Document:

<PAGE>

                                                                   EXHIBIT 10.55

                     NON-COMPETITION AND SEVERANCE AGREEMENT
                 (Amended and Restated as of September 26, 2002)

         This NON-COMPETITION AND SEVERANCE AGREEMENT, originally entered into
as of the 16th day of May 2002, by and between Colorado MEDtech, Inc., a
Colorado corporation ( the "Company"), and __________________ ("Employee"), is
amended and restated as of September 26, 2002.

         WHEREAS, Employee is a valued member of the management group of the
Company, familiar with certain valuable trade secrets, business plans, technical
information and other confidential information of the Company; and

         WHEREAS, to protect the value of certain valuable trade secrets,
business plans, technical information and other confidential information of the
Company, the Company desires to restrict the ability of Employee to compete with
the business of the Company after the termination of Employee's employment with
the Company; and

         WHEREAS, the Company desires to have Employee and other officers of the
Company adhere to the Colorado MEDtech stock ownership guidelines attached
hereto; and

         WHEREAS, as an inducement to Employee to enter into such restriction,
the Company has agreed to enter into this Agreement.

         NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

1. Non-Compete. Employee acknowledges that in the course of Employee's
employment with the Company, Employee has, prior to the date of this Agreement,
and will, during the period of his employment with the Company, become familiar
with the Company's trade secrets, business plans and business strategies and
with other confidential business information concerning the Company, including
but not limited to, information concerning suppliers of hardware, products and
software and other aspects of information processing technology, prices, terms,
inventions, discoveries, concepts, ideas, processes, methods, formulas,
techniques, data, data bases and improvements thereof, and information relating
to research, development, inventions, purchasing, merchandising and marketing of
the Company ("Confidential Information"). Employee's services have been and
shall be of special and unique value to the Company. Employee also acknowledges
that in the course of his employment Employee will have access to relationships
and goodwill with the Company's customers, distributors, alliance partners,
suppliers and employees. Employee acknowledges that his services cannot be
replaced and that the loss of Employee's services, or the use of Employee's
services by a competitor, may cause the inevitable disclosure of trade secret
information and other irreparable harm to the Company.

                  In light of Employee's value to and knowledge of the Company's
business and the Company's agreement to provide the consideration set forth
herein, Employee agrees that, during the period of Employee's employment with
the Company and for a period equal to the

<PAGE>

"Severance Period" (defined below) (the "Non-Compete Period"), Employee will
not, in association with or as an officer, principal, member, advisor, agent,
partner, director, material stockholder, employee or consultant of any
corporation (or sub-unit, in the case of a diversified business) or other
enterprise, entity or association, work on the acquisition or development of, or
engage in any line of business, property or project which is, directly or
indirectly, competitive with any business that the Company engages in or, to the
knowledge of Employee, is planning to engage in during the period of Employee's
employment with the Company, including but not limited to the Business (as
hereinafter defined). Such restriction shall cover Employee's activities
anywhere in the world. As used herein, the term "Business" means the business of
outsource development or outsource manufacturing of medical devices or imaging
components, and the business of developing, manufacturing and distributing
medical accessories and supplies for imaging equipment.

         1.1 Reasonable Restrictions. Employee understands that the provisions
         of Section 1 of this Agreement may limit Employee's ability to earn a
         livelihood in a business similar to the business in which he is
         involved, but as a member of the management group of the Company he
         nevertheless agrees and hereby acknowledges that (a) such provisions do
         not impose a greater restraint than is necessary to protect the
         goodwill or other business interests of the Company and any of the
         Company's affiliates; (b) such provisions contain reasonable
         limitations as to time, scope of activity, and geographical area to be
         restrained; and (c) the consideration set forth in this Agreement is
         sufficient to compensate Employee for the restrictions contained in
         Section 1 hereof. In consideration of the foregoing and in light of
         Employee's education, skills and abilities, Employee agrees that
         Employee will not assert that, and it should not be considered that,
         any provisions of Section 1 otherwise are void, voidable or
         unenforceable or should be voided or held unenforceable.

         1.2 Enforcement of Restrictions. If, at the time of enforcement of the
         foregoing Sections of this Agreement, a court shall hold that the
         duration, scope, or area restrictions stated herein are unreasonable
         under circumstances then existing, the parties hereto agree that the
         maximum period, scope or geographical area reasonable under such
         circumstances shall be substituted for the stated period, scope or area
         and that the court shall be allowed and directed to revise the
         restrictions contained herein to cover the maximum period, scope and
         area permitted by law. Employee acknowledges that, as a key employee of
         the Company, Employee has access to the Company's confidential business
         information and Employee's services are unique to the Company and its
         affiliates. Employee therefore agrees that the remedy at law for any
         breach by Employee of any of the covenants and agreements set forth
         Section 1 of this Agreement will be inadequate and that in the event of
         any such breach, the Company may, in addition to the other remedies
         which may be available to it at law, apply to any court of competent
         jurisdiction to obtain specific performance and/or injunctive relief
         prohibiting Employee (together with all those persons associated with
         Employee) from the breach of such covenants and agreements and to
         enforce, or prevent any violations of, the provisions of this
         Agreement. In addition, in the event of an alleged breach or violation
         by Employee of this Agreement, the applicable Non-Compete Period set
         forth in Section 1 hereof shall be tolled until such breach or
         violation has been cured.

                                       2
<PAGE>

2.       Severance. If, prior to June 30, 2004, CMED completes:

                  (a)      a merger, stock swap, change in control, or sale of
substantially all of its assets (an "entity trigger event"), then:

                           (i)      If, at the time of, or within forty-five
days prior to closing of an entity trigger event, or within twelve (12) months
after closing of an entity trigger event Employee's employment is terminated by
the Company without cause, or if Employee voluntarily terminates employment for
good reason, then severance is payable. Severance payments shall commence two
weeks after closing of an entity trigger event.

                           (ii)     If Employee's employment is not terminated,
or within 10 days after the entity trigger event Employee is offered substitute
employment with the successor entity at a level which would not give Employee
good reason not to accept, then no severance is payable. If Employee is not
terminated or if Employee accepts such offered employment, a 12-month tail
period will begin. If within the tail period Employee's employment is terminated
by the Company or the successor employer without cause, or if Employee
voluntarily terminates employment for good reason, then severance is payable,
and severance payments shall commence two weeks after termination.

or:

                  (b)      a sale of a significant portion of the assets of any
operating division of CMED (treating CIVCO as an operating division, and
including a merger, stock swap or change in control of CIVCO) or closure and
discontinuance of operation of any such operating division (a "division trigger
event"), then the same rules apply as in subparagraph (a), above, but if
Employee remains employed by the Company after a division trigger event then the
tail period shall restart after each division trigger event.

         For purposes of this Agreement, "severance", which shall be considered
liquidated damages in lieu of any other payments or obligations of the Company
in connection with Employee's employment or termination, means continuation of
Employee's base salary payments: for twelve (12) months following the date of
termination. The Company shall make adequate provision for payment of all
severance payment obligations.

If after a qualifying termination Employee elects to continue Employee's group
health insurance coverage through COBRA, the Company will also pay the monthly
medical insurance premium payment required to maintain Employee's then current
medical insurance coverage (less any amount Employee is paying for such
insurance at the time of termination, of which payment from Employee will be
required by the beginning of each month) after termination for twelve (12)
months or until Employee obtains new employment, whichever occurs first.

                                       3
<PAGE>

For purposes of this letter, Employee's employment with the Company shall be
deemed terminated for "Cause" only if it is terminated by the Company for:

                           (i)      misappropriation of corporate confidential
information (or unauthorized disclosure thereof) or funds by Employee or with
Employee's direct involvement;

                           (ii)     fraud, embezzlement, theft or dishonesty by
Employee reasonably suspected by the Company; or

                           (iii)    negligent or willful misconduct or
dereliction of duty by Employee, including without limitation, failure to follow
material direction of the CEO of the Company; provided, however, that no
discharge shall be deemed for Cause under this clause (iii) unless Employee
shall have first received written notice from the Company advising Employee of
the specific acts or omissions alleged to constitute such negligent or willful
misconduct, and such misconduct continues uncured by Employee for a period of
twenty (20) days.

                           "Good Reason" shall exist if Employee: (1) is demoted
                  from the position Employee held prior to an entity trigger
                  event or division trigger event; (2) is assigned duties
                  inconsistent with Employee's roles and responsibilities prior
                  to an entity trigger event or division trigger event; (3) is
                  relocated to an office or site greater than 50 miles from
                  Employee's location prior to an entity trigger event or
                  division trigger event; or (4) Employee's compensation or
                  benefits are materially reduced (including paid time off and
                  vacation).

         A "change of control of the Company" will be deemed to occur under
either of the following circumstances: (A) any "person" (as that term is used in
Section 13(d) and 14(d) of the Securities Exchange of 1934 (the "Exchange Act"),
other than the Company or any "person" who on the date hereof is a director or
officer of the Company, is or becomes the "beneficial owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing fifty percent (50%) or more of the combined voting power of
the Company's then outstanding securities, or (B) if, at any time during any
period of two consecutive years, individuals who at the beginning of such period
constitute the Board cease for any reason to constitute at least a majority
thereof, unless the election of each director who was not a director at the
beginning of such period was approved in advance by two-thirds of the group
comprised of directors who were both (i) in office at the time of election of
the new director; and (ii) who were also directors at the beginning of the two
year measurement period.

         2.1 Request for Post-Employment Allowance: In order to obtain any
         payment pursuant to Section 2, Employee shall submit a Request for
         Post-Employment Allowance (attached hereto as Exhibit A). The Company
         shall have no obligation to make any payments to Employee unless and
         until Employee shall have submitted an executed copy of such request.

3.       Options. In consideration for the restrictions on Employee contained
herein, the Company agrees to grant to Employee options to purchase _______
shares of Company stock. The options shall be granted under a Company stock
option plan and may be incentive or

                                       4
<PAGE>

non-statutory stock options. The exercise price of such options shall be the
fair market value of the Company's Common Stock at the close of the market on
the date of this Agreement. Such options shall vest as follows: one-quarter of
such amount after the one-year anniversary of this Agreement, with an additional
one-quarter on each of the three subsequent anniversary dates of this Agreement.
The options shall expire ten (10) years after the grant date.

4.       Ownership Guidelines. Employee agrees to abide by the guidelines for
ownership of Colorado MEDtech stock attached as Exhibit B hereto.

5.       Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.

6.       Successors and Assigns. This Agreement, all terms and conditions
hereunder, and all remedies arising herefrom, shall inure to the benefit of and
be binding upon the Company, any successor in interest to all or substantially
all of the business and/or assets of the Company, and the heirs, administrators,
successors and assigns of Employee. Except as provided in the preceding
sentence, the rights and obligations of the parties hereto may not be assigned
or transferred by either party without the prior written consent of the other
party.

7.       Notices. For purposes of this Agreement, notices, demands and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by United States
registered mail, return receipt requested, postage prepaid, addressed as
follows:

         If to Employee:        at his last known address as reflected in the
                                Company's personnel files

         If to the Company:     Colorado MEDtech, Inc.
                                4801 N. 63rd St.
                                Boulder, CO 80301
                                Phone: (303) 530-2660
                                Fax: (303) 581-1010
                                Attn:  General Counsel

or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.

8.       Severability.  If any provision of this Agreement is prohibited by or
is unlawful or unenforceable under any applicable law of any jurisdiction as to
such jurisdiction, such provision shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions hereof.

9.       Survival of Obligations.  Termination of this Agreement for any reason
shall not relieve the Company or Employee of any obligation accruing or arising
prior to such termination.

                                       5
<PAGE>

10.      Amendments. No waiver or modification of this Agreement or any
covenant, condition, or limitation herein contained shall be valid unless in
writing and duly executed by the party to be charged therewith, and no evidence
of any waiver or modification shall be offered or received in evidence of any
proceeding, arbitration or litigation between the parties hereto arising out of
or affecting this Agreement, or the rights or obligations of the parties
hereunder, unless such waiver or modification is in writing, duly executed as
aforesaid.

11.      Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original but all of which, when
taken together, shall constitute only one legal instrument. This Agreement shall
become effective when copies hereof, when taken together, shall bear the
signatures of both parties hereto. It shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.

12.      No Agreement to Employ.  This Agreement shall not by itself constitute
an agreement for a specific term of employment. EITHER EMPLOYEE OR THE COMPANY
MAY TERMINATE EMPLOYEE'S EMPLOYMENT AT ANY TIME AND FOR ANY REASON.

13.      Arbitration. Any and all disputes arising under or related to this
Agreement which cannot be resolved through negotiations between the parties
shall be submitted to binding arbitration. If the parties fail to reach a
settlement of their dispute within fifteen (15) days after the earliest date
upon which one of the parties notified the other(s) of its desire to attempt to
resolve the dispute, then the dispute shall be promptly submitted to arbitration
by a single arbiter through the Judicial Arbiter Group ("JAG"), any successor of
the Judicial Arbiter Group, or any similar arbitration provider who can provide
a former judge to conduct such arbitration if JAG is no longer in existence, or
an arbiter appointed by the court. The arbiter shall be selected by JAG or the
court on the basis, if possible, of his or her expertise in the subject
matter(s) of the dispute. The decision of the arbiter shall be final,
non-appealable and binding upon the parties, and it may be entered in any court
of competent jurisdiction. The arbitration shall take place in Denver, Colorado.
The arbitrator shall be bound by the laws of the State of Colorado applicable to
the issues involved in the arbitration and all Iowa rules relating to the
admissibility of evidence, including, without limitation, all relevant
privileges and the attorney work product doctrine. All such discovery shall be
completed in accordance with the time limitations prescribed in the Colorado
Rules of Civil Procedure, unless otherwise agreed by the parties or ordered by
the arbitrator on the basis of strict necessity adequately demonstrated by the
party requesting an extension or reduction of time. The arbitrator shall have
the power to grant equitable relief where applicable under Colorado law. The
arbitrator shall issue a written opinion setting forth her or his decision and
the reasons therefor within thirty (30) days after the arbitration proceeding is
concluded. The obligation of the parties to submit any dispute arising under or
related to this Agreement to arbitration as provided in this Section shall
survive the expiration or earlier termination of this Agreement. Notwithstanding
the foregoing, pending the conclusion of an arbitration proceeding, the Company
may seek and obtain an injunction or other appropriate relief from a court of
competent jurisdiction to prohibit the violation of the non-competition
provisions set forth in this Agreement, but no such application to a court shall
in any way be permitted to stay or otherwise impede the progress of the
arbitration proceeding.

                                       6
<PAGE>

14.      Fees.  If any action at law or in equity is necessary to enforce or
interpret the terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys fees, costs and necessary disbursements in addition to any
other relief to which that party may be entitled.

         IN WITNESS WHEREOF, the Company and Employee have entered into this
Non-Competition and Severance Agreement as of the date first above written.

COLORADO MEDTECH, INC.

By:
   ------------------------------
Name:
Title:

EMPLOYEE:

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

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

                                       7
<PAGE>

SCHEDULE OF NON-COMPETITION AND SEVERANCE AGREEMENTS

        The following schedule of details of the three Non-Competition and
Severance Agreements is provided in accordance with Instruction 2 to Item 601 of
Regulation S-K. One (1) Non-Competition and Severance Agreement has been made
for each person listed in the table below, and each document is substantially
identical in all material respects to the form preceding this schedule except
with respect to the details provided in the table below.

<TABLE>
<CAPTION>
         NAME                                 NUMBER OF OPTIONS IN SECTION 3
<S>                                           <C>
Charles R. Klasson, Jr.                                   15,000

Richard L. Schoen                                         12,000

Kenneth D. Taylor                                         15,000
</TABLE>

                                       8<PAGE>
                                                                   EXHIBIT 10.56

                       THIRD AMENDMENT TO CREDIT AGREEMENT

         THIS THIRD AMENDMENT TO CREDIT AGREEMENT (this "Third Amendment"),
effective as of the 25 day of June, 2002, is by and among COLORADO MEDTECH, INC.
("Medtech") and CIVCO MEDICAL INSTRUMENTS CO. INC. ("Civco") (Medtech and Civco
shall be collectively referred to herein as "Borrower") and KEYBANK NATIONAL
ASSOCIATION, a national banking association (the "Lender").

                                    RECITALS:

         A. On December 21, 2000, Borrower and Lender entered into that certain
Credit Agreement (the "Credit Agreement") pursuant to which Lender agreed to
extend credit to Borrower, on a revolving basis, in an aggregate principal
amount at any time outstanding not in excess of $15,000,000 (the "Loan"), as
evidenced by that certain Promissory Note dated December 21, 2000 (the "Note"),
and secured by, among other items, a Security Agreement dated December 21, 2000,
as amended by First Amendment to Security Agreement dated February 28, 2001 (the
"Security Agreement") executed by Borrower and Lender. The Credit Agreement was
amended by that certain First Amendment to Credit Agreement dated April 30, 2001
(the "First Amendment") to approve the sale and release of CMED Catheter and
Disposables Technology, Inc. (an initial Borrower under the Loan) from its
obligations under the Loan. The Credit Agreement was further amended by that
certain Second Amendment to Credit Agreement dated November 13, 2001 (the
"Second Amendment") to document Lender's approval of the release of Civco as a
Borrower thereunder, releasing Civco from the Note and Security Agreement, and
filing a UCC-3 to release the Civco assets from the UCC-1 Financing Statement
filed by the Lender, all in accordance with a certain Revised Order of
Preliminary Injunction, Case No. SACV 00-1149, United States District Court,
Central District of California in the matter of Victor J. Wedel and Sherrill
Wedel, as Plaintiffs and Colorado Medtech, Inc. and John V. Atanasoff, as
Defendants (the "Civil Action").

         B. Upon the terms and conditions set forth herein, Lender and Borrower
desire to, among other things, amend the Credit Agreement to again include Civco
as a Borrower under the Loan and to include the Civco assets in the collateral
securing the Loan due to a settlement of the Civil Action which required the
initial release of Civco as a Borrower under the Loan.

         C. All references herein to the Loan Documents shall refer collectively
to the Credit Agreement, Note, Security Agreement, and any other instruments or
documents evidencing, securing or relating to the Loan, as amended by the First
Amendment, the Second Amendment and this Third Amendment.

                                   AGREEMENT:

         NOW, THEREFORE, in consideration of the foregoing premises and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto covenant and agree as follows:

<PAGE>

         1. MODIFICATION OF DEFINITION OF "BORROWER". The term "Borrower" as
used in the Loan Documents is hereby modified to include Civco, and accordingly
is hereby amended to collectively refer to, on a joint and several basis,
Medtech and Civco.

         2. AMENDMENT TO THE CREDIT AGREEMENT. The Credit Agreement is hereby
amended as follows:

            (a) The definition of "Maturity Date" as set forth in Section 1.1 of
the Credit Agreement shall be deleted in its entirety and replaced with the
following:

                   "Maturity Date" shall mean January 1, 2003.

            (b) Subsections (l) and (m) that were added to Article VII- Events
of Default pursuant to the Second Amendment are hereby deleted.

            (c) Section 5.4(d) shall be deleted in its entirety and replaced
with the following:

                           "(d) Within 15 days after the end of each month,
         provided that there is an outstanding balance owing under the Loan, the
         Borrower shall deliver to the Lender a borrowing base certificate in
         the form of Exhibit A hereto (the "Borrowing Base Certificate")
         detailing the Borrower's Eligible Accounts Receivable and Eligible
         Inventory as of the last day of such month, certified as complete and
         correct on behalf of the Borrower by a Financial Officer of the
         Borrower. In addition, each Borrowing Base Certificate shall have
         attached to it such additional schedules and/or other information as
         the Lender may reasonably request including, without limitation, an
         accounts receivable aging report, and an Inventory listing. If the
         Borrower fails to deliver any such Borrowing Base Certificate within 15
         days after the end of any month in which there is an outstanding
         balance owing under the Loan, then the Borrowing Base shall be deemed
         to be $0 until such time as the Borrower delivers such required
         Borrowing Base Certificate."

            (d) Section 5.5(d) that was added as an Affirmative Covenant
pursuant to the Second Amendment is hereby deleted.

            (e) Schedule 3.9 of the Credit Agreement with respect to litigation
matters is hereby replaced in its entirety with the Schedule 3.9 attached
hereto.

            (f) Schedule 3.8 of the Credit Agreement with respect to
subsidiaries of Borrower is hereby replaced in its entirety with the Schedule
3.8 attached hereto.

            (g) The address for notice to Borrower in Section 8.1 of the Credit
Agreement is changed to 4801 N. 63rd Street, Boulder, CO 80301.

         3. AMENDMENT TO NOTE. The Note shall be replaced by an Amended and
Restated Promissory Note to be executed by all Borrowers simultaneous with the
execution of this Third Amendment.

<PAGE>

         4. AMENDMENT TO SECURITY AGREEMENT. Civco shall be included as a Debtor
under the Security Agreement, and agrees to evidence the same by (i) execution
of an Amended and Restated Security Agreement which shall replace the Security
Agreement and (ii) filing of a UCC-1 with the Iowa Secretary of State.

         5. LOAN DOCUMENT AMENDMENTS. Each of the Loan Documents is hereby
amended to conform to the amendments set forth in Paragraphs 1, 2, 3 and 4 and 5
above.

         6. CONDITIONS PRECEDENT. Notwithstanding anything to the contrary set
forth herein, this Third Amendment shall not be effective until Borrower has
executed the Amended and Restated Note, the Amended and Restated Security
Agreement and the UCC-1 as set forth in Paragraphs 4 and 5 above in such forms
approved by Lender.

         7. DOCUMENT RATIFICATION. Subject to the amendments set forth in
Paragraphs 1, 2, 3, 4 and 5 above, all of the terms and conditions contained in
the Credit Agreement and the other Loan Documents, shall remain unmodified and
in full force and effect.

         8. RELEASE. Except as specifically set forth herein, the execution of
this Third Amendment by Lender does not and shall not constitute a waiver of any
rights or remedies to which Lender is entitled pursuant to the Loan Documents,
nor shall the same constitute a waiver of any default now existing or which may
occur in the future with respect to the Loan Documents. Borrower hereby agrees
that Lender has fully performed its obligations pursuant to the Loan Documents
through the date hereof.

         9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER. Borrower
represents, warrants and covenants to Lender:

            (a) No default or event of default under any of the Loan Documents
as modified herein, nor any event, that, with the giving of notice or the
passage of time or both, would be a default or an event of default under the
Loan Documents as modified herein has occurred and is continuing.

            (b) There has been no material adverse change in the financial
condition of Borrower or any other person whose financial statement has been
delivered to Lender in connection with the Loan from the most recent financial
statement received by Lender.

            (c) Each and all representations and warranties of Borrower in the
Loan Documents, are accurate on the date hereof, except that contained in
Section 3.6 of the Credit Agreement, as to which the date for purposes of this
Third Amendment shall be changed to March 31, 2002; and except that Schedules
3.8 and 3.9 to the Credit Agreement are replaced by Schedules 3.8 and 3.9
attached to this Third Amendment.

            (d) Borrower has no claims, counterclaims, defenses, or set-offs
with respect to the Loan or the Loan Documents as modified herein.

            (e) The Loan Documents as modified herein are the legal, valid, and
binding obligation of Borrower, enforceable against Borrower in accordance with
their terms.

<PAGE>

            (f) Borrower shall execute, deliver, and provide to Lender such
additional agreements, documents, and instruments as reasonably required by
Lender to effectuate the intent of this Third Amendment.

         10. CONTROLLING LAW. The terms and provisions of this Third Amendment
shall be construed in accordance with and governed by the laws of the State of
Colorado.

         11. BINDING EFFECT. This Third Amendment shall be binding upon and
inure to the benefit of the parties hereto, their successors and assigns.

         12. CAPTIONS. The paragraph captions utilized herein are in no way
intended to interpret or limit the terms and conditions hereof, rather, they are
intended for purposes of convenience only.

         13. COUNTERPARTS. This Third Amendment may be executed in any number of
counterparts, each of which shall be effective only upon delivery and thereafter
shall be deemed an original, and all of which shall be taken to be one and the
same instrument, for the same effect as if all parties hereto had signed the
same signature page. Any signature page of this Third Amendment may be detached
from any counterpart of this Third Amendment without impairing the legal effect
of any signatures thereon and may be attached to another counterpart of this
Third Amendment identical in form hereto but having attached to it one or more
additional signature pages.

         14. DEFINED TERMS. Capitalized terms not defined herein shall have the
same meaning as set forth in the Credit Agreement.

         IN WITNESS WHEREOF, the parties hereto have executed this Third
Amendment as of the day and year first above written.

                                    BORROWER:

                                    COLORADO MEDTECH, INC., a Colorado
                                    corporation

                                    By:        /s/ Gregory A. Gould
                                             -----------------------------------
                                    Name:    Gregory A. Gould
                                    Its:     CFO

                                    CIVCO MEDICAL INSTRUMENTS CO., INC.,
                                    an Iowa corporation

                                    By:        /s/ Peter J. Jensen
                                             -----------------------------------
                                    Name:    Peter J. Jensen
                                    Its:     Secretary

                                    LENDER:

                                    KEYBANK NATIONAL ASSOCIATION, a
                                    national banking association

                                    By:        /s/ Michelle K. Bushey
                                             -----------------------------------
                                    Name:    Michelle K. Bushey
                                    Its:     Vice President

<PAGE>

                     AMENDED AND RESTATED SECURITY AGREEMENT

1.       DEBTORS:            COLORADO MEDTECH, INC.
                             4801 N. 63rd Street
                             Boulder, Colorado 80301

                             CIVCO MEDICAL INSTRUMENTS CO. INC.
                             102 1st Street South
                             Kalona, Iowa 52247

                             (Collectively referred to herein, on a joint and
                             several basis, as "Debtor").

2.       SECURED PARTY:      KEYBANK NATIONAL ASSOCIATION
                             1675 Broadway, Suite 500
                             Denver, Colorado 80202
                             Attention: Michelle Bushey, Vice President

3.       DATED:              June 25, 2002

4. COLLATERAL: The following property which is now or hereafter owned by Debtor
or in which Debtor now or hereafter has any right, title or interest is
hereinafter collectively referred to as the "Collateral":

                  (a) All inventory; and

                  (b) All deposit accounts, reserves, deferred payments,
refunds, accounts receivable, notes, chattel paper; all books, records and other
documentation relating to the foregoing including, without limitation, all
listing and compilations of such accounts and all original documents creating,
evidencing, securing or guaranteeing the indebtedness under any such accounts
such as contracts, orders, invoices, receipts, security documents and
guarantees;

                  (c) All rights to payment under contracts relating to
inventory or any part thereof and all accounts receivable derived from sales
therefrom; and in all proceeds and products of such inventory in any form,
including without limitation, in all accounts and chattel paper arising out of
the sale or lease of such inventory, in any accessions thereto and in all
returned or repossessed inventory;

                  (d) All causes of action, claims and compensation of every
kind and nature, whether direct or consequential, or for any injury, loss or
diminution in value of the property owned by Debtor, and all policies of
insurance covering any of the other items of property listed herein and all
proceeds, loss payments and premium refunds which may become payable with
respect to such insurance policies;

<PAGE>

                  (e) All books, records and other property relating to or
referring to any of the foregoing, including, without limitation, all books,
records, ledger cards, customer lists, vendor lists, computer records and
computer software; and

                  (f) All additions, renewals and replacements of the items of
property listed in this Amended and Restated Security Agreement and all articles
in substitution therefor, including, without limitation, all cash and non-cash
proceeds from the sale or other transfer of any of such items.

5. PRIMARY USE OF COLLATERAL: Business.

6. OBLIGATIONS (collectively, the "Obligations"):

         (a) All obligations to Secured Party, direct or indirect, absolute or
contingent, now existing or hereafter arising in connection with that certain:

                  (i) revolving credit loan in the amount of up to $5,000,000
(the "Loan") made by Secured Party to Debtor as evidenced by that certain
Amended and Restated Promissory Note dated of even date herewith, executed by
Debtor and payable to the order of Secured Party in the stated principal amount
of Five Million and No/100 Dollars ($5,000,000) (the "Note") and all sums now or
hereafter advanced thereunder;

                  (ii) Credit Agreement (the "Credit Agreement") dated December
21, 2000, as amended, by and between Secured Party and Debtor;

                  (iii) all other documents or instruments now or hereafter
evidencing, securing, guaranteeing and/or relating to the indebtedness evidenced
by the Note.

This Amended and Restated Security Agreement and all of the documents and
instruments referred to in this subparagraph (a), as the same may be amended or
replaced from time to time, are hereinafter collectively referred to as the
"Loan Documents."

         (b) All expenditures made or incurred by Secured Party to protect and
maintain the Collateral and to enforce its rights under this Amended and
Restated Security Agreement, as more fully set forth herein.

         (c) Any and all future advances made under the Note and/or any of the
other Loan Documents.

7. SECURITY INTEREST: Debtor hereby grants to Secured Party a continuing
security interest in the Collateral. The security interest granted herein is
given to secure payment and performance of the Obligations.

8. WARRANTIES AND REPRESENTATIONS: Debtor warrants and represents to Secured
Party that:

<PAGE>

         (a) Debtor is the sole owner of the Collateral free and clear of all
liens, security interests, adverse claims and encumbrances (other than the
security interest created by the Loan Documents), except as otherwise permitted
by Section 6.2 of the Credit Agreement.

         (b) No financing statement covering any of the Collateral is on file in
any public office, other than the financing statement evidencing the security
interest created hereby.

         (c) The execution and delivery of this Amended and Restated Security
Agreement will not violate any law, agreement or document governing Debtor or to
which Debtor is a party.

         (d) The Collateral will be used primarily for the purposes set forth in
Paragraph 5 above.

         (e) The principal place of business of Debtor is at its addresses
listed in Paragraph 1 above.

9. COVENANTS OF DEBTOR: Except as may otherwise be set forth in or allowed under
the terms of any of the other Loan Documents, Debtor covenants and agrees that
unless and until Secured Party expressly agrees in writing to another course of
action:

         (a) Debtor shall not sell, pledge, hypothecate, transfer, lease,
assign, abandon or otherwise dispose of any of the inventory or any interest
therein except in the ordinary course of business.

         (b) Debtor shall promptly notify Secured Party of any Event of Default
(as defined in Paragraph 10 hereof).

         (c) Debtor shall defend the Collateral against the claims and demands
of all persons.

         (d) Debtor shall, at any time upon demand of Secured Party, exhibit to
and allow inspection by Secured Party of records with respect to the Collateral
and shall, promptly upon request from Secured Party, deliver to Secured Party an
accounting as to the identity, location and value of the Collateral in such
detail as Secured Party shall reasonably require.

         (e) Secured Party, at its option, may discharge taxes, liens, security
interests and other encumbrances against the Collateral and may pay for the
maintenance and preservation thereof if not otherwise paid or performed by
Debtor. Debtor shall reimburse Secured Party on demand for any payments as made,
plus interest thereon at the Default Rate (as defined in the Credit Agreement)
from the date of such payment. Any such payments made by Secured Party, together
with interest thereon, shall be secured by the Collateral as provided herein and
by all of the other Loan Documents.

         (f) Debtor shall from time to time execute financing statements and
other documents in form satisfactory to Secured Party (and pay the cost of
filing or recording them in whatever public offices Secured Party deems
necessary) and perform such other acts as Secured Party may request to perfect
and maintain a valid security interest in the Collateral.

<PAGE>

         (g) Debtor shall not move its principal place of business or its books
and records relating to the Collateral without thirty (30) days prior written
notice thereof to Secured Party.

         (h) Debtor shall not change its name, its jurisdiction of organization
or otherwise do anything which would make the information set forth in the
financing statements relating to the Collateral materially misleading without
immediately notifying Secured Party of the same.

10. EVENTS OF DEFAULT: The happening of any of the following events or
conditions shall be a default under this Amended and Restated Security Agreement
(singularly, an "Event of Default" or collectively, "Events of Default"):

         (a) Breach or violation by Debtor of any covenant, term or condition
set forth herein not cured within the notice and grace period provided in
Article VII of the Credit Agreement; or

         (b) Default by Debtor under the Note or any of the other Loan Documents
not cured within any applicable notice or grace period specified therein; or

         (c) Any warranty, representation or statement of Debtor contained
herein, any of the other Loan Documents or otherwise made or furnished to
Secured Party by or on behalf of Debtor proves to have been false in any
material respect when made or furnished; or

         (d) The seizure or taking of any of the Collateral by any governmental
or similar authority or the issuance of a writ, order of attachment or
garnishment with respect thereto.

Any default under this Amended and Restated Security Agreement not cured within
the applicable grace or cure period, if any, shall be a default under each of
the other Loan Documents.

11. RIGHTS AND REMEDIES:

         (a) Upon the occurrence of any Event of Default, which Event of Default
has not been cured within the applicable grace or cure period, Secured Party
may, without further notice or demand, declare any of the Obligations
immediately due and payable and this Amended and Restated Security Agreement in
default, and thereafter, Secured Party shall have the remedies of a secured
party under the Uniform Commercial Code as then in effect in the State of
Colorado and all other rights and remedies at law or in equity available to
secured creditors in the State of Colorado. Proceeds of any disposition of the
Collateral shall be applied to the Obligations as specified in the Credit
Agreement.

         (b) During the time that Secured Party is in possession of the
Collateral, and to the extent permitted by law, Secured Party shall have the
right to hold, use, operate, manage and control all or any part of the
Collateral. Upon the occurrence of an Event of Default, Secured Party may notify
account debtors to make payment directly to Secured Party and collect and retain
all proceeds and other sums due or to become due with respect to the Collateral,
accounting only for the net proceeds arising from such use and charging against
receipts from such use all costs, expenses, charges, damage or loss by reason of
such use. Notwithstanding the foregoing, Secured Party shall also be entitled,
without further notice or demand and to the

<PAGE>

extent permitted by law, to have a receiver appointed to take charge of all or
any part of the Collateral, exercising all of the rights specified in the
immediately preceding sentence.

         (c) Debtor shall pay to Secured Party on demand all reasonable
out-of-pocket expenses, including, without limitation, reasonable attorneys'
fees and costs, incurred by Secured Party incidental to taking, holding,
collecting upon, selling and the like or otherwise dealing with the Collateral,
or incurred by Secured Party in otherwise enforcing any term or condition of
this Amended and Restated Security Agreement, together with interest thereon at
the default interest rate (as specified in the Credit Agreement), and all such
expenses and interest shall be secured by the Collateral as provided herein and
by all of the other Loan Documents securing all or any part of the indebtedness
evidenced by the Note.

         (d) Any and all statements of fact or other recitals made in any bill
of sale or assignment or other instrument evidencing any foreclosure sale
hereunder as to nonpayment of indebtedness or as to the occurrence of any
default, or as to Secured Party having declared all of such indebtedness to be
due and payable, or as to notice of time, place and terms of sale and of the
properties to be sold having been duly given by Secured Party, shall be taken as
prima facie evidence of the truth of the facts so stated and recited.

         (e) Secured Party may appoint or delegate any one or more persons as
agent to perform any act or acts necessary or incident to any sale of the
Collateral held by Secured Party, including the sending of notices and the
conduct of the sale, in the name and on behalf of Secured Party.

         (f) Nothing herein contained is intended, nor shall be construed, to
preclude Secured Party from pursuing any other remedy provided by law for the
collection or enforcement of any of the Obligations. Any and all rights and
remedies herein expressly conferred upon Secured Party shall be deemed
cumulative with, and not exclusive of, any other remedy conferred hereby, by the
other Loan Documents or by law or equity on Secured Party, and the exercise of
any one remedy shall not preclude the exercise of any other.

12. GENERAL:

         (a) Except for matters arising from the gross negligence or willful
misconduct of the Secured Party, its employees, officers or agents, Debtor
hereby indemnifies and holds harmless Secured Party, and its employees, officers
and agents, from and against any and all liabilities to third parties, losses
and damages which may be incurred, asserted or imposed upon them or any of them
as a result of or in connection with any use, operation, lease or consumption of
any of the Collateral or as a result of Secured Party's seeking to obtain
performance of any of the obligations due with respect to the Collateral.

         (b) No default shall be waived by Secured Party except in writing and
no waiver of any payment or other right under this Amended and Restated Security
Agreement shall operate as a waiver of any other payment or right.

         (c) Without affecting any obligations of Debtor under this Amended and
Restated Security Agreement and without prejudice to any of its rights
hereunder, Secured Party may, without notice or demand, renew, extend or grant
indulgences with respect to any of the

<PAGE>

Obligations, take or release any other collateral as security for any of the
Obligations, or add or release any guarantor, endorser, surety or other party to
any of the Obligations.

         (d) Debtor hereby waives diligence, presentment, protest, demand and
notice of every kind, as well as the right to require Secured Party to proceed
against any person liable for the payment or performance of any of the
Obligations or to foreclose upon, sell or otherwise realize upon or collect or
apply any other property, real or personal, securing any of the Obligations, as
a condition or prior to proceeding hereunder.

         (e) All notices, demands, requests or other communications to be sent
by one party to the other hereunder or required by law shall be in writing and
sent to the addresses of the parties specified herein.

         (f) Unless the context otherwise requires, all terms used herein which
are defined in the Uniform Commercial Code as in effect in the State of Colorado
shall have the meanings therein stated.

         (g) All of the rights and remedies of Secured Party under this Amended
and Restated Security Agreement shall inure to the benefit of its successors and
assigns. All obligations of Debtor hereunder shall be binding upon the
successors and assigns of Debtor.

         (h) This Amended and Restated Security Agreement may not be amended,
modified or otherwise changed except by a written instrument duly executed by
Debtor and Secured Party.

         (i) This Amended and Restated Security Agreement shall be construed
under and governed by the laws of the State of Colorado. The parties hereby
consent to the personal jurisdiction of the courts and the venue specified in
the Credit Agreement.

         (j) Time is of the essence of this Amended and Restated Security
Agreement and all of its provisions.

         (k) The headings of this Amended and Restated Security Agreement are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amended and Restated Security Agreement or any provisions hereof.

         (l) This Amended and Restated Security Agreement restates and replaces
in its entirety the Security Agreement dated December 21, 2000, as amended,
between Debtor and Secured Party.

<PAGE>

         DATED: June 25, 2002

                                 COLORADO MEDTECH, INC., a Colorado corporation

                                 By:     /s/ Gregory A. Gould
                                    -------------------------
                                 Name:  Gregory A. Gould
                                 Title: CFO

                                 CIVCO MEDICAL INSTRUMENTS CO., INC., an Iowa
                                 corporation

                                 By:     /s/ Peter J. Jensen
                                    -------------------------
                                 Name:  Peter J. Jensen
                                 Title: Secretary

                                 KEYBANK NATIONAL ASSOCIATION

                                 By:     /s/ Michelle K. Bushey
                                    ---------------------------
                                 Name:  Michelle K. Bushey
                                 Title: Vice President

<PAGE>

THIS AMENDED AND RESTATED PROMISSORY NOTE AMENDS AND RESTATES IN ITS ENTIRETY
THAT CERTAIN PROMISSORY NOTE DATED DECEMBER 21, 2000 IN THE ORIGINAL PRINCIPAL
AMOUNT OF $15,000,000.00 EXECUTED BY COLORADO MEDTECH, INC., CIVCO INSTRUMENTS
CO., INC., BIOMED Y2K, INC., AND CMED CATHETER AND DISPOSABLES TECHNOLOGY, INC.
TO THE ORDER OF KEYBANK NATIONAL ASSOCIATION.

                      AMENDED AND RESTATED PROMISSORY NOTE

$5,000,000.00                                                  Denver, Colorado
                                                                  June 25, 2002

         FOR VALUE RECEIVED, the undersigned, COLORADO MEDTECH, INC., a Colorado
corporation and CIVCO MEDICAL INSTRUMENTS CO., INC., an Iowa corporation
("collectively the Borrower"), whose address is 4801 N. 63rd Street, Boulder,
Colorado 80301, promise to pay, jointly and severally, to the order of KEYBANK
NATIONAL ASSOCIATION ("Lender"), at its office at 1675 Broadway, Suite 500,
Denver, Colorado 80202 (or at such other place as Lender shall designate in
writing), in lawful money of the United States of America, the principal sum of
Five Million Dollars ($5,000,000.00) or so much thereof as may be advanced by
Lender and remain unpaid from time to time, pursuant to the terms of that
certain Credit Agreement dated December 21, 2000, as amended, to which the
Borrower and Lender are parties (as the same may from time to time be amended or
supplemented, the "Credit Agreement"), together with interest on said principal
sum or such part thereof advanced by Lender, from the date of each advance made
by Lender (an "Advance") until repaid in full, at the rate and at the times set
forth in the Credit Agreement. The loan evidenced by this Note is a revolving
loan, whereby the Borrower may borrow, repay and reborrow the principal
indebtedness evidenced hereby.

         1. Credit Agreement. This Amended and Restated Promissory Note (the
"Note") is the Note referred to in the Third Amendment to Credit Agreement (of
even date) and is entitled to the benefits thereof. The proceeds of this Note
have been advanced for the uses specified in the Credit Agreement. Capitalized
terms used herein, unless otherwise defined herein, shall have the meanings
given them in the Credit Agreement.

         2. Interest and Payments. The outstanding principal balance of this
Note shall bear interest, from the date of each Advance made by Lender until
repaid in full, at a per annum rate of interest equal to the Base Rate plus the
Base Rate Margin, which interest shall be due and payable, quarterly in arrears,
as provided in the Credit Agreement. Upon the Maturity Date or earlier upon
termination of the Credit Agreement, the entire outstanding principal balance of
this Note, together with all accrued but unpaid interest thereon and all other
sums due hereunder, shall be due and payable in full. The Borrower shall have
the right to prepay the outstanding principal balance of this Note, together
with all accrued but unpaid interest thereon and all other sums due hereunder,
in full or in part, as set forth in the Credit Agreement. All payments of
principal, interest and any other sums on this Note due from the Borrower to
Lender shall be

<PAGE>

made to Lender in lawful money of the United States of America in the manner set
forth in the Credit Agreement.

         3. Application of Proceeds. All payments hereunder by Borrower shall be
applied by Lender:

            First, to the payment of all reimbursable expenses, liabilities and
advances made or incurred by Lender in connection herewith including reasonable
attorneys fees incurred in connection with any enforcement action taken with
respect to this Note;

            Second, to the payment of any other amounts due (other than
principal and interest) under this Note or the Credit Agreement;

            Third, to the payment of all interest accrued and unpaid on the
outstanding indebtedness; and

            Fourth, to the payment of the outstanding principal balance of the
outstanding indebtedness.

         4. Default. Time is of the essence hereof. The occurrence of any Event
of Default under the Credit Agreement shall be a default hereunder and, upon the
occurrence of any such default, the payment of all principal, interest and any
other sums due in accordance with the terms of this Note shall, at the option of
Lender, be accelerated and such principal, interest and other sums shall be
immediately due and payable without notice or demand, and Lender shall have the
option to foreclose or to require foreclosure of any or all liens and security
interests securing the payment hereof and/or to exercise any other rights and
remedies available to Lender hereunder or under the Credit Agreement. From and
after an Event of Default, the outstanding principal balance shall accrue
interest at the Default Rate.

         5. Governing Law. As additional consideration for the extension of
credit, Borrower understands and agrees that the loan evidenced by this Note is
made in the State of Colorado and the provisions hereof will be construed in
accordance with the laws of the State of Colorado. The parties consent to the
personal jurisdiction of the courts and the venue specified in the Credit
Agreement.

         6. Maximum Interest. The provisions of this Note are hereby expressly
limited so that in no event whatsoever, whether by reason of demand or
acceleration of the maturity of this Note or otherwise, shall the amount paid,
or agreed to be paid ("Interest"), to Lender for the use, forbearance or
retention of the money loaned hereunder exceed the maximum amount permissible
under applicable law. If, from any circumstance whatsoever, performance or
fulfillment of any provision of this Note shall, at the time of performance or
fulfillment of such provision shall be due, exceed the limit for Interest
prescribed by law, then ipso facto the obligation to be performed or fulfilled
shall be reduced to such limit and if, from any circumstance whatsoever, Lender
shall ever receive anything of value deemed Interest by applicable law in excess
of the maximum lawful amount, an amount equal to any excessive

<PAGE>

Interest shall be applied to the reduction of the principal (whether or not then
due) or at the option of Lender be paid over to the Borrower, and not to the
payment of Interest.

         7. Miscellaneous Provisions.

            (a) Borrower hereby waives demand for payment, presentment for
payment, protest, notice of protest, notice of dishonor, notice of nonpayment,
notice of acceleration of maturity, diligence in taking any action to collect
sums owing hereunder and all duty or obligation of Lender to effect, protect,
perfect, retain or enforce any security for the payment of this Note or to
proceed against any collateral before otherwise enforcing this Note.

            (b) This Note and each payment of principal and interest hereunder
shall be paid when due without deduction or setoff of any kind or nature or for
any costs whatsoever.

            (c) Borrower agrees to reimburse Lender upon demand for all
reasonable out-of-pocket expenses, including, without limitation, reasonable
attorneys' fees and costs, incurred in connection with Lender's collection of
payments due from Borrower hereunder.

            (d) Borrower agrees that Lender may from time to time extend the
maturity of this Note or the time any payment is due under this Note and may
accept further security or release security for the payment of this Note,
without in any way affecting any obligations of Borrower to Lender.

            IN WITNESS WHEREOF, Borrower has executed this Note to be effective
as of the day and year first-above written.

                                      COLORADO MEDTECH, INC., a Colorado
                                      corporation

                                      By:  /s/ Gregory A. Gould
                                         ------------------------------
                                      Name:   Gregory A. Gould
                                      Title:  CFO

                                      CIVCO MEDICAL INSTRUMENTS CO., INC., an
                                      Iowa corporation

                                      By:   /s/ Peter J. Jensen
                                         ------------------------------
                                      Name:  Peter J. Jensen
                                      Title: Secretary

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