to be
capitalized pursuant to statement of financial accounting standards no. 13 or
any successor thereto, the amount required to be capitalized pursuant thereto
shall be considered to be an expenditure in the year such asset is first
leased.

     CHANGE IN CONTROL.  Any event or series of events (including a merger or
consolidation) as a result of which (i) any "person" or "group" within the
meaning of Sections 13(d) and 14(d)(2) of the Exchange Act of 1934, as amended,
together with their affiliates, (ii) shall hold or acquire, directly or
indirectly, outstanding voting shares of Borrower such that such person or
group, together with such affiliates thereof, is or becomes the "beneficial
owner" (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act of
1934 as amended) of outstanding voting shares of the Borrower entitling such
person or group, together such affiliates, to exercise more than 30% of the
total voting power of all classes of outstanding voting shares of Borrower, or
(iii) shall have a sufficient number of its or their nominees elected to
Borrower's Board of Directors such that such nominees so elected (whether new
of continuing as directors) shall constitute a majority of Borrower's Board of
Directors, or (iv) individuals who are directors of Borrower on the date hereof
(and any new director whose election by the directors of Borrower or nomination
for election by the stockholders of Borrower was approved by a vote of at least
two-thirds of the directors then still in office who either were directors on
the date hereof or whose election or nomination for election was previously so
approved) shall cease to constitute a majority of the directors of Borrower.

     CODE.  The Internal Revenue Code of 1986 and the rules and regulations
thereunder, collectively, as the same may from time to time be supplemented or
amended and remain in effect.

     COLLATERAL.  Any and all property of the Borrower or Brimfield Precision,
Inc. in which the Bank now has, or by the Security Agreements acquires or
hereafter acquires, a security interest, lien or encumbrance.

     CONSOLIDATED NET OPERATING INCOME.  At any date as of which the amount
thereof shall be determined, the consolidated net income of the Borrower and
its Subsidiaries from continuing operations, after deduction of all expenses,
taxes and other proper charges, determined in accordance with generally
accepted accounting principles, after eliminating therefrom all extraordinary
non-recurring items of income.

     CONSOLIDATED OPERATING CASH FLOW.  For any period, an amount equal to (i)
the sum of (A) Earnings before Interest and Taxes for such period, PLUS (B)
depreciation and amortization expense, LESS  (ii) the sum of (A) cash payments
for all taxes paid by Borrower and its Subsidiaries during such period and (B)
Capital Expenditures made during such period to the extent permitted by the
Agreement, PLUS (iii) issuance of long term debt for Bank equipment financing.

                                     2

<PAGE>

     CONSOLIDATED TANGIBLE NET WORTH.  At any date as of which the amount
thereof shall be determined, the consolidated total assets of the Borrower and
its Subsidiaries MINUS (i) the sum of any amounts attributable to (a) goodwill,
(b) intangible items such as unamortized debt discount and expense, patents,
trade and service marks and names, copyrights and research and development
expenses except prepaid expenses, (c) all reserves not already deducted from
assets; and (d) any write-up in the book value of assets resulting from any
revaluation thereof subsequent to the date of the financial statements referred
to in Section 6.6, and (ii) Consolidated Total Liabilities.

     CONSOLIDATED TOTAL LIABILITIES.  At any date as of which the amount
thereof shall be determined, all obligations that should, in accordance with
generally accepted accounting principles, be classified as liabilities on the
consolidated balance sheet of the Borrower and its Subsidiaries, including in
any event all Indebtedness.

     CONTROLLED GROUP.  All trades or businesses (whether or not incorporated)
under common control that, together with the Borrower, are treated as a single
employer under Section 414(b) or 414(c) of the Code or Section 4001 of ERISA.

     DEFAULT.  An event or condition that, with the passage of time or the
giving of notice, or both, would constitute an Event of Default if not cured or
corrected.

     EARNINGS BEFORE INTEREST AND TAXES.  The Consolidated Net Operating Income
of the Borrower and its Subsidiaries for any period, but before payment or
provision for any income taxes or interest expense for such period, determined
in accordance with generally accepted accounting principles.

     ENCUMBRANCES.  See Section 8.5.

     ENVIRONMENTAL LAWS.  Any and all applicable foreign, federal, state and
local environmental, health or safety statutes, laws, regulations, rules,
ordinances, policies and rules or common law (whether now existing or hereafter
enacted or promulgated), of all governmental agencies, bureaus or departments
which may now or hereafter have jurisdiction over the Borrower or any of its
Subsidiaries and all applicable judicial and administrative and regulatory
decrees, judgments and orders, including common law rulings and determinations,
relating to injury to, or the protection of, real or personal property or human
health or the environment, including, without limitation, all requirements
pertaining to reporting, licensing, permitting, investigation, remediation and
removal of emissions, discharges, releases or threatened releases of Hazardous
Materials, chemical substances, pollutants or contaminants whether solid,
liquid or gaseous in nature, into the environment or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of such Hazardous Materials, chemical substances,
pollutants or contaminants.

     EQUIPMENT LOANS.  See Section 4.8.

                                      3

<PAGE>

     ERISA.  The Employee Retirement Income Security Act of 1974 and the rules
and regulations thereunder, collectively, as the same may from time to time be
supplemented or amended and remain in effect.

     EVENT OF DEFAULT.  Any event described in Section IX.

     GUARANTEES.  As applied to the Borrower and its Subsidiaries, all
guarantees, endorsements or other contingent or surety obligations with respect
to obligations of others whether or not reflected on the balance sheet of the
Borrower, including any obligation to furnish funds, directly or indirectly
(whether by virtue of partnership arrangements, by agreement to keep well or
otherwise), through the purchase of goods, supplies or services, or by way of
stock purchase, capital contribution, advance or loan, or to enter into a
contract for any of the foregoing, for the purpose of payment of obligations of
any other person or entity.

     HAZARDOUS MATERIALS.  Any substance (i) the presence of which, or the
notification of the presence of which, requires or may hereafter require
investigation or remediation under any Environmental Law; (ii) which is or
becomes defined as a "hazardous waste", "hazardous material" or "hazardous
substance" or "controlled industrial waste" or "pollutant" or "contaminant"
under any present or future Environmental Law or amendments thereto including,
without limitation, the Comprehensive Environmental Response, Compensation and
Liability Act (42 U.S.C. Section 9601 ET SEQ.) and any applicable local
statutes and the regulations promulgated thereunder; (iii) which is toxic,
explosive, corrosive, flammable, infectious, radioactive, carcinogenic,
mutagenic or otherwise hazardous and is or becomes regulated by any
governmental authority, agency, department, commission, board, agency or
instrumentality of any foreign country, the United States, any state of the
United States, or any political subdivision thereof to the extent any of the
foregoing has or had jurisdiction over the Borrower or its Subsidiaries; or
(iv) without limitation, which contains gasoline, diesel fuel or other
petroleum products, asbestos or polychlorinated biphenyls ("PCB's").

     INDEBTEDNESS.  As applied to the Borrower and its Subsidiaries, (i) all
obligations for borrowed money or other extensions of credit, including all
obligations representing the deferred purchase price of property, other than
accounts payable arising in the ordinary course of business, (ii) all
obligations evidenced by bonds, notes, debentures or other similar instruments,
(iii) all obligations secured by any mortgage, pledge, security interest or
other lien on property owned or acquired by the Borrower whether or not the
obligations secured thereby shall have been assumed, (iv) that portion of all
obligations arising under capital leases that is required to be capitalized on
the consolidated balance sheet of the Borrower and its Subsidiaries, (v) all
Guarantees, and (vi) all obligations that are immediately due and payable out
of the proceeds of or production from property now or hereafter owned or
acquired by the Borrower or any of its Subsidiaries.

     INVESTMENTS.  The purchase or acquisition of any share of capital stock,
partnership interest, evidence of indebtedness or other equity security of any
other person or entity, any loan, advance or extension of credit to, or
contribution to the capital of, any other person or entity, any real estate
held for sale or investment, any commodities futures contracts held other than
in 

                                      4

<PAGE>

connection with bona fide hedging transactions, any other investment in any 
other person or entity, and the making of any commitment or acquisition of 
any option to make an Investment.

     LOAN.  Any loan made to the Borrower by the Bank pursuant to Section II or
III of this Agreement and all Equipment Loans, and "Loans" means all of such
loans, collectively.

     LOAN DOCUMENTS.  All documents and agreements by Borrower in favor of Bank
evidencing, securing or otherwise relating to any of the Obligations, including
without limitation, all Loans pursuant hereto, including without limitation all
Original Loan Documents assigned to the Bank by Imperial Bank and all documents
in connection with Equipment Loans.

     NOTES.  The Revolving Note, the Term Note, and any notes given in
connection with each certain Lease Line of Credit from BancBoston Leasing or a
similar affiliate of the Bank (as described in Section 4.8).

     NOTICE OF BORROWING.  Such notice as is required of Borrower pursuant to
Section 2.2.

     OBLIGATIONS.  Any and all obligations of the Borrower to the Bank of every
kind and description, direct or indirect, absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising or acquired,
regardless of how they arise or are acquired or by what agreement or
instrument, if any, and including obligations to perform acts and refrain from
taking action as well as obligations to pay money.

     PBGC.  The Pension Benefit Guaranty Corporation or any entity succeeding
to any or all of its functions under ERISA.

     PERMITTED ENCUMBRANCES.  See Section 8.5.

     PERSON.  An individual, partnership, corporation, business trust, joint
stock company, trust, unincorporated association, joint venture, governmental
authority or other entity of whatever nature.

     PLAN.  At any time, an employee pension or other benefit plan that is
subject to Title IV of ERISA or subject to the minimum funding standards under
Section 412 of the Code and is either (i) maintained by the Borrower or any
member of the Controlled Group for employees of the Borrower or any member of
the Controlled Group or (ii) if such Plan is established, maintained pursuant
to a collective bargaining agreement or any other arrangement under which more
than one employer makes contributions and to which the Borrower, or any member
of the Controlled Group is then making or accruing an obligation to make
contributions or has within the preceding five Plan years made contributions.

     QUALIFIED INVESTMENTS.  Investments in (i) notes, bonds or other
obligations of the United States of America or any agency thereof that as to
principal and interest constitute direct obligations of or are guaranteed by
the United States of America; (ii) certificates of deposit or other deposit
instruments or accounts of banks or trust companies organized under the laws of
the United States or any state thereof that have capital and surplus of at
least $100,000,000, (iii) 

                                      5

<PAGE>

commercial paper that is rated not less than prime-one or A-1 or their 
equivalents by Moody's Investors Service, Inc. or Standard & Poor's 
Corporation, respectively, or their successors, (iv) mutual funds, and (v) 
any repurchase agreement secured by any one or more of the foregoing.

     REVOLVING CREDIT COMMITMENT AMOUNT.  $3,000,000.00

     REVOLVING CREDIT TERMINATION DATE.  April 1, 2000.

     REVOLVING LOAN.  Any loan or loans made by Bank pursuant to Section
2.1(a).

     REVOLVING NOTE.  The promissory note of the Borrower evidencing the
obligation of the Borrower to the Bank to repay the Revolving Loan.

     SECURITY AGREEMENT.  The security agreement by each of the Borrower and
BPI in favor of Bank of even date hereto as amended by First Amendment of even
date (including all exhibits, schedules, annexes and the like referred to
therein) as originally executed, or if amended, varied or supplemented from
time to time, as so amended, varied or supplemented.

     SUBORDINATED DEBT.  The debt in the principal amount of $500,000.00 owed
by Borrower to Cruttenden Roth, Inc., evidenced by that certain 12%
Subordinated Promissory Note dated December 12, 1997.

     SUBSIDIARY.  Any corporation, association, joint stock Borrower, business
trust or other similar organization of which 50% or more of the ordinary voting
power for the election of a majority of the members of the board of directors
or other governing body of such entity is held or controlled by the Borrower;
or any other such organization the management of which is directly or
indirectly controlled by the Borrower through the exercise of voting power or
otherwise; or any joint venture, whether incorporated or not, in which the
Borrower has a 50% or more ownership interest.

     TERM LOAN.  The loan made by the Bank pursuant to Section 3.1(a).

     TERM LOAN MATURITY DATE.  April 1, 2003.

     TERM NOTE.  The promissory note of the Borrower evidencing the obligation
of the Borrower to the Bank to repay the Term Loan.

     TOTAL DEBT SERVICE.  The total of (i) interest expense for such period,
PLUS (ii) consolidated current maturities of long-term Indebtedness, including
annual principal payments of term debt and annual operating and capital lease
obligations, for such period.

     1.2.  ACCOUNTING TERMS.  All terms of an accounting character shall have
the meanings assigned thereto by generally accepted accounting principles
applied on a basis consistent with the financial statements referred to in
Section 6.6 of this Agreement, modified to the extent, but only to the extent,
that such meanings are specifically modified herein.

                                  SECTION II

                                      6

<PAGE>

                        DESCRIPTION OF REVOLVING CREDIT
                                       
     2.1.  THE REVOLVING LOANS.

     (a)  Subject to the terms and conditions hereof, the Bank will make
Revolving Loans to the Borrower from time to time until the close of business
on the last Business Day preceding the Revolving Credit Termination Date, in
such amounts as the Borrower may request, PROVIDED that the aggregate principal
amount of all Revolving Loans at any one time outstanding hereunder may not
exceed the Maximum Permitted Amount of Revolving Credit (defined in Section
2.1(b)(iii)).  Subject to the terms and conditions hereof, the Borrower may
borrow, repay pursuant to Section 2.2, and reborrow, from the date of this
Agreement until the last Business Day preceding the Revolving Credit
Termination Date, an amount up to the Maximum Permitted Amount of Revolving
Credit less any principal amounts outstanding under the Revolving Loan. Any
Revolving Loan not repaid by the Revolving Credit Termination Date shall be due
and payable on the Revolving Credit Termination Date.

     (b)  DEFINITIONS WITH RESPECT TO REVOLVING LOAN ELIGIBILITY.
          
          (i)  "ACCEPTABLE ACCOUNTS" means an account receivable or accounts
     receivable of Borrower due not more than:
     
               (a)  ninety (90) days from the date set forth on the original
          invoice evidencing such account receivable, or
          
               (b)  120 days from such date in the case of Richard Allen
          accounts; in each case arising from the absolute sale of goods by
          Borrower in which Borrower had the sole and complete ownership or the
          performance of services by Borrower in the ordinary course of its
          business, which conforms to the warranties set forth in Section 7.14,
          and which:
          
                    (A)  is not an account receivable of a person or entity
               obligated to Borrower upon such account receivable (an "Account
               Debtor") which has suspended business, made a general assignment
               for the benefit of creditors, committed any act of insolvency,
               or filed or have had filed against it any petition under any
               bankruptcy law or any other law or laws for the relief of
               debtors;
               
                    (B)  is not an account receivable which: (1) is subject to
               any setoff, counterclaim, defense, allowance or adjustment other
               than discounts for prompt payment shown on the invoice or to any
               dispute, objection or complaint by the Account Debtor concerning
               its liability on the account receivable and the goods, the sale
               of which gave rise to the account receivable, have not been
               returned, rejected, lost or damaged; (2) arises from a sale or
               sales to an affiliate, parent, or subsidiary of the Borrower;
               (3) is the obligation of a Account Debtor located in a foreign
               country, except that obligations of existing international
               customers of the Borrower shall be 

                                      7

<PAGE>

               included, and (4) arises from a contract containing a prohibition
               against assigning or granting a security interest therein; and
               
                    (C)  is not a account receivable which the Bank, in its
               sole discretion, shall notify the Borrower as being ineligible
               for an advance.

          (ii) "ACCEPTABLE INVENTORY" means inventory of the Borrower
     consisting of BPI raw materials, and Borrower finished goods which are
     held by or on behalf of the Borrower for sale or lease and which is: (A)
     in first class condition and salable through normal trade channels; (B)
     new and unused; (C) owned by the Borrower and subject to no lien, security
     interest, charge or other encumbrance whatsoever, except those of the
     Bank, if any; and (D) not of a class which the Bank, in its sole
     discretion, shall notify the Borrower as being ineligible for an advance.

          (iii)     "MAXIMUM PERMITTED AMOUNT OF REVOLVING CREDIT" means an
     amount equal to the lesser of: (A) $3,000,000, or (B) the sum of: (1)
     ninety percent (90%) of the net balance due on Acceptable Accounts; PLUS
     (2)(i) seventy percent (70%) of the lesser of the cost or market value of
     Acceptable Inventory consisting of Borrower finished goods and (ii)
     seventy percent (70%) of the lesser of the cost or market value of
     Acceptable Inventory consisting of BPI raw materials.
     
     2.2.  NOTICE AND MANNER OF BORROWING.  (a) Whenever the Borrower desires
to obtain a Revolving Loan hereunder, the Borrower shall notify the Bank (which
notice shall be irrevocable) in writing received no later than 10:00 a.m.
(Boston, Massachusetts time) one Business Day before the day on which the
requested Revolving Loan is to be made.  Such notice shall specify the
effective date and amount of each Revolving Loan, subject to the limitations
set forth in Section 2.1, and shall include a borrowing base certificate
evidencing compliance with the provisions of Section 2.1 (each such
notification is called a "NOTICE OF BORROWING ").

     (b)  Subject to the terms and conditions hereof, the Bank shall make each
Revolving Loan on the effective date specified therefor by crediting the amount
of such Revolving Loan to the Borrower's demand deposit account with the Bank.

     2.3  INTEREST RATES AND PAYMENT OF INTEREST UPON REVOLVING LOANS.  Each
Revolving Loan shall bear interest at the Base Rate plus one-quarter of one
percent (.25%) per annum.  On April 1, 1999, if the Borrower satisfies all
covenants set forth herein through December 31, 1998, the interest rate payable
with respect to the Revolving Loans shall decrease to the Base Rate.  All such
interest shall be payable by Borrower to Bank in accordance with the terms and
conditions contained herein and in the Revolving Note.

     2.4  REPAYMENT OF PRINCIPAL.  Unless due and payable to the Bank sooner,
all Revolving Loans outstanding hereunder, and all unpaid interest thereon,
shall be due and payable in full on the Revolving Credit Termination Date.

     2.5  THE REVOLVING NOTE.  (a) The Revolving Loans shall be evidenced by
the Revolving Note, payable to the order of the Bank and having a final
maturity on the Revolving 

                                      8

<PAGE>

Credit Termination Date.  The Revolving Note shall be dated on or before the 
date of the first Revolving Loan and shall have the blanks therein 
appropriately completed.

     (b)  The Bank shall, and is hereby irrevocably authorized by the Borrower
to, enter on the schedule forming a part of the Revolving Note or otherwise in
its records appropriate notations evidencing the date and the amount of each
Revolving Loan, the applicable interest rate and the date and amount of each
payment of principal made by the Borrower with respect thereto; and such
notations shall constitute presumptive evidence thereof.  The Bank is hereby
irrevocably authorized by the Borrower to attach to and make a part of the
Revolving Note a continuation of any such schedule as and when required.  No
failure on the part of the Bank to make any notation as provided in this
subsection (b) shall in any way affect any Revolving Loan or the rights or
obligations of the Bank or the Borrower with respect thereto.

     2.6. REVOLVING CREDIT AVAILABILITY.  The Borrower understands that the
Bank will use the  Maximum Permitted Amount of Revolving Credit as a maximum
ceiling on Revolving Loans.  Notwithstanding the other provisions of this
Agreement, in computing loan availability under the Revolving Note, the Bank
will subtract from the Maximum Permitted Amount of Revolving Credit the
aggregate amount of Revolving Loans outstanding upon the Revolving Note.

     2.7. REVOLVING CREDIT EXCESSES.  If at any time or times the aggregate
amount of Revolving Loans outstanding upon the Revolving Note exceeds the
Maximum Permitted Amount of Revolving Credit, the Borrower shall pay
immediately to the Bank for application to the Revolving Note all amounts
necessary to reduce the aggregate amount of Revolving Loans outstanding under
the Revolving Note to an amount not exceeding the Maximum Permitted Amount of
Revolving Credit.

     2.8. FACILITY FEES.  The Borrower shall pay a facility fee of $15,000.00
at Closing and a quarterly fee equal to one-quarter of one percent on the
unused portion of the Revolving Line of Credit.

                                  SECTION III
                                       
                           DESCRIPTION OF TERM LOAN
                                       
     3.1.      THE TERM LOAN.  (a) Pursuant to this Agreement, the Bank is this
day making a term loan to the Borrower in an original principal amount of TWO
MILLION SEVEN HUNDRED THOUSAND DOLLARS ($2,700,000.00) (the "Term Loan").  The
principal amount of the Term Loan shall be paid down by the Borrower by an
amount equal to FIVE HUNDRED THOUSAND DOLLARS ($500,000.00) upon satisfaction
of the conditions described in Section 7.14.

     3.2. INTEREST RATE AND PAYMENT OF INTEREST UPON THE TERM LOAN.  The Term
Loan shall bear interest at the Base Rate plus one-half of one percent (.50%)
per annum.  When the Borrower repays the Subordinated Debt as described in
Section 7.14, the principal amount of the Term Loan shall be reduced by
$500,000.00  and the interest rate payable with respect to the 

                                      9

<PAGE>

Term Loan shall decrease to the Base Rate plus one-quarter of one percent 
(.25%) per annum. The interest rate payable with respect to the Term Loan 
shall decrease to the Base Rate on April 1, 2000, if the Borrower satisfies 
all covenants through, and has an Operating Cash Flow Coverage ratio equal to 
or greater than 1.50:1.00 on, December 31, 1999.  All such interest shall be 
payable by Borrower to Bank in accordance with the terms and conditions 
contained herein and in the Term Note.

     3.3. REPAYMENT OF NOTE.  Borrower will repay the Term Loan in fifty-nine 
installments commencing June 1, 1998, the first fifty-eight of which shall be 
in the principal amount of Forty Thousand Dollars ($40,000.00) plus all 
interest accrued thereon in arrears, and the fifty-ninth and final payment 
shall equal Three Hundred Eighty Thousand Dollars ($380,000.00) plus all 
interest accrued thereon in arrears due on the Term Loan Maturity Date.

     3.4. THE TERM NOTE.  (a) The Term Loan shall be evidenced by the Term 
Note, payable to the order of the Bank and having a final maturity on the 
Term Loan Maturity Date.  The Term Note shall be dated on or before the date 
of the Term Loan and shall have the blanks therein appropriately completed.

     (b)  The Bank shall, and is hereby irrevocably authorized by the 
Borrower to, enter on the schedule forming a part of the Term Note or 
otherwise in its records appropriate notations evidencing the date and the 
amount of the Term Loan, the applicable interest rate and the date and amount 
of each payment of principal made by the Borrower with respect thereto; and 
such notations shall constitute presumptive evidence thereof.  The Bank is 
hereby irrevocably authorized by the Borrower to attach to and make a part of 
the Term Note a continuation of any such schedule as and when required.  No 
failure on the part of the Bank to make any notation as provided in this 
subsection (b) shall in any way affect the Term Loan or the rights or 
obligations of the Bank or the Borrower with respect thereto.

     3.5. FACILITY FEE.  The Borrower shall pay a facility fee to the Bank 
for the Term Loan equal to $9,450.00 at the Closing.

                           SECTION IV

               PROVISIONS APPLICABLE TO ALL LOANS

     4.1.  INTEREST RATES AND PAYMENTS OF INTEREST.  Each Loan shall bear
interest on the outstanding principal amount thereof at a rate per annum equal
to the Base Rate plus the applicable percentage described in Sections 2.3 and
3.2, which rate shall change contemporaneously with any change in the Base
Rate.  Such interest shall be payable each month, and when such Loan is due
(whether at maturity, by reason of acceleration or otherwise), all in
accordance with the terms and conditions of this Agreement and the Notes
evidencing such Loan.

     4.2.  PAYMENTS AND PREPAYMENTS OF THE LOANS.   (a) Revolving Loans may be
prepaid at any time, in whole or in part, without premium or penalty, but with
accrued interest to the date of payment, at any time and without prior notice.

                                      10

<PAGE>

     (b) If the Borrower desires to prepay the Term Loan in full prior to the
Term Loan Maturity Date, it shall pay to the Bank an amount equal to: three
percent (3%) of the principal amount outstanding if prepaid during the first,
second, or third years of said loan.  No amount shall be payable for prepayment
after the third year of the Term Loan.  The Borrower  shall be permitted to
make partial prepayments of the Term Loan from its operating cash flow without
premium or penalty.

     (c) All payments received by the Bank with respect to any Loan shall be 
applied first to fees, charges, costs and expenses payable to the Bank with 
respect thereto under this Agreement, or otherwise, next to interest then 
accrued on account of such Loan, and only thereafter to principal of the 
Loan, or in such other manner or order as the Bank shall determine in its 
sole discretion.  All prepayments (with prepayment defined herein as any 
payment of principal in advance of its due date) shall be applied to the 
principal payments due with respect to any Loan in the inverse order of their 
maturity.

     4.3. METHOD OF PAYMENT.  All payments and prepayments of principal and 
any and all other amounts due hereunder shall be made by the Borrower to the 
Bank at 100 Federal Street, Boston, Massachusetts in immediately available 
funds and in United States Dollars, on or before 11:00 a.m. (Boston time) on 
the due date thereof, free and clear of, and without any deduction or 
withholding for, any taxes or other payments.  The Bank may, and the Borrower 
hereby authorizes the Bank to, debit the amount of any payment not made by 
such time to the demand deposit account of the Borrower with the Bank.

     4.4. LATE CHARGES AND DEFAULT RATE INTEREST.  (a) If a payment of 
principal or interest hereunder or with respect to any Loan is not made 
within fifteen (15) days of its due date, the Borrower will also pay on 
demand a late payment charge equal to 5% of the amount of such payment.  
Nothing in the preceding sentence shall affect the Bank's right to exercise 
any of its rights or remedies, including those provided in Section 9.2, if an 
Event of Default has occurred.

     (b)  Upon the occurrence of an Event of Default, and without affecting 
the Bank's right to exercise any of its rights and remedies provided herein, 
interest upon the principal amount of any Loan, and to the extent permitted 
by law, on any accrued but unpaid interest thereon, shall, at the Bank's 
option, accrue at a rate (the "Default Rate") equal to the lesser of (a) the 
highest interest rate permitted by applicable law or (b) five percent (5%) 
above the interest rate then applicable to the Loans.

     4.5. COMPUTATION OF INTEREST AND FEES.  (a) Interest and all fees 
payable hereunder shall be computed daily on the basis of a year of 360 days 
and paid for the actual number of days for which due.  If the due date for 
any payment of principal is extended by operation of law, interest shall be 
payable for such extended time.  If any payment required by this Agreement 
becomes due on a day that is not a Business Day such payment may be made on 
the next succeeding Business Day, and such extension shall be included in 
computing interest in connection with such payment.

     (b)  It is not intended under this Agreement or any of the Notes to 
charge interest at a rate exceeding the maximum rate of interest permitted to 
be charged under applicable law, but if 

                                      11

<PAGE>

interest exceeding said maximum rate should be paid hereunder or thereunder, 
the excess shall, at the Bank's option, be (a) deemed a voluntary prepayment 
of principal or (b) refunded to Borrower.

     4.6. AUTHORIZATION TO CHARGE BORROWER'S ACCOUNT.  The Borrower authorizes
the Bank, in the Bank's sole discretion, to charge when due any monetary
Obligation, including, without limitation, all amounts owing for interest,
fees, costs and expenses and other charges provided by any of the Notes, or
this Agreement, to the outstanding principal balance due upon any of the Notes,
to be selected by the Bank in its sole discretion, and such amounts shall be
Loans hereunder and shall be disclosed promptly to the Borrower by way of
written advices adding such charges to the unpaid balance due upon the Notes,
to be selected by the Bank in its sole discretion.

     4.7. CAPITAL ADEQUACY.   If the Bank shall have determined that the 
adoption of any applicable law, rule, regulation, guideline, directive or 
request (whether or not having the force of law) regarding capital 
requirements for banks or bank holding companies, or any change therein or in 
the interpretation or administration thereof by any governmental authority, 
central bank or comparable agency charged with the interpretation or 
administration thereof, or compliance by the Bank with any of the foregoing 
imposes or increases a requirement by the Bank to allocate capital resources 
to the Bank's commitment to make Loans hereunder which has or would have the 
effect of reducing the return on the Bank's capital to a level below that 
which the Bank could have achieved (taking into consideration the Bank's then 
existing policies with respect to capital adequacy and assuming full 
utilization of the Bank's capital) but for such adoption, change or 
compliance by any amount reasonably deemed by the Bank to be material, then 
the Bank may, at its option and by notice to the Borrower, charge to the 
Borrower, and Borrower agrees to pay, on demand, to the Bank, as an 
additional fee hereunder from time to time, such amount or amounts as the 
Bank, in its good faith judgment, determines to be necessary to compensate 
the Bank for such reduction in the Bank's return on its capital, upon 
presentation by the Bank of a statement in the amount and setting forth the 
Bank's calculation thereof.  In determining such amount, the Bank may use any 
reasonable averaging and attributation method.

     Notwithstanding any other provision hereof, in the event the Bank shall 
at any time give notice to the Borrower pursuant to this Section 4.7 
implementing additional charges pursuant thereto, the Borrower shall have the 
right to satisfy in full (within thirty (30) days from the date of such 
notice but without the imposition of any penalty or the additional charges 
pursuant to this Section 4.7 above, or any prepayment penalty pursuant to 
Section 4.2 above, so long such full payment is so received by the Bank 
within such thirty (30) day period above, and no Default has occurred and is 
continuing hereunder, all Obligations due the Bank, including, without 
limitation, all Loans and all unpaid interest thereon.  All borrowing 
availability of Borrower under this Agreement shall automatically terminate 
upon the Bank's receipt of such full payment if such availability has not 
already terminated pursuant to any other provision of this Agreement.

     4.8  EQUIPMENT LEASE LOANS.  The Borrower has obtained and may in the
future obtain equipment lease lines of credit from BancBoston Leasing,
including a $1,380,000.00 equipment 

                                      12

<PAGE>

lease line of credit facility and a $1,000.000.00 new equipment lease line of 
credit facility (collectively, the "Equipment Loans").

                                   SECTION V

                              CONDITIONS OF LOANS

     5.1. CONDITIONS PRECEDENT TO INITIAL LOAN.   The obligation of the Bank to
make the initial Loans is subject to the condition precedent that the Bank
shall have received, in form and substance satisfactory to the Bank and its
counsel, the following:

     (a)  this Agreement, the Notes and other loan documents, including
assignment of existing loan documents in favor of Imperial Bank and amendments
thereto, all as required by Bank, duly executed by the Borrower;

     (b)  a certificate of the Clerk of the Borrower with respect to
resolutions of the Board of Directors authorizing the execution and delivery of
this Agreement, the Notes and all other loan documents, and identifying the
officer(s) authorized to execute, deliver and take all other actions required
under this Agreement, and providing specimen signatures of such officers;

     (c)  the articles of organization of the Borrower and all amendments and
supplements thereto, each certified by the clerk as being a true and correct
copy thereof;

     (d)  the Bylaws of the Borrower and all amendments and supplements
thereto, certified by the clerk as being a true and correct copy thereof;

     (e)  a certificate of the Secretary of State of the State of Colorado, as
to legal existence and good standing in such state and listing all documents on
file in the office of said Secretary of State;

     (f)       favorable opinions addressed to the Bank from the Borrower's
counsel opining as to the matters reasonably required by the Bank; and

     (g)  such other documents, and completion of such other matters, as
counsel for the Bank may deem necessary or appropriate.

     5.2. CONDITIONS PRECEDENT TO ALL LOANS. The obligation of the Bank to make
any future Loan advance, including the initial Loan, is further subject to the
following conditions:

     (a)  timely receipt by the Bank of the applicable Notice of Borrowing, as
provided in Section 2.2 hereof;

     (b)  the representations and warranties contained in Section VI shall be
true and accurate in all material respects on and as of such Notice of
Borrowing and on the effective date of the making, continuation or conversion
of each Loan as though made at and as of each such date (except to the extent
that such representations and warranties expressly relate to an earlier date),
and no Default shall have occurred and be continuing, or would result from such
Loan;

                                     13

<PAGE>

     (c)  the resolutions referred to in Section 5.1(b) shall remain in full
force and effect;

     (d)  no change shall have occurred in any law or regulation or
interpretation thereof that, in the opinion of counsel for the Bank, would make
it illegal or against the policy of any governmental agency or authority for
the Bank to make any Loan hereunder.

     The making of each Loan shall be deemed to be a representation and
warranty by the Borrower on the date of the making, continuation or conversion
of such Loan as to the accuracy of the facts referred to in subsection (b) of
this Section 5.2.

                                  SECTION VI
                                       
                        REPRESENTATIONS AND WARRANTIES
                                       
     In order to induce the Bank to enter into this Agreement and to make Loans
hereunder, the Borrower represents and warrants to the Bank that:

     6.1.  ORGANIZATION AND QUALIFICATION.   Each of the Borrower and its
Subsidiaries (a) is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, (b) has all
requisite corporate power to own its property and conduct its business as now
conducted and as presently contemplated, (c) is duly qualified and in good
standing as a foreign corporation and is duly authorized to do business in each
jurisdiction where the failure to be so qualified would have a material adverse
effect on the business, financial condition, assets or properties of the
Borrower or any of its Subsidiaries, (d) has its chief executive office located
at the address of the Borrower shown in the preamble to this Agreement and (e)
has an office, manufacturing facility, warehouse or occupies space in the
states and at the locations specified in EXHIBIT "6.1" hereto.

     6.2.  CORPORATE AUTHORITY.    The execution, delivery and performance of
this Agreement, the Notes and other Loan Documents and the transactions
contemplated hereby and thereby are within the corporate power and authority of
the Borrower and have been authorized by all necessary corporate proceedings,
and do not and will not:

     (a)  require any consent or approval of the stockholders of the Borrower
other than those consents and approvals, if any, previously obtained;

     (b)  contravene any provision of the charter documents or by-laws of the
Borrower or any law, rule or regulation applicable to the Borrower;

     (c)  contravene any provision of, or constitute an event of default or
event that, but for the requirement that time elapse or notice be given, or
both, would constitute an event of default under, any other agreement,
instrument, order or undertaking binding on the Borrower; or

     (d)  result in or require the imposition of any Encumbrance on any of the
properties, assets or rights of the Borrower.

                                      14

<PAGE>

     6.3.  VALID OBLIGATIONS. This Agreement, the Notes and all other Loan
Documents and all of their respective terms and provisions are the legal, valid
and binding obligations of the Borrower, enforceable in accordance with their
respective terms except as limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally, and except as the remedy of specific performance or of injunctive
relief is subject to the discretion of the court before which any proceeding
therefor may be brought.

     6.4.  CONSENTS OR APPROVALS.  The execution, delivery and performance of
this Agreement, the Notes and all other Loan Documents and the transactions
contemplated herein and therein do not require any approval or consent of, or
filing or registration with, any governmental or other agency or authority, or
any other party.

     6.5.  TITLE TO PROPERTIES; ABSENCE OF ENCUMBRANCES.    Each of the
Borrower and its Subsidiaries has good and marketable title to all of the
properties, assets and rights of every name and nature now purported to be
owned by it, including, without limitation, such properties, assets and rights
as are reflected in the financial statements referred to in Section 6.6 (except
such properties, assets or rights as have been disposed of in the ordinary
course of business since the date thereof), free from all Encumbrances except
Permitted Encumbrances or those Encumbrances permitted by the Bank and
disclosed in EXHIBIT "8.5" hereto, and, except as so disclosed, free from all
defects of title that might materially adversely affect such properties, assets
or rights, taken as a whole.

     6.6.  FINANCIAL STATEMENTS.   The Borrower has furnished the Bank with its
draft 10-K consolidated financial statement as of December 31, 1997 and with
its consolidated statements of income, changes in stockholders' equity and cash
flow for the fiscal year then ended, and related footnotes.   Borrower
represents that the final financial statements for such period shall be
identical to the draft statements presented to the Bank.  All such financial
statements were prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods specified and
present fairly the financial position of the Borrower and its Subsidiaries as
of such dates and the results of the operations of the Borrower and its
Subsidiaries for such periods.  There are no liabilities, contingent or
otherwise, not disclosed in such financial statements that involve a material
amount.

     6.7.  CHANGES.  Since the date of the financial statements referred to in
Section 6.6, there have been no changes in the assets, liabilities, financial
condition, business or prospects of the Borrower or any of its Subsidiaries
other than changes in the ordinary course of business, the effect of which has
not, in the aggregate, been materially adverse.

     6.8.  DEFAULTS.  As of the date of this Agreement, no Default exists.

     6.9.  TAXES.  The Borrower and each Subsidiary have filed all federal,
state and other tax returns which were due prior to the date of this Agreement,
and all taxes, assessments and other governmental charges (other than those
which are being contested in good faith and in accordance with the terms and
conditions of Section 7.4 hereof) due from the Borrower and each Subsidiary
prior to or as of the date hereof have been fully paid.  The Borrower and each

                                     15

<PAGE>

Subsidiary has established and will maintain on their books reserves adequate
for the payment of all federal, state and other tax liabilities.

     6.10.  LITIGATION.  Except as set forth on EXHIBIT "6.10" hereto, there is
no litigation, arbitration, proceeding or investigation pending, or, to the
knowledge of the officers of the Borrower or its Subsidiaries threatened,
against the Borrower or any Subsidiary that, if adversely determined, would
result in a material judgment not fully covered by insurance or would otherwise
have a material adverse effect on the assets, business or prospects of the
Borrower or any Subsidiary.

     6.11.  USE OF PROCEEDS.  No portion of any Loan is to be used for the
purpose of purchasing or carrying" any "margin stock" as such terms are used in
Regulations G, U and X of the Board of Governors of the Federal Reserve System,
12 C.F.R. 221 and 224, as amended.

     6.12.  SUBSIDIARIES.  As of the date of this Agreement, all the
Subsidiaries of the Borrower are listed on EXHIBIT "6.12" hereto.  The Borrower
is the owner, free and clear of all liens and encumbrances, of all of the
issued and outstanding stock of each Subsidiary, except for liens in favor of
the Bank as assignee of Imperial Bank.  All shares of such stock have been
validly issued and are fully paid and nonassessable, and no rights to subscribe
to any additional shares have been granted, and no options, warrants or similar
rights are outstanding.

     6.13.  INVESTMENT BORROWER ACT.  Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Investment Company Act of 1940,
as amended.

     6.14.  COMPLIANCE WITH ERISA.  The Borrower and each member of the
Controlled Group have fulfilled their obligations under the minimum funding
standards of ERISA and the Code with respect to each Plan and are in compliance
in all material respects with the applicable provisions of ERISA and the Code,
and have not incurred any liability to the PBGC or a Plan under Title IV of
ERISA; and no "prohibited transaction" or "reportable event" (as such terms are
defined in ERISA) has occurred with respect to any Plan.

     6.15.  SECURITY INTEREST.  Each Security Agreement creates and continues
in favor of the Bank a security interest in the Collateral as described
therein.  All financing statements with respect to the Collateral have been
executed and will be filed on or before the date of the initial Loan hereunder
in all offices necessary to perfect a security interest in the Collateral, and
such security interest constitutes a first priority perfected security interest
in the Collateral, except in Collateral (if any) in which a security interest
cannot be perfected by filing under the Uniform Commercial Code and except for
Permitted Encumbrances.

     6.16.  INTENTIONALLY DELETED.

     6.17.  TAXES AND CHARGES RELATING TO THE AGREEMENT.  All state and local
recording, franchise, stamp, documentary and other governmental charges and
assessments required to be paid in connection with the execution, delivery,
filing or recordation of, or as a condition to, the enforcement of this
Agreement, or the Bank's lien on or security interest in the Collateral, have
been duly paid.

                                     16
<PAGE>

     6.18.  ENVIRONMENTAL MATTERS.  (a) The Borrower and each of its
Subsidiaries has obtained all material permits, licenses and other
authorizations which are required under all Environmental Laws.  The Borrower
and each of its Subsidiaries is in material compliance with the terms and
conditions of all such permits, licenses and authorizations, and is in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
any applicable Environmental Law or in any regulation, code, plan, order,
decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder.

     (b)  No notice, notification, demand, request for information, citation,
summons or order has been issued, no complaint has been filed, no penalty has
been assessed and no investigation or review is pending or threatened by any
governmental or other entity with respect to any alleged failure by the
Borrower or any of its Subsidiaries to have any permit, license or
authorization required in connection with the conduct of its business or with
respect to any Environmental Laws, including, without limitation, Environmental
Laws relating to the generation, treatment, storage, recycling, transportation,
disposal or release of any Hazardous Materials.

     (c)   No material oral or written notification of a release of a Hazardous
Material has been filed by or on behalf of the Borrower or any of its
Subsidiaries and no property now or previously owned, leased or used by the
Borrower or any of its Subsidiaries is listed or proposed for listing on the
National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, or on any similar state
list of sites requiring investigation or clean-up.

     (d)  There are no liens or encumbrances arising under or pursuant to any
Environmental Laws on any of the real property or properties owned, leased or
used by the Borrower or any of its Subsidiaries and no governmental actions
have been taken or are in process which could subject any of such properties to
such liens or encumbrances or, as a result of which the Borrower or any of its
Subsidiaries would be required to place any notice or restriction relating to
the presence of Hazardous Materials at any property owned by it in any deed to
such property.

     (e)  Neither the Borrower or any of its Subsidiaries, nor any previous
owner, tenant, occupant or user of any property owned, leased or used by the
Borrower or any of its Subsidiaries has (i) engaged in or permitted any
operations or activities upon or any use or occupancy of such property, or any
portion thereof, for the purpose of or in any way involving the handling,
manufacture, treatment, storage, use, generation, release, discharge, refining,
dumping or disposal (whether legal or illegal, accidental or intentional) of
any Hazardous Materials on, under, in or about such property, except to the
extent commonly used in day-to-day operations of such property and, in such
case, in compliance with all Environmental Laws, or (ii) transported any
Hazardous Materials to, from or across such property except to the extent
commonly used in day-to-day operations of such property and, in such case, in
compliance with all Environmental Laws; nor have any Hazardous Materials
migrated from other properties upon, about or beneath such property, nor are
any Hazardous Materials presently constructed, deposited, stored or otherwise
located on, under, in or about such property except to the extent

                                       17
<PAGE>

commonly used in day-to-day operations of such property and, in such case, in 
compliance with all Environmental Laws.

     (f)  Borrower agrees to indemnify, defend and hold harmless the Bank from
and against any and all liabilities, debts, liens, claims, causes of action,
administrative orders or notices, losses, permit fees, damages, fines,
penalties, or expenses, including reasonable attorney's fees, suffered or
incurred by the Bank on account of the presence or release of any Hazardous
Material in, upon or under any property now or previously owned, leased or used
by Borrower or any of its Subsidiaries, or the failure of the Borrower or any
of its Subsidiaries to comply with any Environmental Law.

     6.19.  INTELLECTUAL PROPERTY RIGHTS.  Borrower owns or has a valid right
to use the patents, patent rights or licenses, trademarks, trademark rights and
trade names or trade name rights or franchises now being used or necessary to
conduct its business, all of the patents and trademarks of which are listed on
EXHIBIT 6.19 hereto, and the conduct of its business as now operated does not
conflict with valid patents, patent rights or licenses, copyrights, trademarks,
trademark rights and trade names and trade name rights or franchises of others
in any manner.  Borrower has not granted any license, franchise or other right
to use with respect to any of Borrower's intellectual property except for the
licenses which are also listed in EXHIBIT 6.19 hereto.  Borrower agrees not to
enter into any agreement which is inconsistent with Borrower's obligations
under this Agreement, without Bank's prior written consent.  Borrower has
granted and may, however, grant licenses pursuant to OEM agreements entered
into in the ordinary course of its business.  True and complete copies of each
license and franchise agreement, and evidence of all patents, patent rights,
trademarks, trademark rights, copyrights, trade names and trade name rights,
shall be furnished to the Bank upon request.  If Borrower shall obtain any new
rights in and to any patents, copyrights, trademarks, tradenames or other
intellectual property, the provisions of this Agreement shall apply, and
Borrower shall, within ten (10) days thereof, if not sooner, give Bank proper
written notice thereof, and the Bank shall be authorized to amend EXHIBIT 6.19
hereof to include such additional rights.

                                  SECTION VII
                                       
                             AFFIRMATIVE COVENANTS
                                       
     So long as the Bank has any commitment to lend hereunder or any Loan or
other Obligation remains outstanding, the Borrower covenants as follows:

     7.1.  FINANCIAL STATEMENTS AND OTHER REPORTING REQUIREMENTS. The Borrower
shall furnish to the Bank:

     (a)  as soon as available to the Borrower, but in any event within 90 days
after the end of each of its fiscal years commencing December 31, 1998, a
consolidated balance sheet as of the end of, and a related  consolidated
statement of income, changes in stockholders' equity and cash flow for, such
year (together with comparative figures for the preceding year, and with all
expenses detailed to the Bank's satisfaction), audited and unqualified by
certified public accountants acceptable to the Bank with respect to Borrower
and its Subsidiaries; and, 

                                       18
<PAGE>

concurrently with such financial statements, a copy of said certified public 
accountants' management report and a written statement by such accountants 
that Borrower is not in violation of any of the financial covenants contained 
herein, and that in the making of the audit necessary for their report and 
opinion upon such financial statements they have obtained no knowledge of any 
Default or, if in the opinion of such accountants any such Default exists, 
they shall disclose in such written statement the nature and status thereof;

     (b)  as soon as available to the Borrower, but in any event within 45 days
after the end of each fiscal quarter for Borrower commencing March 31, 1998, a
consolidated balance sheet as of the end of, and a related consolidated
statement of income and cash flow for, the period then ended, all as internally
prepared by Borrower in accordance with generally accepted accounting
principals consistently applied (together with comparison figures for the
preceding year, and with all expenses detailed to the Bank's satisfaction) and
certified to by Borrower's chief financial officer but subject, however, to
normal, recurring year-end adjustments that shall not in the aggregate be
material in amount.

     (c)  concurrently with the delivery of each financial statement pursuant
to subsections (a) and (b) of this Section 7.1, a compliance certificate signed
on behalf of the Borrower by its chief financial officer;

     (d)  Promptly upon completion thereof, and in any event not later than
December 1 of each fiscal year, deliver to Bank a copy of the annual business
plan and budget of Borrower and its Subsidiaries for the next fiscal year,
including budgeted results for each fiscal quarter and for the fiscal year as a
whole, and upon the delivery of any financial statements relating to any period
included in such budget, a summary comparing the actual financial performance
of Borrower and its Subsidiaries during such period to that shown in the
budget.

     (e)  Promptly upon any filing thereof by Borrower, any annual, periodic,
or special reports or registration statements which Borrower may file with the
Securities and Exchange Commission or with any other securities exchange.

     (f)  if and when the Borrower gives or is required to give notice to the
PBGC of any "Reportable Event" (as defined in Section 4043 of ERISA) with
respect to any Plan that might constitute grounds for a termination of such
Plan under Title IV of ERISA, or knows that any member of the Controlled Group
or the plan administrator of any Plan has given or is required to give notice
of any such Reportable Event, a copy of the notice of such Reportable Event
given or required to be given to the PBGC;

     (g)  immediately upon becoming aware of the existence of any condition or
event that constitutes a Default, written notice thereof specifying the nature
and duration thereof and the action being or proposed to be taken with respect
thereto;

     (h)  promptly upon becoming aware of any litigation or of any
investigative proceedings by a governmental agency or authority commenced or
threatened against the Borrower or any of its Subsidiaries of which it has
notice, the outcome of which would or might have a materially adverse effect on
the assets, business, prospects or financial condition of the 

                                      19
<PAGE>

Borrower or the Borrower and its Subsidiaries on a consolidated basis, 
written notice thereof and the action being or proposed to be taken with 
respect thereto;

     (i)  as soon as available to Borrower, but in any event within fifteen
(15) days of the end of each quarter and in form and substance satisfactory to
the Bank, (i) an internally prepared listing of all accounts receivables and
their aging status, and (ii) internally prepared accounts payable summary aging
reports;

     (j)  by September 15 of each year, copies of the signed, dated and filed
federal income tax return for the Borrower and for Brimfield Precision, Inc.
with respect to the  income tax year (then) just ended;

     (k) immediately upon becoming aware of any investigative proceedings by a
governmental agency or authority commenced or threatened against the Borrower
or any of its Subsidiaries regarding any potential violation of environmental
laws or any spill, release, discharge or disposal of any Hazardous Material, or
upon becoming aware of any violation of any Environmental Law or any spill,
release, discharge or disposal of any Hazardous Material by Borrower or any of
its Subsidiaries, written notice thereof and the action being or proposed to be
taken with respect thereto;

     (l) simultaneous with any Change in Control; and

     (m)  from time to time, such other financial data and information about
the Borrower or its Subsidiaries as the Bank may reasonably request.

     7.2.  CONDUCT OF BUSINESS.  Each of the Borrower and its Subsidiaries
shall:

     (a) duly observe and comply in all material respects with all applicable
laws and valid requirements of any governmental authorities relative to its
corporate existence, rights and franchises, to the conduct of its business and
to its property and assets, and shall maintain and keep in full force and
effect all licenses and permits necessary in any material respect to the proper
conduct of its business;

     (b) maintain its corporate existence;

     (c) remain engaged substantially in the business of manufacturing image
guided surgery products, surgical instruments, and implants; and

     (d) maintain its chief executive office at the address specified in the
preamble hereof, unless the Bank shall have first been notified in writing of
any change.

     7.3.  MAINTENANCE AND INSURANCE.  Each of the Borrower and its
Subsidiaries shall maintain its properties in good repair, working order and
condition as required for the normal conduct of its business.  Each of the
Borrower and its Subsidiaries shall at all times maintain with financially
sound and reputable insurers, liability and casualty insurance customary for
companies engaged in businesses similar to that of the Borrower and its
Subsidiaries including in 

                                       20
<PAGE>

any event fire and extended coverage and theft, and, with respect to the 
Borrower's casualty insurance covering the Collateral, shall, in addition be 
in amounts, containing such terms, in such form, and for such periods as may 
be reasonably satisfactory to the Bank, such insurance to be payable to the 
Bank (as loss payee and additional insured) and the Borrower as their 
interests may appear.  All such policies of insurance shall provide for no 
less than thirty (30) days written minimum cancellation notice to the Bank.  
In the event a failure to provide and maintain insurance as herein required, 
the Bank may, at its option, provide such insurance and charge the amount 
thereof to the Revolving Note, which amount shall bear interest at the rate 
specified in, and in accordance with, Section 2.3 of this Agreement.  The 
Borrower shall furnish to the Bank certificates or other evidence reasonably 
satisfactory to the Bank of compliance with the foregoing insurance 
provisions.

     7.4.      TAXES.  The Borrower shall pay or cause to be paid all taxes,
assessments or governmental charges on or against it or any of its Subsidiaries
or its or their properties on or prior to the time when they become due
provided that this covenant shall not apply to any tax, assessment or charge
that is being contested in good faith by appropriate proceedings and with
respect to which adequate reserves have been established and are being
maintained in accordance with generally accepted accounting principles and no
lien shall have been filed to secure any such tax, assessment or charge.

     7.5.      INSPECTION AND VERIFICATION OF ACCOUNTS.  The Borrower shall
permit the Bank or its designees, upon request at any reasonable time and upon
reasonable notice (or if a Default shall have occurred and is upon request
continuing, at any time and without prior notice), including without limitation
at least once per year for examination by the Bank of the Borrower and BPI, to
(i) visit and inspect the properties of the Borrower and its Subsidiaries, (ii)
examine and make copies of and take abstracts from the books and records of the
Borrower and its Subsidiaries, (iii) discuss the affairs, finances and accounts
of the Borrower and its Subsidiaries  and their appropriate officers, employees
and accountants and (iv) arrange for verification of accounts receivables under
reasonable procedures directly with the Borrower's accountants, the account
debtors or by other methods.  In handling such information the Bank shall
exercise the same degree of care that it exercises with respect to its own
proprietary information of the same types to maintain the confidentiality of
any non-public information thereby received or received pursuant to subsections
7.1(a), (b), or (c) except that disclosure of such information may be made (i)
to the subsidiaries or affiliates of the Bank in connection with their present
or prospective business relations with the Borrower, (ii) to prospective
transferees or purchasers of an interest in the Loans, (iii) as required by
law, regulation, rule or order, subpoena, judicial order or similar order and
(iv) as may be required in connection with the examination, audit or similar
investigation of the Bank.

     7.6.      MAINTENANCE OF BOOKS AND RECORDS.  Each of the Borrower and its
Subsidiaries shall keep adequate books and records of account, in which true
and complete entries will be made reflecting all of its business and financial
transactions, and such entries will be made in accordance with generally
accepted accounting principles consistently applied and applicable law.

                                       21
<PAGE>

     7.7  SENIOR DEBT/EARNINGS BEFORE INTEREST AND TAXES.  Borrower shall, by
December 31, 1998 and as of the end of each fiscal year for Borrower
thereafter, maintain a ratio of Senior Debt (which shall mean all Bank secured
debt including operating leases with BancBoston Leasing), to Earnings before
Interest and Taxes, PLUS depreciation and amortization, as follows:

<TABLE>
<CAPTION>
     Fiscal Year End                    Ratio
     ---------------                    ------
     <S>                                <C>
     12/31/98                           2.65:1.0
     
     12/31/99                           2.50:1.0
     
     12/31/2000                         2.35:1.0
</TABLE>

     7.8.  CONSOLIDATED TOTAL LIABILITIES TO CONSOLIDATED TANGIBLE NET WORTH
RATIO.  Borrower shall, as of the end of each quarter (commencing with
Borrower's fiscal quarter ending June 30, 1998), maintain a ratio of
Consolidated Total Liabilities as of the end of such fiscal year to
Consolidated Tangible Net Worth as follows:

<TABLE>
<CAPTION>
     Quarter End                        Ratio
     ---------------                    ------
     <S>                                <C>
     6/30/98                            4.25:1.0
     
     12/31/98                           3.50:1.0
     
     12/31/99                           3.00:1.0
     
     12/31/2000                         2.50:1.0
</TABLE>

     7.9.      OPERATING CASH FLOW COVERAGE.  Borrower shall, with respect to 
each "rolling" four quarter period ending on the last day of each fiscal 
quarter for Borrower (commencing with Borrower's fiscal quarter ending June 
31, 1998), maintain a ratio of consolidated Operating Cash Flow to Total Debt 
Service of not less than 1.35:1.00.

     7.10.     PRINCIPAL DEPOSITORY.  Borrower will at all times maintain the 
Bank as its principal bank of deposit and account for purposes of 
facilitating perfection of Bank's security interest and to facilitate Loan 
advances pursuant hereto.  The Borrower shall upon request, permit the Bank 
to be a co-borrower on the depository accounts of the Borrower located at 
financial institutions other than the Bank, and the Borrower will execute any 
documents necessary to provide the Bank with the right to collect all such 
deposits following an Event of Default.

     7.11.     INTENTIONALLY DELETED.

     7.12.     SHAREHOLDER/OFFICER DEBT SUBORDINATION. All debt due
shareholders, officers, related parties, and guarantors shall be fully
subordinated to the Bank and remain at standstill until all debt due to the
Bank is paid in full.

     7.13      ACCOUNTS RECEIVABLE WARRANTIES.  Each Acceptable Account is 
or, at the time it comes into existence will be, a true and correct statement 
of: (A) the bona fide indebtedness of the 

                                       22
<PAGE>

applicable Account Debtor; and (B) the amount of the account for merchandise 
sold and delivered to, or for services performed for and accepted by, such 
Account Debtor, net of any charges, adjustments, discounts or other 
reductions whatsoever; and (i) at the time of each borrowing hereunder, there 
are and, to the best of the Borrower's knowledge after due investigation, 
will be no defenses, counterclaims, discounts or setoffs that may be asserted 
against Acceptable Accounts.

     7.14      REPAYMENT OF SUBORDINATED DEBT.  Within ninety (90) days of 
the date hereof, the Borrower shall raise One Million Dollars ($1,000,000.00) 
(either in equity or fully subordinated debt) and shall apply such funds to 
repay the Subordinated Debt and to reduce the principal amount of the Term 
Loan by Five Hundred Thousand Dollars ($500,000.00).

     7.15      FURTHER ASSURANCES.  At any time and from time to time the 
Borrower shall, and shall cause each of its Subsidiaries to, execute and 
deliver such further instruments and take such further action as may 
reasonably be requested by the Bank to effect the purposes of this Agreement, 
the Notes or other Loan Documents.

                                 SECTION VIII
                                       
                              NEGATIVE COVENANTS
                                       
     So long as the Bank has any commitment to lend hereunder or any Loan or
other Obligation remains outstanding, the Borrower covenants as follows:

     8.1.      INDEBTEDNESS.  Neither the Borrower or any of its Subsidiaries 
shall create, incur, assume, guarantee or be or remain liable with respect to 
any Indebtedness other than the following:

     (a) Indebtedness of the Borrower to the Bank or any of its Subsidiaries to
the Bank or any of its affiliates;

     (b) Indebtedness existing as of the date of this Agreement and disclosed
on EXHIBIT "8.1(b)" hereto or in the financial statements referred to in
Section 8.1(a); and

     (c) Indebtedness secured by Permitted Encumbrances.

     8.2.      CONTINGENT LIABILITIES.  Neither the Borrower nor any of its 
Subsidiaries shall create, incur, assume, guarantee or remain liable with 
respect to any Guarantees other than the following:

     (a) Guarantees in favor of the Bank, or any of its or their affiliates;

     (b) Guarantees existing on the date of this Agreement and disclosed on
EXHIBIT "8.2(B)" hereto or in the financial statements referred to in Section
6.6;

     (c) Guarantees resulting from the endorsement of negotiable instruments
for collection in the ordinary course of business;

                                       23
<PAGE>

     (d) Guarantees with respect to surety, appeal performance and return-of-
money and other similar obligations incurred in the ordinary course of business
(exclusive of obligations for the payment of borrowed money);

     (e)  Guarantees of normal trade debt relating to the acquisition of goods
and supplies; and

     8.3.      LEASES.  Neither the Borrower nor any of its Subsidiaries 
shall during any fiscal year enter into any leases of real or personal 
property as lessee, except for capital leases to the extent not otherwise 
prohibited by or constituting a violation of any other provision of this 
Agreement, and except for leases pursuant to any Equipment Loans, and except 
for any other lease in an amount up to $25,000.

     8.4.      SALE AND LEASEBACK.  Neither the Borrower nor any of its 
Subsidiaries shall enter into any arrangement, directly or indirectly, 
whereby it shall sell or transfer any property owned by it in order to lease 
such property or lease other property that the Borrower or any such 
Subsidiaries intends to use for substantially the same purpose as the 
property being sold or transferred.

     8.5.      ENCUMBRANCES.  Neither the Borrower nor any of its 
Subsidiaries shall create, incur, assume or suffer to exist any mortgage, 
pledge, security interest, lien or other charge or encumbrance , including 
the lien or retained security title of a conditional vendor upon or with 
respect to any of its property or assets ("ENCUMBRANCES"), or assign or 
otherwise convey any right to receive income, including the sale or discount 
of accounts receivable with or without recourse, except the following 
("PERMITTED ENCUMBRANCES"):

     (a) Encumbrances in favor of the Bank, or any of the Bank's affiliates;

     (b)  Encumbrances existing as of the date of this Agreement and disclosed
in EXHIBIT "8.5" hereto;

     (c) Liens for taxes, fees, assessments and other governmental charges to
the extent that payment of the same may be postponed or is not required in
accordance with the provisions of Section 7.4;

     (d) Landlords' and lessors' liens in respect of rent not in default or
liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws, or similar legislation (other
than ERISA) or in connection with appeal and similar bonds incidental to
litigation; mechanics', laborers' and materialmen's and similar liens, if the
obligations secured by such liens are not then delinquent; liens securing the
performance of bids, tenders, contracts (other than for the payment of money);
and statutory obligations incidental to the conduct of its business and that do
not in the aggregate materially detract from the value of its property or
materially impair the use thereof in the operation of its business; and

     (e) Rights of lessors under capital leases.

                                       24
<PAGE>

     8.6.      MERGER; CONSOLIDATION; SALE OR LEASE OF ASSETS.  Neither the 
Borrower nor any of its Subsidiaries shall sell, transfer, lease or otherwise 
dispose of assets or properties other than sales of inventory or obsolete 
equipment to the extent permitted under the terms of the Security Agreement, 
or liquidate, merge or consolidate into or with any other person or entity.

     8.7       ADDITIONAL STOCK ISSUANCE.  The Borrower shall not permit any 
of its Subsidiaries to issue any additional shares of its capital stock or 
other equity securities, any options therefor or any securities convertible 
thereto other than to the Borrower.  Neither the Borrower nor any of its 
Subsidiaries shall sell, transfer or otherwise dispose of any of the capital 
stock or other equity securities of a Subsidiary, except to the Borrower or 
any of its wholly-owned Subsidiaries.

     8.8.      EQUITY DISTRIBUTIONS.  Without the prior written consent of 
the Bank, the Borrower shall not pay any dividends on any class of its 
capital stock or make any other distribution or payment on account of or in 
redemption, retirement or purchase of such capital stock; PROVIDED that this 
Section shall not apply to (i) the issuance, delivery or distribution by the 
Borrower of shares of its common stock pro rata to its existing shareholders, 
(ii) the purchase or redemption by the Borrower of its capital stock with the 
proceeds of the issuance of additional shares of capital stock, (iii) the 
declaration and payment of dividends to shareholders of Borrower so long as 
at the time of any such declaration and payment (and after giving effect 
thereto) no Default (including, without limitation, a violation of any 
financial covenant herein) has occurred and is continuing hereunder nor would 
a Default (including, without limitation, a violation of any financial 
covenant herein) have occurred had the declaration and payment occurred as of 
the last day of the prior fiscal quarter or year for Borrower, all as 
confirmed to the satisfaction of the Bank by the financial information 
required to be furnished to the Bank pursuant to Section 7.1(a) and (b) 
hereof with respect to such prior fiscal year and quarter preceding such 
dividend; or (iv) the exercise of options or warrants pursuant to "cashless" 
exercise provisions or the withholding of shares of stock exercisable upon 
issuance of employee stock options to cover withholding taxes.

     8.9.      INVESTMENTS.  Without the Bank's consent, neither the Borrower 
nor any of its Subsidiaries shall make or maintain any Investments other than 
(i) existing Investments in Subsidiaries, and (ii) Qualified Investments.

     8.10.     ERISA.  Neither the Borrower nor any member of the Controlled 
Group shall permit any Plan maintained by it to (i) engage in any "prohibited 
transaction" (as defined in Section 4975 of the Code, (ii) incur any 
"accumulated funding deficiency" (as defined in Section 302 of ERISA) whether 
or not waived, or (iii) terminate any Plan in a manner that could result in 
the imposition of a lien or encumbrance on the assets of the Borrower or any 
of its Subsidiaries pursuant to Section 4068 of ERISA.

     8.11.     ENVIRONMENTAL COMPLIANCE.  Borrower covenants to duly observe 
and comply with all Environmental Laws, not to use or store (except in the 
ordinary course of Borrower's business and in full compliance with all 
Environmental Laws), transport, dispose or release, or suffer or permit the 
use or storage (except where such transport, disposal, release, use or 
storage occurs in the ordinary course of Borrower's business and in full 
compliance with all Environmental Laws), 

                                       25
<PAGE>

transportation, disposal or release by any other party of, any Hazardous 
Material on, in or from any Collateral or any premises upon which such 
Collateral is at any time located.

     8.12.     FISCAL YEAR AND CAPITAL STRUCTURE.  The Borrower will not 
change its fiscal year or capital structure, nor will Borrower permit any of 
its Subsidiaries to change its fiscal year or capital structure or suffer or 
permit any circumstance to exist in which any such Subsidiary is not 
wholly-owned, directly or indirectly, by the Borrower.

     8.13      CAPITAL EXPENDITURES.  The Borrower shall not incur Capital 
Expenditures in excess of the following amounts for the following periods:

<TABLE>
<CAPTION>
     FISCAL YEAR END               LIMIT
     ---------------               ------
     <S>                                <C>
     12/31/98                      $1,000,000.00

     12/31/99                         750,000.00

     12/31/2000                       750,000.00
</TABLE>


     Notwithstanding the foregoing, any amount not incurred in 1998 may be
incurred in 1999 provided that the aggregate limit for fiscal years 1998 and
1999 is $1,750,000.

     8.14.     TRANSACTIONS WITH AFFILIATES.  Except as set forth in EXHIBIT 
"8.14", the Borrower will not enter into any transaction, including, without 
limitation, the purchase, sale or exchange of any property, or the rendering 
of any service, with any Affiliate, except in the ordinary course of and 
pursuant to the reasonable requirements of the Borrower's business and upon 
fair and reasonable terms no less favorable to the Borrower than would be 
obtained in a comparable arms-length transaction with any Person not an 
Affiliate.  As used herein, the term "Affiliate" includes (i) any officer or 
director of the Borrower or any Subsidiary, or (ii) any Person, which, 
directly or indirectly, through one or more intermediaries, controls or is 
controlled by or is under common control with the Borrower, or (iii) any 
Person which beneficially owns or holds five percent (5%) or more of any 
class of equity or debt securities of the Borrower.  The term "control" means 
the possession, directly or indirectly, of the power to direct or cause the 
direction of the management and policies of any Person, whether through the 
ownership of voting securities, by contract or otherwise.

     8.15.     CHANGE OF CONTROL TRIGGERING EVENTS.  The Borrower will not enter
into or undertake any transaction, arrangement or agreement (whether a
consolidation, merger, issue or sale of capital stock or other securities,
reorganization, voting agreement or otherwise) that will or could reasonably be
expected to result in a Change of Control.

                                  SECTION IX
                                       
                                   DEFAULTS
                                       
     9.1.      EVENTS OF DEFAULT.  There shall be an Event of Default 
hereunder if any of the following events occurs:

                                       26
<PAGE>

     (a) The Borrower shall fail to pay within ten (10) days of the due date
therefor (i) any amount of principal of or interest on any Loan, or (ii) any
fees or expenses payable hereunder; or

     (b) The Borrower shall fail to perform any term, covenant or agreement
contained in Sections 7 or 8;

     (c) The Borrower shall fail to perform any term, covenant or agreement
(other than in respect of any other subsection of this Section 9.1) contained
in this Agreement and such default shall continue for 30 days after notice
thereof has been sent by the Bank to the Borrower; or

     (d) Any representation or warranty of the Borrower made in this Agreement
or any other documents or agreements executed in connection with the
transactions contemplated by this Agreement or in any certificate delivered
hereunder shall prove to have been false in any material respect upon the date
when made or deemed to have been made; or

     (e) The Borrower or any of its Subsidiaries (except with respect to
obligations to the Bank or its affiliates which are addressed in Section
9.1(j)), shall fail to (i) pay within ten (10) days of maturity, or within any
applicable period of grace, any obligations for borrowed monies or advances of
Five Thousand Dollars ($5,000.00) or more, or for the use of real or personal
property, or (ii) observe or perform any term, covenant or agreement evidencing
or securing such obligations for borrowed monies or advances, or relating to
such use of real or personal property, the result of which failure is to permit
the holder or holders of such Indebtedness to cause such Indebtedness to become
due prior to its stated maturity upon delivery of required notice, if any; or

     (f) The Borrower shall (i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee, liquidator or
similar official of itself or of all or a substantial part of its property,
(ii) be generally not paying its debts as such debts become due, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary
case under the Federal Bankruptcy Code (as now or hereafter in effect), (v)
take any action or commence any case or proceeding under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts, or any other law providing for the relief of debtors, (vi) fail to
contest in a timely or appropriate manner, or acquiesce in writing to, any
petition filed against it in an involuntary case under such Bankruptcy Code or
other law, (vii) take any action under the laws of its jurisdiction of
incorporation or organization similar to any of the foregoing, or (viii) take
any corporate action for the purpose of effecting any of the foregoing; or

     (g) A proceeding or case shall be commenced, without the application or
consent of the Borrower in any court of competent jurisdiction, seeking (i) the
liquidation, reorganization, dissolution, winding up, or composition or
readjustment of its debts, (ii) the appointment of a trustee, receiver,
custodian, liquidator or the like of it or of all or any substantial part of
its assets, or (iii) similar relief in respect of it, under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or adjustment
of debts or any other law providing for the relief of debtors, and such
proceeding or case shall continue undismissed, or unstayed and in effect, for a
period of 30 days; or an order for relief shall be entered in an involuntary
case under 

                                       27
<PAGE>

such Bankruptcy Code, against the Borrower or action under the laws of the 
jurisdiction of incorporation or organization of the Borrower similar to any 
of the foregoing shall be taken with respect to the Borrower and shall 
continue unstayed and in effect for any period of 60 days; or

     (h) A judgment or order for the payment of money not covered by insurance
shall be entered against the Borrower by any court, or a warrant of attachment
or execution or similar process shall be issued or levied against property of
the Borrower, and such judgment, order, warrant or process shall continue
undischarged or unstayed for 60 days; or

     (i) The Borrower or any member of the Controlled Group shall fail to pay
when due any amount which it shall have become liable to pay to the PBGC or to
a Plan under Title IV of ERISA; or notice of intent to terminate a Plan or
Plans shall be filed under Title IV of ERISA by the Borrowers, any member of
the Controlled Group, any plan administrator or any combination of the
foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to
terminate or to cause a trustee to be appointed to administer any such Plan or
Plans or a proceeding shall be instituted by a fiduciary of any such Plan or
Plans against the Borrower and such proceedings shall not have been dismissed
within 60 days thereafter; or a condition shall exist by reason of which the
PBGC would be entitled to obtain a decree adjudicating that any such Plan or
Plans must be terminated;

     (j) Borrower or any guarantor (including BPI) shall fail to perform or
observe, after any applicable period of grace, any term, covenant or agreement
contained in, or the occurrence of a default or event of default under, any
note, contract, agreement or understanding (whether related or unrelated to
this Agreement) now existing or hereafter entered into with or for the benefit
of the Bank, BancBoston Leasing or any affiliate in any capacity or capacities;

     (k) The occurrence of any of the foregoing Events of Default with respect
to any guarantor (including without limitation, BPI) or endorser of any
obligation of Borrower to Bank, including, but not limited to, the breach of,
or the occurrence of a default or event of default under, any obligation or
agreement by any such guarantor (including without limitation, BPI), or
endorser in favor of the Bank;

     (l)  The revocation or termination of any guaranty in favor of Bank by any
guarantor (including, without limitation, BPI),  of any obligation of Borrower
to the Bank;

     (m) A Change in Control shall occur;
     
     (n) The Collateral or the real estate (the "Real Property") subject to a
mortgage (the "Mortgage") granted to the Bank by BPI to secure its guaranty, or
any portion thereof, shall be damaged by fire or other casualty (i) which
involves an uninsured loss involving aggregate costs of repair, restoration or
replacement, in the Bank's sole judgment, exceeding $100,000 or (ii) in
connection with which the Bank is not obligated, under the provisions of either
the Security Agreement, or the Mortgage, to make available insurance proceeds,
if any, to assist the repair, replacement or restoration of the Collateral or
Real Property; or

                                       28
<PAGE>

     (o) The Collateral or Real Property, or any portion thereof, shall be
damaged or taken through condemnation or conveyance in lieu thereof (i) which
involves, in the Bank's sole judgment, an award or claim for damages in excess
of $50,000 or (ii) in connection with which the Bank is not obligated, under
the provisions of either the Security Agreement with the Borrower or the
Mortgage, to make available the proceeds of any award or claim for damages in
connection therewith to assist the restoration of the Collateral or Real
Property.

     9.2.      REMEDIES.  Upon the occurrence of an Event of Default 
described in subsections 9.1(f) and (g), immediately and automatically, and 
upon the occurrence of any other Event of Default, at any time thereafter 
while such Event of Default is continuing, at the Bank's option and upon the 
Bank's declaration:

     (a) The Bank's commitment to make any further Loans hereunder shall
terminate;

     (b) The unpaid principal amount of the Loans together with accrued
interest and all other Obligations shall become immediately due and payable
without presentment, demand, protest or notice of any kind, all of which are
hereby expressly waived; and

     (c) The Bank may exercise any and all rights it has under this Agreement
or any other documents or agreements executed in connection herewith, or at law
or in equity, and proceed to protect and enforce the Bank's rights by any
action at law, in equity or other appropriate proceeding.

     9.3       CROSS-DEFAULT AND CROSS-COLLATERALIZATION.  An Event of 
Default in any of the terms and conditions of the Loans shall constitute a 
Default in all other Obligations (or any document evidencing such obligation 
or security therefor) of the Borrower, and all obligations (however arising) 
of any guarantor including BPI, to the Bank.  An Event of Default in any of 
the terms and conditions of any other Obligations (or any document evidencing 
such obligation or security therefor) of the Borrower, or any  obligations of 
any guarantor including BPI to the Bank (however arising), shall constitute 
an Event of  Default hereunder.  All Collateral granted by the Borrower or 
any guarantor including BPI to the Bank shall secure all Obligations of the 
Borrower and such guarantor to the Bank.

                                   SECTION X
                                       
                                 MISCELLANEOUS
                                       
     10.1.     NOTICES.  All notices, requests and demands to or upon the 
Borrower or the Bank shall be deemed to have been duly given or made: if by 
telecopy, telex, telegram or by hand, immediately upon sending or delivery; 
if by any overnight delivery service, one (1) day after dispatch; and if 
mailed by certified mail, return receipt requested, five (5) days after 
mailing.  All notices, requests and demands are to be given or made to the 
respective parties at the following addresses (or to such other address as 
any party may designate by notice in accordance with this Section):

     (a)  If to the Borrower:

                                       29
<PAGE>

          Image Guided Technologies, Inc.
          5710-B Flatiron Parkway
          Boulder, Colorado
          ATTN:       Jeffrey J. Hiller, Vice President

          Telephone:  (303) 447-0248
          Telecopier: (303) 447-3905
          
     (b)  With a copy to:
          William G. Tanis, Esq.
          Ireland, Stapleton
          1675 Broadway, Suite 2600
          Denver, CO 80202-4685
          
          Telephone:  (303) 623-2700
          Telecopier: (303) 623-2062
          
     (c)  If to the Bank:
          BankBoston, N.A.
          1350 Main Street
          Springfield, MA  01103
          ATTN:  David M. Hobert, Vice President

          Telephone:  (413) 731-4003
          Telecopier: (413)  731-4433

     (d)  With a copy to:
          Robinson, Donovan, Madden & Barry, P.C.
          1500 Main Street, 16th Floor
          Springfield, MA  01115
          ATTN: James F. Martin, Esquire

          Telephone:  (413) 732-2301
          Telecopier: (413) 785-4658


     10.2.     EXPENSES.  The Borrower shall, on demand, pay or reimburse the 
Bank for all reasonable incurred expenses (including attorneys' fees of 
outside counsel or allocation costs of in-house counsel) incurred or paid by 
the Bank in connection with the administration or amendment of this Agreement 
(whether or not the transactions contemplated hereby shall be consummated) 
and with the enforcement of any Obligation of the Borrower or exercise of any 
right of the Bank hereunder.

     10.3.     SET-OFF.  Regardless of the adequacy of the Collateral or 
other means of obtaining payment of the Obligations, any deposits, balances 
or other sums credited by or due from the 

                                       30
<PAGE>

head office of the Bank or any of its branch offices to the Borrower may, at 
any time after the occurrence of a Default hereunder, without notice to the 
Borrower or compliance with any other condition precedent now or hereafter 
imposed by statute, rule of law, or otherwise (all of which are hereby 
expressly waived) be set off, appropriated, and applied by the Bank against 
any and all obligations of the Borrower to the Bank or any of its affiliates 
in such manner as the head office of the Bank or any of its branch offices in 
their sole discretion may determine, and the Borrower hereby grants the Bank 
a continuing security interest in such deposits, balances or other sums for 
the payment and performance of all such obligations.

     10.4.     TERM OF AGREEMENT.  This Agreement shall continue in force and 
effect so long as the Bank has any commitment to make Loans hereunder or any 
Loan or any Obligation shall be outstanding.

     10.5.     NO WAIVERS.  No failure or delay by the Bank in exercising any 
right, power or privilege hereunder or under any other documents or 
agreements executed in connection herewith shall operate as a waiver thereof; 
nor shall any single or partial exercise thereof preclude any other or 
further exercise thereof or the exercise of any other right, power or 
privilege.  The rights and remedies herein provided are cumulative and not 
exclusive of any rights or remedies otherwise provided by law.

     10.6.     GOVERNING LAW.  This Agreement and the Notes shall be deemed 
to be a contracts made under seal and shall be construed in accordance with 
and governed by the laws of the Commonwealth of Massachusetts (without giving 
effect to any conflicts of laws provisions contained therein).

     10.7.     AMENDMENTS.  Neither this Agreement nor the Notes nor any 
provision hereof or thereof may be amended, waived, discharged or terminated 
except by a written instrument signed by the Bank and, in the case of 
amendments, by the Borrower.

     10.8.     BINDING EFFECT OF AN AGREEMENT.  This Agreement shall be 
binding upon and inure to the benefit of the Borrower and the Bank and their 
respective successors and assigns; PROVIDED that the Borrower may not assign 
or transfer its rights or obligations hereunder.  The Bank may assign all of 
its rights and obligations hereunder without the consent of the Borrower.  
The Bank may sell, transfer or grant participations in any Loan without the 
prior written consent of the Borrower, and the Borrower agrees that any 
transferee or participant shall thereupon become vested, to the extent set 
forth in the agreement evidencing such assignment, transfer or participation, 
with all rights in respect thereof granted to Bank hereunder.

     10.9.     COUNTERPARTS.  This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.

     10.10.    SEVERABILITY.  The invalidity or unenforceability of any one 
or more phrases, clauses or sections of this Agreement shall not affect the 
validity or enforceability of the remaining portions of it.

     10.11.    INTENTIONALLY DELETED.

                                       31
<PAGE>

     10.12.    CAPTIONS.  The captions and headings of the various sections and
subsections of this Agreement are provided for convenience only and shall not
be construed to modify the meaning of such sections or subsections.

     10.13.    ENTIRE AGREEMENT.  This Agreement, the Revolving Note, and the
documents and agreements executed in connection herewith and therewith
constitute the final agreement of the parties hereto and supersede any prior
agreement or understanding, written or oral, with respect to the matters
contained herein and therein.

     10.14.    JURY WAIVER.  EACH OF THE BORROWER AND THE BANK AGREE THAT 
NEITHER OF THEM, NOR ANY ASSIGNEE OR SUCCESSOR SHALL (A) SEEK A JURY TRIAL IN 
ANY LAWSUIT, PROCEEDING, COUNTERCLAIM, OR ANY OTHER ACTION BASED UPON, OR 
ARISING OUT OF, THIS AGREEMENT, ANY RELATED INSTRUMENTS, ANY COLLATERAL OR 
THE DEALINGS OR THE RELATIONSHIP BETWEEN OR AMONG ANY OF THEM, OR (B) SEEK TO 
CONSOLIDATE ANY SUCH ACTION WITH ANY OTHER ACTION IN WHICH A JURY TRIAL 
CANNOT BE OR HAS NOT BEEN WAIVED.  THE PROVISIONS OF THIS PARAGRAPH HAVE BEEN 
FULLY DISCUSSED BY THE BORROWER AND THE BANK, AND THESE PROVISIONS SHALL BE 
SUBJECT TO NO EXCEPTIONS.  NEITHER THE BORROWER NOR THE BANK HAS AGREED WITH 
OR REPRESENTED TO THE OTHER THAT THE PROVISIONS OF THIS PARAGRAPH WILL NOT BE 
FULLY ENFORCED IN ALL INSTANCES.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as an instrument under seal as of the day and
year first above written.

                                   IMAGE GUIDED TECHNOLOGIES, INC.



                                   By: /s/ Jeffrey J.Hiller
------------------------           ----------------------------------
Witness                               Name:   Jeffrey J. Hiller
                                      Title:  Vice President
                                      [Seal]

                                   BANKBOSTON, N.A.



                                   By: /s/ David M. Hobert
------------------------           ----------------------------------
Witness                               Name:   David M. Hobert
                                      Title:  Vice President
                                      [Seal]

                                       32