Export-Import Bank Loan and Security Agreement - Silicon Valley Bank and InVision Technologies Inc.


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                             INVISION TECHNOLOGIES, INC.

                                  EXPORT-IMPORT BANK

                             LOAN AND SECURITY AGREEMENT

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     THIS EXPORT-IMPORT BANK LOAN AND SECURITY AGREEMENT (the "Exim 
Agreement") is entered into as of February 20, 1997, by and between SILICON 
VALLEY BANK ("Bank") and INVISION TECHNOLOGIES, INC. ("Borrower").

                                       RECITALS

     A.   Borrower wishes to obtain credit from Bank, and Bank wishes to 
     extend credit to Borrower.

     B.   Borrower and Bank desire in this Exim Agreement to set forth their 
agreement with respect to a working capital facility to be guaranteed by 
Export-Import Bank of the United States.

                                      AGREEMENT

     The parties agree as follows:

     1.   DEFINITIONS AND CONSTRUCTION

          1.1  DEFINITIONS.  As used in this Exim Agreement, the following 
terms shall have the following definitions:

               "ACCOUNTS" means all presently existing and hereafter arising 
accounts, contract rights, and all other forms of obligations owing to 
Borrower arising out of the sale or lease of goods (including, without 
limitation, the licensing of software and other technology) or the rendering 
of services by Borrower, whether or not earned by performance, and any and 
all credit insurance, guaranties, and other security therefor, as well as all 
merchandise returned to or reclaimed by Borrower and Borrower's Books 
relating to any of the foregoing.

               "ADVANCE" or "ADVANCES" means a cash advance under this Exim 
Agreement.

               "AFFILIATE" means, with respect to any Person, any Person that 
owns or controls directly or indirectly such Person, any Person that controls 
or is controlled by or is under common control with such Person, and each of 
such Person's senior executive officers, directors, and partners.

               "BORROWER AGREEMENT" means the Export-Import Bank of the 
United States Working Capital Guarantee Program Borrower Agreement between 
Borrower and Bank.

               "BORROWER'S BOOKS" means all of Borrower's books and records 
including: ledgers; records concerning Borrower's assets or liabilities, the 
Collateral, business operations or financial condition; and all computer 
programs, or tape files, and the equipment, containing such information.


              "BORROWING BASE" has the meaning set forth in Section 2.1 hereof.

                                          1.



               "BUSINESS DAY" means any day that is not a Saturday, Sunday, 
or other day on which banks in the State of California are authorized or 
required to close.

               "CLOSING DATE" means the date of this Agreement.

               "CODE" means the California Uniform Commercial Code.

               "COLLATERAL" means the property described on Exhibit A 
attached hereto.

               "CONTINGENT OBLIGATION" means, as applied to any Person, any 
direct or indirect liability, contingent or otherwise, of that Person with 
respect to (i) any indebtedness, lease, dividend, letter of credit or other 
obligation of another, including, without limitation, any such obligation 
directly or indirectly guaranteed, endorsed, co-made or discounted or sold 
with recourse by that Person, or in respect of which that Person is otherwise 
directly or indirectly liable; (ii) any obligations with respect to undrawn 
letters of credit issued for the account of that Person; and (iii) all 
obligations arising under any interest rate, currency or commodity swap 
agreement, interest rate cap agreement, interest rate collar agreement, or 
other agreement or arrangement designated to protect a Person against 
fluctuation in interest rates, currency exchange rates or commodity prices; 
provided, however, that the term "Contingent Obligation" shall not include 
endorsements for collection or deposit in the ordinary course of business.  
The amount of any Contingent Obligation shall be deemed to be an amount equal 
to the stated or determined amount of the primary obligation in respect of 
which such Contingent Obligation is made or, if not stated or determinable, 
the maximum reasonably anticipated liability in respect thereof as determined 
by such Person in good faith; provided, however, that such amount shall not 
in any event exceed the maximum amount of the obligations under the guarantee 
or other support arrangement.

               "COPYRIGHTS" means any and all copyright rights, copyright 
applications, copyright registrations and like protections in each work or 
authorship and derivative work thereof, whether published or unpublished and 
whether or not the same also constitutes a trade secret, now or hereafter 
existing, created, acquired or held.

               "CURRENT LIABILITIES" means, as of any applicable date, all 
amounts that should, in accordance with GAAP, be included as current 
liabilities on the consolidated balance sheet of Borrower and its 
Subsidiaries, as at such date, plus, to the extent not already included 
therein, all outstanding Advances made under this Agreement, including all 
Indebtedness that is payable upon demand or within one year from the date of 
determination thereof unless such Indebtedness is renewable or extendable at 
the option of Borrower or any Subsidiary to a date more than one year from 
the date of determination.

               "DAILY BALANCE" means the amount of the Obligations owed at 
the end of a given day.

               "DOMESTIC AGREEMENT" means that certain Loan and Security 
Agreement by and between Borrower and Bank dated as of even date herewith.

                                          2.



               "DOMESTIC LOAN DOCUMENTS" means the Domestic Agreement and the 
instruments and documents executed in connection with that Agreement.

               "ELIGIBLE FOREIGN INVENTORY" means Inventory purchased or 
manufactured by Borrower for resale located in the United States, other than 
Inventory that is excluded under the Borrower Agreement and this Exim 
Agreement.  Eligible Foreign Inventory shall not include the following:

               (a)  any Inventory which is not located in the United States;

               (b)  any demonstration Inventory or Inventory sold on 
consignment;

               (c)  any Inventory consisting of proprietary software;

               (d)  any Inventory which is damaged, obsolete, returned, 
defective, recalled or unfit for further processing;

               (e)  any Inventory which has been previously exported from the 
United States;

               (f)  any Inventory which constitutes defense articles or 
defense services;

               (g)  any Inventory which is to be incorporated into items 
destined for shipment to a country in which Exim Bank is legally prohibited 
from doing business;

               (h)  any Inventory which is to be incorporated into items 
destined for shipment to a country in which Exim Bank coverage is not 
available for commercial reasons, except to the extent such items are sold to 
such country on terms of a letter of credit confirmed by a bank acceptable to 
Exim Bank; and

               (i)  any Inventory which is to be incorporated into items 
whose sale would result in an Account that is not an Exim Eligible Foreign 
Account.

               "EQUIPMENT" means all present and future machinery, equipment, 
tenant improvements, furniture, fixtures, vehicles, tools, parts and 
attachments in which Borrower has any interest.

               "ERISA" means the Employment Retirement Income Security Act of
1974,
as amended, and the regulations thereunder.

               "EXIM BANK" means Export-Import Bank of the United States.

               "EXIM BANK EXPENSES" means all: reasonable costs or expenses 
(including reasonable attorneys' fees and expenses) incurred in connection 
with the preparation, negotiation, administration, and enforcement of the 
Loan Documents, including any costs incurred in relation

                                          3.




to opposing or seeking' to obtain relief from any stay or restructuring order 
prohibiting Bank from exercising its rights as a secured creditor, 
foreclosing upon or disposing of Collateral, or such related matters; fees 
that Bank pays to Exim Bank in consideration Of the issuance of the Exim 
Guarantee; and Bank's reasonable attorneys' fees and expenses incurred in 
amending, enforcing or defending the Loan Documents, whether or not suit is 
brought.

               "EXIM COMMITTED LINE" means Four Million Five Hundred Thousand 
Dollars ($4,500,000).

               "EXIM ELIGIBLE FOREIGN ACCOUNTS" means those Accounts payable 
in United States Dollars that arise in the ordinary course of Borrower's 
business from Borrower's sale of Eligible Foreign Inventory (i) with respect 
to which the account debtor is not a resident of the United States; (ii) that 
have been validly assigned and comply with all of Borrower's representations 
and warranties to Bank; and (iii) (A) that are supported by one or more 
letters of credit issued by a financial institution acceptable to Bank on 
terms acceptable to Bank and Exim Bank or (B) are Accounts on open account 
terms approved by Bank in its sole discretion on a case by case basis; 
provided, that standards of eligibility may be fixed and revised from time to 
time by Bank in Bank's reasonable judgment and upon notification thereof to 
the Borrower in accordance with the provisions hereof.  Exim Eligible Foreign 
Accounts shall not include the following:

               (a)  Accounts with a term in excess of ninety (90) days;

               (b)  Unless pre-approved by Bank in its sole discretion, 
Accounts that the account debtor has failed to pay within sixty (60) calendar 
days of the original due date of the invoice unless such Accounts are insured 
through Exim Bank export credit insurance for comprehensive commercial and 
political risk, or through Exim Bank approved private insurers for comparable 
coverage, in which case ninety, (90) calendar days shall apply;

               (c)  Accounts with respect to an account debtor, fifty percent 
(50%) of whose Accounts the account debtor has failed to pay within ninety 
(90) days of the original date of invoice;

               (d)  Accounts evidenced by a letter of credit until the date 
of shipment of the items covered by the subject letter of credit;

               (e)  Accounts with respect to which the account debtor is an 
Affiliate of Borrower;

               (f)  Accounts with respect to which the account debtor is 
located in a country in which Exim Bank is legally prohibited from doing 
business;

               (g)  Accounts with respect to which the account debtor is 
located in a country in which Exim Bank coverage is not available for 
commercial reasons;

                                          4.



               (h)  Accounts with respect to which Borrower is liable to the 
account debtor for goods sold or services rendered by the account debtor to 
Borrower, but only to the extent of Borrower's liability to such account 
debtor;

               (i)  Accounts with respect to which the account debtor 
disputes liability or makes any claim with respect thereto (but only to the 
extent of the amount subject to such dispute or claim), or is subject to any 
Insolvency Proceeding, or becomes insolvent, or goes out of business;

               (j)  Accounts generated by the sale of products purchased for 
military purposes;

               (k)  Accounts generated by sales of Inventory which 
constitutes defense articles or defense services;

               (i)  Accounts payable in currency other than Dollars;

               (m)  Accounts which are due and owing and the collection of 
which must be made outside the United States;

               (n)  Accounts generated by the rendering of maintenance 
services;

               (o)  Advance deposits or payments made by account debtors;

               (p)  Accounts the collection of which Bank or Exim Bank 
determines in its reasonable judgment to be doubtful; and

               (p)  Accounts that are excluded from the Borrowing Base under 
the Borrower Agreement.

               "EXIM GUARANTEE" means that certain Master Guarantee Agreement 
or other agreement, as amended from time to time, the terms of which are 
incorporated by reference into this Exim Agreement, pursuant to which Exim 
Bank guarantees Borrower's obligations under this Exim Agreement.

               "EXIM LOAN DOCUMENTS" means, collectively, this Exim 
Agreement, the Borrower Agreement, any note or notes executed by Borrower, 
and any other agreement entered into between Borrower and Bank in connection 
with this Exim Agreement, all as amended or extended from time to time.

               "GAAP" means generally accepted accounting principles as in 
effect from time to time.

               "INDEBTEDNESS" means (a) all indebtedness for borrowed money 
or the deferred purchase price of property or services, including without 
limitation reimbursement and

                                          5.



other obligations with respect to surety bonds and letters of credit, (b) all 
obligations evidenced by notes, bonds, debentures or similar instruments, (c) 
all capital lease obligations and (d) all Contingent Obligations.

               "INSOLVENCY PROCEEDING" means any proceeding commenced by or 
against any person or entity under any provision of the United States 
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency law, 
including assignments for the benefit of creditors, formal or informal 
moratoria, compositions, extension generally with its creditors, or 
proceedings seeking reorganization, arrangement, or other relief.

               "INTELLECTUAL PROPERTY COLLATERAL" means

               (a)  Copyrights, Trademarks and Patents;

               (b)  Any and all trade secrets, and any and all intellectual 
property rights in computer software and computer software products now or 
hereafter existing, created, acquired or held;

               (c)  Any and all design rights which may be available to 
Borrower now or hereafter existing, created, acquired or held;

               (d)  Any and all claims for damages by way of past, present 
and future infringement of any of the rights included above, with the right, 
but not the obligation, to sue for and collect such damages for said use or 
infringement of the intellectual property rights identified above;

               (e)  All licenses or other rights to use any of the 
Copyrights, Patents or Trademarks, and all license fees and royalties arising 
from such use to the extent permitted by such license or rights;

               (f)  All amendments, renewals and extensions of any of the 
Copyrights, Trademarks or Patents; and

               (g)  All proceeds and products of the foregoing, including 
without limitation all payments under insurance or any indemnity or warranty 
payable in respect of any of the foregoing.

               "INVENTORY" means all present and future inventory in which 
Borrower has any interest, including merchandise, raw materials, parts, 
supplies, packing and shipping materials, work in process and finished 
products intended for sale or lease or to be furnished under a contract of 
service, of every kind and description now or at any time hereafter owned by 
or in the custody or possession, actual or constructive, of Borrower, 
including such inventory as is temporarily out of its custody or possession 
or in transit and including any returns upon any accounts or other proceeds, 
including insurance proceeds, resulting from the sale or

                                          6.



disposition of any of the foregoing and any documents of title representing 
any of the above, and Borrower's Books relating to any of the foregoing,.

               "INVESTMENT" means any beneficial ownership of (including 
stock, partnership interest or other securities) any Person, or any loan, 
advance or capital contribution to any Person.

               "IRC" means the Internal Revenue Code of 1986, as amended, and 
the regulations thereunder.

               "LETTERS OF CREDIT" means letters of credit issued pursuant to 
Section 2.1.1.

               "LIEN" means any mortgage, lien, deed of trust, charge, 
pledge, security interest or other encumbrance.

               "LOAN DOCUMENTS" means, collectively, this Agreement, any note 
or notes executed by Borrower, and any other agreement entered into between 
Borrower and Bank in connection with this Agreement, all as amended or 
extended from time to time.

               "MATERIAL ADVERSE EFFECT" means a material adverse effect on 
(i) the business operations or condition (financial or otherwise) of Borrower 
and its Subsidiaries taken as a whole or (ii) the ability of Borrower to 
repay the Obligations or otherwise perform its obligations under the Loan 
Documents.

               "MATURITY DATE" means the day before the first anniversary of 
the Closing Date.

               "NEGOTIABLE COLLATERAL" means all of Borrower's present and 
future letters of credit of which it is 'a beneficiary, notes, drafts, 
instruments, securities, documents of title, and chattel paper, and 
Borrower's Books relating to any of the foregoing.

               "OBLIGATIONS" means all debt, principal, interest, Bank 
Expenses and other amounts owed to Bank by Borrower pursuant to this 
Agreement or any other agreement, whether absolute or contingent, due or to 
become due, now existing or hereafter arising, including any interest that 
accrues after the commencement of an Insolvency Proceeding and including any 
debt, liability, or obligation owing from Borrower to others that Bank may 
have obtained by assignment or otherwise.

               "PATENTS" means all patents, patent applications and like 
protections including without limitation improvements, divisions, 
continuations, renewals, reissues, extensions and continuations-in-part of 
the same.

               "PERIODIC PAYMENTS" means all installments or similar 
recurring payments that Borrower may now or hereafter become obligated to pay 
to Bank pursuant to the terms and

                                          7.



provisions of any instrument, or agreement now or hereafter in existence 
between Borrower and Bank.

               "PERMITTED INDEBTEDNESS" MEANS:

               (a)  Indebtedness of Borrower in favor of Bank arising under 
this Agreement or any other Loan Document;

               (b)  Indebtedness existing on the Closing Date and disclosed 
in the Schedule;

               (c)  Subordinated Debt;

               (d)  Indebtedness to trade creditors incurred in the ordinary 
course of business;

               (e)  Leases of Equipment pursuant to sale-leaseback 
transactions, provided that sales of such leased-back equipment shall not 
exceed, in the aggregate, Two Million Dollars ($2,000,000)in any fiscal year;

               (f)  Indebtedness secured by Permitted Liens;

               (g)  Capital leases or indebtedness incurred solely to 
purchase equipment which is secured in accordance with clause (c) of 
"Permitted Liens" below and is not in excess of the lesser of the purchase 
price of such equipment or the fair market value of such equipment on the 
date of acquisition;

               (h)  Extensions, refinancings, modifications, amendments and 
restatements of any of items of Permitted Indebtedness (a) through (g) above, 
provided that the principal amount thereof is not increased or the terms 
thereof are not modified to impose more burdensome terms upon Borrower or its 
Subsidiary, as the case may be.

               "PERMITTED INVESTMENT" means:

               (a)  Investments existing on the Closing Date disclosed in the 
Schedule; and

               (b)  (i) marketable direct obligations issued or 
unconditionally guaranteed by the United States of America or any agency or 
any State thereof maturing within one (1) year from tile date of acquisition 
thereof, (ii) commercial paper maturing no more than one (1) year from the 
date of creation thereof and currently having the highest rating obtainable 
from either Standard & Poor's Corporation or Moody's Investors Service, Inc., 
and (iii) certificates of deposit maturing no more than one (1) year from the 
date of investment therein issued by Bank;

                                          8.



               (c)  Investments consisting of notes receivable of, or prepaid 
royalties and other credit extensions to, customers and suppliers who are not 
Affiliates, in the ordinary course of business; provided that this paragraph 
(c) shall not apply to Investments by Borrower in any Subsidiary;

               (d)  Investments consisting of the endorsement of negotiable 
instruments for deposit or collection or similar transaction in the ordinary 
course of business;

               (e)  Investments (including debt obligations) received in 
connection with the bankruptcy or reorganization of customers or suppliers 
and in settlement of delinquent obligations of, and other disputes with, 
customers or suppliers arising in the ordinary course of business; and

               (f)  Investments consisting of (i) compensation of employees, 
officers and directors of Borrower or its Subsidiaries so long as the Board 
of Directors of Borrower determines that such compensation is in the best 
interests of Borrower, (ii) travel advances, employee relocation loans and 
other employee loans and advances in the ordinary course of business, (iii) 
loans to employees, officers or directors relating to the purchase of equity 
securities of Borrower or its Subsidiaries pursuant to employee stock 
purchase plans or agreements approved by Borrower's Board of Directors in an 
aggregate amount not in excess of Two Hundred Fifty Thousand Dollars 
($250,000) outstanding at any time; (iv) other loans to officers and 
employees approved by the Board of Directors in an aggregate amount not in 
excess of Two  Hundred Fifty Thor, sand Dollars ($250,000) outstanding at any 
time; and

               (g)  Other Investments (including the creation of any 
Subsidiary) aggregating not in excess of Two Hundred Fifty Thousand Dollars 
($250,000) at any time.

               "PERMITTED LIENS" means the following:

               (a)  Any Liens existing on the Closing Date and disclosed in 
the Schedule or arising under this Agreement or the other Loan Documents;

               (b)  Liens for taxes, fees, assessments or other governmental 
charges or levies, either not delinquent or being contested in good faith by 
appropriate proceedings, PROVIDED the same have no priority over any of 
Bank's security interests;

               (c)  Liens (i) upon or in any equipment acquired or held by 
Borrower or any of its Subsidiaries to secure the purchase price of such 
equipment or indebtedness incurred solely for the purpose of financing the 
acquisition of such equipment, or (ii) existing on such equipment at the time 
of its acquisition, PROVIDED that the Lien is confined solely to the property 
so acquired and improvements thereon, and the proceeds of such equipment;

               (d)  Liens on Equipment leased by Borrower or any Subsidiary 
pursuant to an operating or capital lease in the ordinary course of business 
(including proceeds thereof and accessions thereto) incurred solely for the 
purpose of financing the lease of such Equipment

                                          9.



(including Liens pursuant to leases permitted pursuant to Section 7.1 and 
Liens arising from UCC financing statements regarding leases permitted by 
this Agreement);

               (e)  Leases or subleases and licenses or sublicenses granted 
to others in the ordinary course of Borrower's business not interfering in 
any material respect with the business of Borrower and its Subsidiaries taken 
as a whole, and any interest or title of a lessor, licensor or under any 
lease or license provided that such leases, subleases, licenses and 
sublicenses do not prohibit the grant of the security interest granted 
hereunder;

               (f)  Liens arising from judgments, decrees or attachments in 
circumstances not constituting an Event of Default under Section 8.8;

               (g)  Easements, reservations, rights-of-way, restrictions, 
minor defects or irregularities in title and other similar charges or 
encumbrances affecting real property not constituting a Material Adverse 
Effect;

               (h)  Liens in favor of customs and revenue authorities arising 
as a matter of law to secure payments of customs duties in connection with 
the importation of goods;

               (i)  Liens that are not prior to the Lien of Bank which 
constitute rights of set-off of a customary nature or banker's Liens with 
respect to amounts on deposit, whether arising by operation of law or by 
contract, in connection with arrangement entered in to with banks in the 
ordinary course of business; and

               (j)  Liens incurred in connection with the extension, renewal 
or refinancing of the indebtedness secured by Liens of the type described in 
clauses (a) through (c) above, PROVIDED that any extension, renewal or 
replacement Lien shall be limited to the property encumbered by the existing 
Lien and the principal amount of the indebtedness being extended, renewed or 
refinanced does not increase.

               "PERSON" means any individual, sole proprietorship, 
partnership, limited liability company, joint venture, trust, unincorporated 
organization, association, corporation, institution, public benefit 
corporation, firm, joint stock company, estate, entity or governmental agency.

               "PRIME RATE" means the variable rate of interest, per annum, 
most recently announced by Bank, as its "prime rate," whether or not such 
announced rate is the lowest rate available from Bank.

               "QUICK ASSETS" means, at any date as of which the amount 
thereof shall be determined, the consolidated cash, cash-equivalents, 
accounts receivable and investments, with maturities not to exceed 90 days, 
of Borrower determined in accordance with GAAP.

               "RESPONSIBLE OFFICER" means each of the Chief Executive 
Officer, the Chief Financial Officer and the Controller of Borrower.

                                         10.



               "REVOLVING FACILITY" means the facility under which Borrower 
may request Bank to issue cash advances and letters of credit, as specified 
in Sections 2.1 and 2.1.1 hereof.

               "SCHEDULE" means the schedule of exceptions attached hereto, 
if any.

               "SUBORDINATED DEBT" means any debt incurred by Borrower that 
is subordinated to the debt owing by Borrower to Bank on terms acceptable to 
Bank (and identified as being such by Borrower and Bank).

               "SUBSIDIARY" means any corporation or partnership in which (i) 
any general partnership interest or (ii) more than 50% of the stock of which 
by the terms thereof ordinary voting power to elect the Board of Directors, 
managers or trustees of the entity shall, at the time as of which any 
determination is being made, be owned by Borrower, either directly or through 
an Affiliate.

               "TANGIBLE NET WORTH" means at any date as of which the amount 
thereof shall be determined, the consolidated total assets of Borrower and 
its Subsidiaries MINUS, without duplication, (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, and (c) all 
reserves not already deducted from assets, and (ii) Total Liabilities.

               "TOTAL LIABILITIES" means at any date as of which the amount 
thereof shall be determined, all obligations that should, in accordance with 
GAAP be classified as liabilities on the consolidated balance sheet of 
Borrower, including in any event all Indebtedness, but specifically excluding 
Subordinated Debt.

               "TRADEMARKS" means any trademark and servicemark rights, 
whether registered or not, applications to register and registrations of the 
same and like protections, and the entire goodwill of the business of 
Assignor connected with and symbolized by such trademarks.

          1.2  ACCOUNTING TERMS.  All accounting terms not specifically 
defined herein shall be construed in accordance with GAAP and all 
calculations made hereunder shall be made in accordance with GAAP.  When used 
herein, the terms "financial statements" shall include the notes and 
schedules thereto.

     2.   LOAN AND TERMS OF PAYMENT

          2.1  REVOLVING ADVANCES.  Subject to the terms and conditions o f 
this Exim Agreement, Bank agrees to make Advances to Borrower in an amount 
not to exceed the lowest of (i) the Exim Committed Line minus the face amount 
of any issued and outstanding Letters of Credit (including drawn but 
unreimbursed Letters of Credit), (ii) the Borrowing Base minus the face 
amount of any issued and outstanding Letters of Credit (including drawn but 
unreimbursed Letters of Credit) or (iii) Three Million Dollars ($3,000,000). 
For purposes of

                                         11.



this Exim Agreement "Borrowing Base" shall mean an amount equal to (i) ninety 
percent (90%) of the Exim Eligible Foreign Accounts and (ii) seventy percent 
(70%) of Eligible Foreign Inventory, minus the amount of any advance payments 
or deposits made by Borrower's account debtors.

     To evidence the Advances, Borrower shall execute and deliver to Bank on 
the date hereof a promissory note (the "Note") in substantially the form 
attached hereto as Exhibit B.

     Whenever Borrower desires an Advance, Borrower will notify Bank by 
facsimile transmission or telephone no later than 3:00 p.m.  California time, 
on the Business Day that the Advance is to be made.  Each such notification 
shall be promptly confirmed by a Payment/Advance Form in substantially the 
form of Exhibit C hereto.  In addition to the procedure set forth in the 
preceding sentence, Bank is authorized to make Advances under this Exim 
Agreement, based upon written instructions received from a Responsible 
Officer or without instructions if in Bank's discretion such Advances are 
necessary to meet Obligations which have become due and remain unpaid.  Bank 
will credit the amount of Advances made under this Section 2.1 to Borrower's 
deposit account.  Amounts borrowed pursuant to this Section 2.1 may be repaid 
and re-borrowed at any time during the term of this Exim Agreement so long as 
no Event of Default has occurred and is continuing.

               2.1.1  LETTERS OF CREDIT.

                    (a)  Subject to the terms and conditions of this Exim 
Agreement, Bank agrees to issue or cause to be issued standby Letters of 
Credit for the account of Borrower in an aggregate face amount not to exceed 
(i) the lesser of the Exim Committed Line or the Borrowing Base minus (ii) 
the then outstanding principal balance of the Advances.  Each Letter of 
Credit shall have an expiry date no later than the Maturity Date.  All 
Letters of Credit shall be, in form and substance, acceptable to Bank in its 
sole discretion and shall be subject to the terms and conditions of Bank's 
form of application:and letter of credit agreement.  All amounts actually 
paid by Bank in respect of a Letter of Credit shall, when paid, constitute an 
Advance under this Exim Agreement.

                    (b)  The obligation of Borrower to immediately reimburse 
Bank for drawings made under Letters of Credit shall be absolute, 
unconditional and irrevocable, and shall be performed strictly in accordance 
with the terms of this Exim Agreement and such Letters of Credit, under all 
circumstances whatsoever.  Borrower shall indemnify, defend and hold Bank 
harmless from any loss, cost, expense or liability, including, without 
limitation, reasonable attorneys' fees, arising out of or in connection with 
any letters of credit issued for the account of Borrower.

               2.1.2  LETTER OF CREDIT REIMBURSEMENT; RESERVE.

                    (a)  Borrower may request that Bank issue a Letter of 
Credit payable in a currency other than United States Dollars.  If a demand 
for payment is made under any such letter of credit, Bank shall treat such 
demand as an advance to Borrower of the 

                                         12.




equivalent of the amount thereof (plus cable charges) in United States 
currency at the then prevailing rate of exchange in San Francisco, 
California, for sales of that other currency for cable transfer to the 
country of which it is the currency.

                    (b)  Upon the issuance of any Letter of Credit payable in 
a currency other than United States Dollars, Bank shall create a reserve 
under the Exim Committed Line for Letters of Credit against fluctuations in 
currency exchange rates, in an amount equal to twenty percent (20%)of the 
face amount of such Letter of Credit. The amount of such reserve may be 
amended by Bank from time to time to account for fluctuations in the exchange 
rate.  The availability of funds under the Exim Committed Line shall be 
reduced by the amount of such reserve for so long as such Letter of Credit 
remains outstanding.

          2.2  OVERADVANCES.  If, at any time or for any reason, the amount 
of Obligations owed by Borrower to Bank pursuant to Section 2.1 of this Exim 
Agreement is greater than the lesser of (i) the Exim Committed Line, or (ii) 
the Borrowing Base, Borrower shall immediately pay to Bank, in cash, the 
amount of such excess.

          2.3  INTEREST RATES, PAYMENTS, AND CALCULATIONS.

               (A)  INTEREST RATE.  Except as provided in Section 2.3(b), any 
Advances under this Exim Agreement shall bear interest, on the average Daily 
Balance, at a rate equal to three quarters of a percentage point (0.75%) 
above the Prime Rate.

               (B)  DEFAULT RATE.  All Obligations shall bear interest, from 
and after the occurrence and during the continuance of an Event of Default, 
at a rate equal to five (5) percentage points above the rate that applied 
immediately prior to the occurrence of the Event of Default.

               (C)  PAYMENTS.  Interest hereunder shall be due and payable in 
arrears on the nineteenth calendar day of each month during the term hereof.  
Bank shall, at its option, charge such interest, all Exim Bank Expenses, and 
all Periodic Payments against Borrower's deposit account or against the Exim 
Committed Line, in which case those amounts shall thereafter accrue interest 
at the rate then applicable hereunder.  Any interest not paid when due shall 
be compounded by becoming a part of the Obligations, and such interest shall 
thereafter accrue interest at the rate then applicable hereunder.

               (D)  COMPUTATION.  In the event the Prime Rate is changed from 
time to time hereafter, the applicable rate of interest hereunder shall be 
increased or decreased contemporaneously with such change by an amount equal 
to such change in the Prime Rate.  All interest chargeable under the Exim 
Loan Documents shall be computed on the basis of a three hundred sixty (360)  
day year for the actual number of days elapsed.

          2.4  CREDITING PAYMENTS.  The receipt by Bank of any wire transfer 
of funds, check, or other item of payment shall be immediately applied to 
conditionally reduce Obligations, but shall not be considered  a payment on 
account unless such wire transfer is of

                                         13.



immediately available federal funds and is made to the appropriate deposit 
account of Bank or unless and until such check or other item of payment is 
honored when presented for payment. Notwithstanding anything to the contrary 
contained herein, any payment (other than a wire transfer of immediately 
available funds) received by Bank after 12:00 noon California time shall be 
deemed to have been received by Bank as of the opening of business on the 
immediately following Business Day.

          2.5  FEES.  Borrower shall pay to bank the following fees:

               (A)  FINANCIAL EXAMINATION AND APPRAISAL FEES.  Bank's 
customary fees and out-of-pocket expenses for Bank's initial audit of 
Borrower's Accounts and Inventory, and for each subsequent appraisal of 
Collateral and financial analysis and examination of Borrower performed from 
time to time by Bank or its agents;

               (B)  EXIM FEE.  A facility fee equal to one and one-half 
percent (1.5%) per annum of the Exim Committed Line, which fee shall be due 
and fully earned upon Bank's receipt of the Exim Guarantee.

               (C)  EXIM BANK EXPENSES.  On the Closing Date, Exim Bank 
Expenses incurred through the Closing Date and, after the Closing Date, all 
Exim Bank Expenses as they become due.

          2.6  INCREASED COSTS.  In case any law, regulation, treaty or 
official directive or the interpretation or application thereof by any court 
or any governmental authority charged with the administration thereof or the 
compliance with any guideline or request of any central bank or other 
governmental authority (whether or not having the force of law):

               (a)  subjects Bank to any tax with respect to payments of 
principal or interest or any other amounts payable hereunder by Borrower or 
otherwise with respect to the transactions contemplated hereby (except for 
taxes on the overall net income of Bank imposed by the United States of 
America or any political subdivision thereof); or

               (b)  imposes, modifies or deems applicable any deposit 
insurance, reserve, special deposit or similar requirement against assets 
held by, or deposits in or for the account of, or loans by, Bank; or

               (c)  imposes upon Bank any other condition with respect to 
their performance under this Exim Agreement,

and the result of any of the foregoing is to increase the cost to Bank, 
reduce the income receivable by Bank or impose any expense upon Bank with 
respect to any loans, Bank shall notify Borrower thereof.  Borrower agrees to 
pay to Bank the amount of such increase in cost, reduction in income or 
additional expense as and when such cost, reduction or expense is incurred or 
determined, upon presentation all in reasonable detail by Bank of a statement 
in the amount and setting forth Bank's calculation thereof, which statement 
shall be deemed true and

                                         14.



correct absent manifest error; provided, however, that Borrower shall not be 
liable for any such amount attributable to any period prior to the date of 
hundred eighty (180) days prior to the date of such statement.

          2.7  TERM.  Subject to Section 13.6, this Exim Agreement shall 
become effective once duly executed and authorized by Borrower and Bank and 
shall continue in full force and effect for a term ending on the Maturity 
Date, on which date all Obligations shall become immediately due and payable. 
 Notwithstanding the foregoing, Bank shall have the right to terminate this 
Exim Agreement immediately and without notice upon the occurrence of an Event 
of Default and Borrower shall have the right to terminate this Exim Agreement 
immediately upon payment in full of its Obligations then outstanding 
hereunder. Notwithstanding any termination of this Exim Agreement, all of 
Bank's security interest in all of the Collateral and all of the terms and 
provisions of this Exim Agreement shall continue in full force and effect 
until all Obligations have been paid and performed in full, and no 
termination shall impair any right or remedy of Bank, nor shall any such 
termination relieve Borrower of any Obligation to Bank until all of the 
Obligations have been paid and performed in full.

          2.8  USE OF PROCEEDS.  Borrower will use the proceeds of Advances 
only for the purposes specified in the Borrower Agreement.  Borrower shall 
not use the proceeds of the Advances for any purpose prohibited by the 
Borrower Agreement.

     3.   CONDITIONS OF LOANS

          3.1  CONDITIONS PRECEDENT TO INITIAL ADVANCE.  The obligation of 
Bank to make the initial Advance or issue the initial Letter of Credit is 
subject to the condition precedent that Bank shall have received, in form and 
substance satisfactory to Bank, the following:

               (a)  this Exim Agreement, the Borrower Agreement and the Note, 
each duly executed by Borrower;

               (b)  a certificate of the secretary of Borrower with respect 
to incumbency and resolutions authorizing the execution and delivery of this 
Exim Agreement;

               (c)  an Intellectual Property Security Agreement;

               (d)  the Exim Guarantee;

               (e)  a financing statement;

               (f)  payment of the fees and Exim Bank Expenses then due and 
specified in Section 2.5 hereof;

               (g)  insurance certificate;

                                         15.



               (h)  documents and agreements as specified in Section 3.1 of 
the Domestic Agreement; and

               (i)  such other documents, and completion of such other 
matters, as Bank may deem reasonably necessary or appropriate.

          3.2  CONDITIONS PRECEDENT TO ALL ADVANCES.  The obligation of Bank 
to make each Advance, including the initial Advance, and to issue each Letter 
of Credit is further subject to the following conditions:

               (a)  timely receipt by Bank of the Payment/Advance Form as 
provided in Section 2.1;

               (b)  timely receipt by Bank of a copy of the executed firm 
written export purchase order relating to the requested Advance, the payment 
terms of which shall be acceptable to Bank;

               (c)  timely receipt by Bank of an Export Order as defined in 
the Borrower Agreement and Borrowing Base Certificate current within five (5) 
Business Days;

               (d)  the Exim Guarantee shall be in full force and effect; and

               (e)  the representations and warranties contained in Section 5 
hereof shall be true and accurate in all material respects on and as of the 
date of such Payment/Advance Form and on the effective date of each Advance 
as though made at and as of each such date (except to the extent they relate 
specifically to an earlier date, in which case such representations and 
warranties shall continue to have been true and accurate as of such date), 
and no Event of Default shall have occurred and be continuing, or would 
result from such Advance.

     The making of each Advance and issuance of each Letter of Credit shall 
be deemed to be a representation and warranty by Borrower on the date of such 
Advance as to the accuracy of the facts referred to in subsection (e) of this 
Section 3.2.

     4.   CREATION OF SECURITY INTEREST

          4.1  GRANT OF SECURITY INTEREST.  Borrower hereby grants to Bank a 
continuing security interest in all presently existing and hereafter acquired 
or arising Collateral in order to secure prompt repayment of any and all 
Obligations and in order to secure prompt performance by Borrower of each of 
its covenants and duties under the Exim Loan Documents. As long as an Event 
of Default has not occurred and is continuing, upon (i) Borrower's 
achievement of three (3) consecutive quarters of minimum net profit of at 
least $1, and (ii) Borrower's receipt of cash proceeds of at least 
$16,000,000 from the issuance of its equity securities after the date hereof, 
Bank shall release its security interest in Intellectual Property Collateral, 
and from and after such release, the Intellectual Property Collateral shall 
not constitute "Collateral" for purposes of the Exim Loan Documents.

                                         16.



          4.2  DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED.  Borrower shall 
from time to time execute and deliver to Bank, at the request of Bank, all 
financing statements and other documents that Bank may reasonably request, in 
form satisfactory to Bank, to perfect and continue perfected Bank's security 
interests in the Collateral and in order to fully consummate all of the 
transactions contemplated under the Exim Loan Documents.

          4.3  RIGHT TO INSPECT.  Each of Bank and Exim Bank (through any of 
their respective officers, employees, or agents) shall have the right, upon 
reasonable prior notice, from time to time during Borrower's usual business 
hours, to inspect Borrower's Books, facilities and activities, and to check, 
test, and appraise the Collateral in order to verify Borrower's financial 
condition or the amount, condition of, or any other matter relating to, the 
Collateral.  Bank shall conduct semi-annual accounts receivable audits and 
physical inspections of the Inventory, the results of which audits shall be 
satisfactory to Bank. Borrower will cause its officers and employees to give 
their full cooperation and assistance in connection therewith.

     5.   REPRESENTATIONS AND WARRANTIES

     Borrower represents, warrants and covenants as follows:

          5.1  DUE ORGANIZATION AND QUALIFICATION.  Borrower and each 
Subsidiary is a corporation duly existing and in good standing under the laws 
of its state of incorporation and qualified and licensed to do business in, 
and is in good standing in, any state in which the conduct of its business or 
its ownership of property requires that it be so qualified, except for states 
as to which any failure to so qualify would not have a Material Adverse 
Effect.

          5.2  DUE AUTHORIZATION: NO CONFLICT.  The execution, delivery, and 
performance of the Exim Loan Documents are within Borrower's powers, have 
been duly authorized, and are not in conflict with nor constitute a breach of 
any provision contained in Borrower's Articles of Incorporation or Bylaws, 
nor will .they constitute an event of default under any material agreement to 
which Borrower is a party or by which Borrower is bound. Borrower is not in 
default under any material agreement to which it is a party or by which it is 
bound, which default could have a Material Adverse Effect.

          5.3  NO PRIOR ENCUMBRANCES.  Borrower has good and indefeasible 
title to the Collateral, free and clear of Liens, except for Permitted Liens.

          5.4  BONA FIDE ELIGIBLE-ACCOUNTS.  The Exim Eligible Foreign 
Accounts are bona fide existing obligations.  The property giving rise to 
such accounts has been delivered to the account debtor or to the account 
debtor's agent for immediate shipment to and unconditional acceptance by the 
account debtor.  Borrower has not received notice of actual or imminent 
Insolvency Proceeding of any account debtor that is included in any Borrowing 
Base Certificate as an Exim Eligible Foreign Account.

          5.5  MERCHANTABLE INVENTORY.  All Inventory is in all material 
respects of good and marketable quality, free from all material defects.

                                         17.



          5.6  INTELLECTUAL PROPERTY.  Borrower is the sole owner of the 
presently registered Intellectual Property Collateral, except for 
non-exclusive licenses granted by Borrower to its customers in the ordinary 
course of business.  Each of the registered Patents is valid and enforceable, 
and no part of the Intellectual Property Collateral has been judged invalid 
or unenforceable, in whole or in part, and no claim has been made that any 
part of the intellectual Property Collateral violates the rights of any third 
party.  Except for and upon the filing with the United States Patent and 
Trademark Office with respect to the Patents and Trademarks and the Register 
of Copyrights with respect to the Copyrights necessary to perfect the 
security interests created hereunder, and except as has been already made or 
obtained, no authorization, approval or other action by, and no notice to or 
filing with, any United States governmental authority or United States 
regulatory body is required either (i) for the grant by Borrower of the 
security interest granted hereby or for the execution, delivery or 
performance of Loan Documents by Borrower in the United States or (ii) for 
the perfection in the United States or the exercise by Bank of its rights and 
remedies hereunder.

          5.7  NAME: LOCATION OF CHIEF EXECUTIVE OFFICE.  Except as disclosed 
in the Schedule, Borrower has not done business under any name other than 
that specified on the signature page hereof.  The chief executive office of 
Borrower is located at the address indicated in Section 11 hereof.

          5.8  LITIGATION.  Except as set forth in the Schedule, there are no 
actions or proceedings pending by or against Borrower or any Subsidiary 
before any court or administrative agency in which an adverse decision could 
have a Material Adverse Effect or a material adverse effect on Borrower's 
interest or Bank's security interest in the Collateral. Borrower does not 
have knowledge of any such pending or threatened actions or proceedings.

          5.9  NO MATERIAL ADVERSE CHANGE IN FINANCIAL STATEMENTS.  All 
consolidated financial statements related to Borrower and any Subsidiary that 
have been delivered by Borrower to Bank fairly present in all material 
respects Borrower's consolidated financial condition as of the date thereof 
and Borrower's consolidated results of operations for the period then ended.  
There has not been a material adverse change in the consolidated financial 
condition of Borrower since the date of the most recent of such financial 
statements submitted to Bank.

          5.10 SOLVENCY.  Borrower is solvent and able to pay its debts 
(including trade debts) as they mature.

          5.11 REGULATORY COMPLIANCE.  Borrower and each Subsidiary has met 
the minimum funding requirements of ERISA with respect to any employee 
benefit plans subject to ERISA.  No event has occurred resulting from 
Borrower's failure to comply with ERISA that is reasonably likely to result 
in Borrower's incurring any liability that could have a Material Adverse 
Effect.  Borrower is not an "investment company" or a company "controlled" by 
an "investment company" within the meaning of the Investment Company Act of 
1940. Borrower is not engaged principally, or as one of the important 
activities, in the business of extending credit for the purpose of purchasing 
or carrying margin stock (within the meaning of Regulations G, T and U of the 
Board of Governors of the Federal  Borrower has complied with all the

                                         18.



provisions of the Federal Fair Labor Standards Reserve System).  Borrower has 
complied with all the provisions of the Federal Fair Labor Borrower has not 
violated any statutes, laws, ordinances or rules applicable to it, violation 
of which could have a Material Adverse Effect.

          5.12 ENVIRONMENTAL CONDITION.  None of Borrower's or any 
Subsidiary's properties or assets has ever been used by Borrower or any 
Subsidiary or, to the best of Borrower's knowledge, by previous owners or 
operators, in the disposal of, or to produce, store, handle, treat, release, 
or transport, any hazardous waste or hazardous substance other than in 
accordance with applicable law; to the best of Borrower's knowledge, none of 
Borrower's properties or assets has ever been designated or identified in any 
manner pursuant to any environmental protection statute as a hazardous waste 
or hazardous substance disposal site, or a candidate for closure pursuant to 
any environmental protection statute; no lien arising under any environmental 
protection statute has attached to any revenues or to any real or personal 
property owned by Borrower or any Subsidiary; and neither Borrower nor any 
Subsidiary has received a summons, citation, notice, or directive from the 
Environmental Protection Agency or any other federal, state or other 
governmental agency concerning any action or omission by Borrower or any 
Subsidiary resulting in the releasing, or otherwise disposing of hazardous 
waste or hazardous substances into the environment.

          5.13 TAXES.  Borrower and each Subsidiary has filed or caused to be 
filed all tax returns required to be filed, and has paid, or has made 
adequate provision for the payment of, all taxes reflected therein.

          5.14 SUBSIDIARIES.  Borrower does not own any stock, partnership 
interest or other equity securities of any Person, except for Permitted 
Investments.

          5.15 GOVERNMENT CONSENTS.  Borrower and each Subsidiary has 
obtained all consents, approvals and authorizations of, made all declarations 
or filings with, and given all notices to, all governmental authorities that 
are necessary for the continued operation of Borrower's business as currently 
conducted.

          5.16 FRILL DISCLOSURE.  No representation, warranty or other 
statement made by Borrower in any certificate or written statement furnished 
to Bank contains any untrue statement of a material fact or omits to state a 
material fact necessary in order to make the statements contained in such 
certificates or statements not misleading.

     6.   AFFIRMATIVE COVENANTS

     Borrower covenants and agrees that, until payment in full of the 
Obligations, Borrower shall do all of the following:

          6.1  GOOD STANDING.  Borrower shall maintain its and each of its 
Subsidiaries' corporate existence 'and good standing in its jurisdiction of 
incorporation and maintain qualification in each jurisdiction in which the 
failure to so qualify could reasonably be expected to have a Material Adverse 
Effect.  Borrower shall maintain, and shall cause each of its

                                         19.



Subsidiaries to maintain, to the extent consistent with prudent management of 
Borrower's business, in force all licenses, approvals and agreements, the 
loss of which could have a Material Adverse Effect.

          6.2  GOVERNMENT COMPLIANCE.  Borrower shall meet, and shall cause 
each Subsidiary to meet, the minimum funding requirements of ERISA with 
respect to any employee benefit plans subject to ERISA.  Borrower shall 
comply, and shall cause each Subsidiary to comply, with all statutes, laws, 
ordinances and government rules and regulations to which it is subject, 
noncompliance with which could reasonably be expected to have a Material 
Adverse Effect or a material adverse effect on the Collateral or the priority 
of Bank's Lien on the Collateral.

          6.3  FINANCIAL STATEMENTS, REPORTS, CERTIFICATES.  Borrower shall 
deliver to Bank: (a) as soon as avail.able, but in any event within thirty 
(30) days after the end of each fiscal quarter, a company prepared 
consolidated balance sheet and income statement covering Borrower's 
consolidated operations during such period, certified by a Responsible 
Officer; (b) as soon as available, but in any event within ninety (90) days 
after the end of Borrower's fiscal year, audited consolidated financial 
statements of Borrower prepared in accordance with GAAP, consistently 
applied, together with an unqualified opinion on such financial statements of 
an independent certified public accounting firm reasonably acceptable to Bank 
and any accompanying management reports; (c) prompt notice of any material 
change in the composition of the Intellectual Property Collateral, including, 
but not limited to, any subsequent ownership right of the Borrower in or to 
any Copyright, Patent or Trademark not specified in any intellectual property 
security agreement between Borrower and Bank or knowledge of an event that 
materially adversely effects the value of the Intellectual Property 
Collateral; (d) within five (5) days upon becoming available, copies of all 
statements, reports and notices sent or made available generally by Borrower 
to its security holders or to any holders of Subordinated Debt and all 
reports on Form 10-K and 10-Q filed with the Securities and Exchange 
Commission; (e) promptly upon receipt of notice thereof, a report of any 
legal actions pending or threatened against Borrower or any Subsidiary that 
could result in damages or costs to Borrower or any Subsidiary of One Hundred 
Thousand Dollars ($100,000) or more; and (f) such budgets, sales projections, 
operating plans or other financial information as Bank may reasonably request 
from time to time.

     Within twenty (20) days after the last day of each month in which an 
Advance is outstanding (and as a condition to Borrower requesting an 
Advance), Borrower shall deliver to Bank Borrowing Base Certificates signed 
by a Responsible Officer in substantially the form of Exhibit D hereto, 
together with aged listings of accounts receivable and accounts payable and a 
schedule of Inventory.

     Borrower shall deliver to Bank with the quarterly financial statements a 
Compliance Certificate signed by a Responsible Officer in substantially the 
form of Exhibit E hereto.

                                         20.



     Bank shall have a right from time to time hereafter to audit Borrower's 
Accounts at Borrower's expense, provided that such audits will be conducted 
no more often than every six (6) months unless an Event of Default has 
occurred and is continuing.

          6.4  INVENTORY; RETURNS.  Borrower shall keep all Inventory in good 
and marketable condition, free from. all material defects.  Returns and 
allowances, if any, as between Borrower and its account debtors shall be on 
the same basis and in accordance with the usual customary practices of 
Borrower, as they exist at the time of the execution and delivery of this 
Agreement.  Borrower shall promptly notify Bank of all returns and recoveries 
and of all disputes and claims, where the return, recovery, dispute or claim 
involves more than Fifty Thousand Dollars ($50,000).

          6.5  TAXES.  Borrower shall make, and shall cause each Subsidiary 
to make, due and timely payment or deposit of all material federal, state, 
and local taxes, assessments, or contributions required of it by law, and 
will execute and deliver to Bank, on demand, appropriate certificates 
attesting to the payment or deposit thereof; and Borrower will make, and will 
cause each Subsidiary to make, timely payment or deposit of all material tax 
payments and withholding taxes required of it by applicable laws, including, 
but not limited to, those laws concerning F.I.C.A., F.U.T.A., state 
disability, and local, state, and federal income taxes, and will, upon 
request, furnish Bank with proof satisfactory to Bank.  indicating that 
Borrower or a Subsidiary has made such payments or deposits; provided that 
Borrower or a Subsidiary need not make any payment if the amount or validity 
of such payment is contested in good faith by appropriate proceedings and is 
reserved against (to the extent required by GAAP) by Borrower.

          6.6  INSURANCE.

               (a)  Borrower, at its expense, shall keep the Collateral 
insured against loss or damage by fire, theft, explosion, sprinklers, and all 
other hazards and risks, and in such amounts, as ordinarily insured against 
by other owners in similar businesses conducted in the locations where 
Borrower's business is conducted on the date hereof.  Borrower shall also 
maintain insurance relating to Borrower's ownership and use of the Collateral 
in amounts and of a type that are customary to businesses similar to 
Borrower's.

               (b)  All such policies of insurance shall be in such form, 
with such companies, and in such amounts as reasonably satisfactory to Bank.  
All such policies of property insurance shall contain a lender's loss payable 
endorsement, in a form satisfactory to Bank, showing Bank as an additional 
loss payee thereof and all liability insurance policies shall show the Bank 
as an additional insured, and shall specify that the insurer must give at 
least twenty (20) days notice to Bank before canceling its policy for any 
reason. Upon Bank's request, Borrower shall deliver to Bank certified copies 
of such policies of insurance and evidence of the payments of all premiums 
therefor.  All proceeds payable under any such policy shall, at the option of 
Bank, be payable to Bank to be applied on account of the Obligations.

          6.7  PRINCIPAL DEPOSITORY.  Borrower shall maintain its principal 
depository and operating accounts with Bank.

                                         21.



          6.8  ADJUSTED QUICK RATIO.  Borrower shall maintain, as of the last 
day of each fiscal quarter, a ratio of Quick Assets to Current Liabilities, 
excluding deferred revenue and customer deposits, of at least 1.25 to 1.0.  
For purposes of this Section, Quick Assets shall be deemed to include cash, 
cash-equivalents, and investments with maturities not exceeding 90 days held 
in deposit accounts in which Bank has a Lien prior to any other Lien.

          6.9  DEBT-NET WORTH RATIO.  Borrower shall maintain, as of the last 
day of each fiscal quarter, a ratio of Total Liabilities, excluding deferred 
revenue and customer deposits, less Subordinated Debt to Tangible Net Worth 
plus Subordinated Debt of not more than 1.0 to 1.0.

          6.10 TANGIBLE NET WORTH.  Borrower shall maintain, as of the last 
day of each fiscal quarter, a Tangible Net Worth of not less than Eight 
Million Dollars ($8,000,000) plus seventy-five percent of the net proceeds 
from the sale of Borrower's equity securities after the Closing Date.

          6.11 PROFITABILITY.  Borrower shall be profitable for each fiscal 
quarter, except Borrower may suffer a loss not to exceed $600,000 for one 
fiscal quarter in any fiscal year.

          6.12 REGISTRATION OF INTELLECTUAL PROPERTY RIGHTS.

               (a)  Borrower shall register or cause to be registered (to the 
extent not already registered) with the United States Patent and Trademark 
Office or the United States Copyright Office, as applicable, those 
intellectual property rights listed on Exhibits A, B and C to the 
Intellectual Property Security Agreement delivered to Bank by Borrower in 
connection with this Agreement within thirty (30) days of the date of this 
Agreement. Borrower shall have no duty to register or cause to be registered 
with the United States Patent and Trademark Office or the United States 
Copyright Office, as applicable, those additional intellectual property 
rights developed or acquired by Borrower from time to time in connection with 
any product prior to the sale or licensing of such product to any third 
party, including without limitation revisions or additions to the 
intellectual property rights listed on such Exhibits A, B and C.

               (b)  Borrower shall execute and deliver such additional 
instruments and documents from time to time as Bank shall reasonably request 
to perfect Bank's security interest in the Intellectual Property Collateral.

               (c)  Borrower shall (i) protect, defend and maintain the 
validity and enforceability of the Trademarks, Patents and Copyrights, (ii) 
use its best efforts to detect infringements of the Trademarks, Patents and 
Copyrights and promptly advise Bank in writing of material infringements 
detected and (iii) not allow any Trademarks, Patents or Copyrights to be 
abandoned, forfeited or dedicated to the public without the written consent 
of Bank, which shall not be unreasonably withheld, unless Bank determines 
that reasonable business practices suggest that abandonment is appropriate.

                                         22.



               (d)  Bank shall have the right, but not the obligation, to 
take, at Borrower's sole expense, any actions that Borrower is required under 
this Section 6.12 to take but which Borrower fails to take, after fifteen 
(15) days' notice to Borrower. Borrower shall reimburse and indemnify Bank 
for all reasonable costs and reasonable expenses incurred in the reasonable 
exercise of its rights under this Section 6.12.

          6.13 TERMS OF SALE.  Borrower shall cause all sales of products 
upon which Advances are based either to be (i) supported by one or more 
irrevocable letters of credit in an amount and of a tenor, naming a 
beneficiary and issued by a financial institution acceptable to Bank or (ii) 
on open account to creditworthy buyers that have been preapproved in writing 
by Bank and Exim Bank.

          6.14 BORROWER AGREEMENT.  Borrower shall comply with all of the 
terms of the Borrower Agreement.  In the event of any conflict or 
inconsistency between any provision contained in the Borrower Agreement with 
any provision contained in this Exim Agreement, the more strict provision, 
with respect to Borrower, shall control.

          6.15 NOTICE IN EVENT OF FILING OF ACTION FOR DEBTOR'S RELIEF. 
Borrower shall notify Bank in writing within five (5) days of the occurrence 
of any of the following: (1) Borrower begins or consents in any manner to any 
proceeding or arrangement for its liquidation in whole or in part or to any 
other proceeding or arrangement whereby any of its assets are subject 
generally to the payment of its liabilities or whereby any receiver, trustee, 
liquidator or the like is appointed for it or any substantial part of its 
assets (including without limitation the filing by Borrower of a petition for 
appointment as a debtor-in-possession under Title 11 of the U.S. Code); (2) 
Borrower fails to obtain the dismissal or stay on appeal within thirty (30) 
calendar days of the commencement of any proceeding arrangement referred to 
in (1) above; (3) Borrower begins any other procedure for the relief of 
financially distressed or insolvent debtors, or such procedure has been 
commenced against it, whether voluntarily or involuntarily, and such 
procedure has not been effectively terminated, dismissed or stayed within 
.thirty (30) calendar days after the commencement thereof, or (4) Borrower 
begins any procedure for its dissolution, or a procedure therefor has been 
commenced against it.

          6.16 PAYMENT IN DOLLARS.  Borrower shall require payment in United 
States Dollars for the products, unless Exim Bank otherwise agrees in writing.

          6.17 FURTHER ASSURANCES.  At any time and from time to time 
Borrower shall execute and deliver such further instruments and take such 
further action as may reasonably be requested by Bank to effect the purposes 
of this Exim Agreement.

     7.   NEGATIVE COVENANTS

          Borrower covenants and agrees that so long as any credit hereunder 
shall be available and until payment in full of the Obligations, Borrower 
will not do any of the following, or enter into any agreement to do any of 
the following:

                                         23.



          7.1  DISPOSITIONS.  Convey, sell, lease, transfer or otherwise 
dispose of (collectively, a "Transfer"), or permit any of its Subsidiaries to 
Transfer, all or any part of its business or property, other than: (i) 
Transfers of Inventory in the ordinary course of business; (ii) Transfers of 
non-exclusive licenses and similar arrangements for the use of the property 
of Borrower or its Subsidiaries; (iii) Transfers of worn-out or obsolete 
Equipment; or (iv) sale-leaseback transactions of Equipment as described in 
clause; (e) of the defined term-"Permitted Indebtedness."

          7.2  CHANGE IN BUSINESS.  Engage in any business, or permit any of 
its Subsidiaries to engage in any business, other than the businesses 
currently engaged in by Borrower and any business substantially similar or 
related thereto (or incidental thereto), or suffer a material change in 
Borrower's ownership of greater than forty percent (40%).  Borrower will not, 
without thirty (30) days prior written notification to Bank, relocate its 
chief executive office.

          7.3  MERGERS OR ACQUISITIONS.  Merge or consolidate, or permit any 
of its Subsidiaries to merge or consolidate, with or into any other business 
organization, or acquire, or permit any of its Subsidiaries to acquire, all 
or substantially all of the capital stock or property of another Person, 
except such transactions that do not result in a change of more than 25% of 
Borrower's Net Worth PROVIDED that immediately after giving effect to such 
merger or consolidation, no Event of Default, or event which with the lapse 
of time or giving of notice or both, would result in an Event of Default 
shall have occurred and be continuing.

          7.4  INDEBTEDNESS.  Create, incur, assume or be or remain liable 
with respect to any Indebtedness, or permit any Subsidiary so to do, other 
than Permitted Indebtedness.

          7.5  ENCUMBRANCES.  Create, incur, assume or suffer to exist any 
Lien with respect to any of its property, or assign or otherwise convey any 
right to receive income, including the sale of any Accounts, or permit any of 
its Subsidiaries so to do, except for Permitted Liens.

          7.6  DISTRIBUTIONS.  Pay any dividends or make any other 
distribution or payment on account of or in redemption, retirement or 
purchase of any capital stock. Notwithstanding the foregoing, Borrower may 
redeem or repurchase its common stock and pay dividends on its preferred 
stock, provided the sum of (i) the purchase price of any stock so redeemed or 
repurchased and (ii) any such dividends paid on preferred stock does not 
exceed, in the aggregate, $250,000 in any fiscal year.

          7.7  INVESTMENTS.  Directly or indirectly acquire or own, or make 
any Investment in or to any Person, or permit any of its Subsidiaries so to 
do, other than Permitted Investments.

          7.8  TRANSACTIONS WITH AFFILIATES.  Directly or indirectly enter 
into or permit to exist any material transaction with any Affiliate of 
Borrower except for transactions that are in the ordinary course of 
Borrower':s business, upon fair and reasonable terms that are no less

                                         24.



favorable to Borrower than would be obtained in an arm's length transaction 
with a nonaffiliated Person.

          7.9  INTELLECTUAL PROPERTY AGREEMENTS.  Borrower shall not permit 
the inclusion in any material contract to which it becomes a party of any 
provisions that could or might in any way prevent the creation of a security 
interest in Borrower's rights and interests in any property included within 
the definition of the Intellectual Property Collateral acquired under such 
contracts.

          7.10 SUBORDINATED DEBT.  Make any payment in respect of any 
Subordinated Debt, or permit any of its Subsidiaries to make any such 
payment, except in compliance with the terms of such Subordinated Debt, or 
amend any provision contained in any documentation relating to the 
Subordinated Debt without Bank's prior written consent.

          7.11 INVENTORY.  Store the Inventory with a bailee, warehouseman, 
or similar party unless Bank has received a pledge of the warehouse receipt 
covering such Inventory. Except for Inventory sold in the ordinary course of 
business and except for such other locations as Bank may approve in writing,  
Borrower shall keep the Inventory only at the location set forth in Section 
11 hereof and such other locations of which Borrower gives Bank prior written 
notice and as to which Borrower signs and files a financing statement where 
needed to perfect Bank's security interest.

          7.12 COMPLIANCE.  Become an "investment company" controlled by an 
"investment company," within the meaning of the Investment Company Act of 
1940, or become principally engaged in, or undertake as one of its important 
activities, the business of extending credit for the purpose of purchasing or 
carrying margin stock, or use the proceeds' of any Advance for such purpose.  
Fail to meet the minimum funding requirements of ERISA, permit a Reportable 
Event or Prohibited Transaction, as defined in ERISA, to occur, fail to 
comply with the Federal Fair Labor Standards Act or violate any law or 
regulation, which violation could have a Material Adverse Effect or a 
material adverse effect on the Collateral or the priority of Bank's Lien on 
the Collateral, or permit any of its Subsidiaries to do any of the foregoing.

          7.13 LOANS TO SHAREHOLDERS OR AFFILIATES.  Without Exim Bank's 
prior written consent, make any loans to any shareholder or entity affiliated 
with Borrower. As used in this Section, the term "loan" does' not include 
salary, rent paid to an affiliated entity owned by the shareholders, or to 
other expenses incurred in the ordinary course of Borrower's business.

          7.14 BORROWER AGREEMENT.  Violate or otherwise fail to comply with 
any provision of the Borrower Agreement.

          7.15 EXIM GUARANTEE.  Take any action, or permit any action to be 
taken, that causes or, with the passage of time, could reasonably be expected 
to cause, the Exim Guarantee to cease to be in full force and effect.

                                         25.



     8.   EVENTS OF DEFAULT

          Any one or more of the following events shall constitute an Event 
of Default by Borrower under this Exim Agreement:

          8.1  PAYMENT DEFAULT.  If Borrower fails to pay the principal of, 
or any interest on, any Advances when due and payable; or fails to pay any 
portion of any other Obligations not constituting such principal or interest, 
including without limitation Bank Expenses, within thirty (30) days of 
receipt by Borrower of an invoice for such other Obligations;

          8.2  COVENANT DEFAULT; CROSS DEFAULT.  If Borrower fails or 
neglects to perform, keep, or observe any material term, provision, 
condition, covenant, or agreement contained in this Agreement, in any of the 
Exim Loan Documents, the Domestic Loan Documents, the Borrower Agreement or 
in any other present or future agreement between Borrower and Bank, or an 
Event of Default occurs under any of the Domestic Loan Documents or the 
Borrower Agreement;

          8.3  MATERIAL ADVERSE CHANGE.  If there occurs a material adverse 
change in Borrower's business or financial condition or a material impairment 
of the value or priority of Bank's security interests in the Collateral;

          8.4  ATTACHMENT.  If any material portion of Borrower's assets is 
attached, seized, subjected to a writ or distress warrant, or is levied upon, 
or comes into the possession of any trustee, receiver or person acting in a 
similar capacity and such attachment, seizure, writ or distress warrant or 
levy has not been removed, discharged or rescinded within thirty (30) days, 
or if Borrower is enjoined, restrained, or in any way prevented by court 
order from continuing to conduct all or any material part of its business 
affairs, or if a judgment or other claim becomes a lien or encumbrance upon 
any material portion of Borrower's assets, or if a notice of lien, levy, or 
assessment is filed of record with respect to any of Borrower's assets by the 
United States Government, or any department, agency, or instrumentality 
thereof, or by any state, county, municipal, or governmental agency, and the 
same is not paid within thirty (30) days after Borrower receives notice 
thereof, provided that none of the foregoing shall constitute an Event of 
Default where such action or event is stayed or an adequate bond has been 
posted pending a good faith contest by Borrower (provided that no Advances 
will be required to be made during such cure period);

          8.5  INSOLVENCY.  If Borrower becomes insolvent, or if an 
Insolvency Proceeding is commenced by Borrower, or if an Insolvency 
Proceeding is commenced against Borrower and is not dismissed or stayed' 
within thirty (30) days (provided that no Advances will be made prior to the 
dismissal of such Insolvency Proceeding);

          8.6  OTHER AGREEMENTS.  If there is a default in any agreement to 
which Borrower is a party with a third party, or parties resulting in the 
exercise of a right by such third party or parties to accelerate the maturity 
of any Indebtedness in an amount in excess of Two Hundred Fifty Thousand 
Dollars ($250,000) or that could have a Material Adverse Effect.

                                         26.



          8.7  SUBORDINATED DEBT.  If Borrower makes any payment on account 
of Subordinated Debt, except to the extent such payment is allowed under any 
subordination agreement entered into with Bank;

          8.8  JUDGMENTS.  If a judgment or judgments for the payment of 
money in an amount, individually or in the aggregate, of at least One Hundred 
Fifty Thousand Dollars ($150,000) shall be rendered against Borrower and 
shall remain unsatisfied and unstayed for a period of thirty (30) days 
(provided that no Advances will be made prior to the satisfaction or stay of 
such judgment);

          8.9  MISREPRESENTATIONS.  If any material misrepresentation or 
material misstatement exists now or as of any date made or deemed made or 
hereafter in any warranty or representation set forth herein or in any 
certificate delivered to Bank by any Responsible Officer pursuant to this 
Agreement or to induce Bank to enter into this Agreement or any other Loan 
Document; or

          8.10 EXIM GUARANTEE.  If the Exim Guarantee ceases for any reason 
to be in full force and effect, or if the Exim Bank declares the Exim 
Guarantee void or revokes or purports to revoke any obligations under the 
Exim Guarantee.

     9.   BANK'S RIGHTS AND REMEDIES

          9.1  RIGHTS AND REMEDIES.  Upon the occurrence of an Event of 
Default, Bank may, at is election, without notice and without demand, do any 
one or more of the following:

               (a)  Declare all Obligations, whether evidenced by this Exim 
Agreement, by any of the other Exim Loan Documents, or otherwise, immediately 
due and payable;

               (b)  Cease advancing money or extending credit to or for the 
benefit of Borrower under this Exim Agreement or under any other agreement 
between Borrower and Bank;

               (c)  Settle or adjust disputes and claims directly with 
account debtors for amounts, upon terms and in whatever order that Bank 
reasonably considers advisable;

               (d)  Demand that Borrower (i) deposit cash with Bank in an 
amount equal to the amount of any Letters of Credit remaining undrawn, as 
collateral security for the repayment of any future drawings; under such 
Letters of Credit, and Borrower shall forthwith deposit and pay such amounts, 
and (ii) pay in advance all Letters of Credit fees scheduled to be paid or 
payable over the remaining term of the Letters of Credit;

               (e)  Notify customers of Borrower or other third parties to 
pay any amounts owing to Borrower directly to Bank;

                                         27.



               (f)  Without notice to or demand upon Borrower, make such 
payments and do such acts as Bank considers necessary or reasonable to 
protect its security interest in the Collateral.  Borrower agrees to assemble 
the Collateral if Bank so requires, and to make the Collateral available to 
Bank as Bank may designate.  Borrower authorizes Bank to enter the premises 
where the Collateral is located,, to take and maintain possession of the 
Collateral, or any part of it, and to pay, purchase, contest, or compromise 
any encumbrance, charge, or lien which in Bank's determination appears to be 
prior or superior to its security interest and to pay all expenses incurred 
in connection therewith.  With respect to any of Borrower's owned premises, 
Borrower hereby grants Bank a license to enter into possession of such 
premises and to occupy the same, without charge, in order to exercise any of 
Bank's rights or remedies provided herein, at law, in equity, or otherwise;

               (g)  Set off and apply to the Obligations any and all (i) 
balances and deposits of Borrower held by Bank, or (ii) indebtedness at any 
time owing to or for the credit or the account of Borrower held by Bank;

               (h)  Ship, reclaim, recover, store, finish, maintain, repair, 
prepare for sale, advertise for sale, and sell (in the manner provided for 
herein) the Collateral.  Bank is hereby granted a license or other right, 
solely pursuant to the provisions of this section 9.1, to use, without 
charge, Borrower's labels, patents, copyrights, rights of use of any name, 
trade secrets, trade names, trademarks, service marks, and advertising 
matter, or any property of a similar nature, as it pertains to the 
Collateral, in completing production of, advertising for sale, and selling 
any Collateral and, in connection with Bank's exercise of its rights under 
this section 9.1, Borrower's rights under all licenses and all franchise 
agreements shall inure to Bank's benefit;

               (i)  Sell the Collateral at either a public or private sale, 
or both, by way of one or more contra**s or transactions, for cash or on 
terms, in such manner and at such places (including Borrower's premises) as 
Bank determines is commercially reasonable;

               (j)  Bank may credit bid and purchase at any public sale; and

               (k)  Any deficiency that exists after disposition of the 
Collateral as provided above will be paid immediately by Borrower.

          9.2  EXIM DIRECTION.  Upon the occurrence of an Event of Default, 
Exim Bank shall have a right to: (i).direct Bank to exercise the remedies 
specified in section 9.1 and (ii) request that Bank accelerate the maturity 
of any other loans to Borrower as to which Bank has a right to accelerate.

          9.3  EXIM NOTIFICATION.  Bank shall have the right to immediately 
notify Exim Bank in writing if it has knowledge of the occurrence of any of 
the following events: (1) any failure to pay any amount due under this Loan 
Exim Agreement or the Note; (2) the Borrowing Base is less than the sum of 
outstanding Advances hereunder; (3) any failure to pay when due any amount 
payable to Bank by the Borrower under any loan(s) extended by Bank to 
Borrower;

                                         28.



(4) the filing of an action for debtor's relief by, against, or on behalf of 
Borrower; or (5) any threatened or pending material litigation against 
Borrower, or any material dispute involving Borrower.

          In the event that it sends such a notification to Exim Bank, Bank 
shall have the right thereafter to send Exim Bank a written report on the 
status of the events covered by said notification on each Business Day which 
occurs every thirty (30) calendar days after the date of said notification, 
until such time as Bank files a claim with Exim Bank or said default or other 
events have been cured.  Bank shall not have any obligation to make any 
Advances or to issue any Letters of Credit following said notification to 
Exim Bank, unless Exim Bank gives its written approval thereto.  If directed 
to do so by Exim Bank, Bank shall have a right promptly to exercise any 
rights it may have against Borrower to demand the immediate repayment of all 
amounts outstanding under the Exim Loan Documents.

          9.4  POWER OF ATTORNEY.  Borrower hereby irrevocably appoints Bank 
(and any of Bank's designated officers, or employees) as Borrower's true and 
lawful attorney to: (a) send requests for verification of Accounts or notify 
account debtors of Bank's security interest in the Accounts; (b) endorse 
Borrower's name on any checks or other forms of payment or security that may 
come into Bank's possession; (c) sign Borrower's name on any invoice or bill 
of lading relating to any Account, drafts against account debtors, schedules 
and assignments of Accounts, verifications of Accounts, and notices to 
account debtors; (d) make, settle, and adjust all claims under and decisions 
with respect to Borrower's policies of insurance; (e) settle and adjust 
disputes and claims respecting the accounts directly with account debtors, 
for amounts and upon terms which Bank determines to be reasonable; (f) to 
modify, in its sole discretion, any intellectual property security agreement 
entered into between Borrower and Bank without first obtaining Borrower's 
approval of or signature to such modification by amending Exhibit A, Exhibit 
B and Exhibit C, thereof, as appropriate, to include reference to any right, 
title or interest in any Copyrights, Patents or Trademarks acquired by 
Borrower after the execution hereof or to delete any reference to any right, 
title or interest in any Copyrights, Patents or Trademarks in which Borrower 
no longer has or claims any right, title or interest; (g) to file, in its 
sole discretion, one or more financing or continuation statements and 
amendments thereto, relative to any of the Collateral without the signature 
of Borrower where permitted by law; and (h) to transfer the Intellectual 
Property Collateral into the name of Bank or a third party to the extent 
permitted under the California Uniform Commercial Code provided Bank may 
exercise such power of attorney to sign the name of Borrower on any of the 
documents described in Section 4.2 regardless of whether an Event of Default 
has occurred.  The appointment of Bank as Borrower's attorney in fact, and 
each and every one of Bank's rights and powers, being coupled with an 
interest, is irrevocable until all of the Obligations have been fully repaid 
and performed and Bank's obligation to provide advances hereunder is 
terminated.

          9.5  ACCOUNTS COLLECTION.  At any time from the date of this 
Agreement, Bank may notify any Person owing funds to Borrower of Bank's 
security interest in such funds and verify the amount of such Account.  Upon 
the occurrence and during the continuance of an Event of Default, Borrower 
shall collect all amounts owing to Borrower for Bank, receive in

                                          29



trust all payments as Bank's trustee, and immediately deliver such payments 
to Bank in their original form as received from the account debtor, with 
proper endorsements for deposit.

          9.6  BANK EXPENSES.  If Borrower fails to pay any amounts or 
furnish any required proof of payment due to third persons or entities, as 
required under the terms of this Agreement, then Bank may do any of all of 
the following: (a) make payment of the same or any part thereof; (b) set up 
such reserves under the Revolving Facility as Bank deems necessary to protect 
Bank from the exposure created by such failure; or (c) obtain and maintain 
insurance policies of the type discussed in Section 6.6 of this Agreement, 
and take any action with respect to such policies as Bank deems prudent.  Any 
amounts so paid or deposited by Bank shall constitute Bank Expenses, shall be 
immediately due and payable, and shall bear interest at the then applicable 
rate hereinabove provided, ' and shall be secured by the Collateral.  Any 
payments made by Bank shall not constitute an agreement by Bank to make 
similar payments in the future or a waiver by Bank of any Event of Default 
under this Agreement. Bank shall have a non-exclusive, royalty-free license 
to use the Intellectual Property Collateral to the extent reasonably 
necessary to permit Bank to exercise its rights and remedies upon the 
occurrence of an Event of Default.

          9.7  BANK'S LIABILITY FOR COLLATERAL.  So long as Bank complies 
with reasonable banking practices, Bank shall not in any way or manner be 
liable or responsible for: (a) the safekeeping of the Collateral; (b) any 
loss or damage thereto occurring or arising in any manner or fashion from any 
ca.use; (c) any diminution in the value thereof; or (d) any act or default of 
any carrier, warehouseman, bailee, forwarding agency, or other person 
whomsoever. All risk of loss, damage or destruction of the Collateral shall 
be borne by Borrower, except for any loss, damage or destruction caused by 
Bank's gross negligence or wilful misconduct.

          9.8  REMEDIES CUMULATIVE.  Bank's rights and remedies under this 
Agreement, the Loan Documents, and all other agreements shall be cumulative.  
Bank shall have all other rights and remedies not inconsistent herewith as 
provided under the Code, by law, or in equity. No exercise by Bank of one 
right or remedy shall be deemed an election, and no waiver by Bank of any 
Event of Default on Borrower's part shall be deemed a continuing waiver. No 
delay by Bank shall constitute a waiver, election, or acquiescence by it.  No 
waiver by Bank shall be effective unless made in a written document signed on 
behalf of Bank and then shall be effective only in the specific instance and 
for the specific purpose for which it was given.

          9.9  DEMAND; PROTEST.  Borrower waives demand, protest, notice of 
protest, notice of default or dishonor, notice of payment and nonpayment, 
notice of any default, nonpayment at maturity, release, compromise, 
settlement, extension, or renewal of accounts, documents, instruments, 
chattel paper, and guarantees at any time held by Bank on which Borrower may 
in any way be liable.

     10.  WAIVERS: INDEMNIFICATION

          10.1 DEMAND: PROTEST.  Borrower waives demand, protest, notice of 
protest, notice of dishonor, notice of payment and nonpayment, notice of any 
default, nonpayment at

                                          30



maturity, release, compromise, settlement, extension, or renewal of accounts, 
documents, instruments, chattel paper, and guarantees at any time held by 
Bank on which Borrower may in any way be liable.

          10.2 BANK'S LIABILITY FOR COLLATERAL.  Bank shall not in any way or 
manner be liable or responsible for: (a) the safekeeping of tile Collateral; 
(b) any loss or damage thereto occurring or arising in any manner or fashion 
from any cause; (c) any diminution in the value thereof; or (d) any act or 
default of any carrier, warehouseman, bailee, forwarding agency, or other 
person whomsoever.  All risk of loss, damage or destruction of the Collateral 
shall be borne by Borrower.

          10.3 INDEMNIFICATION.  Borrower shall defend, indemnify and hold 
harmless Bank and its officers, employees, and agents against: (a) all 
obligations, demands, claims, and liabilities claimed or asserted by any 
other party in connection with the transactions contemplated by this Exim 
Agreement, and (b) all losses or Exim Bank Expenses in any way suffered, 
incurred, or paid by.  Bank as a result of or in any way arising out of, 
following, or consequential to transactions between Bank and Borrower whether 
under this Exim Agreement, or otherwise (including without limitation 
reasonable attorneys fees and expenses), except for losses caused by Bank's 
gross negligence or willful misconduct.

     11.  NOTICES

          Unless otherwise provided in this Exim Agreement, al notices or 
demands by any party relating to this Exim Agreement or any other agreement 
entered into in connection herewith shall be in writing and (except for 
financial statements and other informational documents which may be sent by 
first-class mail, postage prepaid) shall be personally delivered or sent by 
certified mail, postage prepaid, return receipt requested, or by 
telefacsimile to Borrower or to Bank, as tile case may be, at the address set 
forth below:

If to Bank:        Silicon Valley Bank
                      3003 Tasman Drive      
                      Santa Clara, CA 95054
                      Attn: Patrick McCarthy
                      FAX: (408) 748-9478


If to Borrower:    InVision Technologies, Inc.
                      3420 E. Third Ave.
                      Foster City, CA 94404
                      Attn: Curt DiSibio
                      FAX: (415) 578-1931

     The parties hereto may change tile address at which they are to receive 
notices hereunder, by notice in writing in the foregoing manner given to tile 
other.

                                         31.



     12.  CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER

     This Exim Agreement shall be government by, and construed in accordance 
with, the internal laws of the State of California, without regard to 
principles of conflicts of law.  Each of Borrower and Bank.hereby submits to 
tile exclusive jurisdiction of  the state and Federal courts located in the 
County of Santa Clara, State of California.  BORROWER AND BANK HEREBY WAIVE 
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED 
UPON OR ARISING OUT OF ANY OF THE EXIM LOAN DOCUMENTS OR ANY OF THE 
TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, 
BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.

     13.  GENERAL PROVISIONS

          13.1 SUCCESSORS AND ASSIGNS.  This Exim Agreement shall bind and 
inure to the benefit of the respective successors and permitted assigns of 
each of the parties; provided, however, that neither this Exim Agreement nor 
any rights hereunder may be assigned by Borrower without Bank's prior written 
consent, which consent may be granted or withheld in Bank's sole discretion.  
Bank shall have the right without the consent of or notice to Borrower to 
sell, transfer, negotiate, or grant participation in all or any part of, or 
any interest in Bank's rights and benefits hereunder.

          13.2 INDEMNIFICATION.  Borrower shall defend, indemnify and hold 
harmless Bank and its officers, employees, and agents against: (a) all 
obligations, demands, claims, and liabilities claimed or asserted by any 
other party in connection with the transactions contemplated by the Loan 
Documents; and (b) all losses or Bank Expenses in any way suffered, incurred, 
or paid by Bank as a result of or in any way arising out of, following, or 
consequential to transactions between Bank and Borrower whether under the 
Loan Documents, or otherwise (including without limitation reasonable 
attorneys fees and expenses), except for losses caused by Bank's gross 
negligence or willful misconduct.

          13.3 TIME OF ESSENCE.  Time is of the essence for the performance 
of all obligations set forth in this Exim Agreement.

          13.4 SEVERABILITY OF PROVISIONS.  Each provision of this Exim 
Agreement shall be severable from every other provision of this Exim 
Agreement for the purpose of determining the legal enforceability, of any 
specific provision.

          13.5 AMENDMENTS IN WRITING.  This Exim Agreement cannot be changed 
or terminated orally.  Without the prior written consent of Exim Bank, no 
material amendment of or deviation from the terms of this Exim Agreement or 
the Note shall be made that would adversely affect the interests  of Exim 
Bank under the Exim Guarantee, including without limitation the rescheduling 
of any payment terms provided for in this Exim Agreement.  All prior 
agreements, understandings, representations, warranties, and negotiations 
between the

                                         32.



parties hereto with respect to the subject matter of this Exim Agreement, if 
any, are merged into this Exim Agreement.

          13.6 COUNTERPARTS.  This Exim Agreement may be executed in any 
number of counterparts and by different parties on separate counterparts, 
each of which, when executed and delivered, shall be deemed to be an 
original, and all of which, when taken together, shall constitute but one and 
the same Exim Agreement.

          13.7 SURVIVAL.  All covenants, representations and warranties made 
in this Exim Agreement shall continue in full force and effect so long as any 
Obligations (excluding Obligations under Sections 2.6 and 10.3 to the extent 
they remain inchoate at the time that outstanding payment Obligations are 
paid in full) remain outstanding.  The obligations of Borrower to indemnify 
Bank with respect to the expenses, damages, losses, costs and liabilities 
described in Section 10.3 shall survive until all applicable statute of 
limitations periods with respect to actions that may be brought against Bank 
have run.

          13.8 CONFIDENTIALITY.  In handling any confidential information 
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 this Agreement except that disclosure of such information may be 
made (i) to the subsidiaries or affiliates of Bank in connection with their 
present or prospective business relations with Borrower, (ii) to prospective 
transferees or purchasers of any interest in the Loans, provided that they 
have entered into a Comparable confidentiality agreement in favor of Borrower 
and have delivered a copy to Borrower, (iii) as required by law, regulations, 
rule or order, subpoena, judicial order or similar order, (iv) as'. may be 
required in connection with the examination, audit or similar investigation 
of Bank and (v) as Bank may determine in connection with the enforcement of 
any remedies hereunder.  Confidential information hereunder shall not include 
information that either: (a) is in the public domain or in the knowledge or 
possession of Bank when disclosed to Bank, or becomes part of the public 
domain after disclosure to Bank through no fault of Bank; or (b) is disclosed 
to Bank by  a third party, provided Bank does not have actual knowledge that 
such third party is prohibited from disclosing such information.

                                         33.



     IN WITNESS WHEREOF, the parties hereto have caused this Exim Agreement 
to be executed as of the date first above written.

                                    INVISION TECHNOLOGIES, INC.

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

                                    SILICON VALLEY BANK

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

                                          34



                                      EXHIBIT A

     The Collateral shall consist of all right, title and interest of 
Borrower in and to the following:

     (a)  All goods and equipment now owned or hereafter acquired, including, 
without limitation, all machinery, fixtures, vehicles (including motor 
vehicles and trailers), and any interest in any of the foregoing, and all 
attachments, accessories, accessions, replacements, substitutions, additions, 
and improvements to any of the foregoing, wherever located;

     (b)  All inventory, now owned or hereafter acquired, including, without 
limitation, all merchandise, raw materials, parts, supplies, packing and 
shipping materials, work in process and finished products including such 
inventory as is temporarily out of Borrower's custody or possession or in 
transit and including any returns upon any accounts or other proceeds, 
including insurance proceeds, resulting from the sale or disposition of any 
of the foregoing and any documents of title representing any of he above, and 
Borrower's Books relating to any of the foregoing;

     (c)  All contract rights and general intangibles now owned or hereafter 
acquired, including, without limitation, goodwill, trademarks, service marks, 
trade styles, trade names, patents, patent applications, leases, license 
agreements, franchise agreements, blueprints, drawings, purchase orders, 
customer lists, route lists, infringements, claims, computer programs, 
computer discs, computer tapes, literature, reports, catalogs, design rights, 
income tax refunds, payments of insurance and rights to payment of any kind;

     (d)  All now existing and hereafter arising accounts, contract rights, 
royalties, license rights and all other forms of obligations owing to 
Borrower arising out of the sale or lease of goods, the licensing of 
technology or the rendering of services by Borrower, whether or not earned by 
performance, and any and all credit insurance, guaranties, and other security 
therefor, as well as all "merchandise returned to or reclaimed by Borrower 
and Borrower's Books relating to any of the foregoing;

     (e)  All documents, cash, deposit accounts, securities (other than 
securities of foreign Subsidiaries), letters  of credit, certificates of 
deposit, instruments and chattel paper now owned or hereafter acquired and 
Borrower's Books relating to the foregoing;

     (f)  All copyright rights, copyright applications, copyright 
registrations and like protections in each work of authorship and derivative 
work thereof, whether published or unpublished, now owned or hereafter 
acquired; all trade secret rights, including all rights to unpatented 
inventions, know-how, operating manuals, license rights and agreements and 
confidential information, now owned or hereafter acquired; all mask work or 
similar rights available for the protection of semiconductor chips, now owned 
or hereafter acquired; all claims for damages by way of any past, present and 
future infringement of any of the foregoing; and

                                          35



     (g)  Any and all claims, rights and interests in any of the above and 
all substitutions for, additions and accessions to and proceeds thereof.

                                         36.



                                      EXHIBIT B

                              REVOLVING PROMISSORY NOTE 
                                (EXPORT-IMPORT LINE)

4,500,000                                    Santa Clara, California
                                             February 20, 1997

     FOR VALUE RECEIVED, the undersigned, InVision Technologies, Inc. (the 
"Borrower"), promises to pay to the order of Silicon Valley Bank ("Bank"), at 
such place as the holder hereof may designate, in lawful money of the United 
States of America, the aggregate unpaid principal amount of all advances 
("Advances") made by Bank to Borrower under the terms of this Note, up to a 
maximum principal amount of Four Million Five Hundred Thousand Dollars 
($4,500,000).  Borrower shall also pay interest on the aggregate unpaid 
principal amount of such Advances at the rates and in accordance with the 
terms of the Export-Import Bank Loan and Security Agreement between Borrower 
and Bank of even date herewith, as amended from time to time (the "Loan 
Agreement") on the nineteenth day of each month after an Advance has been 
made.  The entire principal amount and all accrued interest shall be due and 
payable on February 19, 1998, or on such earlier date, as provided for in the 
Loan Agreement.

     Borrower irrevocably waives the right to direct the application of any 
and all payments at any time hereafter received by Bank from or on behalf of 
Borrower, and Borrower irrevocably agrees that Bank shall have the  
continuing exclusive right to apply any and all such payments against the 
then due and owing obligations of Borrower as Bank may deem advisable. In the 
absence of a specific determination by Bank with respect thereto, all 
payments shall be applied in the following order: (a) then due and payable 
fees and expenses; (b) then due and payable interest payments and mandatory 
prepayments; and (c) then due and payable principal payments and optional 
prepayments.

     Bank is hereby authorized by borrower to endorse on Bank's books and 
records each Advance made by Bank under this Note and the amount of each 
payment or prepayment of principal of each such Advance received by Bank; it 
being understood, however, that failure to make any such endorsement (or any 
errors in notation) shall not affect the obligations of Borrower with respect 
to Advances made hereunder, and payments of principal by Borrower shall be 
credited to Borrower notwithstanding the; failure to make a notation (or any 
errors in notation) thereof on such books and records.

     Borrower promises to pay Bank all reasonable costs and reasonable 
expenses of collection of this Note and to pay all reasonable attorneys' fees 
incurred in such collection or in any suit or action to collect this Note or 
in any appeal thereof.  Borrower waives presentment, demand, protest, notice 
of protest, notice of dishonor, notice of nonpayment, and any and all other 
notices and demands in connection with the delivery, acceptance, performance, 
default or enforcement of this Note, as well as any applicable statute of 
limitations.  No delay by Bank in exercising any power or right hereunder 
shall operate as a waiver of any power or right. Time is of the essence as to 
all obligations hereunder.

                                         37.



     This Note is issued pursuant to the Loan Agreement, which shall govern 
the rights and obligations of Borrower with respect to all obligations 
hereunder.

     This Note shall be deemed to be made under, and shall be construed in 
accordance with and governed by, the laws of the State of California, 
excluding conflicts of laws principles.


                                         38.



                                      EXHIBIT C

                     LOAN PAYMENT/ADVANCE TELEPHONE REQUEST FORM
            DEADLINE FOR SAME DAY PROCESSING IS 3:00 P.M., CALIFORNIA TIME

TO: CENTRAL CLIENT SERVICE DIVISION    DATE:
                                            -----------------------------------

FAX#: (408) 432-3249]                  TIME:
                                            -----------------------------------

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

FROM:
     ---------------------------------------------------------------------------
                                  CLIENT NAME (BORROWER)

REQUESTED BY:
             -------------------------------------------------------------------
                                  AUTHORIZED SIGNER'S NAME

AUTHORIZED SIGNATURE:
                     -----------------------------------------------------------

PHONE NUMBER:
             -------------------------------------------------------------------

FROM ACCOUNT #                    TO ACCOUNT #
              --------------------             ---------------------------------

REQUESTED TRANSACTION TYPE        REQUEST DOLLAR AMOUNT

PRINCIPAL INCREASE (ADVANCE)      $
                                   --------------------------------------------
PRINCIPAL PAYMENT (ONLY)                $
                                            -----------------------------------
INTEREST PAYMENT (ONLY)           $
                                   --------------------------------------------
PRINCIPAL AND INTEREST (PAYMENT)  $
                                   --------------------------------------------

OTHER INSTRUCTIONS:
                   -------------------------------------------------------------

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


      All representations and warranties of Borrower stated in the Loan 
Agreement are true, correct and complete in all material respects as of the 
date of the telephone request for and Advance confirmed by this Borrowing 
certificate; provided, however, that those representations and warranties 
expressly referring to another date shall be true, correct and complete in 
all material respects as of such date.

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

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

                                    BANK USE ONLY

TELEPHONE REQUEST:

The following person is authorized to request the loan payment transfer/loan
advance on the advance designated account and is
know to me.

-----------------------------------     ----------------------------------------
           Authorized Requester          Phone #

-----------------------------------     ----------------------------------------
           Received By (Bank)                 Phone #

                          ----------------------------------
                             Authorized Signature (Bank)

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

                                         39.


                                      EXHIBIT D

                              BORROWING BASE CERTIFICATE


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

Borrower: InVision Technologies, Inc.  Lender: Silicon Valley Bank

Commitment Amount: $4,500,000

--------------------------------------------------------------------------------
 
FOREIGN ACCOUNTS RECEIVABLE FROM EXPORT ACTIVITIES 1. Foreign Accounts Receivable Book Value as of_____ $ ------------------------ 2. Additions (please explain on reverse) $ ------------------------ 3. TOTAL FOREIGN ACCOUNTS RECEIVABLE $ ------------------------ ACCOUNTS RECEIVABLE DEDUCTIONS 4. Term in excess of 90 days $ ------------------------ 5. Amounts over 90 days (unless insured, then 90 days) $ ------------------------ 6. Balance of 50% over 90 day accounts $ ------------------------ 7. Credit Balances over 120 days 8. Accounts not payable in the U.S. Dollars or payable in other than U.S. Dollars $ ------------------------ 9. Non-approved Government and Military Accounts $ ------------------------ 10. Contra Accounts $ ------------------------ 11. Promotion, Demo or Consignment Accounts $ ------------------------ 12. Intercompany/Employee and Affiliate Accounts $ ------------------------ 13. Accounts in the form of L/Cs, if subject items have not yet been shipped by Borrower $ ------------------------ 14. Accounts arising from Inventory not originally located in and shipped from the U.S. $ ------------------------ 15. Accounts arising from the sale of defense articles or items $ ------------------------ 16. Accounts of buyers located in or from countries in which shipment is prohibited or no coverage available $ ------------------------ 17. Amounts due and collectable outside U.S. $ ------------------------ 18. Other exclusions $ ------------------------ 19. TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS $ ------------------------ 20. Eligible Accounts (No. 3 minus No. 19) 21. Loan Value of Accounts (90% of No. 20) $ ------------------------ FOREIGN INVENTORY 22. Foreign Inventory Value as of ________ $ ------------------------ 23. Additions (please explain on reverse) $ ------------------------ 24. TOTAL FOREIGN INVENTORY $ ------------------------ 40. FOREIGN INVENTORY DEDUCTIONS 25. Outside U.S. $ ------------------------ 26. Consignment $ ------------------------ 27. Proprietary Software $ ------------------------ 28. Damaged/Defective $ ------------------------ 29. Previously Exported $ ------------------------ 30. Defense Articles/Services $ ------------------------ 31. Prohibited County $ ------------------------ 32. No Coverage County $ ------------------------ 33. Ineligible A/R $ ------------------------ 34. Advance Payments/Deposits $ ------------------------ 35. TOTAL DEDUCTIONS $ ------------------------ 36. Eligible Inventory (No. 23 minus No. 35) $ ------------------------ 37. Loan Value of Inventory (70% of No. 36) $ ------------------------ BALANCES 38. Maximum Loan Amount $ ------------------------ 39. Total Available [Lesser of (No. 21 plus No. 37) or No. 38] $ ------------------------ 40. Present balance owing on Line of Credit $ ------------------------ 41. Outstanding under Sublimits $ ------------------------ 42. RESERVE POSITION (No. 39 - (No. 40 + No. 41)) $ ------------------------
The undersigned represents, and warrants that the foregoing is true, complete and correct, and that the information reflected in this Schedule complies with the representations and warranties set forth in the Borrower Agreement, executed by Borrower and acknowledged by Lender, and the Export-Import Bank Loan and Security Agreement, executed by Borrower and acknowledged by Lender dated February 20, 1997, as may be amended from time to time, as if all representations and warranties were made as of the date hereof, and that Borrower is, and shall remain, in full compliance with its agreements, covenants, and obligations under such agreement. Such representations and warranties include, without limitation, the following: Borrower is using disbursements only for the purpose of enabling Borrower to finance the cost of manufacturing, producing, purchasing or selling items intended for export. Borrower is not using disbursements for the purpose of: (a) servicing any of Borrower's unrelated pre-existing or future indebtedness; (b) acquiring fixed assets or capital goods for the use of Borrower's business; (c) acquiring, equipping, equipping or renting commercial space outside the United States; (d) supporting research and development, (e) paying salaries of non-U.S. citizens or non-U.S. permanent residents who are located in the offices of the United States, or (f)serving as a retainage or warranty bond. Additionally, disbursements are not being used to finance the manufacture, purchase or sale of any of the following: (a) Items to be sold to a buyer located in a country in which the Export Import Bank of the United States is legally prohibited from doing business; (b) that part of the cost of the items which is not U.S. Content unless such 41. part is not greater than fifty percent (50%) of the cost of the items and is incorporated into the items in the United States; (c) defense articles or defense services or items directly or indirectly destined for use by military organizations designed primarily for military use (regardless of the nature or actual use of the items); or (d) any items to be used in the construction, alteration, operation or maintenance of nuclear power, enrichment, reprocessing, research or heavy water production facilities. Sincerely, InVision Technologies, Inc. By: ------------------------------ Name: ---------------------------- Title: --------------------------- Date: ---------------------------- BANK USE ONLY Received by: ---------------------------- Date: ----------------------------------- Verified By: ---------------------------- 42. EXHIBIT E COMPLIANCE CERTIFICATE TO: SILICON VALLEY BANK FROM: INVISION TECHNOLOGIES, INC. The undersigned authorized officer of InVision Technologies, Inc. hereby certifies that in accordance with the terms and conditions of the Loan and Security Agreement between Borrower and Bank (the "Agreement"), (i) Borrower is in complete compliance for the period ending with all required covenants except as noted below and (ii) all representations and warranties of Borrower stated in the Agreement are true and correct in all material respects as of the date hereof. Attached herewith are the required documents supporting the above certification. The Officer further certifies that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied from one period to the next except as explained in an accompanying letter or footnotes. PLEASE INDICATE COMPLIANCE STATUS BY CIRCLING YES/NO UNDER "COMPLIES" COLUMN.
REPORTING COVENANT REQUIRED COMPLIES Quarterly financial statements Quarterly within 30 days Yes No Annual (CPA Audited) FYE within 90 days Yes No A/R & A/P Agings Monthly within 20 days Yes No A/R Audit Initial and Semi-Annual Yes No FINANCIAL COVENANT REQUIRED ACTUAL COMPLIES Maintain on a Quarterly Basis: Minimum Adj. Quick Ratio 1.25:1.0 _______:1.0(1) Yes No Minimum Tangible Net Worth $8,000,000 $ (2) Yes No Maximum Debt/Tangible Net Worth 1.0:1.0 _______:1.0(1) Yes No Profitability: Quarterly(3) $1 $ Yes No
1 excluding deferred revenue and customer deposits 2 plus 75% of new equity proceeds 3 May incur one quarterly loss per year not to exceed $600,000 Comments Regarding Exceptions: See Attached. BANK USE ONLY Sincerely, Received by: ------------------------- Authorized Signer -------------------------------- Signature Date: -------------------------------- -------------------------------- Title Verified: ---------------------------- -------------------------------- Authorized Signer Date Date: -------------------------------- Compliance Status: Yes No 43. DISCLOSURE SCHEDULE TO LOAN AND SECURITY AGREEMENT BETWEEN INVISION TECHNOLOGIES, INC. AND SILICON VALLEY BANK LIENS ----- Secured Party UCC File No. Date ------------- ----------- ----- Telogy, Inc. 9435460289 Dec. 2, 1994 Yale-Northern California, Inc. 9504860580 Feb. 10, 1995 Citicorp Dealer Finance Instituto Bancario San Paolo di Torino, SpA 9600260210 Dec. 28, 1995 (To be terminated on or prior to Closing Date) Anaconda Partners, L.P. 9600260218 Dec. 28, 1995 (To be terminated on or prior to Closing Date) Leasing Technologies International, Inc. 9613560835 May 13, 1996 Leasing Technologies International, Inc. 9633160900 Nov. 25, 1996 European American Bank 9626960074 Sep. 20, 1996 INVESTMENTS ----------- Investments in subsidiaries: Imatron Federal Systems, Inc. and Invision International, Inc. INDEBTEDNESS ------------ Lender ------- Telogy, Inc. Yale-Northern California, Inc. Citicorp Dealer Finance Leasing Technologies International, Inc. Equipment purchased from Hyster to be financed. OTHER ----- Invision's Intellectual Property rights are subject to FAA contracts. 1. Revolving Promissory Note (Export-Import Line) $4,500,000 Santa Clara, California February 20, 1997 FOR VALUE RECEIVED, the undersigned, InVision Technologies, Inc. (the "Borrower"), promises to pay to the order of Silicon Valley Bank ("Bank"), at such place as the holder hereof may designate, in lawful! money of the United States of America, the aggregate unpaid principal amount of all advances ("Advances") made by Bank to Borrower under the terms of this Note, up to a maximum principal amount of Four Million Five Hundred Thousand Dollars ($4,500,000). Borrower shall also pay interest on the aggregate unpaid principal amount of such Advances at the rates and in accordance with the terms of the Export-Import Bank Loan and Security Agreement between Borrower and Bank of even date herewith, as amended from time to time (the "Loan Agreement") on the nineteenth day of each month after an Advance has been made. The entire principal amount and all accrued interest shall be due and payable on February 19, 1998, or on such earlier date, as provided for in the Loan Agreement. Borrower irrevocably waives the right to direct the application of any and all payments at any time hereafter received by Bank from or on behalf of Borrower, and Borrower irrevocably agrees that Bank shall have the continuing exclusive right to apply any and all such payments against the then due and owing obligations of Borrower as Bank may deem advisable. In the absence of a specific determination by Bank with respect thereto, all payments shall be applied in the following order: (a) then due and payable fees and expenses; (b) then due and payable interest payments and mandatory prepayments; and (c) then due and payable principal payments and optional prepayments. Bank is hereby authorized by Borrower to endorse on Bank's books and records each Advance made by Bank under this Note and the amount of each payment or prepayment of principal of each such Advance received by Bank; it being understood, however, that failure to make any such endorsement (or any errors in notation) shall not affect the obligations of Borrower with respect to Advances made hereunder, and payments of principal by Borrower shall be credited to Borrower notwithstanding the failure to make a notation (or any errors in notation) thereof on such books and records. Borrower promises to pay Bank all reasonable costs and reasonable expenses of collection of this Note and to pay all reasonable attorneys' fees incurred in such collection or in any suit or action to collect this Note or in any appeal thereof. Borrower waives presentment, demand, protest, notice of protest, notice of dishonor, notice of nonpayment, and any and all other notices and demands in connection with the, delivery, acceptance, performance, default or enforcement of this Note, as well as any applicable statute of limitations. No delay by Bank in exercising any power or right hereunder shall operate as a waiver of any power or right. Time is of the essence as to all obligations hereunder. This Note is issued pursuant to the .Loan Agreement, which shall govern the rights and obligations of Borrower with respect to all obligations hereunder. This Note shall be deemed to be made under, and shall be construed in accordance with and governed by, the laws of the State of California, excluding conflicts of laws principles. INVISION TECHNOLOGIES, INC. By: /s/ ---------------------------------- Title: ---------------------------------- TABLE OF CONTENTS PAGE 1. DEFINITIONS AND CONSTRUCTION. . . . . . . . . . . . . . . . . . 1 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . 1 1.2 Accounting Terms . . . . . . . . . . . . . . . . . . . . 11 2. LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . 11 2.1 Revolving Advances . . . . . . . . . . . . . . . . . . . 11 2.2 Overadvances . . . . . . . . . . . . . . . . . . . . . . 13 2.3 Interest Rates, Payments, and Calculations . . . . . . . 13 2.4 Crediting Payments . . . . . . . . . . . . . . . . . . . 13 2.5 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.6 Increased Costs. . . . . . . . . . . . . . . . . . . . . 14 2.7 Term . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.8 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . 15 3. CONDITIONS OF LOANS . . . . . . . . . . . . . . . . . . . . . . 15 3.1 Conditions Precedent to Initial Advance. . . . . . . . . 15 3.2 Conditions Precedent to all Advances . . . . . . . . . . 16 4. CREATION OF SECURITY INTEREST . . . . . . . . . . . . . . . . . 16 4.1 Grant of Security Interest . . . . . . . . . . . . . . . 16 4.2 Delivery of Additional Documentation Required. . . . . . 17 4.3 Right to Inspect . . . . . . . . . . . . . . . . . . . . 17 5. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 17 5.1 Due Organization and Qualification . . . . . . . . . . . 17 5.2 Due Authorization: No Conflict . . . . . . . . . . . . . 17 5.3 No Prior Encumbrances. . . . . . . . . . . . . . . . . . 17 5.4 Bona Fide Eligible-Accounts. . . . . . . . . . . . . . . 17 5.5 Merchantable Inventory . . . . . . . . . . . . . . . . . 17 5.6 Intellectual Property. . . . . . . . . . . . . . . . . . 18 5.7 Name: Location of Chief Executive Office . . . . . . . . 18 5.8 Litigation . . . . . . . . . . . . . . . . . . . . . . . 18 5.9 No Material Adverse Change in Financial Statements . . . 18 5.10 Solvency . . . . . . . . . . . . . . . . . . . . . . . . 18 5.11 Regulatory Compliance. . . . . . . . . . . . . . . . . . 18 5.12 Environmental Condition. . . . . . . . . . . . . . . . . 19 5.13 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 19 5.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 19 5.15 Government Consents. . . . . . . . . . . . . . . . . . . 19 5.16 Frill Disclosure . . . . . . . . . . . . . . . . . . . . 19 6. AFFIRMATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 19 6.1 Good Standing. . . . . . . . . . . . . . . . . . . . . . 19 6.2 Government Compliance. . . . . . . . . . . . . . . . . . 20 6.3 Financial Statements, Reports, Certificates. . . . . . . 20 6.4 Inventory; Returns . . . . . . . . . . . . . . . . . . . 21 6.5 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . 21 6.6 Insurance. . . . . . . . . . . . . . . . . . . . . . . . 21 6.7 Principal Depository . . . . . . . . . . . . . . . . . . 21 6.8 Adjusted Quick Ratio . . . . . . . . . . . . . . . . . . 22 6.9 Debt-Net Worth Ratio . . . . . . . . . . . . . . . . . . 22 6.10 Tangible Net Worth . . . . . . . . . . . . . . . . . . . 22 i. TABLE OF CONTENTS (CONTINUED) PAGE 6.11 Profitability. . . . . . . . . . . . . . . . . . . . . . 22 6.12 Registration of Intellectual Property Rights . . . . . . 22 6.13 Terms of Sale. . . . . . . . . . . . . . . . . . . . . . 23 6.14 Borrower Agreement . . . . . . . . . . . . . . . . . . . 23 6.15 Notice in Event of Filing of Action for Debtor's Relief. 23 6.16 Payment in Dollars . . . . . . . . . . . . . . . . . . . 23 6.17 Further Assurances . . . . . . . . . . . . . . . . . . . 23 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 23 7.1 Dispositions . . . . . . . . . . . . . . . . . . . . . . 24 7.2 Change in Business . . . . . . . . . . . . . . . . . . . 24 7.3 Mergers or Acquisitions. . . . . . . . . . . . . . . . . 24 7.4 Indebtedness . . . . . . . . . . . . . . . . . . . . . . 24 7.5 Encumbrances . . . . . . . . . . . . . . . . . . . . . . 24 7.6 Distributions. . . . . . . . . . . . . . . . . . . . . . 24 7.7 Investments. . . . . . . . . . . . . . . . . . . . . . . 24 7.8 Transactions with Affiliates . . . . . . . . . . . . . . 24 7.9 Intellectual Property Agreements . . . . . . . . . . . . 25 7.10 Subordinated Debt. . . . . . . . . . . . . . . . . . . . 25 7.11 Inventory. . . . . . . . . . . . . . . . . . . . . . . . 25 7.12 Compliance . . . . . . . . . . . . . . . . . . . . . . . 25 7.13 Loans to Shareholders or Affiliates. . . . . . . . . . . 25 7.14 Borrower Agreement . . . . . . . . . . . . . . . . . . . 25 7.15 Exim Guarantee . . . . . . . . . . . . . . . . . . . . . 25 8. EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 26 8.1 Payment Default. . . . . . . . . . . . . . . . . . . . . 26 8.2 Covenant Default; Cross Default. . . . . . . . . . . . . 26 8.3 Material Adverse Change. . . . . . . . . . . . . . . . . 26 8.4 Attachment . . . . . . . . . . . . . . . . . . . . . . . 26 8.5 Insolvency . . . . . . . . . . . . . . . . . . . . . . . 26 8.6 Other Agreements . . . . . . . . . . . . . . . . . . . . 26 8.7 Subordinated Debt. . . . . . . . . . . . . . . . . . . . 27 8.8 Judgments. . . . . . . . . . . . . . . . . . . . . . . . 27 8.9 Misrepresentations . . . . . . . . . . . . . . . . . . . 27 8.10 Exim Guarantee . . . . . . . . . . . . . . . . . . . . . 27 9. BANK'S RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . 27 9.1 Rights and Remedies. . . . . . . . . . . . . . . . . . . 27 9.2 Exim Direction . . . . . . . . . . . . . . . . . . . . . 28 9.3 Exim Notification. . . . . . . . . . . . . . . . . . . . 28 9.4 Power of Attorney. . . . . . . . . . . . . . . . . . . . 29 9.5 Accounts Collection. . . . . . . . . . . . . . . . . . . 29 9.6 Bank Expenses. . . . . . . . . . . . . . . . . . . . . . 30 9.7 Bank's Liability for Collateral. . . . . . . . . . . . . 30 9.8 Remedies Cumulative. . . . . . . . . . . . . . . . . . . 30 9.9 Demand; Protest. . . . . . . . . . . . . . . . . . . . . 30 10. WAIVERS: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . 30 10.1 Demand: Protest. . . . . . . . . . . . . . . . . . . . . 30 ii. TABLE OF CONTENTS (CONTINUED) PAGE 10.2 Bank's Liability for Collateral. . . . . . . . . . . . . 31 10.3 Indemnification. . . . . . . . . . . . . . . . . . . . . 31 11. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 12. CHOICE OF LAW AND VENUE: JURY TRIAL WAIVER . . . . . . . . . . . 32 13. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . 32 13.1 Successors and Assigns . . . . . . . . . . . . . . . . . 32 13.2 Indemnification. . . . . . . . . . . . . . . . . . . . . 32 13.3 Time of Essence. . . . . . . . . . . . . . . . . . . . . 32 13.4 Severability of Provisions . . . . . . . . . . . . . . . 32 13.5 Amendments in Writing. . . . . . . . . . . . . . . . . . 32 13.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . 33 13.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . 33 13.8 Confidentiality. . . . . . . . . . . . . . . . . . . . . 33