{"id":43019,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/agreement-and-plan-of-merger-and-reorganization-invision.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"agreement-and-plan-of-merger-and-reorganization-invision","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/planning\/agreement-and-plan-of-merger-and-reorganization-invision.html","title":{"rendered":"Agreement and Plan of Merger and Reorganization &#8211; InVision Technologies Inc. and Quantum Magnetics Inc."},"content":{"rendered":"<pre>\n                   AGREEMENT AND PLAN OF MERGER AND REORGANIZATION\n\n\n                                        among:\n\n\n                             INVISION TECHNOLOGIES, INC.,\n                               a Delaware corporation;\n\n\n                                QP ACQUISITION CORP.,\n                              a California corporation;\n\n\n                                         and\n\n\n                               QUANTUM MAGNETICS, INC.,\n                               a California corporation\n\n\n\n\n\n\n\n\n\n\n                             ---------------------------\n\n                            Dated as of September 3, 1997\n                             ---------------------------\n\n\n\n\n                                  TABLE OF CONTENTS\n\n                                                                           PAGE\n\nSECTION 1.    DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . .  1\n   1.1   Merger of Merger Sub into the Company . . . . . . . . . . . . . . .  1\n   1.2   Effect of the Merger. . . . . . . . . . . . . . . . . . . . . . . .  1\n   1.3   Closing; Effective Time . . . . . . . . . . . . . . . . . . . . . .  2\n   1.4   Articles of Incorporation and Bylaws; Directors and Officers. . . .  2\n   1.5   Conversion of Shares. . . . . . . . . . . . . . . . . . . . . . . .  2\n   1.6   Employee Stock Options. . . . . . . . . . . . . . . . . . . . . . .  5\n   1.7   Closing of the Company's Transfer Books . . . . . . . . . . . . . .  6\n   1.8   Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . .  6\n   1.9   Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . .  7\n   1.10  Tax Consequences. . . . . . . . . . . . . . . . . . . . . . . . . .  8\n   1.11  Accounting Treatment. . . . . . . . . . . . . . . . . . . . . . . .  8\n   1.12  Further Action. . . . . . . . . . . . . . . . . . . . . . . . . . .  8\n\nSECTION 2.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY. . . . . . . . .  8\n   2.1   Due Organization; No Subsidiaries; Etc. . . . . . . . . . . . . . .  8\n   2.2   Articles of Incorporation and Bylaws; Records . . . . . . . . . . .  9\n   2.3   Capitalization, Etc.. . . . . . . . . . . . . . . . . . . . . . . . 10\n   2.4   Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 11\n   2.5   Absence of Changes. . . . . . . . . . . . . . . . . . . . . . . . . 12\n   2.6   Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 14\n   2.7   Bank Accounts; Receivables; Inventory . . . . . . . . . . . . . . . 14\n   2.8   Equipment; Leasehold. . . . . . . . . . . . . . . . . . . . . . . . 14\n   2.9   Proprietary Assets. . . . . . . . . . . . . . . . . . . . . . . . . 15\n   2.10  Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16\n   2.11  Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21\n   2.12  Compliance with Legal Requirements. . . . . . . . . . . . . . . . . 22\n   2.13  Governmental Authorizations . . . . . . . . . . . . . . . . . . . . 22\n   2.14  Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22\n   2.15  Employee and Labor Matters; Benefit Plans . . . . . . . . . . . . . 23\n   2.16  Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . 26\n   2.17  Controlled Substances; Explosives . . . . . . . . . . . . . . . . . 26\n   2.18  Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27\n   2.19  Related Party Transactions. . . . . . . . . . . . . . . . . . . . . 27\n   2.20  Legal Proceedings; Orders . . . . . . . . . . . . . . . . . . . . . 27\n   2.21  Authority; Binding Nature of Agreement. . . . . . . . . . . . . . . 28\n   2.22  Non-Contravention; Consents . . . . . . . . . . . . . . . . . . . . 28\n   2.23  Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 29\n   2.24  No Brokers or Finders . . . . . . . . . . . . . . . . . . . . . . . 30\n\n\n                                          i\n\n\n                                  TABLE OF CONTENTS\n                                     (CONTINUED)  \n                                                                           PAGE\n\nSECTION 3.    REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. . . . 30\n   3.1   SEC Filings; Financial Statements . . . . . . . . . . . . . . . . . 30\n   3.2   Authority; Binding Nature of Agreement. . . . . . . . . . . . . . . 30\n   3.3   Valid Issuance; Reservation of Shares . . . . . . . . . . . . . . . 31\n\nSECTION 4.    CERTAIN COVENANTS OF THE COMPANY . . . . . . . . . . . . . . . 31\n   4.1   Access and Investigation. . . . . . . . . . . . . . . . . . . . . . 31\n   4.2   Operation of the Company's Business . . . . . . . . . . . . . . . . 31\n   4.3   Notification; Updates to Disclosure Schedule. . . . . . . . . . . . 33\n   4.4   No Negotiation. . . . . . . . . . . . . . . . . . . . . . . . . . . 34\n   4.5   Fees and Expenses.. . . . . . . . . . . . . . . . . . . . . . . . . 34\n\nSECTION 5.    ADDITIONAL COVENANTS OF THE PARTIES. . . . . . . . . . . . . . 34\n   5.1   Filings and Consents. . . . . . . . . . . . . . . . . . . . . . . . 34\n   5.2   Registration Statement; Proxy Statement\/Prospectus. . . . . . . . . 35\n   5.3   Company Shareholders Meeting. . . . . . . . . . . . . . . . . . . . 35\n   5.4   Public Announcements. . . . . . . . . . . . . . . . . . . . . . . . 36\n   5.5   Pooling of Interests. . . . . . . . . . . . . . . . . . . . . . . . 36\n   5.6   Affiliate Agreements. . . . . . . . . . . . . . . . . . . . . . . . 36\n   5.7   Reasonable Efforts. . . . . . . . . . . . . . . . . . . . . . . . . 36\n   5.8   Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36\n   5.9   Noncompetition Agreements . . . . . . . . . . . . . . . . . . . . . 36\n   5.10  Termination of Agreements . . . . . . . . . . . . . . . . . . . . . 36\n   5.11  FIRPTA Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 37\n   5.12  Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37\n   5.13  Termination of Employee Plans . . . . . . . . . . . . . . . . . . . 37\n   5.14  Escrow Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 37\n   5.15  Escrow Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37\n   5.16  Amendment of Articles of Incorporation. . . . . . . . . . . . . . . 37\n\nSECTION 6.    CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB . 37\n   6.1   Accuracy of Representations . . . . . . . . . . . . . . . . . . . . 38\n   6.2   Performance of Covenants. . . . . . . . . . . . . . . . . . . . . . 38\n   6.3   Shareholder Approval. . . . . . . . . . . . . . . . . . . . . . . . 38\n   6.4   Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38\n   6.5   Agreements and Documents. . . . . . . . . . . . . . . . . . . . . . 38\n   6.6   Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40\n   6.7   Legends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40\n   6.8   Termination of Employee Plans . . . . . . . . . . . . . . . . . . . 40\n   6.9   FIRPTA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . 40\n\n\n\n                                          ii\n\n\n                                  TABLE OF CONTENTS\n                                     (CONTINUED)  \n                                                                           PAGE\n\n   6.10  Effectiveness of Registration Statement . . . . . . . . . . . . . . 40\n   6.11  Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40\n   6.12  No Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . 40\n   6.13  No Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 40\n   6.14  Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . 41\n\nSECTION 7.    CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY . . . . . . 41\n   7.1   Accuracy of Representations . . . . . . . . . . . . . . . . . . . . 41\n   7.2   Performance of Covenants. . . . . . . . . . . . . . . . . . . . . . 41\n   7.3   Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41\n   7.4   Listing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42\n   7.5   No Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . . 42\n   7.6   Employment Agreements . . . . . . . . . . . . . . . . . . . . . . . 42\n\nSECTION 8.    TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 42\n   8.1   Termination Events. . . . . . . . . . . . . . . . . . . . . . . . . 42\n   8.2   Termination Procedures. . . . . . . . . . . . . . . . . . . . . . . 43\n   8.3   Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . 43\n\nSECTION 9.    INDEMNIFICATION, ETC.. . . . . . . . . . . . . . . . . . . . . 43\n   9.1   Survival of Representations, Etc. . . . . . . . . . . . . . . . . . 43\n   9.2   Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 44\n   9.3   Threshold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45\n   9.4   Satisfaction of Indemnification Claim . . . . . . . . . . . . . . . 45\n   9.5   No Contribution.. . . . . . . . . . . . . . . . . . . . . . . . . . 45\n   9.6   Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45\n   9.7   Defense of Third Party Claims . . . . . . . . . . . . . . . . . . . 46\n   9.8   Exercise of Remedies by Indemnitees Other Than Parent . . . . . . . 46\n\nSECTION 10.   MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . 46\n   10.1  Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46\n   10.2  Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . 46\n   10.3  Fees and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . 47\n   10.4  Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 47\n   10.5  Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47\n   10.6  Time of the Essence.. . . . . . . . . . . . . . . . . . . . . . . . 48\n   10.7  Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48\n   10.8  Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 48\n   10.9  Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 48\n   10.10 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . 48\n\n\n                                         iii\n\n\n                                  TABLE OF CONTENTS\n                                     (CONTINUED)  \n                                                                           PAGE\n\n   10.11 Remedies Cumulative; Specific Performance . . . . . . . . . . . . . 49\n   10.12 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49\n   10.13 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49\n   10.14 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . 49\n   10.15 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . 49\n   10.16 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 49\n   10.17 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . 50\n\n\n                                          iv\n\n\n\n                                       EXHIBITS\n\nExhibit A     -    Certain definitions\n\nExhibit B     -    Form of Amended and Restated Articles of Incorporation of\n                   Surviving Corporation\n\nExhibit C     -    Directors and officers of Surviving Corporation\n\nExhibit D-1   -    Form of Affiliate Agreement\n\nExhibit D-2   -    Persons to execute Affiliate Agreements\n\nExhibit E     -    Form of Continuity of Interest Certificate\n\nExhibit F     -    Persons to sign Noncompetition Agreements\n\nExhibit G     -    Form of Noncompetition Agreement\n\nExhibit H     -    Form of Release\n\nExhibit I     -    Form of legal opinion of Branton, Wilson &amp; Muns\n\nExhibit J     -    Certain employees\n\nExhibit K     -    Form of legal opinion of Cooley Godward LLP\n\nExhibit L     -    Escrow Agreement\n\n\n\n\n\n                                  AGREEMENT AND PLAN\n                             OF MERGER AND REORGANIZATION\n\n\n\n    THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION (the \"Agreement\") is\nmade and entered into as of September 3, 1997, by and among:  INVISION\nTECHNOLOGIES, INC., a Delaware corporation (\"Parent\"); QP ACQUISITION CORP., a\nCalifornia corporation and a wholly owned subsidiary of Parent (\"Merger Sub\");\nand QUANTUM MAGNETICS, INC., a California corporation (the \"Company\").  Certain\nother capitalized terms used in this Agreement are defined in Exhibit A.\n\n\n                                       RECITALS\n\n    A.   Parent, Merger Sub and the Company intend to effect a merger of Merger\nSub into the Company in accordance with this Agreement and the California\nGeneral Corporation Law (the \"Merger\").  Upon consummation of the Merger, Merger\nSub will cease to exist, and the Company will become a wholly owned subsidiary\nof Parent.\n\n    B.   It is intended that the Merger qualify as a tax-free reorganization\nwithin the meaning of Section 368(a) of the Internal Revenue Code of 1986, as\namended (the \"Code\").\n\n    C.   For accounting purposes, it is intended that the Merger be treated as\na \"pooling of interests.\"\n\n\n                                      AGREEMENT\n\n    The parties to this Agreement agree as follows:\n\n\nSECTION 1.    DESCRIPTION OF TRANSACTION\n\n    1.1  MERGER OF MERGER SUB INTO THE COMPANY.  Upon the terms and subject to\nthe conditions set forth in this Agreement, at the Effective Time (as defined in\nSection 1.3), Merger Sub shall be merged with and into the Company, and the\nseparate existence of Merger Sub shall cease.  The Company will continue as the\nsurviving corporation in the Merger (the \"Surviving Corporation\").\n\n    1.2  EFFECT OF THE MERGER.  The Merger shall have the effects set forth in\nthis Agreement and in the applicable provisions of the California General\nCorporation Law.\n\n\n                                          1.\n\n\n    1.3  CLOSING; EFFECTIVE TIME.  The consummation of the transactions\ncontemplated by this Agreement (the \"Closing\") shall take place at the offices\nof Cooley Godward LLP, Five Palo Alto Square, Palo Alto, California 94306 at\n10:00 a.m. on September 30, 1997, or at such other time and date as Parent may\ndesignate upon not less than five days' prior notice to the Company (the\n\"Scheduled Closing Time\").  (The date on which the Closing actually takes place\nis referred to in this Agreement as the \"Closing Date.\")  Contemporaneously with\nor as promptly as practicable after the Closing, a properly executed agreement\nof merger conforming to the requirements of Chapter 11 of the California General\nCorporation Law shall be filed with the Secretary of State of the State of\nCalifornia.  The Merger shall become effective at the time such agreement of\nmerger is filed with and accepted by the Secretary of State of the State of\nCalifornia (the \"Effective Time\").\n\n    1.4  ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.  Unless\notherwise determined by Parent and the Company prior to the Effective Time:\n\n         (a)  the Articles of Incorporation of the Surviving Corporation shall\n    be amended and restated as of the Effective Time to conform to Exhibit B;\n\n         (b)  the Bylaws of the Surviving Corporation shall be amended and\n    restated as of the Effective Time to conform to the Bylaws of Merger Sub as\n    in effect immediately prior to the Effective Time; and\n\n         (c)  the directors and officers of the Surviving Corporation\n    immediately after the Effective Time shall be the individuals identified on\n    Exhibit C.\n\n    1.5  CONVERSION OF SHARES.\n\n         (a)  Subject to Sections 1.5(b), 1.8(c) and 1.9, at the Effective\nTime, by virtue of the Merger and without any further action on the part of\nParent, Merger Sub, the Company or any shareholder of the Company:\n\n              (i)  each share of Common Stock, no par value, of the Company\n         (the \"Company Common Stock\") outstanding immediately prior to the\n         Effective Time shall be converted into the right to receive (A) such\n         fraction of a share of common stock (par value $.001 per share) of\n         Parent (\"Parent Common Stock\") as is equal to 0.88 multiplied by the\n         \"Applicable Fraction\" (as defined in Section 1.5(c)(i)) plus (B) up to\n         such fraction of a share of Parent Common Stock as is equal to 0.12\n         multiplied by the Applicable Fraction if and when released, in whole\n         or in part, from escrow pursuant to the terms of the Escrow Agreement;\n\n              (ii) each share of Series A Preferred Stock, no par value, of the\n         Company (the \"Series A Stock\") outstanding immediately prior to the\n         Effective Time shall be converted into the right to receive (A) such\n         fraction of a share of Parent Common Stock as is equal to 0.88\n         multiplied by the \"Series A Fraction\" (as defined in Section\n         1.5(c)(ii)) plus (B) up to such fraction of a share of Parent Common\n         Stock as is equal to 0.12 multiplied by the Series A Fraction if and\n\n\n\n                                          2\n\n\n         when released, in whole or in part, from escrow pursuant to the terms\n         of the Escrow Agreement;\n\n              (iii)     each share of Series B Preferred Stock, no par value,\n         of the Company (the \"Series B Stock\") outstanding immediately prior to\n         the Effective Time shall be converted into the right to receive (A)\n         such fraction of a share of Parent Common Stock as is equal to 0.88\n         multiplied by the \"Series B Fraction\" (as defined in Section\n         1.5(c)(iv)) plus (B) up to such fraction of a share of Parent Common\n         Stock as is equal to 0.12 multiplied by the Series B Fraction if and\n         when released, in whole or in part, from escrow pursuant to the terms\n         of the Escrow Agreement;\n\n              (iv) each share of Series C Preferred Stock, no par value, of the\n         Company (the \"Series C Stock\") outstanding immediately prior to the\n         Effective Time shall be converted into the right to receive (A) such\n         fraction of a share of Parent Common Stock as is equal to 0.88\n         multiplied by the \"Series C Fraction\" (as defined in Section\n         1.5(c)(v)) plus (B) up to such fraction of a share of Parent Common\n         Stock as is equal to 0.12 multiplied by the Series C Fraction if and\n         when released, in whole or in part, from escrow pursuant to the terms\n         of the Escrow Agreement;\n\n              (v)  each share of the common stock, $0.001 par value, of Merger\n         Sub outstanding immediately prior to the Effective Time shall be\n         converted into one share of common stock of the Surviving Corporation.\n\n         (b)  Each share of Company Common Stock, Series A Stock, Series B\nStock, Series C Stock outstanding immediately prior to the Effective Time and\nowned by Parent and each share of Series D Preferred stock, no par value, of the\nCompany (\"Series D Stock\") outstanding immediately prior to the Effective Time,\nall of which are owned by Parent, shall automatically be canceled and no\nconversion shall be made in respect thereof.\n\n         (c)  For purposes of this Agreement:\n\n              (i)  The \"Applicable Fraction\" shall be the fraction: (A) having\n         a numerator equal to the amount determined by subtracting (1) the\n         \"Aggregate Liquidation Preference\" (as defined in Section 1.5(c)(vi))\n         from (2) the amount determined by multiplying (i) 777,000 by (ii) the\n         Designated Parent Stock Price (as defined in Section 1.5(c)(viii));\n         and (B) having a denominator equal to the amount determined by\n         multiplying (1) the \"Adjusted Fully Diluted Company Share Amount\" (as\n         defined in Section 1.5(c)(vii)) by (2) the \"Designated Parent Stock\n         Price\" (as defined in Section 1.5(c)(viii));\n\n              (ii) The \"Series A Fraction\" means the sum of:  (A) the fraction\n         determined by dividing (1) $1.50 (representing the liquidation\n         preference of each share of Series A Stock under the Company's\n         Articles of Incorporation) by (2) the \"Designated Parent Stock Price\"\n         (as defined in Section 1.5(c)(viii)); and (B)\n\n\n                                          3\n\n\n         the fraction determined by multiplying (1) the \"Series A Conversion\n         Rate\" (as defined in Section 1.5(c)(iii)) by (2) the \"Applicable\n         Fraction\" (as defined in Section 1.5(c)(i));\n\n              (iii)     The \"Series A Conversion Rate\" shall be the fraction\n         determined by dividing (1) the total number of shares of Common Stock\n         issuable upon the conversion of all shares of Series A Stock\n         outstanding immediately prior to the Effective Time by (2) the total\n         number of shares of Series A Stock outstanding immediately prior to\n         the Effective Time.\n\n              (iv) The \"Series B Fraction\" means the fraction determined by\n         dividing (A) $0.75 (representing the liquidation preference of each\n         share of Series B Stock under the Company's Articles of Incorporation)\n         by (B) the \"Designated Parent Stock Price\" (as defined in Section\n         1.5(c)(viii));\n\n              (v)  The \"Series C Fraction\" means the sum of:  (A) the fraction\n         determined by dividing (1) $1.00 (representing the liquidation\n         preference of each share of Series C Stock under the Company's\n         Articles of Incorporation) by (2) the \"Designated Parent Stock Price\"\n         (as defined in Section 1.5(c)(viii)); and (B) the \"Applicable\n         Fraction\" (as defined in Section 1.5(c)(i));\n\n              (vi) The \"Aggregate Liquidation Preference\" shall be the amount\n         equal to the sum of:  (A) $1.50 (representing the liquidation\n         preference of each share of Series A Stock under the Company's\n         Articles of Incorporation) multiplied by the number of shares of\n         Series A Stock outstanding immediately prior to the Effective Time;\n         (B) $0.75 (representing the liquidation preference of each share of\n         Series B Stock under the Company's Articles of Incorporation)\n         multiplied by the number of shares of Series B Stock outstanding\n         immediately prior to the Effective Time; and (C) $1.00 (representing\n         the liquidation preference of each share of Series C Stock under the\n         Company's Articles of Incorporation) multiplied by the number of\n         shares of Series C Stock outstanding immediately prior to the\n         Effective Time;\n\n              (vii) The \"Adjusted Fully Diluted Company Share Amount\" shall\n         be the sum of:  (A) the number of shares resulting from the\n         subtraction of (1) the number of shares of Company Common Stock\n         outstanding immediately prior to the Effective Time and held by Parent\n         from (2) the aggregate number of shares of Company Common Stock\n         outstanding immediately prior to the Effective Time (including any\n         such shares that are subject to a repurchase option or risk of\n         forfeiture under any restricted stock purchase agreement or other\n         agreement); (B) the aggregate number of shares of Company Common Stock\n         issuable upon conversion of all of the Series A Stock and Series C \n         Stock collectively outstanding immediately prior to the Effective Time \n         and not held by Parent; and (C) the aggregate number of shares of \n         Company Common Stock purchasable under or otherwise subject to all \n         Company Options (as defined in Section 1.6) outstanding immediately \n         prior to the Effective Time (including all\n\n\n                                          4\n\n\n         shares of Company Common Stock that may ultimately be purchased under\n         Company Options that are unvested or are otherwise not then\n         exercisable); and\n\n              (viii) The \"Designated Parent Stock Price\" shall be the\n         average of the closing sale prices of a share of Parent Common Stock\n         as reported on the Nasdaq National Market for each of the sixty (60)\n         consecutive trading days ending (and including) the third trading day\n         prior to the Company Shareholders Meeting, weighted in accordance with\n         the number of shares of Parent Common Stock traded on each such\n         trading day.\n\n         (d)  If any shares of Company Common Stock outstanding immediately\nprior to the Effective Time are unvested or are subject to a repurchase option,\nrisk of forfeiture or other condition under any applicable restricted stock\npurchase agreement or other agreement with the Company, then the shares of\nParent Common Stock issued in exchange for such shares of Company Common Stock\nwill also be unvested and subject to the same repurchase option, risk of\nforfeiture or other condition, and the certificates representing such shares of\nParent Common Stock may accordingly be marked with appropriate legends.\n\n         (e)  All calculations made pursuant to this Section 1.5 shall be\ncalculated to the nearest fifth decimal place, with five millionths rounded up\nto the nearest one-hundred-thousandth.\n\n    1.6  EMPLOYEE STOCK OPTIONS.  At the Effective Time, each stock option that\nis then outstanding under the Company's 1994 Qualified and Nonqualified Stock\nOption Plan (the \"Company Stock Plan\"), whether vested or unvested (a \"Company\nOption\"), shall be assumed by Parent in accordance with the terms (as in effect\nas of the date of this Agreement) of the Company Stock Plan and the stock option\nagreement by which such Company Option is evidenced.  All rights with respect to\nCompany Common Stock under outstanding Company Options shall thereupon be\nconverted into rights with respect to Parent Common Stock.  Accordingly, from\nand after the Effective Time, (a) each Company Option assumed by Parent may be\nexercised solely for shares of Parent Common Stock, (b) the number of shares of\nParent Common Stock subject to each such assumed Company Option shall be equal\nto the number of shares of Company Common Stock that were subject to such\nCompany Option immediately prior to the Effective Time multiplied by the\nApplicable Fraction, rounded down to the nearest whole number of shares of\nParent Common Stock, (c) the per share exercise price for the Parent Common\nStock issuable upon exercise of each such assumed Company Option shall be\ndetermined by dividing the exercise price per share of Company Common Stock\nsubject to such Company Option, as in effect immediately prior to the Effective\nTime, by the Applicable Fraction, and rounding the resulting exercise price up\nto the nearest whole cent, and (d) all restrictions on the exercise of each such\nassumed Company Option shall continue in full force and effect, and the term,\nexercisability, vesting schedule and other provisions of such Company Option\nshall otherwise remain unchanged; PROVIDED, HOWEVER, that each such assumed\nCompany Option shall, in accordance with its terms, be subject to further\nadjustment as appropriate to reflect any stock split, reverse stock split, stock\ndividend, recapitalization or other similar transaction effected by Parent after\nthe Effective Time; PROVIDED FURTHER, that upon the issuance of Parent Common\nStock pursuant to the exercise of an assumed Company Option prior to the\n\n\n                                          5\n\n\nrelease of all shares of Parent Common Stock held in escrow pursuant to the\nEscrow Agreement, (i) Parent shall issue to the Person exercising such assumed\nCompany Option only that portion of the shares of Parent Common Stock issuable\nupon suchexercise of such assumed Company Option that such holder would have\nreceived had such assumed Company Option been exercised prior to the Effective\nTime and converted into shares of Parent Common Stock pursuant to Section\n1.5(a)(i), (ii) the remainder of the shares of Parent Common Stock issuable upon\nthe exercise of such assumed Company Option shall be held in escrow pursuant to\nthe terms of the Escrow Agreement, and (iii) any such shares of Parent Common\nStock shall be deemed to have been deposited into escrow as of the Effective\nTime and appropriate adjustments shall be made in Exhibit A of the Escrow\nAgreement with respect to the incidence of any prior release of shares of Parent\nCommon Stock to an Indemnitee, so that any such Person bears a proportionate\nshare of any release to an Indemnitee that occurs after the Effective Time.  The\nCompany and Parent shall take all actions that may be necessary (under the\nCompany Stock Plan and otherwise) to effectuate the provisions of this Section\n1.6.  Following the Closing, Parent will send to each holder of an assumed\nCompany Option a written notice setting forth (i) the number of shares of Parent\nCommon Stock subject to such assumed Company Option, and (ii) the exercise price\nper share of Parent Common Stock issuable upon exercise of such assumed Company\nOption.  Parent shall file with the SEC, within sixty (60) days after the\nClosing Date, a registration statement on Form S-8 registering the exercise of\nthe Company Options assumed by Parent pursuant to this Section 1.6.\n\n\n    1.7  CLOSING OF THE COMPANY'S TRANSFER BOOKS.  At the Effective Time,\nholders of certificates representing shares of the Company's capital stock that\nwere outstanding immediately prior to the Effective Time shall cease to have any\nrights as shareholders of the Company, and the stock transfer books of the\nCompany shall be closed with respect to all shares of such capital stock\noutstanding immediately prior to the Effective Time.  No further transfer of any\nsuch shares of the Company's capital stock shall be made on such stock transfer\nbooks after the Effective Time.  If, after the Effective Time, a valid\ncertificate previously representing any of such shares of the Company's capital\nstock (a \"Company Stock Certificate\") is presented to the Surviving Corporation\nor Parent, such Company Stock Certificate shall be canceled and shall be\nexchanged as provided in Section 1.8.\n\n    1.8  EXCHANGE OF CERTIFICATES.\n\n         (a)  At or as soon as practicable after the Effective Time, Parent\nwill send to the holders of Company Stock Certificates (i) a letter of\ntransmittal in customary form and containing such provisions as Parent may\nreasonably specify, and (ii) instructions for use in effecting the surrender of\nCompany Stock Certificates in exchange for certificates representing Parent\nCommon Stock.  Upon surrender of a Company Stock Certificate to Parent for\nexchange, together with a duly executed letter of transmittal and such other\ndocuments as may be reasonably required by Parent, the holder of such Company\nStock Certificate shall be entitled to receive in exchange therefor a\ncertificate representing the number of whole shares of Parent Common Stock that\nsuch holder has the right to receive pursuant to the provisions of this Section\n1, and the Company Stock Certificate so surrendered shall be canceled.  Until\nsurrendered as contemplated by this Section 1.8, each Company Stock Certificate\nshall be deemed, from and after the Effective Time, to represent only the right\nto receive upon such surrender a certificate\n\n\n                                          6\n\n\nrepresenting shares of Parent Common Stock (and cash in lieu of any fractional\nshare of Parent Common Stock) as contemplated by this Section 1.  If any Company\nStock Certificate shall have been lost, stolen or destroyed, Parent may, in its\ndiscretion and as a condition precedent to the issuance of any certificate\nrepresenting Parent Common Stock, require the owner of such lost, stolen or\ndestroyed Company Stock Certificate to provide an appropriate affidavit and to\ndeliver a bond (in such sum as Parent may reasonably direct) as indemnity\nagainst any claim that may be made against Parent or the Surviving Corporation\nwith respect to such Company Stock Certificate.\n\n         (b)  No dividends or other distributions declared or made with respect\nto Parent Common Stock with a record date after the Effective Time shall be paid\nto the holder of any unsurrendered Company Stock Certificate with respect to the\nshares of Parent Common Stock represented thereby, and no cash payment in lieu\nof any fractional share shall be paid to any such holder, until such holder\nsurrenders such Company Stock Certificate in accordance with this Section 1.8\n(at which time such holder shall be entitled to receive all such dividends and\ndistributions and such cash payment).\n\n         (c)  No fractional shares of Parent Common Stock shall be issued in\nconnection with the Merger, and no certificates for any such fractional shares\nshall be issued.  In lieu of such fractional shares, any holder of capital stock\nof the Company who would otherwise be entitled to receive a fraction of a share\nof Parent Common Stock (after aggregating all fractional shares of Parent Common\nStock issuable to such holder) shall, upon surrender of such holder's Company\nStock Certificate(s), be paid in cash the dollar amount (rounded to the nearest\nwhole cent), without interest, determined by multiplying such fraction by the\nDesignated Parent Stock Price.\n\n         (d)  Parent and the Surviving Corporation shall be entitled to deduct\nand withhold from any consideration payable or otherwise deliverable to any\nholder or former holder of capital stock of the Company pursuant to this\nAgreement such amounts as Parent or the Surviving Corporation may be required to\ndeduct or withhold therefrom under the Code or under any provision of state,\nlocal or foreign tax law.  To the extent such amounts are so deducted or\nwithheld, such amounts shall be treated for all purposes under this Agreement as\nhaving been paid to the Person to whom such amounts would otherwise have been\npaid.\n\n         (e)  Neither Parent nor the Surviving Corporation shall be liable to\nany holder or former holder of capital stock of the Company for any shares of\nParent Common Stock (or dividends or distributions with respect thereto), or for\nany cash amounts, delivered to any public official pursuant to any applicable\nabandoned property, escheat or similar law.\n\n    1.9  DISSENTING SHARES.\n\n         (a)  Notwithstanding anything to the contrary contained in this\nAgreement, any shares of capital stock of the Company that, as of the Effective\nTime, are or may become \"dissenting shares\" within the meaning of Section\n1300(b) of the California Corporations Code shall not be converted into or\nrepresent the right to receive Parent Common Stock in accordance with Section\n1.5 (or cash in lieu of fractional shares in accordance with Section 1.8(c)),\nand the\n\n\n                                          7\n\n\nholder or holders of such shares shall be entitled only to such rights\nas may be granted to such holder or holders in Chapter 13 of the California\nGeneral Corporation Law; PROVIDED, HOWEVER, that if the status of any such\nshares as \"dissenting shares\" shall not be perfected, or if any such shares\nshall lose their status as \"dissenting shares,\" then, as of the later of the\nEffective Time or the time of the failure to perfect such status or the loss of\nsuch status, such shares shall automatically be converted into and shall\nrepresent only the right to receive (upon the surrender of the certificate or\ncertificates representing such shares) Parent Common Stock in accordance with\nSection 1.5 (and cash in lieu of fractional shares in accordance with Section\n1.8(c)).\n\n         (b)  The Company shall give Parent (i) prompt notice of any written\ndemand received by the Company prior to the Effective Time to require the\nCompany to purchase shares of capital stock of the Company pursuant to Chapter\n13 of the California General Corporation Law and of any other demand, notice or\ninstrument delivered to the Company prior to the Effective Time pursuant to the\nCalifornia General Corporation Law, and (ii) the opportunity to participate in\nall negotiations and proceedings with respect to any such demand, notice or\ninstrument.  The Company shall not make any payment or settlement offer prior to\nthe Effective Time with respect to any such demand unless Parent shall have\nconsented in writing to such payment or settlement offer.\n\n    1.10 TAX CONSEQUENCES.  For federal income tax purposes, the Merger is\nintended to constitute a reorganization within the meaning of Section 368 of the\nCode.  The parties to this Agreement hereby adopt this Agreement as a \"plan of\nreorganization\" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the\nUnited States Treasury Regulations.\n\n    1.11 ACCOUNTING TREATMENT.  For accounting purposes, the Merger is intended\nto be treated as a \"pooling of interests.\"\n\n    1.12 FURTHER ACTION.  If, at any time after the Effective Time, any further\naction is determined by Parent to be necessary or desirable to carry out the\npurposes of this Agreement or to vest the Surviving Corporation or Parent with\nfull right, title and possession of and to all rights and property of Merger Sub\nand the Company, the officers and directors of the Surviving Corporation and\nParent shall be fully authorized (in the name of Merger Sub, in the name of the\nCompany and otherwise) to take such action.\n\n\nSECTION 2.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY\n\n         The Company represents and warrants, to and for the benefit of the\nIndemnitees, as follows:\n\n    2.1  DUE ORGANIZATION; NO SUBSIDIARIES; ETC.\n\n         (a)  The Company is a corporation duly organized, validly existing and\nin good standing under the laws of the State of California and has all necessary\npower and authority: (i) to conduct its business in the manner in which its\nbusiness is currently being conducted;(ii)\n\n\n                                          8\n\n\nto own and use its assets in the manner in which its assets are currently owned\nand used; and (iii) to perform its obligations under all Company Contracts.\n\n         (b)  Except as set forth in Part 2.1 of the Disclosure Schedule, the\nCompany has not conducted any business under or otherwise used, for any purpose\nor in any jurisdiction, any fictitious name, assumed name, trade name or other\nname, other than the name \"Quantum Magnetics, Inc.\"\n\n         (c)  The Company is not and has not been required to be qualified,\nauthorized, registered or licensed to do business as a foreign corporation in\nany jurisdiction other than the jurisdictions identified in Part 2.1 of the\nDisclosure Schedule, except where the failure to be so qualified, authorized,\nregistered or licensed has not had and will not have a Material Adverse Effect\non the Company.  The Company is in good standing as a foreign corporation in\neach of the jurisdictions identified in Part 2.1 of the Disclosure Schedule.\n\n         (d)  Part 2.1 of the Disclosure Schedule accurately sets forth (i) the\nnames of the members of the Company's board of directors, (ii) the names of the\nmembers of each committee of the Company's board of directors, and (iii) the\nnames and titles of the Company's officers.\n\n         (e)  The Company does not own any controlling interest in any Entity\nand, except for the equity interests identified in Part 2.1 of the Disclosure\nSchedule, the Company has never owned, beneficially or otherwise, any shares or\nother securities of, or any direct or indirect equity interest in, any Entity.\nThe Company has not agreed and is not obligated to make any future investment in\nor capital contribution to any Entity.  The Company has not guaranteed and is\nnot responsible or liable for any obligation of any of the Entities in which it\nowns or has owned any equity interest.\n\n    2.2  ARTICLES OF INCORPORATION AND BYLAWS; RECORDS.  The Company has\ndelivered to Parent accurate and complete copies of:  (1)the Company's articles\nof incorporation and bylaws, including all amendments thereto;(2) the stock\nrecords of the Company; and (3)except as set forth in Part 2.2 of the Disclosure\nSchedule, the minutes and other records of the meetings and other proceedings\n(including any actions taken by written consent or otherwise without a meeting)\nof the shareholders of the Company, the board of directors of the Company and\nall committees of the board of directors of the Company.  There have been no\nformal meetings or other proceedings of the shareholders of the Company, the\nboard of directors of the Company or any committee of the board of directors of\nthe Company that are not fully reflected in such minutes or other records.\nThere has not been any violation of any of the provisions of the Company's\narticles of incorporation or bylaws, and the Company has not taken any action\nthat is inconsistent in any material respect with any resolution adopted by the\nCompany's shareholders, the Company's board of directors or any committee of the\nCompany's board of directors.  The books of account, stock records, minute books\nand other records of the Company are accurate, up-to-date and complete in all\nmaterial respects, and have been maintained in accordance with prudent business\npractices.\n\n\n                                          9\n\n\n    2.3  CAPITALIZATION, ETC.\n\n         (a)  The authorized capital stock of the Company consists of: (i)\n17,000,000 shares of Common Stock (with no par value), of which 3,994,216 shares\nhave been issued and are outstanding as of the date of this Agreement; and (ii)\n7,911,340 shares of Preferred Stock (with no par value), of which (A) 2,500,000\nshares have been designated \"Series A Preferred Stock,\" of which 1,666,669\nshares have been issued and are outstanding as of the date of this Agreement;\n(B) 711,340 shares have been designated \"Series B Preferred Stock,\" of which\n711,340 shares have been issued and are outstanding; (C) 3,500,000 shares have\nbeen designated \"Series C Preferred Stock,\" of which 1,643,556 shares have been\nissued and are outstanding as of the date of this Agreement; and (D) 1,200,000\nshares have been designated \"Series D Preferred Stock,\" of which 441,328 shares\nhave been issued and are outstanding.  Each outstanding share of Series A Stock,\nSeries B Stock, Series C Stock and Series D Stock is convertible into one share\nof Company Common Stock.  All of the outstanding shares of Company Common Stock,\nSeries A Stock, Series B Stock, Series C Stock and Series D Stock have been duly\nauthorized and validly issued, and are fully paid and non-assessable.  Part 2.3\nof the Disclosure Schedule provides an accurate and complete description of the\nterms of each repurchase option which is held by the Company and to which any of\nsuch shares is subject.\n\n         (b)  The Company has reserved 2,200,000 shares of Company Common Stock\nfor issuance under the Company Stock Plan, of which options to purchase\n1,344,119 shares are outstanding as of the date of this Agreement.  Part 2.3 of\nthe Disclosure Schedule accurately sets forth, with respect to each Company\nOption that is outstanding as of the date of this Agreement: (i) the name of the\nholder of such Company Option; (ii) the total number of shares of Company Common\nStock that are subject to such Company Option and the number of shares of\nCompany Common Stock with respect to which such Company Option is immediately\nexercisable; (iii) the date on which such Company Option was granted and the\nterm of such Company Option; (iv) the vesting schedule for such Company Option;\n(v) the exercise price per share of Company Common Stock purchasable under such\nCompany Option; and (vi) whether such Company Option has been designated an\n\"incentive stock option\" as defined in Section 422 of the Code.\n\n         (c)  The Company has warrants (the \"Company Warrants\") to purchase\n211,917 shares of Series A Stock and 642,076 shares of Series C Stock\noutstanding as of the date of this Agreement.  The Company has reserved 211,917\nshares of Series A Stock and 642,076 shares of Series C Stock for issuance upon\nexercise of the Company Warrants.  Part 2.3 of the Disclosure Schedule\naccurately sets forth, with respect to each Company Warrant that is outstanding\nas of the date of this Agreement: (i) the name of the holder of such Company\nWarrant; (ii) the total number of shares of Series A Stock or Series C Stock (as\nthe case may be) that are subject to such Company Warrant and the number of\nshares of Series A Stock or Series C Stock (as the case may be) with respect to\nwhich such Company Warrant is immediately exercisable; (iii) the date on which\nsuch Company Warrant was granted and the term of such Company Warrant; (iv) the\nvesting schedule for such Company Warrant; and (v) the exercise price per share\nof Series A Stock or Series C Stock (as the case may be) purchasable under such\nCompany Warrant.  As of the date of this Agreement, as a consequence of the\ntransactions contemplated by this Agreement or otherwise, all Company Warrants\nare\n\n\n                                          10\n\n\nfully exercisable.  All Company Warrants not previously exercised will\nterminate at the Effective Time and there will be no right (whether or not then\nexercisable) to acquire capital stock or other securities of the Company or any\nother Entity under any Company Warrants at or after the Effective Time.  All\nCompany Warrants exercisable for Series C Stock are in the form provided by Dale\nSheets to Deborah Lawson Cleveland by facsimile transmission dated June 26,\n1997.\n\n         (d)  Except as set forth in Part 2.3 of the Disclosure Schedule, there\nis no: (i) outstanding subscription, option, call, warrant or right (whether or\nnot currently exercisable) to acquire any shares of the capital stock or other\nsecurities of the Company; (ii)outstanding security, instrument or obligation\nthat is or may become convertible into or exchangeable for any shares of the\ncapital stock or other securities of the Company; (iii) Contract under which the\nCompany is or may become obligated to sell or otherwise issue any shares of its\ncapital stock or any other securities; or (iv) to the best of the knowledge of\nthe Company, condition or circumstance that may give rise to or provide a basis\nfor the assertion of a claim by any Person to the effect that such Person is\nentitled to acquire or receive any shares of capital stock or other securities\nof the Company.\n\n         (e)  All outstanding shares of Company Common Stock, Series A Stock,\nSeries B Stock, Series C Stock and Series D Stock, and all outstanding Company\nWarrants and Company Options, have been issued and granted in compliance with\n(i) all applicable securities laws and other applicable Legal Requirements, and\n(ii) all requirements set forth in applicable Contracts.\n\n         (f)  Except as set forth in Part 2.3 of the Disclosure Schedule, the\nCompany has never repurchased, redeemed or otherwise reacquired any shares of\ncapital stock or other securities of the Company.  All securities so reacquired\nby the Company were reacquired in compliance with (i) the applicable provisions\nof the California General Corporation Law and all other applicable Legal\nRequirements, and (ii) all requirements set forth in applicable restricted stock\npurchase agreements and other applicable Contracts.\n\n    2.4  FINANCIAL STATEMENTS.\n\n         (a)  The Company has delivered to Parent the following financial\nstatements and notes (collectively, the \"Company Financial Statements\"):\n\n              (i)  The audited balance sheets of the Company as of September\n    30, 1996 and 1995, and the related audited income statements, statements of\n    shareholders equity and statements of cash flows of the Company for the\n    years then ended, together with the notes thereto and the unqualified\n    report and opinion of Coopers &amp; Lybrand LLP relating thereto; and\n\n              (ii) the unaudited balance sheet of the Company as of May 31,\n    1997 (the \"Unaudited Interim Balance Sheet\"), and the related unaudited\n    income statement of the Company for the eight months then ended.\n\n\n                                          11\n\n\n         (b)  The Company Financial Statements are accurate and complete in all\nmaterial respects and present fairly the financial position of the Company as of\nthe respective dates thereof and the results of operations and (in the case of\nthe financial statements referred to in Section 2.4(a)(i)) cash flows of the\nCompany for the periods covered thereby.  The Company Financial Statements have\nbeen prepared in accordance with generally accepted accounting principles\napplied on a consistent basis throughout the periods covered (except that the\nfinancial statements referred to in Section 2.4(a)(ii) do not contain footnotes\nand are subject to normal and recurring year-end audit adjustments, which will\nnot, individually or in the aggregate, be material in magnitude).\n\n    2.5  ABSENCE OF CHANGES.  Except as set forth in Part 2.5 of the Disclosure\nSchedule, since May 31, 1997:\n\n         (a)  there has not been any material adverse change in the Company's\n    business, condition, assets, liabilities, operations, financial performance\n    or prospects, and, to the best of the knowledge of the Company, no event\n    has occurred that will, or could reasonably be expected to, have a Material\n    Adverse Effect on the Company;\n\n         (b)  there has not been any material loss, damage or destruction to,\n    or any material interruption in the use of, any of the Company's assets\n    (whether or not covered by insurance);\n\n         (c)  the Company has not declared, accrued, set aside or paid any\n    dividend or made any other distribution in respect of any shares of capital\n    stock, and has not repurchased, redeemed or otherwise reacquired any shares\n    of capital stock or other securities;\n\n         (d)  the Company has not sold, issued or authorized the issuance of\n    (i) any capital stock or other security (except for Company Common Stock\n    issued upon the exercise of outstanding Company Options and Series A Stock\n    or Series C Stock issued upon the exercise of outstanding Company\n    Warrants), (ii) any option or right to acquire any capital stock or any\n    other security, or (iii) any instrument convertible into or exchangeable\n    for any capital stock or other security;\n\n         (e)  the Company has not amended or waived any of its rights under, or\n    permitted the acceleration of vesting under, (i) any provision of the\n    Company Stock Plan, (ii) any provision of any agreement evidencing any\n    outstanding Company Option, (iii) any restricted stock purchase agreement,\n    or (iv) any Company Warrant;\n\n         (f)  there has been no amendment to the Company's articles of\n    incorporation or bylaws, and the Company has not effected or been a party\n    to any Acquisition Transaction, recapitalization, reclassification of\n    shares, stock split, reverse stock split or similar transaction;\n\n         (g)  the Company has not formed any subsidiary or acquired any equity\n    interest or other interest in any other Entity;\n\n\n                                          12\n\n\n         (h)  the Company has not made any capital expenditure which, when\n    added to all other capital expenditures made on behalf of the Company since\n    May 31, 1997, exceeds $10,000;\n\n         (i)  the Company has not (i) entered into or permitted any of the\n    assets owned or used by it to become bound by any Contract that is or would\n    constitute a Material Contract (as defined in Section 2.10(a)), or (ii)\n    amended or prematurely terminated, or waived any material right or remedy\n    under, any such Contract;\n\n         (j)  the Company has not (i) acquired, leased or licensed any right or\n    other asset from any other Person, (ii) sold or otherwise disposed of, or\n    leased or licensed, any right or other asset to any other Person, or (iii)\n    waived or relinquished any right, except for immaterial rights or other\n    immaterial assets acquired, leased, licensed or disposed of in the ordinary\n    course of business and consistent with the Company's past practices;\n\n         (k)  the Company has not written off as uncollectible, or established\n    any extraordinary reserve with respect to, any account receivable or other\n    indebtedness;\n\n         (l)  the Company has not made any pledge of any of its assets or\n    otherwise permitted any of its assets to become subject to any Encumbrance,\n    except for pledges of immaterial assets made in the ordinary course of\n    business and consistent with the Company's past practices;\n\n         (m)  the Company has not (i) lent money to any Person (other than\n    pursuant to routine travel advances made to employees in the ordinary\n    course of business), or (ii) incurred or guaranteed any indebtedness for\n    borrowed money;\n\n         (n)  the Company has not (i) established or adopted any Employee\n    Benefit Plan, (ii) paid any bonus or made any profit-sharing or similar\n    payment to, or increased the amount of the wages, salary, commissions,\n    fringe benefits or other compensation or remuneration payable to, any of\n    its directors, officers or employees, or (iii) hired any new employee;\n\n         (o)  the Company has not changed any of its methods of accounting or\n    accounting practices in any respect;\n\n         (p)  the Company has not made any Tax election;\n\n         (q)  the Company has not commenced or settled any Legal Proceeding;\n\n         (r)  the Company has not entered into any material transaction or\n    taken any other material action outside the ordinary course of business or\n    inconsistent with its past practices; and\n\n         (s)  the Company has not agreed or committed to take any of the\n    actions referred to in clauses \"(c)\" through \"(r)\" above.\n\n\n                                          13\n\n\n    2.6  TITLE TO ASSETS.  The Company owns, and has good, valid and marketable\ntitle to, all assets purported to be owned by it, including:  (i)  all assets\nreflected on the Unaudited Interim Balance Sheet;  (ii)  all assets referred to\nin Parts 2.1, 2.7(b), 2.8(b) and 2.9 of the Disclosure Schedule and all of the\nCompany's rights under the Contracts identified in Part 2.10 of the Disclosure\nSchedule; and (iii) all other assets reflected in the Company's books and\nrecords as being owned by the Company.  Except as set forth in Part 2.6 of the\nDisclosure Schedule, all of said assets are owned by the Company free and clear\nof any liens or other Encumbrances, except for (x) any lien for current taxes\nnot yet due and payable, and (y) minor liens that have arisen in the ordinary\ncourse of business and that do not (in any case or in the aggregate) materially\ndetract from the value of the assets subject thereto or materially impair the\noperations of the Company.\n\n    2.7  BANK ACCOUNTS; RECEIVABLES; INVENTORY.\n\n         (a)  Part 2.7(a) of the Disclosure Schedule provides accurate\ninformation with respect to each account maintained by or for the benefit of the\nCompany at any bank or other financial institution.\n\n         (b)  Part 2.7(b) of the Disclosure Schedule provides an accurate and\ncomplete breakdown and aging of all accounts receivable, notes receivable and\nother receivables of the Company as of May 31, 1997.  Except as set forth in\nPart 2.7(b) of the Disclosure Schedule, all existing accounts receivable of the\nCompany (including those accounts receivable reflected on the Unaudited Interim\nBalance Sheet that have not yet been collected and those accounts receivable\nthat have arisen since May 31, 1997 and have not yet been collected) (i)\nrepresent valid obligations of customers of the Company arising from bona fide\ntransactions entered into in the ordinary course of business and (ii) are\ncurrent and will be collected in full when due, without any counterclaim or set\noff (net of an allowance for doubtful accounts not to exceed $10,000 in the\naggregate).\n\n         (c)  All inventory of the Company, whether or not reflected in the\nCompany Financial Statements, consists of a quality and quantity usable and\nsalable in the ordinary course of business, except for obsolete items and items\nof below-standard quality, all of which have been written off or written down to\nnet realizable value in the Company Financial Statements or on the accounting\nrecords of the Company as of the Closing Date, as the case may be.  All\ninventories not written off have been priced at the lower of cost or market on a\nfirst in, first out basis.  The quantities of each item of inventory (whether\nraw materials, work-in-process, or finished goods) are not excessive, but are\nreasonable in the present circumstances of the Company.\n\n    2.8  EQUIPMENT; LEASEHOLD.\n\n         (a)  All material items of equipment and other tangible assets owned\nby or leased to the Company are adequate for the uses to which they are being\nput, are in good condition and repair (ordinary wear and tear excepted) and are\nadequate for the conduct of the Company's business in the manner in which such\nbusiness is currently being conducted.\n\n\n                                          14\n\n\n         (b)  Part 2.8(b) of the Disclosure Schedule identifies all tangible\nassets owned by the Company with an original cost to the Company in excess of\n$5,000.\n\n         (c)  Part 2.8(c) of the Disclosure Schedule identifies all tangible\nassets leased to the Company.\n\n         (d)  The Company does not own any real property or any interest in\nreal property, except for the leasehold created under the real property lease\nidentified in Part 2.10 of the Disclosure Schedule.\n\n    2.9  PROPRIETARY ASSETS.\n\n         (a)  Part 2.9(a)(i) of the Disclosure Schedule sets forth, with\nrespect to each Company Proprietary Asset registered with any Governmental Body\nor for which an application has been filed with any Governmental Body, (i) a\nbrief description of such Proprietary Asset, and (ii) the names of the\njurisdictions covered by the applicable registration or application.  Part\n2.9(a)(ii) of the Disclosure Schedule identifies and provides a brief\ndescription of all other Company Proprietary Assets owned by the Company.  Part\n2.9(a)(iii) of the Disclosure Schedule identifies and provides a brief\ndescription of each Proprietary Asset licensed to the Company by any Person\n(except for any Proprietary Asset that is licensed to the Company under any\nthird party software license generally available to the public at a cost of less\nthan $5,000), and identifies the license agreement under which such Proprietary\nAsset is being licensed to the Company.  Except as set forth in Part 2.9(a)(iv)\nof the Disclosure Schedule, the Company has good, valid and marketable title to\nall of the Company Proprietary Assets identified in Parts 2.9(a)(i) and\n2.9(a)(ii) of the Disclosure Schedule, free and clear of all Encumbrances, and\nhas a valid right to use all Proprietary Assets identified in Part 2.9(a)(iii)\nof the Disclosure Schedule.  Except as set forth in Part 2.9(a)(v) of the\nDisclosure Schedule, the Company is not obligated to make any payment to any\nPerson for the use of any Company Proprietary Asset.  Except as set forth in\nPart 2.9(a)(vi) of the Disclosure Schedule, the Company has not developed\njointly with any other Person any Company Proprietary Asset with respect to\nwhich such other Person has any rights.\n\n         (b)  The Company has taken all measures and precautions necessary to\nprotect and maintain the confidentiality and secrecy of all Company Proprietary\nAssets (except Company Proprietary Assets whose value would be unimpaired by\npublic disclosure) and otherwise to maintain and protect the value of all\nCompany Proprietary Assets.  Except as set forth in Part 2.9(b) of the\nDisclosure Schedule, the Company has not (other than pursuant to license\nagreements identified in Part 2.10 of the Disclosure Schedule) disclosed or\ndelivered to any Person, or permitted the disclosure or delivery to any Person\nof, (i) the source code, or any portion or aspect of the source code, of any\nCompany Proprietary Asset, or (ii) the object code, or any portion or aspect of\nthe object code, of any Company Proprietary Asset.\n\n         (c)  None of the Company Proprietary Assets infringes or conflicts\nwith any Proprietary Asset owned or used by any other Person.  The Company is\nnot infringing, misappropriating or making any unlawful use of, and the Company\nhas not at any time infringed, misappropriated or made any unlawful use of, or\nreceived any notice or other\n\n\n                                          15\n\n\ncommunication (in writing or otherwise) of any actual, alleged, possible or\npotential infringement, misappropriation or unlawful use of, any Proprietary\nAsset owned or used by any other Person. To the best of the knowledge of the\nCompany, no other Person is infringing, misappropriating or making any unlawful\nuse of, and no Proprietary Asset owned or used by any other Person infringes or\nconflicts with, any Company Proprietary Asset.\n\n         (d)   Except as set forth in Part 2.9(d) of the Disclosure Schedule:\n(i) each Company Proprietary Asset conforms in all material respects with any\nspecification, documentation, performance standard, representation or statement\nmade or provided with respect thereto by or on behalf of the Company; and (ii)\nthere has not been any claim by any customer or other Person alleging that any\nCompany Proprietary Asset (including each version thereof that has ever been\nlicensed or otherwise made available by the Company to any Person) does not\nconform in all material respects with any specification, documentation,\nperformance standard, representation or statement made or provided by or on\nbehalf of the Company, and, to the best of the knowledge of the Company, there\nis no basis for any such claim.  The Company has established adequate reserves\non the Unaudited Interim Balance Sheet to cover all costs associated with any\nobligations that the Company may have with respect to the correction or repair\nof programming errors or other defects in the Company Proprietary Assets.\n\n         (e)  The Company Proprietary Assets constitute all the Proprietary\nAssets necessary to enable the Company to conduct its business in the manner in\nwhich such business has been and is being conducted.  Except as set forth in\nPart 2.9(e) of the Disclosure Schedule, (i) the Company has not licensed any of\nthe Company Proprietary Assets to any Person, and (ii) the Company has not\nentered into any covenant not to compete or Contract limiting its ability to\nexploit fully any of its Proprietary Assets or to transact business in any\nmarket or geographical area or with any Person.\n\n         (f)  Except as set forth in Part 2.9(f) of the Disclosure Schedule,\n(i) all current and former employees of the Company have executed and delivered\nto the Company an agreement (containing no exceptions to or exclusions from the\nscope of its coverage) that is substantially identical to the form of\nConfidential Information and Invention Assignment Agreement previously delivered\nto Parent, and (ii) all current and former consultants and independent\ncontractors to the Company have executed and delivered to the Company an\nagreement (containing no exceptions to or exclusions from the scope of its\ncoverage) that is substantially identical to the form of Consultant Confidential\nInformation and Invention Assignment Agreement previously delivered to Parent.\n\n    2.10 CONTRACTS.\n\n         (a)  Part 2.10 of the Disclosure Schedule identifies:\n\n              (i)  each Company Contract relating to the employment of, or the\n    performance of services by, any employee, consultant or independent\n    contractor;\n\n              (ii) each Company Contract relating to the acquisition, transfer,\n    use, development, sharing or license of any technology or any Proprietary\n    Asset;\n\n\n                                          16\n\n\n              (iii)     each Company Contract imposing any restriction on the\n    Company's right or ability (A) to compete with any other Person, (B) to\n    acquire any product or other asset or any services from any other Person,\n    to sell any product or other asset to or perform any services for any other\n    Person or to transact business or deal in any other manner with any other\n    Person, or (C) develop or distribute any technology;\n\n              (iv) each Company Contract creating or involving any agency\n    relationship, distribution arrangement or franchise relationship;\n\n              (v)  each Company Contract relating to the acquisition, issuance\n    or transfer of any securities;\n\n              (vi) each Company Contract relating to the creation of any\n    Encumbrance with respect to any asset of the Company;\n\n              (vii)     each Company Contract involving or incorporating any\n    guaranty, any pledge, any performance or completion bond, any indemnity or\n    any surety arrangement;\n\n              (viii)    each Company Contract creating or relating to any\n    partnership or joint venture or any sharing of revenues, profits, losses,\n    costs or liabilities;\n\n              (ix) each Company Contract relating to the purchase or sale of\n    any product or other asset by or to, or the performance of any services by\n    or for, any Related Party (as defined in Section 2.19);\n\n              (x)  each Company Contract constituting or relating to a\n    Government Contract or Government Bid;\n\n              (xi) any other Company Contract that was entered into outside the\n    ordinary course of business or was inconsistent with the Company's past\n    practices;\n\n              (xii) any other Company Contract that has a term of more than 60\n    days and that may not be terminated by the Company (without penalty) within\n    60 days after the delivery of a termination notice by the Company; and\n\n              (xiii) any other Company Contract that contemplates or involves\n    (A) the payment or delivery of cash or other consideration in an amount or\n    having a value in excess of $10,000 in the aggregate, or (B) the\n    performance of services having a value in excess of $10,000 in the\n    aggregate.\n\n(Contracts in the respective categories described in clauses \"(i)\" through\n\"(xiii)\" above are referred to in this Agreement as \"Material Contracts.\")\n\n         (b)  The Company has delivered to Parent accurate and complete copies\nof all written Contracts identified in Part 2.10 of the Disclosure Schedule,\nincluding all amendments\n\n\n                                          17\n\n\nthereto.  Part 2.10 of the Disclosure Schedule provides an accurate description\nof the terms of each Company Contract that is not in written form.  Each\nContract identified in Part 2.10 of the Disclosure Schedule is valid and in full\nforce and effect, and, to the best of the knowledge of the Company, is\nenforceable by the Company in accordance with its terms, subject to (i) laws of\ngeneral application relating to bankruptcy, insolvency and the relief of\ndebtors, and (ii) rules of law governing specific performance, injunctive relief\nand other equitable remedies.\n\n         (c)  Except as set forth in Part 2.10 of the Disclosure Schedule:\n\n              (i)  the Company has not violated or breached, or committed any\n    default under, any Company Contract, and, to the best of the knowledge of\n    the Company, no other Person has violated or breached, or committed any\n    default under, any Company Contract;\n\n              (ii) to the best of the knowledge of the Company, no event has\n    occurred, and no circumstance or condition exists, that (with or without\n    notice or lapse of time) will, or could reasonably be expected to,\n    (A) result in a violation or breach of any of the provisions of any Company\n    Contract, (B) give any Person the right to declare a default or exercise\n    any remedy under any Company Contract, (C) give any Person the right to\n    accelerate the maturity or performance of any Company Contract, or (D) give\n    any Person the right to cancel, terminate or modify any Company Contract;\n\n              (iii)      since September 30, 1993, the Company has not received\n    any notice or other communication regarding any actual or possible\n    violation or breach of, or default under, any Company Contract; and\n\n              (iv) the Company has not waived any of its material rights under\n    any Company Contract.\n\n         (d)  No Person is renegotiating, or has a right pursuant to the terms\nof any Company Contract to renegotiate, any amount paid or payable to the\nCompany under any Material Contract or any other material term or provision of\nany Material Contract.\n\n         (e)  The Contracts identified in Part 2.10 of the Disclosure Schedule\ncollectively constitute all of the Contracts necessary to enable the Company to\nconduct its business in the manner in which its business is currently being\nconducted.\n\n         (f)  Part 2.10 of the Disclosure Schedule identifies and provides a\nbrief description of each proposed Contract as to which any bid, offer,  award,\nwritten proposal, term sheet or similar document has been submitted or received\nby the Company since January 1, 1997.\n\n         (g)  Part 2.10 of the Disclosure Schedule provides an accurate\ndescription and breakdown of the Company's backlog under Company Contracts and\nGovernment Bids.\n\n         (h)  Except as set forth in Part 2.10(h) of the Disclosure Schedule:\n\n\n                                          18\n\n\n              (i)  the Company has not, in obtaining or performing any\n    Government Contract, violated (A) the Truth in Negotiations Act of 1962, as\n    amended, (B) the Service Contract Act of 1965, as amended, (C) the Contract\n    Disputes Act of 1978, as amended, (D) the Office of Federal Procurement\n    Policy Act, as amended, (E) the Federal Acquisition Regulations (the \"FAR\")\n    or any applicable agency supplement thereto, (F) the Cost Accounting\n    Standards, (G) the Defense Industrial Security Manual (DOD 5220.22-M), (H)\n    the Defense Industrial Security Regulation (DOD 5220.22-R) or any related\n    security regulations;\n\n              (ii) to the best knowledge of the Company, its directors, and its\n    officers, none of the Company's directors, officers, employees, agents or\n    consultants is (or for the last five (5) years has been) under\n    administrative, civil or criminal investigation, indictment or information,\n    audit or internal investigation with respect to any alleged irregularity,\n    misstatement or omission arising under or relating to any Government\n    Contract or Government Bid;\n\n              (iii)     Company has not made a voluntary disclosure to the U.S.\n    Government or any state government with respect to any alleged\n    irregularity, misstatement or omission arising under or relating to a\n    Government Contract or Government Bid;\n\n              (iv) neither the Company, its directors, nor its officers have\n    any knowledge of any irregularity, misstatement or omission arising under\n    or relating to any Government Contract or Government Bid that has led or\n    could lead, either before or after the Closing Date, to any adverse\n    consequences or any damage, penalty assessment, recoupment of payment or\n    disallowance of cost;\n\n              (v)  neither the Company, its directors, nor its officers have\n    any reason to believe that any employee, agent, consultant, representative\n    or affiliate of the Company is in receipt or possession of any competitor\n    or government proprietary or procurement sensitive information under\n    circumstances where there is reason to believe that such receipt or\n    possession is unlawful or unauthorized;\n\n              (vi) neither the Company nor any of its directors, officers of is\n    (or for the last five (5) years has been) suspended or debarred from doing\n    business with the U.S. Government or any State Government, or has been\n    declared ineligible for U.S. Government or State Government contracting.\n    The Company, its directors, and its officers know of no circumstances that\n    would warrant the initiation of suspension or debarment proceedings or the\n    finding of nonresponsibility or ineligibility on the part of the Company in\n    the future;\n\n              (vii)     no negative determinations of responsibility have been\n    issued against the Company in connection with any Government Contract or\n    Government Bid;\n\n\n                                          19\n\n\n              (viii)    no direct or indirect costs incurred by the Company\n    have been questioned or disallowed as a result of a finding or\n    determination of any kind by any Governmental Body;\n\n              (ix) no Governmental Body, and no prime contractor or higher-tier\n    subcontractor of any Governmental Body, has withheld or set off, or\n    threatened to withhold or set off, any amount due to the Company under any\n    Government Contract;\n\n              (x)  to the best of the knowledge of the Company, there are not\n    and have not been any irregularities, misstatements or omissions relating\n    to any Government Contract or Government Bid that have led to or could\n    reasonably be expected to lead to (A) the recoupment of any payments\n    previously made to the Company, (B) a finding or claim of fraud, defective\n    pricing, mischarging or improper payments on the part of the Company, or\n    (E) the assessment of any penalties or damages of any kind against the\n    Company;\n\n             (xi)  there is not and has not been any (A) outstanding claim\n    against the Company by, or dispute involving the Company with, any prime\n    contractor, subcontractor, vendor or other Person arising under or relating\n    to the award or performance of any Government Contract, (B) fact known by\n    the Company upon which any such claim could reasonably be expected to be\n    based or which may give rise to any such dispute, (C) final decision of any\n    Governmental Body against the Company;\n\n            (xii)  no termination for convenience, termination for\n    default, cure notice, show cause notice, or notice of breach has been\n    issued by any Government Body;\n\n           (xiii)  the Company has not entered into any financing\n    arrangement or assignment of proceeds with respect to the performance of\n    any Government Contract;\n\n            (xiv)  no payment has been made by the Company or by any\n    Person acting on the Company's behalf to any Person (other than to any bona\n    fide employee or agent (as defined in subpart 3.4 of the FAR) of the\n    Company) which is or was contingent upon the award of any Government\n    Contract or which would otherwise be in violation of any applicable\n    procurement law or regulation or any other Legal Requirement;\n\n             (xv)  the Company's cost accounting system is in compliance with\n    applicable regulations and other applicable Legal Requirements, and has not\n    been determined by any Governmental Body not to be in compliance with any\n    Legal Requirement;\n\n            (xvi)  the Company has complied with all applicable\n    regulations and other Legal Requirements and with all applicable\n    contractual requirements relating to the placement of legends or\n    restrictive markings on technical data, computer software and other\n    Proprietary Assets;\n\n\n                                          20\n\n\n           (xvii)  in each case in which the Company has delivered or\n    otherwise provided any technical data, computer software or Company\n    Proprietary Asset to any Governmental Body in connection with any\n    Government Contract, the Company has marked such technical data, computer\n    software or Company Proprietary Asset with all markings and legends\n    (including any \"restricted rights\" legend and any \"government purpose\n    license rights\" legend) permitted (under the FAR or other applicable Legal\n    Requirements) to ensure that Company has retained the maximum rights\n    permitted by Government Body regulations;\n\n          (xviii)  the Company has reached agreement with the cognizant\n    government representatives approving and \"closing\" all indirect costs\n    charged to Government Contracts for 1991, 1992, 1993, 1994 and 1995, and\n    those years are closed;\n\n            (xix)  the responsible government representatives have agreed\n    with the Company on the \"forward pricing rates\" that the Company is\n    charging on cost-type Government Contracts and including in Government\n    Bids;\n\n             (xx)  the Company is not and will not be required to make any\n    filing with or give any notice to, or to obtain any Consent from, any\n    Governmental Body under or in connection with any Government Contract or\n    Government Bid as a result of or by virtue of (A) the execution, delivery\n    of performance of this Agreement or any of the other agreements referred to\n    in this Agreement, or (B) the consummation of the Merger or any of the\n    other transactions contemplated by this Agreement;\n\n            (xxi)  the Company has fully complied with all material terms\n    and conditions of all Government Contracts and Government Bids, including\n    all clauses, provisions and requirements incorporated expressly, by\n    reference or by operation of law therein;\n\n           (xxii)  the Company has fully complied with all requirements of\n    statute, rule, regulation, order or agreement pertaining to such Government\n    Contract and Government Bid; and\n\n          (xxiii)  all representations and certifications executed,\n    acknowledged or set forth in or pertaining to such Government Contract and\n    Government Bid  were current, accurate and complete as of their effective\n    date, and the Seller has fully complied with all such representations and\n    certifications.\n\n    2.11 LIABILITIES.  The Company has no accrued, contingent or other\nliabilities of any nature, either matured or unmatured (whether or not required\nto be reflected in financial statements in accordance with generally accepted\naccounting principles, and whether due or to become due), except for: (a)\nliabilities identified as such in the \"liabilities\" column of the Unaudited\nInterim Balance Sheet; (b) accounts payable or accrued salaries that have been\nincurred by the Company since May 31, 1997 in the ordinary course of business\nand consistent with the Company's past practices; (c) liabilities under the\nCompany Contracts identified in Part 2.10 of the Disclosure Schedule, to the\nextent the nature and magnitude of such liabilities can\n\n\n                                          21\n\n\nbe specifically ascertained by reference to the text of such Company Contracts;\nand (d) the liabilities identified in Part 2.11 of the Disclosure Schedule.\n\n    2.12 COMPLIANCE WITH LEGAL REQUIREMENTS.  The Company is, and has at all\ntimes since September 30, 1993 been, in compliance with all applicable Legal\nRequirements, except where the failure to comply with such Legal Requirements\nhas not had and will not have a Material Adverse Effect on the Company.  Except\nas set forth in Part 2.12 of the Disclosure Schedule, since September 30, 1993,\nthe Company has not received any notice or other communication from any\nGovernmental Body regarding any actual or possible violation of, or failure to\ncomply with, any Legal Requirement.\n\n    2.13 GOVERNMENTAL AUTHORIZATIONS.  Part 2.13 of the Disclosure Schedule\nidentifies each material Governmental Authorization held by the Company, and the\nCompany has delivered to Parent accurate and complete copies of all Governmental\nAuthorizations identified in Part 2.13 of the Disclosure Schedule.  The\nGovernmental Authorizations identified in Part 2.13 of the Disclosure Schedule\nare valid and in full force and effect, and collectively constitute all\nGovernmental Authorizations necessary to enable the Company to conduct its\nbusiness in the manner in which its business is currently being conducted.  The\nCompany is, and at all times since September 30, 1993 has been, in substantial\ncompliance with the terms and requirements of the respective Governmental\nAuthorizations identified in Part 2.13 of the Disclosure Schedule. Since\nSeptember 30, 1993, the Company has not received any notice or other\ncommunication from any Governmental Body regarding (a) any actual or possible\nviolation of or failure to comply with any term or requirement of any\nGovernmental Authorization, or (b) any actual or possible revocation,\nwithdrawal, suspension, cancellation, termination or modification of any\nGovernmental Authorization.\n\n    2.14 TAX MATTERS.\n\n         (a)  All Tax Returns required to be filed by or on behalf of the\nCompany with any Governmental Body with respect to any taxable period ending on\nor before the Closing Date (the \"Company Returns\") (i) have been or will be\nfiled on or before the applicable due date (including any extensions of such due\ndate), and (ii) have been, or will be when filed, accurately and completely\nprepared in all material respects in compliance with all applicable Legal\nRequirements.  All amounts shown on the Company Returns to be due on or before\nthe Closing Date have been or will be paid on or before the Closing Date.  The\nCompany has delivered to Parent accurate and complete copies of all Company\nReturns filed since September 30, 1990 which have been requested by Parent.\n\n         (b)  The Company Financial Statements fully accrue all actual and\ncontingent liabilities for Taxes with respect to all periods through the dates\nthereof in accordance with generally accepted accounting principles.  The\nCompany will establish, in the ordinary course of business and consistent with\nits past practices, reserves adequate for the payment of all Taxes for the\nperiod from May 31, 1997 through the Closing Date, and the Company will disclose\nthe dollar amount of such reserves to Parent on or prior to the Closing Date.\n\n\n                                          22\n\n\n         (c)  No Company Return relating to income Taxes has ever been examined\nor audited by any Governmental Body.  Except as set forth in Part 2.14 of the\nDisclosure Schedule, there have been no examinations or audits of any Company\nReturn.  The Company has delivered to Parent accurate and complete copies of all\naudit reports and similar documents (to which the Company has access) relating\nto the Company Returns.  Except as set forth in Part 2.14 of the Disclosure\nSchedule, no extension or waiver of the limitation period applicable to any of\nthe Company Returns has been granted (by the Company or any other Person), and\nno such extension or waiver has been requested from the Company.\n\n         (d)  Except as set forth in Part 2.14 of the Disclosure Schedule, no\nclaim or Proceeding is pending or has been threatened against or with respect to\nthe Company in respect of any Tax.  There are no unsatisfied liabilities for\nTaxes (including liabilities for interest, additions to tax and penalties\nthereon and related expenses) with respect to any notice of deficiency or\nsimilar document received by the Company with respect to any Tax (other than\nliabilities for Taxes asserted under any such notice of deficiency or similar\ndocument which are being contested in good faith by the Company and with respect\nto which adequate reserves for payment have been established).  There are no\nliens for Taxes upon any of the assets of the Company except liens for current\nTaxes not yet due and payable.  The Company has not entered into or become bound\nby any agreement or consent pursuant to Section 341(f) of the Code.  The Company\nhas not been, and the Company will not be, required to include any adjustment in\ntaxable income for any tax period (or portion thereof) pursuant to Section 481\nor 263A of the Code or any comparable provision under state or foreign Tax laws\nas a result of transactions or events occurring, or accounting methods employed,\nprior to the Closing.\n\n         (e)  There is no agreement, plan, arrangement or other Contract\ncovering any employee or independent contractor or former employee or\nindependent contractor of the Company that, considered individually or\nconsidered collectively with any other such Contracts, will, or could reasonably\nbe expected to, give rise directly or indirectly to the payment of any amount\nthat would not be deductible pursuant to Section 280G or Section 162 of the\nCode.  The Company is not, and has never been, a party to or bound by any tax\nindemnity agreement, tax sharing agreement, tax allocation agreement or similar\nContract.\n\n    2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.\n\n         (a)  Part 2.15(a) of the Disclosure Schedule identifies each salary,\nbonus, deferred compensation, incentive compensation, stock purchase, stock\noption, severance pay, termination pay, hospitalization, medical, life or other\ninsurance, supplemental unemployment benefits, profit-sharing, pension or\nretirement plan, program or agreement (collectively, the \"Plans\") sponsored,\nmaintained, contributed to or required to be contributed to by the Company for\nthe benefit of any employee of the Company (\"Employee\"), except for Plans which\nwould not require the Company to make payments or provide benefits having a\nvalue in excess of $10,000 in the aggregate.\n\n         (b)  Except as set forth in Part 2.15(a) of the Disclosure Schedule,\nthe Company does not maintain, sponsor or contribute to, and, to the best of the\nknowledge of the Company, has not at any time in the past maintained, sponsored\nor contributed to, any employee\n\n\n                                          23\n\n\npension benefit plan (as defined in Section 3(2) of the Employee Retirement\nIncome Security Act of 1974, as amended (\"ERISA\"), whether or not excluded from\ncoverage under specific Titles or Merger Subtitles of ERISA) for the benefit of\nEmployees or former Employees (a \"Pension Plan\").\n\n         (c)  The Company maintains, sponsors or contributes only to those\nemployee welfare benefit plans (as defined in Section 3(1) of ERISA, whether or\nnot excluded from coverage under specific Titles or Merger Subtitles of ERISA)\nfor the benefit of Employees or former Employees which are described in Part\n2.15(c) of the Disclosure Schedule (the \"Welfare Plans\"), none of which is a\nmultiemployer plan (within the meaning of Section 3(37) of ERISA).\n\n         (d)  With respect to each Plan, the Company has delivered to Parent:\n\n              (i)  an accurate and complete copy of such Plan (including all\n         amendments thereto);\n\n              (ii) an accurate and complete copy of the annual report, if\n         required under ERISA, with respect to such Plan for the last two years;\n\n              (iii)     an accurate and complete copy of the most recent\n         summary plan description, together with each Summary of Material\n         Modifications, if required under ERISA, with respect to such Plan, and\n         all material employee communications relating to such Plan;\n\n              (iv) if such Plan is funded through a trust or any third party\n         funding vehicle, an accurate and complete copy of the trust or other\n         funding agreement (including all amendments thereto) and accurate\n         and complete copies the most recent financial statements thereof;\n\n              (v)  accurate and complete copies of all Contracts relating to\n         such Plan, including service provider agreements, insurance contracts,\n         minimum premium contracts, stop-loss agreements, investment management\n         agreements, subscription and participation agreements and recordkeeping\n         agreements; and\n\n              (vi) an accurate and complete copy of the most recent\n         determination letter received from the Internal Revenue Service with\n         respect to such Plan (if such Plan is intended to be qualified under\n         Section 401(a) of the Code).\n\n         (e)  The Company is not required to be, and, to the best of the\nknowledge of the Company, has never been required to be, treated as a single\nemployer with any other Person under Section 4001(b)(1) of ERISA or Section\n414(b), (c), (m) or (o) of the Code.  The Company has never been a member of an\n\"affiliated service group\" within the meaning of Section 414(m) of the Code.  To\nthe best of the knowledge of the Company, the Company has never made a complete\nor partial withdrawal from a multiemployer plan, as such term is defined in\nSection 3(37) of ERISA, resulting in \"withdrawal liability,\" as such term is\ndefined in\n\n\n                                          24\n\n\nSection 4201 of ERISA (without regard to subsequent reduction or waiver of such\nliability under either Section 4207 or 4208 of ERISA).\n\n         (f)  The Company does not have any plan or commitment to create any\nadditional Welfare Plan or any Pension Plan, or to modify or change any existing\nWelfare Plan or Pension Plan (other than to comply with applicable law) in a\nmanner that would affect any Employee.\n\n         (g)   Except as set forth in Part 2.15(g) of the Disclosure Schedule,\nno Welfare Plan provides death, medical or health benefits (whether or not\ninsured) with respect to any current or former Employee after any such\nEmployee's termination of service (other than (i) benefit coverage mandated by\napplicable law, including coverage provided pursuant to Section 4980B of the\nCode, (ii) deferred compensation benefits accrued as liabilities on the\nUnaudited Interim Balance Sheet, and (iii) benefits the full cost of which are\nborne by current or former Employees (or the Employees' beneficiaries)).\n\n         (h)  With respect to each of the Welfare Plans constituting a group\nhealth plan within the meaning of Section 4980B(g)(2) of the Code, the\nprovisions of Section 4980B of the Code (\"COBRA\") have been complied with in all\nmaterial respects.\n\n         (i)  Each of the Plans has been operated and administered in all\nmaterial respects in accordance with applicable Legal Requirements, including\nbut not limited to ERISA and the Code.\n\n         (j)  Each of the Plans intended to be qualified under Section 401(a)\nof the Code has received a favorable determination from the Internal Revenue\nService, and the Company is not aware of any reason why any such determination\nletter should be revoked.\n\n         (k)  Except as set forth in Part 2.15(k) of the Disclosure Schedule,\nneither the execution, delivery or performance of this Agreement, nor the\nconsummation of the Merger or any of the other transactions contemplated by this\nAgreement, will result in any payment (including any bonus, golden parachute or\nseverance payment) to any current or former Employee or director of the Company\n(whether or not under any Plan), or materially increase the benefits payable\nunder any Plan, or result in any acceleration of the time of payment or vesting\nof any such benefits.\n\n         (l)  Part 2.15(l) of the Disclosure Schedule contains a list of all\nsalaried employees of the Company as of the date of this Agreement, and\ncorrectly reflects, in all material respects, their salaries, any other\ncompensation payable to them (including compensation payable pursuant to bonus,\ndeferred compensation or commission arrangements), their dates of employment and\ntheir positions.  The Company is not a party to any collective bargaining\ncontract or other Contract with a labor union involving any of its Employees.\nAll of the Company's employees are \"at will\" employees.\n\n\n                                          25\n\n\n         (m)  Part 2.15(m) of the Disclosure Schedule identifies each Employee\nwho is not fully available to perform work because of disability or other leave\nand sets forth the basis of such leave and the anticipated date of return to\nfull service.\n\n         (n)  The Company is in compliance in all material respects with all\napplicable Legal Requirements and Contracts relating to employment, employment\npractices, wages, bonuses and terms and conditions of employment, including\nemployee compensation matters.\n\n         (o)  Except as set forth in Part 2.15(o) of the Disclosure Schedule,\nthe Company has good labor relations, and the Company does not have any reason\nto believe that (i) the consummation of the Merger or any of the other\ntransactions contemplated by this Agreement will have a material adverse effect\non the Company's labor relations, or (ii) any of the Company's employees intends\nto terminate his or her employment with the Company.\n\n    2.16 ENVIRONMENTAL MATTERS.  The Company is in compliance in all material\nrespects with all applicable Environmental Laws, which compliance includes the\npossession by the Company of all permits and other Governmental Authorizations\nrequired under applicable Environmental Laws, and compliance with the terms and\nconditions thereof.  The Company has not received any notice or other\ncommunication (in writing or otherwise), whether from a Governmental Body,\ncitizens group, employee or otherwise, that alleges that the Company is not in\ncompliance with any Environmental Law, and, to the best of the knowledge of the\nCompany, there are no circumstances that may prevent or interfere with the\nCompany's compliance with any Environmental Law in the future.  To the best of\nthe knowledge of the Company, no current or prior owner of any property leased\nor controlled by the Company has received any notice or other communication (in\nwriting or otherwise), whether from a Government Body, citizens group, employee\nor otherwise, that alleges that such current or prior owner or the Company is\nnot in compliance with any Environmental Law.  All Governmental Authorizations\ncurrently held by the Company pursuant to Environmental Laws are identified in\nPart 2.16 of the Disclosure Schedule. (For purposes of this Section 2.16: (i)\n\"Environmental Law\" means any federal, state, local or foreign Legal Requirement\nrelating to pollution or protection of human health or the environment\n(including ambient air, surface water, ground water, land surface or subsurface\nstrata), including any law or regulation relating to emissions, discharges,\nreleases or threatened releases of Materials of Environmental Concern, or\notherwise relating to the manufacture, processing, distribution, use, treatment,\nstorage, disposal, transport or handling of Materials of Environmental Concern;\nand (ii) \"Materials of Environmental Concern\" include chemicals, pollutants,\ncontaminants, wastes, toxic substances, petroleum and petroleum products and any\nother substance that is now or hereafter regulated by any Environmental Law or\nthat is otherwise a danger to health, reproduction or the environment.)\n\n    2.17 CONTROLLED SUBSTANCES; EXPLOSIVES.  The Company is in compliance in\nall material respects with all applicable laws relating to (i) the possession,\nuse and storage of drugs and other controlled substances of a similar nature\n(collectively, \"Controlled Substances\") and (ii) the possession, use and storage\nof explosive materials and devices (collectively, \"Explosives\"), in each case\nwhich compliance includes the possession by the Company of all permits and other\nGovernmental Authorizations required under such applicable laws and compliance\nwith the terms and conditions thereof.  All Governmental Authorizations\ncurrently\n\n\n                                          26\n\n\nheld by the Company pursuant to such applicable laws are identified in Part 2.13\nof the Disclosure Schedule.  The Company maintains inventory controls and use\nand storage procedures to ensure that all Controlled Substances and Explosives\nwill not be lost, stolen or otherwise go unaccounted for.  The Company is in\npossession of all Controlled Substances and Explosives which it has obtained or\nused in the course of its business, other than such Controlled Substances and\nExplosives that the Company has returned to Governmental Bodies from which such\nControlled Substances and Explosives had been obtained.  No employee of the\nCompany or other Person has suffered any injury as a result of the use or\nhandling any Controlled Substances or Explosives on the premises of the Company\nor while engaging in their employment activities with the Company.\n\n    2.18 INSURANCE.  Part 2.18 of the Disclosure Schedule identifies all\ninsurance policies maintained by, at the expense of or for the benefit of the\nCompany and identifies any material claims made thereunder, and the Company has\ndelivered to Parent accurate and complete copies of the insurance policies\nidentified on Part 2.18 of the Disclosure Schedule.  Each of the insurance\npolicies identified in Part 2.18 of the Disclosure Schedule is in full force and\neffect.  Since September 30, 1993, the Company has not received any notice or\nother communication regarding any actual or possible (a) cancellation or\ninvalidation of any insurance policy, (b) refusal of any coverage or rejection\nof any claim under any insurance policy, or (c) material adjustment in the\namount of the premiums payable with respect to any insurance policy.\n\n    2.19 RELATED PARTY TRANSACTIONS.  Except as set forth in Part 2.19 of the\nDisclosure Schedule:  (a) no Related Party has, and no Related Party has at any\ntime since September 30, 1993 had, any direct or indirect interest in any\nmaterial asset used in or otherwise relating to the business of the Company; (b)\nno Related Party is, or has at any time since September 30, 1993 been, indebted\nto the Company; (c) since September 30, 1993, no Related Party has entered into,\nor has had any direct or indirect financial interest in, any material Contract,\ntransaction or business dealing involving the Company; (d) no Related Party is\ncompeting, or has at any time since September 30, 1993 competed, directly or\nindirectly, with the Company; and (e) no Related Party has any claim or right\nagainst the Company (other than rights under Company Options, rights under\nCompany Warrants and rights to receive compensation for services performed as an\nemployee of the Company).  (For purposes of the Section 2.19 each of the\nfollowing shall be deemed to be a \"Related Party\":  (i) shareholders of the\nCompany; (ii) each individual who is, or who has at any time since September 30,\n1993 been, an officer or director of the Company; (iii)  each member of the\nimmediate family of each of the individuals referred to in clauses \"(i)\" and\n\"(ii)\" above; and (iv) any trust or other Entity (other than the Company) in\nwhich any one of the individuals referred to in clauses \"(i)\", \"(ii)\" and\n\"(iii)\" above holds (or in which more than one of such individuals collectively\nhold), beneficially or otherwise, a material voting, proprietary or equity\ninterest.)\n\n    2.20 LEGAL PROCEEDINGS; ORDERS.\n\n         (a)  Except as set forth in Part 2.21 of the Disclosure Schedule,\nthere is no pending Legal Proceeding, and (to the best of the knowledge of the\nCompany) no Person has threatened to commence any Legal Proceeding:  (i) that\ninvolves the Company or any of the assets owned or used by the Company or any\nPerson whose liability the Company has or may\n\n\n                                          27\n\n\nhave retained or assumed, either contractually or by operation of law; or (ii)\nthat challenges, or that may have the effect of preventing, delaying, making\nillegal or otherwise interfering with, the Merger or any of the other\ntransactions contemplated by this Agreement.  To the best of the knowledge of\nthe Company, except as set forth in Part 2.21 of the Disclosure Schedule, no\nevent has occurred, and no claim, dispute or other condition or circumstance\nexists, that will, or that could reasonably be expected to, give rise to or\nserve as a basis for the commencement of any such Legal Proceeding.\n\n         (b)  Except as set forth in Part 2.21 of the Disclosure Schedule, no\nLegal Proceeding has ever been commenced by or has ever been pending against the\nCompany.\n\n         (c)  There is no order, writ, injunction, judgment or decree to which\nthe Company, or any of the assets owned or used by the Company, is subject.  To\nthe best of the knowledge of the Company, no director, officer or other employee\nof the Company is subject to any order, writ, injunction, judgment or decree\nthat prohibits such director, officer or other employee from engaging in or\ncontinuing any conduct, activity or practice relating to the Company's business.\n\n    2.21 AUTHORITY; BINDING NATURE OF AGREEMENT.  The Company has the absolute\nand unrestricted right, power and authority to enter into and to perform its\nobligations under this Agreement; and the execution, delivery and performance by\nthe Company of this Agreement have been duly authorized by all necessary action\non the part of the Company and its board of directors.  This Agreement\nconstitutes the legal, valid and binding obligation of the Company, enforceable\nagainst the Company in accordance with its terms, subject to (i) laws of general\napplication relating to bankruptcy, insolvency and the relief of debtors, and\n(ii) rules of law governing specific performance, injunctive relief and other\nequitable remedies.\n\n    2.22 NON-CONTRAVENTION; CONSENTS.  Except as set forth in Part 2.22 of the\nDisclosure Schedule, neither (1) the execution, delivery or performance of this\nAgreement or any of the other agreements referred to in this Agreement, nor (2)\nthe consummation of the Merger or any of the other transactions contemplated by\nthis Agreement, will directly or indirectly (with or without notice or lapse of\ntime):\n\n         (a)  contravene, conflict with or result in a violation of (i) any of\n    the provisions of the Company's articles of incorporation or bylaws, or\n    (ii) any resolution adopted by the Company's shareholders, the Company's\n    board of directors or any committee of the Company's board of directors;\n\n         (b)  contravene, conflict with or result in a violation of, or give\n    any Governmental Body or other Person the right to challenge any of the\n    transactions contemplated by this Agreement or to exercise any remedy or\n    obtain any relief under, any Legal Requirement or any order, writ,\n    injunction, judgment or decree to which the Company, or any of the assets\n    owned or used by the Company, is subject;\n\n         (c)  contravene, conflict with or result in a violation of any of the\n    terms or requirements of, or give any Governmental Body the right to\n    revoke, withdraw, suspend,\n\n\n                                          28\n\n\n    cancel, terminate or modify, any Governmental Authorization that is held by\n    the Company or that otherwise relates to the Company's business or to any of\n    the assets owned or used by the Company;\n\n         (d)  contravene, conflict with or result in a violation or breach of,\n    or result in a default under, any provision of any Company Contract that is\n    or would constitute a Material Contract, or give any Person the right to\n    (i) declare a default or exercise any remedy under any such Company\n    Contract, (ii) accelerate the maturity or performance of any such Company\n    Contract, or (iii) cancel, terminate or modify any such Company Contract;\n    or\n\n         (e)  result in the imposition or creation of any Encumbrance upon or\n    with respect to any asset owned or used by the Company (except for minor\n    liens that will not, in any case or in the aggregate, materially detract\n    from the value of the assets subject thereto or materially impair the\n    operations of the Company).\n\nExcept as set forth in Part 2.22 of the Disclosure Schedule, the Company is not\nand will not be required to make any filing with or give any notice to, or to\nobtain any Consent from, any Person in connection with (x) the execution,\ndelivery or performance of this Agreement or any of the other agreements\nreferred to in this Agreement, or (y) the consummation of the Merger or any of\nthe other transactions contemplated by this Agreement.\n\n    2.23 FULL DISCLOSURE.\n\n         (a)  This Agreement (including the Disclosure Schedule) does not, and\nthe Closing Certificate (as defined in Section 6.5(m)) will not, (i) contain any\nrepresentation, warranty or information that is false or misleading with respect\nto any material fact, or (ii) omit to state any material fact required to be\nstated therein or necessary in order to make the representations, warranties and\ninformation contained and to be contained herein and therein (in the light of\nthe circumstances under which such representations, warranties and information\nwere or will be made or provided) not false or misleading.\n\n         (b)  None of the information supplied or to be supplied by or on\nbehalf of the Company for inclusion or incorporation by reference in the\nregistration statement on Form S-4 to be filed with the SEC by Parent in\nconnection with the issuance of Parent Common Stock in the Merger (the \"S-4\nRegistration Statement\") will, at the time the S-4 Registration Statement\nbecomes effective under the Securities Act, contain any untrue statement of a\nmaterial fact or omit to state any material fact required to be stated therein\nor necessary in order to make the statements therein, in the light of the\ncircumstances under which they are made, not misleading.  None of the\ninformation supplied or to be supplied by or on behalf of the Company for\ninclusion or incorporation by reference in the Proxy Statement\/Prospectus to be\nfiled with the SEC as part of the S-4 Registration Statement (the \"Proxy\nStatement\/Prospectus\"), will, at the time the Proxy Statement\/Prospectus is\nmailed to the shareholders of the Company, at the time of the Company\nShareholders Meeting or as of the Effective Time, contain any untrue statement\nof a material fact or omit to state any material fact required to be stated\ntherein or necessary in order to make the statements therein, in the light of\nthe circumstances under which they are made, not\n\n\n                                          29\n\n\nmisleading.  The Proxy Statement\/Prospectus will comply as to form in all\nmaterial respects with the provisions of the Exchange Act and the rules and\nregulations promulgated by the SEC thereunder.\n\n    2.24 NO BROKERS OR FINDERS.  No broker, finder or investment banker is\nentitled to any brokerage, finder's or other fee or commission in connection\nwith the Merger or any of the other transactions contemplated by this Agreement\nbased upon arrangements made by or on behalf of the Company.\n\n\nSECTION 3.    REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB\n\n         Parent and Merger Sub jointly and severally represent and warrant to\nthe Company as follows:\n\n    3.1  SEC FILINGS; FINANCIAL STATEMENTS.\n\n         (a)  Parent has delivered to the Company accurate and complete copies\n(excluding copies of exhibits) of each report, registration statement (on a form\nother than Form S-8) and definitive proxy statement filed by Parent with the SEC\nbetween April 23, 1996 and the date of this Agreement (the \"Parent SEC\nDocuments\").  As of the time it was filed with the SEC (or, if amended or\nsuperseded by a filing prior to the date of this Agreement, then on the date of\nsuch filing):  (i) each of the Parent SEC Documents complied in all material\nrespects with the applicable requirements of the Securities Act or the Exchange\nAct (as the case may be); and (ii) none of the Parent SEC Documents contained\nany untrue statement of a material fact or omitted to state a material fact\nrequired to be stated therein or necessary in order to make the statements\ntherein, in the light of the circumstances under which they were made, not\nmisleading.\n\n         (b)  The consolidated financial statements contained in the Parent SEC\nDocuments:  (i) complied as to form in all material respects with the published\nrules and regulations of the SEC applicable thereto; (ii) were prepared in\naccordance with generally accepted accounting principles applied on a consistent\nbasis throughout the periods covered, except as may be indicated in the notes to\nsuch financial statements and (in the case of unaudited statements) as permitted\nby Form 10-Q of the SEC, and except that unaudited financial statements may not\ncontain footnotes and are subject to year-end audit adjustments; and (iii)\nfairly present the consolidated financial position of Parent and its\nsubsidiaries as of the respective dates thereof and the consolidated results of\noperations of Parent and its subsidiaries for the periods covered thereby.\n\n    3.2  AUTHORITY; BINDING NATURE OF AGREEMENT.  Parent and Merger Sub have\nthe absolute and unrestricted right, power and authority to perform their\nobligations under this Agreement; and the execution, delivery and performance by\nParent and Merger Sub of this Agreement (including the contemplated issuance of\nParent Common Stock in the Merger in accordance with this Agreement) have been\nduly authorized by all necessary action on the part of Parent and Merger Sub and\ntheir respective boards of directors.  No vote of Parent's\n\n\n                                          30\n\n\nstockholders is needed to approve the Merger.  This Agreement constitutes the\nlegal, valid and binding obligation of Parent and Merger Sub, enforceable\nagainst them in accordance with its terms, subject to (i) laws of general\napplication relating to bankruptcy, insolvency and the relief of debtors, and\n(ii) rules of law governing specific performance, injunctive relief and other\nequitable remedies.\n\n    3.3  VALID ISSUANCE; RESERVATION OF SHARES.  Subject to Section 1.5(c), the\nParent Common Stock to be issued in the Merger will, when issued in accordance\nwith the provisions of this Agreement, be validly issued, fully paid and\nnonassessable.  Parent has reserved for issuance, or will have reserved for\nissuance prior to the Closing, a sufficient number of shares of Parent Common\nStock to cover the Company Options to be assumed by Parent at the Closing\npursuant to Section 1.6 upon exercise of such rights in accordance with their\nterms.\n\n\nSECTION 4.    CERTAIN COVENANTS OF THE COMPANY\n\n    4.1  ACCESS AND INVESTIGATION.  During the period from the date of this\nAgreement through the Effective Time (the \"Pre-Closing Period\"), the Company\nshall, and shall cause its Representatives to:  (a) provide Parent and Parent's\nRepresentatives with reasonable access to the Company's Representatives,\npersonnel and assets and to all existing books, records, Tax Returns, work\npapers and other documents and information relating to the Company; and (b)\nprovide Parent and Parent's Representatives with copies of such existing books,\nrecords, Tax Returns, work papers and other documents and information relating\nto the Company, and with such additional financial, operating and other data and\ninformation regarding the Company, as Parent may reasonably request.\n\n    4.2  OPERATION OF THE COMPANY'S BUSINESS.  During the Pre-Closing Period:\n\n         (a)  the Company shall conduct its business and operations in the\n    ordinary course and in substantially the same manner as such business and\n    operations have been conducted prior to the date of this Agreement;\n\n         (b)  the Company shall use reasonable efforts to preserve intact its\n    current business organization, keep available the services of its current\n    officers and employees and maintain its relations and good will with all\n    suppliers, customers, landlords, creditors, employees and other Persons\n    having business relationships with the Company;\n\n         (c)  the Company shall keep in full force all insurance policies\n    identified in Part 2.18 of the Disclosure Schedule;\n\n         (d)  the Company shall cause its officers to report regularly in\n    writing (but in no event less frequently than weekly) to Parent concerning\n    the status of the Company's business;\n\n         (e)  the Company shall not declare, accrue, set aside or pay any\n    dividend or make any other distribution in respect of any shares of capital\n    stock, and shall not\n\n\n                                          31\n\n\n    repurchase, redeem or otherwise reacquire any shares of capital stock or\n    other securities (except that the Company may repurchase Company Common\n    Stock from former employees pursuant to the terms of existing restricted\n    stock purchase agreements);\n\n         (f)  the Company shall not sell, issue or authorize the issuance of\n    (i) any capital stock or other security, (ii) any option or right to\n    acquire any capital stock or other security, or (iii) any instrument\n    convertible into or exchangeable for any capital stock or other security\n    (except that the Company shall be permitted (x) to issue Company Common\n    Stock to employees upon the exercise of outstanding Company Options, (y) to\n    issue to holders of outstanding Company Warrants Series A Stock or Series C\n    Stock issuable upon the exercise of such Company Warrants, and (z) to issue\n    shares of Company Common Stock upon the conversion of shares of the\n    Company's outstanding Preferred Stock);\n\n         (g)  the Company shall not amend or waive any of its rights under, or\n    permit the acceleration of vesting under, (i) any provision of the Company\n    Stock Plan, (ii) any provision of any agreement evidencing any outstanding\n    Company Option, (iii) any provision of any restricted stock purchase\n    agreement, or (iv) any provision of any agreement evidencing any\n    outstanding Company Warrant;\n\n         (h)  the Company shall not amend or permit the adoption of any\n    amendment to the Company's articles of incorporation or bylaws, or effect\n    or permit the Company to become a party to any Acquisition Transaction,\n    recapitalization, reclassification of shares, stock split, reverse stock\n    split or similar transaction;\n\n         (i)  the Company shall not form any subsidiary or acquire any equity\n    interest or other interest in any other Entity;\n\n         (j)  the Company shall not make any capital expenditure, except for\n    capital expenditures that, when added to all other capital expenditures\n    made on behalf of the Company during the Pre-Closing Period, do not exceed\n    $10,000 per month;\n\n         (k)  the Company shall not (i) enter into, or permit any of the assets\n    owned or used by it to become bound by, any Contract that is or would\n    constitute a Material Contract, or (ii) amend or prematurely terminate, or\n    waive any material right or remedy under, any such Contract;\n\n         (l)  the Company shall not (i) acquire, lease or license any right or\n    other asset from any other Person, (ii) sell or otherwise dispose of, or\n    lease or license, any right or other asset to any other Person, or (iii)\n    waive or relinquish any right, except for assets acquired, leased, licensed\n    or disposed of by the Company pursuant to Contracts that are not Material\n    Contracts;\n\n         (m)  the Company shall not (i) lend money to any Person (except that\n    the Company may make routine travel advances to employees in the ordinary\n    course of business), or (ii) incur or guarantee any indebtedness for\n    borrowed money (except that\n\n\n                                          32\n\n\n    the Company may make routine borrowings in the ordinary course of business\n    under its line of credit with Silicon Valley Bank, N.A.);\n\n         (n)  the Company shall not (i) establish, adopt or amend any Employee\n    Benefit Plan, (ii) pay any bonus or make any profit-sharing payment, cash\n    incentive payment or similar payment to, or increase the amount of the\n    wages, salary, commissions, fringe benefits or other compensation or\n    remuneration payable to, any of its directors, officers or employees, (iii)\n    hire any new employees, or (iv) enter into new employment or consulting\n    agreements or modify existing employment or consulting agreements;\n\n         (o)  the Company shall not change any of its methods of accounting or\n    accounting practices in any material respect;\n\n         (p)  the Company shall not make any Tax election;\n\n         (q)  the Company shall not commence or settle any material Legal\n    Proceeding; and\n\n         (r)  the Company shall not agree or commit to take any of the actions\n    described in clauses \"(e)\" through \"(q)\" above.\n\nNotwithstanding the foregoing, the Company may take any action described in\nclauses \"(e)\" through \"(r)\" above if Parent gives its prior written consent to\nthe taking of such action by the Company.\n\n    4.3  NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.\n\n         (a)  During the Pre-Closing Period, the Company shall promptly notify\nParent in writing of:\n\n              (i)  the discovery by the Company of any event, condition, fact\n    or circumstance that occurred or existed on or prior to the date of this\n    Agreement and that caused or constitutes an inaccuracy in or breach of any\n    representation or warranty made by the Company in this Agreement;\n\n              (ii) any event, condition, fact or circumstance that occurs,\n    arises or exists after the date of this Agreement and that would cause or\n    constitute an inaccuracy in or breach of any representation or warranty\n    made by the Company in this Agreement if (A) such representation or\n    warranty had been made as of the time of the occurrence, existence or\n    discovery of such event, condition, fact or circumstance, or (B) such\n    event, condition, fact or circumstance had occurred, arisen or existed on\n    or prior to the date of this Agreement;\n\n              (iii)     any breach of any covenant or obligation of the\n    Company; and\n\n\n                                          33\n\n\n              (iv) any event, condition, fact or circumstance that would make\n    the timely satisfaction of any of the conditions set forth in Section 6 or\n    Section 7 impossible or unlikely.\n\n         (b)  If any event, condition, fact or circumstance that is required to\nbe disclosed pursuant to Section 4.3(a) requires any change in the Disclosure\nSchedule, or if any such event, condition, fact or circumstance would require\nsuch a change assuming the Disclosure Schedule were dated as of the date of the\noccurrence, existence or discovery of such event, condition, fact or\ncircumstance, then the Company shall promptly deliver to Parent an update to the\nDisclosure Schedule specifying such change.  No such update shall be deemed to\nsupplement or amend the Disclosure Schedule for the purpose of (i) determining\nthe accuracy of any of the representations and warranties made by the Company in\nthis Agreement, or (ii) determining whether any of the conditions set forth in\nSection 6 has been satisfied.\n\n    4.4  NO NEGOTIATION.  During the Pre-Closing Period, the Company shall not\n(and the Company shall ensure that its Representatives shall not), directly or\nindirectly:\n\n         (a)  solicit or encourage the initiation of any inquiry, proposal or\n    offer from any Person (other than Parent) relating to a possible\n    Acquisition Transaction;\n\n         (b)  participate in any discussions or negotiations or enter into any\n    agreement with, or provide any non-public information to, any Person (other\n    than Parent) relating to or in connection with a possible Acquisition\n    Transaction; or\n\n         (c)  consider, entertain or accept any proposal or offer from any\n    Person (other than Parent) relating to a possible Acquisition Transaction.\n\nThe Company shall promptly notify Parent in writing of any material inquiry,\nproposal or offer relating to a possible Acquisition Transaction that is\nreceived by the Company or any of its Representatives during the Pre-Closing\nPeriod.\n\n    4.5  FEES AND EXPENSES.  The Company shall not incur, nor permit any other\nPerson to incur, any fees, costs and expenses of the type referred to in Section\n10.3, by or for the benefit of the Company (including all such fees, costs and\nexpenses incurred prior to the date of this Agreement and including the amount\nof all special bonuses and other amounts that may become payable to any officers\nof the Company or other Persons in connection with the consummation of the\ntransactions contemplated by this Agreement) that shall exceed $50,000 in the\naggregate.\n\n\nSECTION 5.    ADDITIONAL COVENANTS OF THE PARTIES\n\n    5.1  FILINGS AND CONSENTS.  As promptly as practicable after the execution\nof this Agreement, each party to this Agreement (a) shall make all filings (if\nany) and give all notices (if any) required to be made and given by such party\nin connection with the Merger and the other transactions contemplated by this\nAgreement, and (b) shall use all commercially reasonable\n\n\n                                          34\n\n\nefforts to obtain all Consents (if any) required to be obtained (pursuant to any\napplicable Legal Requirement or Contract, or otherwise) by such party in\nconnection with the Merger and the other transactions contemplated by this\nAgreement.  The Company shall (upon request) promptly deliver to Parent a copy\nof each such filing made, each such notice given and each such Consent obtained\nby the Company during the Pre-Closing Period.\n\n    5.2  REGISTRATION STATEMENT; PROXY STATEMENT\/PROSPECTUS.  As promptly as\npracticable after the date of this Agreement, the Company and Parent shall\nprepare and cause to be filed with the SEC the S-4 Registration Statement,\ntogether with the Proxy Statement\/Prospectus and any other documents required by\nthe Securities Act or the Exchange Act in connection with the Merger.  Each of\nParent and the Company shall use all reasonable efforts to cause the S-4\nRegistration Statement (including the Proxy Statement\/Prospectus) to comply with\nthe rules and regulations promulgated by the SEC, to respond promptly to any\ncomments of the SEC or its staff and to have the S-4 Registration Statement\ndeclared effective under the Securities Act as promptly as practicable after it\nis filed with the SEC.  The Company shall promptly furnish to Parent all\ninformation concerning the Company and the Company's shareholders that may be\nrequired or reasonably requested in connection with any action contemplated by\nthis Section 5.2.  If any event relating to the Company occurs, or if the\nCompany becomes aware of any information, that should be set forth in an\namendment or supplement to the S-4 Registration Statement or the Proxy\nStatement\/Prospectus, then the Company shall promptly inform Parent thereof and\nshall cooperate with Parent in filing such amendment or supplement with the SEC\nand, if appropriate, in mailing such amendment or supplement to the shareholders\nof the Company.\n\n    5.3  COMPANY SHAREHOLDERS MEETING.\n\n         (a)  The Company shall take all action necessary under all applicable\nLegal Requirements to call, give notice of, convene and hold the Company\nShareholders Meeting.  The Company Shareholders Meeting will be held as promptly\nas practicable and in any event within thirty (30) days after the S-4\nRegistration Statement is declared effective by the SEC.  The Company shall\nensure that the Company Shareholders Meeting is called, noticed, convened, held\nand conducted, and that all proxies solicited in connection with the Company\nShareholders Meeting are solicited, in compliance with all applicable Legal\nRequirements.  The Company's obligation to call, give notice of, convene and\nhold the Company Shareholders Meeting in accordance with this Section 5.3(a)\nshall not be limited or otherwise affected by the commencement, disclosure,\nannouncement or submission to the Company of any proposal by a third party to\nacquire the Company or substantially all of the assets of the Company, or by any\nwithdrawal, amendment or modification of the recommendation of the Board of\nDirectors of the Company with respect to the Merger.\n\n         (b)  The Board of Directors of the Company shall unanimously recommend\nthat the Company's shareholders vote in favor of and adopt and approve this\nAgreement and the Merger at the Company Shareholders Meeting.  The Proxy\nStatement\/Prospectus shall include a statement to the effect that the Board of\nDirectors of the Company has unanimously recommended that the Company's\nshareholders vote in favor of and adopt and approve this Agreement and the\nMerger at the Company Shareholders Meeting.  Neither the Board of\n\n\n                                          35\n\n\nDirectors of the Company nor any committee thereof shall withdraw, amend or\nmodify, or propose or resolve to withdraw, amend or modify, in a manner adverse\nto Parent, the unanimous recommendation of the Board of Directors of the Company\nthat the Company's shareholders vote in favor of and adopt and approve this\nAgreement and the Merger.  For purposes of this Agreement, such recommendation\nof the Board of Directors shall be deemed to have been modified in a manner\nadverse to Parent if such recommendation shall no longer be unanimous.\n\n    5.4  PUBLIC ANNOUNCEMENTS.  During the Pre-Closing Period, (a) the Company\nshall not (and the Company shall not permit any of its Representatives to) issue\nany press release or make any public statement regarding this Agreement or the\nMerger, or regarding any of the other transactions contemplated by this\nAgreement, without Parent's prior written consent, and (b) Parent will use\nreasonable efforts to consult with the Company prior to issuing any press\nrelease or making any public statement regarding the Merger.\n\n    5.5  POOLING OF INTERESTS.  During the Pre-Closing Period, the Company\nshall not take any action that could reasonably be expected to have an adverse\neffect on the ability of Parent to account for the Merger as a \"pooling of\ninterests.\"\n\n    5.6  AFFILIATE AGREEMENTS.  The Company shall use all commercially\nreasonable efforts to cause each other Person identified on Exhibit D-2 (and any\nother Person that could reasonably be deemed to be an \"affiliate\" of the Company\nfor purposes of the Securities Act), to execute and deliver to Parent, as\npromptly as practicable after the execution of this Agreement, an Affiliate\nAgreement in the form of Exhibit D-1.\n\n    5.7  REASONABLE EFFORTS.  During the Pre-Closing Period, (a) the Company\nshall use all reasonable efforts to cause the conditions set forth in Sections\n6.1 through and including 6.9, and Section 6.14, to be satisfied on a timely\nbasis, and (b) Parent and Merger Sub shall use all reasonable efforts to cause\nthe conditions set forth in Sections 7.1 and 7.2 to be satisfied on a timely\nbasis.\n\n    5.8  TAX MATTERS.  Prior to the Closing, (a) Parent and the Company shall\nexecute and deliver, to Cooley Godward LLP and to Branton, Wilson &amp; Muns, tax\nrepresentation letters (which will be used in connection with the legal opinions\ncontemplated by Sections 6.5(k) and 7.3(b)), and (b) the Company shall use all\nreasonable efforts to cause each holder of more than one percent (1%) of the\ncapital stock of the Company to execute and deliver to Parent a Continuity of\nInterest Certificate in the form of Exhibit E.\n\n    5.9  NONCOMPETITION AGREEMENTS.  The Company shall use all reasonable\nefforts to cause each of the Persons identified on Exhibit F to execute and\ndeliver to the Company and Parent, at the Closing, a Noncompetition Agreement in\nthe form of Exhibit G.\n\n    5.10 TERMINATION OF AGREEMENTS.  Prior to the Closing the Company and the\nholders of capital stock of the Company shall enter into one or more agreements,\nreasonably satisfactory in form and content to Parent (and conditioned and\neffective upon the Closing), terminating all of the such holders' rights under\n(i) all agreements pursuant to which Series A Stock, Series B Stock or Series C\nStock were issued and (ii) all agreements pursuant to which any holders of the\n\n\n                                          36\n\n\nCompany's outstanding capital stock have registration rights, rights of first\nrefusal, co-sale rights, information rights, inspection rights or the like\n(collectively the \"Shareholder Agreements\").\n\n    5.11 FIRPTA MATTERS.  At the Closing, (a) the Company shall deliver to\nParent a statement (in such form as may be reasonably requested by counsel to\nParent) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of the\nUnited States Treasury Regulations, and (b) the Company shall deliver to the\nInternal Revenue Service the notification required under Section 1.897 - 2(h)(2)\nof the United States Treasury Regulations.\n\n    5.12 RELEASE.  At the Closing, the Company shall use all reasonable efforts\nto cause each of its shareholders (other than Parent) to execute and deliver to\nthe Company a Release in the form of Exhibit H.\n\n    5.13 TERMINATION OF EMPLOYEE PLANS.  At the Closing, the Company shall\nterminate its Plans and shall ensure that no employee or former employee of the\nCompany has any rights under any of such Plans and that any liabilities of the\nCompany under such Plans (including any such liabilities relating to services\nperformed prior to the Closing) are fully extinguished at no cost to the\nCompany.\n\n    5.14 ESCROW AGREEMENT.  The Company shall execute and deliver the Escrow\nAgreement and use all reasonable efforts to cause the Agent (as defined in\nSection 10.1) to execute and deliver the Escrow Agreement.\n\n    5.15 ESCROW AGENT.  Parent may determine the initial escrow agent under the\nEscrow Agreement, so long as the person selected by Parent is a bank, trust\ncompany, escrow company or other person regularly in the business of providing\nescrow services.  Otherwise, the initial Escrow Agent shall be determined by the\nmutual agreement of Parent and the Company.  Parent shall also be entitled to\ndetermine the Escrow Agent's acceptance fee.\n\n    5.16 AMENDMENT OF ARTICLES OF INCORPORATION.  Prior to the Closing Date,\nthe Company shall duly and properly file with the California Secretary of State\nan amendment to its Articles of Incorporation, in form and substance \nsatisfactory to Parent, confirming that the effective conversion prices for its\nSeries A, Series B, Series E and Series D Preferred Stock are $1.2215, $0.50,\n$1.00 and $1.10, respectively.  Prior to such filing, such amendment shall be\napproved by the Board of Directors and Shareholders of the Company as required\nby California law.\n\n\nSECTION 6.    CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB\n\n    The obligations of Parent and Merger Sub to effect the Merger and otherwise\nconsummate the transactions contemplated by this Agreement are subject to the\nsatisfaction, at or prior to the Closing, of each of the following conditions:\n\n\n                                          37\n\n\n    6.1  ACCURACY OF REPRESENTATIONS.  Each of the representations and\nwarranties made by the Company in this Agreement and in each of the other\nagreements and instruments delivered to Parent in connection with the\ntransactions contemplated by this Agreement shall have been accurate in all\nmaterial respects as of the date of this Agreement (without giving effect to any\n\"Material Adverse Effect\" or other materiality qualifications, or any similar\nqualifications, contained or incorporated directly or indirectly in such\nrepresentations and warranties), and shall be accurate in all material respects\nas of the Scheduled Closing Time as if made at the Scheduled Closing Time\n(without giving effect to any update to the Disclosure Schedule and without\ngiving effect to any \"Material Adverse Effect\" or other materiality\nqualifications, or any similar qualifications, contained or incorporated\ndirectly or indirectly in such representations and warranties).\n\n    6.2  PERFORMANCE OF COVENANTS.  All of the covenants and obligations that\nthe Company is required to comply with or to perform at or prior to the Closing\nshall have been complied with and performed in all respects.\n\n    6.3  SHAREHOLDER APPROVAL.  The principal terms of the Merger shall have\nbeen duly approved by the affirmative vote of all of the shares of Company\nCommon Stock, Series A Stock, Series B Stock and Series C Stock entitled to vote\nwith respect thereto.\n\n    6.4  CONSENTS.  All Consents required to be obtained in connection with the\nMerger and the other transactions contemplated by this Agreement (including the\nConsents identified in Part 2.22 of the Disclosure Schedule), in form and\nsubstance satisfactory to Parent, shall have been obtained and shall be in full\nforce and effect.\n\n    6.5  AGREEMENTS AND DOCUMENTS.  Parent and the Company shall have received\nthe following agreements and documents, each of which shall be in full force and\neffect:\n\n         (a)  Affiliate Agreements in the form of Exhibit D-1, executed by the\n    Persons identified on Exhibit D-2 and by any other Person who could\n    reasonably be deemed to be an \"affiliate\" of the Company for purposes of\n    the Securities Act;\n\n         (b)  Noncompetition Agreements in the form of Exhibit G, executed by\n    the individuals identified on Exhibit F and effective for the periods\n    identified in Exhibit F;\n\n         (c)  a Release in the form of Exhibit H, executed by the holders of at\n    least ninety percent (90%) of the outstanding shares of Company Common\n    Stock and the holders of all of the outstanding shares of Series A Stock,\n    Series B Stock and Series C Stock (including those Persons who became\n    holders by virtue of the exercise of Company Warrants prior to the\n    Effective Time);\n\n         (d)  the agreements referred to in Section 5.10, executed by the\n    requisite persons necessary to cause the Shareholder Agreements to be\n    terminated;\n\n         (e)  confidential invention and assignment agreements, reasonably\n    satisfactory in form and content to Parent, executed by all employees and\n    former employees of the\n\n\n                                          38\n\n\n\n    Company and by all consultants and independent contractors and former\n    consultants and former independent contractors to the Company who have not\n    already signed such agreements (including the individuals identified in Part\n    2.9(f) of the Disclosure Schedule);\n\n         (f)  the statement referred to in Section 5.11(a), executed by the\n    Company;\n\n         (g)  Continuity of Interest Certificates in the form of Exhibit E,\n    executed by the Persons identified in Section 5.8(b);\n\n         (h)  an estoppel certificate, dated as of a date not more than five\n    days prior to the Closing Date and satisfactory in form and content to\n    Parent, executed by any and all lessors of real property leased by the\n    Company;\n\n         (i)  a legal opinion of Branton, Wilson &amp; Muns, dated as of the\n    Closing Date, substantially to the effect of Exhibit I;\n\n         (j)  a legal opinion of a reputable law firm (reasonably acceptable to\n    Parent) experienced in government contracts matters, reasonably\n    satisfactory in form and content to Parent, to the effect that the\n    execution, delivery and performance of this Agreement and the consummation\n    of the Merger and the other transactions contemplated by this Agreement do\n    not and will not contravene, conflict with or result in a violation of or\n    default under, or give any Governmental Body  or other Person the right to\n    terminate, to exercise any remedy or to obtain any relief under, any\n    Government Contract to which the Company is a party or under which the\n    Company has any rights or obligations;\n\n         (k)  a legal opinion of Cooley Godward LLP, dated as of the Closing\n    Date, to the effect that the Merger will constitute a reorganization within\n    the meaning of Section 368 of the Code (it being understood that, in\n    rendering such opinion, such counsel may rely upon the tax representation\n    letters referred to in Section 5.8(a) and the Continuity of Interest\n    Certificates referred to in Section 6.5(g));\n\n         (l)  a letter from Price Waterhouse LLP, dated as of the Closing Date,\n    confirming that Parent may account for the Merger as a \"pooling of\n    interests\" in accordance with generally accepted accounting principles,\n    Accounting Principles Board Opinion No. 16 and all published rules,\n    regulations and policies of the SEC;\n\n         (m)  a certificate executed by the President of the Company and\n    containing the representation and warranty of the Company that each of the\n    representations and warranties set forth in Section 2 is accurate in all\n    respects as of the Closing Date as if made on the Closing Date and that the\n    conditions set forth in Sections 6.1, 6.2, 6.3 and 6.4 have been duly\n    satisfied (the \"Closing Certificate\");\n\n         (n)  the Escrow Agreement, executed by the Company, the Agent (as\n    defined in Section 10.1) and the Escrow Agent (as defined in the Escrow\n    Agreement); and\n\n\n                                          39\n\n\n         (o)  written resignations of all directors of the Company, effective\n    as of the Effective Time.\n\n    6.6  EMPLOYEES.  All of the individuals identified on Exhibit J, and no\nmore than ninety percent (90%) of the remaining employees of the Company on the\ndate hereof, shall not have ceased to be employed by, or expressed an intention\nto terminate their employment with, the Company.\n\n    6.7  LEGENDS.  The Company shall have provided Parent with evidence,\nreasonably satisfactory to Parent, that all technical data, computer software\nand Company Proprietary Assets delivered or otherwise provided or made available\nby or on behalf of the Company to Governmental Bodies in connection with\nGovernment Contracts have been marked with all markings and legends (including\nany \"restricted rights\" legend and any \"government purpose license rights\"\nlegend) appropriate (under the FAR, under other applicable Legal Requirements or\notherwise) to ensure that no Governmental Body or other Person is able to\nacquire any unlimited rights with respect to any of such technical data,\ncomputer software or Company Proprietary Assets and to ensure that the Company\nhas not lost or relinquished and will not lose or relinquish any material rights\nwith respect thereto.\n\n    6.8  TERMINATION OF EMPLOYEE PLANS.  The Company shall have provided Parent\nwith evidence, reasonably satisfactory to Parent, as to the termination of the\nbenefit plans referred to in Section 5.13.\n\n    6.9  FIRPTA COMPLIANCE.  The Company shall have filed with the Internal\nRevenue Service the notification referred to in Section 5.11(b).\n\n    6.10 EFFECTIVENESS OF REGISTRATION STATEMENT.  The S-4 Registration\nStatement shall have become effective in accordance with the provisions of the\nSecurities Act, and no stop order shall have been issued by the SEC with respect\nto the S-4 Registration Statement.\n\n    6.11 LISTING.  The shares of Parent Common Stock to be issued in the Merger\nshall have been approved for listing (subject to notice of issuance) on the\nNasdaq National Market.\n\n    6.12 NO RESTRAINTS.  No temporary restraining order, preliminary or\npermanent injunction or other order preventing the consummation of the Merger\nshall have been issued by any court of competent jurisdiction and remain in\neffect, and there shall not be any Legal Requirement enacted or deemed\napplicable to the Merger that makes consummation of the Merger illegal.\n\n    6.13 NO LEGAL PROCEEDINGS.  No Person shall have commenced or threatened to\ncommence any Legal Proceeding (a) challenging or seeking to restrain or prohibit\nthe consummation of the Merger; (b) relating to the Merger and seeking to obtain\nfrom Parent or any of its subsidiaries any damages that may be material to\nParent; (c) seeking to prohibit or limit in any material respect Parent's\nability to vote, receive dividends with respect to or otherwise exercise\nownership rights with respect to the stock of the Surviving Corporation; or\n\n\n                                          40\n\n\n(d) which would affect adversely the right of Parent, the Surviving Corporation\nor any subsidiary of Parent to own the assets or operate the business of the\nCompany.\n\n    6.14 EMPLOYMENT AGREEMENTS.  Each of (i) Lowell Burnett, Andrew Hibbs and\nDale Sheets shall have entered into an employment agreement with Parent\nsubstantially in the form of Parent's standard form of employment agreement\nproviding such Person with a salary equal to such Person's current salary with\nthe Company and providing such Person with severance benefits equal to six\nmonths' salary, and (ii) Mike Law, Peter Czipott, Tim Raynor, Simon Beevor, Mike\nUrbach and Victor Burns shall have entered into an employment agreement with\nParent substantially in the form of Parent's standard form of employment\nagreement providing such Person with a salary equal to such Person's current\nsalary with the Company and providing such Person with severance benefits equal\nto three months' salary.\n\n\nSECTION 7.    CONDITIONS PRECEDENT TO OBLIGATIONS OF THE COMPANY\n\n    The obligations of the Company to effect the Merger and otherwise\nconsummate the transactions contemplated by this Agreement are subject to the\nsatisfaction, at or prior to the Closing, of the following conditions:\n\n    7.1  ACCURACY OF REPRESENTATIONS.  Each of the representations and\nwarranties made by Parent and Merger Sub in this Agreement shall have been\naccurate in all material respects as of the date of this Agreement (without\ngiving effect to any materiality or similar qualifications contained in such\nrepresentations and warranties), and shall be accurate in all material respects\nas of the Scheduled Closing Time as if made at the Scheduled Closing Time\n(without giving effect to any materiality or similar qualifications contained in\nsuch representations and warranties).\n\n    7.2  PERFORMANCE OF COVENANTS.  All of the covenants and obligations that\nParent and Merger Sub are required to comply with or to perform at or prior to\nthe Closing shall have been complied with and performed in all respects.\n\n    7.3  DOCUMENTS.  The Company shall have received the following documents:\n\n         (a)  a legal opinion of Cooley Godward LLP, dated as of the Closing\n    Date, substantially to the effect of Exhibit K; and\n\n         (b)  a legal opinion of Branton, Wilson &amp; Muns (or, if Branton, Wilson\n    &amp; Muns for any reason does not render such legal opinion, a legal opinion\n    of Cooley Godward LLP), dated as of the Closing Date, to the effect that\n    the Merger will constitute a reorganization within the meaning of Section\n    368 of the Code (it being understood that, in rendering such opinion, such\n    counsel may rely upon the tax representation letters referred to in Section\n    5.8(a) and the Continuity of Interest Certificates referred to in Section\n    6.5(g)).\n\n\n                                          41\n\n\n    7.4  LISTING.  The shares of Parent Common Stock to be issued in the Merger\nshall have been approved for listing (subject to notice of issuance) on the\nNasdaq National Market.\n\n    7.5  NO RESTRAINTS.  No temporary restraining order, preliminary or\npermanent injunction or other order preventing the consummation of the Merger\nshall have been issued by any court of competent jurisdiction and remain in\neffect, and there shall not be any Legal Requirement enacted or deemed\napplicable to the Merger that makes consummation of the Merger illegal.\n\n    7.6  EMPLOYMENT AGREEMENTS.  Parent shall have executed and delivered to\neach of (i) Lowell Burnett, Andrew Hibbs and Dale Sheets an employment agreement\nwith Parent substantially in the form of Parent's standard form of employment\nagreement providing such Person with a salary equal to such Person's current\nsalary with the Company and providing such Person with severance benefits equal\nto six months' salary, and (ii) Mike Law, Peter Czipott, Tim Raynor, Simon\nBeevor, Mike Urbach and Victor Burns an employment agreement with Parent\nsubstantially in the form of Parent's standard form of employment agreement\nproviding such Person with a salary equal to such Person's current salary with\nthe Company and providing such Person with severance benefits equal to three\nmonths' salary.\n\n\nSECTION 8.    TERMINATION\n\n    8.1  TERMINATION EVENTS.  This Agreement may be terminated prior to the\nClosing:\n\n         (a)  by Parent if Parent reasonably determines that the timely\n    satisfaction of any condition set forth in Section 6 has become impossible\n    (other than as a result of any failure on the part of Parent or Merger Sub\n    to comply with or perform any covenant or obligation of Parent or Merger\n    Sub set forth in this Agreement);\n\n         (b)  by the Company if the Company reasonably determines that the\n    timely satisfaction of any condition set forth in Section 7 has become\n    impossible (other than as a result of any failure on the part of the\n    Company to comply with or perform any covenant or obligation set forth in\n    this Agreement or in any other agreement or instrument delivered to\n    Parent);\n\n         (c)  by Parent at or after the Scheduled Closing Time if any condition\n    set forth in Section 6 has not been satisfied by the Scheduled Closing\n    Time;\n\n         (d)  by the Company at or after the Scheduled Closing Time if any\n    condition set forth in Section 7 has not been satisfied by the Scheduled\n    Closing Time;\n\n         (e)  by Parent if the Closing has not taken place on or before\n    December 15, 1997 (other than as a result of any failure on the part of\n    Parent to comply with or perform any covenant or obligation of Parent set\n    forth in this Agreement);\n\n\n                                          42\n\n\n         (f)  by the Company if the Closing has not taken place on or before\n    December 15, 1997 (other than as a result of the failure on the part of the\n    Company to comply with or perform any covenant or obligation set forth in\n    this Agreement or in any other agreement or instrument delivered to\n    Parent);\n\n         (g)  by Parent if Parent shall have determined that there has occurred\n    an event or series of events resulting, either individually or in the\n    aggregate, in a Material Adverse Effect on the Company since the date of\n    this Agreement; or\n\n         (h)  by the mutual consent of Parent and the Company.\n\n    8.2  TERMINATION PROCEDURES.  If Parent wishes to terminate this Agreement\npursuant to Section 8.1(a), Section 8.1(c), Section 8.1(e) or Section 8.1(g),\nParent shall deliver to the Company a written notice stating that Parent is\nterminating this Agreement and setting forth a brief description of the basis on\nwhich Parent is terminating this Agreement.  If the Company wishes to terminate\nthis Agreement pursuant to Section 8.1(b), Section 8.1(d) or Section 8.1(f), the\nCompany shall deliver to Parent a written notice stating that the Company is\nterminating this Agreement and setting forth a brief description of the basis on\nwhich the Company is terminating this Agreement.\n\n    8.3  EFFECT OF TERMINATION.  If this Agreement is terminated pursuant to\nSection 8.1, all further obligations of the parties under this Agreement shall\nterminate; PROVIDED, HOWEVER, that:(a) neither the Company nor Parent shall be\nrelieved of any obligation or liability arising from any prior breach by such\nparty of any provision of this Agreement;(b) the parties shall, in all events,\nremain bound by and continue to be subject to the provisions set forth in\nSection 10; and (c) the Company shall, in all events, remain bound by and\ncontinue to be subject to Section 5.4.\n\n\nSECTION 9.    INDEMNIFICATION, ETC.\n\n    9.1  SURVIVAL OF REPRESENTATIONS, ETC.\n\n         (a)  The representations and warranties made by the Company (including\nthe representations and warranties set forth in Section 2 and the\nrepresentations and warranties set forth in the Closing Certificate) shall\nsurvive the Closing and shall expire on the first anniversary of the Closing\nDate; PROVIDED, HOWEVER, that if, at any time prior to the first anniversary of\nthe Closing Date, any Indemnitee (acting in good faith) delivers to the Agent\n(as defined in Section 10.1) a written notice alleging the existence of an\ninaccuracy in or a breach of any of the representations and warranties made by\nthe Company (and setting forth in reasonable detail the basis for such\nIndemnitee's belief that such an inaccuracy or breach may exist) and asserting a\nclaim for recovery under Section 9.2 based on such alleged inaccuracy or breach,\nthen the claim asserted in such notice shall survive the first anniversary of\nthe Closing until such time as such claim is fully and finally resolved.  All\nrepresentations and warranties made by Parent and Merger Sub shall terminate and\nexpire as of the Effective Time, and any liability of Parent or Merger Sub with\nrespect to such representations and warranties shall thereupon cease.\n\n\n                                          43\n\n\n         (b)  The representations, warranties, covenants and obligations of the\nCompany, and the rights and remedies that may be exercised by the Indemnitees,\nshall not be limited or otherwise affected by or as a result of any information\nfurnished to, or any investigation made by or knowledge of, any of the\nIndemnitees or any of their Representatives.\n\n         (c)  For purposes of this Agreement, each statement or other item of\ninformation set forth in the Disclosure Schedule or in any update to the\nDisclosure Schedule shall be deemed to be a representation and warranty made by\nthe Company in this Agreement.\n\n    9.2  INDEMNIFICATION.\n\n         (a)  From and after the Effective Time (but subject to Section\n9.1(a)), each of the Indemnitees shall be held harmless and indemnified from and\nagainst, and shall be compensated and reimbursed for, any Damages which are\ndirectly or indirectly suffered or incurred by any of the Indemnitees or to\nwhich any of the Indemnitees may otherwise become subject (regardless of whether\nor not such Damages relate to any third-party claim) and which arise from or as\na result of, or are directly or indirectly connected with:\n\n              (i)  any inaccuracy in or breach of any representation or\n    warranty of the Company set forth in this Agreement or in the Closing\n    Certificate (without giving effect to any \"Material Adverse Effect\" or\n    other materiality qualification or any similar qualification contained or\n    incorporated directly or indirectly in such representation or warranty);\n\n              (ii) any inaccuracy of any representation, warranty, statement,\n    information or other provision contained in the Disclosure Schedule or in\n    any other document delivered or otherwise made available to Parent or any\n    of its Representatives by or on behalf of the Company or any of the\n    Company's Representatives;\n\n              (iii)     any breach of any covenant or obligation of the Company\n    (including the covenants set forth in Sections 4 and 5);\n\n              (iv) any litigation, arbitration, controversy, dispute or\n    disagreement involving the Company and any of EG&amp;G Astrophysics, Rapiscan\n    Security Products, Inc., Heimann Systems GmbH or any other person\n    identified in Part 2.21 of the Disclosure Schedule or any of their\n    respective affiliates (collectively, the \"Disputes\"); or\n\n              (v)  any Legal Proceeding relating to any inaccuracy or breach or\n    other matter of the type referred to in clause \"(i)\", \"(ii)\", \"(iii)\", or\n    \"(iv)\" above (including any Legal Proceeding commenced by any Indemnitee\n    for the purpose of enforcing any of its rights under this Section 9).\n\n         (b)  If the Surviving Corporation suffers, incurs or otherwise becomes\nsubject to any Damages as a result of or in connection with any inaccuracy in or\nbreach of any representation, warranty, covenant or obligation or any of the\nDisputes, then (without limiting\n\n\n                                          44\n\n\nany of the rights of the Surviving Corporation as an Indemnitee) Parent shall\nalso be deemed, by virtue of its ownership of the stock of the Surviving\nCorporation, to have incurred Damages as a result of and in connection with such\ninaccuracy or breach or Dispute.\n\n    9.3  THRESHOLD.  There shall be no indemnification payment pursuant to\nSection 9.2(a) for any inaccuracy in or breach of any of their representations\nand warranties set forth in Section 2 until such time as the total amount of all\nDamages (including the Damages arising from such inaccuracy or breach and all\nother Damages arising from any other inaccuracies in or breaches of any\nrepresentations or warranties) that have been directly or indirectly suffered or\nincurred by any one or more of the Indemnitees, or to which any one or more of\nthe Indemnitees has or have otherwise become subject, exceeds $100,000 in the\naggregate.  If the total amount of such Damages exceeds $100,000, then the\nIndemnitees shall be entitled to be indemnified against and compensated and\nreimbursed for all Damages, including such $100,000.  Notwithstanding anything\nto the contrary set forth in this Section 9.3, the $100,000 minimum threshold\nshall not apply to Damages arising under the Disputes.\n\n    9.4  SATISFACTION OF INDEMNIFICATION CLAIM.\n\n         (a)  The escrow under the Escrow Agreement shall serve as security for\nthe obligations owed the Indemnitees under this Section 9.  Any liability (for\nindemnification or otherwise) to any Indemnitee under this Section 9 may be\nsatisfied by the delivery to such Indemnitee, from the shares escrowed pursuant\nto the Escrow Agreement, of the number of shares of Parent Common Stock\ndetermined by dividing (i) the aggregate dollar amount of such liability BY (ii)\nthe Designated Parent Stock Price (as defined in Section 1.5(c)(viii) and as\nadjusted as appropriate to reflect any stock split, reverse stock split, stock\ndividend, recapitalization or other similar transaction effected by Parent\nbetween the Effective Time and the date such liability is satisfied).\n\n         (b)  Except with respect to claims based on knowing and intentional\nmisrepresentations of representations and warranties, Parent and Merger Sub\nagree that, after the Closing, the sole recourse of the Indemnitees with respect\nto a breach by the Company of its representations or warranties made in this\nAgreement or in the Disclosure Schedule or the other indemnification rights set\nforth in this Section 9 shall be against the shares held in escrow under the\nEscrow Agreement.\n\n    9.5  NO CONTRIBUTION.  No Person shall have any right of contribution,\nright of indemnity or other right or remedy against the Surviving Corporation in\nconnection with any indemnification obligation or any other liability under or\nin connection with this Agreement or the Closing Certificate.\n\n    9.6  INTEREST.  Any Indemnitee entitled to recover Damages pursuant to this\nSection 9 shall also be entitled to interest on the amount of such Damages (for\nthe period commencing as of the date on which the Agent (as defined in Section\n10.1) first received notice of a claim for recovery by such Indemnitee and\nending on the date on which the liability to such Indemnitee is fully satisfied)\nat a floating rate equal to the rate of interest publicly announced by Bank of\nAmerica, N.T. &amp; S.A. from time to time as its prime, base or reference rate.\n\n\n                                          45\n\n\n    9.7  DEFENSE OF THIRD PARTY CLAIMS.  In the event of the assertion or\ncommencement by any Person of any claim or Legal Proceeding (whether against the\nSurviving Corporation, against Parent or against any other Person) with respect\nto which there may be any obligation to hold harmless, indemnify, compensate or\nreimburse any Indemnitee pursuant to this Section 9, Parent shall have the\nright, at its election, to proceed with such claim or Legal Proceeding on its\nown.  If Parent so proceeds with any such claim or Legal Proceeding:\n\n         (a)  all reasonable expenses relating to such claim or Legal\n    Proceeding shall be deemed Damages, subject to recovery by the Indemnitee\n    under Section 9.2; and\n\n         (b)  Parent shall have the right to settle, adjust or compromise such\n    claim or Legal Proceeding with the consent of the Agent (as defined in\n    Section 10.1); PROVIDED, HOWEVER, that such consent shall not be\n    unreasonably withheld.\n\nParent shall give the Agent (as defined in Section 10.1) prompt notice of the\ncommencement of any such Legal Proceeding against Parent or the Surviving\nCorporation; PROVIDED, HOWEVER, that any failure on the part of Parent to so\nnotify the Agent shall not limit any of the rights of any Indemnitees under this\nSection 9 (except to the extent such failure materially prejudices the defense\nof such Legal Proceeding).\n\n    9.8  EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PARENT.  No Indemnitee\n(other than Parent or any successor thereto or assign thereof) shall be\npermitted to assert any indemnification claim or exercise any other remedy under\nthis Agreement unless Parent (or any successor thereto or assign thereof) shall\nhave consented to the assertion of such indemnification claim or the exercise of\nsuch other remedy.\n\n\nSECTION 10.   MISCELLANEOUS PROVISIONS\n\n    10.1 AGENT.  The Company hereby irrevocably appoints Randall R. Lunn as its\nand its shareholders' agent for purposes of Section 9 (the \"Agent\").  Parent\nshall be entitled to deal exclusively with the Agent on all matters relating to\nSection 9, and shall be entitled to rely conclusively (without further evidence\nof any kind whatsoever) on any document executed or purported to be executed on\nbehalf of the Company or its shareholders by the Agent, and on any other action\ntaken or purported to be taken on behalf of the Company or its shareholders by\nthe Agent, as fully binding upon the shareholders of the Company.  If the Agent\nshall die, become disabled or otherwise be unable to fulfill his\nresponsibilities as agent of the shareholders of the Company, then the\nshareholders of the Company shall, within ten days after such death or\ndisability, appoint a successor agent and, promptly thereafter, shall notify\nParent of the identity of such successor.  Any such successor shall become the\n\"Agent\" for purposes of Section 9 and this Section 10.1.  If for any reason\nthere is no Agent at any time, all references herein to the Agent shall be\ndeemed to refer to the shareholders of the Company.\n\n    10.2 FURTHER ASSURANCES.  Each party hereto shall execute and cause to be\ndelivered to each other party hereto such instruments and other documents, and\nshall take such other\n\n\n                                          46\n\n\nactions, as such other party may reasonably request (prior to, at or after the\nClosing) for the purpose of carrying out or evidencing any of the transactions\ncontemplated by this Agreement.\n\n    10.3 FEES AND EXPENSES.  Each party to this Agreement shall bear and pay\nall fees, costs and expenses (including legal fees and accounting fees) that\nhave been incurred or that are incurred by such party in connection with the\ntransactions contemplated by this Agreement, including all fees, costs and\nexpenses incurred by such party in connection with or by virtue of (a) the\ninvestigation and review conducted by Parent and its Representatives with\nrespect to the Company's business (and the furnishing of information to Parent\nand its Representatives in connection with such investigation and review), (b)\nthe negotiation, preparation and review of this Agreement (including the\nDisclosure Schedule) and all agreements, certificates, opinions and other\ninstruments and documents delivered or to be delivered in connection with the\ntransactions contemplated by this Agreement, (c) the preparation and submission\nof any filing or notice required to be made or given in connection with any of\nthe transactions contemplated by this Agreement, and the obtaining of any\nConsent required to be obtained in connection with any of such transactions, and\n(d) the consummation of the Merger.\n\n    10.4 ATTORNEYS' FEES.  If any action or proceeding relating to this\nAgreement or the enforcement of any provision of this Agreement is brought\nagainst any party hereto, the prevailing party shall be entitled to recover\nreasonable attorneys' fees, costs and disbursements (in addition to any other\nrelief to which the prevailing party may be entitled).\n\n    10.5 NOTICES.  Any notice or other communication required or permitted to\nbe delivered to any party under this Agreement shall be in writing and shall be\ndeemed properly delivered, given and received when delivered (by hand, by\nregistered mail, by courier or express delivery service or by facsimile) to the\naddress or facsimile telephone number set forth beneath the name of such party\nbelow (or to such other address or facsimile telephone number as such party\nshall have specified in a written notice given to the other parties hereto):\n\n\n         IF TO PARENT:\n\n         InVision Technologies, Inc.\n         3420 E. Third Avenue\n         Foster City, CA  94404\n         Attention:  Chief Financial Officer\n         Facsimile:  (415) 578-0930\n\n         with a copy to:\n\n         Robert L. Jones, Esq.\n         Cooley Godward LLP\n         Five Palo Alto Square\n         3000 El Camino Real\n         Palo Alto, CA  94306-2155\n         Facsimile:  (415) 857-0663\n\n\n                                          47\n\n\n         IF TO THE COMPANY:\n\n         Quantum Magnetics, Inc.\n         7740 Kenamar Court\n         San Diego, CA  92121-2425\n         Attention:  President\n         Facsimile:  (619) 566-9388\n\n         with a copy to:\n\n         Edward C. Muns, Esq.\n         Branton, Wilson &amp; Muns\n         701 B Street, Suite 1255\n         San Diego, CA  92101\n         Facsimile:  (619) 236-8175\n\n         IF TO AGENT:\n\n         Randall R. Lunn\n         Techno Venture Management\n         101 Arch Street\n         Suite 1950\n         Boston, MA  02110\n         Facsimile:  (617) 345-9377\n\n    10.6  TIME OF THE ESSENCE.  Time is of the essence of this Agreement.\n\n    10.7  HEADINGS.  The underlined headings contained in this Agreement are \nfor convenience of reference only, shall not be deemed to be a part of this \nAgreement and shall not be referred to in connection with the construction or \ninterpretation of this Agreement.\n\n    10.8  COUNTERPARTS.  This Agreement may be executed in several \ncounterparts, each of which shall constitute an original and all of which, \nwhen taken together, shall constitute one agreement.\n\n    10.9  GOVERNING LAW.  This Agreement shall be construed in accordance \nwith, and governed in all respects by, the internal laws of the State of \nCalifornia (without giving effect to principles of conflicts of laws).\n\n    10.10 SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon: the \nCompany and its successors and assigns (if any); Parent and its successors \nand assigns (if any); and Merger Sub and its successors and assigns (if any). \nThis Agreement shall inure to the benefit of: the Company; the Company's \nshareholders (to the extent set forth in Section 1.5); the holders of assumed \nCompany Options (to the extent set forth in Section 1.6); Parent; Merger Sub; \nthe other Indemnitees (subject to Section 9.8); and the respective successors \nand assigns (if any) of the foregoing.  Parent may freely assign any or all \nof its rights under this Agreement\n\n                                          48\n\n\n(including its indemnification rights under Section 9), in whole or in part, \nto any other Person without obtaining the consent or approval of any other \nparty hereto or of any other Person.\n\n    10.11     REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.  The rights and \nremedies of the parties hereto shall be cumulative (and not alternative).  \nThe parties to this Agreement agree that, in the event of any breach or \nthreatened breach by any party to this Agreement of any covenant, obligation \nor other provision set forth in this Agreement for the benefit of any other \nparty to this Agreement, such other party shall be entitled (in addition to \nany other remedy that may be available to it) to (a) a decree or order of \nspecific performance or mandamus to enforce the observance and performance of \nsuch covenant, obligation or other provision, and (b) an injunction \nrestraining such breach or threatened breach.\n\n    10.12     WAIVER.\n\n         (a)  No failure on the part of any Person to exercise any power, \nright, privilege or remedy under this Agreement, and no delay on the part of \nany Person in exercising any power, right, privilege or remedy under this \nAgreement, shall operate as a waiver of such power, right, privilege or \nremedy; and no single or partial exercise of any such power, right, privilege \nor remedy shall preclude any other or further exercise thereof or of any \nother power, right, privilege or remedy.\n\n         (b)  No Person shall be deemed to have waived any claim arising out \nof this Agreement, or any power, right, privilege or remedy under this \nAgreement, unless the waiver of such claim, power, right, privilege or remedy \nis expressly set forth in a written instrument duly executed and delivered on \nbehalf of such Person; and any such waiver shall not be applicable or have \nany effect except in the specific instance in which it is given.\n\n    10.13     AMENDMENTS.  This Agreement may not be amended, modified, \naltered or supplemented other than by means of a written instrument duly \nexecuted and delivered on behalf of all of the parties hereto.\n\n    10.14     SEVERABILITY.  In the event that any provision of this \nAgreement, or the application of any such provision to any Person or set of \ncircumstances, shall be determined to be invalid, unlawful, void or \nunenforceable to any extent, the remainder of this Agreement, and the \napplication of such provision to Persons or circumstances other than those as \nto which it is determined to be invalid, unlawful, void or unenforceable, \nshall not be impaired or otherwise affected and shall continue to be valid \nand enforceable to the fullest extent permitted by law.\n\n    10.15     PARTIES IN INTEREST.  Except for the provisions of Sections \n1.5, 1.6 and 9, none of the provisions of this Agreement is intended to \nprovide any rights or remedies to any Person other than the parties hereto \nand their respective successors and assigns (if any).\n\n    10.16     ENTIRE AGREEMENT.  This Agreement and the other agreements \nreferred to herein set forth the entire understanding of the parties hereto \nrelating to the subject matter hereof and thereof and supersede all prior \nagreements and understandings among or between any of the parties relating to \nthe subject matter hereof and thereof; PROVIDED, HOWEVER, that the\n\n                                          49\n\n\nConfidentiality Agreement executed on behalf of Parent on and the Company on \nJune 4, 1997 shall not be superseded by this Agreement and shall remain in \neffect in accordance with its terms until the earlier of (a) the Effective \nTime, or (b) the date on which such Confidentiality Agreement is terminated \nin accordance with its terms.\n\n    10.17     CONSTRUCTION.\n\n         (a)  For purposes of this Agreement, whenever the context requires: \nthe singular number shall include the plural, and vice versa; the masculine \ngender shall include the feminine and neuter genders; the feminine gender \nshall include the masculine and neuter genders; and the neuter gender shall \ninclude the masculine and feminine genders.\n\n         (b)  The parties hereto agree that any rule of construction to the \neffect that ambiguities are to be resolved against the drafting party shall \nnot be applied in the construction or interpretation of this Agreement.\n\n         (c)  As used in this Agreement, the words \"include\" and \"including,\" \nand variations thereof, shall not be deemed to be terms of limitation, but \nrather shall be deemed to be followed by the words \"without limitation.\"\n\n         (d)  Except as otherwise indicated, all references in this Agreement \nto \"Sections\" and \"Exhibits\" are intended to refer to Sections of this \nAgreement and Exhibits to this Agreement.\n\n                                          50\n\n\n    The parties hereto have caused this Agreement to be executed and \ndelivered as of September 3, 1997.\n\n                        INVISION TECHNOLOGIES, INC.,\n                          a Delaware corporation\n\n\n                        By:   \/SERGIO MAGISTRI\n                           ----------------------------------------\n                              Sergio Magistri\n                              Chief Executive Officer and President\n\n\n\n                        QP ACQUISITION CORP.,\n                          a California corporation\n\n\n                        By:   \/s\/ SERGIO MAGISTRI\n                           ----------------------------------------\n                              Sergio Magistri\n                              President\n\n\n                        QUANTUM MAGNETICS, INC.,\n                          a California corporation\n\n\n                        By:   \/s\/ DALE SHEETS\n                           ----------------------------------------\n                             Dale Sheets\n                             President\n\n\n\n\n\n                                      EXHIBIT A\n\n                                 CERTAIN DEFINITIONS\n\n\n    For purposes of the Agreement (including this Exhibit A):\n\n    ACQUISITION TRANSACTION.  \"Acquisition Transaction\" shall mean any\ntransaction involving:\n\n         (a)  the sale, license, disposition or acquisition of all or a\n    material portion of the Company's business or assets;\n\n         (b)  the issuance, disposition or acquisition of (i) any capital stock\n    or other equity security of the Company (other than common stock issued to\n    employees of the Company, upon exercise of Company Options or otherwise, in\n    routine transactions in accordance with the Company's past practices), (ii)\n    any option, call, warrant or right (whether or not immediately exercisable)\n    to acquire any capital stock or other equity security of the Company (other\n    than stock options granted to employees of the Company in routine\n    transactions in accordance with the Company's past practices), or (iii) any\n    security, instrument or obligation that is or may become convertible into\n    or exchangeable for any capital stock or other equity security of the\n    Company; or\n\n         (c)  any merger, consolidation, business combination, reorganization\n    or similar transaction involving the Company.\n\n    AGREEMENT.  \"Agreement\" shall mean the Agreement and Plan of Merger and\nReorganization to which this Exhibit A is attached (including the Disclosure\nSchedule), as it may be amended from time to time.\n\n    COMPANY.  \"Company\" shall mean Quantum Magnetics, Inc., a California\ncorporation.\n\n    COMPANY CONTRACT.  \"Company Contract\" shall mean any Contract:  (a) to\nwhich the Company is a party; (b) by which the Company or any of its assets is\nor may become bound or under which the Company has, or may become subject to,\nany obligation; or (c) under which the Company has or may acquire any right or\ninterest.\n\n    COMPANY SHAREHOLDERS MEETING.  \"Company Shareholders Meeting\" shall mean a\nmeeting of the holders of the capital stock of the Company to be held to\nconsider, act upon and vote upon the approval of the Agreement and the Merger.\n\n    COMPANY PROPRIETARY ASSET.  \"Company Proprietary Asset\" shall mean any\nProprietary Asset owned by or licensed to the Company or otherwise used by the\nCompany.\n\n    CONSENT.  \"Consent\" shall mean any approval, consent, ratification,\npermission, waiver or authorization (including any Governmental Authorization).\n\n\n                                         A-1\n\n\n    CONTRACT.  \"Contract\" shall mean any written, oral or other agreement,\ncontract, subcontract, lease, understanding, instrument, note, warranty,\ninsurance policy, benefit plan or legally binding commitment or undertaking of\nany nature.\n\n    DAMAGES.  \"Damages\" shall include any loss, damage, injury, decline in\nvalue, lost opportunity, liability, claim, demand, settlement, judgment, award,\nfine, penalty, Tax, fee (including reasonable attorneys' fees), charge, cost\n(including costs of investigation) or expense of any nature.\n\n    DISCLOSURE SCHEDULE.  \"Disclosure Schedule\" shall mean the schedule (dated\nas of the date of the Agreement) delivered to Parent on behalf of the Company.\n\n    ENCUMBRANCE.  \"Encumbrance\" shall mean any lien, pledge, hypothecation,\ncharge, mortgage, security interest, encumbrance, claim, infringement,\ninterference, option, right of first refusal, preemptive right, community\nproperty interest or restriction of any nature (including any restriction on the\nvoting of any security, any restriction on the transfer of any security or other\nasset, any restriction on the receipt of any income derived from any asset, any\nrestriction on the use of any asset and any restriction on the possession,\nexercise or transfer of any other attribute of ownership of any asset).\n\n    ENTITY.  \"Entity\" shall mean any corporation (including any non-profit\ncorporation), general partnership, limited partnership, limited liability\npartnership, joint venture, estate, trust, company (including any limited\nliability company or joint stock company), firm or other enterprise,\nassociation, organization or entity.\n\n    ESCROW AGREEMENT.  \"Escrow Agreement\" shall mean an escrow agreement in the\nform attached hereto as Exhibit L.\n\n    EXCHANGE ACT.  \"Exchange Act\" shall mean the Securities Exchange Act of\n1934, as amended.\n\n    GOVERNMENT BID.     \"Government Bid\" shall mean any quotation, bid or\nproposal submitted to any Governmental Body or any proposed prime contractor or\nhigher-tier subcontractor of any Governmental Body.\n\n    GOVERNMENT CONTRACT.     \"Government Contract\" shall mean any prime\ncontract, Subcontract, letter contract, purchase order or delivery order\nexecuted or submitted to or on behalf of any Governmental Body or any prime\ncontractor or higher-tier subcontractor, or under which any Governmental Body or\nany such prime contractor or subcontractor otherwise has or may acquire any\nright or interest.  Government Contract includes a cooperative agreement, grant,\nand other \"transaction.\"\n\n    GOVERNMENTAL AUTHORIZATION.  \"Governmental Authorization\" shall mean any:\n(a) permit, license, certificate, franchise, permission, clearance,\nregistration, qualification or authorization issued, granted, given or otherwise\nmade available by or under the authority of any Governmental Body or pursuant to\nany Legal Requirement; or (b) right under any Contract with any Governmental\nBody.\n\n    GOVERNMENTAL BODY.  \"Governmental Body\" shall mean any: (a) nation, state,\ncommonwealth, province, territory, county, municipality, district or other\njurisdiction of any nature; (b) federal, state,\n\n\n                                         A-2\n\n\nlocal, municipal, foreign or other government; or (c) governmental or\nquasi-governmental authority of any nature (including any governmental division,\ndepartment, agency, commission, instrumentality, official, organization, unit,\nbody or Entity and any court or other tribunal).\n\n    INDEMNITEES.  \"Indemnitees\" shall mean the following Persons:  (a) Parent;\n(b) Parent's current and future affiliates (including the Surviving\nCorporation); (c) the respective Representatives of the Persons referred to in\nclauses \"(a)\" and \"(b)\" above; and (d) the respective successors and assigns of\nthe Persons referred to in clauses \"(a)\", \"(b)\" and \"(c)\" above; PROVIDED,\nHOWEVER, that the shareholders of the Company (other than Parent) shall not be\ndeemed to be \"Indemnitees.\"\n\n    LEGAL PROCEEDING.  \"Legal Proceeding\" shall mean any action, suit,\nlitigation, arbitration, proceeding (including any civil, criminal,\nadministrative, investigative or appellate proceeding), hearing, inquiry, audit,\nexamination or investigation commenced, brought, conducted or heard by or\nbefore, or otherwise involving, any court or other Governmental Body or any\narbitrator or arbitration panel.\n\n    LEGAL REQUIREMENT.  \"Legal Requirement\" shall mean any federal, state,\nlocal, municipal, foreign or other law, statute, constitution, principle of\ncommon law, resolution, ordinance, code, edict, decree, rule, regulation, ruling\nor requirement issued, enacted, adopted, promulgated, implemented or otherwise\nput into effect by or under the authority of any Governmental Body.\n\n    MATERIAL ADVERSE EFFECT.  A violation or other matter will be deemed to\nhave a \"Material Adverse Effect\" on the Company if such violation or other\nmatter (considered together with all other matters that would constitute\nexceptions to the representations and warranties set forth in the Agreement or\nin the Closing Certificate but for the presence of \"Material Adverse Effect\" or\nother materiality qualifications, or any similar qualifications, in such\nrepresentations and warranties) would have a material adverse effect on the\nCompany's business, condition, assets, liabilities, operations, financial\nperformance or prospects.\n\n    PERSON.  \"Person\" shall mean any individual, Entity or Governmental Body.\n\n    PRE-CLOSING PERIOD.  \"Pre-Closing Period\" means the period beginning on the\ndate of the Agreement through and including the Effective Time.\n\n    PROPRIETARY ASSET.  \"Proprietary Asset\" shall mean any: (a) patent, patent\napplication, trademark (whether registered or unregistered), trademark\napplication, trade name, fictitious business name, service mark (whether\nregistered or unregistered), service mark application, copyright (whether\nregistered or unregistered), copyright application, maskwork, maskwork\napplication, trade secret, know-how, customer list, franchise, system, computer\nsoftware, computer program, invention, design, blueprint, engineering drawing,\nproprietary product, technology, proprietary right or other intellectual\nproperty right or intangible asset; or (b) right to use or exploit any of the\nforegoing.\n\n    REPRESENTATIVES.  \"Representatives\" shall mean officers, directors,\nemployees, agents, attorneys, accountants, advisors and representatives.\n\n    SEC.  \"SEC\" shall mean the United States Securities and Exchange\nCommission.\n\n\n                                         A-3\n\n\n    SECURITIES ACT.  \"Securities Act\" shall mean the Securities Act of 1933, as\namended.\n\n    SUBCONTRACT.  \"Subcontract\" shall mean any subcontract, basic ordering\nagreement, letter subcontract, purchase order, delivery order, change,\narrangement or other commitment of any kind, between the Company and any prime\ncontractor to either the U.S. Government or a State Government or any\nsubcontractor with respect to a Government Prime Contract.\n\n    TAX.  \"Tax\" shall mean any tax (including any income tax, franchise tax,\ncapital gains tax, gross receipts tax, value-added tax, surtax, excise tax, ad\nvalorem tax, transfer tax, stamp tax, sales tax, use tax, property tax, business\ntax, withholding tax or payroll tax), levy, assessment, tariff, duty (including\nany customs duty), deficiency or fee, and any related charge or amount\n(including any fine, penalty or interest), imposed, assessed or collected by or\nunder the authority of any Governmental Body.\n\n    TAX RETURN.  \"Tax Return\" shall mean any return (including any information\nreturn), report, statement, declaration, estimate, schedule, notice,\nnotification, form, election, certificate or other document or information filed\nwith or submitted to, or required to be filed with or submitted to, any\nGovernmental Body in connection with the determination, assessment, collection\nor payment of any Tax or in connection with the administration, implementation\nor enforcement of or compliance with any Legal Requirement relating to any Tax.\n\n    U.S. GOVERNMENT.  \"U.S. Government\" shall mean the United States Government\nor any department, agency or instrumentality thereof.\n\n\n                                         A-4\n\n\n                                                                     EXHIBIT B\n\n                             FORM OF AMENDED AND RESTATED\n                  ARTICLES OF INCORPORATION OF SURVIVING CORPORATION\n\n                                          I.\n\n    The name of this corporation is QUANTUM MAGNETICS, INC.\n\n                                         II.\n\n    The purpose of this corporation is to engage in any lawful act or activity\nfor which a corporation may be organized under the General Corporation Law of\nCalifornia other than the banking business, the trust company business or the\npractice of a profession permitted to be incorporated by the California\nCorporations Code.\n\n                                         III.\n\n    The corporation is authorized to issue only one class of stock, to be\ndesignated Common Stock.  The total number of shares of Common Stock presently\nauthorized is one thousand (1,000), par value one-tenth of one cent ($0.001).\n\n                                         IV.\n\n    (a)  The liability of the directors of this corporation for monetary\ndamages shall be eliminated to the fullest extent permissible under California\nlaw.\n\n    (b)  This corporation is authorized to provide indemnification of agents\n(as defined in Section 317 of the California Corporations Code) for breach of\nduty to the corporation and its shareholders through bylaw provisions or through\nagreements with the agents, or through shareholder resolutions, or otherwise, in\nexcess of the indemnification otherwise permitted by Section 317 of the\nCorporations Code, subject to the limits on such excess indemnification set\nforth in Section 204 of the Corporations Code.\n\n    (c)  Any repeal or modification of this Article shall only be prospective\nand shall not affect the rights under this Article in effect at the time of the\nalleged occurrence of any act or omission to act giving rise to liability or\nindemnification.\n\n\n\n                                                                EXHIBIT C\n\n                   DIRECTORS AND OFFICERS OF SURVIVING CORPORATION\n\nDirectors\n---------\n\nLowell Burnett\nSergio Magistri\nCurtis P. DiSibio\n\nOfficers\n--------\n\nLowell Burnett                    Chairman of the Board\nDale Sheets                       President and Chief Executive Officer\nCurtis P. DiSibio                 Vice President and Chief Financial Officer\nDavid Pillor                      Vice President, Sales\nAndrew Hibbs                      Chief Technical Officer\nDeborah Lawson Cleveland          Secretary\n\n\n                                     EXHIBIT D-1\n\n                             FORM OF AFFILIATES AGREEMENT\n\n\n    THIS AFFILIATES AGREEMENT (the \"Affiliates Agreement\") is entered into as\nof September __, 1997, between INVISION TECHNOLOGIES, INC., a Delaware\ncorporation (\"Parent\"), and the undersigned shareholder (the \"Shareholder\") of\nQUANTUM MAGNETICS, INC., a California corporation (the \"Company\").\n\n    Pursuant to that certain Agreement and Plan of Merger and Reorganization\n(the \"Reorganization Agreement\"), dated as of September 3, 1997, by and among\nParent, QP ACQUISITION CORP., a California corporation and wholly-owned\nsubsidiary of Parent (\"Merger Sub\"), and the Company, Parent will acquire the\nCompany through a merger of Merger Sub with and into the Company (the \"Merger\")\nwhereby each share of outstanding Common Stock, Series A Preferred Stock, Series\nB Preferred Stock and Series C Preferred Stock of the Company (collectively, the\n\"Company Capital Stock\") shall cease to be existing and shall become and convert\ninto that number of shares of the common stock of Parent (\"Parent Common\nStock\"), as set forth in the Reorganization Agreement.\n\n    As a result of the Merger and certain related transactions, Shareholder\nwill receive shares of Parent Common Stock.  The Shareholder understands that\nthe Parent Common Stock being issued in the Merger will be issued pursuant to a\nRegistration Statement on Form S-4, and that the Shareholder may be deemed an\n\"Affiliate\" of Parent as such term is defined for purposes of paragraphs (c) and\n(d) of Rule 145 (\"Rule 145\") of the General Rules and Regulations of the\nSecurities and Exchange Commission under the Securities Act of 1933, as amended\n(the \"Act\"), and the Securities and Exchange Commissions Accounting Series\nRelease Nos. 130 and 135 (the \"Pooling Rules\"), as amended, and as such the\nShareholder may only transfer, sell or dispose of the Parent Common Stock in\naccordance with this Affiliate Agreement, Rule 145 and the Pooling Rules.\n\n    The Shareholder understands that the representations, warranties and\ncovenants set forth herein will be relied upon by Parent and the Company, and\ntheir respective counsel and accounting firms.\n\n    1.   The Shareholder represents, warrants, understands and agrees that:\n\n         (a)  The Shareholder has full power and capacity to execute and\ndeliver this Affiliates Agreement and to make the representations, warranties\nand agreements set forth herein and to perform its obligations hereunder.\n\n         (b)  The Shareholder has carefully read this Affiliates Agreement, and\nhas discussed with counsel to the extent Shareholder felt necessary the\nrequirements, limitations and restrictions on his or her ability to sell,\ntransfer or otherwise dispose of the Parent Common Stock he or she may receive\nthrough the Reorganization Agreement, and fully understands the\n\n\n                                          1.\n\n\nrequirements limitations and restrictions this Affiliates Agreement places upon\nthe Shareholder's ability to transfer sell or otherwise dispose of the Parent\nCommon Stock.\n\n         (c)  The Shareholder will not, publicly or privately, sell, transfer\nor otherwise dispose of, or reduce the Shareholder's interest in or risk\nrelating to any Parent Common Stock issued to the Shareholder pursuant to the\nMerger, or any Parent Common Stock issued to the Shareholder upon exercise of\nany instrument exercisable for Parent Common Stock held by Shareholder until\nsuch time as the financial results covering at least thirty (30) days of\npost-Merger combined operations of Parent and the Company have been published by\nParent (within the meaning of the Pooling Rules).\n\n         (d)  Until the earlier of (i) the Closing (as defined in the\nReorganization Agreement) or (ii) the termination of the Reorganization\nAgreement, the Shareholder will not sell, transfer or otherwise dispose of, or\nreduce the Shareholder's interest in or risk relating to, any Company Capital\nStock or any instrument exercisable for the Company Capital Stock currently\nowned by the Shareholder.\n\n         (e)  Subject to Section 1(c) above, the Shareholder will not sell,\npledge, transfer or otherwise dispose of any of the Parent Common Stock issued\nto the Shareholder in the Merger unless at such time either (i) such transfer\nshall be in conformity with the provisions of Rule 145, (ii) the Shareholder\nshall have furnished to Parent an opinion of counsel reasonably satisfactory to\nParent, to the effect that no registration under the Act would be required in\nconnection with the proposed offer, sale, pledge, transfer or other disposition,\n(iii) a registration statement under the Act covering the proposed offer, sale,\npledge, or other disposition shall be effective under the Act, or (iv) if the\nShareholder is a partnership, such transfer shall be a pro rata distribution\nfrom the Shareholder to its partners without receipt of consideration, in which\ncase each distributee shall receive stock certificates bearing the legend set\nforth in paragraph 3 below.\n\n    2.   Shareholder understands and agrees that Parent is under no obligation\nto register the sale, transfer or other disposition of the Parent Common Stock\n(other than pursuant to the Registration Statement to be filed in connection\nwith the Merger) or to take any other action necessary in order to make\ncompliance with an exemption from registration available, except to remain\ncurrent in its reporting requirements under the Securities Exchange Act of 1934,\nas amended, which Parent hereby agrees to do.\n\n    3.   The Shareholder also understands and agrees that stop transfer\ninstructions will be given to Parent's transfer agent with respect to the Parent\nCommon Stock issued to the Shareholder, and there will be placed on the\nCertificates representing such Parent Common Stock or any substitutions thereof\n(the \"Certificates\") a legend stating in substance:\n\n    \"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A\n    TRANSACTION TO WHICH RULE 145(d) OF THE SECURITIES ACT OF 1933 APPLIES\n    AND MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE PROVISIONS OF SUCH\n    RULE.  IN ADDITION, UNTIL [a date one year after the Effective Time],\n    THE SHARES REPRESENTED BY THIS\n\n\n                                          2.\n\n\n    CERTIFICATE MAY ONLY BE TRANSFERRED IN ACCORDANCE WITH THE TERMS OF AN\n    AGREEMENT DATED AS OF SEPTEMBER __, 1997, BETWEEN THE REGISTERED HOLDER\n    HEREOF AND INVISION TECHNOLOGIES, INC., COPIES OF WHICH AGREEMENT IS ON FILE\n    AT THE PRINCIPAL OFFICES OF INVISION TECHNOLOGIES, INC.\"\n\n    4.   Parent agrees that such stop transfer instructions and legends\nreferred to above will be removed (i) with respect to transferred Parent Common\nStock, at such time as Parent is reasonably satisfied that the Shareholder has\ncomplied with the provisions of this Affiliates Agreement with respect to a\ntransfer and (ii) otherwise at such time as the restrictions of subsection (d)\nof Rule 145 shall no longer apply to the Shareholder.\n\n    5.   The Shareholder further agrees to irrevocably waive and terminate as\nof the Closing any rights relating to Parent Common Stock (such as rights to\ncause Parent to register such stock) that such Shareholder may possess as the\nresult of agreements entered into between the Shareholder, other shareholders of\nthe Company and the Company (\"Company Shareholder Agreements\") and further\nagrees to execute amendments to the Company Shareholder Agreements pursuant to\nwhich they will terminate at the Closing.\n\n    6.   The Shareholder further agrees that, at any time prior to one year\nfrom the Effective Time (as such term is defined in the Reorganization\nAgreement), the Shareholder shall only sell shares of Parent Common Stock\nreceived by the Shareholder in the Merger through Donald &amp; Co. Securities Inc.\n(\"Donald &amp; Co.\"), acting as broker for such transaction.  In addition, in the\nevent the Shareholder informs Donald &amp; Co. of its intention to sell shares of\nParent Common Stock prior to one year from the Effective Time, Donald &amp; Co.\nshall be entitled to inform Parent of the Shareholder's intention to effect such\ntransaction.  Any such sale shall occur only when otherwise permitted under this\nAffiliates Agreement.\n\n    7.   The Shareholder further represents that it is the beneficial owner of\nthe Company Capital Stock set forth below and the options or warrants to\npurchase the Company Capital Stock set forth below.\n\n    8.   The Shareholder and Parent agree that irreparable damages would occur\nin the event that any of the provisions of this Affiliates Agreement were not\nperformed in accordance with their specific terms, or were otherwise breached.\nIt is, accordingly, agreed that the parties shall be entitled to injunctive\nrelief to prevent breaches of the provisions of this Affiliates Agreement, and\nto enforce specifically the terms and provisions hereof, in addition to any\nother remedy to which they may be entitled at law, in equity, by contract or\notherwise.\n\n    9.   This Affiliates Agreement shall be governed in all respects, including\nvalidity, interpretation and effect, by the laws of the State of California\nwithout reference to choice of law provisions.\n\n    10.  This Affiliates Agreement shall be binding upon, and shall be\nenforceable by and inure solely to the benefit of, the parties hereto and their\nrespective successors; PROVIDED, HOWEVER, that Donald &amp; Co. shall be entitled to\nrely on Section 6 of this Affiliates Agreement,\n\n\n                                          3.\n\n\n which shall also inure to the benefit of Donald &amp; Co.  This Affiliates\nAgreement may not be assigned by any party without the prior written consent of\nParent.  Any attempted assignment not in compliance with this Section 10 shall\nbe void and of no effect.\n\n    11.  This Affiliates Agreement may be executed in several counterparts,\neach of which shall be deemed to be an original, and all of which shall\nconstitute one and the same instrument.\n\n    12.  The execution of this Affiliates Agreement is not an admission of the\nShareholder that it is an affiliate of the Company.\n\n    13.  This Affiliates Agreement shall terminate if the Reorganization\nAgreement is terminated without the Merger having occurred.\n\n\nINVISION TECHNOLOGIES, INC.       [SHAREHOLDER]\n\n\nBy:\n   ------------------------       -----------------------\n   [Name]                         [Name]\n   [Title]\n                                  Company Securities Beneficially Owned:\n\n                                      Common:\n                                             --------------------------------\n                                      Series A Preferred:\n                                                         --------------------\n                                      Series B Preferred:\n                                                         --------------------\n                                      Series C Preferred:\n                                                         --------------------\n                                      Options to Purchase Common:\n                                                                 ------------\n                                      Warrants to Purchase\n                                           Series A Preferred:\n                                                              ---------------\n                                      Warrants to Purchase\n                                           Series C Preferred:\n                                                              ---------------\n\n\n\n                        SIGNATURE PAGE TO AFFILIATES AGREEMENT\n\n\n                                          4.\n\n\n                                                                EXHIBIT D-2\n\n                       PERSONS TO EXECUTE AFFILIATE AGREEMENTS\n\nTechno Venture Management\nTVM Techno Venture Enterprises No. II Limited Partnership\nTVM Intertech Limited Partnership\nTVM Eurotech Limited Partnership\nTVM Zweite Beteilgung-US Limited Partnership\nTVM Techno Venture Investors No. I Limited Partnership\nInVision Technologies, Inc.\nLowell Burnett\nRandall Lunn\nJohn Downing\nDale Sheets\nSergio Magistri\nAndrew Hibbs\n\n\n\n\n                                                                      EXHIBIT E\n\n\n                          CONTINUITY OF INTEREST CERTIFICATE\n\n    _______________________________ (\"Shareholder\") is aware that, pursuant to\nthat certain Agreement and Plan of Merger and Reorganization (the\n\"Reorganization Agreement\") dated as of September 3, 1997 among INVISION\nTECHNOLOGIES, INC., a Delaware corporation (\"Parent\"), QP ACQUISITION CORP., a\nCalifornia corporation and a wholly owned subsidiary of Parent (\"Merger Sub\"),\nand QUANTUM MAGNETICS, INC., a California corporation (the \"Company\"), it is\ncontemplated that Merger Sub will merge into the Company (the contemplated\nmerger of Merger Sub into the Company being referred to in this Certificate as\nthe \"Merger\").  As a result of the Merger, it is contemplated that holders of\nthe Common Stock, Series A Preferred Stock, Series B Preferred Stock and Series\nC Preferred Stock, in each case with no par value, of the Company (collectively,\nthe \"Company Capital Stock\") will receive shares of common stock, par value\n$.001 per share, of Parent (\"Parent Common Stock\") in exchange for their shares\nof Company Capital Stock, and that the Company will become a wholly owned\nsubsidiary of Parent.\n\n    1.   Shareholder represents, warrants and certifies to Parent, Merger Sub\nand the Company as follows:\n\n         (a)  Shareholder currently is the \"beneficial owner\" (as such term is\ndefined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of\n_________________ shares of Company Capital Stock (the \"Shares\"), and did not\nacquire any of the Shares in contemplation of the Merger.\n\n         (b)  Shareholder has not engaged in a Sale (as defined below) of any\nshares of Company Capital Stock in contemplation of the Merger.\n\n         (c)  Shareholder has no plan or intention to engage in a sale,\nexchange, transfer, distribution, redemption or reduction in any way of\nShareholder's risk of ownership (by short sale or otherwise), or other\ndisposition, directly or indirectly (such actions being collectively referred to\nherein as a \"Sale\"), of more than fifty percent (50%) of the shares of Parent\nCommon Stock to be received by Shareholder in the Merger.  (For purposes of the\npreceding sentence, shares of Company Capital Stock (or the portion thereof)\n(i) with respect to which Shareholder will receive consideration in the Merger\nother than shares of Parent Common Stock (including, without limitation, cash to\nbe received in lieu of fractional shares of Parent Common Stock or pursuant to\nthe exercise of dissenters' rights) and\/or (ii) with respect to which a Sale\n(A) occurred in contemplation of the Merger or (B) will occur prior to the\nMerger, shall be considered shares of Company Capital Stock exchanged for shares\nof Parent Common Stock in the Merger and then disposed of pursuant to a plan.)\n\n         (d)  Shareholder has no plan or intention to exercise appraisal rights\nin connection with the Merger.\n\n\n                                          1.\n\n\n         (e)  Shareholder is not aware of, or participating in, any plan or\nintention on the part of the shareholders of the Company to engage in a Sale or\nSales of more than fifty percent (50%) of the shares of Parent Common Stock to\nbe received in the Merger.  (For purposes of the preceding sentence, shares of\nCompany Capital Stock (or the portion thereof) (i) with respect to which a\nshareholder of the Company receives consideration in the Merger other than\nshares of Parent Common Stock (including, without limitation, cash received\npursuant to the exercise of dissenters' rights or in lieu of a fractional share\nof Parent Common Stock) and\/or (ii) with respect to which a Sale (A) occurred in\ncontemplation of the Merger or (B) will occur prior to the Merger, shall be\nconsidered shares of outstanding Company Capital Stock exchanged for shares of\nParent Common Stock in the Merger and then disposed of pursuant to a plan.)\n\n         (f)  Except to the extent written notification to the contrary is\nreceived by Parent and the Company from Shareholder prior to the consummation of\nthe Merger, the representations, warranties and certifications contained herein\nshall be accurate at all times from the date hereof through the date on which\nthe Merger is consummated.\n\n         (g)  Shareholder has consulted with such legal counsel and financial\nadvisors as he has deemed appropriate in connection with the execution of this\nCertificate.\n\n    2.   Shareholder understands and acknowledges that Parent, Merger Sub, the\nCompany and the Company's shareholders, as well as legal counsel to Parent,\nMerger Sub and the Company (in connection with rendering their opinions that the\nMerger will be a \"reorganization\" within the meaning of Section 368(a) of the\nInternal Revenue Code of 1986, as amended) will be relying on the accuracy of\nthe representations, warranties and certifications contained herein.\n\n    Shareholder has executed this Certificate on September __, 1997.\n\n\n\n                                  -------------------------------\n                                  Name:\n\n\n                                          2.\n\n\n                                                                EXHIBIT F\n\n                      PERSONS TO SIGN NONCOMPETITION AGREEMENTS\n\nThree Years\n-----------\n\nLowell Burnett\nDale Sheets\nAndrew Hibbs\n\nOne Year\n--------\n\nMike Law\nPeter Czipott\nTim Raynor\nSimon Beevor\nMike Urbach\nVictor Burns\n\n\n\n                                                                      EXHIBIT G\n\n                               NONCOMPETITION AGREEMENT\n\n\n    This NON-COMPETITION AGREEMENT (the \"Agreement\") is made this __ day of\nSeptember, 1997, by and among INVISION TECHNOLOGIES, INC., a Delaware\ncorporation (\"Parent\"), QP ACQUISITION CORP., a California corporation, (\"Merger\nSub\"), and ____________ (\"Shareholder\").\n\n                                       RECITALS\n\n    Shareholder is a key employee and shareholder of QUANTUM MAGNETICS, INC., a\nCalifornia corporation (\"the Company\").  Parent, Merger Sub and the Company have\nentered into an Agreement and Plan of Merger and Reorganization dated as of\nSeptember 3, 1997 providing for the acquisition (the \"Acquisition\") by Parent of\nthe Company pursuant to a merger of Merger Sub and the Company (the \"Merger\").\nShareholder plans to vote in favor of the Merger and receive all the benefits of\nthe Merger and, in connection therewith, Shareholder has agreed pursuant to and\nto the extent permitted by Section 16601 of the Business and Professions Code of\nthe State of California not to compete with the Company in the manner and to the\nextent herein set forth.  It is a condition to closing the Merger that\nShareholder execute this Agreement, and Shareholder is entering into this\nAgreement as an inducement to Parent and Merger Sub to consummate the Merger,\nwith all of the attendant financial benefits to Shareholder as a shareholder of\nthe Company.\n\n                                      AGREEMENT\n\n    NOW, THEREFORE, in consideration of the mutual covenants herein\ncontemplated and intending to be legally bound hereby, Merger Sub, Parent and\nShareholder agree as follows:\n\n    1.   ACKNOWLEDGEMENTS BY SHAREHOLDER.  Shareholder acknowledges that by\nvirtue of his\/her position with the Company s\/he has developed considerable\nexpertise in the business operations of the Company and has had access to\nextensive confidential information with respect to the Company.  Shareholder\nrecognizes that Merger Sub and Parent would be irreparably damaged, and their\nsubstantial investment in the Company materially impaired, if Shareholder were\nto enter into an activity competing with the Company's business in violation of\nthe terms of this Agreement or if Shareholder were to disclose or make\nunauthorized use of any confidential information concerning the business of the\nCompany.  Accordingly, Shareholder expressly acknowledges that s\/he is\nvoluntarily entering into this Agreement and that the terms and conditions of\nthis Agreement are fair and reasonable to Shareholder in all respects.\n\n    2.   CONFIDENTIALITY.  Shareholder hereby expressly affirms that the\nQuantum Magnetics Employee Proprietary Information and Invention Agreement dated\nas of ____________, 19__ (the \"Confidentiality Agreement\") between the\nShareholder and the Company is and shall remain in full force and effect and\nspecifically agrees that the rights and privileges of the Company under the\nConfidentiality Agreement shall inure to the benefit of\n\n\n                                          1.\n\n\nParent and Merger Sub, to the same extent as if they were original parties\nthereto, as well as to the Company.  Further, Shareholder hereby expressly\nagrees that the Company's rights under this Agreement are in addition to, but\nnot in substitution of, its rights under the Confidentiality Agreement and the\nConfidentiality Agreement remains in full force and effect.\n\n    3.   NON-COMPETITION.  Until the later of (a) [one (1) year] [three (3)\nyears] after completion of the Merger or (b) cessation by Parent or the Company\nto make salary, consulting fee or severance payments to Shareholder under a\nseparate agreement or arrangement, if any (\"Payment Termination\"), Shareholder\nshall not, directly or indirectly, without the prior written consent of Parent,\n(i) own, manage, operate, join, control, finance or participate in the\nownership, management, operation, control or financing of, or be connected as an\nofficer, director, employee, partner, principal, agent, representative,\nconsultant, licensor, licensee or otherwise with, any business or enterprise\nengaged in any business which is competitive with the business of the Company,\nwithin each of the geographical units which are listed in Appendix A hereto (the\n\"Territory\"), or (ii) engage in any other manner, within the Territory, in any\nbusiness which is competitive with the business of the Company.  For the\npurposes of this Section 3, the \"business of the Company\" shall be defined as\nset forth in Appendix B hereto (which also includes a list of companies deemed\nby the parties to be in competition with the business of the Company and\ntherefore covered by the terms of this Noncompetition Agreement).\nNotwithstanding the above, Shareholder shall not be deemed to be engaged\ndirectly or indirectly in any business in contravention of subparagraphs (i) or\n(ii) above, if (x) Shareholder participates in any such business solely as a\npassive investor in up to 1% of the equity securities of a company or\npartnership, the securities of which are publicly traded, or (y) Shareholder is\nemployed by a business or enterprise that is engaged primarily in a business\nother than the business of the Company and Shareholder does not apply his\nexpertise at such business or enterprise to that part of such business or\nenterprise that is or could be competitive with the business of the Company.\n\n    4.   NON-INTERFERENCE.  Shareholder further agrees that until the later of\n(a) [one (1) year] [three (3) years] years following completion of the Merger or\n(b) one (1) year following the Payment Termination, he will not, without the\nprior written consent of Parent, (i) interfere with the business of the Company,\nParent or Merger Sub, by soliciting, attempting to solicit, inducing, or\notherwise causing any employee or consultant of the Company, Parent or Merger\nSub to terminate his or her employment as such in order to become an employee,\nconsultant or independent contractor to or for any competitor of the Company,\nParent or Merger Sub or to or for any company with which Shareholder is\nassociated in any way; or (ii) induce or attempt to induce any customers,\nsuppliers, distributors, resellers, or independent contractor of the Company or\nParent to terminate their relationships with, or to take any action that would\nbe disadvantageous to the business of, the Company or Parent.\n\n    5.   INDEPENDENCE OF OBLIGATIONS.  The covenants of Shareholder set forth\nin this Agreement shall be construed as independent of any other agreement or\narrangement between Shareholder, on the one hand, and Merger Sub, the Company or\nParent or any of their subsidiaries, on the other, and the existence of any\nclaim or cause of action by Shareholder against Merger Sub, the Company or\nParent or any of their subsidiaries shall not constitute a defense to the\nenforcement of such covenants against Shareholder.\n\n\n                                          2.\n\n\n    6.   EQUITABLE RELIEF.  Shareholder expressly acknowledges that damages\nalone will not be an adequate remedy for any breach by Shareholder of the\ncovenants set forth in Sections 2, 3, and 4 hereof and that the other parties\nhereto, in addition to any other remedies which they may have, whether at law,\nin equity, by contract or otherwise, shall be entitled, as a matter of right, to\ninjunctive relief, including specific performance, in any court of competent\njurisdiction with respect to any actual or threatened breach by Shareholder of\nany of said covenants.\n\n    7.   SEVERABILITY, ETC.\n\n         a.   If any provision of this Agreement or any part of any such\nprovision is held under any circumstances to be invalid or unenforceable in any\njurisdiction, then (i) such provision or part thereof shall, with respect to\nsuch circumstances and in such jurisdiction, be deemed amended to conform to\napplicable laws so as to be valid and enforceable to the fullest possible\nextent, (ii) the invalidity or unenforceability of such provision or part\nthereof under such circumstances and in such jurisdiction shall not affect the\nvalidity or enforceability of such provision or part thereof under any other\ncircumstances or in any other jurisdiction, and (iii) such invalidity of\nenforceability of such provision or part thereof shall not affect the validity\nor enforceability of the remainder of such provision or the validity or\nenforceability of any other provision of this Agreement.  Each provision of this\nAgreement is separable from every other provision of this Agreement, and each\npart of each provision of this Agreement is separable from every other part of\nsuch provision.\n\n         b.   The parties intend that the covenant contained in Section 3 above\nshall be construed as a series of separate covenants, one for each geographical\nunit specified.  Except for geographical coverage, each such separate covenant\nshall be deemed identical in terms to the covenant contained in Section 3 above.\nIf, in any judicial proceeding, a court shall refuse to enforce any of the\nseparate covenants deemed included in this Agreement, then the unenforceable\ncovenant shall be deemed eliminated from these provisions for the purpose of\nthose proceedings to the extent necessary to permit the remaining separate\ncovenants to be enforced.\n\n    8.   NOTICES.  All notices or other communications hereunder shall be in\nwriting and deemed given if and when delivered to a party in person, or if and\nwhen mailed by registered or certified mail, return receipt requested, to the\nparties at the addresses set forth below or such other addresses as shall be\nspecified by notice to the other party hereunder:\n\n\n                                          3.\n\n\n    To Parent or\n    Merger Sub at:\n\n         InVision Technologies, Inc.\n         3420 E. Third Avenue\n         Foster City, CA  94404\n         Attention:  Chief Financial Officer\n         Facsimile:  (650) 578-0930\n\n         with a copy to:\n\n         Robert L. Jones, Esq.\n         Cooley Godward LLP\n         Five Palo Alto Square\n         3000 El Camino Real\n         Palo Alto, CA  94306-2155\n         Facsimile:  (650) 857-0663\n\n    To Shareholder at:\n\n         [Address]\n\n\n    9.   WAIVER OF BREACH.  The failure or delay by Parent or Merger Sub in\nenforcing any provision of this Agreement shall not operate as a waiver thereof,\nand the waiver by Parent or Merger Sub or a breach of any provision of this\nAgreement by Shareholder shall not operate or be construed as a waiver of any\nsubsequent breach or violation thereof.  All waivers shall be in writing and\nsigned by the party to be bound.\n\n    10.  ASSIGNMENT.  This Agreement shall be assignable by Parent or Merger\nSub only to any person, firm or corporation which may become a successor in\ninterest by purchase, merger or otherwise to Parent, Merger Sub or the Company\nor the business operated by Parent, Merger Sub or the Company.  This Agreement\nis not assignable by Shareholder.\n\n    11.  ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the Confidentiality\nAgreement represent the entire agreement and understanding of the parties with\nrespect to the subject matter hereof and supersede all prior agreements and\nunderstandings of the parties in connection therewith (other than the\nConfidentiality Agreement).  They may not be altered or amended except by an\nagreement in writing signed by the parties to be bound.\n\n    12.  BINDING EFFECT.  This Agreement shall be binding upon and inure to the\nbenefit of Parent and its permitted successors and assigns and Shareholder and\nShareholder's heirs and legal representatives.\n\n\n                                          4.\n\n\n    13.  GOVERNING LAW.  This Agreement shall be governed by and construed and\nenforced in accordance with the laws of the State of California as applied to\ncontracts entered into between California residents and to be performed entirely\nwithin California.\n\n    IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the\ndate first above written.\n\n                                  [SHAREHOLDER]\n\n\n                                  ---------------------------------------\n\n\n                                  INVISION TECHNOLOGIES, INC.\n\n\n                                  BY:\n                                     ------------------------------------\n\n\n                                  QP ACQUISITION CORP.\n\n\n                                  BY:\n                                     ------------------------------------\n\n\n                                          5.\n\n\n                                      APPENDIX A\n\n                                      TERRITORY\n\n\n    (1)  All counties of California listed below, (2) all other states and\nterritories of the United States of America and provinces and territories of\nCanada, and (3) any foreign country or territory in which the business of the\nCompany is carried on, or in which the Company intends to carry on business as\nevidenced by the Company's policy of seeking patent protection for its\npatentable inventions, including, but not limited to, countries of the European\nEconomic Community (and in particular, but without limitation, the United\nKingdom, the Federal Republic of Germany, Belgium, France and Italy), Japan,\nIndonesia, China, Israel, Philippines, Saudi Arabia and Malaysia.\n\nCOUNTIES OF CALIFORNIA:\n\n    Alameda        Kings          Placer              Sierra\n    Alpine         Lake           Plumas              Siskiyou\n    Amador         Lassen         Riverside           Solano\n    Butte          Los Angeles    Sacramento          Sonoma\n    Calaveras      Madera         San Benito          Stanislaus\n    Colusa         Marin          San Bernardino      Sutter\n    Contra Costa   Mariposa       San Diego           Tehama\n    Del Norte      Mendocino      San Francisco       Trinity\n    El Dorado      Merced         San Joaquin         Tulare\n    Fresno         Modoc          San Luis Obispo     Tuolumne\n    Glenn          Mono           San Mateo           Ventura\n    Humboldt       Monterey       Santa Barbara       Yolo\n    Imperial       Napa           Santa Clara         Yuba\n    Inyo           Nevada         Santa Cruz\n    Kern           Orange         Shasta\n\n\n\n\n\n                                      APPENDIX B\n\n                                       BUSINESS\n\n    The design, development, manufacture, marketing and sale of explosive\ndetection systems and drug detection systems using quadrapole magnetic resonance\ntechnology and\/or CAT Scan technology.\n\n    Companies which are engaged in the business described above include, but\nare not limited to:  Vivid Technologies, Inc., EG&amp;G Astrophysics, Heimann\nSystems GmbH, Thermedics Detection Ind., and Barringer Technologies Inc.\n\n\n\n\n                                                                      EXHIBIT H\n\n\n                                   GENERAL RELEASE\n\n    THIS GENERAL RELEASE (\"General Release\") is being executed and delivered as\nof September __, 1997, by each of the parties identified on Annex I hereto (all\nof whom are referred to collectively as the \"Releasors,\" and each of whom is\nreferred to individually as a \"Releasor\") to and in favor of, and for the\nbenefit of, INVISION TECHNOLOGIES, INC., a Delaware corporation (\"Parent\"),\nQUANTUM MAGNETICS, INC., a California corporation (the \"Company\"),and the other\nReleasees (as defined in Section 2).\n\n\n                                       RECITALS\n\n    A.   Parent, QP ACQUISITION CORP., a California corporation and a\nwholly-owned subsidiary of Parent (\"Merger Sub\"), and the Company have entered\ninto\nthat certain Agreement and Plan of Merger and Reorganization dated as of\nSeptember 3, 1997 (the \"Reorganization Agreement\"), pursuant to which Parent\nshall acquire the Company by the merger (the \"Merger\") of Merger Sub with and\ninto the Company, with the Company surviving the Merger.\n\n    B.   Pursuant to the terms of the Reorganization Agreement, each of the\nshareholders of the Company, including the Releasors, shall acquire common\nstock, par value $0.001 per share, of Parent (\"Parent Common Stock\") in exchange\nfor their equity stock in the Company.  Capitalized terms not otherwise defined\nherein shall have the meaning ascribed to them in the Reorganization Agreement.\n\n    C.   Parent has required, as a condition to consummating the transactions\ncontemplated by the Reorganization Agreement, that the Releasors execute and\ndeliver this General Release.\n\n\n                                      AGREEMENT\n\n    In order to induce Parent to consummate the transactions contemplated by\nthe Reorganization Agreement, and for other valuable consideration (the receipt\nand sufficiency of which are hereby acknowledged by the Releasors), the\nReleasors hereby covenant and agree as follows:\n\n\n    1.   RELEASE.  Each Releasor, for himself and for each of such Releasor's\nAssociated Parties (as defined in Section 2), hereby generally, irrevocably,\nunconditionally and completely releases and forever discharges each of the\nReleasees (as defined in Section 2) from, and hereby irrevocably,\nunconditionally and completely waives and relinquishes, each of the Released\nClaims (as defined in Section 2).\n\n\n                                          1.\n\n\n    2.   DEFINITIONS.\n\n         (a)  The term \"Associated Parties,\" when used herein with respect to a\nReleasor, shall mean and include:  (i) such Releasor's predecessors, successors,\nexecutors, administrators, heirs and estate; (ii) such Releasor's past, present\nand future assigns, agents and representatives; (iii) each entity that such\nReleasor has the power to bind (by such Releasor's acts or signature) or over\nwhich such Releasor directly or indirectly exercises control; and (iv) each\nentity of which such Releasor owns, directly or indirectly, at least 50% of the\noutstanding equity, beneficial, proprietary, ownership or voting interests.\n\n         (b)  The term \"Releasees\" shall mean and include:  (i) Parent; (ii)\nthe Company; (iii) each of the direct and indirect subsidiaries of the Company;\n(iv) each other affiliate of the Company; and (v) the successors and past,\npresent and future assigns, directors, officers, employees, agents, attorneys\nand representatives of the respective entities identified or otherwise referred\nto in clauses \"(i)\" through \"(iv)\" of this sentence, other than the Releasors.\n\n         (c)  The term \"Claims\" shall mean and include all past, present and\nfuture disputes, claims, controversies, demands, rights, obligations,\nliabilities, actions and causes of action of every kind and nature, including:\n(i) any unknown, unsuspected or undisclosed claim; (ii) any claim or right that\nmay be asserted or exercised by a Releasor in such Releasor's capacity as a\nshareholder, director, officer or employee of the Company or in any other\ncapacity; and (iii) any claim, right or cause of action based upon any breach of\nany express, implied, oral or written contract or agreement.\n\n         (d)  The term \"Released Claims\" shall mean and include each and every\nClaim that (i) any Releasor or any Associated Party of any Releasor may have had\nin the past, may now have or may have in the future against any of the\nReleasees, and (ii) has arisen or arises directly or indirectly out of, or\nrelates directly or indirectly to, any circumstance, agreement, activity,\naction, omission, event or matter occurring or existing on or prior to the date\nof this General Release (excluding only such Releasor's rights, if any, under\nthe Reorganization Agreement and the Escrow Agreement).\n\n\n    3.   CIVIL CODE Section 1542.  Each Releasor (a) represents, warrants and\nacknowledges that such Releasor has been fully advised by his attorney of the\ncontents of Section 1542 of the Civil Code of the State of California, and (b)\nhereby expressly waives the benefits thereof and any rights such Releasor may\nhave thereunder.  Section 1542 of the Civil Code of the State of California\nprovides as follows:\n\n              \"A general release does not extend to claims which the\n         creditor does not know or suspect to exist in his favor at the\n         time of executing the release, which if known by him must have\n         materially affected his settlement with the debtor.\"\n\nEach Releasor also hereby waives the benefits of, and any rights such Releasor\nmay have under, any statute or common law principle of similar effect in any\njurisdiction.\n\n\n                                          2.\n\n\n    4.   REPRESENTATIONS AND WARRANTIES.  Each Releasor represents and warrants\nthat:\n\n         (a)  such Releasor has not assigned, transferred, conveyed or\notherwise disposed of any Claim against any of the Releasees, or any direct or\nindirect interest in any such Claim, in whole or in part;\n\n         (b)  to the best of such Releasor's knowledge, no other person or\nentity has any interest in any of the Released Claims;\n\n         (c)  no Associated Party of such Releasor has or had any Claim against\nany of the Releasees;\n\n         (d)  no Associated Party of such Releasor will in the future have any\nClaim against any Releasee that arises directly or indirectly from or relates\ndirectly or indirectly to any circumstance, agreement, activity, action,\nomission, event or matter occurring or existing on or before the date of this\nGeneral Release;\n\n         (e)  this General Release has been duly and validly executed and\ndelivered by such Releasor;\n\n         (f)  this General Release is a valid and binding obligation of such\nReleasor and such Releasor's Associated Parties, and is enforceable against such\nReleasor and each of such Releasor's Associated Parties in accordance with its\nterms;\n\n         (g)  there is no action, suit, proceeding, dispute, litigation, claim,\ncomplaint or investigation by or before any court, tribunal, governmental body,\ngovernmental agency or arbitrator pending or, to the best of the knowledge of\nsuch Releasor, threatened against such Releasor or any of such Releasor's\nAssociated Parties that challenges or would challenge the execution and delivery\nof this General Release or the taking of any of the actions required to be taken\nby such Releasor under this General Release;\n\n         (h)  neither the execution and delivery of this General Release nor\nthe performance hereof will (i) result in any violation or breach of any\nagreement or other instrument to which such Releasor or any of such Releasor's\nAssociated Parties is a party or by which such Releasor or any of such\nReleasor's Associated Parties is bound, or (ii) result in a violation or any\nlaw, rule, regulation, treaty, ruling, directive, order, arbitration award,\njudgment or decree to which such Releasor or any of such Releasor's Associated\nParties is subject; and\n\n         (i)  no authorization, instruction, consent or approval of any person\nor entity is required to be obtained by such Releasor or any of such Releasor's\nAssociated Parties in connection with the execution and delivery of this General\nRelease or the performance hereof.\n\n\n                                          3.\n\n\n\n\n    5.   INDEMNIFICATION.  Without in any way limiting any of the rights or\nremedies otherwise available to any Releasee, each Releasor shall indemnify and\nhold harmless each Releasee against and from any loss, damage, injury, harm,\ndetriment, lost opportunity, liability, exposure, claim, demand, settlement,\njudgment, award, fine, penalty, tax, fee, charge or expense (including\nattorneys' fees) that is directly or indirectly suffered or incurred at any time\nby such Releasee, or to which such Releasee otherwise becomes subject at any\ntime, and that arises directly or indirectly out of or by virtue of, or relates\ndirectly or indirectly to, (a) any failure on the part of such Releasor to\nobserve, perform or abide by, or any other breach of, any restriction, covenant,\nobligation, representation, warranty or other provision contained herein, or (b)\nthe assertion or purported assertion of any of the Released Claims by such\nReleasor or any of such Releasor's Associated Parties.\n\n\n    6.   CONFIRMATION OF APPOINTMENT.    Each Releasor confirms the appointment\nand authority of the Agent in all respects set forth in Section 10.1 of the\nReorganization Agreement.  Such appointment confers complete authority upon the\nAgent to act on behalf of the Releasor with respect to all matters relating to\nSection 9 of the Reorganization Agreement and to the Escrow Agreement.  Any\nsuccessor to the Agent who is appointed in accordance with the provisions of\nSection 10.1 of the Reorganization Agreement shall be deemed to be the \"Agent\"\nfor purposes of the Reorganization Agreement and the Escrow Agreement.  Each\nReleasor agrees that any document executed or action taken by the Agent shall be\nbinding upon Releasor and all of the other shareholders of the Company.  Each\nReleasor agrees to and accepts the terms of the Escrow Agreement and\nacknowledges that the shares of Parent Common Stock escrowed under the Escrow\nAgreement in which the Releasor may have an interest are subject to release upon\nthe terms of the Escrow Agreement.\n\n\n    7.   MISCELLANEOUS.\n\n         (a)  This General Release sets forth the entire understanding of the\nparties relating to the subject matter hereof and supersedes all prior\nagreements and understandings among or between any of the Releasors and\nReleasees relating to the subject matter hereof.\n\n         (b)  If any provision of this General Release or any part of any such\nprovision is held under any circumstances to be invalid or unenforceable in any\njurisdiction, then (i) such provision or part thereof shall, with respect to\nsuch circumstances and in such jurisdiction, be deemed amended to conform to\napplicable laws so as to be valid and enforceable to the fullest possible\nextent, (ii) the invalidity or unenforceability of such provision or part\nthereof under such circumstances and in such jurisdiction shall not affect the\nvalidity or enforceability of such provision or part thereof under any other\ncircumstances or in any other jurisdiction, and (iii) such invalidity or\nenforceability of such provision or part thereof shall not affect the validity\nor enforceability of the remainder of such provision or the validity or\nenforceability of any other provision of this General Release.  If any provision\nof this General Release or any part of such provision is held to be\nunenforceable against any Releasor, then the unenforceability of such provision\nor part thereof against such Releasor shall not affect the enforceability\nthereof against any other Releasor.  Each provision of this General Release is\nseparable from every other\n\n\n                                          4.\n\n\nprovision of this General Release, and each part of each provision of this\nGeneral Release is separable from every other part of such provision.\n\n         (c)  This General Release shall be construed in accordance with, and\ngoverned in all respects by, the laws of the State of California (without giving\neffect to principles of conflicts of laws).\n\n         (d)  Any legal action or other legal proceeding relating to this\nGeneral Release or the enforcement of any provision of this General Release may\nbe brought or otherwise commenced by any Releasee in any state or federal court\nlocated in the State of California.  Each Releasor:\n\n              (i)  expressly and irrevocably consents and submits to the\n    jurisdiction of each state and federal court located in the State of\n    California in connection with any such legal proceeding;\n\n              (ii) agrees that each state and federal court located in the\n    State of California shall be deemed to be a convenient forum; and\n\n              (iii)     agrees not to assert (by way of motion, as a defense or\n    otherwise), in any such legal proceeding commenced in any state or federal\n    court located in the State of California, any claim that such Releasor is\n    not subject personally to the jurisdiction of such court, that such legal\n    proceeding has been brought in an inconvenient forum, that the venue of\n    such proceeding is improper or that this General Release or the subject\n    matter of this General Release may not be enforced in or by such court.\n\nNothing contained in this General Release shall be deemed to limit or otherwise\naffect the right of any Releasee (1) to commence any legal proceeding or to\notherwise proceed against any of the Releasors or any other person or entity in\nany other forum or jurisdiction, or (2) to raise this Release as a defense in\nany legal proceeding in any other forum or jurisdiction.\n\n         (e)  This General Release may be executed in several counterparts,\neach of which shall constitute an original and all of which, when taken\ntogether, shall constitute one agreement.\n\n         (f)  Each Releasor shall execute and\/or cause to be delivered to each\nReleasee such instruments and other documents, and shall take such other\nactions, as such Releasee may reasonably request for the purpose of carrying out\nor evidencing any of the actions contemplated by this General Release.\n\n         (g)  If any legal action or other legal proceeding relating to this\nGeneral Release or the enforcement of any provision hereof is brought by any\nReleasor or Releasee, the prevailing party shall be entitled to recover\nreasonable attorneys' fees, costs and disbursements to the extent actually\nincurred (in addition to any other relief to which the prevailing party may be\nentitled).\n\n\n                                          5.\n\n\n         (h)  This General Release shall be effective with respect to, and\nshall be binding upon and enforceable against, each Releasor who executes this\nGeneral Release, regardless of whether any of the other Releasors executes this\nGeneral Release.  Each Releasor acknowledges that Annex I may be prepared and\/or\nrevised by Parent or Company after the delivery by such Releasor of an executed\ncopy hereof and that such Releasor's obligations hereunder shall be independent\nof, and effective regardless of, the content of Annex I.\n\n         (i)  Whenever required by the context, the singular number shall\ninclude the plural, and vice versa; the masculine gender shall include the\nfeminine and neuter genders; and the neuter gender shall include the masculine\nand feminine genders.\n\n         (j)  Any rule of construction to the effect that ambiguities are to\nbe resolved against the drafting party shall not be applied in the construction\nor interpretation of this General Release.\n\n         (k)  As used in this General Release, the words \"include\" and\n\"including,\" and variations thereof, shall not be deemed to be terms of\nlimitation, and shall be deemed to be followed by the words \"without\nlimitation.\"\n\n\n    IN WITNESS WHEREOF, the Releasors have caused this General Release to be\nexecuted as of the date first above written.\n\n                                  RELEASOR:\n\n\n\n                                  -----------------------------------\n                                  Print Name\n\n                                  -----------------------------------\n                                  Signature\n\n\n\n                                          6.\n\n\n\n\n                                                                        ANNEX I\n\n                                      RELEASORS\n\n\n                                          7.\n\n\n                                                                       EXHIBIT I\n\n\n                   FORM OF LEGAL OPINION OF BRANTON, WILSON &amp; MUNS\n\n    As used herein, \"Merger Agreement\" means the agreement of merger to be\nfiled pursuant to Section 1.3 of the Reorganization Agreement.\n\n    1.   The Company is a corporation duly organized, validly existing and in\ngood standing under the laws of the State of California.  The Company has the\ncorporate power and authority to own, lease and operate its properties and to\ncarry on its business as now conducted.\n\n    2.   To the best of such counsel's knowledge, the Company is qualified as a\nforeign corporation to do business and is in good standing in each jurisdiction\nin the United States in which the ownership of its property or the conduct of\nits business requires such qualification and where any statutory fines or\npenalties or any corporate disability imposed for the failure to qualify would\nmaterially and adversely affect the Company, its assets, financial condition or\noperations.\n\n    3.   Immediately prior to the Closing, the Company's authorized capital\nstock consists of (a) 17,000,000 shares of Common Stock, no par value, of which\n3,994,216 are issued and outstanding, and (b) 7,911,340 shares of Preferred\nStock, no par value, of which 2,500,000 are designated as Series A Preferred\nStock, 1,666,669 of which are issued and outstanding; of which 711,340 are\ndesignated as Series B Preferred Stock, all of which are issued and outstanding;\nof which 3,500,000 are designated as Series C Preferred Stock, 1,643,556 of\nwhich are issued and outstanding; and of which 1,200,000 are designated as\nSeries D Preferred Stock, 441,328 of which are issued and outstanding.  The\noutstanding capital stock of the Company (a) has been duly authorized and\nvalidly issued and is fully paid and nonassessable, (b) is not subject to any\npreemptive rights created by statute, or by the Company's Articles of\nIncorporation or Bylaws, each as in effect immediately prior to the Effective\nTime, or by an agreement to which the Company is a party or may be bound, and\n(c) to the best of such counsel's knowledge, are held by the Company's\nshareholders free and clear of adverse claims.  To such counsel's knowledge,\nother than as set forth in Part 2.3 of the Disclosure Schedule, there are no\noptions, warrants, calls, rights, commitments, conversion rights or agreements\nof any character to which the Company is a party or by which the Company is\nbound obligating the Company to issue, deliver or sell, or cause to be issued,\ndelivered or sold, any shares of capital stock of the Company or securities\nconvertible into or exchangeable for shares of capital stock of the Company, or\nobligating the Company to grant, extend or enter into any such option, warrant,\ncall, right, commitment, conversion right or agreement.\n\n    4.   All corporate action, including approval by the Company's Board of\nDirectors and its shareholders, required to be taken on the part of the Company\nto authorize the Company to execute, deliver and perform its obligations under\nthe Reorganization Agreement, the Merger Agreement and the Escrow Agreement and\nto consummate the Merger has been duly and validly taken.\n\n\n                                          1.\n\n\n    5.   The Reorganization Agreement, the Merger Agreement and the Escrow\nAgreement have been duly and validly authorized, executed and delivered by the\nCompany and are the valid and binding obligations of the Company enforceable in\naccordance with their respective terms, except as the indemnification provisions\ncontained in Section 9 of the Reorganization Agreement and Section 8.2 of the\nEscrow Agreement may be limited by applicable laws and except as may be limited\nby applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or\nother similar laws affecting creditors' rights, and subject to general equity\nprinciples and to limitations on availability of equitable relief, including\nspecific performance.\n\n    6.   The execution and delivery of the Reorganization Agreement, the Merger\nAgreement and the Escrow Agreement by the Company, and the consummation by the\nCompany of the transactions contemplated thereby and compliance by the Company\nwith the provisions thereof, do not violate any provision of the Articles of\nIncorporation or the Bylaws of the Company, and do not constitute a material\ndefault under the provisions of any material agreement known to such counsel to\nwhich the Company is a party or by which it is bound, and do not violate or\ncontravene (a) any governmental statute, rule or regulation applicable to the\nCompany or (b) any order, writ, judgment, injunction, decree, determination or\naward which has been entered against the Company and of which such counsel is\naware.\n\n    7.   No government consent, approval, authorization, registration,\ndeclaration or filing is required for the execution and delivery of the\nReorganization Agreement, the Merger Agreement or the Escrow Agreement on behalf\nof the Company or for the performance by the Company of the Merger, except for\n(a) the filing of the Merger Agreement with the Secretary of State of the State\nof California as contemplated by Section 1.3 of the Reorganization Agreement and\nas required by the California General Corporation Law and (b) such government\nconsents, approvals, authorizations, registrations, declarations and filings as\nhave been obtained or made.\n\n    8.   To the best of such counsel's knowledge, there is no action,\nproceeding or investigation pending or overtly threatened against the Company\nbefore any court or administrative agency that questions the validity of the\nReorganization Agreement, the Merger Agreement or the Escrow Agreement, or,\nother than as disclosed in the Disclosure Schedule, that might result, either\nindividually or in the aggregate, in any material adverse change in the assets,\nfinancial condition, or operations of the Company.\n\n    9.   Upon filing of the Merger Agreement with the Secretary of State of\nCalifornia, assuming Parent and Merger Sub have complied with all requirements\nof applicable law and the Reorganization Agreement and related agreements\nnecessary to effect the Merger, the Merger will become effective with the effect\nstated in the Merger Agreement and Section 1107 of the California General\nCorporation Law.\n\n\n                                          2.\n\n\n                                                                EXHIBIT J\n\n                                  CERTAIN EMPLOYEES\n\nLowell Burnett\nDale Sheets\nAndrew Hibbs\nMike Law\nPeter Czipott\nTim Raynor\nSimon Beevor\nMike Urbach\nVictor Burns\n\n\n\n\n\n                                                                      EXHIBIT K\n\n\n                     FORM OF LEGAL OPINION OF COOLEY GODWARD LLP\n\n     As used herein, \"Merger Agreement\" means the agreement of merger to be\nfiled pursuant to Section 1.3 of the Reorganization Agreement.\n\n     1.   Parent is a corporation duly organized, validly existing and in good\nstanding under the laws of the State of Delaware.  Parent has the corporate\npower and authority to own, lease and operate its properties and to carry on its\nbusiness as now conducted.\n\n     2.   Merger Sub is a corporation duly organized, validly existing and in\ngood standing under the laws of the State of California.  Merger Sub has the\ncorporate power and authority to own, lease and operate its properties and to\ncarry on its business as now conducted.\n\n     3.   To the best of such counsel's knowledge, each of Parent and Merger Sub\nis qualified as a foreign corporation to do business and is in good standing in\neach jurisdiction in the United States in which the ownership of its property or\nthe conduct of its business requires such qualification and where any statutory\nfines or penalties or any corporate disability imposed for the failure to\nqualify would materially and adversely affect Parent, its assets, financial\ncondition or operations.\n\n     4.   The authorized capital stock of Parent consists of twenty million\n(20,000,000) shares of Common Stock, $0.001 par value, and five million\n(5,000,000) shares of Preferred Stock, $0.001 par value.  At the close of\nbusiness on the day immediately prior to the Closing Date, [       ] shares of\nParent Common Stock were issued and outstanding and no shares of Parent Common\nStock were held by Parent in its treasury.  No shares of Parent Preferred Stock\nare issued or outstanding.\n\n     5.   The authorized capital stock of Merger Sub consists of one thousand\n(1,000) shares of Common Stock, $0.001 par value, of which one hundred (100)\nshares were issued and outstanding at the close of business on the day\nimmediately prior to the Closing Date.  Immediately prior to the Closing Date,\nall of the issued and outstanding shares of Merger Sub were owned of record by\nParent.\n\n     6.   All corporate action, including approval by Parent's Board of\nDirectors, required to be taken on the part of Parent to authorize Parent to\nexecute, deliver and perform its obligations under the Reorganization Agreement\nand the Escrow Agreement and to consummate the Merger has been duly and validly\ntaken.  All corporate action, including approval by Merger Sub's Board of\nDirectors and sole shareholder, required to be taken on the part of Merger Sub\nto authorize Merger Sub to execute, deliver and perform its obligations under\nthe Reorganization Agreement and the Merger Agreement and to consummate the\nMerger has been duly and validly taken.\n\n\n                                       1.\n\n\n     7.   The Reorganization Agreement and the Escrow Agreement have been duly\nauthorized, executed and delivered by Parent, and the Reorganization Agreement\nand the Merger Agreement have been duly authorized, executed and delivered by\nMerger Sub.  The Reorganization Agreement and the Escrow Agreement, with respect\nto Parent, and the Reorganization Agreement and the Merger Agreement, with\nrespect to Merger Sub, is the valid and binding obligation of Parent and\/or\nMerger Sub, as applicable, enforceable in accordance with their respective\nterms, except as the indemnification provisions contained in Section 9 of the\nReorganization Agreement and Section 8.2 of the Escrow Agreement may be limited\nby applicable laws and except as may be limited by applicable bankruptcy,\ninsolvency, reorganization, arrangement, moratorium or other similar laws\naffecting creditors' rights, and subject to general equity principles and to\nlimitations on availability of equitable relief, including specific performance.\n\n\n     8.   The execution and delivery of the Reorganization Agreement and the\nEscrow Agreement by Parent, and the execution and delivery of the Reorganization\nAgreement and the Merger Agreement by Merger Sub, and the consummation by Parent\nand Merger Sub of the transactions contemplated thereby and compliance by Parent\nand Merger Sub with the provisions thereof, do not violate any provisions of\nParent's Amended and Restated Certificate of Incorporation, Merger Sub's\nArticles of Incorporation or Parent's or Merger Sub's Bylaws, and do not violate\nor contravene any order, writ, judgment, injunction, decree, determination or\naward which has been entered against Parent and of which such counsel is aware,\nwhich violation or contravention would materially and adversely affect Parent,\nits assets, financial condition or operations.\n\n     9.   No government consent, approval, authorization, registration,\ndeclaration or filing is required for the execution and delivery of the\nReorganization Agreement, the Escrow Agreement or the Merger Agreement on behalf\nof Parent and\/or Merger Sub, as applicable, or for the performance by Parent or\nMerger Sub of the Merger, except for (a) the filing of the Merger Agreement with\nthe Secretary of State of the State of California as contemplated by Section 1.3\nof the Reorganization Agreement and as required by the California General\nCorporation Law and (b) such government consents, approvals, authorizations,\nregistrations, declarations and filings as have been obtained or made, unless\nthe failure to obtain or make the same would not materially and adversely affect\nParent, its assets, financial condition or operations.\n\n     10.  The Parent Common Stock issued in connection with the Merger will be,\nupon issuance pursuant to the terms of the Reorganization Agreement and the\nProxy Statement\/Prospectus, duly authorized, validly issued, fully paid and\nnonassessable.\n\n\n                                       2.\n\n\n                                                                      EXHIBIT L\n\n                                   ESCROW AGREEMENT\n\n\n    THIS ESCROW AGREEMENT is entered into as of September __, 1997 (the\n\"Closing Date\"), by and among: INVISION TECHNOLOGIES, INC., a Delaware\ncorporation (\"Parent\"); QUANTUM MAGNETICS, INC., a California corporation (the\n\"Company\"); RANDALL R. LUNN, as agent of the former shareholders of the Company\n(the \"Agent\"); and _____________ (the \"Escrow Agent\").\n\n\n                                       RECITALS\n\n    A.   Parent, the Company and QP ACQUISITION CORP., a California corporation\nand a wholly owned subsidiary of Parent (\"Merger Sub\"), have entered into an\nAgreement and Plan of Reorganization dated as of September 3, 1997 (the\n\"Reorganization Agreement\"), pursuant to which Merger Sub is merging with and\ninto the Company in a transaction in which issued and outstanding capital stock\nof the Company will be exchanged for shares of Common Stock, $.001 par value, of\nParent (\"Parent Common Stock\").\n\n    B.   The Reorganization Agreement contemplates the establishment of an\nescrow arrangement to secure the indemnification and other obligations of the\nCompany under the Reorganization Agreement and various related agreements.\n\n\n                                      AGREEMENT\n\n    The parties to this Escrow Agreement, intending to be legally bound, agree\nas follows:\n\n\nSECTION 1.    DEFINED TERMS\n\n    Capitalized terms used and not otherwise defined in this Escrow Agreement\nshall have the meanings assigned to them in the Reorganization Agreement.\n\n\nSECTION 2.    CONSENT OF THE SHAREHOLDERS OF THE COMPANY\n\n    By virtue of the approval by the shareholders of the Company of the\nReorganization Agreement, the shareholders of the Company receiving shares of\nParent Common Stock in the Merger (the \"Shareholders\") have, without any further\nact of any such Shareholder, consented to (i) the establishment of an escrow\n(the \"Escrow\") pursuant to this Agreement to secure the indemnification\nobligations of the Company under Section 9 of the Reorganization Agreement, (ii)\nthe appointment of the Agent as agent for the Shareholders in all respects as\nset forth in Section 10.1 of the Reorganization Agreement, (iii) the taking by\nthe Agent of any and all\n\n\n                                          1.\n\n\nactions, including the execution by the Agent of any and all agreements,\ninstruments or other documents, and (iv) all of the other terms and conditions\nof this Agreement.\n\n\nSECTION 3.    ESCROW\n\n    3.1  SHARES AND STOCK POWERS TO BE PLACED IN ESCROW.  Parent shall issue\ncertificates for the aggregate number of shares of Parent Common Stock issuable\nby Parent in the Merger pursuant to clause (B) of each of clause (i), (ii),\n(iii) and (iv) of Section 1.5(a) of the Reorganization Agreement (the \"Escrow\nShares\") in the name of the Escrow Agent evidencing the shares of Parent Common\nStock to be held in escrow in accordance with this Escrow Agreement.  The Escrow\nShares shall be held by the Escrow Agent in the Escrow in accordance with the\nprovisions of this Escrow Agreement and shall not be subject to any lien,\nattachment, trustee process or any other judicial process of any creditor of any\nparty hereto or the Shareholders.  Parent may from time to time deposit in the\nEscrow additional shares of Parent Common Stock pursuant to Sections 1.6 or 1.10\nof the Reorganization Agreement and such shares shall be deemed to have been\ndeposited in the Escrow at the Effective Time.  All such shares shall be deemed\nEscrow Shares, and the Persons with rights in respect of such Escrow Shares\nshall be deemed Shareholders, for all purposes hereunder.\n\n    3.2  INDEMNIFICATION.  The Company has agreed in Section 9 of the\nReorganization Agreement that each of the Indemnitees shall be held harmless and\nindemnified from and against, and shall be compensated and reimbursed for, any\nDamages incurred as set forth in Section 9 of the Reorganization Agreement.  The\nCompany, and the Agent on behalf of the Shareholders, expressly agree that the\nEscrow Shares (i) shall be security for such indemnity obligation, subject to\nthe limitations and in the manner provided for in this Agreement and (ii) are\nsubject to release to Parent or other Indemnitee upon the terms set forth\nherein.\n\n    3.3  VOTING OF SHARES.  The Shareholders shall be entitled to vote their\nrespective proportionate amount of Escrow Shares set forth on Exhibit A.  Parent\nshall give the Agent at least as much notice of meetings of shareholders as it\ngives its shareholders generally.  The Agent shall promptly inform each\nShareholder of each such meeting and of the matters to be considered at such\nmeeting.  The Agent shall, in accordance with the instructions received from the\nShareholders, direct the Escrow Agent in writing as to the exercise of voting\nrights pertaining to the Escrow Shares as to which such voting instructions have\nbeen received, and the Escrow Agent shall comply with any such written\ninstructions.  In the absence of such instructions, the Escrow Agent shall not\nvote any of the Escrow Shares.  The Agent shall have no obligation to solicit\nconsents or proxies from the Shareholders for purposes of any such vote.\n\n    3.4  DIVIDENDS, ETC.  Any cash, securities or other property distributable\n(whether by way of dividend, stock split or otherwise) in respect of or in\nexchange for any Escrow Shares shall not be distributed to the Agent or the\nShareholders, but rather shall be deposited by Parent with the Escrow Agent to\nbe held in the Escrow.  At the time any Escrow Shares are required to be\nreleased from the Escrow to any Person pursuant to this Escrow Agreement, any\ncash, securities or other property previously distributed in respect of or in\nexchange for such Escrow Shares shall be released from the Escrow to such\nPerson.\n\n\n                                          2.\n\n\n    3.5  TRANSFERABILITY.  The interests of the Agent and the Shareholders in\nthe Escrow and in the Escrow Shares shall not be assignable or transferable,\nother than by operation of law.  No transfer of any of such interests by\noperation of law shall be recognized or given effect until Parent shall have\nreceived written notice of such transfer.\n\n    3.6  FRACTIONAL SHARES.  No fractional shares of Parent Common Stock shall\nbe retained in or released from the Escrow pursuant to this Escrow Agreement.\nIn connection with any release of Escrow Shares from the Escrow, any Shareholder\nwho would otherwise be entitled to receive a fraction of a share of Parent\nCommon Stock (after aggregating all fractional shares of Parent Common Stock\nissuable to such shareholder) shall be paid by Parent in cash the dollar amount\n(rounded to the nearest whole cent), without interest, determined by multiplying\nsuch fraction by the Designated Parent Stock Price, and such fraction of a share\nshall be returned to Parent.\n\n\nSECTION 4.    CLAIM PROCEDURES\n\n    4.1  CLAIM NOTICE.  If any Indemnitee determines in good faith that there\nis or has been a possible breach by the Company of any representation, warranty,\ncovenant or other provision set forth in the Reorganization Agreement or other\nevent giving rise to an indemnification obligation under Section 9.2 of the\nReorganization Agreement (collectively, an \"Indemnification Event\"), and if\nParent shall have consented to such Indemnitee asserting a claim for\nindemnification pursuant to Section 9.8 of the Reorganization Agreement and such\nIndemnitee wishes to make a claim against the Escrow with respect to such\npossible Indemnification Event, then such Indemnitee may deliver to each of the\nAgent and the Escrow Agent a written notice of such possible Indemnification\nEvent (a \"Claim Notice\") setting forth (i) a brief description of the\ncircumstances supporting such Indemnitee's belief that such possible\nIndemnification Event exists or has occurred, and (ii) a non-binding,\npreliminary estimate of the aggregate dollar amount of all Damages that have\narisen and may arise as a direct or indirect result of such possible\nIndemnification Event (such aggregate amount being referred to as the \"Claim\nAmount\").\n\n    4.2  RESPONSE NOTICE.  Within 15 days after the delivery of a Claim Notice\nto the Agent, the Agent shall deliver to the Escrow Agent (with a copy to\nParent) a written notice (the \"Response Notice\") containing:  (i) instructions\nto the effect that Escrow Shares having a Fair Market Value (as defined in\nSection 6) equal to the entire Claim Amount set forth in such Claim Notice are\nto be released from the Escrow to such Indemnitee; OR (ii) instructions to the\neffect that Escrow Shares having a Fair Market Value equal to a specified\nportion (but not the entire amount) of the Claim Amount set forth in such Claim\nNotice are to be released from the Escrow to such Indemnitee, together with a\nstatement that the remaining portion of such Claim Amount is being disputed; OR\n(iii) a statement that the entire Claim Amount set forth in such Claim Notice is\nbeing disputed.  If no Response Notice is received by the Escrow Agent from the\nAgent within 30 days after the delivery of a Claim Notice to the Agent, then the\nAgent shall be deemed to have given instructions to the Escrow Agent that Escrow\nShares having a Fair Market Value equal to the entire Claim Amount set forth in\nsuch Claim Notice are to be released to such Indemnitee from the Escrow.\n\n\n                                          3.\n\n\n    4.3  RELEASE OF ESCROW SHARES TO INDEMNITEES.\n\n         (a)  If the Agent gives (or is deemed to have given) instructions that\nEscrow Shares having a Fair Market Value equal to the entire Claim Amount set\nforth in a Claim Notice are to be released from the Escrow to an Indemnitee,\nthen the Escrow Agent shall be authorized to transfer to such Indemnitee, from\nthe Escrow, Escrow Shares having a Fair Market Value equal to such Claim Amount.\n\n         (b)  If a Response Notice delivered by the Agent in response to a\nClaim Notice contains instructions to the effect that Escrow Shares having a\nFair Market Value equal to a specified portion (but not the entire amount) of\nthe Claim Amount set forth in such Claim Notice are to be released from the\nEscrow to an Indemnitee, then (i) the Escrow Agent shall be authorized to\ntransfer to such Indemnitee, from the Escrow, Escrow Shares having a Fair Market\nValue equal to such specified portion of such Claim Amount, and (ii) the\nprocedures set forth in Section 4.3(c) shall be followed with respect to the\nremaining portion of such Claim Amount.\n\n         (c)  If a Response Notice delivered by the Agent in response to a\nClaim Notice contains a statement that all or a portion of the Claim Amount set\nforth in such Claim Notice is being disputed (such Claim Amount or the disputed\nportion thereof being referred to as the \"Disputed Amount\"), then,\nnotwithstanding anything contained in Section 5, the Escrow Agent shall continue\nto hold in the Escrow (in addition to any other Escrow Shares permitted to be\nretained in the Escrow, whether in connection with any other dispute or\notherwise), Escrow Shares having a Fair Market Value equal to 125% of the\nDisputed Amount.  Such Escrow Shares shall continue to be held in the Escrow\nuntil such time as (i) the applicable Indemnitee and the Agent execute a\nsettlement agreement containing instructions regarding the release of such\nshares, or (ii) the Escrow Agent receives a copy of a court order containing\ninstructions to the Escrow Agent regarding the release of such Escrow Shares.\nThe Escrow Agent shall thereupon release such Escrow Shares from the Escrow in\naccordance with the instructions set forth in such settlement agreement or court\norder.  (The parties acknowledge that it is appropriate to retain more than 100%\nof the Claim Amount in the Escrow in recognition of the fact that the Indemnitee\nmay have underestimated the aggregate amount of the actual and potential Damages\narising from a particular Indemnification Event, and to cover interest on such\nClaim Amount in accordance with Section 9.6 of the Reorganization Agreement.)\n\n         (d)  Notwithstanding anything to the contrary set forth in this\nSection 4, the Escrow Agent shall not release to an Indemnitee, and no\nIndemnitee shall be entitled to receive, any Escrow Shares in respect of\nindemnification obligations under Section 9 of the Reorganization Agreement for\nclaims not in respect of or relating to Disputes (\"Non-Dispute Indemnification\nClaims\") if the total number of Escrow Shares previously released to Indemnitees\ntogether with the number of Escrow Shares being released to such Indemnitee\ncollectively in respect of Non-Dispute Indemnification Claims shall exceed\n77,700 shares; PROVIDED, HOWEVER, that the Escrow Agent shall be entitled to\nrelease, and an Indemnitee shall be entitled to receive, up to such number of\nEscrow Shares in respect of a Non-Dispute Indemnification Claim as shall not\ncause such 77,700 share aggregate maximum to be exceeded.\n\n\n                                          4.\n\n\nSECTION 5.    RELEASE OF SHARES TO SHAREHOLDERS\n\n    5.1  SHARES TO BE RELEASED.  On the date 12 months after the Closing Date\n(the \"Scheduled Escrow Termination Date\"), the Escrow Agent shall release to the\nShareholders from the Escrow all Escrow Shares then held in the Escrow, other\nthan any Escrow Shares that are to be retained in the Escrow in accordance with\nSection 4.3(c).  From and after the Scheduled Escrow Termination Date and upon\nthe resolution of a dispute (and the release of Escrow Shares to Indemnitees in\nrespect of such dispute, if any) in accordance with Section 4.3(c), Parent shall\nrelease to the Shareholders any Escrow Shares remaining in the Escrow in respect\nof such dispute.\n\n    5.2  PROCEDURES FOR RELEASING SHARES.\n\n         (a)  In the event that the Escrow Agent is to release Escrow Shares to\nthe Shareholders in accordance with Section 5.1, the Escrow Agent shall be\nauthorized to transfer to each Shareholder, and shall so transfer and release to\neach Shareholder, such number of Escrow Shares, subject to Section 3.6, as shall\nequal the total number of Escrow Shares to be so transferred and released\nmultiplied by the fraction (i) having a numerator equal to the number of shares\nof Parent Common Stock set forth opposite such Shareholder's name on Exhibit A\nhereto and (ii) having a denominator equal to the total number of Escrow Shares\nlisted on Exhibit A.\n\n         (b)  Any release of shares to the Shareholders pursuant to Section 5.1\nmay be effected by mailing a stock certificate to the Shareholders certified\nmail, return receipt requested.\n\n\nSECTION 6.    VALUATION OF SHARES HELD IN ESCROW\n\n    For purposes of this Escrow Agreement, the \"Fair Market Value\" of the\nEscrow Shares shall be deemed to be equal to the number of Escrow Shares\nmultiplied by the Designated Parent Stock Price (adjusted as appropriate to\nreflect any stock split, reverse stock split, stock dividend or similar\ntransaction effected by Parent after the Closing Date).\n\n\nSECTION 7.    FEES AND EXPENSES\n\n    7.1  ESCROW AGENT FEES AND EXPENSES.  Upon execution of this Escrow\nAgreement and initial deposit of the Escrow Shares, an acceptance fee of\n$___________ will be payable to the Escrow Agent.  This acceptance fee will\ncover the first year of the Escrow.  Thereafter, an annual administrative fee\nwill be payable in accordance with the Escrow Agent's fee schedules in effect\nfrom time to time.  The Escrow Agent will also be entitled to reimbursement for\nextraordinary expenses incurred in performance of its duties hereunder.\n\n    7.2  PAYMENT OF ESCROW AGENT.  Parent shall pay the fees and expenses of\nthe Escrow Agent for the services to be rendered by the Escrow Agent hereunder.\nParent shall be entitled to reimbursement of one-half of such fees and expenses\nfrom the Shareholders.\n\n\n                                          5.\n\n\n    7.3  AGENT'S FEES AND EXPENSES.  All reasonable expenses (including\nattorneys' fees) incurred by the Agent in connection with the performance of its\nduties hereunder shall be reimbursed to the Agent by the Shareholders.  Parent\nshall not be obligated to reimburse the Agent for any fees charged or expenses\n(including attorneys' fees) incurred by the Agent in connection with the Agent's\nperformance of his duties hereunder.  The Agent hereby agrees that he shall not\nseek payment or reimbursement of any such fees and expenses, if any, from\nParent, the Surviving Corporation or the Company, and that the Agent shall only\nseek payment or reimbursement of all such fees and expenses from the\nShareholders.\n\n    7.4  REIMBURSEMENT PROCEDURES.  Upon a notice in writing delivered to the\nEscrow Agent by Parent in respect of Section 7.2 or Section 8.2, or by the Agent\nin respect of Section 7.3, the Escrow Agent shall transfer, deliver and assign\nto the Person delivering the notice, in reimbursement of fees and expenses\npursuant to Section 7.2, Section 7.3 or Section 8.2, such number of Escrow\nShares held in the Escrow Account which have a Fair Market Value equal to the\namount to be reimbursed.  Notwithstanding the foregoing, the Agent's right of\nreimbursement from the Escrow Shares shall be in all respects subordinate to\nrights of Parent in respect of the Escrow Shares.  The Escrow Agent shall\ntransfer shares to the Agent in reimbursement of its expenses only at such time\nas Escrow Shares are otherwise distributable pursuant to the terms of this\nAgreement to the Shareholders.\n\n\nSECTION 8.    LIMITATION OF ESCROW AGENT'S LIABILITY\n\n    8.1  LIMITATION.  The Escrow Agent shall incur no liability with respect to\nany action taken or suffered by it in reliance upon any notice, direction,\ninstruction, consent, statement or other documents believed by it to be genuine\nand duly authorized, nor for other action or inaction except its own willful\nmisconduct or negligence.  The Escrow Agent shall not be responsible for the\nvalidity or sufficiency of this Agreement.  In all questions arising under the\nEscrow Agreement, the Escrow Agent may rely on the advice of counsel, and for\nanything done, omitted or suffered in good faith by the Escrow Agent based on\nsuch advice the Escrow Agent shall not be liable to anyone.  The Escrow Agent\nshall not be required to take any action hereunder involving any expense unless\nthe payment of such expense is made or provided for in a manner reasonably\nsatisfactory to it.\n\n    8.2  INDEMNIFICATION OF ESCROW AGENT.  Parent and the Shareholders, jointly\nand severally, shall indemnify the Escrow Agent for, and hold it harmless\nagainst, any loss, liability or expense incurred without negligence or willful\nmisconduct on the part of Escrow Agent, arising out of or in connection with its\ncarrying out of its duties hereunder.  As among themselves, each of (i) Parent\nand (ii) the Shareholders shall be liable for one-half (1\/2) of such amounts and\nParent shall be entitled to reimbursement from the Escrow Shares of the\nShareholders' share of any such loss, liability or expense.\n\n\n                                          6.\n\n\nSECTION 9.    SUCCESSOR ESCROW AGENT\n\n    In the event the Escrow Agent becomes unavailable or unwilling to continue\nin its capacity herewith, the Escrow Agent may resign and be discharged from its\nduties or obligations hereunder by giving resignation to the parties to this\nEscrow Agreement, specifying not less than 60 days' prior written notice of the\ndate when such resignation shall take effect.  Parent may appoint a successor\nEscrow Agent without the consent of the Agent so long as such successor is a\nbank with assets of at least $100 million, and may appoint any other successor\nEscrow Agent with the consent of the Agent, which consent shall not be\nunreasonably withheld.  If, within such notice period, Parent provides to the\nEscrow Agent written instructions with respect to the appointment of a successor\nEscrow Agent and directions for the transfer of any Escrow Shares then held by\nthe Escrow Agent to such successor, the Escrow Agent shall act in accordance\nwith such instructions and promptly transfer such Escrow Shares to such\ndesignated successor.\n\n\nSECTION 10.   GENERAL\n\n    10.1 ADJUSTMENT OF EXHIBIT A.  If and when Parent deposits additional\nEscrow Shares with the Escrow Agent, Parent shall revise Exhibit A to reflect\nsuch deposit.  In connection therewith, Parent may as appropriate alter the\nidentity of the Shareholders listed on Exhibit A and the number of Escrow Shares\nset forth opposite the appropriate Shareholders' names, including appropriate\nadjustments with respect to the incidence of any prior release of shares of\nParent Common Stock to an Indemnitee as permitted in Section 1.6 of the\nReorganization Agreement.  Parent may deliver any revised Exhibit A in\naccordance with Section 10.3.  Upon such delivery, any such revised Exhibit A\n(i) shall be deemed appended to this Agreement in replacement of the prior\nExhibit A and (ii) shall constitute Exhibit A for all purposes under this\nAgreement.\n\n    10.2 OTHER AGREEMENTS.     Nothing in this Escrow Agreement is intended to\nlimit any of Parent's or any other Indemnitee's rights, or any obligation of the\nCompany or any Shareholder, under the Reorganization Agreement or under any\nother agreement entered into in connection with the transactions contemplated by\nthe Reorganization Agreement.\n\n    10.3 NOTICES.  Any notice or other communication required or permitted to\nbe delivered to any party under this Escrow Agreement shall be in writing and\nshall be deemed properly delivered, given and received when delivered (by hand,\nby registered mail, by courier or express delivery service or by facsimile) to\nthe address or facsimile telephone number set forth beneath the name of such\nparty below (or to such other address or facsimile telephone number as such\nparty shall have specified in a written notice given to the other parties\nhereto):\n\n\n                                          7.\n\n\n         if to the Escrow Agent:\n\n         [Address]\n\n\n         if to Parent:\n\n              InVision Technologies, Inc.\n              3420 E. Third Avenue\n              Foster City, CA  94404\n              Attention:  Chief Financial Officer\n              Facsimile:  (415) 578-0930\n\n              with a copy to:\n\n              Robert L. Jones, Esq.\n              Cooley Godward LLP\n              Five Palo Alto Square\n              3000 El Camino Real\n              Palo Alto, CA  94306-2155\n              Facsimile:  (415) 857-0663\n\n\n         if to the Agent:\n\n              Randall R. Lunn\n              Techno Venture Management\n              101 Arch Street\n              Suite 1950\n              Boston, MA  02110\n              Facsimile:  (617) 345-9377\n\n\n    10.4 COUNTERPARTS.  This Escrow Agreement may be executed in two or more\ncounterparts, each of which shall be deemed an original, and all of which\ntogether shall constitute one and the same instrument.\n\n    10.5 HEADINGS.  The underlined headings contained in this Escrow Agreement\nare for convenience of reference only, shall not be deemed to be a part of this\nEscrow Agreement and shall not be referred to in connection with the\nconstruction or interpretation of this Escrow Agreement.\n\n    10.6 GOVERNING LAW; VENUE.  This Escrow Agreement shall be construed in\naccordance with, and governed in all respects by, the internal laws of the State\nof California (without giving effect to principles of conflicts of laws).  Any\nstate or federal court in the County of San Mateo in the State of California\nshall have exclusive jurisdiction and venue over\n\n\n                                          8.\n\n\nany dispute arising out of this Escrow Agreement and the parties hereby consent\nto the jurisdiction and venue of such courts.\n\n    10.7 SUCCESSORS AND ASSIGNS; PARTIES IN INTEREST.\n\n         (a)  Subject to Sections 3.5 and 10.7(b), this Escrow Agreement shall\nbe binding upon: the Company and its successors and assigns (if any); the Agent\nand the shareholders of the Company and their respective estates, successors and\nassigns (if any); and Parent and its successors and assigns (if any).  This\nEscrow Agreement shall inure to the benefit of:  the Company; the Shareholders;\nParent; the other Indemnitees; and the respective successors (if any) of the\nforegoing.\n\n         (b)  Parent may freely assign any or all of its rights under this\nEscrow Agreement, in whole or in part, to any other Person without obtaining the\nconsent or approval of any other party hereto or of any other Person.  None of\nthe Shareholders, the Agent or the Company shall be permitted to assign any of\nhis, her or its rights or delegate any of his, her or its obligations under this\nEscrow Agreement without Parent's prior written consent.\n\n    10.8 WAIVER.\n\n         (a)  No failure on the part of any Person to exercise any power,\nright, privilege or remedy under this Escrow Agreement, and no delay on the part\nof any Person in exercising any power, right, privilege or remedy under this\nEscrow Agreement, shall operate as a waiver of such power, right, privilege or\nremedy; and no single or partial exercise of any such power, right, privilege or\nremedy shall preclude any other or further exercise thereof or of any other\npower, right, privilege or remedy.\n\n         (b)  No Person shall be deemed to have waived any claim arising out of\nthis Escrow Agreement, or any power, right, privilege or remedy under this\nEscrow Agreement, unless the waiver of such claim, power, right, privilege or\nremedy is expressly set forth in a written instrument duly executed and\ndelivered on behalf of such Person; and any such waiver shall not be applicable\nor have any effect except in the specific instance in which it is given.\n\n    10.9 AMENDMENTS.  This Escrow Agreement may not be amended, modified,\naltered or supplemented other than by means of a written instrument duly\nexecuted and delivered on behalf of Parent, the Agent and the Escrow Agent.\n\n    10.10     SEVERABILITY.  In the event that any provision of this Escrow\nAgreement, or the application of any such provision to any Person or set of\ncircumstances, shall be determined to be invalid, unlawful, void or\nunenforceable to any extent, the remainder of this Escrow Agreement, and the\napplication of such provision to Persons or circumstances other than those as to\nwhich it is determined to be invalid, unlawful, void or unenforceable, shall not\nbe impaired or otherwise affected and shall continue to be valid and enforceable\nto the fullest extent permitted by law.\n\n\n                                          9.\n\n\n    10.11     ENTIRE AGREEMENT.  This Escrow Agreement and the Reorganization\nAgreement and the other agreements contemplated in the Reorganization Agreement\nset forth the entire understanding of the parties relating to the subject matter\nhereof and thereof and supersede all prior agreements and understandings among\nor between any of the parties relating to the subject matter hereof and thereof.\n\n    10.12     CONSTRUCTION.\n\n         (a)  For purposes of this Escrow Agreement, whenever the context\nrequires: the singular number shall include the plural, and vice versa; the\nmasculine gender shall include the feminine and neuter genders; the feminine\ngender shall include the masculine and neuter genders; and the neuter gender\nshall include the masculine and feminine genders.\n\n         (b)  The parties hereto agree that any rule of construction to the\neffect that ambiguities are to be resolved against the drafting party shall not\nbe applied in the construction or interpretation of this Escrow Agreement.\n\n         (c)  As used in this Escrow Agreement, the words \"include\" and\n\"including,\" and variations thereof, shall not be deemed to be terms of\nlimitation, but rather shall be deemed to be followed by the words \"without\nlimitation.\"\n\n         (d)  Except as otherwise indicated, all references in this Escrow\nAgreement to \"Sections\" are intended to refer to Sections of this Escrow\nAgreement.\n\n\n                                         10.\n\n\n    IN WITNESS WHEREOF, the parties have executed this Escrow Agreement as of\nthe date first above written.\n\n                                  INVISION TECHNOLOGIES, INC.\n                                  a Delaware corporation\n\n\n                                  By:\n                                      -------------------------------------\n                                       Name:\n                                       Title:\n\n\n                                  QUANTUM MAGNETICS, INC.\n                                  a California corporation\n\n\n                                  By:\n                                      -------------------------------------\n                                       Name:\n                                       Title:\n\n\n\n                                  AGENT:\n\n\n                                  By:\n                                      -------------------------------------\n                                       Randall R. Lunn\n\n\n\n                                  ESCROW AGENT:\n\n\n                                  By:\n                                      -------------------------------------\n                                       Name:\n                                       Title:\n\n\n\n                                         11.\n\n\n                                      EXHIBIT A\n\n                             SHAREHOLDERS OF THE COMPANY\n\n\n                                         NUMBER OF\nSHAREHOLDER                            ESCROW SHARES\n\n\n\n<\/pre>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7912],"corporate_contracts_industries":[9454],"corporate_contracts_types":[9622,9626],"class_list":["post-43019","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-invision-technologies-inc","corporate_contracts_industries-manufacturing__industrial","corporate_contracts_types-planning","corporate_contracts_types-planning__merger"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/43019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=43019"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=43019"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=43019"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=43019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}