InVision Technologies, Inc. Form S-3

As filed with the Securities and Exchange Commission on November 6, 2003 Registration No. 333-

7151 Gateway Boulevard
Newark, CA 94560
(510) 739-2400
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

Trâm T. Phi, Esq.
Corporate Counsel
InVision Technologies, Inc.
7151 Gateway Boulevard
Newark, CA 94560
(510) 739-2400
(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
Gordon K. Davidson, Esq.
David A. Bell, Esq.
Fenwick & West LLP
Silicon Valley Center
801 California Street
Mountain View, California 94014
(650) 988-8500

Approximate date of commencement of proposed sale to the public:
From time to time after this registration statement becomes effective.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. o

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. o

(1) Estimated solely to compute the amount of the registration fee under Rule 457 under the Securities Act of 1933.

(2) Represents the number of shares of common stock that are currently issuable upon conversion of the 3% Convertible Senior Notes due 2023, calculated based on a conversion rate on November 5, 2003 of 31.25 shares per $1,000 principal amount of the notes. Pursuant to Rule 416 under the Securities Act of 1933, we are also registering an indeterminable number of shares of common stock as may be issued from time to time upon conversion of the notes.

(3) Under Rule 457(i) under the Securities Act of 1933, no registration fee is required for these shares because no additional consideration will be received upon conversion of the notes.

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a) may determine.

THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING SECURITYHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES, IN ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.

3% Convertible Senior Notes due 2023
and the shares of common stock issuable upon conversion of the notes

InVision Technologies, Inc. issued the notes in a private placement in September 2003. With this prospectus, the selling securityholders named in this prospectus or in prospectus supplements may offer and sell the notes or the shares of our common stock into which the notes are convertible. The selling securityholders may sell the notes or the shares of common stock issuable upon conversion of the notes in private transactions at negotiated prices, or in the open market at prevailing market prices. We will not receive any proceeds from this offering.

We will pay interest on the notes on April 1 and October 1 of each year, beginning April 1, 2004. The notes will mature on October 1, 2023. The notes rank on a parity in right of payment with all of our existing and future unsubordinated and unsecured debt and are effectively subordinated to all liabilities of our subsidiaries. We may redeem for cash all or a portion of the notes on or after October 1, 2008 at a price equal to 100% of the principal amount of notes being redeemed, plus accrued and unpaid interest to, but excluding, the redemption date.

You may require us to purchase all or a portion of your notes on October 1, 2008, October 1, 2013 or October 1, 2018 or upon the occurrence of a change in control, as described in this prospectus. We will pay the purchase price in cash in an amount equal to 100% of the principal amount of notes being purchased, plus accrued and unpaid interest to, but excluding, the date of purchase.

Unless we have previously redeemed or purchased the notes, you may convert the notes only under the following limited circumstances: (1) prior to October 1, 2021, on any date during any fiscal quarter (and only during such fiscal quarter) after the fiscal quarter ending September 28, 2003 if the closing sale price of our common stock was more than 110% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last day of the previous fiscal quarter, (2) on or after October 1, 2021, at all times on or after any date on which the closing sale price of our common stock is more than 110% of the then current conversion price of the notes, (3) if we elect to redeem the notes on or after October 1, 2008, (4) upon the occurrence of specified corporate transactions or significant distributions to holders of our common stock, as described in this prospectus, or (5) subject to specified exceptions, for the ten business day period after any five consecutive trading day period in which the average trading prices for the notes for such five trading day period was less than 98% of the average conversion value of the notes during that period. Under these circumstances and subject to adjustments described herein, you may convert the notes into a number of shares of our common stock at an initial conversion rate of 31.25 shares of common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of $32.00 per share. At this conversion rate, if all the notes were converted into common stock, we would issue 3,906,250 shares of our common stock to holders of the notes. Our common stock is quoted on the NASDAQ National Market under the symbol “INVN.” The last reported sale price of our common stock on November 5, 2003 was $28.48 per share.

The notes are eligible in The Portal Market^SM (“PORTAL”), a subsidiary of The NASDAQ Stock Market, Inc. The notes sold using this prospectus, however, will no longer be eligible for PORTAL. The notes are not listed on or included in, and we do not intend to list the notes on or include the notes in, any securities exchange or automated quotation system.

Investing in the notes or our common stock involves a high degree of risk. Please carefully consider the “Risk Factors” beginning on page 6 of this prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

You should rely only on the information contained in or incorporated by reference into this prospectus. No dealer, salesperson or any other person is authorized to give any information or to make any representation other than those contained in or incorporated by reference in this prospectus. If such information is given or representations are made, you may not rely on that information or representations as having been authorized by us. You may not imply from the delivery of this prospectus, nor from a sale made under this prospectus, that our affairs are unchanged since the date of this prospectus. This prospectus may only be used where it is legal to sell the securities.

InVision, Quantum Magnetics, Yxlon, CTX, CTX 1000, CTX 2500, CTX 5500 DS, CTX 9000 DSi and QScan, among others, are trademarks of InVision or one of our subsidiaries in the United States and other countries. InVision, Quantum Magnetics, Yxlon and QScan, among others, are registered trademarks of InVision or one of our subsidiaries in the United States.

This summary may not contain all the information that you should consider before investing in our notes. You should read the entire prospectus and the information incorporated by reference in this prospectus carefully, including “Risk Factors” and the financial data and related notes incorporated by reference, before making an investment decision.

We are the leading provider of Transportation Security Administration, or TSA (formerly Federal Aviation Administration, or FAA) certified explosives detection systems, or EDS, used at airports for screening checked passenger baggage. The Aviation and Transportation Security Act of 2001, or Transportation Security Act, mandates 100% screening of checked baggage at U.S. commercial airports using explosives detection equipment and explosives trace detection equipment. In addition, until December 31, 2003, checked baggage may be screened using an alternative means, including, among others, a passenger/bag match program, manual searches and inspections with canine detection units. We believe that these alternative means are more time consuming, more human resource intensive and less effective means of explosives detection, and that replacement of these means continues to provide us with a significant market opportunity.

The Transportation Security Act has led to significantly increased order volume for our EDS products. During 2002, the TSA ordered a total of 625 of our EDS products for deployment at U.S. airports pursuant to a letter agreement entered into with the TSA in February 2002. We believe that the EDS products we have shipped represent approximately two-thirds of the total number of FAA/TSA-certified EDS products delivered through June 2003 for screening checked baggage at U.S. airports and an even larger percentage of the total number of FAA/TSA-certified EDS products delivered internationally.

We believe that heightened focus on homeland security will provide us the opportunity to further benefit from demand for our EDS products, as well as to leverage our core technologies to target security requirements for additional aviation and other security markets. As the homeland security market continues to evolve, we believe there will be greater demand from airport and aviation authorities for EDS products that offer better performance, higher efficiency, passenger convenience and lower cost of ownership through reduction in the manual resolution of false alarms. Our strategy for growth is to:

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enhance and expand our leadership position in automated screening of checked baggage;

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leverage our technology capabilities to address additional aviation security requirements, including passenger, carry-on baggage and air cargo screening;

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apply our portfolio of detection technologies to address broader homeland security market opportunities; and

Through our acquisition of Yxlon International Holding GmbH, or Yxlon, we develop, manufacture and market X-ray based non-destructive testing systems for a wide range of industrial applications and systems that use X-ray based diffraction, or XRD, technology for explosives detection. Through our subsidiary, Quantum Magnetics, Inc., we also design, develop and manufacture products using quadrupole resonance, or QR, and magnetic sensing technologies for the inspection, detection and analysis of explosives, concealed weapons and other materials.

Our principal executive offices are located at 7151 Gateway Boulevard, Newark, California 94560. Our telephone number is (510) 739-2400. Our website address is www.invision-tech.com. Information on our website does not constitute part of this prospectus.

The following is a brief summary of certain terms of the notes offered for resale in this prospectus. For a more complete description of the terms of the notes, see “Description of Notes” in this prospectus.


Securities Offered	$125,000,000 aggregate principal amount of 3% Convertible Senior Notes due 2023. 3,906,250 shares of common stock issuable upon conversion of the notes.

Maturity	October 1, 2023.

Interest	3% per year on the principal amount, payable semi-annually on April 1 and October 1, beginning on April 1, 2004.

Conversion Rights	Unless we have previously redeemed or purchased the notes, you have the right, at your option, to convert your notes, in whole or in part, into shares of our common stock at any time on or prior to the close of business on the maturity date, subject to adjustments described herein, at a conversion rate of 31.25 shares of common stock per $1,000 principal amount of notes (which is equivalent to a conversion price of $32.00 per share), under any of the following circumstances:

		•	prior to October 1, 2021, on any date during any fiscal quarter (and only during such fiscal quarter) after the fiscal quarter ending September 28, 2003, if the closing sale price of our common stock was more than 110% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last day of the previous fiscal quarter;

		•	on or after October 1, 2021, at all times on or after any date on which the closing sale price of our common stock is more than 110% of the then current conversion price of the notes;

		•	until the close of business on the business day prior to the redemption date, if we elect to redeem the notes on or after October 1, 2008;

		•	upon the occurrence of specified corporate transactions or significant distributions to holders of our common stock, as described in this prospectus; or

		•	for the ten business day period after any five consecutive trading day period in which the average trading prices for the notes for such five trading day period was less than 98% of the average conversion value (as defined under “Description of Notes”) for the notes during that period; provided, that you may not convert your notes pursuant to this clause if, at the time of calculation, the closing sale price of shares of our common stock is greater than or equal to the then current conversion price of the notes and less than or equal to 110% of the then current conversion price of the notes.

	The conversion rate may be adjusted for certain reasons, but will not be adjusted for accrued interest. Upon conversion, a holder will not receive any payment representing accrued interest, subject to certain exceptions. See “Description of Notes-Conversion Rights.”

Sinking Fund	None.

Optional Redemption by InVision	We may not redeem the notes prior to October 1, 2008. We may redeem some or all of the notes for cash on or after October 1, 2008, upon at least 20 days’ but not more than 60 days’ notice by mail to holders of notes at a redemption price equal to 100% of the principal amount of the notes being redeemed, plus accrued and unpaid interest to, but excluding, the redemption date. See “Description of Notes-Optional Redemption.”



Purchase of the Notes at Option of the Holder on a Specified Date	You may require us to purchase for cash all or a portion of your notes on October 1, 2008, October 1, 2013 or October 1, 2018 at a purchase price equal to 100% of the principal amount of the notes being purchased, plus accrued and unpaid interest to, but excluding, the purchase date. See “Description of Notes-Purchase at Option of the Holder.”

Change in Control	Upon a change in control, each holder of the notes may require us to purchase for cash all or a portion of such holder’s notes at a price equal to 100% of the principal amount of the notes being purchased, plus accrued and unpaid interest, if any, on such notes to, but excluding, the date of purchase. See “Description of Notes-Purchase at Option of Holders Upon a Change in Control.”

Ranking	The notes:

		•	are our senior unsecured obligations;

		•	rank on a parity in right of payment with all of our existing and future unsubordinated and unsecured debt; and

		•	rank senior to all of our existing and future debt that expressly provides that it is subordinated to the notes.

	The notes are also effectively subordinated in right of payment to our existing and future secured debt, to the extent of such security, and all existing and future debt and other liabilities of our subsidiaries. On June 29, 2003, we had $40.1 million of indebtedness (all of which was secured and is effectively senior to the notes). Our subsidiaries had $26.7 million of outstanding liabilities (excluding intercompany liabilities), which are effectively senior to the notes.

DTC Eligibility	The notes are issued in fully registered book-entry form and are represented by one or more permanent global notes without coupons. The global notes are deposited with the trustee as a custodian for DTC and are registered in the name of Cede & Co., DTC’s nominee. Beneficial interests in global notes are shown on, and transfers thereof will be effected only through, records maintained by DTC and its direct and indirect participants, and your interest in any global note may not be exchanged for certificated notes, except in limited circumstances described in this prospectus. See “Description of Notes-Global Notes; Book-Entry; Form.”

Trading	The notes are eligible for PORTAL. The notes sold using this prospectus, however, will no longer be eligible for PORTAL. The notes are not listed on or included in, and we do not intend to list the notes on or include the notes in, any securities exchange or automated quotation system.

Use of Proceeds	We will not receive any of the proceeds from the selling securityholders’ sale of the notes or shares of our common stock issuable upon conversion of the notes. See “Use of Proceeds.”

Risk Factors	The securities offered under this prospectus involve a high degree of risk. You should carefully consider the information under the “Risk Factors,” and all other information included in this prospectus and the documents incorporated by reference.

You should carefully consider the following risks, as well as the other information contained in or incorporated by reference in this prospectus, before investing in the notes and the underlying common stock. If any of the following risks actually occurs, our business could be harmed. You should refer to the other information set forth or incorporated by reference in this prospectus, including our consolidated financial statements and the related notes incorporated by reference herein.

A number of factors that affect our revenues make our future results difficult to predict, and therefore we may not meet expectations for a particular period.

We believe that our revenues have the potential to vary significantly from time to time. For example, our total revenues were $89.4 million for the second quarter of fiscal 2003, $165.2 million for the first quarter of fiscal 2003 and $220.4 million for the fourth quarter of fiscal 2002, and were $439.1 million for fiscal 2002, $74.3 million for fiscal 2001 and $79.1 million for fiscal 2000. We believe that these variations may result from many factors, including:

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the timing, size and mix of orders from our major customers, including in particular, the TSA and agencies of other governments;

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legislative or other government actions driven, in part, by the public’s perception of the threats facing commercial aviation, leading to fluctuations in demand for aviation security products and services;

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delays in product shipments caused by the inability of airports to install or integrate our products in a timely fashion;

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the introduction and acceptance of new products or enhancements to existing products offered by us or our competitors;

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changes in pricing policies by us, our competitors or our suppliers, including possible decreases in average selling prices of our products caused by customer volume orders or in response to competitive pressures; and

Further, we depend on a small number of customers for a substantial portion of our revenues. In the past, the number of orders placed by these customers has changed significantly from period to period, and we expect that this may continue in the future.

A significant portion of our quarterly and annual operating expenses is, and will continue to be, relatively fixed in nature. This means that revenue fluctuations will cause our quarterly and annual operating results to vary substantially. We also may choose to increase spending to pursue new market opportunities, which may negatively affect our financial results.

Accordingly, we believe that period-to-period comparisons of our results of operations cannot be relied upon as indicators of future performance. Because of all of the foregoing factors, our operating results have from time to time in the past been, and may again in the future be, different from expectations of public market analysts and investors. Failure to meet market expectations has in the past resulted, and may again in the future result, in fluctuations in the trading price of our common stock.

Governmental agencies, the primary customers for our EDS and other products, are subject to budget processes which could limit the demand for these products.

Substantially all of the customers for our EDS products and our other products under development to date have been public agencies or quasi-public agencies, such as the FAA, the TSA and airport authorities. Public agencies are subject to

budgetary processes and expenditure constraints. In the past, many domestic and foreign government agencies have experienced budget deficits that have led to decreased capital expenditures in certain areas.

The funding of government programs is subject to legislative appropriation. Budgetary allocations for EDS depend, in part, upon governmental policies, which fluctuate from time to time in response to political and other factors, including the public’s perception of the threat of commercial airline bombings. For example, the terrorist attacks of September 11, 2001 resulted in the passage of the Aviation and Transportation Security Act of 2001, or Transportation Security Act, mandating a small surcharge on each airline ticket purchase to fund airline security. This surcharge was suspended from June 1, 2003 to September 30, 2003. We cannot assure investors that the surcharge will not again be suspended or that the funds generated by these surcharges will be used to purchase our EDS products. We cannot assure investors that funds will continue to be appropriated by Congress or allocated by the TSA or other agencies for the purchase of EDS products.

Legislative actions could lead to fluctuations in demand for aviation security products and services.

In addition to the Congressional budgetary process, other legislation could be introduced that would impact demand for aviation security products and services. In response to fluctuation in concern on the part of voters about aviation security and competing homeland security demands, or for other reasons, the plans for deployment of EDS to screen baggage could be changed. Budgetary debates and delays could result in fewer EDS being sold to the TSA and elected officials who support the EDS program could fail to maintain their offices, any of which events could cause a decrease in the demand for our EDS products.

Governmental agencies have special contracting requirements, which create additional risks.

In contracting with public agencies, we are subject to public agency contract requirements that vary from jurisdiction to jurisdiction. Future sales to public agencies will depend, in part, on our ability to meet public agency contract requirements, certain of which may be onerous or even impossible for us to satisfy.

Government contracts typically contain termination provisions unfavorable to us and are subject to audit and modification by the government at its sole discretion, which subject us to additional risks. These risks include the ability of the U.S. government to unilaterally:

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suspend or prevent us for a set period of time from receiving new contracts or extending existing contracts based on violations or suspected violations of laws or regulations;

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audit and object to our contract-related costs and fees, including allocated indirect costs;

The U.S. government can terminate any of its contracts with us either for its convenience or if we default by failing to perform in accordance with the contract schedule and terms. Termination for convenience provisions generally enable us to recover only our costs incurred or committed, and settlement expenses and profit on the work completed prior to termination. Termination for default provisions do not permit these recoveries and make us liable for excess costs incurred by the U.S. government in procuring undelivered items from another source. Our contracts with foreign governments may contain similar provisions. Consequently, our backlog is not necessarily indicative of future revenues. The government’s termination of one or more of the contracts for our EDS products or our other products under development would harm our business.

In addition, U.S. government contracts are conditioned upon the continuing availability of Congressional appropriations. Congress usually appropriates funds annually for a given program on a September 30 fiscal year-end basis, even though contract performance may take years. Consequently, our contracts with the TSA may only be partially funded at the outset, and additional monies are normally committed to the contract by the TSA only as appropriations are

made by Congress for future periods. The government’s failure to fully fund one or more of the contracts for our EDS products or our other products under development would harm our business.

Under our new three-year agreement with the TSA announced on August 12, 2003, the TSA has the right to purchase system options and accessories, engineering and installation support and 550 CTX units, principally our CTX 9000 DSi systems, over the three-year term. While the TSA placed an initial $54.8 million delivery order under the new agreement, the TSA has no obligation to place additional delivery orders or purchase additional engineering and installation support under the new agreement. We cannot assure you that the TSA will make any additional delivery orders under the new agreement or will not cancel its existing order. The new agreement is subject to all of the limitations and restrictions that apply to U.S. government contracts, including those described above.

Because we contract with the U.S. government, we are subject to periodic audits and reviews. Based on the results of its audits, the U.S. government may adjust our contract-related costs and fees, including allocated indirect costs. In the future, government audits and reviews could result in adjustments to our revenues and cause other adverse effects, particularly to our relationship with the TSA. In addition, under U.S. government purchasing regulations, some of our costs, including most financing costs, amortization of intangible assets, portions of our research and development costs, and some marketing expenses may not be reimbursable or allowed in our negotiation of fixed-price contracts. Further, because we contract with the U.S. government, we are subject to an increased risk of investigations, criminal prosecution, civil fraud, whistleblower lawsuits and other legal actions and liabilities to which purely private sector companies are not.

In addition, public agency contracts are frequently awarded only after formal competitive bidding processes, which are often protracted and typically contain provisions that permit cancellation in the event that funds are unavailable to the public agency. We may not be awarded any of the contracts for which our products are bid. Even if we are awarded contracts, substantial delays or cancellations of purchases could result from protests initiated by losing bidders.

Our growth depends on our introduction of new products and services, which may be costly to develop and may not achieve market acceptance.

As part of our strategy for growth, we intend to develop products to address additional aviation security opportunities, such as passenger, carry-on baggage and air cargo screening. We also intend to address homeland security requirements beyond aviation, such as screening at border checkpoints, government offices and transportation terminals and ports. We will be required to spend significant funds to develop or acquire technologies and products for these initiatives, and these initiatives may divert our development and management resources away from our core EDS products. In addition, we have acquired, rather than developed internally, some of our technologies in connection with our acquisitions of companies and businesses, and these technologies may not perform as we expect. The development of new products may require greater time and financial resources than we currently anticipate and, despite significant investments in research and development, may not yield commercially successful products.

The development of our products for explosives and weapons detection is highly complex. Successful product development and market acceptance of any new products and services that we develop depend on a number of factors, including:

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our accurate prediction of the demand for homeland security products and the changing requirements of the homeland security industry, including certification or other required performance standards;

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the quality, price and operating performance of our products and those of our competitors;

Finally, new products for aviation security applications may require certification or approval by the TSA, and we believe that the TSA does not currently have standards for the certification of aviation security products other than bulk explosives detection systems and explosives trace detectors, or ETD. Other products, such as metal detectors, are subject to TSA testing prior to approval. Market acceptance of new products may be limited if the TSA has not developed

standards for certification or approval of such products, and even if it does develop such standards, we may be unable to obtain any such certification or approval, which could materially limit market acceptance of such products. If we fail to timely introduce new products or if these products fail to gain market acceptance, our results of operations would be harmed.

In addition, even if successful in the United States, new products that we develop may not achieve market acceptance outside of the United States. Unlike the U.S. government, foreign governments may be unwilling to commit financial resources to purchase our new products, which would reduce our potential revenues and harm our business.

We depend upon a limited number of suppliers for components of our products, and if we are unable to obtain parts from these suppliers on a timely basis, then we may not be able to deliver our products as required.

Key components used in our products have been designed by us to our specifications and are currently available only from one or a limited number of suppliers. We currently do not have long-term agreements with any of these suppliers. In addition, some of the suppliers of the key components used in our products are our competitors, and they may be motivated not to supply us with the components we need. Our inability to develop alternative sources for single or sole source components, to find alternative third party manufacturers or sub-assemblers, or to obtain sufficient quantities of these components, could result in delays or interruptions in product shipments, which could cause current or potential customers to seek other suppliers of our products. In view of the high cost of many of these components, we strive to avoid excess supplies. If our suppliers experience financial, operational, production or quality assurance difficulties, or our sole source suppliers are acquired or otherwise influenced by our competitors, the supply of components to us would be reduced or interrupted. In the event that a supplier ceases operations, discontinues a product or withholds or interrupts supply for any reason, we may be unable to acquire the product from alternative sources within a reasonable period of time.

We plan to continue to develop new models for our family of EDS products, including systems utilizing X-ray based diffraction, or XRD, technology, of our recently acquired subsidiary, Yxlon International Holding GmbH, or Yxlon, and to continue our participation in the ARGUS program, an FAA/TSA-sponsored program designed to develop a smaller, low-cost EDS product. However, we cannot be certain that any new EDS product, including systems utilizing Yxlon’s XRD technology or our CTX 1000 (ARGUS) system, will be certified by the TSA. The failure to gain certification for an EDS product would harm our ability to sell the product, and recognize associated revenues.

Our existing EDS products may fail to obtain re-certification by the TSA for changes in the EDS systems.

Our existing EDS products can be required to be re-certified by the TSA. This can happen when a critical component is changed, or we wish to make other changes to the EDS systems. When this happens, the affected EDS model requires re-certification by the TSA. The failure or delay in gaining re-certification for an existing EDS product could harm our ability to continue to sell the product and recognize associated revenues.

Our major customer, the TSA, is a part of the Department of Homeland Security, a newly created agency that has experienced, and may continue to experience, delays in its operations, which may cause delays in our receiving orders from the TSA.

The TSA is a relatively new agency that was created in November 2001 by the Transportation Security Act. As a result, it has experienced, and may continue to experience, delays in fulfilling its mandate as a result of delays in establishing the necessary infrastructure to operate in an efficient manner. This may result in delays in our receiving orders for our EDS products. Further, the TSA is now a part of the Department of Homeland Security, which was created subsequent to the creation of the TSA and is therefore in an earlier stage of formation, which may further create delays in our receiving orders as this agency is organized.

Future sales of our EDS products will depend on the ability of airports to secure funding to build baggage handling systems and to integrate our EDS products into such systems, which they may not be able to do.

Future sales will depend, in part, on installing our EDS products into airport lobbies or integrating them into existing baggage handling systems. If an airport is not configured for these systems, deployment of our EDS products may require

changes in the airport infrastructure, such as reinforced airport lobby floors and baggage platforms. If our EDS products cannot easily be installed in airport lobbies or integrated into existing baggage handling systems, we may experience reduced sales of our EDS products or these sales may be delayed. In addition, installations and integrations are currently partially funded by the TSA in the United States. Recent legislation established a “letter of intent” program under which an airport can present a request to the TSA for reimbursement of costs incurred by the airport in improving baggage handling systems to increase security. There can be no assurance that the government will continue to fund installations, integrations and reimbursements at the current level or at all. If there is a reduction in funding, we may experience reduced sales of our EDS products or these sales may be delayed.

We believe that a substantial opportunity exists for our CTX 9000 DSi model to be integrated into baggage handling systems. If airports determine, in conjunction with governmental authorities, that they will be unable or unwilling to modify or finance such in-line baggage handling systems, this opportunity may be limited.

As a result of the Transportation Security Act, our EDS products are undergoing substantially increased usage per day, which could cause unforeseen problems with their ability to sustain this increased usage.

As required by the Transportation Security Act, as of December 31, 2002, 100% of checked baggage must undergo screening. As a result, our EDS products in operation are being used more hours per day than before, which places a burden on them not previously experienced. This has resulted in an increase in the amount of maintenance required to keep them operating, and may result in unforeseen problems. If this were to occur, our customers could perceive that there are reliability problems with our EDS products, which could reduce the demand for our products. In addition, our CTX 9000 DSi product is a relatively new model with which we have limited experience in sustaining extensive usage. As a result, our CTX 9000 DSi product may experience maintenance needs and increased down time beyond that experienced by our CTX 2500 and CTX 5500 DS products. Further, because the CTX 9000 DSi product is designed to be integrated into an airport’s baggage handling system, it has, in addition to the detection function and mechanisms, components that integrate it into the baggage handling system, which also require maintenance and may also contribute to increased maintenance needs and down time. If our CTX 9000 DSi product does experience additional maintenance needs beyond that of our CTX 2500 and CTX 5500 DS products, our customers may not purchase this product in favor of our CTX 2500 and CTX 5500 DS products or the products of our competitors.

We may seek to grow by acquisition, which subjects us to substantial risks, including the failure to successfully integrate an acquired business.

As part of our growth strategy, we may expand our business by pursuing selected acquisitions of technologies and companies that offer complementary products, services, technologies or market access. Our ability to grow by acquisition depends upon the availability of acquisition candidates at acceptable prices. We may incur costs in connection with our pursuit of acquisitions for which we are responsible regardless of whether the acquisitions are actually consummated. Future acquisitions by us could result in dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and expenses related to acquired operations and assets, any of which could harm our business and our operating results. Acquisitions entail numerous risks and we may not realize the expected benefits of these transactions. These risks include:

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difficulties in the assimilation of acquired operations, technologies and products;

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lack of experience operating in the geographic market or industry sector of acquired companies;

The process of integrating supply and distribution channels, computer and accounting systems and other aspects of operations, while managing a larger entity, may present a significant challenge to our management. We may not be able to successfully integrate any businesses, products, technologies or personnel that might be acquired in the future. In such case, we would not fully realize the anticipated benefits of a business combination, and the failure of such efforts would harm our business. Maintaining uniform standards, controls, procedures and policies may be harder than we anticipate and interfere with efficient administration of the company as a whole.

For example, on March 31, 2003, we completed the acquisition of Yxlon. Yxlon is active in businesses that are new to us and present a challenge to our management. In order to successfully integrate Yxlon’s security technologies and products, we must, among other things, integrate these into our suite of products, both from an engineering and a sales and marketing perspective. As a result, we may take longer to develop and introduce new products than we anticipate. In addition, Yxlon’s non-destructive testing business is new to us. We do not have experience developing, marketing and selling products in the non-destructive testing business, and we may not be successful competing for customers in industries with which we are unfamiliar. The difficulties of integration of Yxlon may be further complicated by the geographic distance between our U.S. offices and Yxlon’s headquarters, which are located in Germany. If we are not successful in integrating Yxlon’s security technologies into our product line, or in managing Yxlon’s non-destructive testing business, we may incur additional expenses or lose revenue opportunities for Yxlon and us, and our business results may suffer.

Our strategic investments may not provide any of the benefits we anticipate, and as a result, we may incur economic losses or be required to write-down these investments.

From time to time, we consider strategic investments in development-stage companies that we believe provide strategic opportunities for us, such as our recent investment in SafeView, Inc., which is developing portal systems for passenger screening. Although we intend that these investments will provide access to new technologies and emerging markets, we cannot assure you that these investments will create opportunities for us to increase our sales. If these companies are unsuccessful in their product development efforts or are unable to obtain additional private financing, we may be required to write-down these investments or we may lose some or all of these investments, which would harm our results.

We may not be able to grow our service organization quickly enough to support our EDS products deployed in the field.

We are responsible for supporting the installation of, and providing warranty service for, our EDS products. With the rapid increase in the number of units being shipped, we are expanding our service organization’s capability. EDS products are relatively complex machines, which employ high-speed conveyors and sophisticated imaging technology. If we are unable to hire and train sufficient service personnel supported by an expanded logistical system, the reliability of our machines could suffer. If this were to occur, there could be a decrease in demand for our products.

If our EDS products fail to detect explosives, we could be exposed to product liability and related claims for which we may not have adequate insurance coverage, and we may lose current and potential customers.

Our business exposes us to potential product liability risks, which are inherent in the manufacturing, sale and maintenance of EDS products. Our machines are not designed to detect, and FAA/TSA certification does not require, 100% detection of any and all explosives contained in scanned baggage. For this reason, or if our products malfunction, it is possible that explosive material could pass undetected through our products, which could lead to product liability claims. There are also many other factors beyond our control that could lead to liability claims, such as the reliability and competence of the customer’s operators and the training of the operators.

InVision and our subsidiary, Quantum Magnetics, were named as defendants in a number of lawsuits relating to the terrorist acts of September 11, 2001. We anticipate that additional lawsuits relating to the terrorist acts of September 11, 2001 will name us as defendants. The cost of defending these and other product liability claims brought against us could be significant and any adverse determination may result in liabilities in excess of our insurance coverage. We currently have product liability insurance in the amount of $200.0 million. We also have war and terrorism insurance in the amount of $200.0 million, including up to $50.0 million under our product liability insurance. However, since the terrorist acts of September 11, 2001, insurance rates have increased dramatically, and we cannot be certain that our current insurance can be maintained, or additional insurance coverage could be obtained, on acceptable terms, if at all.

In addition, the failure of any EDS product to detect explosives, even if due to operator error and not to the mechanical failure of an EDS product, could result in public and customer perception that our products do not work effectively, which may cause potential customers to not place orders and current customers to cancel orders already placed or to not place additional orders, any of which would harm our business and financial results.

We substantially depend on large orders from a limited number of customers. As a result, order cancellations from any of our customers or the failure of these customers to continue to purchase EDS products could have a material negative impact on our business and financial results.

In any given fiscal quarter or year, our revenues are derived from orders of multiple units of our EDS products from a limited number of customers. Through September 28, 2003, substantially all of our orders from U.S. customers have been funded by the FAA and the TSA, which allocate our products to airports in the United States. Including revenues from the Siemens subcontract to provide maintenance service for TSA-owned EDS systems, EDS sales to the FAA, and following the formation of the TSA, to the TSA, accounted for 79.9% of our EDS revenues in the nine months ended September 28, 2003 and 85.4% of our EDS revenues in the year ended December 31, 2002. In the nine months ended September 28, 2003, 15 customers accounted for all of our EDS units sold during the quarter, and in the year ended December 31, 2002, ten customers accounted for all of our EDS products sold during the year. The failure of these customers, particularly the U.S. government, to continue to purchase our EDS products or the cancellation of existing orders would harm our business.

We have granted a royalty-bearing license to the U.S. government to have our products produced by other manufacturers and if other manufacturers produce our products, we may lose expected revenue opportunities.

In connection with orders for EDS products, the TSA required that we grant the TSA a two-year royalty-bearing license, commencing in March 2002, to enable other manufacturers to build for the TSA EDS products based on our technology used in these products. With this license, the TSA may purchase EDS products from other manufacturers rather than us, even if we have the manufacturing capacity to build those EDS products. If this happens, the royalty we receive under the license may not fully compensate us for the lost business opportunity. Further, since licensed manufacturers will be building substantially the same products as we build, if we fail to timely deliver EDS products which the TSA has ordered from us, the TSA may not give us the opportunity to cure the failure to deliver, and it may transfer the order from us to a licensed manufacturer. The TSA has not exercised this license to date.

The U.S. government’s right to use technology developed by us, but funded by the U.S. government, limits our intellectual property rights.

In accordance with Federal Acquisition Regulations included in our development contracts with the FAA, the U.S. government has rights to use our proprietary technologies developed after the award of the development contract and funded by the development contract. The U.S. government may use these rights to produce or have produced for the U.S. government competing products using CT technology found in our existing EDS products as well as our CTX 1000 model, which has not yet been certified by the TSA. With respect to Quantum, the U.S. government retains the same rights to the passive magnetic technology found in the quadrupole resonance, or QR, technology. In the event that the U.S. government were to exercise these rights, our competitive position in supplying the U.S. government with certified CT-based explosives detection systems and/or the Quantum products would be harmed.

The sales cycle for our EDS products is lengthy, and we may expend a significant amount of effort in obtaining sales orders and not receive them.

The sales cycle of our EDS products is often lengthy due to the protracted approval process that typically accompanies large capital expenditures and the time required to manufacture and install our EDS products. Typically, six to twelve months may elapse between a new customer’s initial evaluation of our systems and the execution of a contract. Another three months to a year may elapse prior to shipment of our EDS products as the customer site is prepared and our EDS products are manufactured. In addition, in the United States, the creation of the TSA and debate on formation of a Department of Homeland Security, as well as budgetary debates in Congress, may result in additional delays in the purchase of additional EDS products. During the sales cycle we expend substantial funds and management resources but recognize no associated revenue.

We measure our backlog of product revenues as orders for systems and upgrades for which contracts or purchase orders have been signed, but which have not yet been shipped. We measure our backlog of service revenues as orders for maintenance related to product support for which contracts have been signed, but maintenance service has not yet been performed. We typically ship our products within three to twelve months after receiving an order. However, such

shipments may be affected by delays which occur in the delivery of components to us or our readiness to accept delivery of components for reasons of site preparation or otherwise. In some instances, shipments may be made more quickly depending on our ability to build machines to order and our customers’ demand for immediate delivery.

We measure our backlog of Quantum government contracts as funded and unfunded awards from government agencies for which services have not yet been performed. At September 28, 2003, our Quantum government contracts backlog was $16.5 million, $4.9 million of which was funded.

Any failure by us to meet an agreed upon schedule could lead to the cancellation of the related order. Variations in the size, complexity and delivery requirements of the customer order may result in substantial fluctuations in backlog from period to period. In addition, all orders are subject to cancellation or delay by the customer and, accordingly, we cannot assure investors that our backlog will eventually result in revenues. For these reasons, we believe that backlog cannot be considered a meaningful indicator of our performance on an annual or quarterly basis.

Our international sales subject us to risks that could materially harm our business.

Sales to countries other than the United States accounted for 26.1% of our revenues in the nine months ended September 28, 2003 and 11.7% of our revenues in the year ended December 31, 2002. It is part of our growth strategy to increase our international operations. A number of factors related to our international sales and operations could adversely affect our business, including:

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our ability to protect and utilize our intellectual property in foreign jurisdictions;

Further, the sale of some of our products outside the United States is subject to compliance with the U.S. International Traffic in Arms Regulations and Export Administration Regulations. Our failure to obtain the requisite licenses, meet registration standards or comply with other government export regulations, may affect our ability to generate revenues from the sale of our products outside the United States, which could harm our business. In particular, some of our EDS products and our landmine detection equipment are deemed regulated military devices subject to export restrictions under the U.S. Department of State regulations. Consequently, these regulations may make these products more difficult to sell to a number of countries. Compliance with government regulations may also subject us to additional fees and costs. The absence of comparable restrictions on competitors in other countries may adversely affect our competitive position.

Exchange rate fluctuations could cause a decline in our financial condition and results of operations.

In 2003, the cost of certain international currencies has increased due to fluctuations in the exchange rate of the U.S. dollar against the euro. As a result of our international operations and recently acquired Yxlon operations, we generate a significant portion of our net sales and incur a significant portion of our expenses in currencies other than the U.S. dollar, primarily the euro. Future fluctuations in this exchange rate could adversely affect our results because we pay our non-U.S. employees and certain suppliers in local currencies, and, in some cases, our sales contracts are denominated in local currencies. From time to time, as and when we determine it is appropriate and advisable to do so, we will seek to mitigate the effect of exchange rate fluctuations through the use of derivative financial instruments. We cannot assure you, however, that we will continue this practice or be successful in these efforts.

Yxlon, which we acquired on March 31, 2003, generally transacts business in euros. Consequently, its financial condition and results of operations are reported in euros and then translated into U.S. dollars at the applicable exchange rate for inclusion in our consolidated financial statements. As a result, appreciation of the U.S. dollar against the euro will have a negative impact on our reported revenues and operating profit while depreciation of the U.S. dollar against the euro will have a positive effect on reported revenues and operating profit.

Our EDS products are typically sold with one-year warranties. We have established reserves for the liability associated with product warranties based on historical experience with warranty claims. However, our actual warranty costs, including actual material usage or service delivery costs, may exceed our reserves, which could have an adverse effect on our operating results.

We may not be selected to provide post-warranty service on our CTX systems, and if we are selected to provide post-warranty services, these services may not be profitable for us.

We offer to our customers the opportunity to buy a service contract from us, which provides for scheduled maintenance, repairs and parts once a warranty period on a CTX system has expired (which is typically a one-year period). If we are not selected to provide post-warranty service, this would harm our business. Some of our post-warranty service contracts contain fixed pricing terms. If our actual costs, including actual material usage or service delivery costs, exceed our revenues under these service agreements, our operating results could be adversely affected. In January 2003, we entered into an agreement with Siemens pursuant to which Siemens subcontracted to us its CTX service obligations to the FAA/TSA. The agreement is retroactive to November 2002. Commencing in January 2003, Siemens has the option, exercisable each year, to extend the agreement for the following year, through 2007. Siemens has exercised its option for 2003. We cannot assure investors that Siemens will renew the agreement in subsequent years. In addition, historically, we have sold service contracts on most eligible CTX systems deployed internationally. We may not achieve this level of service contract sales in the future.

Our inability to adapt to rapid technological change could impair our ability to remain competitive.

The EDS industry may undergo significant technological development in response to increased demand for aviation security products. A fundamental shift in technology in our product markets could harm us, because we derive substantially all of our revenues from sales of EDS products and services.

We anticipate that we will incur significant expenses in the design and initial manufacturing and marketing of new products and services. Our competitors may implement new technologies before we are able to, allowing them to provide more effective products at more competitive prices. Future technological developments could:

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require us to discontinue production of obsolete products before we can recover any or all of our related research, development and commercialization expenses; or

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require significant capital expenditures beyond those currently contemplated.

We cannot assure investors that we will be able to achieve the technological advances to remain competitive and profitable, that new products and services will be developed and manufactured on schedule or on a cost-effective basis, that anticipated markets will exist or develop for new products or services, or that our existing products and services will not become technologically obsolete.

The EDS industry is highly competitive. Given the anticipated continuing demand for airport security products, competition may increase.

The EDS industry is intensely competitive and we may not compete successfully. As a result of increased demand for security systems, additional companies may enter the EDS industry. Some of our competitors, including L-3 Communications Holdings, Inc. and many of the potential new entrants into the EDS industry, have financial, technical, production and other resources substantially greater than ours. We believe that some of our competitors have EDS

products undergoing TSA certification. Our failure to compete successfully could result in lost sales and could hamper our financial results.

We depend on key management and personnel and may not be able to retain those employees or recruit additional qualified personnel.

We believe that our future success will be due, in part, to the continued services of our senior management team. We do not have long-term employment agreements with any of our executive officers. Losing the services of one or more members of our management team could negatively affect our business and our expansion efforts. We do not maintain key person life insurance policies for members of our management. We could be seriously harmed by the loss of any of our executive officers. The implementation of our growth strategy will require that we recruit additional members of our senior management team. In addition, in order to manage our growth, we will need to recruit and retain additional skilled personnel, such as advanced engineering professionals. Our failure to recruit qualified employees in a timely manner and retain them could harm our business and our ability to continue to grow.

Our corporate and manufacturing facilities in California are located near major earthquake faults, which have experienced earthquakes in the past. In the event of a major earthquake or other natural disaster, our facilities may sustain significant damage and our operations could be harmed.

Our business could be harmed if we fail to properly protect our intellectual property.

Our success depends in part on our ability to protect our intellectual property. Although we attempt to protect our intellectual property in the United States and other countries through various methods such as patents and patent applications, trademarks, copyrights and non-disclosure agreements, there can be no assurance that we will successfully protect our technology or that competitors will not be able to develop similar technology independently.

We have two U.S. patents for automatic concealed object detection systems using a pre-scan stage as used in our CTX products. These patents expire in 2010 and 2011. The patents have not prevented competitors from developing CT-based products which do not use a pre-scan stage. The time period for filing foreign counterparts of our two U.S. EDS patents has expired, and we did not seek or obtain patent protection. The absence of foreign counterparts to our patents could adversely affect our ability to prevent a competitor from using technology similar to technology used in our CTX products. We also have a U.S. patent for a mechanical radiation shield for our CTX 9000 DSi model, which expires in 2021. We rely on this technology to increase the speed of the baggage inspection process. We have filed other applications in the United States and Europe for patents covering other features contained in our CTX 9000 DSi model. We cannot assure investors that the claims allowed under any patents held by us will be sufficiently broad to protect our technology against competition from third parties with similar technologies or products. In addition, we cannot assure investors that any patents issued to us will not be challenged, invalidated or circumvented or that the rights granted under these patents will provide a competitive advantage to us. Moreover, the laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States, and we could experience various obstacles and high costs in protecting our intellectual property rights in foreign countries. If we are unable to obtain or maintain these protections, we may not be able to prevent third parties from using our intellectual property.

We also rely on trade secrets, proprietary know-how and continuing technological innovation to remain competitive. We have taken measures to protect our trade secrets and know-how, including the use of confidentiality agreements with our employees. It is possible that these agreements may be breached and that the available remedies for any breach will not be sufficient to compensate us for damages incurred.

Litigation may be necessary to enforce or defend against claims of intellectual property infringement, which could be expensive and, if we lose, could prevent us from selling our products.

Litigation may be necessary in the future to enforce our patents and other intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Any litigation, regardless of the outcome, could be costly and require significant time and attention of key members of our management and technical personnel.

Our domestic and international competitors, many of whom have substantially greater resources and have made substantial investments in competing technologies, may have patents that will prevent, limit or interfere with our ability to manufacture and sell our products. We have not conducted an independent review of patents issued to third parties. Because of the perceived market opportunity we face, companies possessing technology rights that they believe we might be infringing will now be much more motivated to assert infringement of their rights. These third parties may assert infringement or invalidity claims against us and litigation may be necessary to defend against these claims. An adverse outcome in the defense of a patent suit could subject us to significant liabilities to third parties, require disputed rights to be licensed from third parties or require us to cease selling our products. Even successful defenses of patent suits can be costly and time-consuming.

We have received significant amounts of funding from government grants and contracts. We cannot assure investors that we will continue to receive this level of funding for future product development.

The U.S. government currently plays an important role in funding the development of EDS technology and sponsoring its deployment in U.S. airports. We performed reimbursable research and development for EDS products pursuant to FAA and TSA grants and contracts totaling $886,000 for the year ended December 31, 2002. We received reimbursable research and development for EDS products of $2.0 million in the nine months ended September 28, 2003. This is a significant reduction from the $8.3 million for reimbursable research and development for EDS products from FAA grants and contracts in the year ended December 31, 2001. We are also aware that other competitors and potential competitors in the EDS market have received FAA and TSA development grants. The U.S. government also currently funds almost all of the development of Quantum products, including QR and passive magnetic sensing. We had contract research and development revenues from the U.S. government for the development of Quantum products of $3.1 million for the nine months ended September 28, 2003 and of $12.1 million for the year ended December 31, 2002. We cannot assure investors that additional research and development funds from the government will become available in the future or that we will receive any of these additional funds. If the government fails to continue to sponsor our technology, we would have to expend more resources on product development, which could adversely affect our business. In addition, any future grants to our competitors may improve their ability to develop and market advanced detection products and cause our customers to delay any purchase decisions, which could harm our ability to market our products.

The U.S. government may obligate us to give priority to the TSA, which could harm our relationships with other customers.

The TSA has been authorized by the U.S. Department of Commerce to place a priority rating on EDS contracts, which would obligate us to timely fulfill the TSA’s orders and delay any unrated or lower-rated orders. In addition, as part of any future orders, the TSA may request that we agree to timely fill its orders prior to fulfilling the needs of any other customers. Accordingly, we may not be able to fulfill orders for our EDS products from non-U.S. government customers during a period of demand from the U.S. government. This could cause our current and potential non-U.S. government customers to seek EDS products from other sources, and could trigger financial penalties under the agreements with such customers. We also may lose our goodwill and relationships with these customers, which could harm our ability to make sales in the future.

Substantial leverage and debt service obligations may adversely affect our cash flow.

As a result of the convertible debt offering that we completed in September 2003, our debt service obligations increased substantially. There is the possibility that we may be unable to generate cash sufficient to pay the principal of, interest on and other amounts due in respect of our indebtedness when due. We may also add equipment loans and lease lines to finance capital expenditures and may obtain additional long-term debt, working capital lines of credit and lease lines.

Our substantial leverage could have significant negative consequences, including:

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increasing our vulnerability to general adverse economic and industry conditions;

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requiring the dedication of a portion of our expected cash flow from operations to service our indebtedness, thereby reducing the amount of our expected cash flow available for other purposes, including capital expenditures;

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limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we compete; and

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placing us at a possible competitive disadvantage relative to less leveraged competitors and competitors that have better access to capital resources.

The price of our common stock, and consequently the trading price of the notes, may fluctuate significantly.

The trading price of our common stock has been and may continue to be subject to large fluctuations and, therefore, the trading price of the notes may fluctuate significantly, which may result in losses to investors. Our stock price may increase or decrease in response to a number of events and factors, including:

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legislative and regulatory developments related to anti-terrorism efforts or aviation security;

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our quarterly operating results or those of other explosives detection companies;

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the public’s reaction to our press releases, announcements and our filings with the Securities and Exchange Commission;

The market price of our common stock has fluctuated dramatically since the terrorist attacks of September 11, 2001. For example, immediately prior to September 11, 2001, our common stock closed at $3.11 per share. Since that date, our closing stock price has risen to a high of $48.29 per share on March 12, 2002. On September 26, 2003, the last trading day of our third quarter of 2003, our common stock closed at $24.40 per share. In addition, the stock market has periodically experienced significant price and volume fluctuations that have particularly affected the market prices of common stock of technology companies. These changes have often been unrelated to the operating performance of particular companies. These broad market fluctuations may also negatively affect the market price of our common stock and the notes.

The notes are unsecured, and future indebtedness could effectively rank senior to the notes.

The notes are unsecured and rank equal in right of payment with our existing and future unsubordinated and unsecured indebtedness. The notes are effectively subordinated in right of payment to any secured debt to the extent of the value of the assets that secure the indebtedness. The notes are also “structurally subordinated” in right of payment to all indebtedness and other liabilities, including trade payables and lease obligations, of our existing and future subsidiaries. In the event of our bankruptcy, liquidation or reorganization or upon acceleration of the notes, payment on the notes could be less, ratably, than on any secured indebtedness. We may not have sufficient assets remaining to pay amounts due on any or all of the notes then outstanding.

On June 29, 2003, we had $40.1 million of indebtedness (all of which was secured and is effectively senior to the notes). Our subsidiaries had $26.7 million of outstanding liabilities (excluding intercompany liabilities), which are effectively senior to the notes.

The indenture governing the notes does not prohibit or limit us or our subsidiaries from incurring additional indebtedness and other liabilities, or from pledging assets to secure such indebtedness and liabilities. The incurrence of additional indebtedness and in particular the granting of a security interest to secure the indebtedness, could adversely affect our ability to pay our obligations on the notes. We anticipate that from time to time we will incur additional indebtedness in the future.

Upon the occurrence of a change in control, we are required under the indenture governing the notes to purchase all outstanding notes tendered to us by the holders of such notes. In addition, you may require us to purchase your notes on October 1, 2008, October 1, 2013 or October 1, 2018. We cannot assure you that we will have sufficient financial resources, or will be able to arrange financing, to pay the purchase price for all notes tendered by the holders and future credit agreements may restrict our ability to make such payments. A change in control would require us to prepay outstanding loans under our Loan and Security Agreement with Silicon Valley Bank, dated November 8, 2000, as amended, which could limit our ability to purchase any notes. Any future credit agreements or other agreements relating to other indebtedness to which we become a party may contain similar provisions. Any failure to purchase the notes when required will result in an event of default under the indenture. For more information, see “Description of Notes-Purchase at Option of the Holder” and “Description of Notes-Purchase at Option of Holders Upon a Change in Control.”

The indenture governing the notes does not contain any financial or operating controls or restrictions on the payment of dividends, the incurrence of indebtedness or the issuance or repurchase of securities by us or any of our subsidiaries. For example, the indenture does not restrict our ability in the future to enter into additional credit facilities that may be secured and accordingly effectively senior to the notes. The indenture contains no covenants or other provisions to afford protection to holders of the notes in the event of a change in control involving us, except to the extent described under “Description of Notes.”

There is no public market for the notes, and a market for the notes may not develop.

There is no established public trading market for the notes. We do not intend to apply for listing of the notes on any securities exchange or other stock market. At the time of the initial issuance of the notes in September 2003, the initial purchaser advised us that it intended to make a market in the notes. However, the initial purchaser is not obligated to make a market and may discontinue this market-making activity at any time without notice. In addition, market-making activity by the initial purchaser will be subject to the limits imposed by the Securities Act and the Exchange Act. As a result, a market for the notes may not be maintained. If an active market for the notes fails to be sustained, the trading price of the notes could decline significantly.

The conditional feature of the notes could result in you receiving less than the value of the shares into which the notes are convertible.

The notes are convertible into shares only if specified conditions are met. If the specified conditions for conversion are not met, you will not be able to convert your notes, and you may not be able to receive the value of the shares into which the notes would otherwise be convertible.

The notes may not be rated or may receive a lower rating than anticipated, which may harm the market price of the notes and our common stock.

The notes have not been rated and we believe it is unlikely that the notes will be rated. However, if one or more rating agencies rates the notes and assigns the notes a rating lower than the rating expected by investors, or reduces their rating in the future, the market price of the notes and our common stock would be harmed.

Delaware law and our charter documents may impede or discourage a takeover, which could cause the market price of our shares to decline.

We are a Delaware corporation and the anti-takeover provisions of Delaware law impose various impediments on the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders. Our certificate of incorporation provides for 5,000,000 shares of preferred stock which our board of directors may issue with terms determined by them without stockholder approval, a classified board of directors serving staggered three-year terms, restrictions on who may call a special meeting of stockholders and a prohibition on stockholder action by written consent. These provisions of Delaware law and in our charter documents could impede a merger, takeover or other business combination involving us or discourage a potential acquirer from making a tender

offer for our common stock, which, under certain circumstances, could reduce the market value of our common stock and the notes.

We have not declared or paid any cash dividends on our capital stock previously, and we have agreed not to pay cash dividends under our current bank line of credit. Historically, we have retained earnings, if any, to support the development of our business. Payment of future dividends, if any, will be at the discretion of our board of directors after taking into account various factors, including our financial condition, operating results and current and anticipated cash needs.

We may become subject to costly and time-consuming class action litigation following significant changes in our stock price.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted against such a company. Were such litigation to be commenced against us, we would incur substantial costs and there would be diversion of our management’s attention and resources, which could materially harm our business, results of operations and financial condition.

This prospectus includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, or the Exchange Act. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and we are including this statement for purposes of complying with these safe harbor provisions. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions, including those in the section entitled “Risk Factors” and in our filings with the SEC, including our most recent annual report on Form 10-K and quarterly reports on Form 10-Q, which are incorporated by reference in this prospectus. Actual results may vary materially from these forward-looking statements as a result of these and other risks.

Words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “estimate” and variations of these words and similar expressions are intended to identify forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless we are required to do so by law. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this prospectus might not occur.

Market data used or incorporated by reference in this prospectus, including information relating to our relative position in the explosives detection systems industry, is based on independent industry sources, other publicly available information and the good faith estimates of our management. Although we believe that such sources are reliable, the accuracy and completeness of such information is not guaranteed and has not been independently verified.

The ratio of earnings to fixed charges for each of the periods indicated is as follows:

(1)

For the purposes of computing the ratio of earnings to fixed charges, earnings consist of income (loss) before income taxes plus fixed charges. Fixed charges consist of interest expense and discount or premium related to indebtedness, whether expensed or capitalized, and that portion of rental expense we estimate to be representative of interest. Earnings, as defined, were not sufficient to cover fixed charges by $1.8 million for the fiscal year ended December 31, 2000.

We will not receive any of the proceeds from the selling securityholders’ sale of the notes or shares of our common stock issuable upon conversion of the notes.

The following table presents the name of each selling securityholder and the principal amount of notes and number of shares of common stock that each selling securityholder may offer under this prospectus. In September 2003, the notes were originally issued by us and sold by the initial purchaser in transactions exempt from the registration requirements of the Securities Act. To our knowledge, none of the selling securityholders has, or within the past three years has had, any position, office or other material relationship with us or any of our affiliates.

Beneficial ownership is determined under the rules of the SEC, and generally includes voting or investment power with respect to securities. Unless indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all securities beneficially owned. The principal amounts of notes provided in the table below are based on information provided to us by each of the selling securityholders as of October 31, 2003. The number of shares of common stock that may be sold is calculated based on the current conversion rate of 31.25 shares of common stock per $1,000 principal amount in notes. With the exception of the holders noted in the table below, if each selling securityholder named below converted all of its notes, each would own less than 1% of our outstanding common stock. The percentage of common stock outstanding is calculated based on 16,918,645 shares of our common stock outstanding as of October 31, 2003.

Since the selling stockholders provided this information, each of them may have sold, transferred or otherwise disposed of all or a portion of their notes in a transaction exempt from the registration requirements of the Securities Act. The information in this table assumes that holders of the securities do not beneficially own any shares of our common stock other than common stock into which the notes are convertible. Information concerning additional selling securityholders not identified in this prospectus shall be set forth in post-effective amendments. Transferees, successors and donees of selling stockholders identified in this prospectus may be named in supplements to this prospectus. In addition, the conversion rate, and therefore the number of shares of our common stock issuable upon conversion of the notes, is subject to adjustment. Accordingly, the number of shares of common stock issuable upon conversion of the notes may increase or decrease.


	Principal amount
	of notes
	beneficially					Shares of			Percentage of
	owned that		Percentage of notes			common stock			common stock
Name of beneficial owner	may be sold		outstanding			that may be sold(1)			outstanding

AIG DKR Soundshore Strategic Holding Fund Ltd. (2)		504,000		*			15,750			*
Asymmetrical Convertible Fund Ltd.		2,000,000		1.6	%		62,500			*
BNP Paribas Equity Strategies, SNC (3)		6,669,000		5.4	%		209,343	(4)		1.3	%
CNH CA Master Account, L.P. (5)		500,000		*			15,625			*
CALAMOS® Market Neutral Fund — CALAMOS® Investment Trust (6)		1,000,000		*			31,250			*
Canyon Capital Arbitrage Master Fund, Ltd. (7)		2,400,000		1.9	%		75,000			*
Canyon Value Realization Fund, L.P. (7)		1,200,000		1.0	%		37,500			*
Canyon Value Realization Fund (CAYMAN) LTD. (7)		3,280,000		2.6	%		102,500			*
Canyon Value Realization Fund Mac 18, LTD. (RMF) (7)		480,000		*			15,000			*
Context Convertible Arbitrage Fund, LP (8)		700,000		1.4	%		21,875			*
Context Convertible Arbitrage Offshore Ltd (9)		1,750,000		*			54,687			*
CooperNeff Convertible Strategies (Cayman) Master Fund, L.P.		6,731,000		5.4	%		210,343			1.2	%
Davis Appreciation and Income Fund (DAIF) (10)		2,300,000		1.8	%		71,875	(11)		*
Deutsche Bank Securities Inc. (12)		750,000		*			23,437			*
ING Convertible Fund		2,500,000		2.0	%		78,125			*
ING VP Convertible Portfolio		45,000		*			1,406			*
KBC Financial Products USA Inc. (13)		685,000		*			21,406			*
Lyxor/Convertible Arbitrage Fund, Limited		447,000		*			13,968			*
Mellon HBV Master Multi-Strategy Fund LP (14)		250,000		*			7,812			*
Nomura Securities International, Inc. (15)		6,000,000		4.8	%		187,500	(16)		1.1	%
Pioneer High Yield Fund (17)		8,500,000		6.8	%		265,625			1.6	%
UBS AG London (18)		5,000,000		4.0	%		156,250			*
Satellite Convertible Arbitrage Master Fund, LLC (19)		5,200,000		4.2	%		162,500			1.0	%
Singlehedge U.S. Convertible Arbitrage Fund		1,116,000		*			34,875			*


	Principal amount
	of notes
	beneficially					Shares of		Percentage of
	owned that		Percentage of notes			common stock		common stock
Name of beneficial owner	may be sold		Outstanding			that may be sold(1)		outstanding

Topanga XI (20)		640,000		*			20,000		*
Tribeca Investments LTD		10,000,000		8.0	%		312,500		1.8	%
Wachovia Securities International LTD		7,500,000		6.0	%		234,375		1.4	%
Other selling securityholders (21)		46,823,000		37.5	%		1,463,218		8.6	%
Donees of selling securityholders (22)									*
Total Securities that may be sold:		125,000,000		100.0	%		3,906,250		23.1	%

(1)

The numbers in this column include the notes held by each beneficial owner, as converted to shares of our common stock at the current conversion rate of 31.25 shares of common stock per $1,000 principal amount of notes. However, this conversion rate is subject to adjustment as described under “Description of Notes-Conversion of Notes.” As a result, the amount of common stock issuable upon conversion of the notes in the future may increase or decrease.

(2)

Howard Fischer is president of Basso Securities, which is portfolio manager of this selling securityholder. Mr. Fischer has shared dispositive and shared voting power over these securities.

(3)

This selling securityholder has represented that it is an affiliate of a registered broker-dealer. See the “Plan of Distribution” for required disclosure on this selling securityholder.

(4)

In addition to the shares of common stock that the notes are convertible into, this selling securityholder beneficially owns 6,863 shares of our common stock, which are not being registered under this prospectus.

(5)

Robert Krail, Mark Mitchell and Todd Pulvino are investment principals of CNH Partners, LLC (“CNH”), which serves as investment advisor to this selling securityholder. Messrs. Krail, Mitchell and Pulvino act on behalf of CNH and CNH has sole voting and dispositive power over these securities.

(6)

Nick Calamos is the Chief Investment Advisor and head of investments for Calamos Asset Management. Mr. Calamos has sole voting and sole investment power over these securities.

(7)

Joshua S. Friedman, Mitchell R. Julis, R. Christian B. Evensen and K. Robert Turner are the managing partners of these selling securityholders. Messers. Friedman, Julis, Evensen and Turner share dispositive and voting power over these securities. In addition, these selling securityholders have represented that each is an affiliate of a registered broker-dealer. See the “Plan of Distribution” for required disclosure on these selling securityholders.

(8)

This selling securityholder has identified itself as a registered broker-dealer and, accordingly, may be deemed an underwriter of these securities. See “Plan of Distribution” for required disclosure on this selling securityholder. Michael Rosen and William Fertig are managing members of Context Capital Management, LLC (“Context LLC”) and Context LLC is the General Partner for this selling securityholder. Convertible Arbitrage Fund, LP. Mr. Rosen and Mr. Fertig share dispositive power and share voting power over these securities.

(9)

Michael Rosen and William Fertig share dispositive power and share voting power over these securities.

(10)

Anthony Frazia has sole voting and dispositive power over these securities.

(11)

In addition to the shares of common stock that the notes are convertible into, this selling securityholder beneficially owns 76,600 shares of our common stock, which are not being registered under this prospectus.

(12)

(13)

Luke Edwards is managing director of this selling securityholder. Mr. Edwards has sole dispositive and sole voting power over these securities. In addition, this selling securityholder has identified itself as a registered broker-dealer and, accordingly, may be deemed an underwriter of these securities. See “Plan of Distribution” for required disclosure on this selling securityholder.

(14)

This selling securityholders has identified itself as an affiliate of a registered broker-dealer. See the “Plan of Distribution” for required disclosure on this selling securityholder.

(15)

Robert Citrino is the managing director of this selling securityholder and has sole dispositive and sole voting power over these securities. In addition, this selling securityholder has identified itself as a registered broker-dealer and, accordingly, may be deemed an underwriter of these securities. See “Plan of Distribution” for required disclosure on this selling securityholder.

(16)

In addition to the shares of common stock that the notes are convertible into, this selling securityholder beneficially owns 32 shares of our common stock, which are not being registered under this prospectus.

(17)

This selling securityholder has identified itself as an affiliate of a broker-dealer. See the “Plan of Distribution” for required disclosure on this selling securityholder.

(18)

This selling securityholder has identified itself as an affiliate of a broker-dealer. See the “Plan of Distribution” for required disclosure on this selling securityholder.

(19)

Marty Brandt and Thomas Healy are directors of Satellite Asset Management. Messrs. Brandt and Healy share dispositive and share voting power over these securities.

(20)

This selling securityholder has identified itself as an affiliate of a registered broker-dealer. See the “Plan of Distribution” for required disclosure on this selling securityholder.

(21)

Information regarding other selling securityholders will be added to this prospectus by pre-effective amendment.

(22)

Includes securities received from selling securityholders after the effective date of the registration statement. Assumes that any other holders of notes or any future transferee from any holder does not beneficially own any common stock other than 500 or fewer shares common stock into which the notes are convertible at the conversion rate of 31.25 shares of common stock per $1,000 principal amount of notes, as adjusted from time to time.

We are registering the notes, and shares of our common stock issuable upon conversion of the notes, on behalf of the selling securityholders. The selling securityholders acquired their notes from the initial purchaser who purchased the notes from us in September 2003. This prospectus covers the resale of the selling securityholders’ notes and the shares of common stock that we issue if and when their notes are converted. The selling securityholders are bound by a registration rights agreement with us. To our knowledge, the selling securityholders have not entered into any agreement, arrangement or understanding with any particular broker or market maker with respect to the sale of the securities covered by this prospectus.

The selling securityholders may offer and sell notes or shares from time to time. In addition, a selling securityholder’s donees, pledgees, transferees and other successors in interest may sell notes or shares received from a selling securityholder after the date of this prospectus as a gift, pledge, partnership distribution or other transfer. The selling securityholders will act independently of us in making decisions with respect to the timing, manner and size of each sale. The securities covered by this prospectus may be sold from time to time directly by the selling securityholders or through underwriters, broker-dealers or agents. If the securities are sold through underwriters or broker-dealers, the selling securityholder will be responsible for underwriting discounts or commissions or agent’s commissions.

The securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of sale, at varying prices determined at the time of sale or at negotiated prices. Sales may be in transactions, which may involve block transactions, as follows:

•

on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

•

in transactions other than on an exchange or quotation service or in the over-the-counter market; or

These transactions may include block transactions or crosses. Crosses are transactions in which the same broker acts as an agent on both sides of the trade.

In connection with sales of the securities or otherwise, the selling securityholders may enter into hedging transactions with broker-dealers. In connection with these transactions, broker-dealers may engage in short sales of the securities covered by this prospectus and deliver such securities to close out these short positions, or loan or pledge registered securities to broker-dealers that in turn may sell them. The selling securityholders may also engage in similar transactions. In addition, securityholders may resell all or a portion of the securities in open market transactions in reliance upon Rule 144 or Rule 144A under the Securities Act rather than under this prospectus. In addition, we cannot assure you that any such selling securityholder will not transfer, devise or gift the notes and the underlying common stock by other means not described in this prospectus.

Transactions under this prospectus may or may not involve brokers or dealers. The selling securityholders may sell securities directly to purchasers or to or through broker-dealers, who may act as agents or principals. Broker-dealers engaged by the selling securityholders may arrange for other broker-dealers to participate in selling securities. Broker-dealers or agents may receive compensation in the form of commissions, discounts or concessions from the selling securityholders in amounts to be negotiated in connection with the sale. Broker-dealers or agents may also receive compensation in the form of discounts, concessions or commissions from the purchasers of securities for whom the broker-dealers may act as agents or to whom they sell as principal, or both. This compensation as to a particular broker-dealer might exceed customary commissions.

Each selling securityholder that is an affiliate of a registered broker-dealer has represented to us that it purchased the securities in the ordinary course of business and that at the time of such purchase, the selling securityholder had no agreements or understandings, directly or indirectly, with any person to distribute such securities.

The selling securityholders and any participating broker-dealers may be deemed to be “underwriters” within the meaning of the Securities Act in connection with sales of securities covered by this prospectus. As a result, any commission, discount or concession received by a broker-dealer and any profit on the resale of securities sold by them while acting as principals might be deemed to be underwriting discounts or commissions under the Securities Act. Because selling securityholders may be deemed to be underwriters within the meaning of the Securities Act, the selling securityholders will be subject to the prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities including, but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Exchange Act.

The selling securityholders and any other person participating in a distribution of the notes or our common stock will be subject to the Exchange Act. The rules under the Exchange Act include Regulation M, which limits the timing of purchases and sales of the securities by participants in a distribution. In addition, Regulation M restricts the ability of any person engaged in a distribution to engage in market-making activities for the notes and common stock being distributed for a period of up to five business days before the distribution starts. This may affect the marketability of the notes and the shares and the ability of any person or entity to engage in market-making activities in the notes and shares. Each selling securityholder agreed that it will comply with Regulation M in connection with the securities cover by this prospectus.

We will use our reasonable efforts to keep this shelf registration statement effective until the earliest of:

•

the date when all of the registrable securities have been transferred pursuant to this shelf registration statement;

•

the date when the holders of the notes and common stock issuable upon conversion of the notes are able to sell such securities immediately without regard to the volume limitation provisions of Rule 144 under the Securities Act, or any successor provision, subject to permitted exceptions; and

•

the date when all of the notes and the shares of our common stock issuable upon conversion of the notes have ceased to be outstanding (whether as a result of repurchase and cancellation, conversion or otherwise).

We are permitted to suspend the use of this prospectus for up to a total of 45 days in any 90-day period or a total of 90 days in any twelve-month period under circumstances relating to pending corporate developments, public filings with the SEC and similar events.

We have agreed to pay the expenses of registering the notes and the shares under the Securities Act, including registration and filing fees, printing expenses, administrative expenses and certain legal and accounting fees. The selling securityholders must pay all discounts, commissions or other amounts payable to underwriters, dealers or agents as well as fees and disbursements for legal counsel retained by any selling securityholder.

We and the selling securityholders have agreed to indemnify each other and other related parties against specified liabilities, including liabilities arising under the Securities Act. The selling securityholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of securities against liabilities, including liabilities arising under the Securities Act.

Our common stock is listed on the NASDAQ National Market under the symbol “INVN.” We do not intend to apply for the listing of the notes on any securities exchange or for quotation through the NASDAQ National Market. Accordingly, we cannot assure you that the notes will be liquid or that any trading for the notes will develop.

The notes were issued under an indenture between us and U.S. Bank National Association, as trustee. The terms of the notes include those provided in the indenture and those made part of the indenture by reference to the Trust Indenture Act of 1939, as amended.

The following description is a summary of the material provisions of the indenture and the registration rights agreement between us and the initial purchaser of the notes. It does not restate those agreements in their entirety. We urge you to read the indenture and the registration rights agreement because they, and not this description, define your rights as a holder of the notes. A copy of the indenture and registration rights agreement are listed as exhibits to the registration statement in connection with this prospectus.

Terms not defined in this description have the meanings given to them in the indenture. In this section, the words “we,” “us,” “our” or “InVision” means InVision Technologies, Inc., but do not include any current or future subsidiary of InVision Technologies, Inc.

•

rank on a parity in right of payment with all of our existing and future unsubordinated and unsecured debt; and

•

rank senior to all of our existing and future debt that expressly provides that it is subordinated to the notes.

The notes are also effectively subordinated in right of payment to our existing and future secured debt, to the extent of such security, and all existing and future debt and other liabilities of our subsidiaries.

The notes are convertible into our common stock as described under “ - -Conversion Rights.” and will mature on October 1, 2023. The notes were issued in denominations of $1,000 and multiples of $1,000.

We may redeem the notes at any time on or after October 1, 2008 as described under “-Optional Redemption” below. In the event of a change in control, you may require us to purchase the notes held by you as described under “-Purchase at Option of Holders Upon a Change in Control.” In addition, you may require us to purchase your notes on October 1, 2008, October 1, 2013 or October 1, 2018 in the manner described under “-Purchase at Option of the Holder.”

The notes bear interest at the rate of 3% per year from September 19, 2003. Interest is payable semi-annually in arrears on April 1 and October 1 of each year, commencing April 1, 2004, to holders of record at the close of business on the preceding September 15 and March 15, respectively. Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months. In the event of the maturity, conversion, redemption or purchase by us at the option of the holder upon a change of control, interest will cease to accrue on the note under the terms of and subject to the conditions of the indenture.

Principal is payable, and the notes may be presented for conversion, registration of transfer and exchange, without service charge, at our office or agency in New York City, which shall initially be the office or agency of the trustee in New York, New York.

The indenture does not contain any financial covenants or any restrictions on the payment of dividends, the repurchase of our securities or the incurrence by us or our subsidiaries of indebtedness. The indenture also does not contain any covenants or other provisions to afford protection to holders of the notes in the event of a highly leveraged transaction or a change in control of InVision, except to the extent described under “-Purchase at Option of Holders Upon a Change in Control.”

The notes and the common stock issuable upon conversion of the notes may not be sold or otherwise transferred except in compliance with the provisions set forth below under “Notice to Investors.”

The conversion rate is 31.25, which is equal to the number of shares per $1,000 principal amount of notes into which the notes are convertible, subject to adjustment as specified below. The initial conversion rate is equivalent to a conversion price of $32.00. The conversion price is equal to $1,000 principal amount of notes divided by the conversion rate. Unless we have previously redeemed or purchased the notes, you have the right to convert any portion of the principal amount of any note that is an integral multiple of $1,000 into shares of our common stock at any time on or prior to the close of business on the maturity date only under the following circumstances:

•

prior to October 1, 2021, on any date during any fiscal quarter (and only during such fiscal quarter) after the fiscal quarter ending September 28, 2003, if the closing sale price of our common stock was more than 110% of the then current conversion price for at least 20 trading days in the period of the 30 consecutive trading days ending on the last day of the previous fiscal quarter;

•

on or after October 1, 2021, at all times on or after any date on which the closing sale price of our common stock is more than 110% of the then current conversion price of the notes;

•

until the close of business on the business day prior to the redemption date, if we elect to redeem the notes on or after October 1, 2008;

•

if we distribute to all or substantially all holders of our common stock rights, options or warrants entitling them to purchase common stock at less than the closing sale price of our common stock on the day preceding the declaration for such distribution;

•

if we distribute to all or substantially all holders of our common stock cash, assets, debt securities or capital stock, which distribution has a per share value as determined by our board of directors exceeding 10% of the closing sale price of our common stock on the day preceding the declaration for such distribution;

•

upon the occurrence of specified corporate transactions, as described below; or

•

for the ten business day period after any five consecutive trading day period in which the average trading prices for the notes for such five trading day period was less than 98% of the average conversion value (as defined below) for the notes during that period; provided, that you may not convert your notes pursuant to this clause, if at the time of calculation, the closing sale price of shares of our common stock is greater than or equal to the then current conversion price of the notes and less than or equal to 110% of the then current conversion price of the notes.

In the case of the fourth and fifth bullet points above, we must notify holders of notes at least 20 days prior to the ex-dividend date for such distribution. Once we have given such notice, holders may surrender their notes for conversion at any time until the earlier of the close of business on the business day prior to the ex-dividend date or our announcement that such distribution will not take place. In the case of a distribution identified in the fourth and fifth bullets above, the ability of a holder of notes to convert would not be triggered if the holder may participate in the distribution without converting.

•

we are party to a consolidation, merger or binding share exchange pursuant to which all or substantially all of our common stock would be converted into cash, securities or other property;

•

an event occurs that would have been a change in control but for the existence of one of the change in control exceptions under “-Purchase at Option of Holders Upon a Change in Control,”

then you may surrender notes for conversion at any time from and after the date that is 15 days prior to the anticipated effective date of the transaction until 15 days after the actual date of such transaction. If we are a party to a consolidation, merger or binding share exchange pursuant to which all or substantially all of our common stock is

converted into cash, securities or other property, then at the effective time of the transaction, the right to convert a note into our common stock will be changed into a right to convert the notes into the kind and amount of cash, securities or other property that the holder would have received if the holder had converted its notes immediately prior to the transaction. If the transaction also constitutes a “change in control,” as defined below, the holder can require us to purchase all or a portion of its notes as described under “-Purchase at Option of Holders Upon a Change in Control.” If you have exercised your right to require us to purchase your notes as described under "-Purchase at Option of Holders Upon a Change in Control,” you may convert your notes into our common stock only if you withdraw your change in control purchase notice and convert your notes prior to the close of business on the business day immediately preceding the applicable purchase date.

We define conversion value in the indenture to be equal to the product of the closing sale price of our shares of common stock on a given day multiplied by the then current conversion rate, which is the number of shares of common stock into which each note is convertible.

You may convert all or part of any note by delivering the note at the Corporate Trust Office of the trustee in the Borough of Manhattan, The City of New York, accompanied by a duly signed and completed conversion notice, a copy of which may be obtained by the trustee. The conversion date will be the date on which the note and the duly signed and completed conversion notice are so delivered.

As promptly as practicable on or after the conversion date, we will issue and deliver to the trustee a certificate or certificates for the number of full shares of our common stock issuable upon conversion, together with payment in lieu of any fraction of a share. The certificate will then be sent by the trustee to the conversion agent for delivery to the holder. The shares of our common stock issuable upon conversion of the notes will be fully paid and nonassessable and will rank equally with the other shares of our common stock.

No payment or adjustment for any dividends in respect of our common stock, will be made upon conversion. Holders of our common stock issued upon conversion will not be entitled to receive any dividends payable to holders of our common stock as of any record time or date before the close of business on the conversion date. We will not issue fractional shares upon conversion. Instead, we will pay cash based on the market price of our common stock at the close of business on the conversion date.

You will be required to pay any transfer, stamp or similar taxes and duties relating to any transfer involved in the issue or delivery of our common stock on conversion in a name other than yours. Certificates representing shares of our common stock will not be issued or delivered unless all such taxes and duties, if any, payable by you have been paid.

Except as set forth below, we will not make any payment or other adjustment for accrued interest on the notes or dividends on any common stock issued upon conversion of the notes. If you submit your notes for conversion between a record date and the opening of business on the next interest payment date (except (1) for notes or portions of notes called for redemption or subject to purchase following a change in control on a redemption date or on a purchase date, as the case may be, with such date occurring during the period from the close of business on a record date and ending on the opening of business on the fifth business day after the interest payment date or (2) if you submit your notes for conversion between the record date for the final interest payment and the opening of business on the final interest payment date), you must pay funds equal to the interest payable on the principal amount being converted unless a default exists at the time of conversion. As a result of the foregoing provisions, if one of the exceptions described in the preceding sentence does not apply and you surrender your notes for conversion on a date that is not an interest payment date, you will not receive any interest for the period from the interest payment date next preceding the date of conversion or for any later period.

The initial conversion rate set forth on the cover page of this prospectus will be adjusted for certain future events, including:

the issuance of our common stock as a dividend or distribution on our common stock;

the issuance to all holders of our common stock of certain rights or warrants to purchase our common stock or securities convertible into our common stock for a period of not more than 60 days at less than, or having a conversion price per share less than, the current market price of our common stock;

the dividend or other distribution to all holders of our common stock of cash, property or securities (including shares of our capital stock), other than our common stock, but excluding those rights and warrants referred to in clause (3) above; and

the purchase of our common stock pursuant to a tender offer or exchange offer made by us or any of our subsidiaries.

We will not make any adjustments if holders of notes may participate in the transactions described above without converting their notes.

In the event that we pay a dividend or make a distribution on shares of our common stock consisting of capital stock of, or similar equity interests in, as described in clause (4) above, a subsidiary or other business unit of ours, the conversion rate will be adjusted based on the market value of the securities so distributed relative to the market value of our common stock, in each case based on the average sale prices of those securities for the 10 trading days commencing on and including the fifth trading day after the date on which “ex-dividend trading” commences for such dividend or distribution on the NASDAQ National Market or such other national or regional exchange or market on which the securities are then listed or quoted.

No adjustment in the conversion rate is required unless such adjustment would require a change of at least 1% in the conversion rate then in effect at such time. Any adjustment that would otherwise be required to be made shall be carried forward and taken into account in any subsequent adjustment. Except as stated above, the conversion rate will not be adjusted for the issuance of common stock or any securities convertible into or exchangeable for our common stock or carrying the right to purchase any of the foregoing.

•

any reclassification or change of our common stock (other than changes resulting from changes in par value or as a result of a subdivision or combination);

•

a sale or conveyance to another corporation of all or substantially all of our property and assets; or

in each case, as a result of which holders of our common stock are entitled to receive stock, other securities, other property or assets (including cash or any combination thereof) with respect to or in exchange for our common stock, the holders of the notes then outstanding will be entitled thereafter to convert such notes into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) which they would have owned or been entitled to receive upon such reclassification or change of our common stock, consolidation, merger, combination, sale, conveyance or statutory share exchange had such notes been converted into our common stock immediately prior to such reclassification, change, consolidation, merger, combination, sale, conveyance or statutory share exchange. We may not become a party to any such transaction unless its terms are consistent with the foregoing.

In addition, the indenture provides that upon conversion of the notes, the holders of such notes will receive, in addition to the shares of common stock issuable upon such conversion, the rights related to such common stock pursuant to any future stockholder rights plan, whether or not such rights have separated from the common stock at the time of such conversion. However, there shall not be any adjustment to the conversion rate as a result of:

•

the exercise or redemption of such rights in accordance with any rights agreement; or

If a taxable distribution to holders of our common stock or other event occurs which results in any adjustment of the conversion rate, the holders of notes may, in certain circumstances, be deemed to have received a distribution

subject to U.S. income tax as a dividend. In certain other circumstances, the absence of such an adjustment may result in a taxable dividend to the holders of common stock. See “U.S. Federal Tax Considerations.”

We may from time to time, to the extent permitted by law, increase the conversion rate of the notes by any amount for any period of at least 20 days. In that case, we will give at least 15 days’ notice of such increase. We may, but are under no obligation to, make such increases in the conversion rate, in addition to those set forth above, as our board of directors deems advisable to avoid or diminish any income tax to holders of our common stock resulting from any dividend or distribution of stock or rights to acquire stock or from any event treated as such for income tax purposes. See “U.S. Federal Tax Considerations.”

Prior to October 1, 2008, the notes are not redeemable at our option. Beginning on October 1, 2008, we may redeem the notes for cash at any time as a whole, or from time to time in part, at a redemption price equal to 100% of the principal amount of notes being redeemed, plus the accrued and unpaid interest to, but excluding, the redemption date. If the redemption date is an interest payment date, interest is paid to the record holder on the relevant record date. We will give at least 20 days’ but not more than 60 days’ notice of redemption by mail to holders of notes. Notes or portions of notes called for redemption will be convertible by the holder until the close of business on the business day prior to the redemption date.

If we do not redeem all of the notes, the trustee will select the notes to be redeemed in principal amounts of $1,000 or integral multiples of $1,000 by lot or on a pro rata basis. If any notes are to be redeemed in part only, we will issue a new note or notes in principal amount equal to the unredeemed principal portion thereof. If a portion of your notes is selected for partial redemption and you convert a portion of your notes, the converted portion will be deemed to be taken from the portion selected for redemption.

You have the right to require us to purchase for cash your notes on October 1, 2008, October 1, 2013 and October 1, 2018. We are required to purchase any outstanding note for which you deliver a written purchase notice to the paying agent. This notice must be delivered during the period beginning at any time from the opening of business on the date that is 20 business days prior to the purchase date until the close of business on the purchase date. If a purchase notice is given and withdrawn during that period, we are not obligated to purchase the notes listed in the notice. Our purchase obligation will be subject to certain additional conditions.

The purchase price payable for a note will be equal to 100% of its principal amount, plus accrued and unpaid interest to, but excluding, the purchase date.

Your right to require us to purchase notes is exercisable by delivering a written purchase notice to the paying agent within 20 business days of the purchase date until the close of business on the purchase date. The paying agent initially will be the trustee.

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if certificated notes have been issued, the note certificate numbers (or, if your notes are not certificated, your purchase notice must comply with appropriate DTC procedures);

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the portion of the principal amount of notes to be purchased, which must be in $1,000 multiples; and

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that the notes are to be purchased by us pursuant to the applicable provisions of the notes and the indenture.

You may withdraw any written purchase notice by delivering a written notice of withdrawal to the paying agent prior to the close of business on the purchase date. The withdrawal notice must state:

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if certificated notes have been issued, the certificate numbers of the withdrawn notes (or, if your notes are not certificated, your withdrawal notice must comply with appropriate DTC procedures); and

We must give notice of an upcoming purchase date to all note holders not less than 20 business days prior to the purchase date at their addresses shown in the register of the registrar. We will also give notice to beneficial owners as required by applicable law. This notice will state, among other things, the procedures that holders must follow to require us to purchase their notes.

Payment of the purchase price for a note for which a purchase notice has been delivered and not withdrawn is conditioned upon book-entry transfer or delivery of the note, together with necessary endorsements, to the paying agent at its office in the Borough of Manhattan, The City of New York, or any other office of the paying agent, at any time after delivery of the purchase notice. Payment of the purchase price for the note will be made promptly following the later of the purchase date and the time of book-entry transfer or delivery of the note. If the paying agent holds money or securities sufficient to pay the purchase price of the note on the business day following the purchase date, then, on and after the date:

This is the case whether or not book-entry transfer of the note has been made or the note has been delivered to the paying agent, and all other rights of the note holder will terminate, other than the right to receive the purchase price upon delivery of the note.

Our ability to purchase notes with cash may be limited by the terms of our then-existing borrowing agreements. Even though we become obligated to purchase any outstanding note on a purchase date, we may not have sufficient funds to pay the purchase price on that purchase date. If we fail to purchase the notes when required, this failure will constitute an event of default under the indenture. See “Risk Factors-We may not have the ability to purchase the notes.”

We will comply with any applicable provisions of Rule 13e-4 and any other tender offer rules under the Exchange Act.

If a change in control occurs as set forth below, each holder of notes will have the right to require us to purchase all of such holder’s notes, or any portion of those notes that is equal to $1,000 or a whole multiple of $1,000, on the date that is 45 days after the date we give notice of the change in control at a purchase price equal to 100% of the principal amount of the notes to be purchased, together with interest accrued and unpaid to, but excluding, the purchase date; provided that, if such purchase date is an interest payment date, then the interest payable on such date shall be paid to the holder of record of the notes on the relevant record date.

Within 30 days after the occurrence of a change in control, we are required to give notice to all holders of record of notes, as provided in the indenture, of the occurrence of the change in control and of their resulting purchase right. We must also deliver a copy of our notice to the trustee. In order to exercise the purchase right, a holder of notes must deliver, on or before the close of business on the business day before the change of control purchase date referenced in the preceding paragraph, written notice to the trustee of the holder’s exercise of its purchase right, together with the notes with respect to which the right is being exercised.

Under the indenture, a “change in control” of InVision, or any successor entity who is subject to the terms of the indenture, will be deemed to have occurred at such time after the original issuance of the notes when the following has occurred:

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the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger (except a merger involving InVision described in the following paragraph) or other acquisition transaction or series of transactions, of shares of our capital stock entitling that person to exercise 50% or more of the total voting power

of all shares of our capital stock entitled to vote generally in elections of directors, other than any acquisition by us, any of our subsidiaries or any of our employee benefit plans;

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our consolidation or merger with or into any other person, any merger of another person into us, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of our properties and assets to another person, other than:

any transaction (A) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of our capital stock and (B) pursuant to which holders of our capital stock immediately prior to the transaction are entitled to exercise, directly or indirectly, 50% or more of the total voting power of all shares of our capital stock entitled to vote generally in the election of directors of the continuing or surviving person immediately after the transaction;

any merger solely for the purpose of changing our jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of common stock solely into shares of common stock of the surviving entity; or

in the case of a merger or consolidation, all of the consideration (excluding cash payments for fractional shares and cash payments made pursuant to dissenters’ appraisal rights) in a merger or consolidation otherwise constituting a change in control consists of shares of common stock traded on a national securities exchange or quoted on the NASDAQ National Market, or will be so traded or quoted immediately following such merger or consolidation, and as a result of such merger or consolidation the notes become convertible solely into such common stock;

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during any consecutive two-year period, individuals who at the beginning of that two-year period constituted our board of directors (together with any new directors whose election to our board of directors, or whose nomination for election by our stockholders, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease to constitute a majority of our board of directors then in office; or

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our stockholders pass a resolution approving a plan of liquidation or dissolution.

Beneficial ownership shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Exchange Act. The term “person” includes any syndicate or group that would be deemed to be a “person” under Section 13(d)(3) of the Exchange Act.

Rule 13e-4 under the Exchange Act requires the dissemination of information to security holders if an issuer tender offer occurs and may apply if the purchase option becomes available to holders of the notes. We will comply with this rule to the extent applicable at that time.

We may, to the extent permitted by applicable law, at any time purchase the notes in the open market or by tender at any price or by private agreement. Any note so purchased by us may, to the extent permitted by applicable law, be reissued or resold or may be surrendered to the trustee for cancellation. Any notes surrendered to the trustee may not be reissued or resold and will be canceled promptly.

Our ability to purchase notes upon the occurrence of a change in control is subject to important limitations. The occurrence of a change in control would be a mandatory prepayment event under our existing indebtedness and could cause a mandatory prepayment or an event of default under, or be prohibited or limited by, our future indebtedness. We cannot assure you that we would have the financial resources, or would be able to arrange financing, to pay the purchase price for all the notes that might be delivered by holders of notes seeking to exercise the purchase right. Any failure by us to purchase the notes when required following a change in control would result in an event of default under the indenture. Any such default may, in turn, cause a default under existing or future indebtedness.

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rank on a parity in right of payment with all of our existing and future unsubordinated and unsecured debt; and

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rank senior to all of our existing and future debt that expressly provides that it is subordinated to the notes.

our failure to pay when due the principal of, or premium, if any, on any of the notes at maturity, upon redemption, purchase or otherwise;

our failure to pay an installment of interest, including liquidated damages, if any, on any of the notes that continues for 30 days after the date when due;

our failure to perform or observe any other term, covenant or agreement contained in the notes or the indenture for a period of 30 days after written notice of such failure, requiring us to remedy the same, shall have been given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the notes then outstanding;

our failure to timely provide notice of a change in control for a period of 5 days after written notice of such failure, requiring us to remedy the same, shall have been given to us by the trustee or to us and the trustee by the holders of at least 25% in aggregate principal amount of the notes then outstanding;

our failure to make any payment by the end of the applicable grace period, if any, after the maturity of any indebtedness for borrowed money in an amount in excess of $10.0 million, or there is an acceleration of indebtedness for borrowed money in an amount in excess of $10.0 million because of a default with respect to such indebtedness without such indebtedness having been discharged or such acceleration having been cured, waived, recorded or annulled, in either case, for a period of 30 days after written notice to us by the trustee or to us and the trustee by holders of at least 25% in aggregate principal amounts of the notes then outstanding;

certain events of our bankruptcy, insolvency or reorganization or that of any significant subsidiaries; and

our filing of, or any of our significant subsidiaries’ filing of, a voluntary petition seeking liquidation, reorganization arrangement, readjustment of debts or for any other relief under the federal bankruptcy code.

The indenture will provide that the trustee shall, within 90 days of the occurrence of an event of default, give to the registered holders of the notes notice of all uncured defaults known to it, but the trustee shall be protected in withholding such notice if it, in good faith, determines that the withholding of such notice is in the best interest of such registered holders, except in the case of a default in the payment of the principal of, or premium, if any, or interest on, any of the notes when due or in the payment of any purchase obligation.

If an event of default specified in clause (6) or clause (7) above occurs and is continuing, then automatically the principal of all the notes and the interest thereon shall become immediately due and payable. If an event of default shall occur and be continuing, other than with respect to clause (6) or clause (7) above, the default not having been cured or waived as provided under "-Modifications and Waiver,” the trustee or the holders of at least 25% in aggregate principal amount of the notes then outstanding may declare the notes due and payable at their principal amount together with accrued interest, and thereupon the trustee may, at its discretion, proceed to protect and enforce the rights of the holders of notes by appropriate judicial proceedings. Such declaration may be rescinded or annulled with the written consent of the holders of a majority in aggregate principal amount of the notes then outstanding upon the conditions provided in the indenture.

The indenture contains a provision entitling the trustee, subject to the duty of the trustee during default to act with the required standard of care, to receive from the holders of notes reasonable security or indemnity satisfactory to the trustee against any loss, liability or expense before proceeding to exercise any right or power under the indenture at the request of such holders. The indenture provides that the holders of a majority in aggregate principal amount of the notes then outstanding through their written consent may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred upon the trustee.

We will be required to furnish annually to the trustee a statement as to the fulfillment of our obligations under the indenture.

We may, without the consent of the holders of notes, consolidate with, merge into or transfer all or substantially all of our assets to any corporation, limited liability company, partnership or trust organized under the laws of the United States or any of its political subdivisions provided that:

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we are the resulting or surviving corporation or the successor, transferee or lessee, if other than us, (1) is a corporation organized and existing under the laws of the United States or any State of the United States and (2) assumes all our obligations under the indenture and the notes;

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at the time of such transaction, no event of default, and no event which, after notice or lapse of time, would become an event of default, shall have happened and be continuing; and

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an officers’ certificate and an opinion of counsel, each stating that the consolidation, merger or transfer complies with the provisions of the indenture, have been delivered to the trustee.

Modifications and amendments to the indenture or to the terms and conditions of the notes may be made, and noncompliance by us may be waived, with the written consent of the holders of at least a majority in aggregate principal amount of the notes at the time outstanding or by the adoption of a resolution at a meeting of holders at which a quorum is present by at least a majority in aggregate principal amount of the notes represented at the meeting. However, the indenture, including the terms and conditions of the notes, may be modified or amended by us and the trustee, without the consent of the holder of any note, for the purposes of, among other things:

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providing for conversion rights of holders of notes if any reclassification or change of our common stock or any consolidation, merger or sale of all or substantially all of our assets occurs;

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reducing the conversion price, provided that the reduction will not adversely affect the interests of holders of notes in any material respect and provided that we adhere to the relevant SEC regulations and the relevant Nasdaq listing requirements;

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complying with the requirements of the SEC in order to effect or maintain the qualification of the indenture under the Trust Indenture Act of 1939, as amended;

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making any changes or modifications to the indenture necessary in connection with the registration of the notes under the Securities Act as contemplated by the registration rights agreement, provided that this action does not adversely affect the interests of the holders of the notes in any material respect;

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curing any ambiguity, omission, inconsistency or correcting or supplementing any defective provision contained in the indenture; provided that such modification or amendment does not, in the good faith opinion of our board of directors and the trustee, adversely affect the interests of the holders of the notes in any material respect;

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adding or modifying any other provisions which we and the trustee may deem necessary or desirable and which will not adversely affect the interests of the holders of notes in any material respect;

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providing for uncertificated notes in addition to the certificated notes so long as such uncertificated notes are in registered form for purposes of the Internal Revenue Code of 1986, as amended.

Notwithstanding the foregoing, no modification or amendment to, or any waiver of, any provisions of the indenture may, without the written consent of the holder of each note affected:

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change the maturity of the principal of or any installment of interest on any note, including any payment of liquidated damages;

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reduce the principal amount of, premium, if any, or interest on, including the amount of liquidated damages, any note or the amount payable upon redemption or purchase of any note;

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reduce the interest rate or interest, including any liquidated damages, on any note;

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change the currency of payment of principal of, premium, if any, or interest of any note;

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impair the right to institute suit for the enforcement of any payment on or with respect to, or conversion of, any note;

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modify our obligation to purchase notes at the option of holders or our right to redeem notes, in a manner adverse to the holders of notes;

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except as otherwise permitted or contemplated by provisions of the indenture concerning corporate reorganizations, adversely affect the purchase option of holders upon a change in control or the conversion rights of holders of the notes; or

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reduce the percentage in aggregate principal amount of notes outstanding necessary to modify or amend the indenture or to waive any past default.

We may discharge our obligations under the indenture while notes remain outstanding, subject to certain conditions, if:

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all outstanding notes will become due and payable at their scheduled maturity within one year; or

and, in either case, we have deposited with the trustee an amount sufficient to pay and discharge all outstanding notes on the date of their scheduled maturity or the scheduled date of redemption; provided that we shall remain obligated to issue shares upon conversion of the notes.

We issued the notes in the form of one global security. The global security is deposited with the trustee as custodian for DTC and registered in the name of a nominee of DTC. Except as set forth below, the global security may be transferred, in whole and not in part, only to DTC or another nominee of DTC. You will hold your beneficial interests in the global security directly through DTC if you have an account with DTC or indirectly through organizations that have accounts with DTC. Notes in definitive certificated form (called “certificated securities”) will be issued only in certain limited circumstances described below.

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a limited purpose trust company organized under the laws of the State of New York;

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a “clearing corporation” within the meaning of the New York Uniform Commercial Code; and

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a “clearing agency” registered pursuant to the provisions of Section 17A of the Exchange Act.

DTC was created to hold securities of institutions that have accounts with DTC (called “participants”) and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC’s participants include securities brokers and dealers, which may include the initial purchaser, banks, trust companies, clearing corporations and certain other organizations. Access to DTC’s book-entry system is also available to others such as banks, brokers, dealers and trust companies (called, the “indirect participants”) that clear through or maintain a custodial relationship with a participant, whether directly or indirectly.

We expect that pursuant to procedures established by DTC, DTC will credit, on its book-entry registration and transfer system, the principal amount of notes represented by such global security to the accounts of participants. Ownership of beneficial interests in the global security will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in the global security will be shown on, and the transfer of those beneficial interests will be effected only through, records maintained by DTC (with respect to participants’ interests), the participants and the indirect participants. The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. These limits and laws may impair the ability to transfer or pledge beneficial interests in the global security.

Owners of beneficial interests in global securities who desire to convert their interests into common stock should contact their brokers or other participants or indirect participants through whom they hold such beneficial interests to obtain information on procedures, including proper forms and cut-off times, for submitting requests for conversion.

So long as DTC, or its nominee, is the registered owner or holder of a global security, DTC or its nominee, as the case may be, will be considered the sole owner or holder of the notes represented by the global security for all purposes under the indenture and the notes. In addition, no owner of a beneficial interest in a global security will be able to transfer that interest except in accordance with the applicable procedures of DTC. Except as set forth below, as an owner of a beneficial interest in the global security, you will not be entitled to have the notes represented by the global security registered in your name, will not receive or be entitled to receive physical delivery of certificated securities and will not be considered to be the owner or holder of any notes under the global security. We understand that under existing industry practice, if an owner of a beneficial interest in the global security desires to take any action that DTC, as the holder of the global security, is entitled to take, DTC would authorize the participants to take such action. Additionally, in such case, the participants would authorize beneficial owners owning through such participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them.

We will make payments of principal of, premium, if any, and interest (including any liquidated damages) on the notes represented by the global security registered in the name of and held by DTC or its nominee to DTC or its nominee, as the case may be, as the registered owner and holder of the global security. Neither we, the trustee nor any paying agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial interests in the global security or for maintaining, supervising or reviewing any records relating to such beneficial interests.

We expect that DTC or its nominee, upon receipt of any payment of principal of, premium, if any, or interest (including liquidated damages) on the global security, will credit participants’ accounts with payments in amounts proportionate to their respective beneficial interests in the principal amount of the global security as shown on the records of DTC or its nominee. We also expect that payments by participants or indirect participants to owners of beneficial interests in the global security held through such participants or indirect participants will be governed by standing instructions and customary practices and will be the responsibility of such participants or indirect participants. We do not have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial interests in the global security for any note or for maintaining, supervising or reviewing any records relating to such beneficial interests or for any other aspect of the relationship between DTC and its participants or indirect participants or the relationship between such participants or indirect participants and the owners of beneficial interests in the global security owning through such participants.

Transfers between participants in DTC are effected in the ordinary way in accordance with DTC rules and are settled in same-day funds.

DTC has advised us that it will take any action permitted to be taken by a holder of notes only at the direction of one or more participants to whose account the DTC interests in the global security is credited and only in respect of such portion of the aggregate principal amount of notes as to which such participant or participants has or have given such direction. However, if DTC notifies us that it is unwilling to be a depositary for the global security or ceases to be a clearing agency or there is an event of default under the notes, DTC will exchange the global security for certificated securities which it will distribute to its participants and which will be legended, if required, as set forth under “Notice to Investors.”

Although DTC is expected to follow the foregoing procedures in order to facilitate transfers of interests in the global security among participants of DTC, it is under no obligation to perform or continue to perform such procedures,

and such procedures may be discontinued at any time. Neither we nor the trustee will have any responsibility or liability for the performance by DTC or the participants or indirect participants of their respective obligations under the rules and procedures governing their respective operations.

U.S. Bank National Association, as trustee under the indenture, has been appointed by us as paying agent, conversion agent, registrar and custodian with regard to the notes. Equiserve LP is the transfer agent and registrar for our common stock. The trustee, the transfer agent or their affiliates may from time to time in the future provide banking and other services to us in the ordinary course of their business.

The indenture and the notes are governed by, and construed in accordance with, the law of the State of New York.

This prospectus is part of a shelf registration statement under the Securities Act that was filed to register resales of the notes and shares of common stock into which the notes are convertible. The notes and shares of common stock into which the notes are convertible are referred to collectively as registrable securities. The following summary of the registration rights under the registration rights agreement is not complete. You should refer to the registration rights agreement and the form of note listed as exhibits to the registration statement in connection with this prospectus for a full description of the registration rights that apply to the notes.

In connection with the initial purchase of the notes, we entered into a registration rights agreement with the initial purchaser. In the registration rights agreement, we agreed to file with the SEC not later than 90 days after September 19, 2003 (the “S-3 filing deadline”), subject to certain conditions set forth below, a shelf registration statement on such form as we deem appropriate covering resales by holders of the registrable securities. We filed the registration statement (of which this prospectus is part) to meet our obligations under the registration rights agreement.

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cause such registration statement to become effective as promptly as is practicable, but in no event later than 180 days after September 19, 2003; and

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keep the registration statement effective until the earliest of (1) September 19, 2005, (2) the sale pursuant to the shelf registration statement of the registrable securities, (3) the date when the holders of the registrable securities are able to sell all such securities immediately without restriction pursuant to the volume limitation provisions of Rule 144 under the Securities Act or any successor rule thereto or otherwise, and (4) the date when all of the notes and the shares of our common stock issuable upon conversion of the notes have ceased to be outstanding (whether as a result of repurchase and cancellation, conversion or otherwise).

We agreed to provide each registered holder copies of the prospectus, notify each registered holder when the shelf registration statement has become effective and take certain other actions as are required to permit unrestricted resales of the registrable securities. A holder who sells those securities pursuant to the shelf registration statement will be required to be named as a selling securityholder in the related prospectus and to deliver a prospectus to purchasers and will be bound by the provisions of the registration rights agreement, which are applicable to that holder, including certain indemnification provisions. If a shelf registration statement covering those securities is not effective, they may not be sold or otherwise transferred except in accordance with the provisions of Rule 144A under the Securities Act or pursuant to any other available exemption from the registration requirements of the Securities Act, including under Rule 144, if available.

We also agreed in the registration rights agreement to give notice to all holders of the filing and effectiveness of the shelf registration statement. In order to be named as a selling security holder in the related prospectus at the time of effectiveness, the holder must complete and deliver the notice and questionnaire to us within 20 days of the holder’s receipt of notice from us of the filing of the registration statement. After the shelf registration statement has been declared effective, upon receipt of any completed questionnaire, together with such other information as we may reasonably request from a holder of notes, we agreed, as promptly as reasonably practicable, but in any event within

five business days of such receipt, to file such amendments to the shelf registration statement or supplements to the related prospectus as are necessary to permit such holder to deliver such prospectus to purchasers of registrable securities, subject to our right to suspend the use of the prospectus as discussed below. Any holder that does not complete and deliver a questionnaire or provide such other information will not be named as a selling securityholder in the prospectus and therefore will not be permitted to sell any registrable securities pursuant to the shelf registration statement.

We are permitted to suspend the use of the prospectus that is part of the shelf registration statement, including this prospectus, under certain circumstances relating to pending corporate developments, public filings with the SEC and similar events for a period not to exceed 45 days in any three-month period and not to exceed an aggregate of 90 days in any twelve-month period.

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on the day following the S-3 filing deadline, the shelf registration statement has not been filed with the SEC;

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on the 181st day following September 19, 2003, the shelf registration statement is not declared effective;

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the registration statement shall cease to be effective or fail to be usable without being succeeded within five business days by a post-effective amendment or a report filed with the SEC pursuant to the Exchange Act that cures the failure of the registration statement to be effective or usable; or

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the prospectus has been suspended as described in the preceding paragraph longer than the period permitted by such paragraph,

each, a registration default, additional interest as liquidated damages will accrue on the notes, from and including the day following the registration default to but excluding the day on which the registration default has been cured. Liquidated damages will be paid semi-annually in arrears, with the first semi-annual payment due on the first interest payment date, as applicable, following the date on which such liquidated damages begin to accrue, and will accrue at an additional rate per year equal to:

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0.25% of the principal amount to and including the 90th day following such registration default; and

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0.5% of the principal amount from and after the 91st day following such registration default.

In no event will liquidated damages accrue at a rate per year exceeding 0.5%. If a holder has converted some or all of its notes into common stock, the holder is entitled to receive equivalent amounts based on the principal amount of the notes converted.

This section summarizes the material U.S. federal income tax considerations relating to the purchase, ownership and disposition of the notes and of common stock into which the notes may be converted. This summary does not provide a complete analysis of all potential tax considerations. The information provided below is based on existing authorities, which are subject to change, possibly with retroactive effect. There can be no assurances that the Internal Revenue Service (“IRS”) will not challenge one or more of the tax consequences described herein, and we have not obtained, nor do we intend to obtain, a ruling from the IRS with respect to the U.S. federal income tax consequences of acquiring or holding the notes or common stock. The summary generally applies only to investors that hold the notes or common stock as “capital assets” (generally, for investment). This discussion does not purport to deal with all aspects of U.S. federal income taxation that may be relevant to a particular holder in light of the holder’s circumstances (for example, persons subject to the alternative minimum tax provisions of the Internal Revenue Code (the “Code”) or a holder whose “functional currency” is not the U.S. dollar). Also, it is not intended to be wholly applicable to all categories of investors, some of which (such as dealers in securities or currencies, traders in securities that elect to use a mark-to-market method of accounting, banks, thrifts, regulated investment companies, insurance companies, tax-exempt organizations, and persons holding notes or common stock as part of a hedging or conversion transaction or straddle or persons deemed to sell notes or common stock under the constructive sale provisions of the Code) may be subject to special rules. Finally, the summary does not describe the effect of the federal estate and gift tax laws or the effects of any applicable foreign, state or local laws.

INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FEDERAL ESTATE OR GIFT TAX LAWS, FOREIGN, STATE OR LOCAL LAWS, AND TAX TREATIES.

As used herein, the term “U.S. Holders” means beneficial owners of notes or common stock that for U.S. federal income tax purposes are (1) citizens or residents of the United States, (2) corporations, or entities treated as corporations, organized under the laws of the United States or any State of the United States, or (3) estates the income of which is subject to U.S. federal income taxation regardless of its source. Trusts are U.S. Holders if they are (1) subject to the primary supervision of a U.S. court and the control of one of more U.S. persons or (2) have a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. A “Non-U.S. Holder” is a beneficial owner of notes or shares of common stock that is not a U.S. Holder. If a partnership or other flow-through entity is a beneficial owner of a note (or common stock acquired upon conversion of a note), the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity.

U.S. Holders will be required to recognize as ordinary income any interest paid or accrued on the notes, in accordance with their regular method of accounting. In general, if the terms of a debt instrument entitle a holder to receive payments other than fixed periodic interest that exceed the issue price of the instrument, the holder may be required to recognize additional amounts as “original issue discount” over the term of the instrument. We believe that the notes will not be issued with original issue discount for U.S. federal income tax purposes. We may be required to make payments of liquidated damages to holders of the notes if we do not file or cause to be declared, or keep, effective a registration statement, as described under “Description of Notes-Registration Rights.” We believe that there is only a remote possibility that we would be required to pay liquidated damages and therefore do not intend to treat the notes as subject to the special rules governing certain “contingent payment” debt instruments (which, if applicable, would affect the timing, amount and character of income with respect to a note). Our determination in this regard, while not binding on the IRS, is binding on U.S. Holders unless they disclose their contrary position. If, contrary to expectations, we pay liquidated damages while the notes are outstanding, U.S. Holders would be required to recognize additional interest income. If, contrary to expectations, we pay liquidated damages after conversion, U.S. Holders might be required to recognize additional income at that time.

If a U.S. Holder purchases a note for an amount that is less than its stated redemption price at maturity, the amount of the difference will be treated as “market discount,” unless that difference is less than a specified de minimis amount. Under the market discount rules, U.S. Holders will be required to treat any payment on, or any gain recognized on the sale, exchange, retirement or other disposition (including a gift or redemption at maturity) of the note (other than in connection with certain nonrecognition transactions but not including conversion of the note) as ordinary income to the extent of the market discount that U.S. Holders are treated as having accrued on the note at the time of the payment or disposition and have not previously included in income. In addition, U.S. Holders may be required to defer, until the maturity of the note or its earlier disposition in a taxable transaction (or some non-recognition transactions where market discount is required to be taken into account), the deduction of all or a portion of the interest expense on any indebtedness attributable to the note.

Any market discount will be considered to accrue ratably during the period from the date of acquisition to the maturity date of the note, unless the U.S. Holder elects to accrue on a constant interest method. U.S. Holders may elect to include market discount in income currently as it accrues, on either a ratable or constant interest method, in which case the rule described above regarding deferral of interest expense deductions will not apply. A U.S. Holder’s election to include market discount in income currently, once made, applies to all market discount obligations acquired by such holder on or after the first taxable year to which such holder’s election applies and the election may not be revoked without the consent of the IRS.

If a U.S. Holder purchases a note for an amount in excess of the sum of all amounts payable on the note after the purchase date, other than qualified stated interest, such holder will be considered to have purchased the note at a “premium.” A U.S. Holder generally may elect to amortize the premium over the remaining term of the note on a constant yield method as an offset to interest when includible in income under such holder’s regular accounting method. However, the amount of premium that may be amortized and used to offset interest income may not include the amount of premium attributable to the conversion feature of the note (determined under any reasonable method). If a U.S. Holder does not elect to amortize bond premium, that premium will decrease the gain or increase the loss such holder would otherwise recognize on disposition of the note. The election to amortize premium on a constant yield method will also apply to all debt obligations held or subsequently acquired by the U.S. Holder on or after the first day of the first taxable year to which the election applies. A U.S. Holder may not revoke the election without the consent of the IRS.

Subject to the market discount rules discussed above, a U.S. Holder will generally recognize capital gain or loss if the holder disposes of a note in a sale, exchange, redemption or other disposition other than a conversion of the note into common stock. The holder’s gain or loss will equal the difference between the proceeds received by the holder (other than amounts attributable to accrued but unpaid interest not previously included in income) and the holder’s adjusted tax basis in the note. The proceeds received by the holder will include the amount of any cash and the fair market value of any other property received for the note. The holder’s tax basis in the note will generally equal the amount the holder paid for the note (plus any market discount with respect to which the U.S. Holder elected to include in income as it accrued as discussed above and less any bond premium previously taken into account as discussed above). The portion of any proceeds that is attributable to accrued interest will not be taken into account in computing the holder’s capital gain or loss. Instead, that portion will be recognized as ordinary interest income to the extent that the holder has not previously included the accrued interest in income. Subject to the market discount rules discussed above, the gain or loss recognized by a holder on a disposition of the note will be long-term capital gain or loss if the holder held the note for more than one year or short-term capital gain or loss if the holder held the note for one year or less. Long-term capital gains of non-corporate taxpayers are currently taxed at a maximum 15% federal rate. Short-term capital gains are taxed at ordinary income rates. The deductibility of capital losses is subject to limitation. Special rules may apply to a note redeemed in part; U.S. Holders should consult their own tax advisors in this regard.

Subject to the market discount rules discussed above, a U.S. Holder generally will not recognize any income, gain or loss on converting a note into common stock. If the holder receives cash in lieu of a fractional share of stock, however, the holder would be treated as if he received the fractional share and then had the fractional share redeemed for the cash. The holder would recognize gain or loss equal to the difference between the cash received and that portion of his basis in the stock attributable to the fractional share. The holder’s aggregate basis in the common stock (including any fractional share for which cash is paid) will equal his adjusted basis in the note. The holder’s holding period for the stock will include the period during which he held the note. Special rules may apply to a note converted in part; U.S. Holders should consult their own tax advisors in this regard.

If, after a U.S. Holder converts a note into common stock, we make a distribution in respect of that stock from our current or accumulated earnings and profits as determined under U.S. federal income tax principles, the distribution will be treated as a dividend and will be includible in a U.S. Holder’s income as it is paid. If the distribution exceeds our current and accumulated earnings and profits, the excess will be treated first as a tax-free return of the holder’s investment, up to the holder’s basis in its common stock; any remaining excess will be treated as capital gain. If the U.S. Holder is a U.S. corporation, it would generally be able to claim a deduction equal to a portion of any dividends received. U.S. Holders who are individuals and who receive dividends that are treated as “qualified dividend income” will be taxed at a maximum rate of 15%. Qualified dividend income for these purposes generally includes dividends received or accrued in taxable years beginning before January 1, 2009 with respect to our stock held by a U.S. Holder for more than 60 days during the 120-day period beginning on the date which is 60 days before the date on which such stock becomes ex-dividend with respect to such dividend and which is not an amount which the U.S. Holder takes into account as investment income under Code Section 163(d)(4)(B). Dividends received or accrued by U.S. Holders who are not individuals, or dividends received or accrued which do not constitute qualified dividend income, will be subject to tax at ordinary income tax rates.

The terms of the notes allow for changes in the conversion rate of the notes in certain circumstances. A change in conversion rate that allows note holders to receive more shares of common stock on conversion may increase the note holders’ proportionate interests in our earnings and profits or assets. In that case, the note holders would be treated as though they received a dividend in the form of our stock. Such a constructive stock dividend could be taxable to the note holders, although they would not actually receive any cash or other property. A taxable constructive stock dividend would result, for example, if the conversion rate is adjusted to compensate note holders for distributions of cash or property to our stockholders. Not all changes in conversion rate that allow note holders to receive more stock on conversion, however, increase the note holders’ proportionate interests in InVision. For instance, a change in conversion rate could simply prevent the dilution of the note holders’ interests upon a stock split or other change in capital structure. Changes of this type, if made pursuant to bona fide reasonable adjustment formula, are not treated as constructive stock dividends. Conversely, if an event occurs that dilutes the note holders’ interests and the conversion rate is not adjusted, the resulting increase in the proportionate interests of our stockholders could be treated as a taxable stock dividend to them. Any taxable constructive stock dividends resulting from a change to, or failure to change, the conversion rate would be treated like dividends paid in cash or other property. They would result in a taxable dividend to the recipient to the extent of our current or accumulated earnings and profits, with any excess treated as a tax-free return of capital or as capital gain.

A U.S. Holder will generally recognize capital gain or loss on a sale or exchange of common stock. The holder’s gain or loss will equal the difference between the proceeds received by the holder and the holder’s adjusted tax basis in the stock. The proceeds received by the holder will include the amount of any cash and the fair market value of any other property received for the stock. The gain or loss recognized by a holder on a sale or exchange of stock will be long-term capital gain or loss if the holder held or is deemed to have held the stock for more than one year. The deductibility of capital losses is subject to certain limitations.

The following discussion is limited to the U.S. federal income tax consequences relevant to a Non-U.S. Holder (as defined above).

Payments of interest to nonresident persons or entities are generally subject to U.S. federal income tax at a rate of 30%, collected by means of withholding by the payor. Payments of interest on the notes to most Non-U.S. Holders, however, will qualify as “portfolio interest,” and thus will be exempt from the withholding tax, if the holders certify their nonresident status as described below. The portfolio interest exception will not apply to payments of interest to a Non-U.S. Holder that:

In general, a foreign corporation is a controlled foreign corporation if more than 50% of its stock is owned, actually or constructively, by one or more U.S. persons that each owns, actually or constructively, at least 10% of the corporation’s voting stock.

If the portfolio interest exception does not apply, payments of interest to a nonresident person or entity might be subject to withholding tax at a 30% rate, or might be subject to withholding tax at a reduced or zero rate under the terms of an applicable income tax treaty between the United States and the Non-U.S. Holder’s country of residence.

The portfolio interest exception, entitlement to treaty benefits and several of the special rules for Non-U.S. Holders described below apply only if the holder certifies its nonresident status. A Non-U.S. Holder can meet this certification requirement by providing a Form W-8BEN or appropriate substitute form to us or our paying agent. If the holder holds the note through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. For payments made to a foreign partnership or other flow-through entity, the certification requirements generally apply to the partners or other owners rather than to the partnership or other entity, and the partnership or other entity must provide the partners’ or other owners’ documentation to us or our paying agent.

Non-U.S. Holders generally will not be subject to U.S. federal income tax on any gain realized on the sale, exchange, redemption or other disposition of notes. This general rule, however, is subject to several exceptions. For example, the gain would be subject to U.S. federal income tax if:

•

the gain is effectively connected with the conduct by the Non-U.S. Holder of a U.S. trade or business;

•

the Non-U.S. Holder was a citizen or resident of the United States and is subject to special rules that apply to expatriates;

•

the rules of the Foreign Investment in Real Property Tax Act (or FIRPTA) (described below) treat the gain as effectively connected with a U.S. trade or business; or

•

subject to certain exceptions, the Non-U.S. Holder is an individual who holds the notes as a capital asset and is present in the United States for 183 days or more in the year of disposition.

The FIRPTA rules may apply to a sale, exchange, redemption or other disposition of notes if we are, or were within five years before the transaction, a “U.S. real property holding corporation” (or USRPHC). In general, we would be a USRPHC if interests in U.S. real estate comprised most of our assets. We do not believe that we are a USRPHC or that we will become one in the future.

Subject to the market discount rules discussed above, a Non-U.S. Holder generally will not recognize any income, gain or loss on converting a note into common stock. Any income attributable to market discount recognized as a result of the conversion or any gain recognized as a result of the holder’s receipt of cash in lieu of a fractional share of stock would also generally not be subject to U.S. federal income tax. See “-Non-U.S. Holders-Sale of Common Stock” below.

Dividends paid to a Non-U.S. Holder on common stock received on conversion of a note (and any deemed dividends resulting from certain adjustments, or failure to make adjustments, to the number of shares of common stock to be issued on conversion, see “-U.S. Holders-Dividends” above) will generally be subject to U.S. withholding tax at a 30% rate. However, the withholding tax might not apply, or might apply at a reduced rate, under the terms of an applicable income tax treaty between the United States and the Non-U.S. Holder’s country of residence. A Non-U.S. Holder should demonstrate its entitlement to treaty benefits by certifying its nonresident status on a properly executed Form W-8BEN or appropriate substitute form. Some of the common means of meeting this requirement are described above under “-Non-U.S. Holders-Taxation of Interest.”

As more fully described under “Description of Notes-Registration Rights,” upon the occurrence of certain enumerated events we may be required to pay liquidated damages to you. Payments of such liquidated damages may be subject to U.S. federal withholding tax. Holders should contact their tax advisors concerning the treatment of receipt of such liquidated damages.

Non-U.S. Holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange, or other disposition of common stock. This general rule, however, is subject to exceptions, some of which are described under “-Non-U.S. Holders-Sale, Exchange, Redemption or Other Disposition of Notes.”

The preceding discussion of the tax considerations of the purchase, ownership or disposition of notes or common stock by a Non-U.S. Holder assumes that the holder is not engaged in a U.S. trade or business. If any interest on the notes, dividends on common stock, or gain from the sale, exchange, redemption or other disposition of the notes or stock is effectively connected with a U.S. trade or business conducted by the Non-U.S. Holder, then the income or gain will be subject to U.S. federal income tax at the regular graduated rates. If the Non-U.S. Holder is eligible for the benefits of a tax treaty between the United States and the holder’s country of residence, any “effectively connected” income or gain would probably be subject to U.S. federal income tax only if it is also attributable to a permanent establishment or fixed base maintained by the holder in the United States. Payments of interest or dividends that are effectively connected with a U.S. trade or business, and therefore included in the gross income of a Non-U.S. Holder, will not be subject to the 30% withholding tax provided that the holder claims exemption from withholding. To claim exemption from withholding, the holder must certify its qualification, which can be done by filing a Form W-8ECI. If the Non-U.S. Holder is a corporation, that portion of its earnings and profits that is effectively connected with its U.S. trade or business would generally be subject to a “branch profits tax.” The branch profits tax rate is generally 30%, although an applicable income tax treaty might provide for a lower rate.

The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are interest, dividends, and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or repeatedly failing to report interest or dividends on his returns. The withholding tax rate is currently 28%. The backup withholding rules do not apply to payments to corporations, whether domestic or foreign.

Payments of interest or dividends to individual U.S. Holders of notes or common stock will generally be subject to information reporting, and will be subject to backup withholding unless the holder provides us or our paying agent with a correct taxpayer identification number and complies with applicable certification requirements.

Payments to Non-U.S. Holders of dividends on common stock, or interest on notes, will generally not be subject to backup withholding. To avoid backup withholding, a Non-U.S. Holder will have to certify its nonresident status. Some of the common means of doing so are described under “Non-U.S. Holders-Taxation of Interest.” We must report annually to the IRS the interest and/or dividends paid to each Non-U.S. Holder and the tax withheld, if any, with respect to such interest and/or dividends including any tax withheld under the rules described above under “ -Non-U.S. Holders-Taxation of Interest” and “-Non-U.S. Holders-Dividends and Other Potential Withholding.” Copies of these reports may be made available to tax authorities in the country where the Non-U.S. Holder resides.

Payments made to U.S. Holders by a broker upon a sale of notes or common stock will generally be subject to information reporting and backup withholding. If the sale is made through a foreign office of a foreign broker, the sale will generally not be subject to either information reporting or backup withholding. This exception may not apply, however, if the foreign broker is owned or controlled by U.S. persons, or is engaged in a U.S. trade or business.

Payments made to Non-U.S. Holders by a broker upon a sale of notes or common stock will not be subject to information reporting or backup withholding as long as the Non-U.S. Holder certifies its foreign status.

Any amounts withheld from a payment to a holder of notes or common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder.

THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR NOTES OR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

Our authorized capital stock consists of 60,000,000 shares of common stock, par value $0.001, and 5,000,000 shares of preferred stock, par value $0.001. The following description of our capital stock and certain provisions of our Amended and Restated Certificate of Incorporation and Amended Bylaws is a summary and is qualified in its entirety by the provisions of the Certificate and Bylaws.

The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders. The holders of common stock are not entitled to cumulative voting rights with respect to the election of directors and, as a consequence, minority stockholders will not be able to elect directors on the basis of their votes alone.

Subject to preferences that may be applicable to any outstanding shares of preferred stock, holders of common stock are entitled to receive ratably such dividends as may be declared by the board of directors out of funds legally available therefor. In the event of our liquidation, dissolution or winding up, holders of the common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference of any then outstanding shares of preferred stock. Holders of common stock have no preemptive rights and no right to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock. All outstanding shares of common stock are fully paid and nonassessable.

The board of directors is authorized to issue up to 5,000,000 shares of preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof, including dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, without any further vote or action by the stockholders. The issuance of preferred stock could adversely affect the voting power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon liquidation and may have the effect of delaying, deferring or preventing a change in our control, which could have a depressive effect on the market price of our common stock. We have no present plan to issue any shares of preferred stock.

Stockholders rights and related matters are governed by the Delaware General Corporation Law and the Certificate and Bylaws.

Limitation of Liability and Indemnification. Our Certificate contains certain provisions permitted under Delaware law relating to the liability of directors. These provisions eliminate a director’s personal liability for monetary damages resulting from a breach of fiduciary duty, except in certain circumstances involving certain wrongful acts, such as (1) for any breach of the director’s duty of loyalty to us or our stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) under Section 174 of the Delaware General Corporation Law, or (4) for any transaction from which the director derives an improper personal benefit. These provisions do not limit or eliminate our rights or those of any stockholder to seek non-monetary relief, such as an injunction or rescission, in the event of a breach of director’s fiduciary duty. These provisions will not alter a director’s liability under federal securities laws. Our Certificate also contains provisions indemnifying our directors to the fullest extent permitted by Delaware law. We believe that these provisions will assist us in attracting and retaining qualified individuals to serve as directors.

Certain Anti-Takeover Provisions. We are subject to the provisions of Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, the statute prohibits a publicly-held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes a merger, asset sale or other transaction resulting in a financial benefit to the stockholder. For purposes of Section 203, an “interested stockholder” is a person who, together with affiliates and associates, owns (or within three years prior, did own) 15% or more of the corporation’s voting stock.

The foregoing provisions of Delaware law as well as the right of the board of directors to designate the features of, and issue shares of, preferred stock without a stockholder vote, and the staggered election of the board of directors may tend to discourage attempts by third parties to acquire any substantial ownership position in the common stock and may adversely affect the price that such a potential purchaser would be willing to pay for the common stock.

Directors-Number, Vacancies, Removal and Nomination. Pursuant to the Certificate, the number of directors is determined by resolutions adopted by the board of directors, which currently consists of eight members. The Certificate provides that each director will serve for a three-year term and that approximately one-third of the directors are to be elected annually. Candidates for directors shall be nominated only by the nominating and corporate governance committee of our board of directors or generally by a stockholder who gives us written notice no later than the close of business on the 60th day nor earlier than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting. Between stockholder meetings, the board of directors may appoint new directors to fill vacancies or newly created directorships. The Certificate does not provide for cumulative voting at stockholder meetings for election of directors. Stockholders controlling more than 50% of the outstanding common stock can elect all of the directors to be elected at any meeting of stockholders to elect directors, while stockholders controlling 49% of the outstanding common stock may not be able to elect any directors. A director may be removed from office for cause by the affirmative vote of a majority of the combined voting power of the then outstanding shares of stock entitled to vote generally in the election of directors and may be removed without cause by the affirmative vote of the holders of at least 66 2/3% of the then outstanding shares of stock entitled to vote in the election of directors.

Restrictions on Special Meetings. Our Certificate requires that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by a consent in writing. Under the Bylaws, special meetings of the stockholders may be called only by the President, the Chairman of the board of directors, a majority of the directors or the holders of record of 10% or more of our outstanding shares of stock entitled to vote at such meeting. This provision may impede a stockholder who wishes to require that we call a special meeting of stockholders to consider any proposed corporate action.

The validity of the securities offered under this prospectus will be passed upon for us by Fenwick & West LLP, Mountain View, California.

The financial statements and the related financial statement schedule incorporated in this prospectus by reference from InVision Technologies, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2002 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference (which expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets”), and have been so incorporated in reliance upon the report of such firm given upon their authority as experts in accounting and auditing.

We file annual, quarterly and special reports, proxy statements and other information with the SEC under the Exchange Act. You may read and copy this information at the SEC’s Public Reference Room, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You may also obtain copies of this information by mail from the Public Reference Section of the SEC at prescribed rates. Please call the SEC at 1-800-SEC-0330 for additional information about the Public Reference Room.

The SEC also maintains a website that contains reports, proxy statements and other information about issuers, including InVision Technologies, Inc., that file electronically with the SEC. The address of that site is www.sec.gov.

You can also inspect reports and other information about us at the office of the NASDAQ National Market, 1735 K Street, N.W., Washington, D.C. 20006-1005.

We are “incorporating by reference” into this prospectus certain information we file with the SEC, which means that we are disclosing important information to you by referring you to those documents. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information contained directly in this prospectus. This prospectus incorporates by reference the following documents, each of which we previously filed with the SEC:

•

our annual report on Form 10-K for the year ended December 31, 2002 (including portions of our proxy statement relating to our 2003 annual meeting of stockholders incorporated by reference therein);

•

our quarterly reports on Form 10-Q for the quarterly periods ended March 30, 2003 and June 29, 2003; and

All documents that we file with the SEC pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act, from the date of this prospectus to the end of the offering of the notes and common stock issuable upon conversion of the notes under this document shall also be deemed to be incorporated herein by reference and will automatically update information in this prospectus.

Any statements made in this prospectus or in a document incorporated or deemed to be incorporated by reference into this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus or in any other subsequently filed document that is also incorporated or deemed to be incorporated by reference into this prospectus modifies or supersedes the statement. Any statement so modified or superseded will not be deemed, except as so modified or superseded, to constitute a part of this prospectus.

You may request a copy of these filings, at no cost, by writing or calling us at the following address or telephone number:

InVision Technologies, Inc.
7151 Gateway Boulevard
Newark, California 94560
Attention: Investor Relations
(510) 739-2511

The following table sets forth the various expenses payable by the Registrant in connection with the sale and distribution of the securities being registered hereby. Normal commission expenses and brokerage fees are payable individually by the selling holders. All amounts are estimated except the Securities and Exchange Commission registration fee.

Section 145 of the Delaware General Corporation Law permits indemnification of officers, directors, and other corporate agents under certain circumstances and subject to certain limitations. The Registrant’s Amended and Restated Certificate of Incorporation and Bylaws provide that the Registrant shall indemnify its directors, officers, employees and agents to the full extent permitted by the Delaware General Corporation Law, including circumstances in which indemnification is otherwise discretionary under Delaware law. In addition, the Registrant has entered into separate indemnification agreements with its directors and executive officers which require the Registrant, among other things, to indemnify them against certain liabilities which may arise by reason of their status or service (other than liabilities arising from acts or omissions not in good faith or willful misconduct). Further, the Purchase Agreement pursuant to which the initial purchaser acquired the notes and the related Registration Rights Agreement (Exhibit 4.5 to this registration statement) provide for indemnification by the initial purchaser of the Registrant, its directors and officers for certain liabilities, including liabilities arising under the Securities Act, and affords certain rights of contribution with respect thereto.

These indemnifications provisions and the indemnification agreements entered into between the Registrant and its executive officers and directors may be sufficiently broad to permit indemnification of the Registrant’s executive officers and directors for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933.

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

File No.

Date of First Filing

Exhibit Number

Filed Herewith

4.1

Registrant’s Amended and Restated Certificate of Incorporation.

S-1

June 7, 1996

3.1

4.2

Registrant’s Amendment to the Amended and Restated Certificate of Incorporation.

10-K

March 7, 2002

3.3

4.3

Registrant’s Bylaws, as amended.

10-Q

August 13, 2003

3.3

4.4

Indenture, dated as of September 19, 2003, between the Registrant and U.S. Bank National Association, as Trustee.

4.5

Registration Rights Agreement, dated as of September 19, 2003 between the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

4.6

Note for the Registrant’s 3% Convertible Senior Notes due October 1, 2023.

5.1

Opinion of Fenwick & West LLP.

10.1

Solicitation, Offer and Award dated August 5, 2003, between the Registrant and the TSA (the “Frame Agreement”). †

10.2

Delivery Order #1 from the TSA under the Frame Agreement. †

10.3

Amendment of Solicitation/Modification of Contract between the Company and the TSA (the “Definitized Letter Agreement”). †

10.4

Delivery Order #8 from the TSA under the Definitized Letter Agreement. †

10.5

Amendment to Delivery Order Delivery Order #5 from the TSA under the Definitized Letter Agreement. †

10.6

Amendment to Delivery Order Delivery Order #3 from the TSA under the Definitized Letter Agreement. †

12.1

Statement regarding the Registrant’s ratio of earnings to fixed charges.

23.1

Consent of Fenwick & West LLP (included in Exhibit 5.1).

23.3

Independent Auditors’ Consent.

24.1

Power of Attorney (see page II-4).

25.1

Form T-1 statement of eligibility of trustee for the Indenture under the Trust Indenture Act of 1939.

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that (i) and (ii) do not apply if the registration statement is on Form S-3 or Form S-8 and the information required to be included in a post-effective amendment thereby is contained in periodic reports filed with or furnished to the Commission by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the provisions described under Item 15 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

To file an application for the purpose of determining the eligibility of the trustee to act under subsection (a) of Section 310 of the Trust Indenture Act in accordance with the rules and regulations prescribed by the Commission under Section 305(b)(2) of the Act.

Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Newark, State of California, on this 6th day of November, 2003.

KNOW ALL PERSONS BY THESE PRESENTS each person whose signature appears below constitutes and appoints Sergio Magistri, Ph.D. and Ross Mulholland his true and lawful attorney-in-fact and agent, each acting alone, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement on Form S-3, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorney-in-fact and agent, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date



/s/ Sergio Magistri Sergio Magistri, Ph.D.	Chief Executive Officer, President and Director (Principal Executive Officer)	November 6, 2003



/s/ Ross Mulholland Ross Mulholland	Senior Vice President - Chief Financial Officer (Principal Financial and Accounting Officer)	November 6, 2003



/s/ Giovanni Lanzara Giovanni Lanzara, Ph.D.	Chairman of the Board of Directors	November 6, 2003



/s/ Stephen Blum Stephen Blum	Director	November 6, 2003



Douglas P. Boyd, Ph.D.	Director



/s/ Morris D. Busby Morris D. Busby	Director	November 6, 2003



/s/ David M. Pillor David M. Pillor	Senior Vice President, Sales and Marketing and Director	November 6, 2003



/s/ Bruno Trezza Bruno Trezza, Ph.D.	Director	November 6, 2003



/s/ Louis A. Turpen Louis A. Turpen	Director	November 6, 2003

Incorporated by Reference

Exhibit

Number

Exhibit Description

Form

File No.

Date of First Filing

Exhibit Number

Filed Herewith

4.1

Registrant’s Amended and Restated Certificate of Incorporation.

S-1

June 7, 1996

3.1

4.2

Registrant’s Amendment to the Amended and Restated Certificate of Incorporation.

10-K

March 7, 2002

3.3

4.3

Registrant’s Bylaws, as amended.

10-K/A

March 25, 2002

3.1

4.4

Indenture, dated as of September 19, 2003, between the Registrant and U.S. Bank National Association, as Trustee.

4.5

Registration Rights Agreement, dated as of September 19, 2003 between the Registrant and Merrill Lynch, Pierce, Fenner & Smith Incorporated.

4.6

Note for the Registrant’s 3% Convertible Senior Notes due October 1, 2023.

5.1

Opinion of Fenwick & West LLP.

10.1

Solicitation, Offer and Award dated August 5, 2003, between the Registrant and the TSA (the “Frame Agreement”). †

10.2

Delivery Order #1 from the TSA under the Frame Agreement. †

10.3

Amendment of Solicitation/Modification of Contract between the Company and the TSA (the “Definitized Letter Agreement”). †

10.4

Delivery Order #8 from the TSA under the Definitized Letter Agreement. †

10.5

Amendment to Delivery Order Delivery Order #5 from the TSA under the Definitized Letter Agreement. †

10.6

Amendment to Delivery Order Delivery Order #3 from the TSA under the Definitized Letter Agreement. †

12.1

Statement regarding the Registrant’s ratio of earnings to fixed charges.

23.1

Consent of Fenwick & West LLP (included in Exhibit 5.1).

23.3

Independent Auditors’ Consent.

24.1

Power of Attorney (see page II-4).

25.1

Form T-1 statement of eligibility of trustee for the Indenture under the Trust Indenture Act of 1939.

II-5 EX-4.4 3 f94131orexv4w4.txt EXHIBIT 4.4 EXHIBIT 4.4 ================================================================================ INVISION TECHNOLOGIES, INC. 3% CONVERTIBLE SENIOR NOTES DUE 2023 -------------------- INDENTURE DATED AS OF SEPTEMBER 19, 2003 -------------------- U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE ================================================================================ TABLE OF CONTENTS

SECTION 4.2. CONVERSION PROCEDURE.................................................................. 28 SECTION 4.3. FRACTIONAL SHARES..................................................................... 29 SECTION 4.4. TAXES ON CONVERSION................................................................... 30 SECTION 4.5. COMPANY TO PROVIDE STOCK.............................................................. 30 SECTION 4.6. ADJUSTMENT OF CONVERSION RATE......................................................... 30 SECTION 4.7. NO ADJUSTMENT......................................................................... 35 SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES........................................................... 35 SECTION 4.9. NOTICE OF ADJUSTMENT.................................................................. 35 SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS........................................................ 35 SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE..... 36 SECTION 4.12. TRUSTEE'S DISCLAIMER.................................................................. 37 SECTION 4.13. VOLUNTARY INCREASE.................................................................... 37 ARTICLE 5 [Intentionally Omitted].................................................................................... 37 ARTICLE 6 COVENANTS.................................................................................................. 37 SECTION 6.1. PAYMENT OF SECURITIES................................................................. 37 SECTION 6.2. SEC REPORTS........................................................................... 38 SECTION 6.3. COMPLIANCE CERTIFICATES............................................................... 38 SECTION 6.4. FURTHER INSTRUMENTS AND ACTS.......................................................... 38 SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE.................................................... 38 SECTION 6.6. RULE 144A INFORMATION REQUIREMENT..................................................... 38 SECTION 6.7. STAY, EXTENSION AND USURY LAWS........................................................ 39 SECTION 6.8. PAYMENT OF LIQUIDATED DAMAGES......................................................... 39 ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE....................................................... 39 SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.................................. 39 SECTION 7.2. SUCCESSOR SUBSTITUTED................................................................. 40 ARTICLE 8 DEFAULT AND REMEDIES....................................................................................... 40 SECTION 8.1. EVENTS OF DEFAULT..................................................................... 40 SECTION 8.2. ACCELERATION.......................................................................... 42 SECTION 8.3. OTHER REMEDIES........................................................................ 43 SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT.............................................. 43 SECTION 8.5. CONTROL BY MAJORITY................................................................... 43 SECTION 8.6. LIMITATIONS ON SUITS.................................................................. 43 SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT................................... 44 SECTION 8.8. COLLECTION SUIT BY TRUSTEE............................................................ 44 SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM...................................................... 44 SECTION 8.10. PRIORITIES............................................................................ 45 SECTION 8.11. UNDERTAKING FOR COSTS................................................................. 45 ARTICLE 9 TRUSTEE.................................................................................................... 45 SECTION 9.1. DUTIES OF TRUSTEE..................................................................... 45 SECTION 9.2. RIGHTS OF TRUSTEE..................................................................... 46

SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE.......................................................... 47 SECTION 9.4. TRUSTEE'S DISCLAIMER.................................................................. 47 SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT................................................ 47 SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS......................................................... 47 SECTION 9.7. COMPENSATION AND INDEMNITY............................................................ 48 SECTION 9.8. REPLACEMENT OF TRUSTEE................................................................ 48 SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC...................................................... 49 SECTION 9.10. ELIGIBILITY; DISQUALIFICATION......................................................... 49 SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY..................................... 50 ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE................................................................... 50 SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE............................................... 50 SECTION 10.2. APPLICATION OF TRUST MONEY............................................................ 51 SECTION 10.3. REPAYMENT TO COMPANY.................................................................. 51 SECTION 10.4. REINSTATEMENT......................................................................... 51 ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS....................................................................... 52 SECTION 11.1. WITHOUT CONSENT OF HOLDERS............................................................ 52 SECTION 11.2. WITH CONSENT OF HOLDERS............................................................... 52 SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT................................................... 53 SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS..................................................... 53 SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES................................................. 54 SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC....................................................... 54 SECTION 11.7. EFFECT OF SUPPLEMENTAL INDENTURES..................................................... 54 ARTICLE 12 MISCELLANEOUS............................................................................................. 54 SECTION 12.1. TRUST INDENTURE ACT CONTROLS.......................................................... 54 SECTION 12.2. NOTICES............................................................................... 54 SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS.......................................... 55 SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.................................... 55 SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS.................................... 56 SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT........................ 56 SECTION 12.7. LEGAL HOLIDAYS........................................................................ 56 SECTION 12.8. GOVERNING LAW......................................................................... 57 SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS......................................... 57 SECTION 12.10. NO RECOURSE AGAINST OTHERS............................................................ 57 SECTION 12.11. SUCCESSORS............................................................................ 57 SECTION 12.12. MULTIPLE COUNTERPARTS................................................................. 57 SECTION 12.13. SEPARABILITY.......................................................................... 57 SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC...................................................... 57

CROSS-REFERENCE TABLE*
TIA INDENTURE SECTION SECTION - ------- -------------- Section 310(a)(1)................................................................. 9.10 (a)(2).................................................................... 9.10 (a)(3).................................................................... N.A.** (a)(4).................................................................... N.A. (a)(5).................................................................... 9.10 (b)....................................................................... 9.8; 9.10 (c)....................................................................... N.A. Section 311(a).................................................................... 9.11 (b)....................................................................... 9.11 (c)....................................................................... N.A. Section 312(a).................................................................... 2.5 (b)....................................................................... 12.3 (c)....................................................................... 12.3 Section 313(a).................................................................... 9.6 (b)(1).................................................................... N.A. (b)(2).................................................................... 9.6 (c)....................................................................... 9.6; 12.2 (d)....................................................................... 9.6 Section 314(a).................................................................... 6.2; 6.4; 12.2 (b)....................................................................... N.A. (c)(1).................................................................... 12.4(a) (c)(2).................................................................... 12.4(a) (c)(3).................................................................... N.A. (d)....................................................................... N.A. (e)....................................................................... 12.4(b) (f)....................................................................... N.A. Section 315(a).................................................................... 9.1(b) (b)....................................................................... 9.5; 12.2 (c)....................................................................... 9.1(a) (d)....................................................................... 9.1(c) (e)....................................................................... 8.11 Section 316(a)(last sentence)..................................................... 2.9 (a)(1)(A)................................................................. 8.5 (a)(1)(B)................................................................. 8.4 (a)(2).................................................................... N.A. (b)....................................................................... 8.7 (c)....................................................................... 12.5 Section 317(a)(1)................................................................. 8.8 (a)(2).................................................................... 8.9 (b)....................................................................... 2.4
- ----------------- * This Cross-Reference Table shall not, for any purpose, be deemed a part of this Indenture. ** N.A. means Not Applicable. THIS INDENTURE dated as of September 19, 2003 is between InVision Technologies, Inc., a corporation duly organized under the laws of the State of Delaware (the "Company"), and U.S. Bank National Association, a national banking association organized and existing under the laws of the United States, as Trustee (the "Trustee"). In consideration of the purchase of the Securities by the Holders thereof, both parties agree as follows for the benefit of the other and for the equal and ratable benefit of the Holders of the Company's 3% Convertible Senior Notes Due 2023. ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.1. DEFINITIONS. "Affiliate" means, with respect to any specified person, any other person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified person. For the purposes of this definition, "control" when used with respect to any person means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Agent" means any Registrar, Paying Agent or Conversion Agent. "Applicable Procedures" means, with respect to any transfer or exchange of beneficial ownership interests in a Global Security, the rules and procedures of the Depositary, in each case to the extent applicable to such transfer or exchange. "Board of Directors" means either the board of directors of the Company or any committee of the Board of Directors authorized to act for it with respect to this Indenture. "Business Day" means each day that is not a Legal Holiday. "Capital Stock" or "capital stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, but excluding any debt securities convertible into such equity. "Cash" or "cash" means such coin or currency of the United States as at any time of payment is legal tender for the payment of public and private debts. "Certificated Security" means a Security that is in substantially the form attached hereto as Exhibit A and that does not include the information or the schedule called for by footnotes 1, 3 and 4 thereof. "Common Stock" means the common stock of the Company, $0.001 par value per share, as it exists on the date of this Indenture and any shares of any class or classes of capital stock of the Company resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding-up of the Company and which are not subject to redemption by the Company; provided, however, that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable on conversion of Securities shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to the total number of shares of all such classes resulting from all such reclassifications. "Company" means the party named as such in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture, and thereafter "Company" shall mean such successor Company. "Corporate Trust Office" means the principal office of the Trustee at which at any particular time its corporate trust business shall be administered which office at the date of the execution of this Indenture is located at 633 West Fifth Street, 24th Floor, LM-CA-T24T, Los Angeles, CA 90071; Attention: Corporate Trust Services (InVision Technologies, Inc. -- 3% Convertible Senior Notes Due 2023) or at any other time at such other address as the Trustee may designate from time to time by notice to the Company. "Default" or "default" means, when used with respect to the Securities, any event which is or, after notice or passage of time or both, would be an Event of Default. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time. "Final Maturity Date" means October 1, 2023. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the date of this Indenture, including those set forth in (1) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (2) the statements and pronouncements of the Financial Accounting Standards Board, (3) such other statements by such other entity as approved by a significant segment of the accounting profession and (4) the rules and regulations of the SEC governing the inclusion of financial statements (including pro forma financial statements) in registration statements filed under the Securities Act and periodic reports required to be filed pursuant to Section 13 of the Exchange Act, including opinions and pronouncements in staff accounting bulletins and similar written statements from the accounting staff of the SEC. "Global Security" means a permanent global security that is in substantially the form attached hereto as Exhibit A and that includes the information and schedule called for by footnotes 1, 3 and 4 thereof and which is deposited with the Depositary or its custodian and registered in the name of the Depositary or its nominee. "Holder" or "Securityholder" means the person in whose name a Security is registered on the Primary Registrar's books. "Indenture" means this Indenture as amended or supplemented from time to time pursuant to the terms of this Indenture. "Initial Purchaser" means Merrill Lynch, Pierce, Fenner & Smith Incorporated. "Interest Payment Date" means April 1 and October 1 of each year. 2 "Liquidated Damages" has the meaning specified in the Registration Rights Agreement. All references herein to interest accrued or payable as of any date shall include any Liquidated Damages accrued or payable as of such date as provided in the Registration Rights Agreement. "Officer" means the Chairman or any Co-Chairman of the Board, any Vice Chairman of the Board, the Chief Executive Officer, the President, any Vice President, the Chief Financial Officer, the Controller, the Secretary, any Assistant Controller or any Assistant Secretary of the Company. "Officers' Certificate" means a certificate signed by two Officers; provided, however, that for purposes of Sections 4.11 and 6.3, "Officers' Certificate" means a certificate signed by the principal executive officer, principal financial officer or principal accounting officer of the Company and by one other Officer. "Opinion of Counsel" means a written opinion from legal counsel. The counsel may be an employee of or counsel to the Company or the Trustee. "Person" or "person" means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Principal" or "principal" of a debt security, including the Securities, means the principal of the security plus, when appropriate, the premium, if any, on the security. "Redemption Date" or "redemption date" when used with respect to any Security to be redeemed, means the date fixed by the Company for such redemption pursuant to this Indenture, as set forth in the form of Security annexed as Exhibit A hereto. "Redemption Price" when used with respect to any Security to be redeemed, means the price fixed for such redemption pursuant to this Indenture, as set forth in the form of Security annexed as Exhibit A hereto. "Registration Rights Agreement" means the Registration Rights Agreement dated, as of September 19, 2003, between the Company and the Initial Purchaser. "Regular Record Date" means, with respect to each Interest Payment Date, the March 15 or September 15, as the case may be, next preceding such Interest Payment Date. "Regulation S" means Regulation S under the Securities Act or any successor for such Rule. "Restricted Global Security" means a Global Security that is a Restricted Security. "Restricted Security" means a Security required to bear the restricted legend set forth in the form of Security set forth in Exhibit A of this Indenture. "Rule 144" means Rule 144 under the Securities Act or any successor to such Rule. "Rule 144A" means Rule 144A under the Securities Act or any successor to such Rule. "SEC" means the Securities and Exchange Commission. 3 "Securities" means the 3% Convertible Senior Notes due 2023 or any of them (each, a "Security"), as amended or supplemented from time to time, that are issued under this Indenture. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as in effect from time to time. "Securities Custodian" means the Trustee, as custodian with respect to the Securities in global form, or any successor thereto. "Significant Subsidiary" means, in respect of any Person, a Subsidiary of such Person that would constitute a "significant subsidiary" as such term is defined under Rule 1-02 of Regulation S-X under the Securities Act and the Exchange Act. "Subsidiary" means, in respect of any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of Capital Stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person. "TIA" means the Trust Indenture Act of 1939, as amended, and the rules and regulations thereunder as in effect on the date of this Indenture, except as provided in Section 11.3, and except to the extent any amendment to the Trust Indenture Act expressly provides for application of the Trust Indenture Act as in effect on another date. "Trading Day" means (i) if the Common Stock is quoted on the Nasdaq National Market or any other system of automated dissemination of quotations of securities prices, days on which trades may be effected through such system, (ii) if the Common Stock is listed or admitted for trading on any national or regional securities exchange, days on which such national or regional securities exchange is open for business, or (iii) if the Common Stock is not listed on a national or regional securities exchange or quoted on the Nasdaq National Market or any other system of automated dissemination of quotation of securities prices, days on which the Common Stock is traded regular way in the over-the-counter market and for which a closing bid and a closing asked price for the Common Stock are available. "Trustee" means the party named as such in the first paragraph of this Indenture until a successor replaces it in accordance with the provisions of this Indenture, and thereafter means the successor. "Trust Officer" means, with respect to the Trustee, any officer assigned to the Corporate Trust Office, and also, with respect to a particular matter, any other officer to whom such matter is referred because of such officer's knowledge of and familiarity with the particular subject. "Unrestricted Certificated Security" means a Certificated Security that is not a Restricted Security. "Unrestricted Global Security" means a Global Security that is not a Restricted Security. "Vice President" when used with respect to the Company or the Trustee, means any vice president, whether or not designated by a number or a word or words added before or after the title "vice president." 4 "Voting Stock" of a Person means all classes of Capital Stock or other interests (including partnership interests) of such Person then outstanding and normally entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof. SECTION 1.2. OTHER DEFINITIONS.
TERM DEFINED IN SECTION - --------------------------------------------------------------------------------------------- ------------------ "Agent Members".............................................................................. 2.1(b) "Bankruptcy Law"............................................................................. 8.1 "Change in Control".......................................................................... 3.8(a) "Change in Control Repurchase Date".......................................................... 3.8(a) "Change in Control Repurchase Notice"........................................................ 3.8(c) "Change in Control Repurchase Price"......................................................... 3.8(a) "Closing Price".............................................................................. 4.6(d) "Company Order".............................................................................. 2.2 "Company Put Right Notice" .................................................................. 3.12(b) "Conversion Agent"........................................................................... 2.3 "Conversion Date"............................................................................ 4.2 "Conversion Price"........................................................................... 4.1(b) "Conversion Rate"............................................................................ 4.1(b) "Conversion Value"........................................................................... 4.1(a) "Current Market Price"....................................................................... 4.6(d) "Custodian".................................................................................. 8.1 "DTC"........................................................................................ 2.1(a) "Depositary"................................................................................. 2.1(a) "Determination Date"......................................................................... 4.6(c) "Distribution Notice"........................................................................ 4.1(a) "Event of Default"........................................................................... 8.1 "Exchange Act"............................................................................... 3.8(a) "Expiration Date"............................................................................ 4.6(c) "Expiration Time"............................................................................ 4.6(c) "Instrument"................................................................................. 8.1(6) "Legal Holiday".............................................................................. 12.7 "Legend" .................................................................................... 2.12(a) "Merger Notice".............................................................................. 4.1(a) "Notice of Default".......................................................................... 8.1 "Paying Agent"............................................................................... 2.3 "Primary Registrar".......................................................................... 2.3 "Purchase Agreement"......................................................................... 2.1 "Purchased Shares"........................................................................... 4.6(c) "Put Right Purchase Date" ................................................................... 3.12 "Put Right Purchase Notice" ................................................................. 3.12 "Put Right Purchase Price" .................................................................. 3.12 "QIB"........................................................................................ 2.1 "Registrar".................................................................................. 2.3 "Rights"..................................................................................... 4.6(c) "Rights Plan"................................................................................ 4.6(c) "Spinoff Valuation Period.................................................................... 4.6(c) "Trading Price".............................................................................. 4.1(a)
5
TERM DEFINED IN SECTION - --------------------------------------------------------------------------------------------- ------------------ "Trigger Event" ............................................................................. 4.6(c) "Triggering Distribution".................................................................... 4.6(c)
SECTION 1.3. TRUST INDENTURE ACT PROVISIONS. Whenever this Indenture refers to a provision of the TIA, that provision is incorporated by reference in and made a part of this Indenture. The Indenture shall also include those provisions of the TIA required to be included herein by the provisions of the Trust Indenture Reform Act of 1990. The following TIA terms used in this Indenture have the following meanings: "indenture securities" means the Securities; "indenture security holder" means a Securityholder; "indenture to be qualified" means this Indenture; "indenture trustee" or "institutional trustee" means the Trustee; and "obligor" on the indenture securities means the Company or any other obligor on the Securities. All other terms used in this Indenture that are defined in the TIA, defined by TIA reference to another statute or defined by any SEC rule and not otherwise defined herein have the meanings assigned to them therein. SECTION 1.4. RULES OF CONSTRUCTION. Unless the context otherwise requires: (A) a term has the meaning assigned to it; (B) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (C) words in the singular include the plural, and words in the plural include the singular; (D) provisions apply to successive events and transactions; (E) the term "merger" includes a statutory share exchange and the term "merged" has a correlative meaning; (F) the masculine gender includes the feminine and the neuter; (G) references to agreements and other instruments include subsequent amendments thereto; and (H) "herein," "hereof" and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. 6 ARTICLE 2 THE SECURITIES SECTION 2.1. FORM AND DATING. The Securities and the Trustee's certificate of authentication shall be substantially in the respective forms set forth in Exhibit A, which Exhibit is incorporated in and made part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage. The Company shall provide any such notations, legends or endorsements to the Trustee in writing. Each Security shall be dated the date of its authentication. The Securities are being offered and sold by the Company pursuant to a Purchase Agreement, dated September 16, 2003 (the "Purchase Agreement"), between the Company and the Initial Purchaser, in transactions exempt from, or not subject to, the registration requirements of the Securities Act. (a) Restricted Global Securities. All of the Securities are initially being offered and sold to qualified institutional buyers as defined in Rule 144A (collectively, "QIBs" or individually, each a "QIB") in reliance on Rule 144A under the Securities Act and shall be issued initially in the form of one or more Restricted Global Securities, which shall be deposited on behalf of the purchasers of the Securities represented thereby with the Trustee, at its Corporate Trust Office, as custodian for the depositary, The Depository Trust Company ("DTC") (such depositary, or any successor thereto, being hereinafter referred to as the "Depositary"), and registered in the name of its nominee, Cede & Co., for the accounts of participation in the Depositary duly executed by the Company and authenticated by the Trustee as hereinafter provided. The aggregate principal amount of the Restricted Global Securities may from time to time be increased or decreased by adjustments made on the records of the Securities Custodian as hereinafter provided, subject in each case to compliance with the Applicable Procedures. (b) Global Securities In General. Each Global Security shall represent such of the outstanding Securities as shall be specified therein and each shall provide that it shall represent the aggregate amount of outstanding Securities from time to time endorsed thereon and that the aggregate amount of outstanding Securities represented thereby may from time to time be reduced or increased, as appropriate, to reflect replacements, exchanges, repurchases, redemptions, purchases or conversions of such Securities. Any adjustment of the aggregate principal amount of a Global Security to reflect the amount of any increase or decrease in the amount of outstanding Securities represented thereby shall be made by the Trustee in accordance with instructions given by the Holder thereof as required by Section 2.12 hereof and shall be made on the records of the Trustee and the Depositary. Members of, or participants in, the Depositary ("Agent Members") shall have no rights under this Indenture with respect to any Global Security held on their behalf by the Depositary or under the Global Security, and the Depositary (including, for this purpose, its nominee) may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and Holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall (A) prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or (B) impair, as between the Depositary and its Agent Members, the operation of customary practices governing the exercise of the rights of a Holder of any Security. (c) Book Entry Provisions. The Company shall execute and the Trustee shall, in accordance with this Section 2.1(c), authenticate and deliver initially one or more Global Securities that (i) shall be registered 7 in the name of the Depositary or its nominee, (ii) shall be delivered by the Trustee to the Depositary or pursuant to the Depositary's instructions and (iii) shall bear legends substantially to the following effect: "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO INVISION TECHNOLOGIES, INC. (THE "COMPANY") OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY." SECTION 2.2. EXECUTION AND AUTHENTICATION. The aggregate principal amount of Securities which may be authenticated and delivered under this Indenture is limited to $125,000,000, except as provided in Sections 2.6 and 2.7. An Officer shall sign the Securities for the Company by manual or facsimile signature attested by the manual or facsimile signature of the Secretary or an Assistant Secretary of the Company. Typographic and other minor errors or defects in any such facsimile signature shall not affect the validity or enforceability of any Security which has been authenticated and delivered by the Trustee. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. The Trustee shall authenticate and make available for delivery Securities for original issue in the aggregate principal amount of up to $125,000,000 upon receipt of a written order or orders of the Company signed by two Officers of the Company (a "Company Order"). The Company Order shall specify the amount of Securities to be authenticated, shall provide that all such Securities will be represented by a Restricted Global Security and the date on which each original issue of Securities is to be authenticated. 8 The Trustee shall act as the initial authenticating agent. Thereafter, the Trustee may appoint an authenticating agent acceptable to the Company to authenticate Securities. An authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent shall have the same rights as an Agent to deal with the Company or an Affiliate of the Company. The Securities shall be issuable only in registered form without coupons and only in denominations of $1,000 principal amount and any integral multiple thereof. SECTION 2.3. REGISTRAR, PAYING AGENT AND CONVERSION AGENT. The Company shall maintain one or more offices or agencies where Securities may be presented for registration of transfer or for exchange (each, a "Registrar"), one or more offices or agencies where Securities may be presented for payment (each, a "Paying Agent"), one or more offices or agencies where Securities may be presented for conversion (each, a "Conversion Agent") and one or more offices or agencies where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served. The Company will at all times maintain a Paying Agent, Conversion Agent, Registrar and an office or agency where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served in the Borough of Manhattan, The City of New York. One of the Registrars (the "Primary Registrar") shall keep a register of the Securities and of their transfer and exchange. The Company shall enter into an appropriate agency agreement with any Agent not a party to this Indenture. The agreement shall implement the provisions of this Indenture that relate to such Agent. The Company shall notify the Trustee of the name and address of any Agent not a party to this Indenture. If the Company fails to maintain a Registrar, Paying Agent, Conversion Agent or agent for service of notices and demands in any place required by this Indenture, or fails to give the foregoing notice, the Trustee shall act as such. The Company or any Affiliate of the Company may act as Paying Agent (except for the purposes of Section 6.1 and Article 10). The Company hereby initially designates the Trustee as Paying Agent, Registrar, Custodian (as defined in Section 8.1) and Conversion Agent, and each of the Corporate Trust Office of the Trustee and the office or agency of the Trustee in the Borough of Manhattan, The City of New York, one such office or agency of the Company for each of the aforesaid purposes. SECTION 2.4. PAYING AGENT TO HOLD MONEY IN TRUST. Prior to 11:00 a.m., New York City time, on each due date of the principal of, or interest, on any Securities, the Company shall deposit with a Paying Agent a sum sufficient to pay such principal or interest, so becoming due. Subject to Section 10.2, a Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money held by the Paying Agent for the payment of principal of, or interest, on the Securities, and shall notify the Trustee of any default by the Company (or any other obligor on the Securities) in making any such payment. If the Company or an Affiliate of the Company acts as Paying Agent, it shall, before 11:00 a.m., New York City time, on each due date of the principal of, or interest, on any Securities, segregate the money and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee, and the Trustee may at any time during the continuance of any default, upon written request to a Paying Agent, require such Paying Agent to pay forthwith to the Trustee all sums so held in trust by such Paying Agent. Upon doing so, the Paying Agent (other than the Company) shall have no further liability for the money. 9 SECTION 2.5. SECURITYHOLDER LISTS. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders. If the Trustee is not the Primary Registrar, the Company shall furnish to the Trustee on or before each semiannual Interest Payment Date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders. SECTION 2.6. TRANSFER AND EXCHANGE. (a) Subject to compliance with any applicable additional requirements contained in Section 2.12, when a Security is presented to a Registrar with a request to register a transfer thereof or to exchange such Security for an equal principal amount of Securities of other authorized denominations, the Registrar shall register the transfer or make the exchange as requested; provided, however, that every Security presented or surrendered for registration of transfer or exchange shall be duly endorsed or accompanied by an assignment form and, if applicable, a transfer certificate each in the form included in Exhibit A, and in form satisfactory to the Registrar duly executed by the Holder thereof or its attorney duly authorized in writing. To permit registration of transfers and exchanges, upon surrender of any Security for registration of transfer or exchange at an office or agency maintained pursuant to Section 2.3, the Company shall execute and the Trustee shall authenticate Securities of a like aggregate principal amount at the Registrar's request. Any exchange or transfer shall be without charge, except that the Company or the Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto, and provided, that this sentence shall not apply to any exchange pursuant to Section 2.10, 2.12(a), 3.6, 3.13, 4.2 (second to last paragraph) or 11.5. Neither the Company, any Registrar nor the Trustee shall be required to exchange or register a transfer of (i) any Securities for a period of 15 days next preceding mailing of a notice of Securities to be redeemed, (ii) any Securities or portions thereof selected or called for redemption (except in the case of redemption of a Security in part, the portion thereof not to be redeemed) or (iii) any Securities or portions thereof in respect of which a Change in Control Repurchase Notice has been delivered and not withdrawn by the Holder thereof (except, in the case of the purchase of a Security in part, the portion thereof not to be purchased). All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt and entitled to the same benefits under this Indenture, as the Securities surrendered upon such transfer or exchange. (b) Any Registrar appointed pursuant to Section 2.3 hereof shall provide to the Trustee such information as the Trustee may reasonably require in connection with the delivery by such Registrar of Securities upon transfer or exchange of Securities. (c) Each Holder of a Security agrees to indemnify the Company and the Trustee against any liability that may result from the transfer, exchange or assignment of such Holder's Security in violation of any provision of this Indenture and/or applicable United States federal or state securities law. The Trustee shall have no obligation or duty to monitor, determine or inquire as to compliance with any restrictions on transfer imposed under this Indenture or under applicable law with respect to any transfer of any interest in any Security (including any transfers between or among Agent Members or other beneficial 10 owners of interests in any Global Security) other than to require delivery of such certificates and other documentation or evidence as are expressly required by, and to do so if and when expressly required by the terms of, this Indenture, and to examine the same to determine substantial compliance as to form with the express requirements hereof. SECTION 2.7. REPLACEMENT SECURITIES. If any mutilated Security is surrendered to the Company, a Registrar or the Trustee, or the Company, a Registrar and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company, the applicable Registrar and the Trustee such security or indemnity as will be required by them to save each of them harmless, then, in the absence of notice to the Company, such Registrar or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be purchased, redeemed or repurchased by the Company pursuant to Article 3, the Company in its discretion may, instead of issuing a new Security, pay, redeem, repurchase or purchase such Security, as the case may be. Upon the issuance of any new Securities under this Section 2.7, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the reasonable fees and expenses of the Trustee or the Registrar) in connection therewith. Every new Security issued pursuant to this Section 2.7 in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the mutilated, destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder. The provisions of this Section 2.7 are (to the extent lawful) exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities. SECTION 2.8. OUTSTANDING SECURITIES. Securities outstanding at any time are all Securities authenticated by the Trustee, except for those canceled by it, those converted pursuant to Article 4, those delivered to it for cancellation or surrendered for transfer or exchange and those described in this Section 2.8 as not outstanding. If a Security is replaced pursuant to Section 2.7, it ceases to be outstanding unless the Company receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser. If a Paying Agent (other than the Company or an Affiliate of the Company) holds in respect of the outstanding Securities on a Redemption Date, a Change in Control Repurchase Date or the Final Maturity Date money sufficient to pay the principal of (including premium, if any) and accrued interest on Securities (or portions thereof) payable on that date, then on and after such Redemption Date, Change in Control 11 Repurchase Date, or the Final Maturity Date, as the case may be, such Securities (or portions thereof, as the case may be) shall cease to be outstanding and interest on them shall cease to accrue; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision thereof satisfactory to the Trustee has been made. Subject to the restrictions contained in Section 2.9, a Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security. SECTION 2.9. TREASURY SECURITIES. In determining whether the Holders of the required principal amount of Securities have concurred in any notice, direction, waiver or consent, Securities owned by the Company or any other obligor on the Securities or by any Affiliate of the Company or of such other obligor shall be disregarded, except that, for purposes of determining whether the Trustee shall be protected in relying on any such notice, direction, waiver or consent, only Securities which a Trust Officer of the Trustee actually knows are so owned shall be so disregarded. Securities so owned which have been pledged in good faith shall not be disregarded if the pledgee establishes to the satisfaction of the Trustee the pledgee's right so to act with respect to the Securities and that the pledgee is not the Company or any other obligor on the Securities or any Affiliate of the Company or of such other obligor. SECTION 2.10. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Company may prepare and execute, and, upon receipt of a Company Order, the Trustee shall authenticate and deliver, temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company with the consent of the Trustee considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate and deliver definitive Securities in exchange for temporary Securities. SECTION 2.11. CANCELLATION. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar, the Paying Agent and the Conversion Agent shall forward to the Trustee or its agent any Securities surrendered to them for transfer, exchange, redemption, repurchase, purchase, payment or conversion. The Trustee and no one else shall cancel, in accordance with its standard procedures, all Securities surrendered for transfer, exchange, redemption, repurchase, purchase, payment, conversion or cancellation and shall deliver the canceled Securities to the Company. All Securities which are redeemed, repurchased, purchased or otherwise acquired by the Company or any of its Subsidiaries prior to the Final Maturity Date shall be delivered to the Trustee for cancellation, and the Company may not hold or resell such Securities or issue any new Securities to replace any such Securities or any Securities that any Holder has converted pursuant to Article 4. SECTION 2.12. LEGEND; ADDITIONAL TRANSFER AND EXCHANGE REQUIREMENTS. (a) If Securities are issued upon the transfer, exchange or replacement of Securities subject to restrictions on transfer and bearing the legends set forth on the forms of Securities attached hereto as Exhibit A (collectively, the "Legend"), or if a request is made to remove the Legend on a Security, the Securities so issued shall bear the Legend, or the Legend shall not be removed, as the case may be, unless 12 there is delivered to the Company and the Registrar such satisfactory evidence, which shall include an opinion of counsel if requested by the Company or such Registrar, as may be reasonably required by the Company and the Registrar, that neither the Legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of Rule 144A, Rule 144 or Regulation S under the Securities Act or that such Securities are not "restricted" within the meaning of Rule 144 under the Securities Act; provided that no such evidence need be supplied in connection with the sale of such Security pursuant to a registration statement that is effective at the time of such sale. Upon (i) provision of such satisfactory evidence if requested, or (ii) notification by the Company to the Trustee and Registrar of the sale of such Security pursuant to a registration statement that is effective at the time of such sale, the Trustee, at the written direction of the Company, shall authenticate and deliver a Security that does not bear the Legend. If the Legend is removed from the face of a Security and the Security is subsequently held by an Affiliate of the Company, the Legend shall be reinstated. (b) A Global Security may not be transferred, in whole or in part, to any Person other than the Depositary or a nominee or any successor thereof, and no such transfer to any such other Person may be registered; provided that the foregoing shall not prohibit any transfer of a Security that is issued in exchange for a Global Security but is not itself a Global Security. No transfer of a Security to any Person shall be effective under this Indenture or the Securities unless and until such Security has been registered in the name of such Person. Notwithstanding any other provisions of this Indenture or the Securities, transfers of a Global Security, in whole or in part, shall be made only in accordance with this Section 2.12. (c) Subject to the succeeding paragraph, every Security shall be subject to the restrictions on transfer provided in the Legend other than a Restricted Global Security. Whenever any Restricted Security other than a Restricted Global Security is presented or surrendered for registration of transfer or for exchange for a Security registered in a name other than that of the Holder, such Security must be accompanied by a certificate in substantially the form set forth in Exhibit A, dated the date of such surrender and signed by the Holder of such Security, as to compliance with such restrictions on transfer. The Registrar shall not be required to accept for such registration of transfer or exchange any Security not so accompanied by a properly completed certificate. (d) The restrictions imposed by the Legend upon the transferability of any Security shall cease and terminate when such Security has been sold pursuant to an effective registration statement under the Securities Act or transferred in compliance with Rule 144 under the Securities Act (or any successor provision thereto) or, if earlier, upon the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision). Any Security as to which such restrictions on transfer shall have expired in accordance with their terms or shall have terminated may, upon a surrender of such Security for exchange to the Registrar in accordance with the provisions of this Section 2.12 (accompanied, in the event that such restrictions on transfer have terminated by reason of a transfer in compliance with Rule 144 or any successor provision, by, if requested by the Company or the Registrar, an opinion of counsel reasonably acceptable to the Company and addressed to the Company in form acceptable to the Company, to the effect that the transfer of such Security has been made in compliance with Rule 144 or such successor provision), be exchanged for a new Security, of like tenor and aggregate principal amount, which shall not bear the restrictive Legend. The Company shall inform the Trustee of the effective date of any registration statement registering the Securities under the Securities Act. The Trustee shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the aforementioned opinion of counsel or registration statement. 13 (e) As used in the preceding two paragraphs of this Section 2.12, the term "transfer" encompasses any sale, pledge, transfer, hypothecation or other disposition of any Security. (f) The provisions below shall apply only to Global Securities: (i) Notwithstanding any other provisions of this Indenture or the Securities, a Global Security shall not be exchanged in whole or in part for a Security registered in the name of any Person other than the Depositary or one or more nominees thereof, provided that a Global Security may be exchanged for Securities registered in the names of any person designated by the Depositary in the event that (A) the Depositary has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or such Depositary has ceased to be a "clearing agency" registered under the Exchange Act, and a successor Depositary is not appointed by the Company within 90 days, (B) the Company has provided the Depositary with written notice that it has decided to discontinue use of the system of book-entry transfer through the Depositary or any successor Depositary or (C) an Event of Default has occurred and is continuing with respect to the Securities. Any Global Security exchanged pursuant to clauses (A) or (B) above shall be so exchanged in whole and not in part, and any Global Security exchanged pursuant to clause (C) above may be exchanged in whole or from time to time in part as directed by the Depositary. Any Security issued in exchange for a Global Security or any portion thereof shall be a Global Security; provided that any such Security so issued that is registered in the name of a Person other than the Depositary or a nominee thereof shall not be a Global Security. (ii) Securities issued in exchange for a Global Security or any portion thereof shall be issued in definitive, fully registered form, without interest coupons, shall have an aggregate principal amount equal to that of such Global Security or portion thereof to be so exchanged, shall be registered in such names and be in such authorized denominations as the Depositary shall designate and shall bear the applicable legends provided for herein. Any Global Security to be exchanged in whole shall be surrendered by the Depositary to the Trustee, as Registrar. With regard to any Global Security to be exchanged in part, either such Global Security shall be so surrendered for exchange or, if the Trustee is acting as custodian for the Depositary or its nominee with respect to such Global Security, the principal amount thereof shall be reduced, by an amount equal to the portion thereof to be so exchanged, by means of an appropriate adjustment made on the records of the Trustee. Upon any such surrender or adjustment, the Trustee shall authenticate and deliver the Security issuable on such exchange to or upon the order of the Depositary or an authorized representative thereof. (iii) Subject to the provisions of clause (v) below, the registered Holder may grant proxies and otherwise authorize any Person, including Agent Members and persons that may hold interests through Agent Members, to take any action which a Holder is entitled to take under this Indenture or the Securities. (iv) In the event of the occurrence of any of the events specified in clause (i) above, the Company will promptly make available to the Trustee a reasonable supply of Certificated Securities in definitive, fully registered form, without interest coupons. (v) Neither Agent Members nor any other Persons on whose behalf Agent Members may act shall have any rights under this Indenture with respect to any Global 14 Security registered in the name of the Depositary or any nominee thereof, or under any such Global Security, and the Depositary or such nominee, as the case may be, may be treated by the Company, the Trustee and any agent of the Company or the Trustee as the absolute owner and holder of such Global Security for all purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the Company, the Trustee or any agent of the Company or the Trustee from giving effect to any written certification, proxy or other authorization furnished by the Depositary or such nominee, as the case may be, or impair, as between the Depositary, its Agent Members and any other Person on whose behalf an Agent Member may act, the operation of customary practices of such Persons governing the exercise of the rights of a holder of any Security. SECTION 2.13. CUSIP NUMBERS. The Company in issuing the Securities may use one or more "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption or purchase as a convenience to Holders; provided that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption or purchase and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption or purchase shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee of any change in the "CUSIP" numbers. ARTICLE 3 REDEMPTION, PURCHASE AND REPURCHASE SECTION 3.1. TO REDEEM; NOTICE TO TRUSTEE. The Securities may be redeemed at the election of the Company, as a whole or from time to time in part, at any time on or after October 1, 2008 at the Redemption Price, together with any accrued interest up to, but not including, the Redemption Date; provided that, if the Redemption Date falls after a Regular Record Date and on or before an Interest Payment Date, then interest on the Securities shall be payable to the Holders in whose name the Securities are registered at the close of business on such Regular Record Date. If the Company elects to redeem Securities pursuant to this Section 3.1 and paragraph 5 of the Securities, it shall notify the Trustee at least 25 days prior to the Redemption Date as fixed by the Company (unless a shorter notice shall be satisfactory to the Trustee) of the Redemption Date and the principal amount of Securities to be redeemed. If fewer than all of the Securities are to be redeemed, the record date relating to such redemption shall be selected by the Company and given to the Trustee, which record date shall not be less than five days after the date of notice to the Trustee. SECTION 3.2. SELECTION OF SECURITIES TO BE REDEEMED. If less than all of the Securities are to be redeemed, unless the procedures of the Depositary provide otherwise, the Trustee shall, at least 20 days but not more than 60 days prior to the Redemption Date, select the Securities to be redeemed. The Trustee shall make the selection from the Securities outstanding and not previously called for redemption by lot, or in its discretion, on a pro rata basis. Securities in denominations of $1,000 may only be redeemed in whole. The Trustee may select for redemption portions (equal to $1,000 or any integral multiple thereof) of the principal of Securities that have denominations larger than $1,000. 15 Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed to be the portion selected for redemption. Securities which have been converted subsequent to the Trustee commencing selection of Securities to be redeemed but prior to redemption of such Securities shall be treated by the Trustee as outstanding for the purpose of such selection. SECTION 3.3. NOTICE OF REDEMPTION. At least 20 days but not more than 60 days before a Redemption Date, the Company shall mail or cause to be mailed a notice of redemption to each Holder of Securities to be redeemed at such Holder's address as it appears on the Registrar's books. The notice shall identify the Securities (including CUSIP numbers) to be redeemed and shall state: (i) the Redemption Date; (ii) the Redemption Price; (iii) the then current Conversion Price and Conversion Rate; (iv) the name and address of each Paying Agent and Conversion Agent; (v) that Securities called for redemption must be presented and surrendered to a Paying Agent to collect the Redemption Price; (vi) that Holders who wish to convert Securities must surrender such Securities for conversion no later than the close of business on the Business Day immediately preceding the Redemption Date and must satisfy the other requirements set forth in paragraph 9 of the Securities and Article 4 hereof; (vii) that, unless the Company defaults in making the payment of the Redemption Price, interest on Securities called for redemption shall cease accruing on and after the Redemption Date and the only remaining right of the Holder shall be to receive payment of the Redemption Price plus accrued interest upon presentation and surrender to a Paying Agent of the Securities; and (viii) if any Security is being redeemed in part, the portion of the principal amount of such Security to be redeemed and that, after the Redemption Date, upon presentation and surrender of such Security, a new Security or Securities in aggregate principal amount equal to the unredeemed portion thereof will be issued. If any of the Securities to be redeemed is in the form of a Global Security, then the Company shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to redemptions. At the Company's written request, which request shall (i) be irrevocable once given and (ii) set forth all relevant information required by clauses (i) through (viii) of the preceding paragraph, the Trustee shall give the notice of redemption to each Holder in the Company's name and at the Company's expense. 16 At the Company's request, the Trustee shall give such notice of redemption on behalf of the Company and at the Company's expense; provided, however, that, in all cases, the text of such notice of redemption shall be prepared by the Company. SECTION 3.4. EFFECT OF NOTICE OF REDEMPTION. Once notice of redemption is mailed, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price stated in the notice, together with accrued interest, except for Securities that are converted in accordance with the provisions of Article 4. On or after the Redemption Date and upon presentation and surrender to a Paying Agent, Securities called for redemption shall be paid at the Redemption Price, plus any accrued interest, up to but not including the Redemption Date; provided that if the Redemption Date falls after a Regular Record Date and on or before an Interest Payment Date, then interest on the Securities will be payable to the Holders in whose names the Securities are registered at the close of business on such Regular Record Date. SECTION 3.5. DEPOSIT OF REDEMPTION PRICE. Prior to 11:00 a.m., New York City time, on the Redemption Date, the Company shall deposit with a Paying Agent (or, if the Company acts as Paying Agent, shall segregate and hold in trust) an amount of money (in immediately available funds if deposited on such Redemption Date) sufficient to pay the Redemption Price of, and any accrued interest on, all Securities to be redeemed on that date, other than Securities or portions thereof called for redemption on that date which have been delivered by the Company to the Trustee for cancellation or have been converted. The Paying Agent shall as promptly as practicable return to the Company any money not required for that purpose because of the conversion of Securities pursuant to Article 4 or, if such money is then held by the Company in trust and is not required for such purpose, it shall be discharged from the trust. SECTION 3.6. SECURITIES REDEEMED IN PART. Upon presentation and surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security equal in principal amount to the unredeemed portion of the Security surrendered. SECTION 3.7. CONVERSION ARRANGEMENT ON CALL FOR REDEMPTION. In connection with any redemption of Securities, the Company may arrange for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment banks or other purchasers to purchase such Securities by paying to a Paying Agent (other than the Company or any of its Affiliates) in trust for the Holders, on or before 11:00 a.m. New York City time, on the Redemption Date, an amount that, together with any amounts deposited with such Paying Agent by the Company for the redemption of such Securities, is not less than the Redemption Price, together with any accrued interest accrued to, but not including, the Redemption Date of such Securities. Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the Redemption Price of such Securities, including all accrued interest shall be deemed to be satisfied and discharged to the extent such amount is so paid by such purchasers; provided, however, that nothing in this Section 3.7 shall relieve the Company of its obligation to pay the Redemption Price, plus any accrued interest, to but excluding the relevant Redemption Date, on Securities called for redemption. If such an agreement with one or more 17 investment banks or other purchasers is entered into, any Securities called for redemption and not surrendered for conversion by the Holders thereof prior to the relevant Redemption Date may, at the option of the Company upon written notice to the Trustee, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article 4) surrendered by such purchasers for conversion, all as of 11:00 a.m., New York City time, on the Redemption Date, subject to payment of the above amount as aforesaid. The Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it for purchase in the same manner as it would money deposited with it by the Company for the redemption of Securities. Without the Paying Agent's prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Paying Agent as set forth in this Indenture, and the Company agrees to indemnify the Paying Agent from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture. SECTION 3.8. REPURCHASE OF SECURITIES AT OPTION OF THE HOLDER UPON CHANGE IN CONTROL. (a) If at any time the Securities remain outstanding there shall have occurred a Change in Control, all or any portion of the Securities of any Holder equal to $1,000 or a whole multiple of $1,000, shall be repurchased by the Company, at the option of such Holder, at a repurchase price equal to 100% of the principal amount of the Securities to be repurchased, together with interest accrued and unpaid to, but excluding, the repurchase date (the "Change in Control Repurchase Price"), on the date (the "Change in Control Repurchase Date") that is 45 days after the date of the Change in Control Repurchase Notice; provided, however, if the Change in Control Repurchase Date falls after a Regular Record Date and on or before an Interest Payment Date, then interest on the Securities shall be payable to the Holders in whose name the Securities are registered at the close of business on such Regular Record Date. Whenever in this Indenture (including Sections 2.1, 8.1 and 8.7 hereof) or in the form of Securities there is a reference, in any context, to the principal of any Securities as of any time, such reference shall be deemed to include reference to the Change in Control Repurchase Price payable in respect to such Securities to the extent that such Change in Control Repurchase Price is, was or would be so payable at such time, and express mention of the Change in Control Repurchase Price in any provision of this Indenture shall not be construed as excluding the Change in Control Repurchase Price in those provisions of this Indenture when such express mention is not made. A "Change in Control" of the Company, or any successor entity who is subject to the terms of this Indenture, shall be deemed to have occurred at such time after the original issuance of Securities as any of the following events shall occur: (1) the acquisition by any person of beneficial ownership, directly or indirectly, through a purchase, merger or other acquisition transaction or series of transactions, of shares of the Capital Stock of the Company (or in the case of a merger or consolidation described in clause (2)(C) below, the common stock referred to in such clause) entitling that person to exercise 50% or more of the total voting power of all shares 18 of such Capital Stock (or common stock) entitled to vote generally in elections of directors, other than any acquisition by the Company, any of its Subsidiaries or any employee benefit plans of the Company. (2) any consolidation or merger of the Company with or into any other person, any merger of another person into the Company, or any conveyance, transfer, sale, lease or other disposition of all or substantially all of the Company's properties and assets to another person, other than: (A) any transaction (1) that does not result in any reclassification, conversion, exchange or cancellation of outstanding shares of the Capital Stock of the Company and (2) pursuant to which holders of the Capital Stock of the Company immediately prior to the transaction are entitled to exercise, directly or indirectly, 50% or more of the total voting power of all shares of the Capital Stock of the Company entitled to vote generally in the election of directors of the continuing or surviving person immediately after the transaction; (B) any merger solely for the purpose of changing the Company's jurisdiction of incorporation and resulting in a reclassification, conversion or exchange of outstanding shares of Common Stock solely into shares of common stock of the surviving entity; (C) in the case of a merger or consolidation, all of the consideration (excluding cash payments for fractional shares and cash payments pursuant to dissenters' appraisal rights) in the merger or consolidation otherwise constituting the Change in Control consists of shares of common stock traded on a United States national securities exchange or quoted on the Nasdaq National Market (or which will be so traded or quoted when issued or exchanged in connection with such Change in Control) and as a result of such transaction or transactions the Securities become convertible solely into such common stock. (3) during any consecutive two-year period, individuals who at the beginning of that two-year period constituted the Board of Directors (together with any new directors whose election to the Board of Directors, or whose nomination for election by the stockholders of the Company, was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election were previously so approved) cease to constitute a majority of the Board of Directors then in office, except if such change results solely and directly from, force majeure, acts of war and/or terrorism; or (4) a resolution is passed by the Company's stockholders approving a plan of liquidation or dissolution of the Company other than in a transaction which complies with the provisions described in Article 7 of the Indenture. Beneficial ownership shall be determined in accordance with Rule 13d-3 promulgated by the SEC under the Securities and Exchange Act of 1934, as amended (the "Exchange Act"). The term "person" shall include any syndicate or group that would be deemed to be a "person" under Section 13(d)(3) of the Exchange Act. (b) Within 30 days after the occurrence of a Change in Control, the Company, or, at the written request and expense of the Company, the Trustee, shall mail a written notice of the Change in Control to the Trustee (if the Trustee does not mail such notice) and to each Holder (and to beneficial owners as required by applicable law). The notice shall include the form of a Change in Control Repurchase Notice to be completed by the Holder and shall state: 19 (1) the date of such Change in Control and, briefly, the events causing such Change in Control; (2) the date by which the Change in Control Repurchase Notice pursuant to this Section 3.8 must be given; (3) the Change in Control Repurchase Date; (4) the Change in Control Repurchase Price; (5) the Holder's right to require the Company to repurchase the Securities; (6) briefly, the conversion rights of the Securities; (7) the name and address of each Paying Agent and Conversion Agent and that the Securities must be surrendered to the Paying Agent to collect payment; (8) the Conversion Price and Conversion Rate and any adjustments thereto; (9) that Securities as to which a Change in Control Repurchase Notice has been given may be converted into Common Stock pursuant to Article 4 of this Indenture only to the extent that the Change in Control Repurchase Notice has been withdrawn in accordance with the terms of this Indenture; (10) the procedures that the Holder must follow to exercise rights under this Section 3.8; (11) the procedures for withdrawing a Change in Control Repurchase Notice, including a form of notice of withdrawal; and (12) that the Holder must satisfy the requirements set forth in the Securities in order to convert the Securities. If any of the Securities is in the form of a Global Security, then the Company shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to the repurchase of Global Securities. (c) A Holder may exercise its rights specified in subsection (a) of this Section 3.8 upon delivery of a written notice (which shall be in substantially the form included in Exhibit A hereto and which may be delivered by letter, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may be delivered electronically or by other means in accordance with the Depositary's customary procedures) of the exercise of such rights (a "Change in Control Repurchase Notice") to any Paying Agent at any time prior to the close of business on the Business Day next preceding the Change in Control Repurchase Date. The delivery of such Security to any Paying Agent prior to, on or after the Change in Control Repurchase Date (together with all necessary endorsements) at the office of such Paying Agent shall be a condition to the receipt by the Holder of the Change in Control Repurchase Price therefor. The Company shall repurchase from the Holder thereof, pursuant to this Section 3.8, a portion of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of the 20 Indenture that apply to the repurchase of all of a Security pursuant to this Article 3 also apply to the repurchase of such portion of such Security. Notwithstanding anything herein to the contrary, any Holder delivering to a Paying Agent the Change in Control Repurchase Notice contemplated by this subsection (c) shall have the right to withdraw such Change in Control Repurchase Notice in whole or in a portion thereof that is a principal amount of $1,000 or in an integral multiple thereof at any time prior to the close of business on the Business Day next preceding the Change in Control Repurchase Date by delivery of a written notice of withdrawal to the Paying Agent in accordance with Section 3.9. A Paying Agent shall promptly notify the Company of the receipt by it of any Change in Control Repurchase Notice or written withdrawal thereof. Anything herein to the contrary notwithstanding, in the case of Global Securities, any Change in Control Repurchase Notice may be delivered or withdrawn and such Securities may be surrendered or delivered for repurchase in accordance with the Applicable Procedures as in effect from time to time. SECTION 3.9. EFFECT OF CHANGE IN CONTROL REPURCHASE NOTICE. Upon receipt by any Paying Agent of the Change in Control Repurchase Notice specified in Section 3.8(c), the Holder of the Security in respect of which such Change in Control Repurchase Notice was given shall (unless such Change in Control Repurchase Notice is withdrawn as specified below) thereafter be entitled to receive the Change in Control Repurchase Price with respect to such Security. Such Change in Control Repurchase Price shall be paid to such Holder promptly following the later of (a) the Change in Control Repurchase Date with respect to such Security (provided the conditions in Section 3.8(c) have been satisfied) and (b) the time of delivery of such Security to a Paying Agent by the Holder thereof in the manner required by Section 3.8(c). Securities in respect of which a Change in Control Repurchase Notice has been given by the Holder thereof may not be converted into shares of Common Stock pursuant to Article 4 on or after the date of the delivery of such Change in Control Repurchase Notice unless such Change in Control Repurchase Notice has first been validly withdrawn. A Change in Control Repurchase Notice may be withdrawn by means of a written notice (which may be delivered by mail, overnight courier, hand delivery, facsimile transmission or in any other written form and, in the case of Global Securities, may be delivered electronically or by other means in accordance with the Depositary's customary procedures) of withdrawal delivered by the Holder to a Paying Agent at any time prior to the close of business on the Business Day immediately preceding the Change in Control Repurchase Date, specifying the principal amount of the Security or portion thereof (which must be a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof) with respect to which such notice of withdrawal is being submitted. SECTION 3.10. DEPOSIT OF CHANGE IN CONTROL REPURCHASE PRICE. On or before 11:00 a.m. New York City time on the Change in Control Repurchase Date, the Company shall deposit with the Trustee or with a Paying Agent (other than the Company or an Affiliate of the Company) an amount of money (in immediately available funds if deposited on such Change in Control Repurchase Date) sufficient to pay the aggregate Change in Control Repurchase Price of all the Securities or portions thereof that are to be purchased as of such Change in Control Repurchase Date. The manner in which the deposit required by this Section 3.10 is made by the Company shall be at the option of the 21 Company, provided that such deposit shall be made in a manner such that the Trustee or a Paying Agent shall have immediately available funds on the Change in Control Repurchase Date. If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the Change in Control Repurchase Price of any Security for which a Change in Control Repurchase Notice has been tendered and not withdrawn in accordance with this Indenture then, on the Change in Control Repurchase Date, such Security will cease to be outstanding and the rights of the Holder in respect thereof shall terminate (other than the right to receive the Change in Control Repurchase Price as aforesaid). The Company shall publicly announce the principal amount of Securities purchased as a result of such Change in Control on or as soon as practicable after the Change in Control Repurchase Date. SECTION 3.11. REPAYMENT TO THE COMPANY. To the extent that the aggregate amount of cash deposited by the Company pursuant to Sections 3.10 or 3.12 exceeds the aggregate Change in Control Repurchase Price or Put Right Purchase Price, as the case may be, together with interest thereon of the Securities or portions thereof that the Company is obligated to purchase, then promptly after the Change in Control Repurchase Date or Put Right Purchase Date, as the case may be, the Trustee or a Paying Agent, as the case may be, shall return any such excess cash to the Company. SECTION 3.12. PURCHASE OF SECURITIES AT OPTION OF THE HOLDER ON SPECIFIED DATES. (a) Securities shall be purchased in cash by the Company in accordance with the provisions of paragraph 8 of the Securities promptly after October 1, 2008, October 1, 2013 and October 1, 2018 (each a respective "Put Right Purchase Date"), at a purchase price per Security equal to 100% of the aggregate principal amount of the Security, together with any accrued interest up to but not including the applicable Put Right Purchase Date (the "Put Right Purchase Price"); provided that if the Put Right Purchase Date falls after a Regular Record Date and on or before the related Interest Payment Date, any interest on the Securities will be payable to the Holders in whose names the Securities are registered at the close of business on such Regular Record Date. (b) The Company shall give written notice of the applicable Put Right Purchase Date by notice sent by first-class mail to the Trustee and to each Holder (at its address shown in the register of the Registrar) not less than 20 Business Days prior to each Put Right Purchase Date (the "Company Put Right Notice"). Each Company Put Right Notice shall include a form of Put Right Purchase Notice to be completed by a Securityholder and shall state: (1) the Put Right Purchase Price, the Put Right Purchase Date and the Conversion Price and Conversion Rate then in effect; (2) the name and address of the Paying Agent and the Conversion Agent; (3) that Securities as to which a Put Right Purchase Notice has been given may be converted if they are otherwise convertible only in accordance with Article 4 hereof and paragraph 9 of the Securities only to the extent that the Put Right Purchase Notice has been withdrawn in accordance with the terms of this Indenture; (4) that Securities must be surrendered to the Paying Agent to collect payment; 22 (5) that the Put Right Purchase Price for any Security as to which a Put Right Purchase Notice has been given and not withdrawn will be paid promptly following the later of the Put Right Purchase Date and the time of surrender of such Security as described in subclause (4) above; (6) the procedures the Holder must follow to exercise rights under this Section and a brief description of those rights; (7) briefly, the conversion rights of the Securities; (8) the procedures for withdrawing a Put Right Purchase Notice (including pursuant to the terms of Section 3.12(d)); (9) that, unless the Company defaults in making payment on Securities for which a Put Right Purchase Notice has been submitted, interest on such Securities will cease to accrue on and after the Put Right Purchase Date; and (10) the CUSIP number of the Securities. If any of the Securities are to be redeemed in the form of a Global Security, the Company shall modify such notice to the extent necessary to accord with the procedures of the Depositary applicable to redemptions. At the Company's request, the Trustee shall give such Company Put Right Notice on behalf of the Company and at the Company's expense; provided, however, that, in all cases, the text of such Company Put Right Notice shall be prepared by the Company. (c) Purchases of Securities by the Company pursuant to this Section 3.12 shall be made, at the option of the Holder thereof, upon: (1) delivery to the Paying Agent by the Holder of a written notice of purchase in the form set forth in Exhibit A attached hereto (a "Put Right Purchase Notice") at any time from the opening of business on the date that is 20 Business Days prior to the applicable Put Right Purchase Date until the close of business on the Put Right Purchase Date stating: (A) if certificated Securities have been issued, the certificate number of the Security which the Holder will deliver to be purchased (or if the Securities are not certificated, the Put Right Purchase Notice must comply with the procedures of the Depositary applicable to repurchases), (B) the portion (which may be 100%) of the principal amount of the Security which the Holder will deliver to be purchased, which portion must be in a principal amount of $1,000 or an integral multiple thereof, and (C) that such Security shall be purchased as of the applicable Put Right Purchase Date pursuant to the terms and conditions specified in paragraph 8 of the Securities and in this Section 3.12 of this Indenture. (2) delivery of such Security to the Paying Agent at any time after delivery of the Put Right Purchase Notice (together with all necessary endorsements) at the offices of the Paying Agent (if the Securities are not certificated, such delivery must comply with the procedures of the Depositary applicable to 23 repurchases). Delivery of such Security shall be a condition to receipt by the Holder of the Put Right Purchase Price therefor. The Put Right Purchase Price shall be paid pursuant to this Section 3.12 only if the Security delivered to the Paying Agent shall conform in all respects to the description thereof in the related Put Right Purchase Notice, as determined by the Company. (d) Notwithstanding anything herein to the contrary, any Holder delivering to the Paying Agent the Put Right Purchase Notice contemplated by this Section 3.12 shall have the right to withdraw such Put Right Purchase Notice at any time prior to the close of business on the Put Right Purchase Date by delivery of a written notice of withdrawal to the Paying Agent specifying: (1) the certificate number, if any, of the Security in respect of which such notice of withdrawal is being submitted (or, if the Securities are not certificated, the withdrawal notice must comply with the procedures of the Depositary applicable to withdrawals), (2) the aggregate principal amount of the Security with respect to which such notice of withdrawal is being submitted, and (3) the aggregate principal amount, if any, of such Security which remains subject to the original Put Right Purchase Notice and which has been or will be delivered for purchase by the Company. The Paying Agent shall promptly notify the Company of the receipt by it of any Put Right Purchase Notice or written notice of withdrawal thereof. (e) On or before 5:00 p.m. (local time in the City of New York) on the Business Day following the Put Right Purchase Date, the Company shall deposit with the Trustee or with the Paying Agent (or if the Company or an Affiliate of the Company is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.4) an amount of money (in immediately available funds if deposited on such Put Right Purchase Date) sufficient to pay the aggregate Put Right Purchase Price of all the Securities or portions thereof which are to be purchased as of the Put Right Purchase Date. The manner in which the deposit required by this Section 3.12(e) is made by the Company shall be at the option of the Company; provided that such deposit shall be made in a manner such that the Trustee or a Paying Agent shall have immediately available funds by the close of business on the Business Day after the Put Right Purchase Date. If a Paying Agent holds, in accordance with the terms hereof, money sufficient to pay the Put Right Purchase Price of any Security for which a Put Right Notice has been tendered and not withdrawn on the Put Right Purchase Date, then, on the close of business on the Business Day after the Put Right Purchase Date, such Security will cease to be outstanding, whether or not the Security is delivered to the Paying Agent, and the rights of the Holder in respect thereof shall terminate (other than the right to receive the Put Right Purchase Price as aforesaid) and interest will cease to accrue on such Security. The Put Right Purchase Price shall be paid to such Holder with respect to Securities for which a Put Right Purchase Notice has been tendered and not withdrawn, subject to receipt of funds by the Paying Agent, promptly following the later of (x) the Business Day after the Put Right Purchase Date with respect to such Security (provided the conditions in Section 3.12(c) have been satisfied) and (y) the time of delivery of such Security to the Paying Agent by the Holder thereof in the manner required by Section 3.12(c). Securities in respect of which a Put Right Purchase Notice has been given by the Holder thereof may not be converted pursuant to Article 4 hereof on or after the date of the delivery of such Put Right Purchase Notice, unless such Put Right Purchase Notice has first been validly withdrawn as specified in Section 3.12(d). 24 To the extent that the aggregate amount of cash deposited by the Company pursuant to this Section 3.12(e) exceeds the aggregate Put Right Purchase Price of the Securities or portions thereof that the Company is obligated to purchase, then promptly after the Put Right Purchase Date the Trustee or a Paying Agent, as the case may be, shall return any such excess cash to the Company. (f) There shall be no purchase of any Securities pursuant to this Section 3.12 if there has occurred (prior to, on or after as the case may be, the giving, by the Holders of such Securities, of the required Put Right Purchase Notice) and is continuing an Event of Default (other than a default in the payment of the Put Right Purchase Price). The Paying Agent will promptly return to the respective Holders thereof any Securities (x) with respect to which a Put Right Purchase Notice has been withdrawn in compliance with this Indenture, or (y) held by it during the continuance of an Event of Default (other than a default in the payment of the Put Right Purchase Price) in which case, upon such return, the Put Right Purchase Notice with respect thereto shall be deemed to have been withdrawn. Upon receipt by the Paying Agent of the Put Right Purchase Notice specified in Section 3.12(c), the Holder of the Security in respect of which such Put Right Purchase Notice was given shall (unless such Put Right Purchase Notice is withdrawn as specified herein) thereafter be entitled to receive solely the Put Right Purchase Price with respect to such Security. (g) The Company shall purchase from the Holder thereof, pursuant to this Section 3.12, a portion of a Security if the principal amount of such portion is $1,000 or an integral multiple of $1,000. Provisions of this Indenture that apply to the purchase of all of a Security also apply to the purchase of such portion of such Security. SECTION 3.13. SECURITIES PURCHASED IN PART. Any Security that is to be purchased only in part shall be surrendered at the office of a Paying Agent, and promptly after the Change in Control Repurchase Date or the Put Right Purchase Date, as the case may be, the Company shall execute and the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of such authorized denomination or denominations as may be requested by such Holder, in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered that is not purchased or repurchased. SECTION 3.14. COMPLIANCE WITH SECURITIES LAWS UPON REPURCHASE OF SECURITIES. In connection with any offer to purchase or repurchase of Securities under Section 3.8 or Section 3.12, the Company shall (a) comply with Rule 13e-4 and Rule 14e-1 (or any successor to either such Rule), if applicable, under the Exchange Act, (b) file the related Schedule TO (or any successor or similar schedule, form or report) if required under the Exchange Act, and (c) otherwise comply with all federal and state securities laws in connection with such offer to purchase or repurchase of Securities, all so as to permit the rights of the Holders and obligations of the Company under Sections 3.8 through 3.12 to be exercised in the time and in the manner specified therein. 25 ARTICLE 4 CONVERSION SECTION 4.1. CONVERSION PRIVILEGE AND CONVERSION RATE. (a) Subject to and upon compliance with the provisions of this Article and the Securities, at the option of the Holder thereof, any Security that is an integral multiple of $1,000 may be converted into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100th of a share) of Common Stock of the Company at any time on or prior to the close of business on the Final Maturity Date at the Conversion Rate, determined as hereinafter provided, in effect at the time of conversion and subject to the adjustments described below, only under the following circumstances: (1) prior to October 1, 2021, on any date during any fiscal quarter (and only during such fiscal quarter) after the fiscal quarter ending September 28, 2003, if the Closing Price per share of the Common Stock was more than 110% of the then current Conversion Price for at least 20 Trading Days in the period of the 30 consecutive Trading Days ending on the last day of the previous fiscal quarter; (2) on or after October 1, 2021, at all times on or after any date on which the Closing Price per share of the Common Stock is more than 110% of the then current Conversion Price on the Securities; (3) until the close of business on the Business Day prior to the Redemption Date if the Company elects to redeem the Securities on or after October 1, 2008; (4) if the Company distributes to all or substantially all holders of Common Stock rights, options or warrants entitling them to purchase Common Stock at less than the Closing Price per share of the Common Stock on the last Trading Day preceding the declaration for such distribution; (5) if the Company distributes to all or substantially all holders of Common Stock cash, assets, debt securities or capital stock, which distribution has a per share value as determined by the Board of Directors exceeding 10% of the Closing Price per share of the Common Stock on the last Trading Day preceding the declaration for such distribution; (6) if the Company becomes a party to a consolidation, merger or binding share exchange pursuant to which all or substantially all of the Company's Common Stock would be converted to cash, securities or other property, or if the Company undergoes a Change in Control or an event occurs that would have been a Change in Control but for the existence of one of the Change in Control exceptions pursuant to Section 3.8(a)(2) of this Indenture; or (7) for the ten Business Day period after any five consecutive Trading Day period in which the average Trading Prices for the Securities for such five Trading Day period was less than 98% of the average Conversion Value for the Securities during such period; provided, however, that a Holder may not convert its Securities pursuant to this clause (7) if, on the Conversion Date, the Closing Price per share of Common Stock is greater than or equal to the then current Conversion Price of the Securities and less than or equal to 110% of the then current Conversion Price of the Securities. In the case of a distribution contemplated by clauses (4) and (5) of this Section 4.1(a), the Company will notify Holders at least 20 days prior to the ex-dividend date for such distribution (the "Distribution Notice"). Once the Company has given the Distribution Notice, Holders may surrender their Securities for 26 conversion at any time until the earlier of the close of business on the last Business Day preceding the ex-dividend date or the Company's announcement that such distribution will not take place. Notwithstanding the foregoing, in the event of a distribution contemplated by clauses (4) and (5) of this Section 4.1(a), Holders may not convert the Securities if the Holders may participate in such distribution without converting their Securities. In the case of an event contemplated by clause (6) of this Section 4.1(a), the Company will notify Holders at least 25 days prior to the anticipated effective date of such transaction (the "Merger Notice"). Once the Company has given the Merger Notice, the Holders may surrender Securities for conversion at any time from and after the date which is 15 days prior to the anticipated effective date of such transaction until the date which is 15 days after the actual effective date of such transaction. If the Company is party to a transaction contemplated by clause (6) of this Section 4.1(a), then at the effective time of the transaction, the right to convert a Security into shares of Common Stock shall be changed into a right to convert such Security into the kind and amount of cash, securities or other property of the Company or another person that the Holders would have received if the Holders had converted such Security immediately prior to the effective time of the transaction. With respect to clause (1) of this Section 4.1(a), the Conversion Agent will determine, on behalf of the Company, on the first Business Day of each fiscal quarter whether the Securities are convertible as set forth in such clause (1) as a result of the Closing Price per share of the Common Stock and the then current Conversion Price and, if so, will notify the Company. With respect to clause (2) of this section 4.1(a), the Conversion Agent will determine, on behalf of the Company, daily on any date on or after October 1, 2021, whether the Securities are convertible as set forth in such clause (2) as a result of the Closing Price per share of the Common Stock and the then current Conversion Price and, if so, will notify the Company. The "Conversion Value" for the Securities is equal to the product of (i) the Closing Price per share of the Common Stock on a given day and (ii) the then current Conversion Rate. The "Trading Price" of the Securities on any date of determination means the average of the secondary market bid quotations per Security obtained by the Conversion Agent for $5,000,000 principal amount of the Securities at approximately 4:00 p.m., New York City time, on such determination date from three unaffiliated nationally recognized securities dealers the Company selects, which may include the Initial Purchaser, provided that if at least three such bids cannot be reasonably obtained by the Conversion Agent, but two bids are obtained, then the average of the two bids will be used, and if only one such bid can be reasonably obtained by the Conversion Agent, this one bid will be used. If the Conversion Agent, through the exercise of reasonable efforts, cannot obtain at least one bid for $5,000,000 principal amount of the Securities from a nationally recognized securities dealer or if in the Company's reasonable judgment, the bid quotations are not indicative of the secondary market value of the Securities, then the Trading Price of the Securities will be deemed to be less than 98% of the product of the then current Conversion Rate and the Closing Price of Common Stock on the five Trading Days ending on such determination date, appropriately adjusted. The Conversion Agent shall have no obligation to determine the Trading Price of the Securities unless the Company has requested such determination; and the Company shall have no obligation to make such request unless a Holder provides the Company with reasonable evidence that the Trading Price of the Securities is reasonably likely to be less than 98% of the Conversion Value; at which time, the Company shall instruct the Conversion Agent to determine the Trading Price and Conversion Value of the Securities beginning on the next Trading Day and on each successive Trading Day until the Trading Price is greater than or equal to 98% of the Conversion Value, and the Conversion Agent shall make such determinations and 27 determine whether the Securities are convertible as set forth in such clause (7) and, if so, will notify the Company. The Company will provide written notice to the Conversion Agent upon the occurrence of any of the conversion events specified in (3), (4), (5) or (6) above. (b) The conversion right, subject to the conditions described in clause (a) of this Section 4.1, shall commence on the initial issuance date of the Securities and expire at the close of business on the Final Maturity Date, subject, in the case of conversion of any Global Security, to any Applicable Procedures. If a Security is called for redemption or submitted or presented for purchase or repurchase pursuant to Article 3, such conversion right shall terminate at the close of business on the Business Day immediately preceding the Redemption Date, Change in Control Repurchase Date or Put Right Purchase Date, as the case may be, for such Security or such earlier date as the Holder presents such Security for redemption, purchase or repurchase (unless the Company shall default in making the Redemption Price payment, Change in Control Repurchase Price payment or Put Right Purchase Price payment when due in accordance with Article 3, in which case the conversion right shall terminate at the close of business on the date such default is cured and such Security is redeemed, purchased or repurchased, as the case may be). Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted its Securities into Common Stock, and only to the extent such Securities are deemed to have been converted into Common Stock pursuant to this Article 4. The rate at which shares of Common Stock shall be delivered upon conversion (herein called the "Conversion Rate") shall be initially 31.25 shares of Common Stock for each $1,000 principal amount of Securities. The Conversion Rate shall be adjusted in certain instances as provided in this Article 4. The "Conversion Price" shall initially equal $1,000 divided by the Conversion Rate and shall be adjusted when the Conversion Price is so adjusted in accordance with this Article 4. SECTION 4.2. CONVERSION PROCEDURE. To convert a Security, a Holder must (a) complete and manually sign the conversion notice on the back of the Security and deliver such notice to a Conversion Agent, (b) surrender the Security to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if required. The date on which the Holder satisfies all of those requirements is the "Conversion Date." As soon as practicable after the Conversion Date, the Company shall deliver to the Holder through a Conversion Agent a certificate for the number of whole shares of Common Stock issuable upon the conversion and cash in lieu of any fractional shares pursuant to Section 4.3. Anything herein to the contrary notwithstanding, in the case of Global Securities, conversion notices may be delivered and such Securities may be surrendered for conversion in accordance with the Applicable Procedures as in effect from time to time. The person in whose name the Common Stock certificate is registered shall be deemed to be a stockholder of record on the Conversion Date; provided, however, that no surrender of a Security on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders 28 of such shares of Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; provided, further, that such conversion shall be at the Conversion Rate in effect on the Conversion Date as if the stock transfer books of the Company had not been closed. Upon conversion of a Security, such person shall no longer be a Holder of such Security. No payment or adjustment will be made for dividends or distributions on shares of Common Stock issued upon conversion of a Security. Securities so surrendered for conversion (in whole or in part) during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date (excluding (1) Securities or portions thereof called for redemption or presented for repurchase upon a Change in Control on a Redemption Date or on a Change in Control Repurchase Date, as the case may be, with such date occurring during the period beginning at the close of business on a Regular Record Date and ending at the opening of business on the fifth Business Day after the next succeeding Interest Payment Date or (2) Securities that are submitted for conversion between the Regular Record Date for the final interest payment and the opening of business on the final Interest Payment Date) shall also be accompanied by payment in funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Security then being converted, and such interest shall be payable to such registered Holder notwithstanding the conversion of such Security, subject to the provisions of this Indenture relating to the payment of defaulted interest by the Company. Except as otherwise provided in this Section 4.2, no payment or adjustment will be made for accrued interest on a converted Security. If the Company defaults in the payment of interest payable on such Interest Payment Date, the Company shall promptly repay such funds to such Holder. Nothing in this Section shall affect the right of a Holder in whose name any Security is registered at the close of business on a Regular Record Date to receive the interest payable on such Security on the related Interest Payment Date in accordance with the terms of this Indenture, the Securities and the Registration Rights Agreement. If a Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the aggregate principal amount of Securities converted. Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security equal in principal amount to the unconverted portion of the Security surrendered. In the case of any Security which is converted in part only, upon such conversion the Company shall execute and the Trustee shall authenticate and deliver to the Holder thereof, at the expense of the Company, a new Security or Securities of authorized denominations in an aggregate principal amount equal to the unconverted portion of the principal amount of such Security. A Security may be converted in part, but only if the principal amount of such Security to be converted is any integral multiple of $1,000 and the principal amount of such security to remain outstanding after such conversion is equal to $1,000 or any integral multiple of $1,000 in excess thereof. SECTION 4.3. FRACTIONAL SHARES. The Company will not issue fractional shares of Common Stock upon conversion of Securities. In lieu thereof, the Company will pay an amount in cash for the current market value of the fractional shares. The current market value of a fractional share shall be determined (calculated to the nearest 1/100th of a share) 29 by multiplying the Closing Price (determined as set forth in Section 4.6(d)) of the Common Stock on the Trading Day immediately prior to the Conversion Date by such fractional share and rounding the product to the nearest whole cent. SECTION 4.4. TAXES ON CONVERSION. If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon such conversion. However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder's name. The Conversion Agent may refuse to deliver the certificate representing the Common Stock being issued in a name other than the Holder's name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder's name. Nothing herein shall preclude any tax withholding required by law or regulation. SECTION 4.5. COMPANY TO PROVIDE STOCK. The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve, out of its authorized but unissued Common Stock, a sufficient number of shares of Common Stock to permit the conversion of all outstanding Securities into shares of Common Stock. All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares, shall be duly authorized, validly issued, fully paid and nonassessable and shall be free from preemptive or similar rights and free of any lien or adverse claim. The Company will endeavor promptly to comply with all federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will list or cause to have quoted such shares of Common Stock on each national securities exchange or on the Nasdaq National Market or other over-the-counter market or such other market on which the Common Stock is then listed or quoted; provided, however, that if rules of such automated quotation system or exchange permit the Company to defer the listing of such Common Stock until the first conversion of the Securities into Common Stock in accordance with the provisions of this Indenture, the Company covenants to list such Common Stock issuable upon conversion of the Securities in accordance with the requirements of such automated quotation system or exchange at such time. Any Common Stock issued upon conversion of a Security hereunder which at the time of conversion was a Restricted Security will also be a Restricted Security. SECTION 4.6. ADJUSTMENT OF CONVERSION RATE. The Conversion Rate shall be adjusted from time to time by the Company as follows: (a) In case the Company shall (i) pay a dividend on its Common Stock in shares of Common Stock, (ii) make a distribution on its Common Stock in shares of Common Stock, (iii) subdivide its outstanding Common Stock into a greater number of shares, or (iv) combine its outstanding Common Stock into a smaller number of shares, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the Holder of any Security thereafter surrendered for conversion shall be entitled to receive that number of shares of Common Stock which it would have owned had such Security been converted immediately prior to the happening of such event. An adjustment made pursuant to this subsection (a) shall become effective immediately after the record date in the case of a dividend or distribution and shall become effective immediately after the effective date in the case of subdivision or combination. 30 (b) In case the Company shall issue rights, options or warrants to all holders of its Common Stock entitling them (for a period of not more than 60 days after such issuance) to subscribe for or purchase shares of Common Stock (or securities convertible into Common Stock) at a price per share (or having a conversion price per share) less than the Current Market Price per share of Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the record date for the determination of stockholders entitled to receive such rights, options or warrants, the Conversion Rate in effect immediately prior thereto shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to such record date by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on such record date plus the number of additional shares of Common Stock offered (or into which the convertible securities so offered are convertible) and of which the denominator shall be the number of shares of Common Stock outstanding on such record date plus the number of shares which the aggregate offering price of the total number of shares of Common Stock so offered (or the aggregate conversion price of the convertible securities so offered, which shall be determined by multiplying the number of shares of Common Stock issuable upon conversion of such convertible securities by the conversion price per share of Common Stock pursuant to the terms of such convertible securities) would purchase at the Current Market Price per share (as defined in subsection (d) of this Section 4.6) of Common Stock on such record date. Such adjustment shall be made successively whenever any such rights, options or warrants are issued, and shall become effective immediately after such record date. If at the end of the period during which such rights, options or warrants are exercisable not all rights, options or warrants shall have been exercised, the adjusted Conversion Rate shall be immediately readjusted to what it would have been based upon the number of additional shares of Common Stock actually issued (or the number of shares of Common Stock issuable upon conversion of convertible securities actually issued). (c) In case the Company shall distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock), evidences of indebtedness or other non-cash assets (including securities of any person other than the Company but excluding (1) dividends or distributions paid exclusively in cash or (2) dividends or distributions referred to in subsection (a) of this Section 4.6), or shall distribute to all holders of its Common Stock rights, options or warrants to subscribe for or purchase any of its securities (excluding those rights and warrants referred to in subsection (b) of this Section 4.6) and also excluding the distribution of rights to all holders of Common Stock pursuant to a Rights Plan (as defined below) adopted before or after the date of this Indenture), then in each such case the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the current Conversion Rate by a fraction of which the numerator shall be the Current Market Price per share (as defined in subsection (d) of this Section 4.6) of the Common Stock on such record date and of which the denominator shall be Current Market Price per share (as defined in subsection (d) of this Section 4.6) of the Common Stock on the record date mentioned below less the fair market value on such record date (as determined by the Board of Directors, whose determination shall be conclusive evidence of such fair market value and which shall be evidenced by an Officers' Certificate delivered to the Trustee) of the portion of the capital stock, evidences of indebtedness or other non-cash assets so distributed or of such rights, options or warrants applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the record date). Such adjustment shall be made successively whenever any such distribution is made and shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution. In the event the then fair market value (as so determined) of the portion of the capital stock, evidences of indebtedness or other non-cash assets so distributed or of such rights or warrants applicable to one share of Common Stock is equal to or greater than the Current Market Price per share of the Common Stock on such record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of a 31 Security shall have the right to receive upon conversion the amount of capital stock, evidences of indebtedness or other non-cash assets so distributed or of such rights or warrants such holder would have received had such holder converted each Security on such record date. In the event that such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. If the Board of Directors determines the fair market value of any distribution for purposes of this Section 4.6(c) by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock. Notwithstanding the foregoing, if the securities distributed by the Company to all holders of its Common Stock consist of capital stock of, or similar equity interests in, a Subsidiary or other business unit, the Conversion Rate shall be increased so that the same shall be equal to the rate determined by multiplying the Conversion Rate in effect on the record date with respect to such distribution by a fraction: the numerator of which shall be the sum of (x) the average Closing Price of one share of Common Stock over the ten consecutive Trading Day period (the "Spinoff Valuation Period") commencing on and including the fifth Trading Day after the date on which "ex-dividend trading" commences on the Common Stock on the Nasdaq National Market or such other national or regional exchange or market on which the Common Stock is then listed or quoted and (y) the average Closing Price over the Spinoff Valuation Period of the portion of the securities so distributed applicable to one share of Common Stock and the denominator of which shall be the average Closing Price of one share of Common Stock over the Spinoff Valuation Period, such adjustment to become effective immediately prior to the opening of business on the fifteenth Trading Day after the date on which "ex-dividend trading" commences; provided, however, that the Company may in lieu of the foregoing adjustment elect to reserve the pro rata portion of such Securities so that each Holder of securities shall have the right to receive upon conversion the amount of such shares of capital stock or similar equity interests of such Subsidiary or business unit that such Holder of Securities would have received if such Holder of Securities had converted such Securities on the record date with respect to such distribution. With respect to any rights (the "Rights") that may be issued or distributed pursuant to any rights plan that the Company implements after the date of this Indenture (any Rights that may be issued pursuant to any such future rights plan being referred to as, a "Rights Plan"), upon conversion of the Securities into Common Stock, to the extent that such Rights Plan is in effect upon such conversion, the holders of Securities will receive, in addition to the Common Stock, the Rights described therein (whether or not the Rights have separated from the Common Stock at the time of conversion), subject to the limitations set forth in any such Rights Plan. Any distribution of rights or warrants pursuant to a Rights Plan complying with the requirements set forth in the immediately preceding sentence of this paragraph shall not constitute a distribution of rights or warrants pursuant to this Section 4.6(c). Rights or warrants (other than rights issued pursuant to a Rights Plan) distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company's Capital Stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events ("Trigger Event"): (i) are deemed to be transferred with such shares of Common Stock; (ii) are not exercisable; and (iii) are also issued in respect of future issuances of Common Stock, shall be deemed not to have been distributed for purposes of this Section 4.6 (and no adjustment to the Conversion Price under this Section 4.6 will be required) until the occurrence of the earliest Trigger Event, whereupon such rights and warrants shall be deemed to have been distributed and an appropriate adjustment (if any is required) to the Conversion Rate shall be made under this Section 4.6(c). If any such right or warrant, including any such existing rights or warrants distributed prior to the date of this Indenture, are subject to events, upon the occurrence of which such rights or warrants become exercisable to purchase 32 different securities, evidences of indebtedness or other assets, then the date of the occurrence of any and each such event shall be deemed to be the date of distribution and record date with respect to new rights or warrants with such rights (and a termination or expiration of the existing rights or warrants without exercise by any of the holders thereof). In addition, in the event of any distribution (or deemed distribution) of rights or warrants, or any Trigger Event or other event (of the type described in the preceding sentence) with respect thereto that was counted for purposes of calculating a distribution amount for which an adjustment to the Conversion Rate under this Section 4.6 was made, (1) in the case of any such rights or warrants which shall all have been redeemed, purchased by the Company or repurchased without exercise by any holders thereof, the Conversion Rate shall be readjusted upon such final redemption, purchase by the Company or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder or holders of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of such rights or warrants which shall have expired or been terminated without exercise by any holders thereof, the Conversion Rate shall be readjusted as if such rights and warrants had not been issued. (1) In case the Company shall, by dividend or otherwise, at any time distribute (a "Triggering Distribution") to all holders of its Common Stock cash, the Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying such Conversion Rate in effect immediately prior to the Business Day immediately preceding the day on which such Triggering Distribution is declared ("Determination Date") by a fraction of which the numerator shall be such Current Market Price per share of the Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Determination Date and the denominator of which shall be the Current Market Price per share of the Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Determination Date less the sum of the aggregate amount of cash, paid or payable within such 12 months (including, without limitation, the Triggering Distribution) applicable to one share of Common Stock (determined on the basis of the number of shares of Common Stock outstanding on the Determination Date), such increase to become effective immediately prior to the opening of business on the day following the date on which the Triggering Distribution is paid. (2) In case any tender offer made by the Company or any of its Subsidiaries for Common Stock shall expire, then immediately prior to the opening of business on the day after the last date (the "Expiration Date") tenders could have been made pursuant to such tender offer (as it may be amended) (the last time at which such tenders could have been made on the Expiration Date is hereinafter sometimes called the "Expiration Time"), the Conversion Rate shall be increased so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the Expiration Date by a fraction of which the numerator shall be the sum of (x) the aggregate consideration (determined as aforesaid) payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender offer) of all shares validly tendered and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares and excluding any shares held in the treasury of the Company) at the Expiration Time and the Current Market Price per share of Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Trading Day next succeeding the Expiration Date and the denominator of which shall be the product of the number of shares of Common Stock outstanding (including tendered shares but excluding any shares held in the treasury of the Company) at the Expiration Time multiplied by the Current Market Price per share of the Common Stock (as determined in accordance with subsection (d) of this Section 4.6) on the Trading Day next succeeding the Expiration Date, such increase to become effective immediately prior to the opening of business on the day 33 following the Expiration Date. In the event that the Company is obligated to purchase shares pursuant to any such tender offer, but the Company is permanently prevented by applicable law from effecting any or all such purchases or any or all such purchases are rescinded, the Conversion Rate shall again be adjusted to be the Conversion Rate which would have been in effect based upon the number of shares actually purchased. If the application of this Section 4.6(c)(2) to any tender offer would result in a decrease in the Conversion Rate, no adjustment shall be made for such tender offer under this Section 4.6(c)(2). (3) For purposes of this Section 4.6(c), the term "tender offer" shall mean and include both tender offers and exchange offers, all references to "purchases" of shares in tender offers (and all similar references) shall mean and include both the purchase of shares in tender offers and the acquisition of shares pursuant to exchange offers, and all references to "tendered shares" (and all similar references) shall mean and include shares tendered in both tender offers and exchange offers. (d) For the purpose of any computation under subsections (b) and (c) of this Section 4.6, the current market price (the "Current Market Price") per share of Common Stock on any date shall be deemed to be the average of the daily closing prices for the 30 consecutive Trading Days commencing 45 Trading Days before (i) the Determination Date or the Expiration Date, as the case may be, with respect to distributions or tender offers under subsection (c) of this Section 4.6 or (ii) the record date with respect to distributions, issuances or other events requiring such computation under subsection (b) or (c) of this Section 4.6. The closing price (the "Closing Price") for each day shall be the last reported sales price or, in case no such reported sale takes place on such date, the average of the reported closing bid and asked prices in either case on the Nasdaq National Market or, if the Common Stock is not listed or admitted to trading on the Nasdaq National Market, on the principal national securities exchange on which the Common Stock is listed or admitted to trading or, if not listed or admitted to trading on the Nasdaq National Market or any national securities exchange, the last reported sales price of the Common Stock as quoted on NASDAQ or, in case no reported sales takes place, the average of the closing bid and asked prices as quoted on NASDAQ or any comparable system or, if the Common Stock is not quoted on NASDAQ or any comparable system, the closing sales price or, in case no reported sale takes place, the average of the closing bid and asked prices, as furnished by any two members of the National Association of Securities Dealers, Inc. selected from time to time by the Company for that purpose. If no such prices are available, the Current Market Price per share shall be the fair value of a share of Common Stock as reasonably determined by the Board of Directors (which shall be evidenced by an Officers' Certificate delivered to the Trustee). (e) In any case in which this Section 4.6 shall require that an adjustment be made following a record date or a Determination Date or Expiration Date, as the case may be, established for purposes of this Section 4.6, the Company may elect to defer (but only until five Business Days following the filing by the Company with the Trustee of the certificate described in Section 4.9) issuing to the Holder of any Security converted after such record date or Determination Date or Expiration Date the shares of Common Stock and other capital stock of the Company issuable upon such conversion over and above the shares of Common Stock and other capital stock of the Company issuable upon such conversion only on the basis of the Conversion Rate prior to adjustment; and, in lieu of the shares the issuance of which is so deferred, the Company shall issue or cause its transfer agents to issue due bills or other appropriate evidence prepared by the Company of the right to receive such shares. If any distribution in respect of which an adjustment to the Conversion Rate is required to be made as of the record date or Determination Date or Expiration Date therefor is not thereafter made or paid by the Company for any reason, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect if such record date had not been fixed or such effective date or Determination Date or Expiration Date had not occurred. 34 (f) For purposes of this Section 4.6, "record date" shall mean, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged or converted into any combination of cash, securities or other property, the date fixed for determination of stockholders entitled to receive such cash, security or other property (whether or not such date is fixed by the Board of Directors or by statute, contract or otherwise). SECTION 4.7. NO ADJUSTMENT. No adjustment in the Conversion Rate shall be required if Holders may participate in the transactions set forth in Section 4.6 above without converting the Securities held by such Holders. No adjustment in the Conversion Rate shall be required unless the adjustment would require an increase or decrease of at least 1% in the Conversion Rate as last adjusted; provided, however, that any adjustments which by reason of this Section 4.7 are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this Article 4 shall be made to the nearest cent or to the nearest one-hundredth of a share, as the case may be. No adjustment in the Conversion Rate shall be required for issuances of Common Stock pursuant to a Company plan for reinvestment of dividends or interest or for a change in the par value or a change to no par value of the Common Stock. To the extent that the Securities become convertible into the right to receive cash, no adjustment need be made thereafter as to the cash. Interest will not accrue on the cash. SECTION 4.8. ADJUSTMENT FOR TAX PURPOSES. The Company shall be entitled to make such increases in the Conversion Rate, in addition to those required by Section 4.6, as it in its discretion shall determine to be advisable in order that any stock dividends, subdivisions of shares, distributions of rights to purchase stock or securities or distributions of securities convertible into or exchangeable for stock hereafter made by the Company to its stockholders shall not be taxable. Any such change in the Conversion Rate shall also be made to the Conversion Price. SECTION 4.9. NOTICE OF ADJUSTMENT. Whenever the Conversion Rate or conversion privilege is adjusted, the Company shall promptly mail to Securityholders a notice of the adjustment and file with the Trustee an Officers' Certificate briefly stating the facts requiring the adjustment and the manner of computing it. Unless and until the Trustee shall receive an Officers' Certificate setting forth an adjustment of the Conversion Rate, the Trustee may assume without inquiry that the Conversion Rate has not been adjusted and that the last Conversion Rate of which it has knowledge remains in effect. SECTION 4.10. NOTICE OF CERTAIN TRANSACTIONS. In the event that: (1) the Company takes any action which would require an adjustment in the Conversion Rate; 35 (2) the Company consolidates or merges with, or transfers all or substantially all of its property and assets to, another corporation and stockholders of the Company must approve the transaction; or (3) there is a dissolution or liquidation of the Company, the Company shall mail to Holders and file with the Trustee a notice stating the proposed record or effective date, as the case may be. The Company shall mail the notice at least ten days before such date. Failure to mail such notice or any defect therein shall not affect the validity of any transaction referred to in clause (1), (2) or (3) of this Section 4.10. SECTION 4.11. EFFECT OF RECLASSIFICATION, CONSOLIDATION, MERGER OR SALE ON CONVERSION PRIVILEGE. If any of the following shall occur, namely: (a) any reclassification or change of shares of Common Stock issuable upon conversion of the Securities (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination, or any other change for which an adjustment is provided in Section 4.6); (b) any statutory share exchange, consolidation or merger or combination to which the Company is a party other than a merger in which the Company is the continuing corporation and which does not result in any reclassification of, or change (other than in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination) in, outstanding shares of Common Stock; or (c) any sale or conveyance of all or substantially all the property and assets of the Company, directly or indirectly, to any person, then the Company, or such successor, purchasing or transferee corporation, as the case may be, shall, as a condition precedent to such reclassification, change, combination, statutory share exchange, consolidation, merger, sale or conveyance, execute and deliver to the Trustee a supplemental indenture providing that the Holder of each Security then outstanding shall have the right to convert such Security into the kind and amount of shares of stock and other securities and property (including cash) receivable upon such reclassification, change, combination, statutory share exchange, consolidation, merger, sale or conveyance by a holder of the number of shares of Common Stock deliverable upon conversion of such Security immediately prior to such reclassification, change, combination, statutory share exchange, consolidation, merger, sale or conveyance. Such supplemental indenture shall provide for adjustments of the Conversion Rate which shall be as nearly equivalent as may be practicable to the adjustments of the Conversion Rate provided for in this Article 4. If, in the case of any such consolidation, merger, combination, statutory share exchange, sale or conveyance, the stock or other securities and property (including cash) receivable thereupon by a holder of Common Stock include shares of stock or other securities and property of a person other than the successor, purchasing or transferee corporation, as the case may be, in such consolidation, merger, combination, statutory share exchange, sale or conveyance, then such supplemental indenture shall also be executed by such other person and shall contain such additional provisions to protect the interests of the Holders of the Securities as the Board of Directors shall reasonably consider necessary by reason of the foregoing. The provisions of this Section 4.11 shall similarly apply to successive reclassifications, changes, combinations, consolidations, mergers, sales or conveyances. In the event the Company shall execute a supplemental indenture pursuant to this Section 4.11, the Company shall promptly file with the Trustee (x) an Officers' Certificate briefly stating the reasons therefor, the kind or amount of shares of stock or other securities or property (including cash) receivable by Holders of the Securities upon the conversion of their Securities after any such reclassification, change, combination, consolidation, merger, sale or conveyance, any adjustment to be made with respect thereto and that all 36 conditions precedent have been complied with and (y) an Opinion of Counsel that all conditions precedent have been complied with, and shall promptly mail notice thereof to all Holders. SECTION 4.12. TRUSTEE'S DISCLAIMER. The Trustee shall have no duty to determine when an adjustment under this Article 4 should be made, how it should be made or what such adjustment should be, but may accept as conclusive evidence of that fact or the correctness of any such adjustment, and shall be protected in relying upon, an Officers' Certificate including the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.9. The Trustee makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities, and the Trustee shall not be responsible for the Company's failure to comply with any provisions of this Article 4. The Trustee shall not be under any responsibility to determine the correctness of any provisions contained in any supplemental indenture executed pursuant to Section 4.11, but may accept as conclusive evidence of the correctness thereof, and shall be fully protected in relying upon, the Officers' Certificate with respect thereto which the Company is obligated to file with the Trustee pursuant to Section 4.11. SECTION 4.13. VOLUNTARY INCREASE. The Company from time to time may increase the Conversion Rate by any amount for any period of time if the period is at least 20 days and if the increase is irrevocable during the period if the Board of Directors determines that such increase would be in the best interest of the Company or to avoid or diminish income tax to holders of shares of our Common Stock in connection with a dividend or distribution of stock or similar event, and the Company provides 15 days prior notice of any increase in the Conversion Rate; provided, however, that in no event may the Company increase the Conversion Rate so that the adjusted Conversion Price would be less than the par value of a share of Common Stock. Any such change in the Conversion Rate shall also be made to the Conversion Price. ARTICLE 5 [INTENTIONALLY OMITTED] ARTICLE 6 COVENANTS SECTION 6.1. PAYMENT OF SECURITIES. The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities and this Indenture. An installment of principal or interest or Liquidated Damages, if any, shall be considered paid on the date it is due if the Paying Agent (other than the Company) holds by 11:00 a.m., New York City time, on that date money, deposited by the Company or an Affiliate thereof, sufficient to pay the installment. Subject to Section 4.2 hereof, accrued and unpaid interest on any Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the Person in whose name that Security is registered at the close of business on the Regular Record Date for such interest at the office or agency of the Company maintained for such purpose. The Company shall, (in immediately available funds) to the fullest extent permitted by law, pay interest on overdue principal (including premium, if any) and overdue installments of interest at the rate borne by the Securities. 37 Payment of the principal of (and premium, if any) and interest on the Securities shall be made at the office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York (which shall initially be the Trustee) or at the Corporate Trust Office of the Trustee in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of the Person entitled thereto as such address appears in the Register; provided further that a Holder with an aggregate principal amount in excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder if such Holder has provided wire transfer instructions to the Company at least 10 Business Days prior to the payment date. SECTION 6.2. SEC REPORTS. The Company shall file all reports and other information and documents which it is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, and within 15 days after it files them with the SEC, the Company shall file copies of all such reports, information and other documents with the Trustee. Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officers' Certificates). SECTION 6.3. COMPLIANCE CERTIFICATES. The Company shall deliver to the Trustee, within 90 days after the end of each fiscal year of the Company (beginning with the fiscal year ending December 31, 2003), an Officers' Certificate as to the signer's knowledge of the Company's compliance with all conditions and covenants on its part contained in this Indenture and stating whether or not the signer knows of any default or Event of Default. If such signer knows of such a default or Event of Default, the Officers' Certificate shall describe the default or Event of Default and the efforts to remedy the same. For the purposes of this Section 6.3, compliance shall be determined without regard to any grace period or requirement of notice provided pursuant to the terms of this Indenture. SECTION 6.4. FURTHER INSTRUMENTS AND ACTS. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture. SECTION 6.5. MAINTENANCE OF CORPORATE EXISTENCE. Subject to Article 7, the Company will do or cause to be done all things necessary to preserve and keep in full force and effect its corporate existence. SECTION 6.6. RULE 144A INFORMATION REQUIREMENT. Within the period prior to the expiration of the holding period applicable to sales thereof under Rule 144(k) under the Securities Act (or any successor provision), the Company covenants and agrees that it shall, during any period in which it is not subject to Section 13 or 15(d) under the Exchange Act, upon the request of any Holder or beneficial holder of the Securities make available to such Holder or beneficial holder 38 of Securities or any Common Stock issued upon conversion thereof which continue to be Restricted Securities in connection with any sale thereof and any prospective purchaser of Securities or such Common Stock designated by such Holder or beneficial holder, the information required pursuant to Rule 144A(d)(4) under the Securities Act and it will take such further action as any Holder or beneficial holder of such Securities or such Common Stock may reasonably request, all to the extent required from time to time to enable such Holder or beneficial holder to sell its Securities or Common Stock without registration under the Securities Act within the limitation of the exemption provided by Rule 144A, as such Rule may be amended from time to time. Upon the request of any Holder or any beneficial holder of the Securities or such Common Stock, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. SECTION 6.7. STAY, EXTENSION AND USURY LAWS. The Company covenants (to the extent that it may lawfully do so) that it shall not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of, premium, if any, or interest (including Liquidated Damages, if any), on the Securities as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants or the performance of this Indenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefit or advantage of any such law and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 6.8. PAYMENT OF LIQUIDATED DAMAGES. If Liquidated Damages are payable by the Company pursuant to the Registration Rights Agreement, the Company shall deliver to the Trustee a certificate to that effect stating (i) the amount of such Liquidated Damages that are payable, (ii) the reason why such Liquidated Damages are payable and (iii) the date on which such Liquidated Damages are payable. Unless and until a Trust Officer of the Trustee receives such a certificate, the Trustee may assume without inquiry that no such Liquidated Damages is payable. If the Company has paid Liquidated Damages directly to the Persons entitled to such Liquidated Damages, the Company shall deliver to the Trustee a certificate setting forth the particulars of such payment. ARTICLE 7 CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE SECTION 7.1. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS. The Company shall not consolidate with, merge with or into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless: (1) either (a) the Company shall be the resulting or surviving corporation or (b) the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease, the properties and assets of the Company substantially as an entirety shall (i) be a corporation organized and validly existing under the laws of the United States of America or any State thereof and (ii) expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, the due and punctual payment of the principal of 39 and any premium and interest on all the Securities and the performance or observance of every covenant of this Indenture on the part of the Company to be performed or observed and the conversion rights shall be provided for in accordance with Article 4, by supplemental indenture satisfactory in form to the Trustee, executed and delivered to the Trustee, by the Person (if other than the Company) formed by such consolidation or into which the Company shall have been merged or by the Person which shall have acquired the Company's assets; (2) immediately after giving effect to such transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have happened and be continuing; and (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture complies with this Article and that all conditions precedent herein provided for relating to such transaction have been complied with. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise) of the properties and assets of one or more Subsidiaries (other than to the Company or another Subsidiary), which, if such assets were owned by the Company, would constitute all or substantially all of the properties and assets of the Company, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Company. SECTION 7.2. SUCCESSOR SUBSTITUTED. Upon any consolidation of the Company with, or merger of the Company into, any other Person or any conveyance, transfer or lease of the properties and assets of the Company substantially as an entirety in accordance with Section 7.1, the successor Person formed by such consolidation or into which the Company is merged or to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations and covenants under this Indenture and the Securities. ARTICLE 8 DEFAULT AND REMEDIES SECTION 8.1. EVENTS OF DEFAULT. An "Event of Default" shall occur if: (1) the Company defaults in the payment of any interest (or Liquidated Damages, if any, payable to all holders of Registrable Securities (as defined in the Registration Rights Agreement)) on any Security when the same becomes due and payable and the default continues for a period of 30 days; (2) the Company defaults in the payment of any principal of (including, without limitation, any premium, if any, on) any Security when the same becomes due and payable (whether at maturity, upon a Change in Control Repurchase Date, Redemption Date, in connection with a Put Right Purchase Date or otherwise); 40 (3) the Company fails to comply with any of its other terms, covenants or agreements contained in the Securities or this Indenture and the default continues for a period of 30 days after the Notice of Default specified below; (4) the Company fails to provide a Change in Control Repurchase Notice when required by Section 3.8 and the default continues for a period of 5 days after the Notice of Default specified below; or (5) any indebtedness under any bond, debenture, note or other evidence of indebtedness for money borrowed (or guarantee thereof) by the Company or under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by the Company (an "Instrument") with an aggregate principal amount then outstanding in excess of $10,000,000, whether such indebtedness now exists or shall hereafter be created, is not paid at final maturity of the Instrument by the end of the applicable grace period (either at its stated maturity or upon acceleration thereof), and such indebtedness is not discharged, or such acceleration is not rescinded or annulled, within a period of 30 days after there shall have been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the Holders of at least 25% in aggregate principal amount of the Securities then outstanding a written notice specifying such default and requiring the Company to cause such indebtedness to be discharged or cause such default to be cured or waived or such acceleration to be rescinded or annulled and stating that such notice is a "Notice of Default" hereunder; or (6) the Company or any Significant Subsidiary, pursuant to or within the meaning of any Bankruptcy Law: (A) commences a voluntary case or proceeding; (B) consents to the entry of an order for relief against it in an involuntary case or proceeding or the commencement of any case against it; (C) consents to the appointment of a Custodian of it or for all or substantially all of its property; (D) makes a general assignment for the benefit of its creditors; (E) files a petition in bankruptcy or answer or consent seeking reorganization or relief; or (F) consents to the filing of such a petition or the appointment of or taking possession by a Custodian; or (7) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (A) is for relief against the Company or any Significant Subsidiary in an involuntary case or proceeding or adjudicates the Company or any Significant Subsidiary insolvent or bankrupt; (B) appoints a Custodian of the Company or any Significant Subsidiary or for all or substantially all of the property of the Company or any Significant Subsidiary; or 41 (C) orders the winding up or liquidation of the Company or any Significant Subsidiary; and in each case the order or decree remains unstayed and in effect for 60 consecutive days. The term "Bankruptcy Law" means Title 11 of the United States Code (or any successor thereto) or any similar federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, sequestrator or similar official under any Bankruptcy Law. A default under clauses (3) or (4) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding notify the Company and the Trustee, in writing of the default, and the Company does not cure the default within the time specified in clauses (3) or (4) above after receipt of such notice. The notice given pursuant to this Section 8.1 must specify the default, demand that it be remedied and state that the notice is a "Notice of Default." When any default under this Section 8.1 is cured, it ceases. The Company will deliver to the Trustee, within 5 business days of becoming aware of the occurrence of an Event of Default, written notice thereof. In addition, the Company shall deliver to the Trustee, within 10 days after it becomes aware of the occurrence thereof, written notice of any event which with the lapse of time would become an Event of Default under clause (3), (4) or (5) above. The Trustee shall not be charged with knowledge of any Event of Default unless written notice thereof shall have been given to a Trust Officer at the Corporate Trust Office of the Trustee by the Company, a Paying Agent, any Holder or any agent of any Holder. SECTION 8.2. ACCELERATION. If an Event of Default (other than an Event of Default specified in clause (6) or (7) of Section 8.1) occurs and is continuing, the Trustee may, by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities then outstanding may, by notice to the Company and the Trustee, declare all unpaid principal to the date of acceleration on the Securities then outstanding (if not then due and payable) to be due and payable upon any such declaration, and the same shall become and be immediately due and payable. If an Event of Default specified in clause (6) or (7) of Section 8.1 occurs, all unpaid principal of the Securities then outstanding shall ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holder. The Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may rescind an acceleration and its consequences if (a) all existing Events of Default, other than the nonpayment of the principal of the Securities which has become due solely by such declaration of acceleration, have been cured or waived; (b) to the extent the payment of such interest is lawful, interest (calculated at the rate per annum borne by the Securities) on overdue installments of interest and overdue principal, which has become due otherwise than by such declaration of acceleration, has been paid; (c) the rescission would not conflict with any judgment or decree of a court of competent jurisdiction; and (d) all payments due to the Trustee and any predecessor Trustee under Section 9.7 have been made. No such rescission shall affect any subsequent default or impair any right consequent thereto. 42 SECTION 8.3. OTHER REMEDIES. If an Event of Default occurs and is continuing, the Trustee may, but shall not be obligated to, pursue any available remedy by proceeding at law or in equity to collect the payment of the principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative to the extent permitted by law. SECTION 8.4. WAIVER OF DEFAULTS AND EVENTS OF DEFAULT. Subject to Sections 8.7 and 11.2, the Holders of a majority in aggregate principal amount of the Securities then outstanding by notice to the Trustee may waive an existing default or Event of Default and its consequences, except a default or Event of Default in the payment of the principal of, premium, if any, or interest on any Security, a failure by the Company to convert any Securities into Common Stock or any default or Event of Default in respect of any provision of this Indenture or the Securities which, under Section 11.2, cannot be modified or amended without the consent of the Holder of each Security affected. When a default or Event of Default is waived, it is cured and ceases. SECTION 8.5. CONTROL BY MAJORITY. The Holders of a majority in aggregate principal amount of the Securities then outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture, that the Trustee determines may be unduly prejudicial to the rights of another Holder or the Trustee, or that may involve the Trustee in personal liability unless the Trustee is offered indemnity satisfactory to it; provided, however, that the Trustee may take any other action deemed proper by the Trustee which is not inconsistent with such direction. SECTION 8.6. LIMITATIONS ON SUITS. A Holder may not pursue any remedy with respect to this Indenture or the Securities (except actions for payment of overdue principal, premium, if any, or interest for the conversion of the Securities pursuant to Article 4) unless: (1) the Holder gives to the Trustee written notice of a continuing Event of Default; (2) the Holders of at least 25% in aggregate principal amount of the then outstanding Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable indemnity to the Trustee against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of indemnity; and 43 (5) no direction inconsistent with such written request has been given to the Trustee during such 60-day period by the Holders of a majority in aggregate principal amount of the Securities then outstanding. A Securityholder may not use this Indenture to prejudice the rights of another Securityholder or to obtain a preference or priority over such other Securityholder. SECTION 8.7. RIGHTS OF HOLDERS TO RECEIVE PAYMENT AND TO CONVERT. Notwithstanding any other provision of this Indenture, the right of any Holder of a Security to receive payment of the principal of and interest on the Security, on or after the respective due dates expressed in the Security and this Indenture, to convert such Security in accordance with Article 4 and to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, is absolute and unconditional and shall not be impaired or affected without the consent of the Holder. SECTION 8.8. COLLECTION SUIT BY TRUSTEE. If an Event of Default in the payment of principal or interest specified in clause (1) or (2) of Section 8.1 occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company or another obligor on the Securities for the whole amount of principal and accrued interest remaining unpaid, together with, to the extent that payment of such interest is lawful interest on overdue principal and overdue installments of interest in each case at the rate per annum borne by the Securities and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel. SECTION 8.9. TRUSTEE MAY FILE PROOFS OF CLAIM. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders allowed in any judicial proceedings relative to the Company (or any other obligor on the Securities), its creditors or its property and shall be entitled and empowered to collect and receive any money or other property payable or deliverable on any such claims and to distribute the same, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 9.7, and to the extent that such payment of the reasonable compensation, expenses, disbursements and advances in any such proceedings shall be denied for any reason, payment of the same shall be secured by a lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other property which the Holders may be entitled to receive in such proceedings, whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to, or, on behalf of any Holder, to authorize, accept or adopt any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding. 44 SECTION 8.10. PRIORITIES. If the Trustee collects any money pursuant to this Article 8, it shall pay out the money in the following order: First, to the Trustee for amounts due under Section 9.7; Second, to Holders for amounts due and unpaid on the Securities for principal and interest (including Liquidated Damages, if any), ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest (including Liquidated Damages, if any), respectively; Third, to such other Person or Persons, if any, to the extent entitled thereto; and Fourth, the balance, if any, to the Company. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section 8.10. SECTION 8.11. UNDERTAKING FOR COSTS. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees and expenses, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 8.11 does not apply to a suit made by the Trustee, a suit by a Holder pursuant to Section 8.7, or a suit by Holders of more than 10% in aggregate principal amount of the Securities then outstanding. ARTICLE 9 TRUSTEE SECTION 9.1. DUTIES OF TRUSTEE. (a) If an Event of Default has occurred and is continuing, the Trustee shall exercise such of the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs. (b) Except during the continuance of an Event of Default: (1) the Trustee need perform only those duties as are specifically set forth in this Indenture and no others; and (2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. The Trustee, however, shall examine any certificates and opinions which by any provision hereof are specifically required to be delivered to the Trustee to determine whether or not they conform to the requirements of this Indenture. 45 (c) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (1) this paragraph does not limit the effect of subsection (b) of this Section 9.1; (2) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (3) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 8.5. (d) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers unless the Trustee shall have received adequate indemnity in its opinion against potential costs and liabilities incurred by it relating thereto. (e) Every provision of this Indenture that in any way relates to the Trustee is subject to subsections (a), (b), (c) and (d) of this Section 9.1. (f) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. SECTION 9.2. RIGHTS OF TRUSTEE. Subject to Section 9.1: (a) The Trustee may rely conclusively on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (b) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel, which shall conform to Section 12.4(b). The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion. (c) The Trustee may act through its agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (d) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers. (e) The Trustee may consult with counsel of its selection, and the advice or opinion of such counsel as to matters of law shall be full and complete authorization and protection in respect of any such action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (f) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders pursuant to this Indenture, unless such Holders 46 shall have offered to the Trustee security or indemnity satisfactory to the Trustee against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction. (g) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit, and, if the Trustee shall determine to make such further inquiry or investigation, it shall be entitled to examine the books, records and premises of the Company, personally or by agent or attorney at the sole cost of the Company and shall incur no liability or additional liability of any kind by reason of such inquiry or investigation. (h) The Trustee shall not be deemed to have notice of any Default or Event of Default unless a Trust Officer of the Trustee has actual knowledge thereof or unless written notice of any event which is in fact such a default is received by the Trustee at the Corporate Trust Office, and such notice references the Securities and this Indenture. (i) The rights, privileges, protections, immunities and benefits given to the Trustee, including, without limitation, its right to be indemnified, are extended to, and shall be enforceable by, the Trustee in each of its capacities hereunder, including, without limitation as Paying Agent, Registrar and Conversion Agent, and to each agent, custodian and other Person employed to act hereunder. SECTION 9.3. INDIVIDUAL RIGHTS OF TRUSTEE. The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or an Affiliate of the Company with the same rights it would have if it were not Trustee. Any Agent may do the same with like rights. However, the Trustee is subject to Sections 9.10 and 9.11. SECTION 9.4. TRUSTEE'S DISCLAIMER. The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement in the Securities other than its certificate of authentication. SECTION 9.5. NOTICE OF DEFAULT OR EVENTS OF DEFAULT. If a default or an Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Securityholder notice of the default or Event of Default within 90 days after it occurs. However, the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding notice is in the interests of Securityholders, except in the case of a default or an Event of Default in payment of the principal of or interest on any Security. SECTION 9.6. REPORTS BY TRUSTEE TO HOLDERS. If a report is required by TIA Section 313, within 60 days after each October 1, beginning with the October 1 following the date of this Indenture, the Trustee shall mail to each Securityholder a brief report dated as of such October 1 that complies with TIA Section 313(a). The Trustee also shall comply with TIA Section 313(b)(2) and (c). 47 A copy of each report at the time of its mailing to Securityholders shall be mailed to the Company and, to the extent required by the TIA, filed with the SEC, and each stock exchange, if any, on which the Securities are listed. The Company shall notify the Trustee whenever the Securities become listed on any stock exchange or listed or admitted to trading on any quotation system and any changes in the stock exchanges or quotation systems on which the Securities are listed or admitted to trading and of any delisting thereof. SECTION 9.7. COMPENSATION AND INDEMNITY. The Company shall pay to the Trustee from time to time such compensation (as agreed to from time to time by the Company and the Trustee in writing) for its services (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust). The Company shall reimburse the Trustee upon request for all reasonable disbursements, expenses and advances incurred or made by it. Such expenses may include the reasonable compensation, disbursements and expenses of the Trustee's agents and counsel. The Company shall indemnify the Trustee or any predecessor Trustee (which for purposes of this Section 9.7 shall include its officers, directors, employees and agents) for, and hold it harmless against, any and all loss, liability or expense including taxes (other than taxes based upon, measured by or determined by the income of the Trustee), (including reasonable legal fees and expenses) incurred by it in connection with the acceptance or administration of its duties under this Indenture or any action or failure to act as authorized or within the discretion or rights or powers conferred upon the Trustee hereunder including the reasonable costs and expenses of the Trustee and its counsel in defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. The Trustee shall notify the Company promptly of any claim asserted against the Trustee for which it may seek indemnity. The Company need not pay for any settlement effected without its prior written consent, which shall not be unreasonably withheld. The Company need not reimburse the Trustee for any expense or indemnify it against any loss or liability incurred by it resulting from its gross negligence or bad faith. To secure the Company's payment obligations in this Section 9.7, the Trustee shall have a senior claim to which the Securities are hereby made subordinate on all money or property held or collected by the Trustee, except such money or property held in trust to pay the principal of and interest on particular Securities. The obligations of the Company under this Section 9.7 shall survive the satisfaction and discharge of this Indenture or the resignation or removal of the Trustee. When the Trustee incurs expenses or renders services after an Event of Default specified in clause (6) or (7) of Section 8.1 occurs, the expenses and the compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law. The provisions of this Section shall survive the termination of this Indenture. SECTION 9.8. REPLACEMENT OF TRUSTEE. The Trustee may resign by so notifying the Company. The Holders of a majority in aggregate principal amount of the Securities then outstanding may remove the Trustee by so notifying the Trustee and may, with the Company's written consent, appoint a successor Trustee. The Company may remove the Trustee if: 48 (1) the Trustee fails to comply with Section 9.10; (2) the Trustee is adjudged a bankrupt or an insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee becomes incapable of acting. If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint a successor Trustee. The resignation or removal of a Trustee shall not be effective until a successor Trustee shall have delivered the written acceptance of its appointment as described below. If a successor Trustee does not take office within 45 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of 10% in principal amount of the Securities then outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee at the expense of the Company. If the Trustee fails to comply with Section 9.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Immediately after that, the retiring Trustee shall transfer all property held by it as Trustee to the successor Trustee and be released from its obligations (exclusive of any liabilities that the retiring Trustee may have incurred while acting as Trustee) hereunder, the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. A successor Trustee shall mail notice of its succession to each Holder. A retiring Trustee shall not be liable for the acts or omissions of any successor Trustee after its succession. Notwithstanding replacement of the Trustee pursuant to this Section 9.8, the Company's obligations under Section 9.7 shall continue for the benefit of the retiring Trustee. SECTION 9.9. SUCCESSOR TRUSTEE BY MERGER, ETC. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all of its corporate trust assets (including the administration of this Indenture) to, another corporation, the resulting, surviving or transferee corporation, without any further act, shall be the successor Trustee, provided such transferee corporation shall qualify and be eligible under Section 9.10. Such successor Trustee shall promptly mail notice of its succession to the Company and each Holder. SECTION 9.10. ELIGIBILITY; DISQUALIFICATION. The Trustee shall always satisfy the requirements of paragraphs (1), (2) and (5) of TIA Section 310(a). The Trustee (or its parent holding company) shall have a combined capital and surplus of at least $50,000,000. If at any time the Trustee shall cease to satisfy any such requirements, it shall resign immediately in the manner and with the effect specified in this Article 9. The Trustee shall be subject to the 49 provisions of TIA Section 310(b). Nothing herein shall prevent the Trustee from filing with the SEC the application referred to in the penultimate paragraph of TIA Section 310(b). SECTION 9.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY. The Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). A Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated therein. ARTICLE 10 SATISFACTION AND DISCHARGE OF INDENTURE SECTION 10.1. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall cease to be of further effect (except as to any surviving rights of conversion, registration of transfer or exchange of Securities herein expressly provided for and except as further provided below), and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture, when (1) either (A) all Securities theretofore authenticated and delivered (other than (i) Securities which have been destroyed, lost or stolen and which have been replaced or paid as provided in Section 2.7 and (ii) Securities for whose payment money has theretofore been deposited in trust and thereafter repaid to the Company as provided in Section 10.3) have been delivered to the Trustee for cancellation; or (B) all such Securities not theretofore delivered to the Trustee for cancellation, (i) have become due and payable, (ii) will become due and payable at the Final Maturity Date within one year, or (iii) are to be called for redemption within one year under arrangements reasonably satisfactory to the Trustee for the giving of notice of redemption by the Trustee in the name, and at the expense, of the Company and the Company has irrevocably deposited or caused to be irrevocably deposited cash with the Trustee or a Paying Agent (other than the Company or any of its Affiliates) as trust funds in trust for the purpose of and in an amount sufficient to pay and discharge the entire indebtedness on such Securities not theretofore delivered to the Trustee for cancellation, for principal and interest to the date of such deposit (in the case of Securities which have become due and payable) or to the Final Maturity Date or Redemption Date, as the case may be. In the event that the Company exercises its right to redeem the Securities as provided in Article 3, the Company shall have the right to withdraw its funds previously deposited with the Trustee or Paying Agent pursuant to the immediately preceding sentence; (2) the Company has paid or caused to be paid all other sums payable hereunder by the Company; and 50 (3) the Company has delivered to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein relating to the satisfaction and discharge of this Indenture have been complied with. Notwithstanding the satisfaction and discharge of this Indenture, the obligations of the Company to the Trustee under Section 9.7 shall survive and, if money shall have been deposited with the Trustee pursuant to subclause (B) of clause (1) of this Section, the provisions of Sections 2.3, 2.4, 2.5, 2.6, 2.7, 2.12 and 12.5, Articles 3 and 4, the last paragraph of Section 6.2 and this Article 10, shall survive until the Securities have been paid in full. SECTION 10.2. APPLICATION OF TRUST MONEY. Subject to the provisions of Section 10.3, the Trustee or a Paying Agent shall hold in trust, for the benefit of the Holders, all money deposited with it pursuant to Section 10.1 and shall apply the deposited money in accordance with this Indenture and the Securities to the payment of the principal of and interest on the Securities. SECTION 10.3. REPAYMENT TO COMPANY. The Trustee and each Paying Agent shall promptly pay to the Company upon request any excess money (i) deposited with them pursuant to Section 10.1 and (ii) held by them at any time. The Trustee and each Paying Agent shall, subject to applicable abandonment property laws, pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years after a right to such money has matured; provided, however, that the Trustee or such Paying Agent, before being required to make any such payment, may at the expense of the Company cause to be mailed to each Holder entitled to such money notice that such money remains unclaimed and that after a date specified therein, which shall be at least 30 days from the date of such mailing, any unclaimed balance of such money then remaining will be repaid to the Company. After payment to the Company, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. SECTION 10.4. REINSTATEMENT. If the Trustee or any Paying Agent is unable to apply any money in accordance with Section 10.2 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to Section 10.1 until such time as the Trustee or such Paying Agent is permitted to apply all such money in accordance with Section 10.2; provided, however, that if the Company has made any payment of the principal of or interest on any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive any such payment from the money held by the Trustee or such Paying Agent. If pursuant to the last sentence of Section 10.1(1), the Company withdraws its previously deposited funds as a result of its exercise of its redemption right, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit has occurred pursuant to Section 10.1. 51 ARTICLE 11 AMENDMENTS, SUPPLEMENTS AND WAIVERS SECTION 11.1. WITHOUT CONSENT OF HOLDERS. The Company and the Trustee may amend or supplement this Indenture or the Securities without notice to or consent of any Securityholder for the purpose of: (1) adding to the Company's covenants for the benefit of the Holders; (2) surrendering any right or power conferred upon the Company; (3) providing for conversion rights of Holders if any reclassification or change of Common Stock or any consolidation, merger or sale of all or substantially all of the Company's assets occurs; (4) reducing the Conversion Price, provided that the reduction will not adversely affect the interests of Holders in any material respect; (5) complying with the requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA; (6) making any changes or modifications to this Indenture necessary in connection with the registration of the Securities under the Securities Act as contemplated by the Registration Rights Agreement, provided that this action does not adversely affect the interests of the Holders in any material respect; (7) curing any ambiguity, omission, inconsistency or correcting or supplementing any defective provision contained in this Indenture; provided that such modification or amendment does not, in the good faith opinion of the Board of Directors and the Trustee, adversely affect the interests of the Holders in any material respect; (8) adding or modifying any other provisions which the Company and the Trustee may deem necessary or desirable and which will not adversely affect the interests of the Holders in any material respect; (9) complying with Article 7; or (10) providing for uncertificated Securities in addition to the Certificated Securities so long as such uncertificated Securities are in registered form for purposes of the Internal Revenue Code of 1986, as amended. SECTION 11.2. WITH CONSENT OF HOLDERS. The Company and the Trustee may amend or supplement this Indenture or the Securities with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities then outstanding. The Holders of at least a majority in aggregate principal amount of the Securities then outstanding may waive compliance in a particular instance by the Company with any provision of this Indenture or the Securities without notice to any Securityholder. However, notwithstanding the foregoing but subject to Section 11.4, without the written consent of each Securityholder affected, an amendment, supplement or waiver, including a waiver pursuant to Section 8.4, may not: 52 (1) change the maturity of the principal of or any installment of interest on, or any Liquidated Damages with respect to any Note; (2) reduce the principal amount of, premium, if any, or interest on, or any Liquidated Damages, or the amount payable upon redemption, repurchase or purchase, with respect to any Note; (3) reduce the interest rate or interest on, or any Liquidated Damages with respect to any Note; (4) change the currency of payment of principal of, premium, if any, or interest on any Note; (5) impair the right to institute suit for the enforcement of any payment on or with respect to, or conversion of, any Note; (6) modify the Company's obligation to purchase Securities at the option of Holders or the Company's right to redeem Securities, in a manner adverse to the Holders; (7) except as otherwise permitted or contemplated by provisions of this Indenture concerning corporate reorganizations, adversely affect the repurchase option of Holders upon a Change in Control or the conversion rights of Holders; or (8) reduce the percentage in aggregate principal amount of Securities outstanding necessary to modify or amend this Indenture or to waive any past default. After an amendment, supplement or waiver under this Section 11.2 becomes effective, the Company shall promptly mail to the Holders affected thereby a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment, supplement or waiver. SECTION 11.3. COMPLIANCE WITH TRUST INDENTURE ACT. Every amendment to or supplement of this Indenture or the Securities shall comply with the TIA as in effect at the date of such amendment or supplement. SECTION 11.4. REVOCATION AND EFFECT OF CONSENTS. Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder is a continuing consent by the Holder and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent is not made on any Security. However, any such Holder or subsequent Holder may revoke the consent as to its Security or portion of a Security if the Trustee receives the notice of revocation before the date the amendment, supplement or waiver becomes effective. After an amendment, supplement or waiver becomes effective, it shall bind every Securityholder, unless it makes a change described in any of clauses (1) through (8) of Section 11.2. In that case the amendment, supplement or waiver shall bind each Holder of a Security who has consented to it and every subsequent Holder of a Security or portion of a Security that evidences the same debt as the consenting Holder's Security. 53 SECTION 11.5. NOTATION ON OR EXCHANGE OF SECURITIES. If an amendment, supplement or waiver changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security about the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company in exchange for the Security shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. SECTION 11.6. TRUSTEE TO SIGN AMENDMENTS, ETC. The Trustee shall sign any amendment or supplemental indenture authorized pursuant to this Article 11 if the amendment or supplemental indenture does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may, in its sole discretion, but need not sign it. In signing or refusing to sign such amendment or supplemental indenture, the Trustee shall be entitled to receive and, subject to Section 9.1, shall be fully protected in relying upon, an Opinion of Counsel stating that such amendment or supplemental indenture is authorized or permitted by this Indenture. The Company may not sign an amendment or supplement indenture until the Board of Directors approves it. SECTION 11.7. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby. ARTICLE 12 MISCELLANEOUS SECTION 12.1. TRUST INDENTURE ACT CONTROLS. If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by any of Sections 310 to 317, inclusive, of the TIA through operation of Section 318(c) thereof, such imposed duties shall control. SECTION 12.2. NOTICES. Any demand, authorization notice, request, consent or communication shall be given in writing and delivered in person or mailed by first-class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by delivery in person or mail by first-class mail, postage prepaid, or by guaranteed overnight courier) to the following facsimile numbers: 54 If to the Company, to: InVision Technologies, Inc. 7151 Gateway Boulevard Newark, California 94560 Attention: Andrew Siegel and Tram T. Phi Facsimile No.: (510) 608-0770 if to the Trustee, to: U.S. Bank National Association 633 West Fifth Street, 24th Floor LM-CA-T24T Los Angeles, California 90071 Attn: Corporate Trust Services (InVision Technologies, Inc. - 3% Convertible Senior Notes Due 2023) Facsimile No.: (213) 615-6197 Such notices or communications shall be effective when received. The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Securityholder shall be mailed by first-class mail or delivered by an overnight delivery service to it at its address shown on the register kept by the Primary Registrar. Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders. If a notice or communication to a Securityholder is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. SECTION 12.3. COMMUNICATIONS BY HOLDERS WITH OTHER HOLDERS. Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and any other person shall have the protection of TIA Section 312(c). SECTION 12.4. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT. (a) Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee at the request of the Trustee: (1) an Officers' Certificate stating that, in the opinion of the signers, all conditions precedent (including any covenants, compliance with which constitutes a condition precedent), if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent (including any covenants, compliance with which constitutes a condition precedent) have been complied with. 55 (b) Each Officers' Certificate and Opinion of Counsel with respect to compliance with a condition or covenant provided for in this Indenture shall include: (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such person, such condition or covenant has been complied with; provided however, that with respect to matters of fact an Opinion of Counsel may rely on an Officers' Certificate or certificates of public officials. SECTION 12.5. RECORD DATE FOR VOTE OR CONSENT OF SECURITYHOLDERS. The Company (or, in the event deposits have been made pursuant to Section 10.1, the Trustee) may set a record date for purposes of determining the identity of Holders entitled to vote or consent to any action by vote or consent authorized or permitted under this Indenture, which record date shall not be more than thirty (30) days prior to the date of the commencement of solicitation of such action. Notwithstanding the provisions of Section 11.4, if a record date is fixed, those persons who were Holders of Securities at the close of business on such record date (or their duly designated proxies), and only those persons, shall be entitled to take such action by vote or consent or to revoke any vote or consent previously given, whether or not such persons continue to be Holders after such record date. SECTION 12.6. RULES BY TRUSTEE, PAYING AGENT, REGISTRAR AND CONVERSION AGENT. The Trustee may make reasonable rules (not inconsistent with the terms of this Indenture) for action by or at a meeting of Holders. Any Registrar, Paying Agent or Conversion Agent may make reasonable rules for its functions. SECTION 12.7. LEGAL HOLIDAYS. A "Legal Holiday" is a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York and the state in which the Corporate Trust Office is located are not required to be open. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a Regular Record Date is a Legal Holiday, the record date shall not be affected. 56 SECTION 12.8. GOVERNING LAW. This Indenture and the Securities shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principles of conflicts of laws. SECTION 12.9. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This Indenture may not be used to interpret another indenture, loan or debt agreement of the Company or a Subsidiary of the Company. Any such indenture, loan or debt agreement may not be used to interpret this Indenture. SECTION 12.10. NO RECOURSE AGAINST OTHERS. All liability described in paragraph 15 of the Securities of any director, officer, employee or stockholder, as such, of the Company is waived and released. SECTION 12.11. SUCCESSORS. All agreements of the Company in this Indenture and the Securities shall bind its successor. All agreements of the Trustee in this Indenture shall bind its successor. SECTION 12.12. MULTIPLE COUNTERPARTS. The parties may sign multiple counterparts of this Indenture. Each signed counterpart shall be deemed an original, but all of them together represent the same agreement. SECTION 12.13. SEPARABILITY. In case any provisions in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 12.14. TABLE OF CONTENTS, HEADINGS, ETC. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof. [SIGNATURE PAGE FOLLOWS] 57 IN WITNESS WHEREOF, the parties hereto have hereunto set their hands as of the date and year first above written. INVISION TECHNOLOGIES, INC. By: /s/ Sergio Magistri -------------------------------- Name: Sergio Magistri, Ph.D. Title: President and Chief Executive Officer By: /s/ Ross Mulholland -------------------------------- Name:Ross Mulholland Title: Senior Vice President and Chief Financial Officer U.S. BANK NATIONAL ASSOCIATION, AS TRUSTEE By: /s/ Paula Oswald -------------------------------- Name:Paula Oswald Title: Vice President EXHIBIT A [FORM OF FACE OF SECURITY] [UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.](1) [THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.](2) [THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE - -------------------------- (1) These paragraphs should be included only if the Security is a Global Security. (2) These paragraphs to be included only if the Security is a Restricted Security. ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH INVISION TECHNOLOGIES, INC. OR ANY AFFILIATE OF INVISION TECHNOLOGIES, INC. WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO INVISION TECHNOLOGIES, INC. OR ANY PARENT OR SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO INVISION TECHNOLOGIES, INC.'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.](2) [THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT.](2) INVISION TECHNOLOGIES, INC. CUSIP: __________ R-______ 3% CONVERTIBLE SENIOR NOTES DUE 2023 InVision Technologies, Inc., a Delaware corporation (the "Company", which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to___________ _________________, or registered assigns, the principal sum of _____________________________ Dollars ($__________) on October 1, 2023 [or such greater or lesser amount as is indicated on the Schedule of Exchanges of Notes on the other side of this Note].(3) Interest Payment Dates: April 1 and October 1. Regular Record Dates: March 15 and September 15. This Note is convertible as specified on the other side of this Note. Additional provisions of this Note are set forth on the other side of this Note. SIGNATURE PAGE FOLLOWS - ------------------------- (3) This phrase should be included only if the Security is a global Security. IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. INVISION TECHNOLOGIES, INC. By:_________________________________ Name:Sergio Magistri, Ph.D. Title: President and Chief Executive Officer By:_________________________________ Name:Ross Mulholland Title: Senior Vice President and Chief Financial Officer Dated: Trustee's Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture. U.S. BANK NATIONAL ASSOCIATION, as Trustee _________________________________________ Authorized Signatory By: [FORM OF REVERSE SIDE OF SECURITY] INVISION TECHNOLOGIES, INC. 3% CONVERTIBLE SENIOR NOTES DUE 2023 1. INTEREST InVision Technologies, Inc., a Delaware corporation (the "Company", which term shall include any successor corporation under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of 3% per annum. The Company shall pay interest semiannually on April 1 and October 1 of each year, commencing April 1, 2004. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from September 19, 2003; provided, however, that if there is not an existing default in the payment of interest and if this Note is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such Interest Payment Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Any reference herein to interest accrued or payable as of any date shall include any Liquidated Damages accrued or payable on such date as provided in the Registration Rights Agreement. 2. METHOD OF PAYMENT The Company shall pay interest on this Note (except defaulted interest) to the person who is the Holder of this Note at the close of business on March 15 or September 15, as the case may be, (each, a Regular Record Date) next preceding the related Interest Payment Date. The Holder must surrender this Note to a Paying Agent to collect payment of principal. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may, however, pay principal and interest in respect of any Certificated Security by check or wire payable in such money; provided, however, that a Holder with an aggregate principal amount in excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder if such Holder has provided wire transfer instructions to the Company. The Company may mail an interest check to the Holder's registered address. Notwithstanding the foregoing, so long as this Note is registered in the name of a Depositary or its nominee, all payments hereon shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. 3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT Initially, U.S. Bank National Association (the "Trustee", which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice to the Holder. The Company or any of its Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar. 4. INDENTURE, LIMITATIONS This Note is one of a duly authorized issue of Securities of the Company designated as its 3% Convertible Senior Notes Due 2023 (the "Notes"), issued under an Indenture dated as of September 19, 2003 (together with any supplemental indentures thereto, the "Indenture"), between the Company and the Trustee. The terms of this Note include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Note is subject to all such terms, and the Holder of this Note is referred to the Indenture and said Act for a statement of them. The Notes are senior unsecured obligations of the Company limited to $125,000,000 aggregate principal amount. The Indenture does not limit other debt of the Company, secured or unsecured. 5. OPTIONAL REDEMPTION The Notes are subject to redemption, at any time, or from time to time, on or after October 1, 2008, as a whole or in part, at the election of the Company. The Redemption Price is 100% of the principal amount of the Notes to be redeemed, together with accrued and unpaid interest up to but not including the Redemption Date; provided that if the Redemption Date falls after a Regular Record Date and on or before an Interest Payment Date, then the interest will be payable to the Holders in whose names the Notes are registered at the close of business on such Regular Record Date. No sinking fund is provided for the Notes. 6. NOTICE OF REDEMPTION Notice of redemption will be mailed by first-class mail at least 20 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On and after the Redemption Date, subject to the deposit with the Paying Agent of funds sufficient to pay the Redemption Price plus accrued interest to, but excluding, the Redemption Date, interest shall cease to accrue on Notes or portions of them called for redemption. 7. REPURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to repurchase all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Notes held by such Holder on the date that is 45 days after the date of the Change in Control Purchase Notice, at a repurchase price equal to 100% of the principal amount thereof together with any accrued interest up to, but excluding, the Change in Control Repurchase Date. The Holder shall have the right to withdraw any Change in Control Repurchase Notice (in whole or in a portion thereof that is $1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to the close of business on the Business Day immediately preceding the Change in Control Repurchase Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture. 8. PURCHASE OF NOTES AT OPTION OF HOLDER ON SPECIFIED DATES At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase for cash all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Notes held by such Holder on the applicable Put Right Purchase Date at the applicable Put Right Purchase Price. The Holder shall have the right to withdraw any Put Right Purchase Notice (in whole or in a portion thereof that is $1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to the close of business on the Put Right Purchase Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture. 9. CONVERSION Subject to and upon compliance with the provisions of the Indenture, at the option of the Holder thereof, any Security that is an integral multiple of $1,000 may be converted into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100th of a share) of Common Stock of the Company at any time on or prior to the close of business on the Final Maturity Date at the Conversion Rate, determined as hereinafter provided, in effect at the time of conversion and subject to the adjustments described below, only under the following circumstances: (1) prior to October 1, 2021, on any date during any fiscal quarter (and only during such fiscal quarter) after the fiscal quarter ending September 28, 2003, if the Closing Price per share of the Common Stock was more than 110% of the then current Conversion Price for at least 20 Trading Days in the period of the 30 consecutive Trading Days ending on the last day of the previous fiscal quarter; (2) on or after October 1, 2021, at all times on or after any date on which the Closing Price per share of the Common Stock is more than 110% of the then current Conversion Price on the Securities; (3) until the close of business on the Business Day prior to the Redemption Date if the Company elects to redeem the Securities on or after October 1, 2008; (4) if the Company distributes to all or substantially all holders of Common Stock rights, options or warrants entitling them to purchase Common Stock at less than the Closing Price per share of the Common Stock on the last Trading Day preceding the declaration for such distribution; (5) if the Company distributes to all or substantially all holders of Common Stock cash, assets, debt securities or capital stock, which distribution has a per share value as determined by the Board of Directors exceeding 10% of the Closing Price per share of the Common Stock on the last Trading Day preceding the declaration for such distribution; (6) if the Company becomes a party to a consolidation, merger or binding share exchange pursuant to which all or substantially all of the Company's Common Stock would be converted to cash, securities or other property, or if the Company undergoes a Change in Control or an event occurs that would have been a Change in Control but for the existence of one of the Change in Control exceptions pursuant to Section 3.8(a)(2) of the Indenture; or (7) for the ten Business Day period after any five consecutive Trading Day period in which the average Trading Prices for the Securities for such five Trading Day period was less than 98% of the average Conversion Value for the Securities during such period; provided, however, that a Holder may not convert its Securities pursuant to this clause (7) if, on the Conversion Date, the Closing Price per share of Common Stock is greater than or equal to the then current Conversion Price of the Securities and less than or equal to 110% of the then current Conversion Price of the Securities. Provisions of the Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted its Securities into Common Stock, and only to the extent such Securities are deemed to have been converted into Common Stock pursuant to Article 4 of the Indenture. The rate at which shares of Common Stock shall be delivered upon conversion (herein called the "Conversion Rate") shall be initially 31.25 shares of Common Stock for each $1,000 principal amount of Securities. The Conversion Rate shall be adjusted in certain instances as provided in the Indenture. The "Conversion Price" shall initially equal $1,000 divided by the Conversion Rate. No fractional shares will be issued upon conversion; in lieu thereof, an amount will be paid in cash based upon the Closing Price (as defined in the Indenture) of the Common Stock on the Trading Day immediately prior to the Conversion Date. To convert a Note, a Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to a Conversion Agent, (b) surrender the Note to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if required. Notes so surrendered for conversion (in whole or in part) during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date (excluding (1) Notes or portions thereof called for redemption or presented for repurchase upon a Change in Control on a Redemption Date or on a Change in Control Repurchase Date, as the case may be, with such date occurring during the period beginning at the close of business on a Regular Record Date and ending at the opening of business on the fifth Business Day after the next succeeding Interest Payment Date or (2) Notes that are submitted for conversion between the Regular Record Date for the final interest payment and the opening of business on the final Interest Payment Date) shall also be accompanied by payment in funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Note then being converted, and such interest shall be payable to such registered Holder notwithstanding the conversion of such Note, subject to the provisions of the Indenture relating to the payment of defaulted interest by the Company. If the Company defaults in the payment of interest payable on such Interest Payment Date the Company shall promptly repay such funds to such Holder. A Holder may convert a portion of a Note equal to $1,000 or any integral multiple thereof. A Note in respect of which a Holder had delivered a Change in Control Repurchase Notice exercising the option of such Holder to require the Company to repurchase such Note may be converted only if the Change in Control Repurchase Notice is withdrawn in accordance with the terms of the Indenture. 10. DENOMINATIONS, TRANSFER, EXCHANGE The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture. 11. PERSONS DEEMED OWNERS The Holder of a Note may be treated as the owner of it for all purposes. 12. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request, subject to applicable unclaimed property law. After that, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 13. AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and an existing default or Event of Default and its consequence or compliance with any provision of the Indenture or the Notes may be waived in a particular instance with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder. 14. SUCCESSOR ENTITY When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation (except in certain circumstances specified in the Indenture) be released from those obligations. 15. DEFAULTS AND REMEDIES Under the Indenture, an Event of Default includes: (i) a default for 30 days in payments of interest (including Liquidated Damages, if any) on any Notes; (ii) a default in payment of any principal of, or premium, if any, on the Notes when due; (iii) failure by the Company for 30 days after notice to comply with any of its other terms, covenants or agreements contained in the Indenture or the Notes; (iv) failure by the Company for 5 days after notice to provide a notice of a Change in Control; (v) certain defaults in the payment of certain indebtedness of the Company or (vi) certain events of bankruptcy, insolvency or reorganization of the Company or any Significant Subsidiary. If an Event of Default (other than as a result of certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare all unpaid principal to the date of acceleration on the Notes then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization of the Company, unpaid principal of the Notes then outstanding shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company is required to file periodic reports with the Trustee as to the absence of default. 16. TRUSTEE DEALINGS WITH THE COMPANY U.S. Bank National Association, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an Affiliate of the Company, and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee. 17. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture nor for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Note. 18. AUTHENTICATION This Note shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Note. 19. ABBREVIATIONS AND DEFINITIONS Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act). All terms defined in the Indenture and used in this Note but not specifically defined herein are defined in the Indenture and are used herein as so defined. 20. INDENTURE TO CONTROL; GOVERNING LAW In the case of any conflict between the provisions of this Note and the Indenture, the provisions of the Indenture shall control. This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principals of conflicts of law. The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: InVision Technologies, Inc., 7151 Gateway Boulevard, Newark, California 94560, (510) 739-2400, Attention: Andrew Siegel and Tram T. Phi. ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________________________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her. Your Signature: Date:_______________________________ ____________________________________ (Sign exactly as your name appears on the other side of this Note) *Signature guaranteed by: By:_________________________________ * The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. CONVERSION NOTICE To convert this Note into Common Stock of the Company, check the box: [ ] To convert only part of this Note, state the principal amount to be converted (must be $1,000 or a integral multiple of $1,000): $____________. If you want the stock certificate made out in another person's name, fill in the form below: ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) Your Signature: Date:____________________________ ____________________________________ (Sign exactly as your name appears on the other side of this Note) *Signature guaranteed by: By:______________________________ * The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. OPTION TO ELECT REPURCHASE UPON A CHANGE IN CONTROL To: InVision Technologies, Inc. The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a notice from InVision Technologies, Inc. (the "Company") as to the occurrence of a Change in Control with respect to the Company and requests and instructs the Company to repurchase the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security at the Change in Control Repurchase Price, together with accrued interest to, but excluding, such date, to the registered Holder hereof. Dated: ____________ ____________________________________ ____________________________________ Signature(s) Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ____________________________________ Signature Guaranty Principal amount to be redeemed (in an integral multiple of $1,000, if less than all): - -------------------------- NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. OPTION TO ELECT PURCHASE ON SPECIFIED DATES To: InVision Technologies, Inc. The undersigned hereby requests and instructs InVision Technologies, Inc. to purchase the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, on September 1, _____ in accordance with the terms of the Indenture referred to in this Security at the Put Right Purchase Price to the registered Holder hereof. Dated:____________ ____________________________________ Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ____________________________________ Signature Guaranty Principal amount to be redeemed (in an integral multiple of $1,000, if less than all): ____________________________________ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. SCHEDULE OF EXCHANGES OF NOTES(3) The following exchanges, purchase, redemptions, repurchases or conversions of a part of this global Note have been made:
PRINCIPAL AMOUNT OF THIS GLOBAL NOTE AUTHORIZED AMOUNT OF FOLLOWING SUCH SIGNATORY OF AMOUNT OF DECREASE IN INCREASE IN DECREASE DATE SECURITIES PRINCIPAL AMOUNT PRINCIPAL AMOUNT OF EXCHANGE (OR INCREASE) CUSTODIAN OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE - ------------------------- --------- ------------------- -------------------
- ---------------------------- (3) This schedule should be included only if the Security is a global Security. CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF RESTRICTED SECURITIES(4) Re: _____ Convertible Senior Notes Due 2023 (the "Notes") of InVision Technologies, Inc. This certificate relates to $_______ principal amount of Notes owned in (check applicable box) [ ] book-entry or [ ] definitive form by ___________________ (the "Transferor"). The Transferor has requested a Registrar or the Trustee to exchange or register the transfer of such Notes. In connection with such request and in respect of each such Note, the Transferor does hereby certify that the Transferor is familiar with transfer restrictions relating to the Notes as provided in Section 2.12 of the Indenture dated as of September 19, 2003 between InVision Technologies, Inc. and U.S. Bank National Association, as trustee (the "Indenture"), and the transfer of such Note is being made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") (check applicable box) or the transfer or exchange, as the case may be, of such Note does not require registration under the Securities Act because (check applicable box): [ ] Such Note is being transferred pursuant to an effective registration statement under the Securities Act. [ ] Such Note is being acquired for the Transferor's own account, without transfer. [ ] Such Note is being transferred to the Company or a Subsidiary (as defined in the Indenture) of the Company. [ ] Such Note is being transferred to a person the Transferor reasonably believes is a "qualified institutional buyer" (as defined in Rule 144A or any successor provision thereto ("Rule 144A") under the Securities Act) that is purchasing for its own account or for the account of a "qualified institutional buyer", in each case to whom notice has been given that the transfer is being made in reliance on such Rule 144A, and in each case in reliance on Rule 144A. [ ] Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements under the Securities Act in accordance with Rule 144 (or any successor thereto) ("Rule 144") under the Securities Act. [ ] Such Note is being transferred to a non-U.S. Person in an offshore transaction in compliance with Rule 904 of Regulation S under the Securities Act (or any successor thereto). - ---------------------------- (4) This certificate should only be included if this Security is a Transfer Restricted Security. Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements of the Securities Act (other than an exemption referred to above) and as a result of which such Note will, upon such transfer, cease to be a "restricted security" within the meaning of Rule 144 under the Securities Act. The Transferor acknowledges and agrees that, if the transferee will hold any such Notes in the form of beneficial interests in a global Note which is a "restricted security" within the meaning of Rule 144 under the Securities Act, then such transfer can only be made pursuant to (i) Rule 144A under the Securities Act and such transferee must be a "qualified institutional buyer" (as defined in Rule 144A) or (ii) Regulation S under the Securities Act. Date:__________________________________ ________________________________ (Insert Name of Transferor) EX-4.5 4 f94131orexv4w5.txt EXHIBIT 4.5 EXHIBIT 4.5 EXECUTION COPY REGISTRATION RIGHTS AGREEMENT DATED SEPTEMBER 19, 2003 BETWEEN INVISION TECHNOLOGIES, INC. AND MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "AGREEMENT") is made and entered into this 19th day of September, 2003, between InVision Technologies, Inc., a Delaware corporation (the "COMPANY"), and Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "INITIAL PURCHASER"). This Agreement is made pursuant to that certain Purchase Agreement, dated September 16, 2003, between the Company and the Initial Purchaser (the "PURCHASE AGREEMENT"), which provides for the sale by the Company to the Initial Purchaser of $100,000,000 aggregate principal amount of the Company's 3% Convertible Senior Notes due 2023 (the "NOTES"), plus an additional $25,000,000 aggregate principal amount of Notes as to which the Initial Purchaser may exercise its option set forth in Section 2(b) of the Purchase Agreement. In order to induce the Initial Purchaser to enter into the Purchase Agreement and in satisfaction of a condition to the Initial Purchaser's obligations thereunder, the Company has agreed to provide the registration rights provided for in this Agreement, pursuant to Section 5 of the Purchase Agreement. In consideration of the foregoing, the parties hereto agree as follows: 1. Definitions. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "1933 ACT" shall mean the Securities Act of 1933, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "1934 ACT" shall mean the Securities Exchange Act of 1934, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "CLOSING DATE" shall mean the Closing Time as defined in the Purchase Agreement. "COMMON STOCK" shall mean common stock of the Company and any other shares of common stock as may constitute "Common Stock" for purposes of the Indenture, including the Underlying Common Stock (as defined in the Indenture). "COMPANY" shall have the meaning set forth in the preamble to this Agreement and also includes the Company's successors. "DEPOSITARY" shall mean The Depository Trust Company, or any other depositary appointed by the Company; provided, however, that any such depositary must have an address in The Borough of Manhattan, The City of New York. "EFFECTIVENESS PERIOD" shall have the meaning set forth in Section 2.1(a) hereof. "EFFECTIVENESS TARGET DATE" shall mean the one hundred eightieth (180th) day after the Closing Date. "EVENT DATE" shall have the meaning set forth in Section 2.4 hereof. "FILING DATE" shall mean the ninetieth (90th) day after the Closing Date. "HOLDER" shall mean the Initial Purchaser, for so long as it owns any Registrable Securities, and each of its successors, assigns and direct and indirect transferees who become registered owners of Registrable Securities under the Indenture. "INDENTURE" shall mean the Indenture relating to the Securities, dated as of September 19, 2003, between the Company and U.S. Bank National Association, as trustee, as the same may be amended, supplemented, waived or otherwise modified from time to time in accordance with the terms thereof. "INITIAL PURCHASER" shall have the meaning set forth in the preamble to this Agreement. "LIQUIDATED DAMAGES" shall have the meaning set forth in Section 2.4 hereof. "MAJORITY HOLDERS" shall mean the Holders of a majority of the aggregate principal amount of Registrable Securities outstanding; provided, that whenever the consent or approval of Holders of a specified percentage of Registrable Securities is required hereunder, Registrable Securities held by the Company or any of its affiliates (as such term is defined in Rule 405 under the 1933 Act) shall be disregarded in determining whether such consent or approval was given by the Holders of such required percentage. "NASD" shall mean the National Association of Securities Dealers, Inc. "NOTES" shall have the meaning set forth in the preamble to this Agreement. "OFFERING MEMORANDUM" means that certain final Offering Memorandum of the Company, dated September 16, 2003, relating to the sale of the Securities. "PERSON" shall mean an individual, partnership, corporation, limited liability company, joint venture, trust or unincorporated organization, or a government or agency or political subdivision thereof. "PROSPECTUS" shall mean the prospectus included in any Registration Statement, including any preliminary prospectus, and any such prospectus as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement, and all other amendments and supplements to any such prospectus, including post-effective amendments, and in each case including all material incorporated or deemed to be incorporated by reference therein. "PURCHASE AGREEMENT" shall have the meaning set forth in the preamble to this Agreement. "QUESTIONNAIRE" shall have the meaning set forth in Section 2.1(d) hereof. -2- "REGISTRABLE SECURITIES" shall mean the Notes and the shares of Common Stock into which the Notes are convertible, upon original issuance thereof, and at all times subsequent thereto; provided, however, that any Securities shall cease to be Registrable Securities when (i) a Registration Statement with respect to such Securities shall have been declared effective under the 1933 Act and such Securities shall have been disposed of pursuant to such Registration Statement, (ii) such Securities shall have been sold to the public pursuant to Rule 144 (or any similar provision then in force, but not Rule 144A) under the 1933 Act, (iii) expiration of the holding period that would be applicable to such Securities under Rule 144(k) under the 1933 Act were they not held by an affiliate of the Company or (iv) such Securities shall have ceased to be outstanding. "REGISTRATION DEFAULT" shall have the meaning set forth in Section 2.4 hereof. "REGISTRATION EXPENSES" shall mean any and all expenses incident to performance of or compliance by the Company with this Agreement, including without limitation: (i) all SEC, stock exchange or NASD registration and filing fees, including, if applicable, the fees and expenses of any "qualified independent underwriters" (and its counsel) that is required to be retained by any holder of Registrable Securities in accordance with the rules and regulations of the NASD, (ii) all fees and expenses incurred in connection with compliance with state or other securities or blue sky laws and compliance with the rules of the NASD (including reasonable fees and disbursements of counsel for any underwriters or Holders in connection with qualification of any Registrable Securities under state or other securities or blue sky laws and any filing with and review by the NASD), (iii) all expenses of any Persons in preparing or assisting in preparing, word processing, printing and distributing any Registration Statement, any Prospectus, any amendments or supplements thereto, any underwriting agreements, securities sales agreements, certificates representing the Securities and other documents relating to the performance of and compliance with this Agreement, (iv) all fees and expenses incurred in connection with the listing, if any, of any of the Registrable Securities on any securities exchange or exchanges or on any quotation system, (v) all rating agency fees, (vi) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws, (vii) the fees and disbursements of counsel for the Company and the fees and expenses of independent public accountants for the Company or for any other Person, business or assets whose financial statements are included in any Registration Statement or Prospectus, including the expenses of any special audits or "cold comfort" letters required by or incident to such performance and compliance, (viii) the fees and expenses of the Trustee, any registrar, any depositary, any paying agent, any escrow agent, any transfer agent or any custodian, in each case including their respective counsel, (ix) the reasonable fees and expenses of the Initial Purchaser in connection with the Shelf Registration, including the reasonable fees and expenses of one counsel to the Initial Purchaser and to the Holders of Registrable Securities, and (x) any fees and disbursements of the underwriters customarily paid by issuers or sellers of securities and the fees and expenses of any special experts retained by the Company in connection with any Registration Statement, but excluding underwriting discounts and commissions and any transfer taxes, if any, relating to the sale or disposition of Registrable Securities by a Holder. "REGISTRATION STATEMENT" shall mean any registration statement of the Company pursuant to the provisions of Section 2 of this Agreement that covers all of the Registrable Securities held by -3- Holders that have provided the information required pursuant to the terms of Section 2.1(d) hereof on an appropriate form under Rule 415 under the 1933 Act, or any similar rule that may be adopted by the SEC, and all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated or deemed to be incorporated by reference therein. "SEC" shall mean the United States Securities and Exchange Commission or any successor agency or government body performing the functions currently performed by the United States Securities and Exchange Commission. "SECURITIES" shall mean the Notes and the shares of Common Stock into which the Notes are convertible, upon original issuance thereof, and at all times subsequent thereto. "SHELF REGISTRATION" shall have the meaning set forth in Section 2.1(a) hereof. "TIA" shall mean the Trust Indenture Act of 1939, as amended from time to time, and the rules and regulations of the SEC promulgated thereunder. "TRUSTEE" shall mean the trustee with respect to the Securities under the Indenture. "UNDERWRITERS" or "UNDERWRITERS" shall have the meaning set forth in Section 4(a) hereof. For purposes of this Agreement, (i) all references in this Agreement to any Registration Statement or Prospectus or any amendment or supplement to any of the foregoing shall be deemed to include the copy filed with the SEC pursuant to its Electronic Data Gathering, Analysis and Retrieval system; (ii) all references in this Agreement to financial statements and schedules and other information which is "contained", "included" or "stated" in any Registration Statement or Prospectus (or other references of like import) shall be deemed to mean and include all such financial statements and schedules and other information which is incorporated or deemed to be incorporated by reference in such Registration Statement or Prospectus, as the case may be; and (iii) all references in this Agreement to amendments or supplements to any Registration Statement or Prospectus shall be deemed to mean and include the filing of any document under the 1934 Act which is incorporated or deemed to be incorporated by reference in such Registration Statement or Prospectus, as the case may be. 2. Registration Under the 1933 Act. 2.1 Shelf Registration. (a) As promptly as practicable, but no later than the Filing Date, the Company shall file with the SEC, a Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415 under the 1933 Act covering all of the Registrable Securities held by Holders that have provided the information pursuant to the terms of Section 2.1(d) hereof (the "SHELF REGISTRATION"). The Shelf Registration shall be on Form S-3 under the 1933 Act or another appropriate form permitting registration of such Registrable Securities for resale by the Holders in -4- the manner or manners reasonably designated by them (including, without limitation, one or more underwritten offerings). The Company shall use its reasonable best efforts to cause the Registration Statement to be declared effective by the SEC as promptly as practicable, but no later than the Effectiveness Target Date, and to keep the Registration Statement continuously effective, supplemented and amended, as required in order to permit the Prospectus forming a part thereof to be useable by the Holders until the earliest of (i) two years after the last date of issuance of the Notes, (ii) the date when the Holders are able to sell all of their Securities immediately without restriction pursuant to the volume limitation provisions of Rule 144 under the 1933 Act or otherwise, or (iii) all of the Registrable Securities covered by the Registration Statement have been sold pursuant to the Registration Statement (the "EFFECTIVENESS PERIOD"). (b) Notwithstanding any other provisions hereof, the Company shall use its reasonable best efforts to ensure that (i) any Registration Statement and any amendment thereto and any Prospectus forming a part thereof and any supplements thereto complies in all material respects with the 1933 Act, (ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming a part of any Registration Statement and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (c) The Company shall not permit any securities other than Registrable Securities to be included in the Registration Statement. The Company further agrees, if necessary, to supplement or amend the Registration Statement, as required by Section 3(b) below. (d) Notwithstanding any other provision hereof, no Holder of Registrable Securities may include any of its Registrable Securities in the Registration Statement pursuant to this Agreement unless the Holder furnishes to the Company a completed questionnaire in the form attached as Annex A to the Offering Memorandum (the "QUESTIONNAIRE") and such other information in writing as the Company may reasonably request in writing for use in connection with the Registration Statement or Prospectus included therein and in any application to be filed with or under state securities laws. Before the effectiveness of the Registration Statement and no later than the 20th business day after receipt of the notice by a Holder from the Company of the filing of the Registration Statement (which notice shall include the Questionnaire and any other reasonable information requested by the Company for use in connection with the Registration Statement), each such Holder of Registrable Securities must furnish the completed Questionnaire and such other information, if any, to the Company in writing and the Company will include the information from the completed Questionnaire and such other information, if any, in the Registration Statement in a manner so that upon effectiveness the Holders will be permitted to deliver the Prospectus to purchasers of the Holder's Securities. From and after the date that the Registration Statement is first declared effective, upon receipt of a completed Questionnaire and such other information, if any, the Company will, as promptly as practicable but in any event within 5 business days of receipt, file any amendments or supplements to the Registration Statement necessary for the relevant Holders to be -5- named as selling securityholders in the Prospectus contained therein to be permitted to deliver the Prospectus to purchasers of the Holder's Securities (subject to the Company's right to suspend the Registration Statement as described in Sections 3(e)(iii), 3(e)(v) and 3(e)(vi) below). Holders that do not deliver a completed written Questionnaire and such other information, if any, in a timely manner, as provided for in this Section 2.1(d), will not be named as selling securityholders in the Prospectus. Each Holder as to which the Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make information previously furnished to the Company by the Holder not materially misleading. 2.2 Expenses. The Company shall pay all Registration Expenses in connection with the Shelf Registration and any Registration Statement. Each Holder shall pay all fees and disbursements of its counsel (other than as set forth in the preceding sentence or in the definition of Registration Expenses) and all underwriting discounts and commissions and transfer taxes, if any, relating to the sale or disposition of such Holder's Registrable Securities pursuant to the Registration Statement. 2.3 Effectiveness. The Registration Statement shall not be deemed to have become effective unless it has been declared effective by the SEC; provided, however, that if, after it has been declared effective, the offering of Registrable Securities pursuant to the Registration Statement is interfered with by any stop order, injunction or other order or requirement of the SEC or any other governmental agency or court, such Registration Statement shall be deemed not to have been effective during the period of such interference, until the offering of Registrable Securities pursuant to such Registration Statement may legally resume. 2.4 Liquidated Damages. The Company and the Initial Purchaser agree that the Holders of Registrable Securities will suffer damages if the Company fails to fulfill its obligations under Section 2.1 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Company agrees to pay liquidated damages on the Registrable Securities ("LIQUIDATED DAMAGES") under the circumstances and to the extent as set forth below. In the event that (a) the Registration Statement has not been filed with the SEC on or prior to the Filing Date, (b) the Registration Statement is not declared effective by the SEC on or prior to the Effectiveness Target Date, (c) the Registration Statement has been declared effective by the SEC and such Registration Statement ceases to be effective or usable at any time during the Effectiveness Period for any reason without being succeeded within five business days by a post-effective amendment to such Registration Statement or a report filed with the SEC pursuant to the 1934 Act that cures such failure or (d) the Company suspends the use of any Prospectus related to the Registration Statement for a period exceeding forty-five (45) days in any consecutive three-month period or exceeding an aggregate of ninety (90) days in any consecutive twelve-month period (each such event referred to in clauses (a) through (d) above, a "REGISTRATION DEFAULT"), then the interest rate borne by the Notes shall be increased as Liquidated Damages (x) by one-quarter of one percent (0.25%) per annum upon the occurrence of such Registration Default up to and including the ninetieth (90th) day following such Registration Default and (y) by one half of one percent (0.50%) -6- from and after the ninety-first (91st) day following the occurrence of such Registration Default, provided that the aggregate increase in such interest rate will in no event exceed one half of one percent (0.50%) per annum. Upon the cure of such Registration Default, the accrual of Liquidated Damages will cease and the interest rate will revert to the original rate so long as no other Registration Default shall have occurred and shall be continuing at such time; provided, however, that, if after any such reduction in interest rate, one or more Registration Defaults shall again occur, the interest rate shall again be increased pursuant to the foregoing provisions. A Registration Default under clause (a) above shall be cured on the date that the Shelf Registration is filed with the SEC; a Registration Default under clause (b) above shall be cured on the date that the Shelf Registration is declared effective by the SEC; a Registration Default under clause (c) above shall be cured on the date the Shelf Registration is declared effective or useable; and a Registration Default under clause (d) above shall be cured on the date the Prospectus is declared useable by the Company. In the event of a Registration Default, the Company shall pay Liquidated Damages to (x) the holders of Notes and (y) the holders of Common Stock issued upon conversion of Notes in proportion to the principal amount of such Notes converted. The Company shall notify the Trustee within three business days after each and every date on which a Registration Default occurs (an "EVENT DATE"). Liquidated Damages shall be paid by the Company to the Holders of Notes by depositing with the Trustee, in trust, for the benefit of the Holders of Notes, on or before the applicable semiannual interest payment date, immediately available funds in sums sufficient to pay the Liquidated Damages then due. Such Liquidated Damages due shall be payable on each interest payment date to the record Holder of Securities entitled to receive the interest payment to be paid on such date as set forth in the Indenture. Liquidated Damages in respect of Common Stock issued upon conversion of Notes shall be payable by the Company to the holders of Common Stock issued upon conversion of such Notes concurrently with the payment of Liquidated Damages to the holders of Notes. Each obligation to pay Liquidated Damages shall be deemed to accrue from and including the day following the applicable Event Date. 3. Registration Procedures. In connection with the obligations of the Company with respect to the Shelf Registration and the Registration Statement pursuant to Section 2 hereof, the Company shall: (a) prepare and file with the SEC a Registration Statement within the period specified in Section 2, on the appropriate form under the 1933 Act, which form (i) shall be selected by the Company, (ii) shall be available for the sale of the Registrable Securities by the selling Holders thereof, and (iii) shall comply as to form in all material respects with the requirements of the applicable form and include or incorporate by reference all financial statements required by the SEC to be filed therewith or incorporated by reference therein, and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective in accordance with Section 2 hereof; (b) prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement as may be necessary under applicable law to keep such -7- Registration Statement effective for the applicable period; cause each Prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 (or any similar provision then in force) under the 1933 Act; and comply with the provisions of the 1933 Act and the 1934 Act with respect to the disposition of all securities covered by a Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the selling Holders thereof; (c) (i) notify each Holder of Registrable Securities, as promptly as practicable, but in any event no less than five business days prior to filing, that a Registration Statement with respect to the Registrable Securities is being filed (which notice shall include the Questionnaire and any other reasonable information requests referenced in Section 2.1(d)) and advising such Holders that the distribution of Registrable Securities will be made in accordance with the method elected by the Majority Holders subject to Section 2.1(a) above; (ii) furnish to each Holder of Registrable Securities, to counsel for the Holders, to counsel for the Initial Purchaser and to each underwriter of an underwritten offering of Registrable Securities, if any, without charge, as many copies of the Prospectus included therein, including each preliminary Prospectus (in the event of an underwritten offering), and any amendment or supplement thereto in order to facilitate the public sale or other disposition of the Registrable Securities; and (iii) subject to any notice by the Company in accordance with Section 3(h) of the existence of any fact of the kind described in Sections 3(e)(iii), 3(e)(v) and 3(e)(vi) hereof, the Company hereby consents to the use of the Prospectus, including each preliminary Prospectus (in the event of an underwritten offering), that is contained in a Registration Statement declared effective by the SEC, or any amendment or supplement thereto by each of the Holders and underwriters of Registrable Securities in connection with the offering and sale of the Registrable Securities covered by any Prospectus that is contained in a Registration Statement declared effective by the SEC or any amendment or supplement thereto; (d) use its reasonable best efforts to register or qualify (or establish an exemption from such registration or qualification for) the Registrable Securities under all applicable state securities or "blue sky" laws of such jurisdictions as any Holder of Registrable Securities covered by a Registration Statement and each underwriter of an underwritten offering of Registrable Securities shall reasonably request, to cooperate with the Holders and the underwriters of any Registrable Securities in connection with any filings required to be made with the NASD, to keep each such registration or qualification effective during the period such Registration Statement is required to be effective, and do any and all other acts and things which may be reasonably necessary or advisable to enable such Holder and underwriter to consummate the disposition in each such jurisdiction of such Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (i) qualify as a foreign corporation or as a dealer in securities in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(d) or (ii) take any action which would subject it to general service of process or taxation in any such jurisdiction if it is not then so subject; (e) notify each Holder of Registrable Securities as promptly as reasonably practicable and, if requested by such Holder, confirm such advice in writing as promptly as reasonably practicable (i) when a Registration Statement has become effective and when any post- -8- effective amendments and supplements thereto become effective, (ii) of any request by the SEC or any state securities authority for post- effective amendments or supplements to a Registration Statement or Prospectus or for additional information after a Registration Statement has become effective, (iii) of the issuance by the SEC or any state securities authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose, (iv) if between the effective date of a Registration Statement and the closing of any sale of Registrable Securities covered thereby, the representations and warranties of the Company contained in any underwriting agreement, securities sales agreement or other similar agreement, if any, relating to such offering cease to be true and correct in all material respects, (v) of the happening of any event or the discovery of any facts during the period a Registration Statement is effective which makes any statement made in such Registration Statement or the related Prospectus untrue in any material respect or which constitutes an omission to state a material fact in such Registration Statement or Prospectus or which requires the making of any changes in such Registration Statement or Prospectus in order to make the statements therein not misleading, (vi) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose and (vii) of any reasonable determination by the Company that a post-effective amendment to a Registration Statement would be appropriate; (f) make every reasonable effort to obtain the withdrawal of any order suspending the effectiveness of a Registration Statement as soon as practicable and provide notice as promptly as reasonably practicable to each Holder of the withdrawal of any such order; (g) cooperate with the selling Holders of Registrable Securities to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be sold and not bearing any restrictive legends; and cause such Registrable Securities to be in such denominations (consistent with the provisions of the Indenture) and registered in such names as the selling Holders or the underwriters, if any, may reasonably request in writing at least three business days prior to the closing of any sale of Registrable Securities; (h) upon the occurrence of any event or the discovery of any facts, each as contemplated by Sections 3(e)(iii), 3(e)(v) and 3(e)(vi) hereof, as promptly as practicable after the occurrence of such an event, use its reasonable best efforts to prepare a supplement or post-effective amendment to a Registration Statement or the related Prospectus or any document incorporated or deemed to be incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of the Registrable Securities, such Prospectus will not contain at the time of such delivery any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The Company agrees to notify each Holder to suspend use of the Prospectus as promptly as practicable after the occurrence of such an event, and each Holder hereby agrees to suspend use of the Prospectus until the Company has amended or supplemented the Prospectus to correct such misstatement or omission. At such time as such public disclosure is otherwise made or the Company determines that such disclosure is not necessary, in each case to correct any misstatement of a material fact or to include any omitted material fact, the Company -9- agrees promptly to notify each Holder of such determination and to furnish each Holder such number of copies of the Prospectus, as amended or supplemented, as such Holder may reasonably request; (i) a reasonable time prior to the filing of any Registration Statement, any Prospectus, any amendment to a Registration Statement or amendment or supplement to a Prospectus or a Prospectus after the initial filing of a Registration Statement, provide copies of such document to the Initial Purchaser on behalf of such Holders if requested by the Initial Purchaser; and make representatives of the Company as shall be reasonably requested by the Holders of Registrable Securities, or the Initial Purchaser on behalf of such Holders, available for discussion of such document; (j) obtain CUSIP numbers for all Registrable Securities not later than the effective date of a Registration Statement, and provide the Trustee with printed certificates for the Registrable Securities in a form eligible for deposit with the Depositary; (k) cause the Indenture to be qualified under the TIA in connection with the registration of the Registrable Securities, (ii) cooperate with the Trustee and the Holders to effect such changes, if any, to the Indenture as may be required for the Indenture to be so qualified in accordance with the terms of the TIA and (iii) execute, and use its reasonable best efforts to cause the Trustee to execute, all documents as may be required to effect such changes, if any, and all other forms and documents required to be filed with the SEC to enable the Indenture to be so qualified in a timely manner; (l) subject to Section 2.1(a), enter into agreements (including underwriting agreements) and take all other customary and appropriate actions in order to expedite or facilitate the disposition of such Registrable Securities and in such connection, whether or not an underwriting agreement is entered into and whether or not the registration is an underwritten registration: (i) make such representations and warranties to the Holders of such Registrable Securities and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in similar underwritten offerings as may be reasonably requested by such Holders and underwriters; (ii) in connection with any underwritten offering hereunder, seek to obtain opinions of counsel to the Company and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the managing underwriters, if any, and the Holders of a majority in principal amount of the Registrable Securities being sold) addressed to each selling Holder (where reasonably possible) and the underwriters, if any, covering the matters customarily covered in opinions requested in sales of securities or underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (iii) in connection with any underwritten offering hereunder, seek to obtain "comfort letters" and updates thereof with respect to such Registration Statement and the Prospectus included therein, all amendments and supplements thereto and all documents -10- incorporated or deemed to be incorporated by reference therein from the Company's independent certified public accountants and (where reasonably practicable) from the independent certified public accountants for any other Person or any business or assets whose financial statements are, or are required to be, included or incorporated by reference in the Registration Statement or Prospectus, each addressed to the underwriters, if any, and (where reasonably practicable) to have such letter addressed to the selling Holders of Registrable Securities, such letters to be in customary form and covering matters of the type customarily covered in "comfort letters" to underwriters in connection with similar underwritten offerings; (iv) if an underwriting agreement is entered into, cause the same to set forth indemnification and contribution provisions and procedures substantially equivalent to the indemnification and contribution provisions and procedures set forth in Section 4 hereof with respect to the underwriters and all other parties to be indemnified pursuant to Section 4 hereof or, at the request of any underwriters, in the form customarily provided to such underwriters in similar types of transactions; and (v) deliver such other documents and certificates as may be reasonably requested and as are customarily delivered in similar offerings to the Holders of a majority in principal amount of the Registrable Securities being sold and the managing underwriters, if any. The above shall be done at (i) the effectiveness of such Registration Statement (and, if appropriate, each post-effective amendment thereto) and (ii) each closing under any underwriting or similar agreement as and to the extent required thereunder; (m) if reasonably requested in writing in connection with a disposition of Registrable Securities pursuant to a Registration Statement, make reasonably available for inspection during normal business hours by representatives of the Holders of the Registrable Securities and any underwriters participating in any disposition pursuant to a Registration Statement and any counsel or accountant retained by such Holders or underwriters, all relevant financial and other records, documents and properties of the Company reasonably requested by any such Persons, and cause the appropriate officers, directors, employees, and any other agents of the Company to make all information reasonably requested by any such representative, underwriter, special counsel or accountant in connection with a Registration Statement reasonably available for inspection during normal business hours, and make such representatives of the Company reasonably available for discussion during normal business hours of such documents as shall be reasonably requested by the Initial Purchaser; provided, however, that such persons shall first agree in writing with the Company that any information that is reasonably designated by the Company in writing as confidential at the time of delivery of such information shall be kept confidential by such persons and shall be used solely for the purposes of exercising rights under this Agreement, unless (i) disclosure of such information is required by court or administrative order or is necessary to respond to inquiries of regulatory authorities; provided, however, that such persons shall as promptly as reasonably practicable, provide written notice to the Company of any request by any such regulatory authority for any such confidential information of the Company in order to allow the Company a reasonable -11- amount of time to seek an appropriate protective order to prevent the disclosure of such information, (ii) disclosure of such information is required by law (including any disclosure requirements pursuant to federal securities laws in connection with the filing of any Registration Statement or the use of any Prospectus referred to in this Agreement), (iii) such information becomes generally available to the public other than as a result of a disclosure or failure to safeguard by any such person or (iv) such information becomes available to any such person from a source other than the Company and such source is not bound by a confidentiality agreement or otherwise obligated to keep such information confidential. (n) a reasonable time prior to filing any Registration Statement, any Prospectus forming a part thereof, any amendment to such Registration Statement or amendment or supplement to such Prospectus (other than supplements that do nothing more than name one or more Holders and provide information with respect thereto), provide copies of such document upon request to the Initial Purchaser, to the underwriter or underwriters of an underwritten offering of Registrable Securities, if any, and, to counsel for the Initial Purchaser or underwriters, and make such changes in any such document prior to the filing thereof as the Initial Purchaser or the underwriter or underwriters, or any of their respective counsel may reasonably request in writing within five business days after the delivery of such copies by the Company; cause the representatives of the Company to be available for discussion of such documents during normal business hours as shall be reasonably requested by the Initial Purchaser on behalf of the Holders or any underwriter or any of their respective counsel; and shall not at any time make any filing of any such document of which the Initial Purchaser on behalf of the Holders, their counsel or any underwriter or their counsel shall not have previously been advised and furnished a copy or to which the Majority Holders, the Initial Purchaser on behalf of the Holders, their counsel or any underwriter or their counsel shall reasonably object within a reasonable time period; (o) use its reasonable best efforts to cause all Registrable Securities to be listed on any securities exchange or inter-dealer quotation system such as NASDAQ on which similar debt or equity securities issued by the Company are then listed, if any; (p) use its commercially reasonable efforts to cause the Registrable Securities to be rated with the appropriate rating agencies, if reasonably requested by the Majority Holders or by the underwriter or underwriters of an underwritten offering of Registrable Securities, if any, unless the Registrable Securities are already so rated; (q) otherwise comply with all applicable rules and regulations of the SEC and make available to its security holders, as soon as reasonably practicable, an earnings statement covering at least twelve (12) months which shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule 158 thereunder; and (r) cooperate and assist in any filings required to be made with the NASD and in the performance of any due diligence investigation by any underwriter and its counsel (including any "qualified independent underwriter" that is required to be retained in accordance with the rules and regulations of the NASD); -12- The Company may (as a condition to such Holder's participation in the Shelf Registration) require each Holder of Registrable Securities to furnish to the Company such information regarding such Holder and the proposed distribution by such Holder of such Registrable Securities as the Company may from time to time reasonably request in writing. Each Holder further agrees promptly to furnish to the Company in writing all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not misleading, any other information regarding such Holder and the distribution of such Registrable Securities as may be required to be disclosed in the Registration Statement under applicable law or pursuant to SEC comments and any information otherwise required by the Company to comply with applicable law or regulations. Each Holder further agrees, following termination of the Effectiveness Period, to notify the Company, within ten business days of a request, of the amount of Registrable Securities sold pursuant to the Registration Statement and, in the absence of a response, the Company may assume that all of the Holder's Registrable Securities were so sold. Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event or the discovery of any facts, each of the kind described in Sections 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, such Holder will forthwith discontinue disposition of Registrable Securities pursuant to a Registration Statement until receipt by such Holder of (i) the copies of the supplemented or amended Prospectus contemplated by Section 3(h) hereof or (ii) written notice from the Company that the Shelf Registration is once again effective or that no supplement or amendment is required. If so directed by the Company, such Holder will deliver to the Company (at the Company's expense) all copies in such Holder's possession, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Registrable Securities current at the time of receipt of such notice. Nothing in this paragraph shall prevent the accrual of Liquidated Damages on any Securities. If any of the Registrable Securities covered by any Registration Statement are to be sold in an underwritten offering, the underwriter or underwriters and manager or managers that will manage such offering will be selected by the Majority Holders of such Registrable Securities included in such offering and shall be reasonably acceptable to the Company. No Holder of Registrable Securities may participate in any underwritten registration hereunder unless such Holder (a) agrees to sell such Holder's Registrable Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements, (b) completes and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements and (c) provides the Company with the information required in Section 2.1(d) above. 4. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless the Initial Purchaser, each Holder, each Person who participates as an underwriter (each, an "UNDERWRITER" or an "UNDERWRITER") and each Person, if any, who controls the Initial Purchaser, Holder or Underwriter within the meaning of either Section 15 of the 1933 Act or Section 20 of the 1934 Act as follows: -13- (i) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, arising out of any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement (or any amendment or supplement thereto) pursuant to which Registrable Securities were registered under the 1933 Act, including all documents incorporated therein by reference, or any omission or alleged omission therefrom of a material fact required to be stated therein or necessary to make the statements therein not misleading, or arising out of any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto) or any omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; (ii) against any and all loss, liability, claim, damage and expense whatsoever, as incurred, to the extent of the aggregate amount paid in settlement of any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or of any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission; provided that (subject to Section 4(d) below) any such settlement is effected with the written consent of the Company; and (iii) against any and all expense whatsoever, as incurred (including the reasonable fees and disbursements of counsel chosen by any indemnified party), reasonably incurred in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue statement or omission, or any such alleged untrue statement or omission, to the extent that any such expense is not paid under subparagraph (i) or (ii) above; provided, however, that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with written information furnished to the Company by or on behalf of the Initial Purchaser, any Holder or Underwriter (or any person who expressly controls the Initial Purchaser, Holder or Underwriter) expressly for use in a Registration Statement (or any amendment thereto) or any Prospectus (or any amendment or supplement thereto) provided further that this indemnity agreement shall not apply to any loss, liability, claim, damage or expense if the Holder fails to deliver at or prior to the written confirmation of sale, the most recent Prospectus, as amended or supplemented, and such Prospectus, as amended or supplemented, would have corrected such untrue statement or omission or alleged untrue statement or omission of a material fact and the delivery thereof was required by law. (b) Each Holder, severally but not jointly, agrees to indemnify and hold harmless the Company, the Initial Purchaser, each Underwriter and the other selling Holders, and each of their respective directors and officers, and each Person, if any, who controls the Company, the Initial Purchaser, any Underwriter or any other selling Holder within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act, against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 4(a) hereof, as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the -14- Registration Statement (or any amendment thereto) or any Prospectus included therein (or any amendment or supplement thereto) in reliance upon and in conformity with written information with respect to such Holder furnished to the Company by or on behalf of such Holder or any other person who controls such Holder expressly for use in the Registration Statement (or any amendment thereto) or such Prospectus (or any amendment or supplement thereto); provided, however, that no such Holder shall be liable for any claims hereunder in excess of the amount of net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. (c) Each indemnified party shall give notice as promptly as reasonably practicable to each indemnifying party of any action or proceeding commenced against it in respect of which indemnity may be sought hereunder, but failure so to notify an indemnifying party shall not relieve such indemnifying party from any liability hereunder to the extent it is not materially prejudiced as a result thereof and in any event shall not relieve it from any liability which it may have otherwise than on account of this indemnity agreement. An indemnifying party may participate at its own expense in the defense of any such action; provided, however, that counsel to the indemnifying party shall not (except with the consent of the indemnified party) also be counsel to the indemnified party. In no event shall the indemnifying party or parties be liable for the fees and expenses of more than one counsel (in addition to any local counsel) separate from their own counsel for all indemnified parties in connection with any one action or separate but similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances. No indemnifying party shall, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever in respect of which indemnification or contribution could be sought under this Section 4 (whether or not the indemnified parties are actual or potential parties thereto), unless such settlement, compromise or consent (i) includes an unconditional release of each indemnified party from all liability arising out of such litigation, investigation, proceeding or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. (d) If at any time an indemnified party shall have requested an indemnifying party to reimburse the indemnified party for fees and expenses of counsel, such indemnifying party agrees that it shall be liable for any settlement of the nature contemplated by Section 4(a)(ii) effected without its written consent if (i) such settlement is entered into more than forty-five (45) days after receipt by such indemnifying party of the aforesaid request, (ii) such indemnifying party shall have received notice of the terms of such settlement at least thirty (30) days prior to such settlement being entered into and (iii) such indemnifying party shall not have reimbursed such indemnified party in accordance with such request prior to the date of such settlement. (e) If the indemnification provided for in this Section 4 is for any reason unavailable to or insufficient to hold harmless an indemnified party in respect of any losses, liabilities, claims, damages or expenses referred to therein, then each indemnifying party shall contribute to the aggregate amount of such losses, liabilities, claims, damages and expenses incurred -15- by such indemnified party, as incurred, in such proportion as is appropriate to reflect the relative fault of the indemnifying party or parties on the one hand and of the indemnified party or parties on the other hand in connection with the statements or omissions that resulted in such losses, liabilities, claims, damages or expenses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party or parties on the one hand and the indemnified party or parties on the other hand shall be determined by reference to, among other things, whether any such untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by such indemnifying party or parties or such indemnified party or parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. (f) The Company, the Holders and the Initial Purchaser agree that it would not be just or equitable if contribution pursuant to this Section 4 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in paragraph (e) above. The aggregate amount of losses, liabilities, claims, damages and expenses incurred by an indemnified party and referred to above in this Section 4 shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in investigating, preparing or defending against any litigation, or any investigation or proceeding by any governmental agency or body, commenced or threatened, or any claim whatsoever based upon any such untrue or alleged untrue statement or omission or alleged omission. Notwithstanding the provisions of this Section 4, the Initial Purchaser or any Holder or Underwriter shall not be required to contribute any amount in excess of the amount by which the total price at which Registrable Securities sold by it pursuant to a Registration Statement were offered exceeds the amount of any damages that the Initial Purchaser, Holder or Underwriter has otherwise been required to pay by reason of any such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 4, each Person, if any, who controls the Initial Purchaser, Holder or Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Initial Purchaser or such Holder or Underwriter, as the case may be, and each director of the Company, each officer of the Company who signed the Registration Statement and each Person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall have the same rights to contribution as the Company. The respective obligations of the Initial Purchaser, Holders, and Underwriters to contribute pursuant to this Section 4 are several in proportion to the principal amount of Securities sold by them pursuant to a Registration Statement and not joint. The indemnity and contribution provisions contained in this Section 4 shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation -16- made by or on behalf of the Initial Purchaser or any Holder or Underwriter or any Person controlling the Initial Purchaser, or any Holder or Underwriter, or by or on behalf of the Company, its officers, or directors or any Person controlling the Company and (iii) any sale of Registrable Securities pursuant to a Registration Statement. 5. Miscellaneous. 5.1 Rule 144 and Rule 144A. For so long or the Company is subject to the reporting requirements of Section 13 or 15 of the 1934 Act, the Company covenants that it will file the reports required to be filed by it under the 1933 Act and Section 13(a) or 15(d) of the 1934 Act. If the Company ceases to be subject to the reporting requirements of Section 13 or 15 of the 1934 Act, it will upon the request of any Holder or beneficial owner of Registrable Securities (a) make publicly available such information (including, without limitation, the information specified in Rule 144A(d)(4) under the 1933 Act) as is necessary to permit sales pursuant to Rule 144 under the 1933 Act, (b) deliver or cause to be delivered, promptly following a request by any Holder or beneficial owner of Registrable Securities or any prospective purchaser or transferee designated by such Holder or beneficial owner, such information (including, without limitation, the information specified in Rule 144A(d)(4) under the 1933 Act) as is necessary to permit sales pursuant to Rule 144A under the 1933 Act and it will take such further action as any Holder or beneficial owner of Registrable Securities may reasonably request, and (c) take such further action that is reasonable in the circumstances, in each case, to the extent required from time to time to enable such Holder to sell its Registrable Securities without registration under the 1933 Act within the limitation of the exemptions provided by (i) Rule 144 under the 1933 Act, as such Rule may be amended from time to time, (ii) Rule 144A under the 1933 Act, as such Rule may be amended from time to time or (iii) any similar rules or regulations hereafter adopted by the SEC. Upon the request of any Holder or beneficial owner of Registrable Securities, the Company will deliver to such Holder a written statement as to whether it has complied with such requirements. 5.2 No Inconsistent Agreements. The Company has not entered into nor will the Company on or after the date of this Agreement enter into any agreement which is inconsistent with the rights granted to the Holders of Registrable Securities in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not for the term of this Agreement and will not in any way conflict with and are not and will not be inconsistent with the rights granted to the holders of any of the Company's other issued and outstanding securities under any other agreements entered into by the Company or any of its subsidiaries. 5.3 Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Company has obtained the written consent of Holders of at least a majority in aggregate principal amount of the outstanding Registrable Securities affected by such amendment, modification, supplement, waiver or departure. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders of Registrable Securities whose securities are being sold pursuant to a Registration Statement and that does not directly or -17- indirectly affect the rights of other Holders of Registrable Securities may be given by Holders of at least a majority of the Registrable Securities being sold by such Holders pursuant to such Registration Statement; provided that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. Each Holder of Registrable Securities outstanding at the time of any such amendment, modification, supplement, waiver or consent or thereafter shall be bound by any such amendment, modification, supplement, waiver or consent effected pursuant to this Section 5.3, whether or not any notice, writing or marking indicating such amendment, modification, supplement, waiver or consent appears on the Registrable Securities or is delivered to such Holder. 5.4 Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand delivery, registered first-class mail, telecopier or any courier guaranteeing overnight delivery (a) if to a Holder (other than the Initial Purchaser), at the most current address set forth on the records of the registrar under the Indenture, (b) if to the Initial Purchaser, at the most current address given by the Initial Purchaser to the Company by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the Purchase Agreement with respect to the Initial Purchaser with a copy to Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill Road, Palo Alto, California 94304, Attention: Robert Claassen, (c) if to the Company, initially at the Company's address set forth in the Purchase Agreement with a copy to Fenwick & West LLP, 801 California Street, Mountain View, California, 94014, Attention: Gordon Davidson, and thereafter at such other address of which notice is given in accordance with the provisions of this Section 5.4, and (d) if to any Underwriter, at the most current address given by such Underwriter to the Company by means of a notice given in accordance with the provisions of this Section 5.4, which address initially is the address set forth in the applicable underwriting agreement. All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; two business days after being deposited in the mail, postage prepaid, if mailed; when receipt is acknowledged, if telecopied; and on the next business day if timely delivered to an air courier guaranteeing overnight delivery. Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee, at the address specified in the Indenture. 5.5 Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors, assigns and transferees of each of the parties, including, without limitation and without the need for an express assignment, subsequent Holders; provided, that (a) this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquires Registrable Securities from a Holder and (b) nothing herein shall be deemed to permit any assignment, transfer or other disposition of Registrable Securities in violation of the terms hereof or of the Purchase Agreement or the Indenture. If any transferee of any Holder shall acquire Registrable Securities, in any manner, whether by operation of law or otherwise, such Registrable Securities shall be held subject to all of the terms of this Agreement, and by taking and holding such Registrable Securities, such Person -18- shall be conclusively deemed to have agreed to be bound by and to perform all of the terms and provisions of this Agreement, including the restrictions on resale set forth in this Agreement and, if applicable, the Purchase Agreement, and such person shall be entitled to receive the benefits hereof. 5.6 Third Party Beneficiaries. The Initial Purchaser (even if the Initial Purchaser is not a Holder of Registrable Securities) shall be third party beneficiaries of the agreements made hereunder between the Company, on the one hand, and the Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent they deem such enforcement necessary or advisable to protect their rights or the rights of Holders hereunder. Each Holder of Registrable Securities shall be a third party beneficiary to the agreements made hereunder between the Company, on the one hand, and the Initial Purchaser, on the other hand, and shall have the right to enforce such agreements directly to the extent it deems such enforcement necessary or advisable to protect its rights hereunder. 5.7 Restrictions on Resales Until the expiration of two years after the original issuance of the Securities, the Company will not, and will cause its "affiliates" (as such terms is defined in Rule 144(a)(1) under the 1933 Act) not to, resell any Securities which are "restricted securities" (or such term is defined under Rule 144(a)(3) under the 1933 Act) that have been reacquired by any of them and shall immediately upon any purchase of any such Securities submit such Securities to the Trustee for cancellation. 5.8 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. 5.9 Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby. 5.10 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. 5.11 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. -19- IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. INVISION TECHNOLOGIES, INC. By: /s/ Sergio Magistri ------------------------------------------------- Sergio Magistri, Ph.D. President and Chief Executive Officer By: /s/ Ross Mulholland ------------------------------------------------- Ross Mulholland Senior Vice President and Chief Financial Officer Confirmed and accepted as of the date first above written: MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED By: /s/ Chet Bozdog ----------------------------- Authorized Signatory -20- EX-4.6 5 f94131orexv4w6.txt EXHIBIT 4.6 EXHIBIT 4.6 UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH INVISION TECHNOLOGIES, INC. OR ANY AFFILIATE OF INVISION TECHNOLOGIES, INC. WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY) ONLY (A) TO INVISION TECHNOLOGIES, INC. OR ANY PARENT OR SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (D) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO INVISION TECHNOLOGIES, INC.'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. THE HOLDER OF THIS SECURITY IS ENTITLED TO THE BENEFITS OF A REGISTRATION RIGHTS AGREEMENT (AS SUCH TERM IS DEFINED IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF) AND, BY ITS ACCEPTANCE HEREOF, AGREES TO BE BOUND BY AND TO COMPLY WITH THE PROVISIONS OF SUCH REGISTRATION RIGHTS AGREEMENT. INVISION TECHNOLOGIES, INC. CUSIP: 461851 AA 5 R-1 3% CONVERTIBLE SENIOR NOTES DUE 2023 InVision Technologies, Inc., a Delaware corporation (the "Company", which term shall include any successor corporation under the Indenture referred to on the reverse hereof), promises to pay to Cede & Co., or registered assigns, the principal sum of One Hundred Twenty-Five Million Dollars ($125,000,000) on October 1, 2023 or such greater or lesser amount as is indicated on the Schedule of Exchanges of Notes on the other side of this Note. Interest Payment Dates: April 1and October 1. Regular Record Dates: March 15 and September 15. This Note is convertible as specified on the other side of this Note. Additional provisions of this Note are set forth on the other side of this Note. SIGNATURE PAGE FOLLOWS IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. INVISION TECHNOLOGIES, INC. By: /s/ Sergio Magistri _________________________________________ Name: Sergio Magistri, Ph.D. Title: President and Chief Executive Officer Attest: /s/ Ross Mulholland ________________________________________________________ Name: Ross Mulholland Title: Senior Vice President and Chief Financial Officer Dated: September 19, 2003 Trustee's Certificate of Authentication: This is one of the Securities referred to in the within-mentioned Indenture. U.S. BANK NATIONAL ASSOCIATION, as Trustee By: /s/ Paula Oswald ____________________________________________________ Authorized Signatory : INVISION TECHNOLOGIES, INC. 3% CONVERTIBLE SENIOR NOTES DUE 2023 1. INTEREST InVision Technologies, Inc., a Delaware corporation (the "Company", which term shall include any successor corporation under the Indenture hereinafter referred to), promises to pay interest on the principal amount of this Note at the rate of 3% per annum. The Company shall pay interest semiannually on April 1 and October 1 of each year, commencing April 1, 2004. Interest on the Securities shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from September 19, 2003; provided, however, that if there is not an existing default in the payment of interest and if this Note is authenticated between a Regular Record Date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such Interest Payment Date. Interest will be computed on the basis of a 360-day year of twelve 30-day months. Any reference herein to interest accrued or payable as of any date shall include any Liquidated Damages accrued or payable on such date as provided in the Registration Rights Agreement. 2. METHOD OF PAYMENT The Company shall pay interest on this Note (except defaulted interest) to the person who is the Holder of this Note at the close of business on March 15 or September 15, as the case may be, (each, a Regular Record Date) next preceding the related Interest Payment Date. The Holder must surrender this Note to a Paying Agent to collect payment of principal. The Company will pay principal and interest in money of the United States that at the time of payment is legal tender for payment of public and private debts. The Company may, however, pay principal and interest in respect of any Certificated Security by check or wire payable in such money; provided, however, that a Holder with an aggregate principal amount in excess of $2,000,000 will be paid by wire transfer in immediately available funds at the election of such Holder if such Holder has provided wire transfer instructions to the Company. The Company may mail an interest check to the Holder's registered address. Notwithstanding the foregoing, so long as this Note is registered in the name of a Depositary or its nominee, all payments hereon shall be made by wire transfer of immediately available funds to the account of the Depositary or its nominee. 3. PAYING AGENT, REGISTRAR AND CONVERSION AGENT Initially, U.S. Bank National Association (the "Trustee", which term shall include any successor trustee under the Indenture hereinafter referred to) will act as Paying Agent, Registrar and Conversion Agent. The Company may change any Paying Agent, Registrar or Conversion Agent without notice to the Holder. The Company or any of its Subsidiaries may, subject to certain limitations set forth in the Indenture, act as Paying Agent or Registrar. 4. INDENTURE, LIMITATIONS This Note is one of a duly authorized issue of Securities of the Company designated as its 3% Convertible Senior Notes Due 2023 (the "Notes"), issued under an Indenture dated as of September 19, 2003 (together with any supplemental indentures thereto, the "Indenture"), between the Company and the Trustee. The terms of this Note include those stated in the Indenture and those required by or made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended, as in effect on the date of the Indenture. This Note is subject to all such terms, and the Holder of this Note is referred to the Indenture and said Act for a statement of them. The Notes are senior unsecured obligations of the Company limited to $125,000,000 aggregate principal amount. The Indenture does not limit other debt of the Company, secured or unsecured. 5. OPTIONAL REDEMPTION The Notes are subject to redemption, at any time, or from time to time, on or after October 1, 2008, as a whole or in part, at the election of the Company. The Redemption Price is 100% of the principal amount of the Notes to be redeemed, together with accrued and unpaid interest up to but not including the Redemption Date; provided that if the Redemption Date falls after a Regular Record Date and on or before an Interest Payment Date, then the interest will be payable to the Holders in whose names the Notes are registered at the close of business on such Regular Record Date. No sinking fund is provided for the Notes. 6. NOTICE OF REDEMPTION Notice of redemption will be mailed by first-class mail at least 20 days but not more than 60 days before the Redemption Date to each Holder of Notes to be redeemed at its registered address. Notes in denominations larger than $1,000 may be redeemed in part, but only in whole multiples of $1,000. On and after the Redemption Date, subject to the deposit with the Paying Agent of funds sufficient to pay the Redemption Price plus accrued interest to, but excluding, the Redemption Date, interest shall cease to accrue on Notes or portions of them called for redemption. 7. REPURCHASE OF NOTES AT OPTION OF HOLDER UPON A CHANGE IN CONTROL At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to repurchase all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Notes held by such Holder on the date that is 45 days after the date of the Change in Control Purchase Notice, at a repurchase price equal to 100% of the principal amount thereof together with any accrued interest up to, but excluding, the Change in Control Repurchase Date. The Holder shall have the right to withdraw any Change in Control Repurchase Notice (in whole or in a portion thereof that is $1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to the close of business on the Business Day immediately preceding the Change in Control Repurchase Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture. 8. PURCHASE OF NOTES AT OPTION OF HOLDER ON SPECIFIED DATES At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to purchase for cash all or any part specified by the Holder (so long as the principal amount of such part is $1,000 or an integral multiple of $1,000 in excess thereof) of the Notes held by such Holder on the applicable Put Right Purchase Date at the applicable Put Right Purchase Price. The Holder shall have the right to withdraw any Put Right Purchase Notice (in whole or in a portion thereof that is $1,000 or an integral multiple of $1,000 in excess thereof) at any time prior to the close of business on the Put Right Purchase Date by delivering a written notice of withdrawal to the Paying Agent in accordance with the terms of the Indenture. 9. CONVERSION Subject to and upon compliance with the provisions of the Indenture, at the option of the Holder thereof, any Security that is an integral multiple of $1,000 may be converted into fully paid and nonassessable shares (calculated as to each conversion to the nearest 1/100th of a share) of Common Stock of the Company at any time on or prior to the close of business on the Final Maturity Date at the Conversion Rate, determined as hereinafter provided, in effect at the time of conversion and subject to the adjustments described below, only under the following circumstances: (1) prior to October 1, 2021, on any date during any fiscal quarter (and only during such fiscal quarter) after the fiscal quarter ending September 28, 2003, if the Closing Price per share of the Common Stock was more than 110% of the then current Conversion Price for at least 20 Trading Days in the period of the 30 consecutive Trading Days ending on the last day of the previous fiscal quarter; (2) on or after October 1, 2021, at all times on or after any date on which the Closing Price per share of the Common Stock is more than 110% of the then current Conversion Price on the Securities; (3) until the close of business on the Business Day prior to the Redemption Date if the Company elects to redeem the Securities on or after October 1, 2008; (4) if the Company distributes to all or substantially all holders of Common Stock rights, options or warrants entitling them to purchase Common Stock at less than the Closing Price per share of the Common Stock on the last Trading Day preceding the declaration for such distribution; (5) if the Company distributes to all or substantially all holders of Common Stock cash, assets, debt securities or capital stock, which distribution has a per share value as determined by the Board of Directors exceeding 10% of the Closing Price per share of the Common Stock on the last Trading Day preceding the declaration for such distribution; (6) if the Company becomes a party to a consolidation, merger or binding share exchange pursuant to which all or substantially all of the Company's Common Stock would be converted to cash, securities or other property, or if the Company undergoes a Change in Control or an event occurs that would have been a Change in Control but for the existence of one of the Change in Control exceptions pursuant to Section 3.8(a)(2) of the Indenture; or (7) for the ten Business Day period after any five consecutive Trading Day period in which the average Trading Prices for the Securities for such five Trading Day period was less than 98% of the average Conversion Value for the Securities during such period; provided, however, that a Holder may not convert its Securities pursuant to this clause (7) if, on the Conversion Date, the Closing Price per share of Common Stock is greater than or equal to the then current Conversion Price of the Securities and less than or equal to 110% of the then current Conversion Price of the Securities. Provisions of the Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security. A Holder of Securities is not entitled to any rights of a holder of Common Stock until such Holder has converted its Securities into Common Stock, and only to the extent such Securities are deemed to have been converted into Common Stock pursuant to Article 4 of the Indenture. The rate at which shares of Common Stock shall be delivered upon conversion (herein called the "Conversion Rate") shall be initially 31.25 shares of Common Stock for each $1,000 principal amount of Securities. The Conversion Rate shall be adjusted in certain instances as provided in the Indenture. The "Conversion Price" shall initially equal $1,000 divided by the Conversion Rate. No fractional shares will be issued upon conversion; in lieu thereof, an amount will be paid in cash based upon the Closing Price (as defined in the Indenture) of the Common Stock on the Trading Day immediately prior to the Conversion Date. To convert a Note, a Holder must (a) complete and manually sign the conversion notice set forth below and deliver such notice to a Conversion Agent, (b) surrender the Note to a Conversion Agent, (c) furnish appropriate endorsements and transfer documents if required by a Registrar or a Conversion Agent, and (d) pay any transfer or similar tax, if required. Notes so surrendered for conversion (in whole or in part) during the period from the close of business on any Regular Record Date to the opening of business on the next succeeding Interest Payment Date (excluding (1) Notes or portions thereof called for redemption or presented for repurchase upon a Change in Control on a Redemption Date or on a Change in Control Repurchase Date, as the case may be, with such date occurring during the period beginning at the close of business on a Regular Record Date and ending at the opening of business on the fifth Business Day after the next succeeding Interest Payment Date or (2) Notes that are submitted for conversion between the Regular Record Date for the final interest payment and the opening of business on the final Interest Payment Date) shall also be accompanied by payment in funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of such Note then being converted, and such interest shall be payable to such registered Holder notwithstanding the conversion of such Note, subject to the provisions of the Indenture relating to the payment of defaulted interest by the Company. If the Company defaults in the payment of interest payable on such Interest Payment Date the Company shall promptly repay such funds to such Holder. A Holder may convert a portion of a Note equal to $1,000 or any integral multiple thereof. A Note in respect of which a Holder had delivered a Change in Control Repurchase Notice exercising the option of such Holder to require the Company to repurchase such Note may be converted only if the Change in Control Repurchase Notice is withdrawn in accordance with the terms of the Indenture. 10. DENOMINATIONS, TRANSFER, EXCHANGE The Notes are in registered form, without coupons, in denominations of $1,000 and integral multiples of $1,000. A Holder may register the transfer of or exchange Notes in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes or other governmental charges that may be imposed in relation thereto by law or permitted by the Indenture. 11 . PERSONS DEEMED OWNERS The Holder of a Note may be treated as the owner of it for all purposes. 12. UNCLAIMED MONEY If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent will pay the money back to the Company at its written request, subject to applicable unclaimed property law. After that, Holders entitled to money must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person. 13 . AMENDMENT, SUPPLEMENT AND WAIVER Subject to certain exceptions, the Indenture or the Notes may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the Notes then outstanding, and an existing default or Event of Default and its consequence or compliance with any provision of the Indenture or the Notes may be waived in a particular instance with the consent of the Holders of a majority in aggregate principal amount of the Notes then outstanding. Without the consent of or notice to any Holder, the Company and the Trustee may amend or supplement the Indenture or the Notes to, among other things, cure any ambiguity, defect or inconsistency or make any other change that does not adversely affect the rights of any Holder. 14. SUCCESSOR ENTITY When a successor corporation assumes all the obligations of its predecessor under the Notes and the Indenture in accordance with the terms and conditions of the Indenture, the predecessor corporation (except in certain circumstances specified in the Indenture) be released from those obligations. 15. DEFAULTS AND REMEDIES Under the Indenture, an Event of Default includes: (i) a default for 30 days in payments of interest (including Liquidated Damages, if any) on any Notes; (ii) a default in payment of any principal of, or premium, if any, on the Notes when due; (iii) failure by the Company for 30 days after notice to comply with any of its other terms, covenants or agreements contained in the Indenture or the Notes; (iv) failure by the Company for 5 days after notice to provide a notice of a Change in Control; (v) certain defaults in the payment of certain indebtedness of the Company or (vi) certain events of bankruptcy, insolvency or reorganization of the Company or any Significant Subsidiary. If an Event of Default (other than as a result of certain events of bankruptcy, insolvency or reorganization of the Company) occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding may declare all unpaid principal to the date of acceleration on the Notes then outstanding to be due and payable immediately, all as and to the extent provided in the Indenture. If an Event of Default occurs as a result of certain events of bankruptcy, insolvency or reorganization of the Company, unpaid principal of the Notes then outstanding shall become due and payable immediately without any declaration or other act on the part of the Trustee or any Holder, all as and to the extent provided in the Indenture. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. The Trustee may require indemnity satisfactory to it before it enforces the Indenture or the Notes. Subject to certain limitations, Holders of a majority in aggregate principal amount of the Notes then outstanding may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing default (except a default in payment of principal or interest) if it determines that withholding notice is in their interests. The Company is required to file periodic reports with the Trustee as to the absence of default. 16. TRUSTEE DEALINGS WITH THE COMPANY U.S. Bank National Association, the Trustee under the Indenture, in its individual or any other capacity, may make loans to, accept deposits from and perform services for the Company or an Affiliate of the Company, and may otherwise deal with the Company or an Affiliate of the Company, as if it were not the Trustee. 17. NO RECOURSE AGAINST OTHERS A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Notes or the Indenture nor for any claim based on, in respect of or by reason of such obligations or their creation. The Holder of this Note by accepting this Note waives and releases all such liability. The waiver and release are part of the consideration for the issuance of this Note. 18. AUTHENTICATION This Note shall not be valid until the Trustee or an authenticating agent manually signs the certificate of authentication on the other side of this Note. 19. ABBREVIATIONS AND DEFINITIONS Customary abbreviations may be used in the name of the Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian) and UGMA (= Uniform Gifts to Minors Act). All terms defined in the Indenture and used in this Note but not specifically defined herein are defined in the Indenture and are used herein as so defined. 20. INDENTURE TO CONTROL; GOVERNING LAW In the case of any conflict between the provisions of this Note and the Indenture, the provisions of the Indenture shall control. This Note shall be governed by, and construed in accordance with, the laws of the State of New York, without regard to principals of conflicts of law. The Company will furnish to any Holder, upon written request and without charge, a copy of the Indenture. Requests may be made to: InVision Technologies, Inc., 7151 Gateway Boulevard, Newark, California 94560, (510) 739-2400, Attention: Andrew Siegel and Tram T. Phi. ASSIGNMENT FORM To assign this Note, fill in the form below: I or we assign and transfer this Note to ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) and irrevocably appoint ________________________________________________________________________________ agent to transfer this Note on the books of the Company. The agent may substitute another to act for him or her. Your Signature: Date: _______________________ _________________________________________ (Sign exactly as your name appears on the other side of this Note) *Signature guaranteed by: By: _________________________ * The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. CONVERSION NOTICE To convert this Note into Common Stock of the Company, check the box: [ ] To convert only part of this Note, state the principal amount to be converted (must be $1,000 or a integral multiple of $1,000): $____________. If you want the stock certificate made out in another person's name, fill in the form below: ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. no.) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ (Print or type assignee's name, address and zip code) Your Signature: Date: _______________________ _________________________________________ (Sign exactly as your name appears on the other side of this Note) *Signature guaranteed by: By: __________________________ * The signature must be guaranteed by an institution which is a member of one of the following recognized signature guaranty programs: (i) the Securities Transfer Agent Medallion Program (STAMP); (ii) the New York Stock Exchange Medallion Program (MSP); (iii) the Stock Exchange Medallion Program (SEMP); or (iv) such other guaranty program acceptable to the Trustee. OPTION TO ELECT REPURCHASE UPON A CHANGE IN CONTROL To: InVision Technologies, Inc. The undersigned registered owner of this Security hereby irrevocably acknowledges receipt of a notice from InVision Technologies, Inc. (the "Company") as to the occurrence of a Change in Control with respect to the Company and requests and instructs the Company to repurchase the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security at the Change in Control Repurchase Price, together with accrued interest to, but excluding, such date, to the registered Holder hereof. Dated: ____________ ____________________________________________ ____________________________________________ Signature(s) Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ____________________________________________ Signature Guaranty Principal amount to be redeemed (in an integral multiple of $1,000, if less than all): ____________________________ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. OPTION TO ELECT PURCHASE ON SPECIFIED DATES To: InVision Technologies, Inc. The undersigned hereby requests and instructs InVision Technologies, Inc. to purchase the entire principal amount of this Security, or the portion thereof (which is $1,000 or an integral multiple thereof) below designated, on September 1, _____ in accordance with the terms of the Indenture referred to in this Security at the Put Right Purchase Price to the registered Holder hereof. Dated: _______________ ____________________________________________ Signature(s) must be guaranteed by a qualified guarantor institution with membership in an approved signature guarantee program pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934. ____________________________________________ Signature Guaranty Principal amount to be redeemed (in an integral multiple of $1,000, if less than all): ____________________________ NOTICE: The signature to the foregoing Election must correspond to the Name as written upon the face of this Security in every particular, without alteration or any change whatsoever. SCHEDULE OF EXCHANGES OF NOTES The following exchanges, purchase, redemptions, repurchases or conversions of a part of this global Note have been made:
PRINCIPAL AMOUNT OF THIS GLOBAL NOTE AUTHORIZED AMOUNT OF FOLLOWING SUCH SIGNATORY OF AMOUNT OF DECREASE IN INCREASE IN DECREASE DATE SECURITIES PRINCIPAL AMOUNT PRINCIPAL AMOUNT OF EXCHANGE (OR INCREASE) CUSTODIAN OF THIS GLOBAL NOTE OF THIS GLOBAL NOTE - ------------------------- --------- ------------------- -------------------
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF RESTRICTED SECURITIES Re: _____ Convertible Senior Notes Due 2023 (the "Notes") of InVision Technologies, Inc. This certificate relates to $_______ principal amount of Notes owned in (check applicable box) [ ] book-entry or [ ] definitive form by ___________________ (the "Transferor"). The Transferor has requested a Registrar or the Trustee to exchange or register the transfer of such Notes. In connection with such request and in respect of each such Note, the Transferor does hereby certify that the Transferor is familiar with transfer restrictions relating to the Notes as provided in Section 2.12 of the Indenture dated as of September 19, 2003 between InVision Technologies, Inc. and U.S. Bank National Association, as trustee (the "Indenture"), and the transfer of such Note is being made pursuant to an effective registration statement under the Securities Act of 1933, as amended (the "Securities Act") (check applicable box) or the transfer or exchange, as the case may be, of such Note does not require registration under the Securities Act because (check applicable box): [ ] Such Note is being transferred pursuant to an effective registration statement under the Securities Act. [ ] Such Note is being acquired for the Transferor's own account, without transfer. [ ] Such Note is being transferred to the Company or a Subsidiary (as defined in the Indenture) of the Company. [ ] Such Note is being transferred to a person the Transferor reasonably believes is a "qualified institutional buyer" (as defined in Rule 144A or any successor provision thereto ("Rule 144A") under the Securities Act) that is purchasing for its own account or for the account of a "qualified institutional buyer", in each case to whom notice has been given that the transfer is being made in reliance on such Rule 144A, and in each case in reliance on Rule 144A. [ ] Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements under the Securities Act in accordance with Rule 144 (or any successor thereto) ("Rule 144") under the Securities Act. [ ] Such Note is being transferred to a non-U.S. Person in an offshore transaction in compliance with Rule 904 of Regulation S under the Securities Act (or any successor thereto). Such Note is being transferred pursuant to and in compliance with an exemption from the registration requirements of the Securities Act (other than an exemption referred to above) and as a result of which such Note will, upon such transfer, cease to be a "restricted security" within the meaning of Rule 144 under the Securities Act. The Transferor acknowledges and agrees that, if the transferee will hold any such Notes in the form of beneficial interests in a global Note which is a "restricted security" within the meaning of Rule 144 under the Securities Act, then such transfer can only be made pursuant to (i) Rule 144A under the Securities Act and such transferee must be a "qualified institutional buyer" (as defined in Rule 144A) or (ii) Regulation S under the Securities Act. Date: ____________________ ___________________________ (Insert Name of Transferor) EX-5.1 6 f94131orexv5w1.txt EXHIBIT 5.1 EXHIBIT 5.1 [Letterhead of Fenwick & West LLP] November 6, 2003 InVision Technologies, Inc. 7175 Gateway Boulevard Newark, California 94560 Gentlemen/Ladies: At your request, we have examined the Registration Statement on Form S-3 (the "REGISTRATION STATEMENT") filed by InVision Technologies, Inc., a Delaware corporation (the "COMPANY"), with the Securities and Exchange Commission (the "COMMISSION") on or about November 6, 2003, in connection with the registration under the Securities Act of 1933, as amended, for resale by certain selling securityholders (the "SELLING SECURITYHOLDERS") specified in the Registration Statement and the prospectus associated therewith (the "PROSPECTUS"), from time to time, of (i) $125,000,000 aggregate principal amount of the Company's 3% Convertible Senior Notes due 2023 (the "NOTES") and (ii) an aggregate of 3,906,250 shares of the Company's Common Stock (the "STOCK") issuable upon conversion of the Notes, which Notes are convertible into such Stock at a conversion rate of approximately 31.25 shares per $1,000 principal amount of Notes, subject to adjustment in certain circumstances. In rendering this opinion, we have examined such matters of fact as we have deemed necessary in order to render the opinion set forth herein, which included examination of the following. (1) The Company's Amended and Restated Certificate of Incorporation dated April 23, 1996, and filed with the Delaware Secretary of State on April 30, 1996 and the Company's Amendment to Amended and Restated Certificate of Incorporation dated February 28, 2002 and filed with the Delaware Secretary of State on February 28, 2002 (collectively, the "CERTIFICATE OF INCORPORATION"); (2) the Company's Bylaws, as amended as of July 1, 2003, certified by the Assistant Secretary of the Company on September 19, 2003 (the "BYLAWS"); (3) the Registration Statement, together with the Exhibits filed as a part thereof or incorporated therein by reference; (4) the Prospectus prepared in connection with the Registration Statement; (5) the actions, consents and minutes of all meetings of the Board of Directors, committees thereof and stockholders since May 29, 1998; (6) the minutes of the Board of Directors and stockholders of the Company relating to the election of the members of the Board of Directors who were serving on September 15, 2003; (7) the stock records of the Company and that the Company has provided to us (consisting of a certificate from the Company's transfer agent of even date herewith verifying the number of the Company's issued and outstanding shares of capital stock as of the date hereof and a list of option and warrant holders respecting the Company's capital stock and of any rights to purchase capital stock that was prepared by the Company of even date herewith verifying the number of such issued and outstanding securities); (8) a Management Certificate addressed to us and dated of even date herewith executed by the Company containing certain factual representations (the "MANAGEMENT Certificate"). (9) the Purchase Agreement (the "PURCHASE AGREEMENT"), dated September 17, 2003, by and among the Company and the initial purchasers of the Notes; (10) the Cross-Receipt, dated September 19, 2003, by the Company and the initial purchasers of the Notes; (11) the global note representing the Notes (the "GLOBAL NOTE"), dated September 19, 2003; (12) the Indenture (the "INDENTURE"), dated September 19, 2003, between the Company and U.S. Bank National Association, the trustee of the Notes. In our examination of documents for purposes of this opinion, we have assumed, and express no opinion as to, the genuineness of all signatures on original documents, the authenticity and completeness of all documents submitted to us as originals, the conformity to originals and completeness of all documents submitted to us as copies, the legal capacity of all persons or entities executing the same, the lack of any undisclosed termination, modification, waiver or amendment to any document reviewed by us and the due authorization, execution and delivery of all documents (except for the due authorization, execution and delivery of the above Purchase Agreement, the Global Note and the Indenture by the Company) where due authorization, execution and delivery are prerequisites to the effectiveness thereof. We have also assumed that the certificates representing the Stock have been, or will be when issued, properly signed by authorized officers of the Company or their agents. 2 As to matters of fact relevant to this opinion, we have relied solely upon our examination of the documents referred to above and have assumed the current accuracy and completeness of the information obtained from the documents referred to above and the representations and warranties made by representatives of the Company to us, including but not limited to those set forth in the Management Certificate. We have made no independent investigation or other attempt to verify the accuracy of any of such information or to determine the existence or non-existence of any other factual matters; however, we are not aware of any facts that would cause us to believe that the opinion expressed herein is not accurate. We are admitted to practice law in the State of California, and we render this opinion only with respect to, and express no opinion herein concerning the application or effect of the laws of any jurisdiction other than (a) the existing federal laws of the United States of America, (b) the laws of the State of California, (c) the Delaware General Corporation Law, the Delaware Constitution and reported judicial decisions relating thereto as in effect on the date hereof, and (d) with respect to the opinion expressed in clause (i)(b) of the penultimate paragraph of this letter and only insofar as such opinion relates to the valid and legally binding nature of and the enforceability of the Notes, the laws of the State of New York as in effect on the date hereof (which we have assumed to be the governing law with respect to enforceability of the Indenture). In rendering this opinion, we have also assumed that, at the time of any issuance of any shares of Stock, the number of shares of Stock so issued will not exceed that number of shares of common stock of the Company obtained by subtracting from the number of shares of common stock of the Company then authorized under the Company's Certificate of Incorporation: (a) the number of shares of common stock of the Company that are then issued and outstanding and (b) the number of shares of common stock of the Company that are then reserved for issuance or otherwise are issuable pursuant to the Company's then outstanding commitments or obligations. With respect to our opinions regarding the valid and binding nature of the Notes, this opinion is qualified by, and is subject to, and we render no opinion with respect to, general limitations and exceptions applicable to all contracts, including the following: (a) the effect of the laws of bankruptcy, insolvency, reorganization, arrangement, moratorium, fraudulent conveyance, and other similar laws now or hereinafter in effect relating to or affecting the rights and remedies of creditors; (b) the effect of general principles of equity and similar principles, including, without limitation, concepts of materiality, reasonableness, good faith and fair dealing, public policy and unconscionability, and the possible unavailability of specific performance, injunctive relief, or other equitable remedies, regardless of whether considered in a proceeding in equity or at law; (c) the unenforceability under certain circumstances under law or court decisions of provisions providing for the indemnification of, or contribution to, a party with respect to a liability where such indemnification or contribution is contrary to public policy; and 3 (d) the effect of California, New York and federal laws relating to usury or permissible rates of interest for loans, forbearances or the use of money. Based upon the foregoing, it is our opinion that (i) the Notes (a) have been duly authorized and validly issued by the Company and (b) are valid and legally binding obligations of the Company, and (ii) up to 3,906,250 shares of Stock to be sold by the Selling Securityholders when issued, sold and delivered upon conversion of the Notes in accordance with the terms of the global note representing the Notes and of the Indenture, in the manner and for the consideration stated in the global note representing the Notes, the Indenture, the Registration Statement and the Prospectus, will be validly issued, fully paid and nonassessable. We consent to the use of this opinion as an exhibit to the Registration Statement and further consent to all references to us, if any, in the Registration Statement, the Prospectus constituting a part thereof and any amendments thereto. This opinion is intended solely for use in connection with the resale of the Notes and the Stock issuable upon conversion of the Notes by the Selling Securityholders subject to the Registration Statement and is not to be relied upon for any other purpose. We assume no obligation to advise you of any fact, circumstance, event or change in the law or the facts that may hereafter be brought to our attention whether or not such occurrence would affect or modify the opinions expressed herein. Very truly yours, /s/ Fenwick & West LLP FENWICK & WEST LLP 4 EX-10.1 7 f94131orexv10w1.txt EXHIBIT 10.1 Exhibit 10.1 SOLICITATION, OFFER AND AWARD 1. THIS CONTRACT IS A RATED ORDER RATING PAGE OF PAGES [X] Yes [ ] No DO-H8 1 2. CONTRACT NO DTSA20-03-C-01900 3. SOLICITATION NO. 4. THIS IS A SMALL BUSINESS SET-ASIDE [ ] YES [X] NO 5. DATE ISSUED 06/30/03 6. REQUSITION/PURCHASE NO. 7. ISSUED BY: 8. ADDRESS OFFER TO (1f TRANSPORTATION SECURITY ADMINISTRATION OTHER THAN BLOCK 7) SECURITY TECHNOLOGY DEPLOYMENT OFFICE JACK HANDRAHAN 590 HERNDON PARKWAY, SUITE 120 SAME ADDRESS AS BLOCK 7 HERNDON, VA 20170-5232 SOLICITATION 9. OFFERS IN ORIGINAL AND COPIES FOR FURNISHING THE SUPPLIES OR SERVICES IN THE SCHEDULE WILL BE RECEIVED AT THE PLACE IN THE DEPOSITORY SPECIFIED IN ITEM 8, OR IF HAND-CARRIED LOCATED IN UNTIL LOCAL TIME (HOUR) (DATE) CAUTION - LATE SUBMISSIONS, MODIFICATIONS, AND WITHDRAWALS: SEE SECTION L. 10. FOR INFORMATION A. NAME B. TELEPHONE NO. include area cede) CALL: Jack Handrahan (NO COLLECT CALLS) (703) 796-7125 11. TABLE OF CONTENTS (X) SEC DESCRIPTION PAGE(S)(X) PART I - THE SCHEDULE [X] A SOLICITATIONICONTRACT FORM 1 [X] B SUPPLIES OR SERVICES AND PRICES/COSTS 5 [X] C DESCRIPTION/SPECS/WORK STATEMENT 35 [X] D PACKAGING AND MARKING 1 [X] E INSPECTION AND ACCEPTANCE 4 [X] F DELIVERIES OR PERFORMANCE 4 [X] G CONTRACT ADMINISTRATION DATA 11 [X] H SPECIAL CONTRACT REQUIREMENTS 15 PART II - CONTRACT CLAUSES [X] I CONTRACT CLAUSES 11 PART III - LIST OF DOCUMENTS, EXHIBITS, AND OTHER ATTACH. [X] J LIST OF ATTACHMENTS 5 PART IV - REPRESENTATIONS AND INSTRUCTIONS [ ] K REPRESENTATIONS, CERTIFICATIONS AND OTHER STATEMENTS OF OFFERORS [ ] L INSTRS., CONDS., AND NOTICES TO OFFERORS [ ] M EVALUATION FACTORS FOR AWARD OFFER (must be fully completed by Offeror) 12. IN COMPLIANCE WITH THE ABOVE, THE UNDERSIGNED AGREE, IF THIS OFFER IS ACCEPTED WITHIN CALENDAR DAYS (60 CALENDAR DAYS UNLESS A DIFFERENT PERIOD IS INSERTED BY THE OFFEROR) FROM THE DATE FOR RECEIPT OF OFFERS SPECIFIED ABOVE, TO FURNISH ANY OR ALL ITEMS UPON WHICH PRICES ARE OFFERED AT THE PRICE SET OPPOSITE EACH ITEM, DELIVERED AT THE DESIGNATED POINT(S), WITHIN THE TIME SPECIFIED IN THE SCHEDULE.
13. DISCOUNT FOR 10 CALENDAR 20 CALENDAR 30 CALENDAR CALENDAR PROMPT PAYMENT DAYS DAYS DAYS DAYS ~~(See Section 1, Clause No 3.3 1-6) % % % %~~

14. ACKNOWLEDGMENT OF AMENDMENTS AMENDMENT NO. DATE AMENDMENT NO. DATE ~~(The Offeror acknowledges receipt of amendments to the SOLICITATION for Offerors and related documents numbered and dated)~~
15A. NAME AND InVision Technologies. Inc. ADDRESS 7157 Gateway Boulevard OF Newark, CA 94560 OFFEROR 15B. TELEPHONE NO. 15C. CHECK IF REMITTANCE ADDRESS (include area IS DIFFERENT FROM ABOVE - ENTER code) [ ] SUCH ADDRESS IN SCHEDULE (510) 739-2400 16. NAME AND TITLE OF PERSON AUTHORIZED TO SIGN DAVID PILLOR 17. SIGNATURE 18. OFFER DATE /S/ DAVID PILLOR 5 AUG 2003 AWARD (To be completed by Government) 19. ACCEPTED AS TO ITEMS NUMBERED ALL 21. ACCOUNTING AND APPROPRIATION DATA SEE DELIVERY ORDERS 22. RESERVED 23. SUBMIT INVOICES TO ADDRESS SHOWN IN ITEM (4 copies unless otherwise specified) 24. ADMINISTERED BY (If other than item 7) 25. PAYMENT WILL BE MADE BY 26. NAME OF CONTRACTING OFFICER (Type or print) JOHN J. HANDRAHAN 27. UNITED STATES OF AMERICA /S/ JOHN J. HANDRAHAN 28. AWARD DATE 5 AUG 03 DTSA20-03-C-01900 PART I - SECTION B SUPPLIES/SERVICES & PRICE/COST B.1 IDENTIFICATION OF SUPPLIES/SERVICES The Contractor shall provide the following supplies and services in accordance with the terms and conditions of this contract. The period of the contract is date of contract award through 36 months thereafter. All Contract Line Item Numbers (CLINs) will be activated by means of delivery orders or task orders. B.2 TYPE OF CONTRACT This is a firm fixed price contract with indefinite delivery/indefinite quantity (IDIQ) and time and material (T&M) Contract Line Item Numbers (CLINs). Delivery/Task orders will be issued for all equipment and service orders. B.3 INDEFINITE QUANTITY CONTRACT - MINIMUM AND MAXIMUM AMOUNT During the period of performance of this contract, the Government shall provide to the Contractor one or more delivery orders. The minimum price of the delivery orders shall be at least [***] (cost of the CLINS listed in B.4.1 below) when all orders are added together. The maximum ceiling price for all orders established under this contract shall not exceed $641,470,000.00 (excluding T&M orders), unless the contract is modified by the Contracting Officer. The government is not obligated to order more than the minimum stated amount under this contract. B.4 CONTRACT LINE ITEM NUMBERS (CLINS) The following line items will be ordered in accordance with the contract amounts set forth below. B.4.1 INDEFINITE DELIVERY/INDEFINITE QUANTITY (IDIQ) CLINS EFFECTIVE ORDERING PERIOD - DATE OF CONTRACT AWARD THROUGH 36 MONTHS THEREAFTER. MINIMUM QUANTITY CLINS - to be issued at contract award
MIN MAX UNIT CLIN DESCRIPTION QTY QTY UNIT PRICE TOTAL - ---- ----------- --- --- ---- ----- ----- 0001A Pass Through SA EDS [***] [***] [***] [***] [***] Unit (CTX-2500) w/powered inclined conveyor and baggage exit slide/conveyor (See specification 3.1.2) 0001B Pass Through SA EDS [***] [***] [***] [***] [***] Unit (CTX-5500DS) w/powered inclined conveyor and baggage exit slide conveyor (See specification 3.1.2) 0002 High Speed [***] [***] [***] [***] [***] Integrated EDS Unit (CTX 9000DSi) (See specification
* Confidential treatment requested. B-1 DTSA20-03-C-01900
MIN MAX UNIT CLIN DESCRIPTION QTY QTY UNIT PRICE TOTAL - ---- ----------- --- --- ---- ----- ----- 3.1.2) 0003 Medium Speed [***] [***] [***] [***] [***] Integrated EDS Unit (CTX-5500DS) (See specification 3.1.2) 0004 Technical [***] [***] [***] [***] [***] Interchange Meeting 0005 Equipment 0005A Powered Incline [***] [***] [***] [***] [***] Conveyor 0005B Powered Flat [***] [***] [***] [***] [***] Conveyor 0005C Baggage Exit Slide [***] [***] [***] [***] [***] 0005D Luggage Positioning [***] [***] [***] [***] [***] Adapter 0005E Standalone Training [***] [***] [***] [***] [***] Simulator Medium Speed EDS (CTX 5500DS) 0005F Standalone Training [***] [***] [***] [***] [***] Simulator High Speed EDS (CTX 9000DSi) 0005G Programmable Logic [***] [***] [***] [***] [***] Control (PLC) 0005H Remote Image Replay [***] [***] [***] [***] [***] 0005I BVS Remoting Kit [***] [***] [***] [***] [***] 0006A Multiplex Network [***] [***] [***] [***] [***] 0006B Additional TRI [***] [***] [***] [***] [***] workstation 0006C PTRI workstation [***] [***] [***] [***] [***] 0006D Additional Control [***] [***] [***] [***] [***] Interface Workstation 0006E Network Printer [***] [***] [***] [***] [***] Total Material $641,470,000
B.4.4 TIME AND MATERIALS (T&M) CLIN 3000 (EFFECTIVE ORDERING PERIOD - DATE OF CONTRACT AWARD THROUGH 36 MONTHS THEREAFTER) * Confidential treatment requested. B-2 DTSA20-03-C-01900 CLIN 3000 will be used in the event that engineering support or installation services are ordered pursuant to Statement of Work, Section C 3.15.
ESTIMATED HOURLY HOURS (NOT CLIN DESCRIPTION UNIT RATE TO EXCEED) TOTAL ---- ----------- ---- ---- ---------- ----- 3000 Labor Categories (Ref. Section B.4.4.1) Field Service Engineer [***] [***] [***] [***] Design Engineer [***] [***] [***] [***] Document [***] [***] [***] [***] Specialist/Tech Writer Sr. Document Spec [***] [***] [***] [***] Drafter [***] [***] [***] [***] Manufacturing [***] [***] [***] [***] Program Manager [***] [***] [***] [***] Project Manager [***] [***] [***] [***] QA [***] [***] [***] [***] Senior Design Engineer [***] [***] [***] [***] Senior Software [***] [***] [***] [***] Engineer Senior System Engineer [***] [***] [***] [***] Senior Test Engineer [***] [***] [***] [***] Software Engineer [***] [***] [***] [***] System Engineer [***] [***] [***] [***] (Test) Technician [***] [***] [***] [***] Cost Reimbursable Items Estimated Travel/Per [***] [***] Diem (Ref. Section B.4.4.2) Estimated Materials [***] [***] (Ref. Section B.4.4.3) Estimated Shipping [***] [***]
* Confidential treatment requested. B-3 DTSA20-03-C-01900
ESTIMATED HOURLY HOURS (NOT CLIN DESCRIPTION UNIT RATE TO EXCEED) TOTAL ---- ----------- ---- ---- ---------- ----- ~~Estimated Other [***] [***] Direct Cost TOTAL ESTIMATED COST $3,050,000~~
CLIN 0007 will be used by the government to procure the QASP items listed below if desired based upon the Contractor's proposals, pursuant to Section J.14.
MIN MAX UNIT CLIN DESCRIPTION QTY QTY UNIT PRICE TOTAL - ---- ----------- --- --- ---- ----- ----- 0007 QASP Items (Ref clause J.14) 0007A Threat Image [***] [***] [***] [***] [***] Projection 0007B OJT / OQT [***] [***] [***] [***] [***] 0007C Alarm Indicator [***] [***] [***] [***] [***] Lights 0007D Acquire TIP [***] [***] [***] [***] [***] images 0007E Remote Scheduling [***] [***] [***] [***] [***] TIP
* Confidential treatment requested. B-4 DTSA20-03-C-01900 B.4.4.1 HOURLY RATES Hourly rates shall include all direct and indirect costs and profit. The minimum qualifications of the labor categories are found in Section G.9. B.4.4.2 TRANSPORTATION AND PER DIEM Actual and reasonable costs for transportation, lodging, meals and incidental expenses will be reimbursed in accordance with Section H.19. Profit will not be paid on these costs. B.4.4.3 MATERIAL COSTS Material costs will be reimbursed in accordance with Section H.19. Profit will not be paid on these costs. B-5 DTSA20-03-C-01900 PART I - SECTION C SCOPE OF WORK PART I - SECTION C STATEMENT OF WORK FOR EXPLOSIVE DETECTION SYSTEMS (EDS) C-1 DTSA20-03-C-01900 THIS PAGE INTENTIONALLY LEFT BLANK C-2 1 SCOPE This Statement of Work (SOW) defines the requirements for fabrication, test, and delivery of the Stand Alone (SA) and Integrated Explosive Detection System (EDS). The EDS shall be composed of commercial-off-the-shelf (COTS) and Non-Developmental Item (NDI) hardware and software components to the maximum extent practicable. This SOW includes provisions for program management, quality assurance, configuration management, systems engineering, system test and evaluation, implementation and transition, training, and integrated logistics support. 1.1 OBJECTIVES The objective of this contract is to purchase government certified Stand Alone Explosive Detection Systems that meet specification STDO-EDS-0002A arid Integrated Explosive Detection Systems that meet specification STDO-EDS-0001B along with other requirements stated herein. Upon successful completion of government inspection and testing, the government may exercise options for additional production units as stated in section B of the contract. The SA EDS and Integrated EDS shall be deemed operational for government use after each unit has passed Factory Acceptance Test (FAT) and Site Acceptance Test (SAT). 1.2 DEFINITIONS "Certified EDS": A Certified Explosives Detection System (EDS) that meets all the requirements specified in the Federal Register, April 13, 1998: "Criteria for Certification of Explosives Detection Systems", Volume 63, Number 70. 2 APPLICABLE DOCUMENTS The following specifications, handbooks, orders, standards, and drawings form a part of this SOW and are applicable to the extent specified herein. The latest version of these documents as of the contract date shall apply. 2.1 GOVERNMENT DOCUMENTS ACS Memorandum Classification Guide for FAA Explosive Detection System information and Data, November 21, 1990 DOT/FAA/AR-97/67 Functional Requirements for Threat Image Projection Systems on X-Ray Machines C-1 FAA Air Carrier Standard Security Sensitive - portions relevant to this Security Program contract as stated in this SOW will be available upon request from the Contracting Officer. FAA-D-2494/B Appendix I, Commercial Instruction Books FAA Order 1600.2D Safeguarding Controls and Procedures For Classified National Security Information and Sensitive Unclassified Information FAA-STD-020B Transition Protection, Grounding, Bonding, and Shielding Requirements For Electronic Equipment (5/11/92) STDO-EDS-0002A Stand Alone Explosives Detection Systems (SA EDS) Specification dated 22 July 2003 STDO-EDS-0001B Integrated Explosive Detection System dated 22 July 2003 2.2 MILITARY STANDARDS MIL-STD-973 Configuration Management, Interim Notice 3, 13 January 1995 2.3 OTHER DOCUMENTS 49 CFR Part 1520 Protection of Sensitive Security Information Contract Security Classification Specification, DD Form 254 NFPA-70 National Electrical Code (NEC) Uniform Building Code Section 2312 and Table 23-J 2.4 SOURCE OF DOCUMENTS Copies of government specifications and interface documents may be obtained from the Federal Aviation Administration, Headquarters Public Inquiry Center APA-230, 800 Independence Avenue, SW, Washington, DC 20591, 202-267-3484. Requests should fully identify material desired and cite the solicitation or contract number. Requests for copies of documents not covered in the preceding paragraph should be addressed to C-2 the Contracting Officer (CO). Requests should fully identify material desired and cite the solicitation or contract number. Military Standards and Specifications can be ordered from the Department of Defense Single Stock Point (DODSSP), Building 4/Section D, 700 Robbins Avenue, Philadelphia, PA 19111-5098. Information is available at their website, http://www.dodssp.daps.mil. Copies of ANSI/ASQC Q9000 series standards can be obtained from the following source: American Society for Quality Control 611 East Wisconsin Avenue P.O. Box 3005; Milwaukee, Wisconsin 53201-3005. Phones: (414) 272-8575 or (800) 248-1946. The Fax is: (414) 272-1734. Copies of the Acquisition Management System Test and Evaluation Process Guidelines are available in the FAA Acquisition System Toolset (FAST). The on-line Internet address of FAST is http://FAST.faa.gov 2.5 ORDER OF PRECEDENCE In the event of conflict between this SOW and any of the applicable documents herein, the provisions of this SOW shall apply. 3.0 REQUIREMENTS The supplies and services required by this contract shall be performed in accordance with the Stand Alone Explosives Detection Systems (SA EDS) Specification STDO-EDS-0002A, Integrated Explosive Detection System Specification STDO-EDS-0001B, and this Statement of Work (SOW). The Contractor shall provide program management, systems engineering, integrated logistics support, quality assurance, configuration management, training, materials and support to test, deliver, install, and maintain EDS and supporting equipment/deliverables in accordance with this SOW. Basic equipment for EDS shall be provided under Contract Line Item Number (CLIN) 0001, 0002, and 0003. Data items referenced by their Contract Data Requirements List (CDRL) titles are to be performed in accordance with the CDRL of the same name. All data deliverables shall be prepared or updated and delivered in accordance with the corresponding CDRL items specified under the SOW requirement. Any documents containing security sensitive information as defined in 49 CFR Part 1520 shall contain the following statement: "WARNING: This document contains sensitive security information that is controlled under the provisions of 49 CFR Part 1520. No part of this document may be released C-3 without the written permission of the Under Secretary of Transportation for Security, Washington, DC 20590. Unauthorized release may result in civil penalty or other action. For U.S. government agencies, public availability to be determined under 5 U.S.C. 552." The Contractor shall perform in accordance with the plans developed in response to this SOW and as approved by the government. The plans shall be updated as required and submitted for approval prior to implementation of any changes. All reference to the "government" in this SOW shall mean by authority of the Contracting Officer or designee. All digital media submitted to the government in response to SOW requirements shall be compatible with Microsoft Office suite of products. Acceptable digital media are floppy disks (1.44 MB capacity), Iomega-compatible zip disks (100 MB capacity), DAT tape or Compact Disc Read Only Memory (CDROM) (650 MB capacity). 3.1 PROGRAM MANAGEMENT 3.1.1 PROGRAM MANAGEMENT ORGANIZATION The Contractor shall establish and maintain a formal organization to manage the EDS contract and associated subcontracts. The Contractor shall develop and implement a Management Program to efficiently and effectively execute the requirements of this contract to include: systems engineering, hardware engineering, software engineering, program planning and control, quality assurance, reliability and maintainability, configuration management, integrated logistics support, training, subcontract management, management of government furnished resources, risk management, security, production, and contract management. The Contractor shall identify in section G.2 of the contract, the Program Manager who is responsible for accomplishment of all tasks required by this SOW and who is authorized to commit the company. The Program Manager will organize, plan, schedule, implement, control, analyze, and report on all elements of the contract. The Program Manager shall have resources and authority to ensure efficient and timely program execution and shall be the Contractor's focal point for all required program tasks. The Contractor's Program Manager shall be prepared at all times to present and discuss the status of contract activities, requirements, and problems. Additionally the Contractor shall identify in the PMP the company's functional representatives, who shall be able to respond to request for information from their government functional counterparts. CDRL A001 PROGRAM MANAGEMENT PLAN (PMP) 3.1.1.1 SYSTEM ENGINEERING MANAGEMENT The Contractor shall develop and implement a System Engineering Management program for the definition, development, verification, integration, and testing of the EDS requirements as allocated to the computer software configuration items (CSCIs) and hardware configuration items (HWCIs). System engineering efforts shall include all aspects of performance, quality, life C-4 cycle costs, maintainability, reliability, schedule, data processing reserves, and future growth requirements. The system engineering management program shall be described in the PMP. The Contractor shall maintain effective control over the system engineering and design development process, including subcontract items and services, to ensure cost, performance, and schedule requirements are met, to provide early detection and resolution of problems, and to reduce risk. The Contractor shall specify a primary point of contact for system engineering issues. 3.1.1.2 SOFTWARE ENGINEERING MANAGEMENT The Contractor shall describe in the PMP its plans for acquiring and developing the required software, including firmware, to meet contract requirements. The PMP shall identify a primary point of contact for software engineering issues. 3.1.1.3 RISK MANAGEMENT/ASSESSMENT The Contractor shall identify cost, schedule and technical risks and describe how it will effectively manage these risks throughout the performance of this contract. The Contractor shall describe its risk management techniques in the PMP. Significant risks shall be identified and discussed in the PMP. The Contractor shall quantify risks with respect to the impact on integration, installation, performance, technical parameters, schedule, and cost. The Contractor shall identify risks and assign a priority for developing a recommended course of action. The Contractor shall develop and maintain a list identifying, analyzing, and classifying program risks. Program risks shall be classified as low, medium, or high. The Contractor shall conduct risk mitigation planning for risks considered medium or high. The Contractor shall provide the status of and mitigation actions for identified program risks at Program Management Reviews (PMRs) and in the Program Status Reports (PSRs). 3.1.1.4 REQUIREMENTS MANAGEMENT The Contractor shall document and manage all EDS requirements. The Contractor shall include requirements traceability in all design and test documents. Traceability shall be maintained for forward and backward reference. This information shall be updated as necessary throughout the life of the contract, and provided to the government as part of the monthly PMR and the program status reporting requirement. CDRL A002 REQUIREMENTS TRACEABILITY REPORT 3.1.2 PROGRAM CONTROL A clear line of project authority shall exist among all organizational elements. The Contractor shall report on cost, schedule, and technical progress in meeting reviews/status reports. Program C-5 Status Reports shall be provided monthly and shall address cost, schedule, technical and status of deliverables. The reports shall address problems/risks in the Contractor's functional areas (see paragraph 3.1.1 above). CDRL A003 PROGRAM STATUS REPORT (PSR) 3.1.2.1 EQUIPMENT DATABASE The Contractor shall create and maintain an equipment database. This database shall be a collection of data that for each individual EDS, identifying Contract Delivery Order (DO), installation site location, airline (or other responsible user), forecast test schedule, actual/anticipated government acceptance date, Manufacturer's serial number, government Bar Code, equipment model, equipment options included, modem electronic identification, and contacts for airline and government witness for site acceptance test. In addition, any maintenance or warranty action performed on the system after delivery to the site shall be noted. This information shall be updated as necessary throughout the equipment life cycle. CDRL A004 EQUIPMENT DATABASE 3.1.2.2 PROGRAM TROUBLE REPORT DATABASE The Contractor shall establish and maintain a Program Trouble Report (PTR) database. This database shall be a collection of data that documents problems relative to the design, production, and test of EDS hardware and software. The Contractor's PTR procedures shall be documented in the PMP. 3.1.2.3 PROGRAM DOCUMENT LIBRARY The Contractor shall maintain a digital Program Document Library (PDL) that contains all documents/data generated by the Contractor or provided to the Contractor by the government during the performance of this contract. The Contractor shall provide authorized government personnel access to the PDL. The list of documents included in the PDL shall be listed in the Document Library Index (DLI). Documents/data provided by government in paper only format are exempt from digital storage requirement. CDRL A005 DOCUMENT LIBRARY INDEX (DLI) 3.1.2.4 ACCESSION DATA The Contractor shall provide a list of Contractor internal data with the exception of proprietary data that has been generated by the Contractor in compliance with the work effort described in this SOW. CDRL A006 DATA ACCESSION LIST C-6 3.1.3 SUBCONTRACTOR MANAGEMENT The Contractor shall review each subcontractor's technical progress on all assigned tasks and include such technical progress and status information in program reviews. 3.1.4 INTEGRATED LOGISTICS SUPPORT MANAGEMENT The Contractor shall establish and maintain an Integrated Logistics Support (ILS) program to ensure the EDS is fully supported throughout its life cycle. The Contractor shall designate a primary point of contact for coordination with the government on all matters relating to the management of the ILS program. 3.1.4.1 ILS PROGRAM PLANNING The Contractor shall prepare an Integrated Support Plan (ISP). The ISP shall provide a detailed description of the plans, procedures, actions, events (including schedules), and organization that the Contractor intends to employ to accomplish the life cycle ILS program under this contract. The Contractor shall maintain the ISP to reflect the current program status and shall update the plan to reflect changes emanating from program changes, reviews and other actions affecting the logistics support aspects of the program. CDRL A008 INTEGRATED SUPPORT PLAN (ISP) 3.1.5 POST AWARD CONFERENCE A post award conference will be conducted at the Contractor's facility within 30 calendar days after contract award. The government will designate conference attendees and will identify any unique conference support requirements. The Contractor will provide the minutes for the conference. CDRL A009 MEETING MINUTES 3.2 QUALITY PROGRAM 3.2.1 QUALITY ASSURANCE The Contractor shall establish, implement and maintain a documented quality system in accordance with section E of the contract as a means of assuring compliance with all requirements of the contract. All spare parts shall be inspected and tested following the same procedures used for primary equipment components. The Contractor shall identify to the government the location where these inspections and tests will take place. C-7 The Contractor shall require that sub-suppliers have an appropriate documented quality system that controls the quality of the services and supplies provided. CDRL A010 QUALITY SYSTEM PLAN (QSP) 3.2.2 QUALITY ASSESSMENT The Contractor shall support an initial quality assessment conducted by the government Quality Reliability Officer (QRO) within 60 days after the approval of the QSP. The assessment will determine the capability of the Contractor's Quality System to comply with the contract requirements. The duration of the assessment will be approximately one week. Any discrepancies discovered during the assessment shall be corrected in a reasonable time frame so as not to affect the performance of the contract. 3.3 CONFIGURATION MANAGEMENT PROGRAM 3.3.1 CONFIGURATION MANAGEMENT The Contractor shall establish, implement and maintain a Configuration Management (CM) Program using MIL-STD-973, "Configuration Management," as tailored in this section of the SOW. The CM program shall provide an organizational structure with configuration identification and control methods, configuration audits, and configuration status accounting procedures for hardware and software. The Contractor shall identify a single focal point, under the Program Manager, who will serve as the primary point of contact for all communication on CM-related issues. The CM requirements are applicable to all deliverables under this contract. The Contractor shall follow MIL-STD-973, Paragraph 4 - GENERAL REQUIREMENTS, including subparagraphs. Note: Any reference to "Military" in the MIL-STD is to be interpreted as the government for this contract. 3.3.1.1 CONFIGURATION MANAGEMENT PLAN The Contractor shall develop a Configuration Management Plan (CMP) using MIL-STD-973 subparagraph 5.2.1 and Appendix A. CDRL A011 CONFIGURATION MANAGEMENT PLAN (CMP) 3.3.1.1.1 CONFIGURATION BASELINES The Contractor shall maintain the configuration baseline and the required documentation to support this baseline. The approved Product Baseline will be established after successful completion of the Functional Configuration Audit/Physical Configuration Audit (FCA/PCA). MIL-STD-973 paragraph 5.3.4 and subparagraphs 5.3.4.1, 5.3.4.1.3 and 5.3.4.2 shall be followed for establishing and maintaining the Product Baseline. C-8 3.3.2 CONFIGURATION IDENTIFICATION The Contractor's PDL shall retain all documentation for identification, control and status accounting of all Configuration Items (CIs) throughout the program life cycle. The Contractor shall identify each CI and its configuration documentation in accordance with MIL-STD-973 paragraph 5.3.6 and subparagraphs 5.3.6.3 through 5.3.6.6, 5.3.6.6.2, 5.3.6.7, 5.3.6.7.1 through 5.3.6.7.3. The configuration item identification shall be available in a Master Configuration Item Listing (MCIL). CDRL A012 MASTER CONFIGURATION ITEM LISTING (MCIL) 3.3.3 CONFIGURATION CONTROL The Contractor shall apply configuration control measures to each baseline CI, and its configuration documentation in accordance with MIL-STD-973 paragraph 5.3.5 and subparagraph 5.3.5.1. The Contractor's configuration control system shall provide effective means, as applicable, for proposing changes to CIs and ensuring implementation of the approved change. The Contractor shall maintain configuration control of hardware, software, firmware, and developmental/commercial documentation. The Contractor shall maintain configuration control of hardware to the Line Replaceable Unit (LRU) level and software to the version level. 3.3.3.1 ENGINEERING CHANGE PROPOSALS (ECPS) The Contractor shall establish and maintain a system for control and submittal of engineering changes in accordance with MIL-STD-973 paragraph 5.4 including all subparagraphs except the following: 5.4.2.3.3.1.2, 5.4.2.3.5.1, 5.4.2.3.5.2, 5.4.2.3.6.2 - 5.4.2.3.6.5, 5.4.2.4.4, and 5.4.2.4.5. CDRL A013 ENGINEERING CHANGE PROPOSAL (ECP) 3.3.3.2 REQUEST FOR DEVIATION (RFD) The Contractor shall establish and maintain a system for control and submittal of deviations in accordance with MIL-STD-973 paragraph 5.4.3 and subparagraphs. CDRL A014 REQUEST FOR DEVIATION (RFD 3.3.3.3 REQUEST FOR WAIVER (RFW) The Contractor shall establish and maintain a system for control and submittal of waivers in accordance with MIL-STD-973 paragraph 5.4.4 and subparagraphs. CDRL A015 REQUEST FOR WAIVER (RFW) C-9 3.3.4 CONFIGURATION STATUS ACCOUNTING The Contractor shall maintain a Configuration Status Accounting (CSA) Information System to assure accurate identification of each CI. The Contractor shall ensure that the CSA information is available for review by the government, upon request. The CSA information shall be available in the Contractor's PDL as a monthly Configuration Status Accounting Report (CSAR). The Contractor shall use MIL-STD-973 paragraph 5.5 and associated appendices for guidance in establishing the CSA Information System. The CSA System shall be described in the CM Plan. CDRL A016 CONFIGURATION STATUS ACCOUNTING REPORT (CSAR) 3.3.5 CONFIGURATION AUDITS The Contractor shall support configuration audits using MIL-STD-973 paragraph 5.6 and subparagraphs. The Contractor shall prepare and submit a Configuration Audit Plan for FCA/PCA. The Contractor shall be responsible for ensuring that subcontractors, vendors, and suppliers participate in the configuration audits, as proposed and approved via the Configuration Audit Plan. The Contractor shall prepare and submit a Configuration Audit Summary Report documenting the findings of each audit. CDRL A017 CONFIGURATION AUDIT PLAN CDRL A018 CONFIGURATION AUDIT SUMMARY REPORT 3.3.5.1 FUNCTIONAL CONFIGURATION AUDIT The Contractor shall support a Functional Configuration Audit (FCA) using MIL-STD-973 as guidance. The FCA shall be conducted in conjunction with the First Article Test and Evaluation (FAT&E). The FCA will include the verification of system and individual requirements irrespective of the test guidance provided from any requirements or verification test matrix. The intent is to audit the attainment of all functional requirements and to validate their attainment during the FCA. Upon successful completion of the FCA a Physical Configuration Audit will be performed. 3.3.5.2 PHYSICAL CONFIGURATION AUDIT The Contractor shall support a Physical Configuration Audit (PCA) of a first production article EDS prior to the start of production. Subcontractor, vendor, and supplier PCAs shall be performed for CIs developed for the EDS procurement or modified for use by other than the EDS prime Contractor. Successful completion of the PCA shall include, but not be limited to, successful conclusion of FCA and government approval of the Contractor's final submission of the associated CDRL items. 3.4 MEETING AND REVIEWS C-10 The Contractor shall conduct meetings and reviews in accordance with the government approved PMP and this SOW. The Contractor shall prepare and submit a meeting agenda and presentation materials. The Contractor shall be prepared to substantiate assumptions made and methodologies used in arriving at recommendations or conclusions. The Contractor shall record meeting minutes during all meetings. The Contractor shall prepare formal written minutes, accompanied by a summary of action items and all presentation materials used, for government approval. Meetings and reviews shall not be considered finalized until the government has approved the minutes. Support provided by the Contractor shall include, but is not limited to, facilities, materials, office equipment, clerical personnel, mockups, technical data, and subcontractor participation (when appropriate). CDRL A009 MEETING MINUTES 3.4.1 PROGRAM MANAGEMENT REVIEWS The Contractor shall be responsible for conducting monthly Program Management Reviews (PMRs) at the Contractor site, Herndon, VA, or an alternate site specified by the government. The Contractor's PMRs shall be targeted for no more than one day in length. Attendance will generally be limited to 10-15 key government personnel and 5-10 Contractor personnel. PMRs shall include, at a minimum, a review of all pertinent technical, schedule and cost aspects of the contract, including an estimate of the work to be accomplished in the next month; current performance measurement information; and current and anticipated technical and implementation problems. The Contractor shall identify risks and assign a priority for developing a recommended course of action. The government reserves the right to replace a formal monthly review with a less formal update completed by teleconference, to change the location of the reviews at any time, and to increase or decrease the frequency of reviews as required. The results of the PMR will be documented and the minutes submitted for government review and approval. 3.4.2 TECHNICAL INTERCHANGE MEETINGS (CLIN 0004) The Contractor shall conduct and administratively support periodic Technical Interchange Meetings (TIMs) at the Contractor's facility. If requested, TIMs may also be conducted in Herndon, VA, or at another location approved by the government. During the TIMs, the Contractor and the government will discuss specific technical activities, including studies, design issues, technical decisions, test plans, test results, and implementation concerns to ensure continuing government visibility into the technical progress of the contract. 3.5 SYSTEM DESIGN 3.5.1 HARDWARE C-11 3.5.1.1 STAND ALONE (SA) EDS (CLIN 0001) The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of the Stand Alone (SA) EDS is provided as part of the supplies and services provided herein. The Contractor shall satisfy all the requirements for SA Explosives Detection System (EDS) in Specification STDOEDS-0002A. All equipment models are subject to government approval for each installation site configuration. 3.5.1.2 INTEGRATED EDS 3.5.1.2.1 INTEGRATED EDS - HIGH SPEED (CLIN 0002) The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of an Integrated EDS is provided as part of the supplies and services provided herein. The Contractor shall satisfy all the requirements for an Integrated (EDS) in Specification STDO-EDS-0001B. All equipment models are subject to government approval for each installation site configuration. 3.5.1.2.2 INTEGRATED EDS - MEDIUM SPEED (CLIN 0003) The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of a Integrated EDS is provided as part of the supplies and services provided herein. The Contractor shall satisfy all the requirements for Partially Integrated (EDS) in Specification STDO-EDS-0001B. All equipment models are subject to government approval for each installation site configuration. 3.5.2 SOFTWARE The Contractor shall acquire/develop, document, test, and manage all system software provided or developed under this contract. The Contractor shall employ best commercial practices as guidance for all software engineering requirements. The Contractor shall permit authorized government personnel or designees to inspect all software documentation with the exception of proprietary information. The Contractor shall make available to the government for review, the information, practices, procedures, or documentation developed or purchased by the Contractor or its subcontractors solely for the EDS software program. The Contractor shall allow the government to witness any test associated with the software development or integration of software developed solely for the EDS program. The Contractor shall establish an escrow account in accordance with section H.10 of the contract. C-12 3.5.2.1 SOFTWARE METRICS As a minimum, the Contractor shall track the following software metrics: (1) Program Trouble Reports (PTRs) open/closed items. All tracked software metrics that result in a software patch issued as a deviation or change shall be reported in the monthly PSR and discussed at each PMR. 3.5.2.2 SOFTWARE PROGRAM TROUBLE REPORT The Contractor shall develop and implement internal procedures to identify, report, monitor, and resolve all software and/or software-related problems. All such software-related problems shall be documented in the PTR database. The Contractor shall include software-related problems identified by both the Contractor and the government, and those identified by other users that have an impact on the EDS functionality. The PTR database shall contain the master copy of all PTRs. 3.6 SYSTEM REFRESH, UPGRADE, AND TECHNOLOGY INFUSION The Contractor may provide routine updates, upgrades, design modifications, and performance improvements for Product Baselined EDS systems. Additionally, the Contractor is encouraged to independently propose, engineering changes to Product Baselined EDS systems or other requirements of this contract due to available technology enhancements. These enhancements may be proposed to save money or energy, improve performance, satisfy increased data processing requirements, or for the replacement of equipment and software due to technological advancement. All such proposed modifications to Product Baselined EDS system shall be accomplished as Engineering Changes under the Configuration Management Program. The Contractor shall include a risk benefits analysis to include life cycle and transition planning for any proposed modification. 3.7 TEST AND EVALUATION (T&E) 3.7.1 TEST AND EVALUATION PROGRAM The Contractor shall: (1) Plan and conduct Contractor tests; (2) Support government conducted acceptance testing and continuous assessment; and (3) Provide maintenance supporting during operational and field testing. C-13 3.7.1 GENERAL TEST PROGRAM REQUIREMENTS The Contractor's responsibilities for the EDS test program shall include the following activities: + (1) Provide and maintain a single point of contact for the T&E program; (2) Conduct and/or support those T&E program activities described within this SOW and the Stand Alone Explosives Detection Systems (EDS) Specification STDOEDS-0002A and Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B and; + (3) Develop a Master Test Plan (MTP), for government approval, to describe the Contractor's EDS test program. The MTP shall describe the Contractor's tests (both internal and government required) include detailed schedules for conduct of each test. The MTP shall identify Stand Alone Explosives Detection Systems (SA EDS) Specification STDO-EDS-0002A and Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B requirements to be verified by each test, with general descriptions of methods to be used for verification. A Contractor Verification Requirements Traceability Matrix (VRTM) shall be included and list each requirement to be verified in each test with a reference to the appropriate requirement paragraph; (4) Develop Contractor test plans and procedures. The Contractor test procedures shall be provided for government approval 30 days prior to planned start of a formal test; (5) Conduct, or support the government in conducting, a Test Readiness Review (TRR) prior to performing any formal test; (6) Notify the government at least seven (7) days prior to commencement of all formal Contractor conducted T&E, and permit the government to witness the test; (7) Conduct tests according to Government approved test plans, test cases, and test procedures. Tests may be witnessed by an authorized Government representative; (8) Perform all data reduction associated with Contractor testing, and furnish analysis methods and results to support claims of T&E success; (9) If requested by the government, provide within fifteen days after the completion of a formal Contractor conducted test copies of all original data collected during the Contractor-conducted test; (10) Develop Factory Acceptance Test (FAT) plans and procedures for EDS. The FAT procedures shall be provided for government approval 30 days prior to submitting the first EDS for FAT; (11) Conduct FAT on each EDS prior to shipping to the sites for installation and report the results; and (12) Develop Site Acceptance Test (SAT) plans and procedures for EDS. The SAT procedures shall be provided for government approval at the same time the FAT procedures are submitted. C-14 CDRL A021 MASTER TEST PLAN (MTP) 3.7.1.2 GENERAL TEST REQUIREMENTS The Contractor shall, at a minimum, verify each of the Stand Alone Explosives Detection Systems (EDS) Specification STDO-EDS-0002A and Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B requirements in at least one test procedure as a system. Prior to commencing testing, the Contractor shall identify the configuration of the system to be tested. The configuration shall not be changed or modified during test and evaluation without concurrence from the government. During Contractor testing, the Contractor shall ensure that each test procedure is considered complete only when the test executes without aborts or errors, unless attributable to a procedure that has been acknowledged as faulty by the government. The Contractor shall conduct T&E using Contractor developed and government approved test plans and procedures. Any change to approved Contractor T&E procedures shall be approved by the government prior to implementation. The Contractor shall provide the necessary test equipment and shall ensure its availability, proper calibration, full operational status, and operation as documented by the test equipment manufacturer. The Contractor shall obtain prior written approval from the government before using unique or modified commercial test equipment not specified in the approved test plans and procedures. In the event of test equipment failure, test equipment damage, or faulty operation, the government may require the Contractor to verify calibration of any test equipment provided by the Contractor. The Contractor shall record all inputs, outputs, and test results as described in the approved test procedures. Anomalies, test deviations, test equipment substitutions, members of the test team, and any other significant events and the start and stop time for each test shall be documented in the Contractor's test logbook. The Contractor shall record in the Program Trouble Report (PTR) Database each failure or problem (system, hardware, or software) discovered and fully document the problem including corrective actions taken. 3.7.1.3 TEST READINESS REVIEW The Contractor shall support the government's Test Readiness Review (TRR) prior to conduct of all testing. The TRR shall include, but not be limited to the following: contract number/delivery order number/line item/serial number of the unit(s) to be tested, type of test to be conducted, open test anomalies observed to date, deviations/waivers requested and/or approved, open ECP(s), test procedure status (approved/disproved, version/date), configuration of the unit(s) (serial number(s)/revision level(s)) to be tested, software version. 3.7.1.4 TEST AND EVALUATION PLANNING C-15 The Contractor shall prepare the following test plans/procedures for government approval in advance of initiating the test program. These plans and procedures shall be designed to ensure the tests are capable of being repeated with substantially similar results. Each plan shall include a detailed schedule for conduct of the test. The plan/procedure shall identify specification and lower-level derived requirements to be verified by the test, with general descriptions of methods to be used for verification. The Contractor VRTM shall be included in each test plan/procedure and list each specification and lower-level derived requirement to be verified in that test with a reference to the appropriate requirement paragraph. 3.7.1.4.1 FIRST ARTICLE TEST AND EVALUATION If directed by the government, a First Article Test and Evaluation (FAT&E) shall be performed on the Contractor's initial, pre-production model to verify compliance with all contract requirements. FAT&E shall include those test requirements that are best suited to an EDS operational environment (e.g., power, voltage, electromagnetic, stress, loading, live interfaces, alarm resolution). This test will be performed concurrent with the Functional Configuration Audit (FCA), and will verify each requirement in the Stand Alone Explosives Detection Systems (EDS) Specification STDO-EDS-0002A, Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B and each requirement in DOT/government/AR-97/67, Functional Requirements for Threat Image Projection Systems on X-Ray Machines. 3.7.1.4.1.1 FIRST ARTICLE TEST AND EVALUATION PLAN The Contractor shall prepare and submit a FAT&E Plan that describes methods for testing and evaluating the EDS system. The plan shall define the range of tests, system initialization requirements, input data, expected output, and the criteria for evaluating test results. The Contractor shall identify all test and evaluation resources required, including personnel, equipment, facility support, and schedules. CDRL A022 FIRST ARTICLE TEST AND EVALUATION (FAT&E) PLAN 3.7.1.4.1.2 First Article Test and Evaluation Procedures and Report The Contractor shall prepare and submit FAT&E Procedures. The Contractor shall ensure that the test procedures indicate traceable paths to the approved Contractor VRTM. The Contractor shall prepare a First Article Test and Evaluation (FAT&E) Report at the conclusion of the evaluation. CDRL A023 FIRST ARTICLE TEST AND EVALUATION (FAT&E) PROCEDURES CDRL A024 FIRST ARTICLE TEST AND EVALUATION (FAT&E) REPORT 3.7.1.4.2 CONTRACTOR CERTIFICATION OF UNDERWRITER'S LAB CONFORMANCE C-16 The Contractor shall provide an independent Certificate of Conformance to verify compliance to applicable safety standards for fire and shock hazard. The Contractor is solely responsible for obtaining certification from an independent audit/test agency. 3.7.1.4.3 FACTORY ACCEPTANCE TEST The Contractor shall conduct Factory Acceptance Test (FAT) for each EDS in accordance with the FAT plan and procedure prepared by the Contractor, and approved by the government. The FAT will be witnessed by government-designated representative(s). 3.7.1.4.3.1 FACTORY ACCEPTANCE TEST PLAN The Contractor shall prepare and submit a FAT Plan that describes methods for testing, evaluating, and accepting EDS systems at the Contractor site for shipment to delivery sites. The FAT plan shall define the range of tests, system initialization requirements, input data, expected output, and the criteria for evaluating test results. The Contractor shall identify schedules and all test and evaluation resources required, including personnel, equipment, and facility. CDRL A025 FACTORY ACCEPTANCE TEST (FAT) PLAN 3.7.1.4.3.2 FACTORY ACCEPTANCE TEST PROCEDURES AND REPORTS The Contractor shall prepare and submit Factory Acceptance Test (FAT) Procedures. The Contractor shall use the FAT Procedures for each FAT. The Contractor shall ensure that the test procedures indicate traceable paths to the approved Contractor VRTM. The Contractor shall prepare a Factory Acceptance Test (FAT) Report at the conclusion of each test. CDRL A026 FACTORY ACCEPTANCE TEST (FAT) PROCEDURES CDRL A027 FACTORY ACCEPTANCE TEST (FAT) REPORT 3.7.1.4.4 SITE ACCEPTANCE TEST The Contractor shall setup and configure each EDS for Site Acceptance Test (SAT). The Contractor shall conduct a SAT at every delivery site location for each EDS installed in accordance with the government approved SAT plan and procedure. The SAT will confirm that the EDS is properly setup and operationally configured, has not been damaged during shipping, and remains in compliance with contractual requirements. The SAT will be witnessed by government-designated representative(s). 3.7.1.4.4.1 SITE ACCEPTANCE TEST PLAN The Contractor shall prepare and submit a Site Acceptance Test (SAT) Plan that describes methods for testing, evaluating, and accepting the EDS at each site. The Contractor's SAT plan shall define the range of tests, system initialization requirements, input data, expected output, and the criteria for evaluating test results. The Contractor shall identify all test and evaluation resources required, including personnel, and equipment. C-17 CDRL A028 SITE ACCEPTANCE TEST (SAT) PLAN 3.7.1.4.4.2 SITE ACCEPTANCE TEST PROCEDURES AND REPORTS The Contractor shall prepare and submit Site Acceptance Test (SAT) Procedures that detail the step-by-step test process to be conducted during each SAT. In an addendum to the SAT procedures, the Contractor shall provide procedure updates necessary to address site unique configurations and capabilities. The Contractor shall ensure the test procedures indicate traceable paths to the approved Contractor VRTM. The Contractor shall prepare a Site Acceptance Test (SAT) Report at the conclusion of each test. CDRL A029 SITE ACCEPTANCE TEST (SAT) PROCEDURES CDRL A030 SITE ACCEPTANCE TEST (SAT) REPORT 3.8 TECHNICAL MANUALS The Contractor shall develop and deliver EDS Technical Manuals to support the EDS. (1) An Operations Manual for all tasks to be performed by the operator/screener including state management, alarm resolution, training and limited diagnostics and maintenance shall be developed. The manual shall provide sufficient guidance for task performance. The manual will include instructions for daily operational use of the OTK. (2) A Maintenance Manual to support on site maintenance performed by maintenance technicians at the EDS sites shall be developed. The Maintenance Manual shall indicate the type of maintenance action and frequency. The manual shall contain instructions on how to perform the action. The manual and instructions shall be written at a level to allow on-site air carrier maintenance personnel to perform preventive/ scheduled maintenance and repair actions. (3) An Installation/Integration Manual to support the installation, setup, and configuration of EDS system shall be developed. Supplemental data to augment the COTS and Commercially Available Software data shall be developed as required and provided to make the technical manuals fully acceptable for use in the EDS environment. The supplemental data development shall use FAA-D-2494/B, Appendix I, Commercial Instruction Books, as a guide. Although the government will not be actively performing network management and remote monitoring and control, the Maintenance Manual shall include a section that describes operation and maintenance of the Contractor's network management and remote monitoring and control system functions and procedures. The Contractor shall ensure and certify that all technical manuals are current, accurate, and complete before submitting to the government for validation and acceptance. CDRL A031 OPERATIONS MANUAL C-18 CDRL A032 MAINTENANCE MANUAL CDRL A033 INSTALLATION/INTEGRATION MANUAL CDRL A034 SITE INSTALLATION PLANNING GUIDE 3.9 SITE INSTALLATION FOR CLINS 0001, 0002 AND 0003 3.9.1 SITE INSTALLATION SUPPORT The Contractor shall perform all activities necessary to assemble, and perform final system checkout of the EDS in preparation for site acceptance test (SAT). The Contractor shall coordinate the installation activities with the government system integration Contractor. The Contractor shall prepare the EDS and associated equipment for shipping to an airport receiving dock or to other location. The Contractor shall utilize shipping crates of appropriate sizes to allow movement through airport terminal areas. The maximum size of any individual system crate, or package, will not exceed external dimensions that allow for ease of transportability through airport terminal areas from the equipment delivery point to its final location at the airport site. Unless otherwise provided for through additional tasking, the Contractor shall not be responsible for site installation engineering. 3.9.2 SITE INSTALLATION ENGINEERING (CLIN 3000) The Contractor shall install and integrate EDS when directed by the CO by individual delivery orders. The Contractor shall ensure proper operation when connected to existing baggage handling equipment and external interfaces. The Contractor shall obtain all necessary approvals, permits, and authorizations required for providing utilities (heating, ventilating, air-conditioning, power, and telecommunications) and space for the EDS installation. The Contractor shall take into account terminal main doorway openings, doorway clearances, floor ramps and other physical constraints. The Contractor shall resolve all installation-related issues. 3.9.2.1 GOVERNMENT SITE MANAGER/REPRESENTATIVE The government will designate a site manager for each equipment installation. The site manager will be the primary point of contact for each installation to assist in the facilitation of the installation and will receive copies of all plans, reports, and any additional documentation pertaining to that site. The site manager will be included in all communication and resolution of site installation issues. The site manager will coordinate with the Contracting Officer Technical Representative (COTR), and the CO as necessary, to resolve site installation matters. The site manager does not have the authority to make changes to scope, price, schedule, or terms and conditions of the contract. In addition, the site manager does not have the authority to sign C-19 contractual documents, order contract changes, modify contract terms, or create any commitment or liability on the part of the government different from that set forth in the contract. 3.9.2.2 SITE COORDINATION The Contractor shall coordinate with Government Site Manager/representative, other government contractors, airport and air carrier representatives, and stakeholders for specific EDS installation sites. 3.9.2.3 SITE INSTALLATION ENGINEERING The Contractor shall integrate and install the EDS. The site installation engineering and design analysis will determine the placement of equipment to optimize baggage handling based on airline schedule, airline operational factors, and airport facility layout. The designs shall reflect the capability to handle peak load of baggage on the busiest days of the year. The Contractor shall ensure that equipment physical environmental guidelines are taken into account including any special structural foundation and mechanical requirements. All security equipment shall be physically positioned in accordance with the equipment installation guidelines and air carrier operational requirements. The equipment layout must, to the extent possible, provide clear and unrestricted access to any rack or equipment unit, including consoles, to permit equipment maintenance or removal. 3.9.2.4 SITE SURVEYS AND SITE SURVEY REPORTS The Contractor shall prepare and submit a Site Survey Report (SSR) for each EDS installation site. The Contractor shall coordinate with the COTR concerning access to an EDS installation site at least thirty (30) days prior to performing the required site surveys. The surveys of the site will consider special service requirements for electrical power, climate control, communication services, floor loading, equipment handling, and access clearance requirements. The Contractor shall collect and analyze data, conduct necessary demand and baggage flow modeling, and consult with the appropriate airline and airport representatives to determine any special operational or facility considerations including existing or planned terminal modification or construction that will be accommodated. The site surveys will describe the site preparation requirements, site-specific deficiencies, and provide detailed estimates of cost, schedule and major milestone to complete integration, installation, acceptance testing and initial operational capability. The site survey report will include the advantages and disadvantages of each installation option presented in the site survey. The Contractor shall provide a complete, accurate, and validated set of installation drawings for each site where the equipment is installed. The Contractor shall also ensure that the SSR satisfies the following site implementation requirements: (1) Installation complies with NEC NFPA-70; (2) Equipment grounding, bonding, shielding, and transient protection shall comply with FAA-STD-020B Section 3.8.5; (3) Mounting of cabinets and installation of equipment complies with state and local building codes; and C-20 (4) Seismic requirements as specified in the Uniform Building Code, Section 2312 and Table 23-J. CDRL B001 SITE SURVEY REPORT 3.9.2.5 SITE INSTALLATION PLAN After all issues resulting from the site survey have been resolved the government will notify the Contractor of the acceptance of the SSR. After SSR approval the Contractor shall prepare and submit a Site Installation Plan (SIP) detailing all steps to be conducted throughout the installation and integration process. The Contractor must ensure that equipment physical environmental guidelines are taken into account including any special structural foundation and mechanical requirements. After government approval of the SIP, the Contractor shall perform site preparations in accordance with the plan. The Contractor shall conduct pre-construction meeting with the sub-contractor (s) prior to equipment installation to ensure that the site preparation is done in accordance with the SIP. CDRL B002 SITE INSTALLATION PLAN (SIP) 3.9.2.5.1 MULTIPLE SITE SURVEYS The Contractor shall not perform additional surveys at the same air carrier terminal site without specific written authorization from the government's COTR. 3.9.2.6 EQUIPMENT INSTALLATION Installation, integration and testing of EDS will not, to the extent possible, disrupt, or interfere with airline or airport operations. The Contractor shall work in conjunction with the government Site Manager/Representative. The Contractor shall ensure that the installation activities are coordinated, prior to installation, with the sites to minimize the impact on day-to-day operation of the sites and their related systems. Any disruptions or interference with airline or airport operations that cannot be avoided shall be closely coordinated with and approved in advance by the affected parties prior to commencement of such activities. The Contractor shall perform work at night, weekends, or other varied non-operational hours when required. If dismantling of existing airline or airport facilities or equipment or other measures is necessary to complete the installation, the Contractor shall be responsible for the full restoration to pre-installation conditions of these unrelated facilities or equipment. Site Installation will encompass the test and evaluation requirements listed in paragraph 3.7.1.4.4 of this SOW. The Contractor shall remove all debris from the site following site preparation and installation activities. 3.9.2.7 EQUIPMENT RELOCATION In the event an EDS needs to be relocated from or within an installed site, the Contractor shall inventory, pack, and perform all activities associated with the preparation for relocation of the C-21 hardware when directed by the CO. The Contractor shall remove all debris on the site resulting from relocation. 3.9.2.8 EQUIPMENT REMOVAL In the event an EDS needs to be removed from an installed site, the Contractor, if directed by the CO, shall inventory, pack, and perform all activities associated with the preparation for shipping of the removed hardware. The Contractor shall remove all debris on the site resulting from removal. 3.9.3 FIRST ARTICLE UNITS First Article units, if required, under CLIN 0001 and CLIN 0002 shall be housed at the Contractor's facility until such time the government requires delivery to a site. The government anticipates that the First Article units will be the last units shipped under this contract. These units shall be maintained under strict configuration management per Section 3.3 of this SOW, and will be considered as the product baseline for the entire inventory. The contractor shall not alter this unit in any way without the express approval of the government. If approved by the government the contractor may be allowed to install proposed ECPs for government evaluation. The First Article unit(s) shall be restored to the approved government configuration baseline as soon as testing or evaluation is completed, or when directed by the government. 3.10 SECURITY The Contractor shall develop, apply and maintain effective security practices in accordance with the following requirements: 49 CFR Part 1520 Protection of Sensitive Security Information ACS Memorandum, Classification Guide for FAA Explosive Detection System Information and Data, November 21, 1990 Contract Security Classification Specification, DD Form 254 FAA Order 1600.2D, Safeguarding Controls and Procedures For Classified National Security Information and Sensitive Unclassified Information CDRL A038 PERSONNEL LIST CDRL A039 FACILITY SECURITY CERTIFICATE The Contractor must request written government approval prior to release of any information text, images or video associated with this contract. C-22 The Contractor shall document all incidents through the Physical and Communications Security Breach/Incident Report. The Contractor shall notify the COTR of such incidents, which include: (1) Actual or suspected unauthorized attempts to penetrate an EDS through the remote workstation or remote functions; (2) Actual or suspected unauthorized attempts to penetrate the EDS through the Contractors Remote Maintenance Monitoring Facility or Contractor's support facility; (3) Actual or suspected unauthorized penetration of the Contractor's EDS support facility or Remote Maintenance Monitoring facility(s); and (4) Actual or suspected attempt to subvert the EDS. CDRL A040 PHYSICAL AND COMMUNICATIONS SECURITY BREACH/INCIDENT REPORT 3.11 (RESERVED) 3.12 EQUIPMENT (CLIN 0005) 3.12.1 POWERED INCLINE CONVEYOR (CLIN 0005A) The Contractor shall deliver and install a powered incline entrance conveyor for semi-automated luggage loading. 3.12.2 POWERED FLAT CONVEYOR (CLIN 0005B) The Contractor shall deliver and install a powered flat entrance conveyor for semi-automated luggage loading. 3.12.3 BAGGAGE EXIT SLIDE (CLIN 0005C) The Contractor shall deliver and install a bag exit slide or conveyor. The exit slide or conveyor shall be sloped from the SA EDS Pass Through exit to ground level with a bag stop. 3.12.4 LUGGAGE POSITIONING ADAPTER (CLIN 0005D) The Contractor shall deliver and install a luggage positioning adapter for the medium speed Integrated EDS. This adapter will position luggage to from the BHS conveyors into the medium speed EDS. 3.12.5 STANDALONE TRAINING SIMULATOR (CLIN 0005E) (MEDIUM SPEED EDS) C-23 An EDS Standalone Training Simulator shall be provided that includes the same screener/operator interface as the EDS. The training simulator shall be a Commercial Off-The-Shelf (COTS) platform that simulates real time operation of the EDS. The simulator shall include a printer. 3.12.6 Standalone Training Simulator (CLIN 0005F) (High Speed EDS) An EDS Standalone Training Simulator shall be provided that includes the same screener/operator interface as the EDS. The training simulator shall be a Commercial Off-The-Shelf (COTS) platform that simulates real time operation of the EDS. The simulator shall include a printer. 3.12.7 PROGRAMMABLE LOGIC CONTROL (PLC) (CLIN 0005G) The contractor shall provide a programmable logic control (PLC) device to interface BHS with the medium speed Integrated EDS. 3.12.8 REMOTE IMAGE REPLAY (CLIN 0005H) The contractor shall provide the hardware and software necessary to store images from the SA EDS and replay them at a remotely located passive threat resolution interface (PTRI). 3.12.9 BVS REMOTING KIT (CLIN 0005I) The contractor shall provide the hardware and software to extend the usable range of a BVS to 300 feet (cable length). The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of the printer is provided as part of the supplies and services provided herein. All equipment models are subject to government approval for each installation site configuration. 3.12.10 MULTIPLEX OPERATION (CLIN 0006) The Contractor shall provide the necessary hardware, software, and documentation to allow multiple operators to review and resolve alarms from multiple Integrated EDS, in accordance with the requirements for multiplexing in the Integrated Explosives Detection System (EDS) Specification STDO-EDS-0001B. C-24 3.12.10.1 MULTIPLEX NETWORK (CLIN 0006A). The hardware can include: (a) EDS scanners and Baggage Viewing Stations (BVS). (b) A server (to store common data required for network operation) with modified software configurations to enable data to be dynamically routed between EDS scanners and specific BVSs. The server maintains a database of all the information required for the multiplexing operation. (c) A network switch (for routing communications between network elements). (d) Racks, switches, cables and ancillary hardware, as required. 3.12.10.2 ADDITIONAL TRI WORKSTATION (CLIN 0006B). The Contractor shall provide additional workstations for screener/operator on-screen threat resolution. 3.12.10.3 PTRI WORKSTATION (CLIN 0006C). The Contractor shall provide additional workstations for image retrieval for hand searching or other remote screening procedure. 3.12.10.4 ADDITIONAL CONTROL INTERFACE WORKSTATION (CLIN 0006D). The Contractor shall provide additional workstations for central network monitoring and control of EDS scanner machine operation. 3.12.10.5 NETWORK PRINTER (CLIN 0006E). The Contractor shall provide a high speed network printer. 3.13 EDS SYSTEM WARRANTY FOR CLINS 0001, 0002, 0003 AND ASSOCIATED EQUIPMENT [***] Acceptance of the commercial warranty does not waive the government's rights with regard to other terms and conditions of this contract. The commercial warranty shall be in addition to and in no way limit the government's right that the system and its components will be delivered in conformity with all contract requirements and free from defects in workmanship and material. In the event of a conflict, the terms and conditions of the contract shall take precedence over the commercial warranty. C-25 3.13.1 SCHEDULED/PREVENTIVE MAINTENANCE The Contractor shall perform all scheduled/preventive maintenance for the EDS during the warranty period. For all scheduled/preventive maintenance actions, the Contractor shall coordinate in advance with the Federal Security Director (FSD) or his designee. The Contractor shall provide a logbook with each EDS. The logbook shall contain, at a minimum, a description of each action performed, date performed, and the individual that performed the action. The Contractor shall establish and maintain an electronic database containing the maintenance history and planned preventive maintenance actions of each EDS. 3.13.2 UNSCHEDULED MAINTENANCE For all unscheduled maintenance actions during the warranty period, the Contractor shall issue a Maintenance Coordination Electronic Message to the government's EDS systems integration contractor. A Maintenance after Action Report shall be prepared for each unscheduled (preventive and corrective) maintenance action and sent to the government's EDS system integration contractor upon completion of action. All maintenance actions shall be reported to the COTR on a monthly basis. CDRL A049 MAINTENANCE COORDINATION MESSAGE CDRL A050 MAINTENANCE AFTER ACTION REPORT 3.14 ENGINEERING SUPPORT SERVICES (CLIN 3000) The Contractor shall provide the services of senior engineers and technicians to perform support tasks including, but not limited to, witnessing and assisting in operational and field tests, troubleshooting and correction of problems that may arise after successful completion of tests, assisting the government in installing of a network integrated EDS, equipment installation including performance of site surveys, site design, and project coordination. C-26 ACRONYMS Acronym Definition ------- ---------- CDRL Contract Data Requirements List CDROM Compact Disc Read Only Memory CFR Code of Federal Regulations CI Configuration Item CM Configuration Management CMP Configuration Management Plan CO Contracting Officer COTR Contracting Officer's Technical Representative COTS Commercial Off-the-Shelf CPR Cost Performance Report CSA Configuration Status Accounting CSAR Configuration Status Accounting Report CSCI Computer Software Configuration Item DLI Document Library Index DO Delivery Order DODSSP Department of Defense Single Stock Point DOT Department of Transportation ECP Engineering Change Proposal EDS Explosives Detection System FAA Federal Aviation Administration FAST FAA Acquisition System Toolset FAT Factory Acceptance Test FAT&E First Article Test and Evaluation FCA Functional Configuration Audit FDRS Field Data Reporting Subsystem FSD Federal Security Director HWCI Hardware Configuration Item ILS Integrated Logistics Support ISP Integrated Support Plan LRU Line Replaceable Unit C-27 Acronym Definition ------- ---------- MCIL Master Configuration Item Listing NEC National Electrical Code OTK Operational Test Kit PCA Physical Configuration Audit PDL Program Document Library PMP Program Management Plan PMR Program Management Review PSR Program Status Report PTR Program Trouble Report QRO Quality Reliability Officer QSP Quality System Plan RFD Request for Deviation RFW Request for Waiver SAT Site Acceptance Test SIP Site Installation Plan SOW Statement of Work SSR Site Survey Report STDO Security Technology Deployment Office T&E Test and Evaluation TIM Technical Interchange Meeting TIP Threat Image Projection TRR Test Readiness Review TQP Training, Quality, Performance VRTM Verification Requirements Traceability Matrix C-28 5 Table of Contract Data Requirements List
CDRL NUMBER DESCRIPTION - ----------- ----------- A001 Program Management Plan (PMP) A002 Requirements Traceability Report A003 Program Status Report (PSR) A004 Equipment Database A005 Document Library Index (DLI) A006 Data Accession List A007 (reserved) A008 Integrated Support Plan (ISP) A009 Meeting Minutes A010 Quality System Plan (QSP) A011 Configuration Management Plan (CMP) A012 Master Configuration Item List (MCIL) A013 Engineering Change Proposal (ECP) A014 Request for Deviation (RFD) A015 Request for Waiver (RFW) A016 Configuration Status Accounting Report (CSAR) A017 Configuration Audit Plan A018 Configuration Audit Summary Plan A019 (reserved) A020 (reserved) A021 Master Test Plan (MTP) A022 First Article Test and Evaluation (FAT&E) Plan A023 First Article Test and Evaluation (FAT&E) Procedures A024 First Article Test and Evaluation (FAT&E) Report A025 Factory Acceptance Test (FAT) Plan A026 Factory Acceptance Test (FAT) Procedures A027 Factory Acceptance Test (FAT) Report A028 Site Acceptance Test (SAT) Plan A029 Site Acceptance Test (SAT) Procedures A030 Site Acceptance Test (SAT) Report A031 Operations Manual A032 Maintenance Manual A033 lnstallation/Integration Manual A034 Site Installation Planning Guide A035 (reserved) A036 (reserved) A037 (reserved) A038 (reserved) A039 (reserved) A040 (reserved) A041 Training Syllabus (Operator)
C-29 A042 Training Materials (Operator) A043 Operator Training Syllabus (Recurrent) A044 Operator Training Materials (Recurrent) A045 Training Syllabus (Instructor) A046 Training Materials (Instructor) A047 (reserved) A048 (reserved) A049 Maintenance Coordination Message A050 Maintenance After Action Report B001 Site Survey Report B002 Site Installation Plan (SIP)

C-30 PART I - SECTION D PACKAGING AND MARKING D.1 PACKING AND PACKAGING All deliverables under this contract shall be preserved and packaged in accordance with ASTM-D-3951, Standard Commercial Practice, to assure delivery at the destination and to prevent deterioration and damage due to shipping, handling, and storage hazards. The contractor shall identify any unique storage requirements for units and related equipment. D.2 MARKING OF DELIVERABLES In addition to information provided with shipping instructions, all deliverables shall be marked on the outside of the packaging with the following: a. TSA contract number b. Contractor's name and address c. List of contents d. Task/Delivery Order Number e. Date of submittal The Contractor may be required to install TSA furnished inventory bar codes upon completion of the EDS Site Acceptance Test as specified in delivery/task orders. D.3 MARKING OF REPORTS The Contractor shall mark all reports as follows: a. TSA contract number b. Contract Line Item Number (CLIN) c. Report Title d. Task/Delivery Order Number (if applicable) e. Date f. Distribution D-1 PART I - SECTION E INSPECTION AND ACCEPTANCE E.1 TSA ACQUISITION MANAGEMENT SYSTEM CLAUSES E.1.1 3.1-1 CLAUSES AND PROVISIONS INCORPORATED BY REFERENCE (JUNE 1999) This Screening Information Request (SIR) or contract, as applicable, incorporates by reference one or more provisions or clauses listed below with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make the full text available. (End of provision) 3.10.4-1 Contractor Inspection Requirements 3.10.4-16 Responsibility for Supplies E.1.2 TSA ACQUISITION MANAGEMENT SYSTEM CLAUSES, FULL TEXT E.1.2.A 3.10.4-13 HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT (a) The Contractor shall comply with the standard(s) titled ANSI/ISO/ASQC Q9001-1994 AMERICAN NATIONAL STANDARD Quality Systems-Model for Quality Assurance in Production, Installation, and Servicing, and ANSI/ISO/ASQ Q9000-3-1997 Quality management and quality assurance standard-Part 3: Guidelines for the application of ANSI/ISO/ASQC Q9001-1994 to the development, supply, installation and maintenance of computer software. (b) The Contractor shall establish and maintain a Quality System in accordance with the above referenced standard(s) and the Contractor's Quality System Plan (QSP). This QSP is hereby incorporated into this contract when approved by the Contracting Officer. If the QSP is submitted as part of a response to a Screening Information Request (SIR) submission and approved before award, then the QSP is hereby incorporated into this contract at time of award. The QSP shall describe the Contractor's provisions for quality assurance, inspection and test of all supplies to be provided under this contract, in accordance with the terms of this contract, including but not limited to the contract specifications and the above referenced standard. (Note: formal third-party ISO 9000 registration is not required. formal third-party ISO 9000 registration does not relieve the Contractor from the requirements of submitting a QSP.) E-1 (c) In the event of conflict between the Quality System Plan (QSP) and the above referenced standard(s), the applicable ANSI/ISO/ASQC documents shall control. (d) Calibration systems and measuring and test equipment shall be controlled in accordance with MIL-STD-45662, ISO 10012, or equivalent. (e) Government Furnished Property shall be controlled to assure acceptability upon receipt, preclude degradation, damage or misuse during storage, use or test, and assure proper final disposition in accordance with the contract. (f) Site installation activities, maintenance, and support services shall be controlled in accordance with contract requirements. E.1.2.B 3.10.4-14 ASSIGNMENT OF TSA QUALITY REPRESENTATIVE The following provisions are a part of this contract. (a) The Government's TSA Quality Representative assigned to this contract, and designated as such by the Government, has the authority to verify that the Contractor's quality system complies with contract requirements, including the Contractor's Quality System Plan (QSP) (if applicable), to witness tests, and to inspect and accept or reject supplies provided under this contract. (b) Prior to shipment thereof, the Contractor shall submit to the TSA Quality Representative, for inspection and preliminary acceptance, all supplies which are subject to final Government inspection and acceptance at destination. Preliminary acceptance by the TSA Quality Representative constitutes verification by the Government that supplies comply with all contract requirements, which are to be completed prior to shipment, including satisfactory completion of factory tests. Any supplies determined by the TSA Quality Representative to be nonconforming shall be corrected prior to shipment. All other supplies, except those specified to be accepted by the Contracting Officer, shall be submitted to the TSA Quality Representative for final inspection and acceptance prior to shipment. for all supplies subject to preliminary acceptance, final acceptance and passage of title to the Government shall occur at destination. (c) Failure of the Contractor to maintain and operate a Quality System in accordance with the terms of the contract may, based upon a written determination of the TSA Quality Representative (and consistent with the quality system requirements of the contract), be grounds for rejection of affected supplies. (d) The Contractor shall provide appropriate office space for the TSA Quality Representative and his/her staff for the performance of Government evaluations and administrative functions. The office area shall be secure to accommodate meetings of a sensitive nature. File cabinets and suitable desks, both with locking capabilities; typewriters and chairs; and other miscellaneous office equipment; as required, all in E-2 good repair, shall be supplied by the Contractor. The Contractor shall provide secretarial help, as required by the TSA Quality Representative, for typing documents related to the contract. A telephone shall be provided to each desk, with no less than one line per two TSA Quality Representative staff members. The cost of long distance calls placed by the TSA Quality Representative staff will be borne by the Government. The Contractor shall provide parking space to the extent available. In the event a change in location of the TSA Quality Representative staff is required, Contractor/TSA Quality Representative coordination will take place in order to facilitate Government planning and implementation of a smooth transition. (e) Notification of Readiness for Inspection. Unless otherwise specified in the contract, the Contractor shall notify the designated resident TSA Quality Representative in writing within 2 workdays (7 workdays if there is not a resident TSA Quality Representative) of the time (1) when Contractor inspection or tests will be performed in accordance with the conditions of the contract and (2) when the supplies or services performed will be ready for government inspection. E.2 POINTS OF INSPECTION AND ACCEPTANCE E.2.1 Supplies and/or services specified for delivery in Part I - Section F, Deliveries or Performance, of this Contract shall be inspected and accepted at location specified in Section F. E.2.2 All deliverables under this Contract shall be subject to review and inspection by the Contracting Officer's TSA Quality Representative), specified in Section G. E.2.3 Inspection, review and approval of deliverables or associated services prior to final acceptance shall not be construed as assurance of acceptance of the finished product. E.2.4 Unless otherwise specifically provided in this contract, the Contracting Officer is the person authorized to make final Government acceptance of all deliverables called for in the CDRLs and all reviews specified in the SOW. Final acceptance of all deliverable items shall be made, in writing, by the TSA Contracting Officer or designee. E.3 INSPECTION AND ACCEPTANCE E.3.1 PRELIMINARY INSPECTION AND ACCEPTANCE Inspection and test associated with preliminary government acceptance of systems components and aggregates, including all hardware/equipment, along with all software, firmware and interface requirements shall be performed by the Contractor at the Contractor's facility and shall be witnessed by the TSA Quality Representative. Preliminary Government acceptance of systems components and aggregates, including all hardware/equipment, along with all software, firmware and interface requirements E-3 consists of satisfactory completion of all required factory inspections and tests. Preliminary acceptance shall be made by the Contracting Officer or designated representative on form FAA-256, Inspection Report of Material and/or Services. E.3.2 FINAL INSPECTION AND ACCEPTANCE The Government shall perform final inspection and acceptance on all systems components and aggregates, including all hardware/equipment, along with all software, firmware and interface requirements under Part I - Section F, Deliveries or Performance of this contract including installation services. Final acceptance consists of satisfactory completion of all inspections and test associated with the delivered items. Final acceptance shall be made by the Contracting Officer or designated representative on form FAA-256, Inspection Report of Material and/or Services. E.4 DEVIATIONS AND WAIVERS The Government reserves the right to waive any Government inspection. If Government inspection is waived for a Contract Item, the Contractor shall nevertheless perform all of the required tests utilizing the Government approved test procedures and provide to the Government certified test data recorded on forms as approved by the Government. The TSA Quality Representative has the authority to approve minor deviations and waivers affecting a Contract End Item if so designated by the Contracting Officer. A minor deviation or waiver is one, which does not adversely affect safety, durability, reliability, performance, interchangeability of parts or assemblies, or any technical or other requirement of the Contract and does not change price or quantity, or affect delivery under the Contract. E-4 PART I - SECTION F DELIVERIES OR PERFORMANCE F.1 3.1-1 CLAUSES AND PROVISIONS INCORPORATED BY REFERENCE This Screening Information Request (SIR) or contract, as applicable, incorporates by reference one or more provisions or clauses listed below with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make the full text available. (End of provision) 3.10.1-9 Stop Work Order 3.10.1-11 Government Delay of Work 3.10.4-16 Responsibility for Supplies F.2 3.11-29 F.O.B. ORIGIN (a) The term "f.o.b. origin," as used in this clause, means free of expense to the Government delivered -- (1) On board the indicated type of conveyance of the carrier (or of the Government, if specified) at a designated point in the city, county, and State from which the shipment will be made and from which line-haul transportation service (as distinguished from switching, local drayage, or other terminal service) will begin; (2) To, and placed on, the carrier's wharf (at shipside, within reach of the ship's loading tackle, when the shipping point is within a port area having water transportation service) or the carrier's freight station; (3) To a U.S. Postal Service facility; or (4) If stated in the SIR to any Government designated point located within the same city or commercial zone as the f.o.b. origin point specified in the contract (commercial zones are prescribed by the Interstate Commerce Commission at 49 CFR 1048). (b) The Contractor shall-- (1) (i) Pack and mark the shipment to comply with contract specifications; or (ii) In the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) Order specified carrier equipment when requested by the Government; or (ii) If not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; F-1 (b)(3) Deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the Contractor) on or in the carrier's conveyance as required by carrier rules and regulations; (4) Be responsible for any loss of and/or damage to the goods-- (i) Occurring before delivery to the carrier; (ii) Resulting from improper packing and marking; or (iii) Resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the Contractor on or in the carrier's conveyance; (5) Complete the Government bill of lading supplied by the (Transportation Security Administration) TSA or, when a Government bill of lading is not supplied, prepare a commercial bill of lading or other transportation receipt. The bill of lading shall show-- (i) A description of the shipment in terms of the governing freight classification or tariff (or Government rate tender) under which lowest freight rates are applicable; (ii) The seals affixed to the conveyance with their serial numbers or other identification; (iii) Lengths and capacities of cars or trucks ordered and furnished; (iv) Other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and ZIP code of consignee, routing, etc.; (v) Special instructions or annotations requested by the ordering agency for commercial bills of lading; e.g., (A) "To be converted to a Government bill of lading," or (B) "This shipment is the property of, and the freight charges paid to the carrier(s) will be reimbursed by, the Government"; and (vi) The signature of the carrier's agent and the date the shipment is received by the carrier; and (6) Distribute the copies of the bill of lading, or other transportation receipts, as directed by the TSA. (c) These Contractor responsibilities are specified for performance at the plant or plants at which the supplies are to be finally inspected and accepted, unless the facilities for shipment by carrier's equipment are not available at the Contractor's plant, in which case the responsibilities shall be performed f.o.b. the point or points in the same or nearest city where the specified carrier's facilities are available; subject, however, to the following qualifications: (1) If the Contractor's shipping plant is located in the State of Alaska or Hawaii, the Contractor shall deliver the supplies listed for shipment outside Alaska or Hawaii to the port of loading in Alaska or Hawaii, respectively, as specified in the contract, at Contractor's expense, and to that extent the contract shall be "f.o.b. destination." (2) Notwithstanding subparagraph (c)(1) of this clause, if the Contractor's shipping plant is located in the State of Hawaii, and the contract requires delivery to be made by F-2 container service, the Contractor shall deliver the supplies, at the Contractor's expense, to the container yard in the same or nearest city where seavan container service is available. (End of clause) (c) The term "Ex Works" (Newark, CA) as used in this clause, means that the Contractor delivers the goods at the disposal of the Government at the Contractor's premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. (d) The Contractor shall: (1) Pack and mark the shipment to comply with contract specifications; or (2) In the absence of specifications, prepare the shipment in conformance with carrier requirements. F.3 PERIOD OF PERFORMANCE The period of performance of this contract is from contract award through 36 months thereafter. The period of performance of individual Delivery Orders/Task Orders shall be specified therein. The period of performance of the CLINs in accordance with the commercial QASP are as follows:
CLIN DESCRIPTION DATE ---- ----------- ---- 0007A Threat Image Projection [***] 0007B OJT / OQT [***] 0007C Alarm Indicator Lights [***] 0007D Acquire TIP images [***] 0007E Remote Scheduling TIP [***]
F.4 TRANSPORTATION The Contractor shall make all arrangements for transportation, as required. * Confidential treatment requested. F-3 F.5 PLACE OF DELIVERY/PERFORMANCE - NON-DATA ITEMS The place of delivery or performance shall be as specified in individual task/delivery orders. The Contractor is responsible for all shipping charges through final installation. The Factory Acceptance Test will be the basis for final acceptance by the government for each EDS, but such acceptance will not relieve the Contractor of its warranty obligations under this agreement. Payment shall be processed as specified in clause H.9 of this agreement. F.6 TIME AND PLACE OF DELIVERY - DATA ITEMS Time and place of delivery of all contract data requirements shall be as detailed in the applicable Contract Data Requirements List (CDRL), Section J. F.7 NOTICE REGARDING LATE DELIVERY In the event the Contractor anticipates difficulty in complying with any delivery schedule, the Contractor shall immediately notify the Contracting Officer in writing, giving pertinent details, including the date by which it expects to make delivery; PROVIDED, however, that this data shall be informational only in character and that receipt thereof shall not be construed as a waiver by the Government of any contract delivery schedule, or any rights or remedies provided by law or under this contract. (End of clause) F.8 TIME OF DELIVERY - INDEFINITE DELIVERY/INDEFINITE QUANTITY ITEMS The time of delivery schedule for all contract line items (CLINs) shall be as specified in individual delivery orders and task orders. However, the Government will not order nor shall the Contractor be required to deliver indefinite delivery/indefinite quantity units in excess of the quantities indicated in Section B. The Government agrees to order the minimum quantity in accordance with Section B.4.1 in the initial delivery order, concurrent with contract award. F-4 PART I - SECTION G CONTRACT ADMINISTRATION DATA G.1 CONTRACT ADMINISTRATION (TSA) a. Contracting Officer: The TSA Administrative Contracting Officer (CO) for this contract shall be designated upon contract award. The Contracting Officer's address is as follows: Transportation Security Administration Jack Handrahan 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7125 Fax (703) 707-8997 Email: jack.handrahan@tsa.dot.gov b. Contracting Officer's Technical Representative (COTR). To be designated in writing by the Contracting Officer upon contract award. 590 Herndon Parkway, Suite 120 Ed Ocker, TSA STDO Herndon, VA 20170-5232 Telephone (703) 796-7104 Fax (703) 707-5675 Email: Keith.Goll@tsa.dot.gov c. TSA QUALITY REPRESENTATIVE. To be designated in writing by the Contracting Officer upon contract award. G.2 CONTRACT ADMINISTRATION (CONTRACTOR) a. Contract Manager: Dana Piper 7151 Gateway Blvd. Newark, CA 94560 Telephone: 510-739-2591 Fax: 510-608-0761 Email: dana_piper@invision.iip.com G-1 b. Program Manager: David Pillor 7151 Gateway Blvd Newark, CA 94560 Telephone: 510-739-2404 Fax: 510-739-0768 Email: david_pillor@invision.iip.com G.3 CONTRACTING OFFICER'S AUTHORITY a. The Contracting Officer has responsibility for ensuring the performance of all necessary actions for effective contracting; ensuring compliance with the terms of the contract and safeguarding the interests of the United States in its contractual relationships. Accordingly, the Contracting Officer is the only individual who has the authority to enter into, administer, or terminate this contract. In addition, the Contracting Officer is the only person authorized to approve changes to any of the requirements under this contract, and notwithstanding any provision contained elsewhere in this contract, the said authority remains solely with the Contracting Officer. b. The Contracting Officer may designate, in writing, representatives to perform functions required to administer this contract, however, any implied or expressed actions taken by these representatives must be within the limits cited within the Contracting Officer's written designations. The Contracting Officer shall provide the Contractor copies of all relevant written designations. If any individual alleges to be a representative of the Contracting Officer and the Contractor has not received a copy of the document designating that representative, the Contractor shall refrain from acting upon the representative's requirements and immediately contact the Contracting Officer to obtain a copy of the document designating that individual as a representative of the Contracting Officer. c. The Contractor shall immediately notify the Contracting Officer for clarification when a question arises regarding the authority of any person to act for the Contracting Officer under the contract. G.4 3.10.1-22 CONTRACTING OFFICER'S TECHNICAL REPRESENTATIVE (a) The Contracting Officer may designate other Government personnel (known as the Contracting Officer's Technical Representative) to act as his or her authorized representative for contract administration functions which do not involve changes to the scope, price, schedule, or terms and conditions of the contract. The designation will be in writing, signed by the Contracting Officer, and will set forth the authorities and limitations of the representative(s) under the contract. Such designation will not contain authority to sign contractual documents, order contract changes, modify contract terms, or create any G-2 commitment or liability on the part of the Government different from that set forth in the contract. (b) The Contractor shall immediately contact the Contracting Officer if there is any question regarding the authority of an individual to act on behalf of the Contracting Officer under this contract. (End of clause) G.5 INVOICES The Transportation Security Administration intends to make payment within 30 days of receipt of a properly prepared invoice submitted to the billing office below: See individual delivery orders: Transportation Security Administration DOT/FAA/TSA-AMZ-110 FAA Mailroom-Powership Attn: Terri King 6500 So. MacArthur Blvd, Room #370 Oklahoma City, OK 73169 The Contractor shall place the following statement on each invoice, signed by an authorized company representative: "THIS IS TO CERTIFY THAT THE SERVICES SET FORTH HEREIN WERE PERFORMED DURING THE PERIOD STATED, AND THAT INCURRED COSTS BILLED WERE ACTUALLY EXPENDED. - --------------------------------------------------- ----- SIGNATURE OF CONTRACTOR'S AUTHORIZED REPRESENTATIVE DATE" The Contractor shall submit an original and three copies of all invoices to the above designated billing office not more than once monthly. TSA approval of the invoices will be based on Contracting Officer/Contract Specialist and Contracting Officer's Technical Representative review. The Contracting Officer will authorize payment in amounts determined to be allowable, allocable, and reasonable in accordance with the following Transportation Security Administration Acquisition Management System (TSAAMS) clauses: Section G: G.5.1 3.3.1-27 Invoices for Equipment Delivered G.7 Travel Costs G.10 Accountability of Costs/Segregation of Task Orders Section H: H.9 Payment Terms G-3 Section I: 3.3.1-25 Mandatory Information for Electronic Funds Transfer Payment Method 3.3.2-1 TSA Cost Principles The Contractor shall provide simultaneously with the original, a copy of each certified invoice to the Contracting Officer, and the Contracting Officer's Technical Representative as listed in Section G.1. Payment will be made pursuant to the "Mandatory Information for Electronic Funds Transfer Payment Methods" clause in Section I of this contract. G.5.1 3.3.1-27 INVOICES FOR EQUIPMENT DELIVERED (a) The Contractor shall submit a copy of FAA form 4500-1, Project Materiel Shipping and Receiving and a signed form FAA-256, Inspection Report of Material and/or Services, with invoices submitted to the TSA for payment of equipment delivered to the TSA. Further, the Contractor's invoice shall indicate the appropriate Contract Line Item number (CLIN) and, when applicable, the sub-CLIN under which each piece of equipment was ordered. (b) In addition, for each piece of equipment previously delivered, the Contractor shall list the price according to each CLIN or sub-CLIN, and indicate the corresponding form 4500-1 outgoing number. (c) If the Contractor fails to submit FAA form 4500-1, form FAA-256, or fails to submit the form in the format required by this clause, payment may be delayed. (End of Clause) G-4 G.6 CORRESPONDENCE PROCEDURES To promote timely and effective contract administration, correspondence submitted under this contract shall be subject to the following procedures (except for invoices and deliverable items): a. All correspondence relative to this contract shall be addressed to the Contracting Officer, listed in Section G.1. Correspondence of a technical nature shall include an information copy addressed to the Contracting Officer's Technical Representative (COTR), TSA, STDO Herndon, Va., listed in Section G.1. b. Mail: The Contractor shall use discretion in the use of "express" or "overnight" mail. These premium services should be used sparingly and in situations where the regular U.S. mail system would not be adequate for the timely transfer of technical or contract related documentation. Use of electronic mail or facsimile (FAX) service is encouraged where appropriate. G.7 TRAVEL COSTS a. Travel shall be reimbursed on a cost plus no fee basis, subject to Joint Federal Travel Regulations (JFTR) guidelines and any other limitations cited below. 1. The Government will reimburse the Contractor, up to amounts allowed by the JFTR, for reasonable travel expenditures, incurred in the performance of this contract. In maintaining a policy of keeping travel costs `reasonable' in the performance of this contract, the Contractor agrees to use a cost effective approach and continuously pursue opportunities to lower and contain travel costs using, where practical, group rate arrangements, off-peak travel itineraries and other similar travel cost containment methods. Further, the Contractor agrees to effect procedures to ensure Government reimbursable travel expenditures are only incurred when absolutely necessary. To assist it in determining reasonable travel cost objectives, as needed, the Contractor is encouraged to contact the TSA travel office for general guidance. Further, to mitigate the inherently higher rates associated with urgent emergent travel, the Contractor agrees to contact, reasonably in advance, the Contracting Officer for assistance prior to executing such travel, unless documented circumstances clearly indicate such advance contact was not possible. G-5 2. Incurred travel costs, listed below, will be disallowed for Government reimbursement and considered as being expenditures to be absorbed by the Contractor. Included are costs: (i) in excess of amounts allowed by the JFTR; (ii) within a Government installation, where Government transportation is available; (iii) for personal convenience, including daily travel to and from work; (iv) in the case of urgent emergent travel, in excess of amounts allowed by the JFTR, due to the Contractor not requesting Contracting Officer assistance reasonably in advance except for justifiable and documented circumstances which prevented such advance contact from being possible; and (v) in the replacement of personnel, when such replacement is accomplished for the Contractor's or employee's convenience In the case of urgent emergent travel, if the Contracting Officer's assistance has been reasonably requested in advance, or if requested as soon as practical after commencement of travel and properly justified and documented, the Contracting Officer may authorize, on a case-by-case basis, reimbursement for amounts in excess of JFTR rates. The Contractor shall implement procedures to minimize urgent emergent travel. Any Contracting Officer decision regarding reimbursement of travel costs in excess of amounts allowed by JFTR, for urgent emergent travel, shall be a unilateral decision, not subject to dispute or any right contained in the contracts disputes clause of this contract. 3. Relocation and travel costs incident to relocation will only be reimbursable by the Government if such costs are: (i) in conformance with existing company policy; (ii) represent the most cost effective approach among all other potential alternatives; and (iii) are specifically authorized by the Contracting Officer in advance of being incurred. If the Contractor anticipates relocation costs will be incurred, the Contractor must submit, to the Contracting Officer, reasonably in advance, a written request with detailed justification and a cost/benefit analysis of alternatives. The Contracting Officer shall make a unilateral decision, on the request, which will not be subject to dispute or any other recourse contained in this contract. G-6 G.8 3.8.2-17 KEY PERSONNEL AND FACILITIES a. The personnel and/or facilities as specified below are considered essential to the work being performed hereunder and may, with the consent of the contracting parties, be changed from time to time during the course of the contract. b. Prior to removing, replacing or diverting the personnel the Contractor shall notify in writing and receive consent from the Contracting Officer reasonably in advance of the action and shall submit justification (including proposed substitutions) in sufficient detail to permit the evaluation of the impact on this contract. c. No diversion shall be made by the Contractor without the written consent of the Contracting Officer. d. The key personnel and/or facilities under this contract are: Program Manager - David Pillor Production Manager - Waldemar Orlow Lead System Engineer - Lee Deal Lead Software Engineer - Lee Deal Quality Manager - John Peacock Configuration Control Manager - Michael Heintzman InVision Technologies, Inc. 7151 Gateway Boulevard Newark (Alameda County) California 94560 G.9 LABOR CATEGORIES/SKILL LEVELS - MINIMUM QUALIFICATIONS a. The Contractor shall bill for each hour using professional labor category/skill level cited in the contract. Each labor category/skill level is derived by combining one of the labor categories with one of the skill levels cited below. Labor categories describe the type of experience or expertise and specific degree type needed. Skill levels describe the amount of experience required and level of education needed or preferred. b. In determining if an employee's level of education qualifies for a specific labor category, the Contractor shall ensure that any degrees the employee has received were obtained from accredited colleges only. In determining the amount of employee direct or related work experience, the Contractor shall not count any time the employee spent acquiring education, in any form, including tine on-the-job in a cooperative program. G-7 c. Professional labor categories and skill levels required on this contract, LABOR CATEGORIES Field Service Engineer: Requires three years experience as servicing Unix systems, medical x-ray, CT, MW or related equipment. Must have good customer skills and the ability to work under pressure. Requires a BSEE, BSCS, BSME or equivalent education and skills. Design Engineer: Requires experience in static, dynamic design, and analysis of mechanical systems, equipment and packages, following standard practices and procedures or exercising judgment within defined procedures. Requires a BS degree or equivalent experience in mechanical and system design. Document Specialist / Technical Writer: Requires ability to prepare software and hardware manuals per company, customer, and product type requirements, working with FrameMaker, Microsoft Word, and IBM-PC or Apple Macintosh. Experience with other desktop publishing software is a plus, and C/C++ familiarity preferred. Must be able to read, write, and understand the English language fluently and have excellent communication skills. Requires BSEE or equivalent experience. Senior Document Specialist: Requires 5 years experience preparing software and hardware manuals per company, customer, and product type requirements, working with FrameMaker, Microsoft Word, and IBM-PC or Apple Macintosh. Experience with other desktop publishing software is a plus, and C/C++ familiarity preferred. Must be able to read, write, and understand the English language fluently and have excellent communication skills. Requires BSEE or equivalent experience. Drafter: Requires ability to produce detail manufacturing drawings of high tolerance machined parts, heavy welded structures, and sheet metal enclosures working with 2D and 3D drafting, solid modeling, exploded assemblies, and tolerancing to ANSI Y14.5. Requires knowledge and use of AutoCad including 3D and Mechanical Desktop. Familiarity with CadKey and Pro-E is a plus. Requires High School Diploma, Technical College preferred. Manufacturing: Requires experience in assembly of high technology electromechanical components or systems, following standardized procedures. Familiarity with x-ray or medical imaging systems is desirable. Requires High School diploma or equivalent experience. Program Manager: Requires 5 years experience managing engineering projects in a high tech environment. Experience in engineered product definition, introduction and upgrade and engineering services in equipment installation projects. Requires experience determining minimum and desired features and tasks needed to complete a program, including budget, critical milestones, and documentation. Requires experience working with all functional departments to achieve program G-8 goals. Experience with Government procurement a plus. Requires Bachelors degree, Masters preferred, in engineering or related field. Project Manager: Requires 5 years experience in complex project management for engineering development and/or equipment installation. Requires ability to communicate with company departments, customers and other stakeholders. Requires experience in scheduling, testing and documentation. Requires Associates degree or equivalent skills and background. Quality, Assurance Inspector: Minimum 2 years of experience in performing the activities related to the inspection functions in a manufacturing environment. Requires PC literacy and excellent communication skills. Requires Associates Degree with ASQ Certification or equivalent experience Senior Design Engineer: Requires three years experience in static and dynamic design, and analysis of mechanical systems, equipment and packages. Requires experience with feasibility studies, testing and prototype fabrication, exercising judgment within generally defined practices and policies. Experience in assigning work and resolving problems is desired. Requires a MS degree or equivalent experience in mechanical and system design. Senior Software Engineer: Requires three years experience in software design and development with C++ on Windows environments as well as higher-level analysis packages, including CART, SAS, Matbab, MathCAD, etc. Requires experience in design improvements related to cost, function and reliability, working with very large and complex data sets and leadership of technical tasks. Requires MS in Computer Science, Mathematics, Physics, or Engineering. Senior System Engineer: Requires three years experience in design and development of systems including requirements specification, vendor selection, high level software design, product introduction and manufacturing support. Familiarity with the use of CAE/CAD tools in the design/development process is a must. Experience with Real-Time Operating systems, machine system controls, programming in Windows or Unix operating systems is desirable. Requires MS degree in computer science, computer engineering, or electrical engineering with an emphasis in software engineering, or equivalent experience. Senior Test Engineer: Requires three years experience in a test-engineering role with sub-assembly and system level testing of complex capital equipment, with management experience in a production test, system test, or test-engineering role. Hands-on experience in a "traditional" test-engineering role is desirable. Requires a MS in Electrical Engineering or equivalent technical discipline, or equivalent experience. Software Engineer: Requires experience in software design and development with C++ on Windows environments. Requires experience in design improvements related to cost, function and reliability. Requires a Bachelors degree in Computer Science or related field or equivalent experience. G-9 System Engineer: Requires experience in design and development of systems including requirements specification, vendor selection, high level software design, product introduction and manufacturing support. Familiarity with the use of CAE/CAD tools in the design/development process is a must. Experience with Real-Time Operating systems, machine system controls, programming in Windows or Unix operating systems is desirable. Requires a BS degree in computer science, computer engineering, or electrical engineering with an emphasis in software engineering. (Test) Technician: Requires 2 years of experience working in a production test organization recognizing various electrical components, performing basic electrical troubleshooting, performing test setup and operating electrical test equipment. Must have good written and verbal communication. Requires Associates degree in electronics. EQUIVALENCIES High School Diploma -- A High School diploma is equivalent to 5 years of relevant experience in the desired field. Work-study programs and/or trade school education can also he used to equal a high school diploma. Associates Degree or Apprenticeship -- An Associates Degree or Apprenticeship is equal to 8 years of relevant experience in the desired field plus a high school diploma. Bachelor's Degree -- A Bachelor's Degree is equivalent to 10 years of relevant experience in the desired field plus a high school diploma. Work-study programs and/or trade school education, in addition to a High School diploma, plus 8 years of relevant experience can be used to equal a Bachelor's Degree. Masters Degree -- A Master's Degree is equivalent to a Bachelors Degree in a related discipline with 10 years of relevant experience in the desired field. Doctorate -- A Doctorate is equivalent to a Master's Degree in a related discipline with 10 years of relevant experience in the desired field. G.10 ACCOUNTABILITY OF COSTS/SEGREGATION OF TASK ORDERS All costs incurred, in performance of Task Orders issued under this contract, shall be accumulated in a separate job order cost account established specifically for that task order number. There shall be no commingling of costs between Task Orders. G.11 ACCOUNTING AND APPROPRIATION DATA G-10 All task and delivery orders issued under this contract will be accompanied by a proper TSA funding sheet which cites, at a minimum, the task/delivery order number, accounting data to charge for effort performed under the task/delivery order and the total amount of funding authorized to be expended for the task/delivery order. G.12 TSA INTERNAL REVIEWS OF CONTRACTOR PERFORMANCE Notwithstanding the requirement that price must always be assessed by the Contracting Officer as being reasonable, the TSA places a high value on the Contractor providing a high level of quality support in performing this contract. This TSA emphasis on the importance of quality performance initiated in awarding this contract, will be ongoing throughout the duration of this contract. Accordingly, the TSA will periodically, as subsequently scheduled by the Contracting Officer, conduct formal internal reviews focused on assessing the quality of the Contractor's performance. The Contracting Officer will share the summary results of these ongoing reviews with the Contractor as a means of providing ongoing feedback on the TSA's perception of Contractor performance. Should these reviews disclose a pattern of poor performance, lack of adherence to contractual requirements, negligence or other unfavorable trends, the TSA may terminate or, not exercise options in, this contract. Additionally, completed TSA internal review reports of Contractor performance will be maintained in the TSA's past performance database, which may be used by other Federal, State and local Government personnel in future procurements. G-11 PART I - SECTION H SPECIAL CONTRACT REQUIREMENTS H.1 SYSTEM INTEGRATION CONTRACTOR/OTHER CONTRACTOR RELATIONSHIPS a. The Contractor shall enter into a Liaison Agreement (the "Agreement") with the TSA's General Contractor and/or System Integration Contractor. All parties to the Agreement shall comply with the terms of the Agreement for the duration of this contract. The General Contractor and/or System Integration Contractor shall not, by execution of the Agreement, be considered as a subcontractor for the purposes of this contract b. The Agreements shall facilitate the exchange of data and information between the General Contractor and/or System Integration Contractor and the Contractor as reasonable and necessary for the successful integration and implementation of contract deliverables in Section B. c. As a minimum, the Agreements shall provide for the following: 1. As requested by the General Contractor and/or System Integration Contractor, the Contractor shall provide the General Contractor and/or System Integration Contractor all necessary interface data for the successful integration and implementation of the contract deliverables. 2. Concurrent with its submittal to the Government of each proposed engineering change, the Contractor shall provide to the General Contractor and/or System Integration Contractor any interface data that the Contractor believes is changed or impacted by the proposed engineering change. The Contractor will communicate to the General Contractor and/or System Integration Contractor in a reasonable and efficient manner the details of any known impact of the proposed engineering change on the TSA's Configuration Management Plan, and any information regarding the Contractor's projected and actual costs and schedule that is necessary for the General Contractor and/or System Integration Contractor to evaluate the proposed engineering change. 3. Concurrent with its submittal to the Government, the Contractor shall coordinate each proposed contract specification change, deviation and waiver that impacts the integration and implementation of the contract deliverables with the General Contractor and/or System Integration Contractor. The Contractor shall provide to the General Contractor and/or System Integration Contractor interface data that is necessary for the System Integration Contractor to evaluate the proposed specification change, deviation or waiver. H-1 4. The Contractor shall promptly disclose to the General Contractor and/or System Integration Contractor material interface problems known to the Contractor that, if unresolved, would prevent successful integration and implementation of the contract effort with other systems or subsystems. If an interface problem is proposed to be resolved by a change in the contract specifications, the Contractor shall do so as described in c.2 above. 5. Unless restricted by the Government, the General Contractor and/or System Integration Contractor shall be permitted to attend all meetings between the Contractor and the Government pertaining to equipment integration issues or matters, and the Contractor shall be permitted to attend all meetings between the General Contractor and/or System Integration Contractor and the Government pertaining to equipment integration issues. 6. As may be necessary to accomplish the purposes of the Agreement, representatives of the Contractor shall meet from time to time at the Contractor's facility with the General Contractor and/or System Integration Contractor. 7. If requested by the TSA, the General Contractor and/or System Integration Contractor shall be permitted to monitor all acceptance testing by the Contractor in connection with this contract which the Government has the right to witness and the Contractor shall be permitted to monitor all testing by the General Contractor and/or System Integration Contractor in connection with the General Contractor and/or Systems Integration Contract as it pertains to the equipment. 8. In accordance with paragraph (d) of this agreement, the General Contractor and/or System Integration Contractor and the Contractor shall agree on the procedures for the proper protection of proprietary information owned by the Contractor and disclosed to the General Contractor and/or System Integration Contractor, and of proprietary information owned by other Contractors and disclosed to the Contractor. The General Contractor and/or System Integration Contractor will agree to use the proprietary information owned by the Contractor, whether provided by the Government, the Contractor or any other Contractor or subcontractor solely for the performance of the General Contract and/or System Integration Contract and execute an appropriate non-disclosure agreement. 9. For as long as InVision offers to maintain the EDS machines sold or manufactured by InVision to the TSA or any Government entity (the InVision machines) to a reasonable standard and at a fair and reasonable price, InVision will have a perpetual right to be the maintenance provider for all InVision machines. d. The Contractor may receive proprietary information owned by other TSA Contractors from the General Contractor and/or System Integration Contractor or the Government. Except with the prior written permission of the owner of the proprietary information, the Contractor shall not release, use or disclose, in whole or part, proprietary information owned by another person. Neither this contract nor the Agreement shall affect the H-2 right of the Government, the Contractor, the Contractor's subcontractors, the General Contractor and/or System Integration Contractor, the General Contractor and/or System Integration Contractor's subcontractors, or any other TSA Contractor to use proprietary information if such information is lawfully obtained on an unrestricted basis from any source. At no time during the performance of this contract is the Contractor required to release proprietary information, or proprietary direct or indirect rate information to the General Contractor and/or System Integration Contractor, or other Contractors. Should any inadvertent release occur, neither this contract nor the Agreement shall be the basis for any liability on the part of the Government for the use, release or disclosure, by the General Contractor and/or System Integration Contractor, or other Contractors, of any proprietary information owned by the Contractor. The Contractor agrees that it shall use proprietary information owned by others, whether provided by the Government, the General Contractor and/or System Integration Contractor or any other Contractor or subcontractor, solely for the performance of this contract. This provision, however, shall not affect the right of the Contractor or any of its subcontractors to use such proprietary information for other purposes if the information is lawfully obtained on an unrestricted basis from any source. e. The Contractor shall provide the Contracting Officer with one copy of each Agreement entered into with the General Contractor and/or System Integration Contractor, and other Contractors, and any Amendments thereto. f. The Contractor shall include the requirements of this agreement in its subcontracts in excess of $100,000. g. Nothing in this contract or in the Agreement shall be deemed to be a basis for the alteration of, deviation from or failure to comply with, the terms and provisions of this contract. In the event of a conflict between any of the terms and provisions of this contract and the Agreement, the terms and provisions of this contract shall control with respect to the parties to this contract. H.2 TASK ORDER PROCEDURES (APPLICABLE TO CLIN 3000) a. General. Services to be performed under the referenced Contract Line Item Number shall be ordered by the issuance of Task Orders. b. Format. The Contracting Officer will issue all Task Orders, in writing, to the Contractor using TSA form titled "Award for Supplies or Services", or "Revision to Award for Supplies or Services" in the case of a modification to an order. Each Task Order shall be in accordance with and subject to all terms and conditions of the contract under which it is issued and shall contain, as a minimum, the following information: H-3 1. A Task Order number 2. Task Order Title 3. Task Order (or revision) Action Description 4. Appropriate TSAA points-of-contact 5. A period-of-performance 6. Funding information: Not-to-exceeds, limitations, appropriation data, task order cost detail, and other appropriate information 7. A description of the work to be performed which is within the scope of the statement-of- work for this contract 8. A list of deliverables and the required delivery schedule; 9. A description of any authorized travel including to and from points as applicable; 10. A description of any Government-Furnished Information or Property to be provided with delivery locations and required delivery dates; c. Procedures. The Contracting Officer will submit to the Contractor a Task Order marked "Draft" for Contractor review and comment. The Contractor will consult with the COTR to estimate resources (time, material, travel and GFP/GFI support) needed to accomplish the Task Order requirements. The Contractor will prepare an estimate and forward it to the Contracting Officer by facsimile transmission or other rapid communication method. Upon receipt, the Contracting Officer shall check the Task Order for acceptability, accuracy and completeness; include additional information if necessary; and forward the Task Order to the Contractor at least 24 hours prior to commencement of performance. Upon receipt, the Contractor shall review and acknowledge acceptance of the Task Order by signing and dating the order and expeditiously returning the signed Task Order to the Contracting Officer by facsimile transmission or other rapid communication method. If the Contractor determines that the Task Order, as written, is unacceptable, the Contractor shall immediately notify the Contracting Officer and detail the reasons for its position. Upon receipt of this notification, the Contracting Officer will initiate action, as appropriate. Upon receipt of an acceptable signed Task Order from the Contractor, the Contracting Officer will countersign and date the Task Order. d. Immediate Need Procedures. In the event the STDO has an immediate need to start an activity in the field that cannot wait for the usual task order procedures, the Technical Officer will notify the Contracting Officer via electronic mail and phone. The Technical Officer will provide the Contracting Officer all pertinent information to base a decision to authorize work. Upon deciding that the STDO should start this effort, the Contracting Officer will send electronic mail and phone messages to the Contractor authorizing work to begin, and providing as much written direction as feasible to start work. The Technical Officer has five (5) working days to prepare the draft task order for submittal to the Contractor, as per the procedures in Section C above. H.3 DELIVERY ORDER PROCEDURES (APPLICABLE TO CLIN 0003) a. General. Items to be delivered under the referenced Contract Line Item Numbers (CLINs) shall be ordered via the issuance of Delivery Orders. H-4 b. format. The Contracting Officer will issue Delivery Orders, in writing, to the Contractor, using TSA format (Order for Supplies or Services). Each Delivery order issued shall be in accordance with and subject to all terms and conditions of the contract under which it is issued and shall contain, as a minimum, the following information: 1. A Delivery Order number; 2. Appropriate TSA points-of-contact; 3. A period-of-performance; 4. A list of deliverables and the delivery schedule; 5. A description of authorized travel including to and from points; 6. A maximum allowable travel amount, as applicable; 7. A description of any Government-Furnished Information or Property to be provided with delivery locations and required delivery dates; 8. A delivery order maximum amount; 9. Applicable appropriation and accounting data; and c. Procedures. Each Delivery Order shall be prepared by the COTR and forwarded to the Contracting Officer for review anti signature. Upon receipt, the Contracting Officer shall check the Delivery Order for acceptability, accuracy and completeness and shall forward the Order to the Contractor. Upon receipt, the Contractor shall review and acknowledge acceptance of the Delivery Order by signing and dating the order and expeditiously returning the signed Delivery Order to the Contracting Officer by facsimile transmission or other rapid communication method. If the Contractor determines that the Delivery Order, as written, is unacceptable, the Contractor shall immediately notify the Contracting Officer and detail the reasons for its position. Upon receipt of this notification, the Contracting Officer will initiate action, as appropriate. Upon receipt of an acceptable, signed Delivery Order from the Contractor, the Contracting Officer will countersign and date the Order. d. Minimum Lead Time - Order to Delivery. Via issuance of delivery orders, the Government shall afford the Contractor a minimum lead time from date of Contracting Officer signature to required date of item delivery, as stated in individual delivery orders. The minimum lead times shall be not less than the following: CLIN Lead Time 0003 A minimum of six months from date of order to date of delivery T&M A minimum of three weeks from date of order to date of performance H.4 3.2.4-16 ORDERING (a) Any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or task orders by the individuals or activities designated in the Schedule. Such orders may be issued from date of contract award through 24 months thereafter. H-5 (b) All delivery orders or task orders are subject to the terms and conditions of this contract. In the event of conflict between a delivery order or task order and this contract, the contract shall control. (c) If mailed, a delivery order or task order is considered "issued" when the Government deposits the order in the mail. Orders may be issued orally, by facsimile, or by electronic commerce methods only if authorized in the Schedule. (End of clause) H.5 3.2.4-17 ORDER LIMITATIONS (OCTOBER 1996) (a) Minimum order. When the Government requires supplies or services covered by this contract in an amount of less than $1,000,000 the Government is not obligated to purchase, nor is the Contractor obligated to furnish, those supplies or services under the contract. (b) Maximum order. The Contractor is not obligated to honor- (1) Any order for a single item in excess of N/A units; (2) Any order for a combination of items in excess of N/A; or (3) A series of orders from the same ordering office within N/A days that together call for quantities exceeding the limitation in subparagraph (1) or (2) above. (c) If this is a requirements contract, the Government is not required to order a part of any one requirement from the Contractor if that requirement exceeds the maximum-order limitations in paragraph (b) above. (d) Notwithstanding paragraphs (b) and (c) above, the Contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within 15 days after issuance, with written notice stating the Contractor's intent not to ship the item (or items) called for and the reasons. Upon receiving this notice, the Government may acquire the supplies or services from another source. (End of clause) H.6 DISSEMINATION OF CONTRACT INFORMATION The Contractor shall not publish, permit to be published, or distribute for public consumption any information, oral or written, concerning the results or conclusions made pursuant to the performance of this contract, without the prior written consent of the H-6 Contracting Officer. This statement includes seminars, professional society meeting/conferences and meetings with foreign dignitaries both government and from the private sector. Two copies of any material proposed to be published or distributed shall be submitted to the Contracting Officer. The following schedule is established as a guideline when requesting consent (calendar days): ~~Written information - 15 days Oral information - 15 days Congressional information - 10 days~~

Any Contractor proposals for perspective work, exclusive of this contract, for which the Contractor may employ information generated in the performance of this contract, the Contractor is required only to notify the Contracting Officer of its intent to submit a proposal. Such notification shall include a brief description of the requirement for which the Contractor is proposing and indicate the Government or business entity to which the proposal is being submitted. H.7 INCORPORATION OF REPRESENTATIONS AND CERTIFICATIONS BY REFERENCE All representations, certifications and other written statements made by the Contractor in response to Section K of the SOLICITATION, incident to award of this contract or modification of this contract, are hereby incorporated by reference into this contract with the same force and effect as if they were given in full text herein. H.8 ETHICAL BEHAVIOR Notwithstanding the Contractor's obligation to comply with all requirements, terms and conditions contained in this contract, the Contractor is encouraged to conduct an ongoing program to ensure its and subcontractor employees are aware of, understand and practice ethical behavior and conduct themselves in an unbiased and objective manner. Situations may arise where employees of the Contractor or subcontractor may review documentation, participate in discussions, help execute actions or otherwise exert influence on decisions, which could involve competitors. In such situations, involved Contractor or subcontractor employees shall refrain from making any statement or taking action, which could be construed as demonstrating bias against a competitor. H.9 PAYMENT TERMS The TSA shall pay the Contractor, upon the submission of proper invoices, the prices stipulated in this contract for supplies delivered and accepted or services rendered and accepted, less any deductions provided in this contract. Payment will be made upon receipt of a proper invoice that includes a form FAA-256, Inspection Report of Material and/or Services, signed by the TSA Quality Representative, upon successful completion of Factory Acceptance Test (FAT) and Site Acceptance Test (SAT). Payment shall be H-7 made in accordance with the following schedule. Offerors may propose alternate payment terms. Payment Terms: For CLIN, 0001A, 0001B, 0002, 0003, Production units : 50% of the CLIN price at the time of order. 40% of the CLIN price at satisfactory completion of Factory Acceptance Test, Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. 10% of the CLIN price at satisfactory completion of Site Acceptance Test, but not later than 90 days after successful completion of the Factory Acceptance Test. Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. H.10 ESCROW ACCOUNT REQUIREMENT The TSA has a mandate to acquire and install airport security equipment throughout the country. It is essential that the TSA have the ability to acquire and maintain the systems in the event the Contractor goes out of business, or cannot supply and maintain the equipment acquired under this contract. Therefore, the Contractor shall establish an escrow account to include all necessary software (installation disks and documentation) source and object code and documentation, and related hardware drawings (level 3) for the equipment and its peripheral equipment ordered under this contract. The Contractor shall ensure that the escrow is updated and kept current to the product baseline and any engineering change proposals provided under this contract as modified. The Contractor shall coordinate this effort with the TSA and provide a copy of the account document for TSA review and concurrence. The escrow account shall be established within sixty (60) days from contract award, and the final agreement shall be completed no later than sixty (60) days after TSA concurrence of account. The account shall include the same information for subcontractors IAW Clause H.1.f, except for commercial off the shelf items from subcontractors or vendors, for which the escrow account shall include only installation disks and documentation, and not source and object code and documentation. H. 11 SUBCONTRACTING PLAN SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN. H-8 The Contractor's Small Business and Small Disadvantaged Business Subcontracting Plan, will be approved by contract modification, and will be incorporated into and made a part of this contract. The Small Business and Small Disadvantaged Business Subcontracting Plan must be submitted and approved no later than July 31, 2003. H.12 RESERVED H.13 CONTRACTOR NON-COMPLIANCE WITH CONTRACT a. Contractor non-compliance with any requirement, term or condition contained in this contract may result in the TSA: 1. Terminating this contract, in whole or part, for convenience or default; 2. Withholding payments; 3. Initiating suspension or debarment action against the Contractor; and 4. Initiating other action, as appropriate. b. In addition to paragraph a., Contractor non-compliance with any statutory requirement included in this contract, may result in the Contractor and, its employees and subcontractors being fined and/or imprisoned, or incurring other sanctions. H.14 SUBCONTRACTS The Contractor shall ensure all subcontracts awarded under this contract incorporate all clauses and provisions required by this contract, including applicable Section K "Representations and Certifications". The Contractor shall only invoice for work completed by subcontractors and make payments to subcontractors in a manner consistent with or more expeditious than the Government's requirement for prompt payment. If the Contractor fails to comply with this procedure, it will be proceeding at its own risk and may result in this contract subsequently being terminated. H.15 RESERVED H.16 RELEASE OF INFORMATION Work performed under this contract may involve access to information, including specification, cost estimates and other sensitive data. Consequently, the Contractor and subcontractor(s) (including individual employees thereof) shall not release or communicate, except as required by law or regulations, such information, including any news release, public announcement, or advertising material concerned with this contract, whether orally or in writing, to any person except: H-9 a. TSA personnel with a "need to know" who have signed a non-disclosure form b. Employees of the Contractor with a "need to know", who have signed a non-disclosure form, or c. Such other person as may be designated in writing by the CO and who have signed a non-disclosure form. Further, no documents, reports, information, etc., related to work under this contract, may be released to the public or provided to any party other than the TSA and it's Contractors without Security Sensitive Information and Classification review in accordance with the form DD-254 and written approval of the TSA. H.17 DATA RIGHTS TRANSFER In the event that the Government transfers title to the supplies acquired under this contract to a third party, the license document titled InVision Technologies, Inc. Software License (Attached at the end of Section H) ("the InVision License") shall apply to the transferee. Government data rights under this contract are as detailed in the InVision License, Section I clauses 3.5-11, "Patent Rights - Retained by Contractor (Long Form)," 3.5-13/alt 1, "Rights in Data - General" and 3.5-18 "Commercial Computer Software - Restricted Rights" for any customization or modification made to Contractor software. Additionally, the Government shall not be liable for any patent or copyright infringement resulting from a title transfer. H.18 FIXED RATES (CLIN 3000) - INDEFINITE QUANTITY CONTRACT The rate, or rates, set forth in the contract include salary, overhead, general and administrative expenses, and profit. The Contractor shall submit an invoice for only the time of the personnel whose services are applied directly to the work called for in each individual Delivery/Task Order and accepted by the Contracting Officer's Technical Representative. The Government shall pay the Contractor for a Delivery/Task Order at rates in effect in the contract for the contract period when the Delivery/Task Order was issued. The Contractor shall maintain time and labor distribution records for all employees who worked under the contract. These records must document time worked and work performed by each individual on all Delivery/Task Orders. H.19 MATERIALS AND TRAVEL Travel and incidental materials used during installation shall be reimbursed at cost plus G&A, if applicable and approved by DCAA. No profit shall be paid on travel and incidental materials used during installation. H-10 H.20 COMPLETION OF DELIVERY ORDERS All orders issued during the effective period of the contract and not completed within that period shall be completed by the Contractor within the time specified in the order, or any option exercised. The rate prevailing immediately prior to contract expiration shall apply to all such work. H.21 3.10.4-22 DIMINISHING MANUFACTURING SOURCES AND MATERIAL SHORTAGES (a) The Contractor shall perform an initial baseline analysis of the electronic parts / electronic micro-circuits including preferred and alternate parts and submit it to the TSA Contracting Officer for acceptance within (90*) days after contract award. The Contracting Officer will review the analysis and notify the Contractor of acceptance within 90* days after receipt. (b) The Contractor's analysis shall identify obsolete parts and diminishing manufacturing sources and material shortages (DMSMS). Criteria used in evaluating obsolete parts and DMSMS shall include the life cycle use of the product and available suppliers. The Contractor's analysis shall identify electronic parts / electronic micro-circuits in a high, medium and low risk category as follows: High risk indicates parts are obsolete and availability is minimal or nonexistent. Medium risk indicates the parts are a diminishing item and projected availability is for one or two years or only one supplier is available. Low risk indicates parts are projected to be available for 3 years or more and multiple suppliers are available. (c) The Contractor shall monitor the parts and material that have the potential to adversely affect production or life cycle supportability. (d) The Contractor shall also monitor the Government Industry Data Exchange Program (GIDEP) data base for all high risk parts identified as part of the analysis and during risk monitoring. The Contractor shall prepare a DMSMS notice in accordance with GIDEP for all parts not found in the data base. (e) The Contractor shall submit a recommendation to the Contracting Officer or designated representative stating how the DMSMS parts will be supported. The Contractor shall submit the recommendation quarterly after the initial baseline analysis is accepted by the TSA Contracting Officer. The Contractor shall also address part cost, where and how often parts are used in the product, and how many parts are affected in the recommendation. H-11 (f) Compliance with this clause shall not relieve the Contractor from complying with any other provisions of the contract. * Specify at time of award. (End of clause) H.23 RESERVED H.24 EQUIPMENT NONCONFORMANCE a. Definitions Nonconformance - The failure of a characteristic to conform to the requirements specified in the contract, drawings, specifications, or other approved product description. (1) Minor Nonconformance - A nonconformance that is not likely to materially reduce the usability of the supplies or services for their intended purpose, or is a departure from established standards having little bearing on the effective use or operation of the supplies or services. Multiple minor non-conformances, when considered collectively, may raise the category to a major/critical nonconformance. A minor nonconformance does not adversely affect any of the following: a) Health or Safety. b) Performance. c) Interchangeability, reliability, or maintainability. d) Effective use or operation. e) Weight or appearance (when a factor). (2) Major Nonconformance - A nonconformance, other than critical, that is likely to result in failure, or to materially reduce the usability of the supplies or services for their intended purpose; and that cannot be completely eliminated by rework or reduced to a minor nonconformance by repair and directly affects items in subparagraph (1) a through e above. This may also include a failure or refusal by the Contractor to repair the supplies or services under the warranty. (3) Critical Nonconformance - A nonconformance that is likely to result in hazardous or unsafe conditions for individuals using, maintaining, or depending upon the supplies or services, or is likely to prevent performance of a vital agency mission. b. If a piece of equipment purchased by the TSA is discovered to have any nonconformance, the Contractor must propose a fix to the TSA. At the discretion of the Contracting Officer, this fix can be, but is not limited to, a "swap out" with a new piece of equipment or extended warranty. The proposed fix must be at no additional cost to the TSA, it's Assignee, or agent. H-12 c. If a piece of equipment is found to have any major or critical nonconformance and the Contractor does not satisfactorily correct the nonconformance, the TSA must be compensated as follows: (1) If the nonconformance is discovered in year 1 - complete replacement d. If the major or critical nonconformance is so grievous as to affect the TSA's, Assignee's, or agent's ability to maintain security at the site where the subject equipment is located, the TSA, as determined by the Contracting Officer, may: (1) Suspend all subsequent orders at no cost to the TSA; (2) Cancel all subsequent orders at no cost to the TSA; (3) Seek an equitable adjustment for the value of the nonconforming equipment; (4) Seek any remaining common law damages; or (5) Terminate for default. (End of Clause) H.25 CONTRACTOR EMPLOYEES WITH LIMITED ACCESS TO DHS INFORMATION, FACILITIES, AND RESOURCES The Contracting Officer may require dismissal from work of those employees that he/she deems incompetent, careless, insubordinate, unsuitable or otherwise objectionable, or whose continued employment he/she deems contrary to the public interest or inconsistent with the best interests of security and the Department. The Contractor and Contractor's employees shall complete and submit to the Government such forms as may be necessary for security or other reasons. At a minimum, a fingerprint card will be submitted by each Contractor employee, prior to entrance on duty. H.26 3.2.2.3-33 ORDER OF PRECEDENCE Any inconsistency in this contract shall be resolved by giving precedence in the following order: (a) the Schedule (excluding the specifications); (b) representations and other instructions; (c) contract clauses; (d) other documents, exhibits, and attachments; (e) the specifications; and (f) the drawings. H.27 RESERVED H-13 H.28 RESERVED H.29 Indemnification, Limitation of Liabilities and Government Contractor Defense: In accordance with Section 73 of Executive Order 13286 of February 28, 2003, which amends Executive Order 10789 of November 14, 1958, executive departments or agency of the United States are prohibited from granting indemnification to sellers or contractors with respect to any matter that has been, or could be, designated by the Secretary of Homeland Security as a qualified anti-terrorism technology as defined in the Support Anti-Terrorism by Fostering Effective Technologies Act of 2002 (the SAFETY Act"), title VIII, subtitle G of the Homeland Security Act of 2002, Pub. L. 107296. Under the SAFETY Act, providers of anti-terrorism technologies receive certain liability protections once the Secretary of Homeland Security approves the designation of the technologies as qualified anti-terrorism technology. The qualified anti-terrorism technologies designation and approval by the Secretary under Section 863(d) of the SAFETY Act also creates a rebuttable presumption that the government contractor defense applies to the technologies. TSA acknowledges that the contractor intends to seek the designation of some of the products being provided under this contract as qualified antiterrorism technologies. H.30. DEFENSE PRIORITY AND ALLOCATION REQUIREMENT This is a DO-H8 rated order certified for national defense use. Contractor shall follow all the requirements of the Defense Priorities and Allocations System regulation (15 CFR 700). H-14 INVISION TECHNOLOGIES, INC. SOFTWARE LICENSE Where any Product includes software, whether embedded or on a disk or tape or other media, InVision grants to Purchaser a perpetual, non-exclusive, license to use the software portion of such Product, in object code and firmware form only, in connection with Purchaser's use of the Product. InVision retains all right, title and interest in the software portion of the Product, and all improvements, modifications and upgrades (if any) to the software portion of the Product. This license may not be transferred except in connection with the transfer of the Product itself. Purchaser shall not reproduce, decompile or disassemble all or any portion of the software portion of the Products or sub-license, distribute or disclose all or any portion of the software to any third party without InVision's express prior written consent. Purchaser agrees that it shall not exceed, nor permit others to exceed, the scope of the license granted herein. H-15 PART II - SECTION I CONTRACT CLAUSES I.1 3.1-1 CLAUSES AND PROVISIONS INCORPORATED BY REFERENCE) This Screening Information Request (SIR) or contract, as applicable, incorporates by reference one or more provisions or clauses listed below with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make the full text available. (End of provision) 3.1.8-2 Price or Fee Adjustment for Illegal or Improper Activity 3.2.2.3-1 False Statements in Offers 3.2.2.3-8 Audit and Records 3.2.2.3-25 Price Reduction for Defective Cost or Pricing Data 3.2.2.3-29 Integrity of Unit Prices (April 1996) 3.2.2.3-31 Facilities Capital Cost of Money 3.2.2.3-32 Waiver of Facilities Capital Cost of Money 3.2.2.3-37 Notification of Ownership Changes 3.2.2.3-67 Special Precautions for Work at Operating Airports 3.2.2.7-6 Protecting the Government's Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment 3.2.2.8-1 New Material 3.2.5-1 Officials Not to Benefit 3.2.5-3 Gratuities or Gifts 3.2.5-4 Contingent Fees 3.2.5-5 Anti-Kickback Procedures 3.2.5-8 Whistleblower Protection for Contractor Employees 3.2.5-11 Drug Free Workplace 3.3.1-12 Limitation of Cost 3.3.1-15 Assignment of Claims 3.3.1-25 Mandatory Information for Electronic Funds Transfer Payment 3.3.2-1 TSA Cost Principles 3.5-11 Patent Rights - Retention by Contractor (Long Form) 3.5-13/alt 1 Rights in Data - General 3.5-18 Commercial Computer Software - Restricted Rights* 3.6.2-4 Walsh-Healey Public Contracts Act 3.6.2-7 Pre-award On-Site Equal Opportunity Compliance Review 3.6.2-9 Equal Opportunity 3.6.2-12 Affirmative Action for Special Disabled and Vietnam Era Veterans 3.6.2-13 Affirmative Action for Workers with Disabilities 3.6.2-14 Employment Reports on Special Disabled Veterans and Veterans of Vietnam Era

* Applies for any customization or modification made to Contractor software I-1 3.6.3-1 Clean Air and Water 3.6.3-2 Clean Air and Clean Water Certification 3.6.3-10 Certification of Toxic Chemical Release Reporting 3.6.4-2 Buy American Act-Supplies 3.10.1-1 Notice of Intent To Disallow Costs 3.10.1-2 Production Progress Reports 3.10.1-9 Stop-Work Order 3.10.1-11 Government Delay of Work 3.10.1-12 Changes--Fixed-Price 3.10.1-14 Changes--Time and Materials or Labor Hours 3.10.1-24 Notice of Delay 3.10.2-3. Subcontracts (Time-and-Materials and Labor-Hour Contracts) 3.10.2-6. Subcontracts for Commercial Items and Commercial Components 3.10.4-2 Inspection of Supplies--Fixed-Price 3.10.4-5 Inspection--Time-and-Material and Labor-Hour 3.10.4-23 Contractor and Subcontractor Compliance with Fastener Act 3.10.5-1 Product Improvement/Technology Enhancement 3.10.6-1 Termination for Convenience of the Government (Fixed Price) 3.10.6-3/alt4 Termination (Cost-Reimbursement) Alternate IV 3.10.6-4 Default (Fixed-Price Supply and Service) 3.10.6-7 Excusable Delays

I.2 RESERVED I.3 3.1.8-1 CANCELLATION, RECISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR IMPROPER ACTIVITY (a) If the Government receives information that a Contractor or person has engaged in conduct constituting a violation of subsection (a), (b), (c), or (d) of section 27 of the Office of Federal Procurement Policy Act (41 U.S.C. 423) (the Act), as amended by section 4304 of the National Defense Authorization Act for Fiscal Year 1996 (Pub. L. 104-106), the Government may- (1) Cancel the Screening Information Request, if the contract has not been awarded or issued; or (2) Rescind the contract with respect to which- (i) The Contractor or someone acting for the Contractor has been convicted for an offense where the conduct constitutes a violation of subsection 27 (a) or (b) of the Act for the purpose of either- (A) Exchanging the information covered by such subsections for anything of value; or (B) Obtaining or giving anyone a competitive advantage in the award of an TSA procurement contract; or I-2 (ii) The head of the contracting activity has determined, based upon a preponderance of the evidence, that the Contractor, or someone acting for the Contractor has engaged in conduct constituting an offense punishable under subsection 27 (e)(1) of the Act. (b) If the Government rescinds the contract under paragraph (a) of this clause, the Government is entitled to recover, in addition to any penalty prescribed by law, the amount expended under the contract. (c) The rights and remedies of the Government specified herein are not exclusive, and are in addition to any other rights and remedies provided by law, regulation, or under this contract. (End of clause) I.4 3.2.5-12 NOTICE OF EMPLOYMENT OF FORMER UNITED STATES GOVERNMENT EMPLOYEES (SERVICE CONTRACTS) (a) This clause implements the Federal Workforce Restructuring Act of 1994 ("Buyout"), P.L. 103-226. The following requirements apply to any contract, task order, or other arrangement for service contracts entered into after March 30, 1994 and immediately upon knowledge of such arrangements. (b) The offeror shall provide, along with the submittal, the following notice and certification of employment of employee(s) who were previously employed by the United States Government and received the voluntary separation incentive payment ("buyout"). This notice is required immediately upon the Contractor's knowledge at any time during the contract period. The Contractor shall provide notice to employees that in accordance with the buyout legislation, the buyout employee performing on a personal service contract for the Untied States Government is required to repay the buyout incentive. NOTICE OF EMPLOYMENT OF FORMER UNITED STATES GOVERNMENT EMPLOYEES (SERVICE CONTRACTS) The following individuals are former United States Government employees who are presently employed by [company name]. I-3
Employee's former Agency Description of SubContractor Date of Separation Name of Employment Contract Task from Agency - ---- ------------- ------------- ----------- - ---- ------------- ------------- ----------- - ---- ------------- ------------- ----------- - ---- ------------- ------------- -----------
This company has not hired and does not intend to hire any former United States Government employees who took the buyout. Contractor's Certification On behalf of________________________________[company's name] I certify that the above information is accurate and complete to the best of my knowledge. _______________________________________ [Name of Company Representative] Contracting Officer's Certification I have reviewed the above information and have determined that: ______ The buyout legislation has not been violated. ______ The employment is in violation of the buyout legislation and the employee is required to repay the incentive payment. The Contractor shall remind the employee of his/her obligation to pay. _________________________________ [Contracting Officer's Name] _________________________________ Date (End of clause) I.5 RESERVED I.6 3.9.1-1 CONTRACT DISPUTES (a) All contract disputes arising under or related to this contract shall be resolved through the Federal Aviation Administration (FAA) dispute resolution system at the Office of Dispute Resolution for I-4 Acquisition (ODRA) and shall be governed by the procedures set forth in 14 C.F.R. Parts 14 and 17, which are hereby incorporated by reference. Judicial review, where available, will be in accordance with 49 U.S.C. 46110 and shall apply only to final agency decisions. A Contractor may seek review of a final TSA decision only after its administrative remedies have been exhausted. (b) The filing of a contract dispute with the ODRA may be accomplished by mail, overnight delivery, hand delivery, or by facsimile. A contract dispute is considered to be filed on the date it is received by the ODRA. (c) Contract disputes are to be in writing and shall contain: (1) The Contractor's name, address, telephone and fax numbers and the name, address, telephone and fax numbers of the Contractor's legal representative(s) (if any) for the contract dispute; (2) The contract number and the name of the Contracting Officer; (3) Contractor's positions regarding each element or count of the contract dispute (i.e., broken down by individual claim item), citing to relevant contract provisions and documents and attaching copies of those provisions and documents; (4) All information establishing that the contract dispute was timely filed; (5) A request for a specific remedy, and if a monetary remedy is requested, a sum certain must be specified and pertinent cost information and documentation (e.g., invoices and cancelled checks) attached, broken down by individual claim item and summarized; and (6) The signature of a duly authorized representative of the initiating party. (d) Contract disputes shall be filed at the following address: (1) Office of Dispute Resolution for Acquisition, AGC-70, Federal Aviation Administration, 400 7th Street, S.W., Room 8332, Washington, DC 20590, Telephone: (202) 366-6400, Facsimile: (202) 366-7400; or (2) other address as specified in 14 CFR Part 17. (e) A contract dispute against the TSA shall be filed with the ODRA within two (2) years of the accrual of the contract claim involved. A contract dispute by the TSA against a Contractor (excluding contract disputes alleging warranty issues, fraud or latent defects) likewise shall be filed within two (2) years after the accrual of the contract claim. If an underlying contract entered into prior to the effective date of this part provides for time limitations for filing of contract disputes with the ODRA I-5 which differ from the aforesaid two (2) year period, the limitation periods in the contract shall control over the limitation period of this section. In no event will either party be permitted to file with the ODRA a contract dispute seeking an equitable adjustment or other damages after the Contractor has accepted final contract payment, with the exception of TSA claims related to warranty issues, gross mistakes amounting to fraud or latent defects. TSA claims against the Contractor based on warranty issues must be filed within the time specified under applicable contract warranty provisions. Any TSA claims against the Contractor based on gross mistakes amounting to fraud or latent defects shall be filed with the ODRA within two (2) years of the date on which the TSA knew or should have known of the presence of the fraud or latent defect. (f) A party shall serve a copy of the contract dispute upon the other party, by means reasonably calculated to be received on the same day as the filing is to be received by the ODRA. (g) After filing the contract dispute, the Contractor should seek informal resolution with the Contracting Officer. (h) The TSA requires continued performance with respect to contract disputes arising under this contract, in accordance with the provisions of the contract, pending a final TSA decision. (i) The TSA will pay interest on the amount found due and unpaid from (1) the date the Contracting Officer receives the contract dispute, or (2) the date payment otherwise would be due, if that date is later, until the date of payment. Simple interest on contract disputes shall be paid at the rate fixed by the Secretary of the Treasury that is applicable on the date the Contracting Officer receives the contract dispute and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary until payment is made. (j) Additional information and guidance about the ODRA dispute resolution process for contract disputes can be found on the ODRA Website at HTTP://WWW.FAA.GOV. (End of clause) I.7 3.9.1-2 PROTEST AFTER AWARD (a) Upon receipt of a notice that a protest has been filed with the FAA Office of Dispute Resolution, or a determination that a protest is likely, the Administrator or his designee may instruct the Contracting Officer) to direct the Contractor to stop performance of the work called for by this contract. The order to the Contractor shall be in writing, and shall be specifically identified as a stop-work order issued under this clause. Upon receipt of the order, the Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Upon receipt of the final decision or other resolution of the protest, the Contracting Officer shall either-- (1) Cancel the stop-work order; or I-6 (2) for other than cost-reimbursement contracts, terminate the work covered by the order as provided in the "Default" or the "Termination for Convenience of the Government" clause(s) of this contract; or (3) for cost-reimbursement contracts, terminate the work covered by the order as provided in the "Termination" clause of this contract. (b) If a stop-work order issued under this clause is canceled either before or after the final resolution of the protest, the Contractor shall resume work. The Contracting Officer shall make for other than cost-reimbursement contracts, an equitable adjustment in the delivery schedule or contract price, or both; and for cost-reimbursement contracts, an equitable adjustment in the delivery schedule, the estimated cost, the fee, or a combination thereof, and in any other terms of the contract that may be affected; and the contract shall be modified, in writing, accordingly, if-- (1) The stop-work order results in an increase in the time required for, or in the Contractor's cost properly allocable to, the performance of any part of this contract; and (2) The Contractor asserts its right to an adjustment within 30 days after the end of the period of work stoppage; provided, that if the Contracting Officer decides the facts justify the action, the Contracting Officer may receive and act upon a proposal submitted at any time before final payment under this contract. (c) If a stop-work order is not canceled and the work covered by the order is terminated for the convenience of the Government, the Contracting Officer shall allow reasonable costs resulting from the stop-work order in arriving at the termination settlement. (d) If a stop-work order is not canceled and the work covered by the order is terminated for default, the Contracting Officer shall allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop-work order. (e) The Government's rights to terminate this contract at any time are not affected by action taken under this clause. (End of clause) I.8 3.13-6 CONTRACTOR PERSONNEL SUITABILITY REQUIREMENTS (a) Definitions. (1) Access - In general the term "access' is defined as the ability to physically enter or pass through an TSA area or a facility; or having the physical ability or authority to obtain TSA sensitive information, materials or resources. In relation to classified information, the ability, authority or opportunity to obtain knowledge of such information or materials. (2) Classified information - means official information or material that requires protection in the interest of national security and is classified for such purpose by appropriate classification I-7 authority in accordance with the provisions of Executive Order 12958, Classified National Security Information, in accordance with the provisions of Executive Order 12968, Access to Classified. (3) Contractor employee as used for personnel security - any person employed as or by a Contractor, subcontractor or consultant in support of the TSA. (4) TSA Facility as it applies to personnel security - any manned or unmanned building, structure, warehouse, appendage, storage area, utilities, and components, which, when related by function and location form an operating entity owned, operated, or controlled by the TSA. (5) Operating Office - a TSA line of business, an office or service in TSA headquarters, or a TSA division level organization in a region or center. (6) Resources - TSA resources includes a physical plant, information databases including hardware and software, as well as manual records pertaining to agency mission or personnel. (7) Sensitive Information - any information which if subject to unauthorized access, modification, loss, or misuse could adversely affect the national interest, the conduct of Federal programs, or the privacy to which individuals are entitled under Section 552a of Title 5, United States Code (the Privacy Act), but which has not been specifically authorized under criteria established by an Executive Order or an Act of Congress to be kept secret in the interest of national defense or foreign policy. Sensitive data also includes proprietary data. (8) Servicing Security Element - the TSA headquarters, region, or center organizational element, which is responsible for providing security services to a particular activity. (b) This clause applies to the extent that this contract requires Contractor employees, subcontractors, or consultants to have access to: (1) TSA facilities, (2) sensitive information, and/or (3) resources regardless of the location where such access occurs, and none of the requirements and exceptions listed in Appendix 9, paragraph 8 of FAA Order 1600.1D pertain. (c) Consistent with Appendices 3 and 9 of FAA Order 1600.1D, the TSA Servicing Security Element (SSE) has approved designated risk levels for the following positions under the contract:
Position Risk Level -------- ---------- Program Manager 5 Production Manager 1 Lead System Engineer 1 Lead Software Engineer 1 Quality Manager 1 Configuration Control Manager 1
(d) Not later than 30 days after contract award (or date of modification, if this provision is included by modification to an existing contract), for each employee in a listed position, provided, no previous I-8 background investigations can be supported as described below, the Contractor shall submit the following documentation to the SSE for an employment suitability determination. - - Standard form (SF) 85P, Questionnaire for Public Trust Positions, revised September 1995. The SF 85P shall be completed (all questions answered) in accordance with the instruction sheet. - - One single sheet fingerprint chart (FD-258). Fingerprinting facilities are available through the SSE and local police department. All fingerprint charts shall be written in ink or typewritten with all answerable question blocks completed, and shall be signed and dated within the 60 day period preceding the submission. The type of investigation conducted will be determined by the position risk level designation for all duties, functions, and/or tasks performed and shall serve as the basis for granting a favorable employment suitability authorization as described in Appendix 9 of FAA Order 1600.1D. If an employee has had a previous background investigation completed by a federal Government entity, which meets the requirements of Chapter 7 of FAA Order 1600.1D, it will be accepted by the TSA, however, the TSA reserves the right to conduct further investigations, if necessary. for each employee for whom a previous background investigation was completed the Contractor shall provide, in writing to the SSE, the name, date of birth, place of birth, and social security number of the employee, the name of the investigating entity and approximate date the previous background investigation was completed. The Contractor shall submit the required information with a transmittal letter referencing the contract number and this request to: Headquarters Contracts: Manager, Investigations Division, TSA Regional and Center Contracts: NONE The transmittal letter shall also include a list of the names of employees and their positions for which completed forms were submitted to the SSE pursuant to this Clause. A copy of the transmittal letter shall also be provided to the Contracting Officer. (e) The Contractor shall submit the information required by Section (d) of this Clause for any new employee not listed in the Contractor's initial thirty (30) day submission who is hired into any position identified in Section (c) of this Clause. (f) No Contractor employee shall work in a high, moderate, or low risk position unless the SSE has received all forms necessary to conduct any required investigation and has granted its approval of the forms. However, if this provision is added by modification to an existing contract, Contractor employees performing in the positions listed above may continue work on the contract pending: I-9 (1) the submittal of all necessary forms within [CO to insert information] days, but not to exceed a maximum of 30 days, and (2) completion of a suitability investigation by the SSE, subject to the following conditions: (State any SSE conditions such as restricted access to sensitive information or facilities. Specify information or facilities. If the SSE imposes no conditions, state "None"). If the necessary forms are not submitted by the Contractor to the SSE within 30 days of the effective date of the modification, the Contractor employee shall be denied access to TSA facilities, sensitive information and/or resources until such time as the forms are submitted. (g) As applicable, the Contractor shall submit quarterly reports providing the following information to the Contracting Officer with a copy to the SSE and the Operating Office on or before the fifth day following each report period: A complete listing by full name in alphabetical order with the social security number, of all Contractor personnel who had access to an TSA facility, sensitive information and/or resources anytime during the report period (date of birth and social security number shall be omitted from CO and Operating Office copies of report(s)). (h) The Contractor shall notify the CO within one (1) day after any employee identified pursuant to Section (c) of this Clause is terminated from performance on the contract. (i) The Contracting Officer may also, after coordination with the SSE and other security specialists, require Contractor employees to submit any other security information (including additional fingerprinting) deemed reasonably necessary to protect the interests of the TSA. In this event, the Contractor shall provide, or cause each of its employees to provide such security information to the SSE, and the same transmittal letter requirements of Section (d) of this Clause shall apply. (j) Failure to submit information required by this clause within the time required may be determined by the Contracting Officer a material breach of the contract. (k) If subsequent to the effective date of this contract, the security classification or security requirements under this contract are changed by the Government and if the changes cause an increase or decrease in security costs or otherwise affect any other term or condition of this contract, the contract shall be subject to an equitable adjustment as if the changes were directed under the Changes clause of this contract. (l) The Contractor agrees to insert terms that conform substantially to the language of this clause, including this paragraph (I) but excluding any reference to the Changes clause of this contract, in all subcontracts under this contract that involve access and where the Appendix 9, paragraph 8 requirements and exceptions do not apply. (End of clause) I-10 I.9 QUALIFICATIONS OF EMPLOYEES The Contracting Officer will provide notice to the Contractor when any Contractor employee is found to unsuitable or otherwise objectionable, or whose conduct appears contrary to the public interest, or inconsistent with the best interest of national security. The Contractor shall take appropriate action, including the removal of such employees from working on this TSA contract, at their own expense. The Contractor agrees to insert terms that conform substantially to the language of this clause in all subcontracts under this contract. (End of clause) I.10 3.13-8 FOREIGN NATIONALS AS CONTRACTOR EMPLOYEES Each employee of the Contractor who have access to EDS data, shall be a citizen of the United States of America, or an alien who has been lawfully admitted for permanent residence as evidenced by Alien Registration Receipt Card form I-151, or who presents other evidence from the Immigration and Naturalization Service that employment will not affect his/her immigration status. (End of clause) I-11 PART III - SECTION J LIST OF ATTACHMENTS J.1 Standalone Explosive Detection System Procurement Specification, STDO- EDS-002A 22 July 2003 J.2 Integrated Explosive Detection System Procurement Specification, STDO- EDS-001B 22 July 2003 J.3 Program Management Plan (PMP) - CDRL A001 J.4 Integrated Support Plan (ISP) - CDRL A008 J.5 Quality System Plan (QSP) - CDRL A010 J.6 Configuration Management Plan (CMP) -CDRL A011 J.7 Master Test Plan (MTP) - CDRL A021 J.8 Subcontracting Plan J-9 Manuals and Training Materials J.10 Description of CDRL and DID forms (Requirements/instructions) J.11 CDRL Data Items and DIDs J.12 Contractor's Warranty (To be included at contract award) J.13 Scheduled Preventive Maintenance J.14 Quality Assurance Surveillance Plan (QASP)

I-1 J.12 Contractor's Warranty INVISION TECHNOLOGIES, INC LIMITED WARRANTY. A) DEFECTS WARRANTY. InVision warrants that for a period of [***] ("the Warranty Period") the Products: 1) will be free from defects in materials and workmanship; and 2) will substantially conform to the product specifications published by InVision at the time of Delivery. B) INFRINGEMENT WARRANTY. InVision warrants that the Purchaser's use of the Products in accordance with InVision's instructions (absent any modifications by the Purchaser) and not in combination with any other product will not: (1) infringe any United States patent, trademark or copyright; or (2) constitute misappropriation of any trade secret. C) PURCHASER OPERATION. InVision's warranty obligations are conditioned upon Purchaser operating the Products in accordance with InVision's instructions, and performing Operator Maintenance including daily inspections and software tool resets. D) NOTICE. InVision's warranty obligations are conditioned upon Purchaser's notice of claims, as set forth herein. Purchaser shall notify InVision of any alleged defect, non-conformance or infringement or misappropriation claim within ten (10) days of discovery. Purchaser shall provide InVision a reasonable opportunity to inspect the Products. Purchaser shall allow InVision to reasonably assist in the defense of any infringement or misappropriation claim. E) EXCLUSIONS. This warranty is conditioned upon the proper use of the Products, and will not apply to Products that have been: 1) improperly stored, installed, operated, serviced, maintained or repaired; 2) modified without InVision's prior written consent; or 3) damaged by negligence, accident, fire, power failure, power surge, or other hazard. F) EXCLUSIVE REMEDY. Any Product which InVision finds to be defective or non-conforming during the Warranty Period will be repaired or replaced at Purchaser's facility or InVision's facility, as InVision shall determine in its sole discretion. Repair or replacement does not extend the warranty period beyond the stated Warranty Period. If Purchaser's use of any Product is enjoined or restricted as a result of an Infringement Claim, InVision will at a commercially reasonable cost secure for Purchaser the right to use the Product in accordance with the terms of this Agreement. If InVision cannot secure the right to use at a commercially reasonable cost, then InVision may, at its option, replace the Product or remove the Product and refund the Purchase Price less depreciation calculated using a five-year straight line depreciation schedule. THE ABOVE REMEDY IS PURCHASER'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE FOREGOING WARRANTIES. G) DISCLAIMER. THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING TITLE, NONINFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WHICH EXTEND BEYOND THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT. SC-2 SUPPORT AND MAINTENANCE. During the Warranty Period, InVision will provide the following support and maintenance: [***] * Confidential treatment requested. I-2 J.14 Quality Assurance Surveillance Plan (QASP) The items of equipment to be provided under this agreement are commercial items that may be modified by the Contractor to meet the particular technical requirements described in the Quality Assurance Surveillance Plan (QASP) below. Contractor has offered to provide the additional features for the estimated additional prices, and per the estimated delivery dates, stated in the QASP because the modifications are anticipated to be minor. Contractor will propose detailed specifications, cost estimates and delivery schedules for these additional features. If the government does not order the modifications within nine months after award of contract, the Contractor shall be relieved from the particular technical requirements. QASP for SA and Integrated EDS
EDS Date Specification available Additional Paragraph Paragraph Title Model to order Price InVision Remarks --------- --------------- ----- -------- ----- ---------------- 3.1.1.6; C.1; Threat Image All [***] [***] InVision CTX systems include at TIP engine to project C.2; Projection (TIP) test images, and record the results, in accordance with C3.2(c)(4); Function; Remote InVision specifications and FAA specifications in C3.3(b) Uploading; TIP bag ID previous contracts. Currently, the TSA has not gathered format; TIP images new TIP images. The requirement to upload TIP images is upload contingent upon the completion of Automated Data Collection (see 3.1.1.5); See also section 3.1.1.4 for use of RFDRS for TIP reporting. 3.1.1.7 On the Job Training 2500/ [***] [***] The current CTX 2500/5500 systems do not have (OJT)/ Operator 5500 specialized OJT/OQT software built in, but certain Qualification Test training and testing functions are available on the (OQT) standalone Training Simulator. The TSA should further evaluate the proposed equipment to determine if OJT/OQT is needed in the actual EDS, on only in the simulator. 9000 [***] [***] The current CTX 9000 systems do not have specialized OJT/OQT software built in, but certain training and testing functions will shortly be available on the standalone Training Simulator. The TSA should further evaluate the proposed equipment to determine if OJT/OQT is needed in the actual EDS, on only in the simulator. 3.2.1.8 Alarm Indicator Light All [***] [***] The specification calls for flashing or steady white - light is on, lights. The current InVision visible alarm uses steady flashing, red, yellow and green lights. The TSA should evaluate or off depending on the proposed equipment to determine if new units should suspect state of bag. have a different warning method than deployed units, and if the TSA is going to order and pay for the retrofitting of deployed units. Also, the current InVision alarm lights comply with the warning lights specified in Human Factors Design Guide DOT/FAA/CT-96/1, Section 7.2.2.3.3, and the specified white lights do not. C3.2(c) Content of a TIP All [***] [***] InVision understands that the TIP libraries will be (1),(2) library Government Furnished. and (3)
* Confidential treatment requested. I-3
EDS Date Specification available Additional Paragraph Paragraph Title Model to order Price InVision Remarks --------- --------------- ----- -------- ----- ---------------- ~~C.3.5 (3); Scheduling TIP All [***] [***] C.3.5(a)-(g) remotely from the FAA server~~
* Confidential treatment requested. I-4 TABLE OF CONTENTS
SECTION PARAGRAPH PAGE - ------- --------- ---- 1 SCOPE.................................................................... 1 1.1 Objectives............................................................... 1 1.2 Definitions.............................................................. 1 2 APPLICABLE DOCUMENTS..................................................... 1 2.1 Government Documents..................................................... 1 2.2 Military Standards....................................................... 2 2.3 Other Documents.......................................................... 2 2.4 Source of Documents...................................................... 2 2.5 Order of Precedence...................................................... 3 3.0 REQUIREMENTS............................................................. 3 3.1 Program Management....................................................... 4 3.1.1 Program Management Organization........................................... 4 3.1.1.1 System Engineering Management............................................ 4 3.1.1.2 Software Engineering Management.......................................... 5 3.1.1.3 Risk Management/Assessment............................................... 5 3.1.1.4 Requirements Management.................................................. 5 3.1.2 Program Control........................................................... 5 3.1.2.1 Equipment Database....................................................... 6 3.1.2.2 Program Trouble Report Database.......................................... 6 3.1.2.3 Program Document Library................................................. 6 3.1.2.4 Accession Data........................................................... 6 3.1.3 Subcontractor Management.................................................. 7 3.1.4 Integrated Logistics Support Management................................... 7 3.1.4.1 ILS Program Planning..................................................... 7 3.1.5 Post Award Conference..................................................... 7 3.2 Quality Program.......................................................... 7 3.2.1 Quality Assurance......................................................... 7 3.2.2 Quality Assessment........................................................ 8 3.3 Configuration Management Program......................................... 8 3.3.1 Configuration Management.................................................. 8 3.3.1.1 Configuration Management Plan............................................ 8 3.3.1.1.1 Configuration Baselines.................................................. 8 3.3.2 Configuration Identification.............................................. 9 3.3.3 Configuration Control..................................................... 9 3.3.3.1 Engineering Change Proposals (ECPs)...................................... 9 3.3.3.2 Request for Deviation (RFD).............................................. 9 3.3.3.3 Request for Waiver (RFW)................................................. 9 3.3.4 Configuration Status Accounting........................................... 10 3.3.5 Configuration Audits...................................................... 10 3.3.5.1 Functional Configuration Audit........................................... 10 3.3.5.2 Physical Configuration Audit............................................. 10 3.4 Meeting and Reviews...................................................... 10 3.4.1 Program Management Reviews................................................ 11
C-1 TABLE OF CONTENTS
SECTION PARAGRAPH PAGE - ------- --------- ---- 3.4.2 Technical Interchange Meetings (CLIN 0004)................................ 11 3.5 System Design............................................................ 11 3.5.1 Hardware.................................................................. 11 3.5.1.1 Stand Alone (SA) EDS (CLIN 0001)......................................... 12 3.5.1.2 Integrated EDS........................................................... 12 3.5.1.2.1 Integrated EDS - High Speed (CLIN 0002).................................. 12 3.5.1.2.2 Integrated EDS - Medium Speed (CLIN 0003)................................ 12 3.5.2 Software.................................................................. 12 3.5.2.1 Software Metrics......................................................... 13 3.5.2.2 Software Program Trouble Report.......................................... 13 3.6 System Refresh, Upgrade, and Technology Infusion......................... 13 3.7 Test and Evaluation (T&E)................................................ 13 3.7.1 Test and Evaluation Program............................................... 13 3.7.1.1 General Test Program Requirements........................................ 14 3.7.1.2 General Test Requirements................................................ 15 3.7.1.3 Test Readiness Review.................................................... 15 3.7.1.4 Test and Evaluation Planning............................................. 15 3.7.1.4.1 First Article Test and Evaluation........................................ 16 3.7.1.4.1.1 First Article Test and Evaluation Plan................................... 16 3.7.1.4.2 Contractor Certification of Underwriter's Lab Conformance............... 16 3.7.1.4.3 Factory Acceptance Test................................................. 17 3.7.1.4.3.1 Factory Acceptance Test Plan............................................. 17 3.7.1.4.3.2 Factory Acceptance Test Procedures and Reports .......................... 17 3.7.1.4.4 Site Acceptance Test..................................................... 17 3.7.1.4.4.1 Site Acceptance Test Plan................................................ 17 3.7.1.4.4.2 Site Acceptance Test Procedures and Reports.............................. 18 3.8 Technical Manuals........................................................ 18 3.9 Site Installation for CLINs 0001, 0002 and 0003.......................... 19 3.9.1 Site Installation Support................................................. 19 3.9.2 Site Installation Engineering (CLIN 3000)................................. 19 3.9.2.1 Government Site Manager/Representative................................... 19 3.9.2.2 Site Coordination........................................................ 20 3.9.2.3 Site Installation Engineering............................................ 20 3.9.2.4 Site Surveys and Site Survey Reports..................................... 20 3.9.2.5 Site Installation Plan................................................... 21 3.9.2.5.1 Multiple Site Surveys.................................................... 21 3.9.2.6 Equipment Installation................................................... 21 3.9.2.7 Equipment Relocation..................................................... 21 3.9.2.8 Equipment Removal........................................................ 22 3.9.3 First Article Units....................................................... 22 3.10 Security................................................................. 22 3.11 (Reserved)............................................................... 23 3.12 Equipment (CLIN 0005).................................................... 23 3.12.1 Powered Incline Conveyor (CLIN 0005A)..................................... 23 3.12.2 Powered Flat Conveyor (CLIN 0005B)........................................ 23
C-2 TABLE OF CONTENTS
SECTION PARAGRAPH PAGE - ------- --------- ---- 3.12.3 Baggage Exit Slide (CLIN 0005C)........................................... 23 3.12.4 Luggage Positioning Adapter (CLIN 0005D).................................. 23 3.12.5 Standalone Training Simulator (CLIN 0005E) (Medium Speed EDS)............. 23 3.12.7 Programmable Logic Control (PLC) (CLIN 0005G)............................. 24 3.12.8 Remote Image Replay (CLIN 0005H).......................................... 24 3.12.9 BVS Remoting Kit (CLIN 0005I)............................................. 24 3.12.10 Multiplex Operation (CLIN 0006)........................................... 24 3.12.10.1 Multiplex Network (CLIN 0006A)........................................... 25 3.12.10.2 Additional TRI workstation (CLIN 0006B).................................. 25 3.12.10.3 PTRI workstation (CLIN 0006C)............................................ 25 3.12.10.4 Additional Control Interface Workstation (CLIN 0006D)................... 25 3.12.10.5 Network Printer (CLIN 0006E)............................................. 25 3.13 EDS System Warranty For CLINs 0001, 0002, 0003 and Associated Equipment... 25 3.13.1 Scheduled/Preventive Maintenance.......................................... 26 3.13.2 Unscheduled Maintenance................................................... 26 3.14 Engineering Support Services (CLIN 3000).................................. 26 4 ACRONYMS ................................................................. 27 5 TABLE OF CONTRACT DATA REQUIREMENTS LIST.................................. 29
C-3 EX-10.2 8 f94131orexv10w2.txt EXHIBIT 10.2 Exhibit 10.2 ORDER FOR SUPPLIES OR SERVICES PAGE OF PAGES 1 6 IMPORTANT: Mark all packages and papers with contract and/or order numbers 1. DATE OF ORDER 7/31/03 2. CONTRACT NO. IF ANY DTSA20-03-C-01900 3. DATE REQUESTED 4/01/03 4. REQUESITION/REFERENCE NO. TSA-03-015-245 and TSA-03-015-269 5. ISSUING OFFICE Address Correspondence to TSA/HDO 6. SHIP TO: a. NAME OF CONSIGNEE ED OCKER b. STREET ADDRESS 590 HERNDON PKWY c. CITY HERNDON d. STATE VA e. ZIP CODE 20170 f. SHIP VIA FOB ORIGIN 7. TO: a. NAME OF CONTRACTOR INVISION TECHNOLOGIES b. COMPANY NAME INVISION TECHNOLOGIES c. STREET ADDRESS 7157 GATEWAY BLVD d. CITY NEWARK e. STATE CA f. ZIP CODE 94560 8. TYPE OF ORDER [ ] a. PURCHASE REFERENCE YOUR: ________________________ Please furnish the following on the terms and conditions specified both sides of the sheet, if any, including delivery as indicated. [x] b. DELIVERY Except for billing instructions on the reverse, this delivery order is subject to instructions contained on this side only of this form and is issued subject to the terms and conditions of the above numbered contract. 9. ACCOUNTING AND APPROPRIATION DATA SEE BLOCK 17 10. REQUISITION OFFICE TRANSPORTATION SECURITY ADMINISTRATION 11. BUSINESS CLASSIFICATION (Check appropriate boxes)) [ ] a. SMALL [ ] b. OTHER THAN SMALL [ ] c. DISADVANTAGED [ ] d. WOMEN-OWNED 12. F.O.B. POINT ORIGIN 13. PLACE OF a. INSPECTION CA b. ACCEPTANCE CA 14. GOVERNMENT B/L NO. 15. DELIVER TO F.O.B. POINT ON OR BEFORE (Date) 12/31/2004 16. DISCOUNT TERMS NET 30 17. SCHEDULE (See reverse for Rejections)
QUANTITY UNIT PRICE AMOUNT ITEM NO. SUPPLIES OR SERVICES ORDERED UNIT (IN DOLLARS) (IN DOLLARS) QUANTITY (a) (b) (c) (d) (e) (f) ACCEPTED SEE ATTACHED DELIVERY ORDER DTSA20-03-F-19001 ACCOUNTING CODE: PR#03-015-245 05X0508200-2003-102FDEPA13-2F40000000-31673 [***] ACCOUNTING CODE: PR#03-015-269 05X0508200-2003-102FDEPA14-2F40000000-25305 [***] SEE BILLING 18. SHIPPING POINT 19. GROSS SHIPPING WEIGHT 20. INVOICE NO. INSTRUCTIONS ON REVERSE 21. MAIL INVOICE TO: a. NAME Terri King, Accounts Payable, AMZ-110 $54,800,000.00 17(H) Total (Cont. pages) b. STREET ADDRESS (or PO Box) $54,800,000.00 17(I) GRAND TOTAL 6500 S. MacArthur Blvd #370 c. CITY d. STATE e. ZIP CODE Oklahoma City OK 73169 22. UNITED STATES OF 23. NAME (Typed) AMERICA BY (Signature) JOHN J. HANDRAHAN /s/ John J. Handrahan TITLE CONTRACTING/ORDERING OFFICER
* Confidential treatment requested. Delivery Order DTSA20-03-F-19001 Contract DTSA20-03-C-01900 DELIVERY ORDER DO#1 Contract No. DTSA20-03-C-01900 The purpose of this Delivery Order is to order [***] Integrated Explosives Detection Systems (EDS), and engineering services to support the integration of CTX-9000 and CTX-5500 in accordance with Contract number DTFA01-03-C-01900. Items authorized under this Delivery Order are prescribed herein. 1. Section B The Contractor shall provide the following supplies and services in accordance with the terms and conditions of this letter contract. The following line item(s) will be ordered in accordance with the contract amounts set forth below.
CLIN TITLE QUANTITY UNIT PRICE TOTAL - ---- ----- -------- ---------- ----- 0002 High Speed Integrated EDS Unit [***] [***] [***] (CTX-9000DSi) [***] [***] [***] 0006A - Multiplex Network 0006C PTRI workstation [***] [***] [***] 0006E Network Printer [***] [***] [***] TOTAL ORDERED [***]

TIME AND MATERIALS CLIN LABOR CATEGORY HOURS COST/HOUR TOTAL (NTE) 3000 Field Service Engineer [***] [***] [***] Project Manager [***] [***] [***] System Engineer [***] [***] [***] (Test) technician [***] [***] [***] Travel/Per Diem [***] [***] [***] Shipping [***] [***] [***] Estimated Materials [***] [***] [***] Other Direct Costs [***] [***] [***] TOTAL TIME AND MATERIALS [***] ORDERED
2. Funding: Funding in the amount of $54,800,000.00 is hereby authorized under this Delivery Order, under the provisions set forth below: 3.2.4-22 Limitation of Government Liability (April 1996) (a) In performing this contract, the Contractor is not authorized to make expenditures or incur obligations exceeding $54,800,000.00. (b) The maximum amount for which the Government shall be liable if this contract is terminated is $54,800,000.00. Expenditures above the maximum amount are not authorized, and are at In Vision's own risk. (End of clause) * Confidential treatment requested. Delivery Order DTSA20-03-F-19001 Contract DTSA20-03-C-01900 3.Section C The Contractor shall deliver the supplies and services associated with the above CLINs in accordance with the Statement of Work in Contract DTSA20-03-C-01900. Services: The contractor shall supply the manpower and materials necessary to provide engineering and technical support on an as-needed basis. Descriptions of this support include, but are not limited to, the following: 1) Site-specific engineering services to support the integration of the CTX-9000 and CTX-5500. This support will allow the contractor to respond to site-specific, non-standard deployment requirements beyond what is covered with typical installation. An example of this support would include the manpower and hardware associated with the installation of remote console locations for the CTX 5500s. 2) Engineering support for the implementation of multiplexing of the CTX 9000 units. 3) Support for redeployment of EDS equipment, where not covered by the system integrator. This may include both the disassembly and reassembly of redeployed units. 4) Technical support for TSA training to include upon request review of TSA training curriculum pertaining to CTX equipment, and auditing of TSA-provided training classes. 5) Refurbishment of out-of-warranty CTX units. 6) Maintenance of out-of-warranty CTX simulators 4. Section F The CLINS are to be delivered to the following locations (TBD locations will be supplied upon completion of FAA site surveys.
DATE OF PLACE OF PLACE OF ITEM NO. SUPPLY/SERVICE QTY DELIVERY DELIVERY ACCEPTANCE - -------- -------------- --- -------- -------- ---------- 0002 High Speed Integrated EDS Unit [***] [***] FOB ORIGIN (CTX-9000Dsi) 0002 High Speed Integrated EDS Unit [***] [***] FOB ORIGIN (CTX-9000Dsi) 0002 High Speed Integrated EDS Unit [***] [***] FOB ORIGIN (CTX-9000Dsi) 0002 High Speed Integrated EDS Unit [***] [***] FOB ORIGIN (CTX-9000Dsi)
b. Period of Performance The Period of Performance for this order is from the date of award through December 31, 2004. *Confidential treatment requested. Delivery Order DTSA20-03-F-19001 Contract DTSA20-03-C-01900 5. Section G a) The following administration data applies to this order: Contracting Officer Transportation Security Administration Jack Handrahan 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7125 Fax (703) 707-5675 Contracting Officer's Technical Representative (COTR) Transportation Security Administration Ed Ocker 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7104 Fax (703) 707-5675 b. This Delivery Order is funded in the amount of $54,800,000. This amount is considered the contract ceiling. Unless modified by the Contracting Officer in writing, the Contractor may not exceed this ceiling except at its own risk. c. The Contractor shall submit to the Contracting Officer the serial numbers/ID numbers for each system delivered under this Delivery Order, at least one week. prior to, but no later than, delivery of the system. 6. Section H - Special Terms and Conditions The following terms apply to this Delivery Order, number DTFA01-03-01900 only. (1) In the event the Contractor fails to meet the delivery schedule as provided herein, such failure will be considered in accordance with the Termination for Default clause (AMS 3.10.6-4(1996)). (2) The Contractor shall execute and perform all terms and conditions of the License Agreement contained in the Letter Contract under which this Delivery Order is executed. Failure to adhere to the licensing agreement may result in the Government terminating the contract for default pursuant to the Termination for Default clause (AMS 3.10.6-4(1996)). (3) Payment Terms: For CLIN 0002 Production Units. 50% of the CLIN price upon order for long lead items. 40% of the CLIN price at satisfactory completion of Factory Acceptance Test. Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. Delivery Order DTSA20-03-F-19001 Contract DTSA20-03-C-01900 10% of the CLIN price at satisfactory completion of Site Acceptance Test of the unit in its integrated system. Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. 7. Defense Priority and Allocation Requirement The Contractor shall follow all the requirements of the Defense Priorities and Allocations System regulation (15 Code of Federal Regulations Part 700). END OF DELIVERY ORDER EX-10.3 9 f94131orexv10w3.txt EXHIBIT 10.3 . . . Exhibit 10.3 1. CONTRACT ID CODE PAGE OF 144 AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 1 2. AMENDMENT/MODIFICATION NO. 3. EFFECTIVE DATE 4. REQUISITION/PURCHASE NO. 5. PROJECT NO. (If applicable) 0002 05/15/02 various S6. ISSUED BY CODE 7. ADMINISTERED BY (If other than Item 6) CODE US Department of Homeland Security US Department of Homeland Security Transportation Security Administration Transportation Security Administration 590 Herndon Parkway, Suite 120 590 Herndon Parkway, Suite 120 Herndon, Va. 20170 Herndon, Va. 20170 8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State, and Zip Code) 9A. AMENDMENT OF SOLICITATION NO. InVision Technologies, Inc 7157 Gateway Blvd 9B. DATED (SEE ITEM 11) Newark, CA 94560 10A. MODIFICATION OF CONTRACT/ORDER NO. CODE FACILITY CODE DTFA01-02-C-00023

11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers found.[ ] is extended, is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing Items 8 and 15, and returning ___________ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. 12. ACCOUNTING AND APPROPRIATION DATA (If required) See various Delivery Orders 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. A. THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. B. THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C. THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: D. OTHER (Specify type of modification and authority) E. IMPORTANT: Contractor is required to sign this document and return five (5) copies to the issuing office. 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.) THE PURPOSE OF THIS MODIFICATION IS TO DEFINITIZE THE LETTER CONTRACT DATED FEB 19, 2002. THIS DOCUMENT REPRESENTS THE AGREEMENT OF THE PARTIES CONCERNING THE DEFINITIZATION FROM THE LETTER CONTRACT TO A FULLY INTEGRATED DOCUMENT. Except as provided herein, all terms and conditions of the document referenced in Item 9A or 10A, as heretofore changed, remains unchanged and in full force and effect. 15A. NAME AND TITLE OF SIGNER (Type or print) 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) David Pillor Senior VP John J. Handrahan, Contracting Officer 15B. CONTRACTOR/OFFEROR 15C. DATE SIGNED 16B. UNITED STATES OF AMERICA 16C. DATE SIGNED /s/ DAVID PILLOR 6 Sept 03 BY /s/ JOHN J. HANDRAHAN 6 Sept 03 - -------------------------- ---------------------------- (Signature of person (Signature of Contracting Officer) authorized to sign) PREVIOUS EDITION UNUSABLE STANDARD FORM 30 (Rev. 10-83) Prescribed by GSA FAR (48 CFR) 53.243

PART I - SECTION B SUPPLIES/SERVICES & PRICE/COST B.1 IDENTIFICATION OF SUPPLIES/SERVICES The Contractor shall provide the following supplies and services in accordance with the terms and conditions of this contract. The period of the contract is date of contract award through 36 months thereafter. All Contract Line Item Numbers (CLINs) will be activated by means of delivery orders or task orders. B.2 TYPE OF CONTRACT This is a firm fixed price contract with indefinite delivery/indefinite quantity (IDIQ) and time and material (T&M) Contract Line Item Numbers (CLINs). Delivery/Task orders will be issued for all equipment and service orders. B.3 INDEFINITE QUANTITY CONTRACT - MINIMUM AND MAXIMUM AMOUNT During the period of performance of this contract, the Government shall provide to the Contractor one or more delivery orders. The minimum price of the delivery orders shall be at least [***], (cost of the CLINS listed in B.4.1 below) when all orders are added together. The maximum ceiling price for all orders established under this contract shall not exceed [***], (excluding T&M orders), unless the contract is modified by the Contracting Officer. The government is not obligated to order more than the minimum stated amount under this contract. B.4 CONTRACT LINE ITEM NUMBERS (CLINS) The following line items will be ordered in accordance with the contract amounts set forth below. B.4.1 INDEFINITE DELIVERY/INDEFINITE QUANTITY (IDIQ) CLINS (EFFECTIVE ORDERING PERIOD - DATE OF CONTRACT AWARD THROUGH 36 MONTHS THEREAFTER)
MINIMUM MAXIMUM UNIT CLIN DESCRIPTION QUANTITY* QUANTITY UNIT PRICE TOTAL RF-01B Technical Data Package (TDP) [***] [***] EA [***] Facilitation and factory training RU-01 Manufacture Ramp Up [***] [***] EA [***] [***]
* Confidential treatment requested. B-1
MINIMUM MAXIMUM UNIT CLIN DESCRIPTION QUANTITY* QUANTITY UNIT PRICE TOTAL ---- ----------- --------- -------- ---- ----- ----- 0001A* Pass Through SA EDS Unit (CTX-2500) [***] [***] [***] w/powered inclined conveyor and baggage exit slide/conveyor (See specification 3.1.2) [***] EA [***] [***] EA [***] [***] EA [***] 00A1A Parts Kits for SA EDS Unit [***] [***] EA [***] (CTX-2500) w/powered incline conveyor and baggage exit slide/conveyor 00005 Standalone Training Simulator [***] [***] EA [***] [***] 0005E Programmable Logic Controller [***] [***] EA [***] [***] 0005F Luggage Positioning Adapter [***] [***] EA [***] [***] 0006A* Pass Through SA EDS Unit (CTX-5500) [***] [***] [***] w/powered inclined conveyor and baggage exit slide/conveyor (See specification 3.1.2) [***] EA [***] [***] EA [***] [***] EA [***] 00A6A Parts Kits for SA EDS Unit [***] [***] EA [***] (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor
* Confidential treatment requested. B-2
MINIMUM MAXIMUM UNIT CLIN DESCRIPTION QUANTITY* QUANTITY UNIT PRICE TOTAL 0007 Integrated EDS Unit (CTX 9000DSi) [***} [***] EA [***] [***] (See specification 3.1.2) 0008 QASP Items (Ref clause J.14) 0008A [***] Mulltiplexing [***] [***] EA [***] [***] 0008B [***] Mulltiplexing [***] [***] EA [***] [***] 0008C [***] Mulltiplexing [***] [***] EA [***] [***] 0008D [***] Passive Threat Resolution WorkstationsI [***] [***] EA [***] [***] 0008E [***] Mulltiplexing [***] [***] EA [***] [***] 0008F [***] Selectee Bag [***] [***] EA [***] [***] 0008G [***] High Speed Integrated EDS (CTX 9000) Integration [***] [***] EA [***] [***] 0008H Remote Image Replay/Archiver [***] [***] EA [***] [***] 0008I Refurbishments w/o wty [***] [***] EA [***] [***] 0008J UL Conformance [***] [***] EA [***] [***] 0008K Automated Data Collection [***] [***] EA [***] [***] 0008L Three try logon [***] [***] EA [***] [***] 0008M Human Factors New GUI [***] [***] EA [***] [***] 0008N Threat tracking [***] [***] EA [***] [***] 0008O Radiation Survey Mode [***] [***] EA [***] [***] 0008P Print format [***] [***] EA [***] [***] 0008Q Feedback to Operator [***] [***] EA [***] [***] 0008R MuX Development [***] [***] EA [***] [***]
*Minimum Quantities were ordered under Delivery Order DTFA01-02-F-23002 and DTFA01-02-F-23003 under the letter contract. B.4.2 RESERVED B.4.3 RESERVED * Confidential treatment requested. B-3 B.4.4 TIME AND MATERIALS (T&M) CLIN 3000 (EFFECTIVE ORDERING PERIOD - DATE OF CONTRACT AWARD THROUGH 36 MONTHS THEREAFTER) CLIN 3000 will be used in the event that engineering support or installation services are ordered pursuant to Statement of Work, Section C 3.15.
CLIN DESCRIPTION UNIT HOURLY RATE HOURLY RATE HOURS TOTAL (BASE PERIOD) (OPTION PERIOD) CEILING CEILING 3000 Labor Categories (Ref. Section B.4.4.1) Field Service Engineer HR [***] [***] [***] [***] Design Engineer HR [***] [***] Document Specialist/Tech Writer HR [***] [***] Sr. Document Spec HR [***] [***] Drafter HR [***] [***] Manufacturing HR [***] [***] Program Manager HR [***] [***] Project Manager HR [***] [***] QA HR [***] [***] Senior Design Engineer HR [***] [***] Senior Software Engineer HR [***] [***] Senior System Engineer HR [***] [***] Senior Test Engineer HR [***] [***] Software Engineer HR [***] [***] System Engineer HR [***] [***] (Test) Technician HR [***] [***]
* Confidential treatment requested. B-4
CLIN DESCRIPTION UNIT HOURLY RATE HOURLY RATE HOURS TOTAL (BASE PERIOD) (OPTION PERIOD) CEILING CEILING Cost Reimbursable Items Estimated Travel/Per Diem (Ref. Section LOT [***] B.4.4.2) Estimated Materials (Ref. Section B.4.4.3) LOT [***] Estimated Other Direct Cost LOT [***] TOTAL CEILING [***]
*Confidential treatment requested. B-5 B.4.4.1 HOURLY RATES Hourly rates shall include all direct and indirect costs and profit. The minimum qualifications of the labor categories are found in Section G.9. B.4.4.2 TRANSPORTATION AND PER DIEM Actual and reasonable costs for transportation, lodging, meals and incidental expenses will be reimbursed in accordance with Section H.19. Profit will not be paid on these costs. B.4.4.3 MATERIAL COSTS Material costs will be reimbursed in accordance with Section H.19. Profit will not be paid on these costs. B-6 PART I - SECTION C SCOPE OF WORK PART I - SECTION C STATEMENT OF WORK FOR EXPLOSIVE DETECTION SYSTEMS (EDS) C-1 THIS PAGE INTENTIONALLY LEFT BLANK C-2 TABLE OF CONTENTS
SECTION PARAGRAPH PAGE - ------- --------- ---- 1 SCOPE................................................................................... 1 1.1 Objectives............................................................ 1 1.2 Definitions........................................................... 1 2 APPLICABLE DOCUMENTS.................................................................... 1 2.1 Government Documents.................................................. 1 2.2 Military Standards.................................................... 2 2.3 Other Documents....................................................... 2 2.4 Source of Documents................................................... 2 2.5 Order of Precedence................................................... 3 3 REQUIREMENTS............................................................................ 3 3.1 Program Management.................................................... 4 3.1.1 Program Management Organization....................................... 4 3.1.1.1 System Engineering Management......................................... 4 3.1.1.2 Software Engineering Management....................................... 5 3.1.1.3 Risk Management/Assessment............................................ 5 3.1.1.4 Requirements Management............................................... 5 3.1.2 Program Control....................................................... 5 3.1.2.1 Equipment Database.................................................... 6 3.1.2.2 Program Trouble Report Database....................................... 6 3.1.2.3 Program Document Library.............................................. 6 3.1.2.4 Accession Data........................................................ 6 3.1.3 Subcontractor Management.............................................. 6 3.1.4 Integrated Logistics Support Management............................... 6 3.1.4.1 ILS Program Planning.................................................. 7 3.1.5 Post Award Conference................................................. 7 3.2 Quality Program....................................................... 7 3.2.1 Quality Assurance..................................................... 7 3.2.2 Quality Assessment.................................................... 7 3.3 Configuration Management Program...................................... 8 3.3.1 Configuration Management.............................................. 8 3.3.1.1 Configuration Management Plan......................................... 8 3.3.1.1.1 Configuration Baselines............................................... 8 3.3.2 Configuration Identification.......................................... 8 3.3.3 Configuration Control................................................. 9 3.3.3.1 Engineering Change Proposals (ECPs)................................... 9 3.3.3.2 Request for Deviation (RFD)........................................... 9 3.3.3.3 Request for Waiver (RFW).............................................. 9 3.3.4 Configuration Status Accounting....................................... 9 3.3.5 Configuration Audits................................................. 10 3.3.5.1 Functional Configuration Audit....................................... 10 3.3.5.2 Physical Configuration Audit......................................... 10 3.4 Meeting and Reviews.................................................. 10 3.4.1 Program Management Reviews........................................... 11
C-1
SECTION PARAGRAPH PAGE - ------- --------- ---- 3.4.2 Technical Interchange Meetings (CLIN 0004)........................... 11 3.5 System Design........................................................ 11 3.5.1 Hardware............................................................. 11 3.5.1.1 Stand Alone (SA) EDS (CLIN 0001)..................................... 11 3.5.1.2 Integrated EDS....................................................... 12 3.5.1.2.1 Integrated EDS - High Speed (CLIN 0002).............................. 12 3.5.1.2.2 Integrated EDS - Medium Speed (CLIN 0003)............................ 12 3.5.2 Software............................................................. 12 3.5.2.1 Software Metrics..................................................... 12 3.5.2.2 Software Program Trouble Report...................................... 13 3.6 System Refresh, Upgrade, and Technology Infusion..................... 13 3.7 Test and Evaluation (T&E)............................................ 13 3.7.1 Test and Evaluation Program.......................................... 13 3.7.1.1 General Test Program Requirements.................................... 13 3.7.1.2 General Test Requirements............................................ 14 3.7.1.3 Test Readiness Review................................................ 15 3.7.1.4 Test and Evaluation Planning......................................... 15 3.7.1.4.1 First Article Test and Evaluation.................................... 15 3.7.1.4.1.1 First Article Test and Evaluation Plan............................... 16 3.7.1.4.2 Contractor Certification of Underwriter's Lab Conformance.......... 16 3.7.1.4.3 Factory Acceptance Test............................................ 16 3.7.1.4.3.1 Factory Acceptance Test Plan......................................... 16 3.7.1.4.3.2 Factory Acceptance Test Procedures and Reports....................... 17 3.7.1.4.4 Site Acceptance Test................................................. 17 3.7.1.4.4.1 Site Acceptance Test Plan............................................ 17 3.7.1.4.4.2 Site Acceptance Test Procedures and Reports.......................... 17 3.8 Technical Manuals.................................................... 17 3.9 Site Installation for CLINs 0001, 0002 and 0003...................... 18 3.9.1 Site Installation Support............................................ 18 3.9.2 Site Installation Engineering (CLIN 3000)............................ 19 3.9.2.1 Government Site Manager/Representative............................... 19 3.9.2.2 Site Coordination.................................................... 19 3.9.2.3 Site Installation Engineering........................................ 19 3.9.2.4 Site Surveys and Site Survey Reports................................. 20 3.9.2.5 Site Installation Plan............................................... 20 3.9.2.5.1 Multiple Site Surveys................................................ 21 3.9.2.6 Equipment Installation............................................... 21 3.9.2.7 Equipment Relocation................................................. 21 3.9.2.8 Equipment Removal.................................................... 21 3.9.3 First Article Units.................................................. 21 3.10 Security............................................................. 22 3.11 Training (CLIN 0007)................................................. 22 3.11.1 Operator Training Course (CLIN 0007A)................................ 23 3.11.1.1 Training Validation (CLIN 0007B)..................................... 23 3.11.1.2 Operator Training (Initial) (CLIN 0007C)............................. 23
C-2
SECTION PARAGRAPH PAGE - ------- --------- ---- 3.11.1.3 Additional Operator Training (Initial) (CLIN 0007D).................. 23 3.11.1.4 Operator Training (Recurrent) (CLIN 0007E)........................... 24 3.11.2 Instructor Training Course (CLIN 0007F).............................. 24 3.11.3 Maintainer Training Course (CLIN 0007G).............................. 24 3.12 Equipment (CLIN 0005)................................................ 24 3.12.1 Powered Incline Conveyor (CLIN 0005A)................................ 24 3.12.2 Powered Flat Conveyor (CLIN 0005B)................................... 24 3.12.3 Baggage Exit Slide (CLIN 0005C)...................................... 25 3.12.4 Luggage Positioning Adapter (CLIN 0005D)............................ 25 3.12.5 Standalone Training Simulator (CLIN 0005E) (Medium Speed EDS)....... 25 3.12.7 Programmable Logic Control (PLC) (CLIN 0005G)....................... 25 3.12.8 Remote Image Replay (CLIN 0005H)................................... 25 3.12.9 BVS Remoting Kit (CLIN 0005I)....................................... 25 3.12.10 Multiplex Operation (CLIN 0006)...................................... 26 3.12.10.1 Multiplex Network (CLIN 0006A)...................................... 26 3.12.10.2 Additional TRI workstation (CLIN 0006B)........................... 26 3.12.10.3 PTRI workstation (CLIN 0006C)..................................... 26 3.12.10.4 Additional Control Interface Workstation (CLIN 0006D)............ 26 3.12.10.5 Network Printer (CLIN 0006E)....................................... 26 3.13 EDS System Warranty For CLINs 0001, 0002, 0003 and Associated Equipment.............................................. 27 3.13.1 Scheduled/Preventive Maintenance..................................... 27 3.13.2 Unscheduled Maintenance.............................................. 27 3.14 After Warranty Maintenance (CLIN 2000).......... 3.15 Engineering Support Services (CLIN 3000)............................. 27 4 ACRONYMS............................................................................... 28 5 TABLE OF CONTRACT DATA REQUIREMENTS LIST.................................................. 30
C-3 1 SCOPE This Statement of Work (SOW) defines the requirements for fabrication, test, and delivery of the Stand Alone (SA) and Integrated Explosive Detection System (EDS). The EDS shall be composed of commercial-off-the-shelf (COTS) and Non-Developmental Item (NDI) hardware and software components to the maximum extent practicable. This SOW includes provisions for program management, quality assurance, configuration management, systems engineering, system test and evaluation, implementation and transition, training, and integrated logistics support. 1.1 Objectives The objective of this contract is to purchase government certified Stand Alone Explosive Detection Systems that meet specification SEIPT-EDS-0002 and Integrated Explosive Detection Systems that meet specification STDO-EDS-0001B along with other requirements stated herein. Upon successful completion of government inspection and testing, the government may exercise options for additional production units as stated in section B of the contract. The SA EDS and Integrated EDS shall be deemed operational for government use after each unit has passed Factory Acceptance Test (FAT) and Site Acceptance Test (SAT). 1.2 Definitions "Certified EDS": A Certified Explosives Detection System (EDS) that meets all the requirements specified in the Federal Register, April 13, 1998: "Criteria for Certification of Explosives Detection Systems", Volume 63, Number 70. 2 APPLICABLE DOCUMENTS The following specifications, handbooks, orders, standards, and drawings form a part of this SOW and are applicable to the extent specified herein. The latest version of these documents as of the contract date shall apply. 2.1 Government Documents ACS Memorandum Classification Guide for FAA Explosive Detection System Information and Data, November 21, 1990 DOT/FAA/AR-97/67 Functional Requirements for Threat Image Projection Systems on X-Ray Machines

C-1 FAA Air Carrier Standard Security Sensitive - portions relevant to this contract as stated in this SOW will be Security Program available upon request from the Contracting Officer. FAA-D-2494/B Appendix I, Commercial Instruction Books FAA Order 1600.2D Safeguarding Controls and Procedures For Classified National Security Information and Sensitive Unclassified Information FAA-STD-020B Transition Protection, Grounding, Bonding, and Shielding Requirements For Electronic Equipment (5/11/92) SEIPT-EDS-0002 Pass Through and Single Entry Stand Alone Explosives Detection Systems (EDS) Specification dated 11/19/2001 STDO-EDS-0001B Integrated Explosive Detection System dated 22 July 2003

2.2 Military Standards MIL-STD-973 Configuration Management, Interim Notice 3, 13 January 1995 2.3 Other Documents 49 CFR Part 1520 Protection of Sensitive Security Information Contract Security Classification Specification, DD Form 254 NFPA-70 National Electrical Code (NEC) Uniform Building Code Section 2312 and Table 23-J 2.4 Source of Documents Copies of government specifications and interface documents may be obtained from the Federal Aviation Administration, Headquarters Public Inquiry Center APA-230, 800 Independence Avenue SW, Washington, DC 20591, 202-267-3484. Requests should fully identify material desired and cite the solicitation or contract number. Requests for copies of documents not covered in the preceding paragraph should be addressed to C-2 the Contracting Officer (CO). Requests should fully identify material desired and cite the solicitation or contract number. Military Standards and Specifications can be ordered from the Department of Defense Single Stock Point (DODSSP), Building 4/Section D, 700 Robbins Avenue, Philadelphia, PA 19111-5098. Information is available at their website, http://www.dodssp.daps.mil. Copies of ANSI/ASQC Q9000 series standards can be obtained from the following source: American Society for Quality Control 611 East Wisconsin Avenue P.O. Box 3005; Milwaukee, Wisconsin 53201-3005. Phones: (414) 272-8575 or (800) 248-1946. The Fax is: (414) 272-1734. Copies of the Acquisition Management System Test and Evaluation Process Guidelines are available in the FAA Acquisition System Toolset (FAST). The on-line Internet address of FAST is: http://FAST.faa.gov 2.5 Order of Precedence In the event of conflict between this SOW and any of the applicable documents herein, the provisions of this SOW shall apply. 3 REQUIREMENTS The supplies and services required by this contract shall be performed in accordance with the Pass Through and Single Entry Stand Alone Explosives Detection Systems (EDS) Specification SEIPT-EDS-0002, Integrated Explosive Detection System Specification STDO-EDS-0001B, and this Statement of Work (SOW). The Contractor shall provide program management, systems engineering, integrated logistics support, quality assurance, configuration management, training, materials and support to test, deliver, install, and maintain EDS and supporting equipment/deliverables in accordance with this SOW. Basic equipment for EDS shall be provided under Contract Line Item Number (CLIN) 0001, 0002, and 0003. Data items referenced by their Contract Data Requirements List (CDRL) titles are to be performed in accordance with the CDRL of the same name. All data deliverables shall be prepared or updated and delivered in accordance with the corresponding CDRL items specified under the SOW requirement. Any documents containing security sensitive information as defined in 49 CFR Part 1520 shall contain the following statement: "WARNING: This document contains sensitive security information that is controlled under the provisions of 49 CFR Part 1520. No part of this document may be released without the written permission of the Under Secretary of Transportation for Security, Washington, DC 20590. Unauthorized release may result in civil penalty or other action. For U.S. government agencies, public availability to be determined under 5 U.S.C. 552." C-3 The Contractor shall perform in accordance with the plans developed in response to this SOW and as approved by the government. The plans shall be updated as required and submitted for approval prior to implementation of any changes. All reference to the "government" in this SOW shall mean by authority of the Contracting Officer or designee. All digital media submitted to the government in response to SOW requirements shall be compatible with Microsoft Office suite of products. Acceptable digital media are floppy disks (1.44 MB capacity), Iomega-compatible zip disks (100 MB capacity), DAT tape or Compact Disc Read Only Memory (CDROM) (650 MB capacity). 3.1 Program Management 3.1.1 Program Management Organization The Contractor shall establish and maintain a formal organization to manage the EDS contract and associated subcontracts. The Contractor shall develop and implement a Management Program to efficiently and effectively execute the requirements of this contract to include: systems engineering, hardware engineering, software engineering, program planning and control, quality assurance, reliability and maintainability, configuration management, integrated logistics support, training, subcontract management, management of government furnished resources, risk management, security, production, and contract management. The Contractor shall identify in section G.2 of the contract, the Program Manager who is responsible for accomplishment of all tasks required by this SOW and who is authorized to commit the company. The Program Manager will organize, plan, schedule, implement, control, analyze, and report on all elements of the contract. The Program Manager shall have resources and authority to ensure efficient and timely program execution and shall be the Contractor's focal point for all required program tasks. The Contractor's Program Manager shall be prepared at all times to present and discuss the status of contract activities, requirements, and problems. Additionally the Contractor shall identify in the PMP the company's functional representatives, who shall be able to respond to request for information from their government functional counterparts. CDRL A001 Program Management Plan (PMP) 3.1.1.1 System Engineering Management The Contractor shall develop and implement a System Engineering Management program for the definition, development, verification, integration, and testing of the EDS requirements as allocated to the computer software configuration items (CSCIs) and hardware configuration items (HWCIs). System engineering efforts shall include all aspects of performance, quality, life cycle costs, maintainability, reliability, schedule, data processing reserves, and future growth requirements. The system engineering management program shall be described in the PMP. The Contractor shall maintain effective control over the system engineering and design C-4 development process, including subcontract items and services, to ensure cost, performance, and schedule requirements are met, to provide early detection and resolution of problems, and to reduce risk. The Contractor shall specify a primary point of contact for system engineering issues. 3.1.1.2 Software Engineering Management The Contractor shall describe in the PMP its plans for acquiring and developing the required software, including firmware, to meet contract requirements. The PMP shall identify a primary point of contact for software engineering issues. 3.1.1.3 Risk Management/Assessment The Contractor shall identify cost, schedule and technical risks and describe how it will effectively manage these risks throughout the performance of this contract. The Contractor shall describe its risk management techniques in the PMP. Significant risks shall be identified and discussed in the PMP. The Contractor shall quantify risks with respect to the impact on integration, installation, performance, technical parameters, schedule, and cost. The Contractor shall identify risks and assign a priority for developing a recommended course of action. The Contractor shall develop and maintain a list identifying, analyzing, and classifying program risks. Program risks shall be classified as low, medium, or high. The Contractor shall conduct risk mitigation planning for risks considered medium or high. The Contractor shall provide the status of and mitigation actions for identified program risks at Program Management Reviews (PMRs) and in the Program Status Reports (PSRs). 3.1.1.4 Requirements Management The Contractor shall document and manage all EDS requirements. The Contractor shall include requirements traceability in all design and test documents. Traceability shall be maintained for forward and backward reference. This information shall be updated as necessary throughout the life of the contract, and provided to the government as part of the monthly PMR and the program status reporting requirement. CDRL A002 Requirements Traceability Report 3.1.2 Program Control A clear line of project authority shall exist among all organizational elements. The Contractor shall report on cost, schedule, and technical progress in meeting reviews/status reports. Program Status Reports shall be provided monthly and shall address cost, schedule, technical and status of deliverables. The reports shall address problems/risks in the Contractor's functional areas (see paragraph 3.1.1 above). CDRL A003 Program Status Report (PSR) C-5 3.1.2.1 Equipment Database The Contractor shall create and maintain an equipment database. This database shall be a collection of data that for each individual EDS, identifying Contract Delivery Order (DO), installation site location, airline (or other responsible user), forecast test schedule, actual/anticipated government acceptance date, Manufacturer's serial number, government Bar Code, equipment model, equipment options included, modem electronic identification, and contacts for airline and government witness for site acceptance test. In addition, any maintenance or warranty action performed on the system after delivery to the site shall be noted. This information shall be updated as necessary throughout the equipment life cycle. CDRL A004 Equipment Database 3.1.2.2 Program Trouble Report Database The Contractor shall establish and maintain a Program Trouble Report (PTR) database. This database shall be a collection of data that documents problems relative to the design, production, and test of EDS hardware and software. The Contractor's PTR procedures shall be documented in the PMP. 3.1.2.3 Program Document Library The Contractor shall maintain a digital Program Document Library (PDL) that contains all documents/data generated by the Contractor or provided to the Contractor by the government during the performance of this contract. The Contractor shall provide authorized government personnel access to the PDL. The list of documents included in the PDL shall be listed in the Document Library Index (DLI). Documents/data provided by government in paper only format are exempt from digital storage requirement. CDRL A005 Document Library Index (DLI) 3.1.2.4 Accession Data The Contractor shall provide a list of Contractor internal data with the exception of proprietary data, that has been generated by the Contractor in compliance with the work effort described in this SOW. CDRL A006 Data Accession List 3.1.3 Subcontractor Management The Contractor shall review each subcontractor's technical progress on all assigned tasks and include such technical progress and status information in program reviews. 3.1.4 Integrated Logistics Support Management The Contractor shall establish and maintain an Integrated Logistics Support (ILS) program to C-6 ensure the EDS is fully supported throughout its life cycle. The Contractor shall designate a primary point of contact for coordination with the government on all matters relating to the management of the ILS program. 3.1.4.1 ILS Program Planning The Contractor shall prepare an Integrated Support Plan (ISP). The ISP shall provide a detailed description of the plans, procedures, actions, events (including schedules), and organization that the Contractor intends to employ to accomplish the life cycle ILS program under this contract. The Contractor shall maintain the ISP to reflect the current program status and shall update the plan to reflect changes emanating from program changes, reviews and other actions affecting the logistics support aspects of the program. CDRL A008 Integrated Support Plan (ISP) 3.1.5 Post Award Conference A post award conference will be conducted at the Contractor's facility within 30 calendar days after contract award. The government will designate conference attendees and will identify any unique conference support requirements. The Contractor will provide the minutes for the conference. CDRL A009 Meeting Minutes 3.2 Quality Program 3.2.1 Quality Assurance The Contractor shall establish, implement and maintain a documented quality system in accordance with section E of the contract as a means of assuring compliance with all requirements of the contract. All spare parts shall be inspected and tested following the same procedures used for primary equipment components. The Contractor shall identify to the government the location where these inspections and tests will take place. The Contractor shall require that sub-suppliers have an appropriate documented quality system that controls the quality of the services and supplies provided. CDRL A010 Quality System Plan (QSP) 3.2.2 Quality Assessment C-7 The Contractor shall support an initial quality assessment conducted by the government Quality Reliability Officer (QRO) within 60 days after the approval of the QSP. The assessment will determine the capability of the Contractor's Quality System to comply with the contract requirements. The duration of the assessment will be approximately one week. Any discrepancies discovered during the assessment shall be corrected in a reasonable time frame so as not to affect the performance of the contract. 3.3 Configuration Management Program 3.3.1 Configuration Management The Contractor shall establish, implement and maintain a Configuration Management (CM) Program using MIL-STD-973, "Configuration Management," as tailored in this section of the SOW. The CM program shall provide an organizational structure with configuration identification and control methods, configuration audits, and configuration status accounting procedures for hardware and software. The Contractor shall identify a single focal point, under the Program Manager, who will serve as the primary point of contact for all communication on CM-related issues. The CM requirements are applicable to all deliverables under this contract. The Contractor shall follow MIL-STD-973, Paragraph 4 - GENERAL REQUIREMENTS, including subparagraphs. Note: Any reference to "Military" in the MIL-STD is to be interpreted as the government for this contract. 3.3.1.1 Configuration Management Plan The Contractor shall develop a Configuration Management Plan (CMP) using MIL-STD-973 subparagraph 5.2.1 and Appendix A. CDRL A011 Configuration Management Plan (CMP) 3.3.1.1.1 Configuration Baselines The Contractor shall maintain the configuration baseline and the required documentation to support this baseline. The approved Product Baseline will be established after successful completion of the Functional Configuration Audit/Physical Configuration Audit (FCA/PCA). MIL-STD-973 paragraph 5.3.4 and subparagraphs 5.3.4.1, 5.3.4.1.3 and 5.3.4.2 shall be followed for establishing and maintaining the Product Baseline. 3.3.2 Configuration Identification C-8 The Contractor's PDL shall retain all documentation for identification, control and status accounting of all Configuration Items (CIs) throughout the program life cycle. The Contractor shall identify each CI and its configuration documentation in accordance with MIL-STD-973 paragraph 5.3.6 and subparagraphs 5.3.6.3 through 5.3.6.6, 5.3.6.6.2, 5.3.6.7, 5.3.6.7.1 through 5.3.6.7.3. The configuration item identification shall be available in a Master Configuration Item Listing (MCIL). CDRL A012 Master Configuration Item Listing (MCIL) 3.3.3 Configuration Control The Contractor shall apply configuration control measures to each baseline CI, and its configuration documentation in accordance with MIL-STD-973 paragraph 5.3.5 and subparagraph 5.3.5.1. The Contractor's configuration control system shall provide effective means, as applicable, for proposing changes to CIs and ensuring implementation of the approved change. The Contractor shall maintain configuration control of hardware, software, firmware, and developmental/commercial documentation. The Contractor shall maintain configuration control of hardware to the Line Replaceable Unit (LRU) level and software to the version level. 3.3.3.1 Engineering Change Proposals (ECPs) The Contractor shall establish and maintain a system for control and submittal of engineering changes in accordance with MIL-STD-973 paragraph 5.4 including all subparagraphs except the following: 5.4.2.3.3.1.2, 5.4.2.3.5.1, 5.4.2.3.5.2, 5.4.2.3.6.2 - 5.4.2.3.6.5, 5.4.2.4.4, and 5.4.2.4.5. CDRL A013 Engineering Change Proposal (ECP) 3.3.3.2 Request for Deviation (RFD) The Contractor shall establish and maintain a system for control and submittal of deviations in accordance with MIL-STD-973 paragraph 5.4.3 and subparagraphs. CDRL A014 Request for Deviation (RFD 3.3.3.3 Request for Waiver (RFW) The Contractor shall establish and maintain a system for control and submittal of waivers in accordance with MIL-STD-973 paragraph 5.4.4 and subparagraphs. CDRL A015 Request for Waiver (RFW) 3.3.4 Configuration Status Accounting The Contractor shall maintain a Configuration Status Accounting (CSA) Information System to assure accurate identification of each CI. The Contractor shall ensure that the CSA information C-9 is available for review by the government, upon request. The CSA information shall be available in the Contractor's PDL as a monthly Configuration Status Accounting Report (CSAR). The Contractor shall use MIL-STD-973 paragraph 5.5 and associated appendices for guidance in establishing the CSA Information System. The CSA System shall be described in the CM Plan. CDRL A016 Configuration Status Accounting Report (CSAR) 3.3.5 Configuration Audits The Contractor shall support configuration audits using MIL-STD-973 paragraph 5.6 and subparagraphs. The Contractor shall prepare and submit a Configuration Audit Plan for FCA/PCA. The Contractor shall be responsible for ensuring that subcontractors, vendors, and suppliers participate in the configuration audits, as proposed and approved via the Configuration Audit Plan. The Contractor shall prepare and submit a Configuration Audit Summary Report documenting the findings of each audit. CDRL A017 Configuration Audit Plan CDRL A018 Configuration Audit Summary Report 3.3.5.1 Functional Configuration Audit The Contractor shall support a Functional Configuration Audit (FCA) using MIL-STD-973 as guidance. The FCA shall be conducted in conjunction with the First Article Test and Evaluation (FAT&E). The FCA will include the verification of system and individual requirements irrespective of the test guidance provided from any requirements or verification test matrix. The intent is to audit the attainment of all functional requirements and to validate their attainment during the FCA. Upon successful completion of the FCA a Physical Configuration Audit will be performed. 3.3.5.2 Physical Configuration Audit The Contractor shall support a Physical Configuration Audit (PCA) of a first production article EDS prior to the start of production. Subcontractor, vendor, and supplier PCAs shall be performed for CIs developed for the EDS procurement or modified for use by other than the EDS prime Contractor. Successful completion of the PCA shall include, but not be limited to, successful conclusion of FCA and government approval of the Contractor's final submission of the associated CDRL items. 3.4 Meeting and Reviews The Contractor shall conduct meetings and reviews in accordance with the government approved PMP and this SOW. The Contractor shall prepare and submit a meeting agenda and presentation materials. The Contractor shall be prepared to substantiate assumptions made and methodologies used in arriving at recommendations or conclusions. The Contractor shall record meeting minutes during all meetings. The Contractor shall prepare formal written minutes, accompanied by a summary of action items and all presentation materials used, for government C-10 approval. Meetings and reviews shall not be considered finalized until the government has approved the minutes. Support provided by the Contractor shall include, but is not limited to, facilities, materials, office equipment, clerical personnel, mockups, technical data, and subcontractor participation (when appropriate). CDRL A009 Meeting Minutes 3.4.1 Program Management Reviews The Contractor shall be responsible for conducting monthly Program Management Reviews (PMRs) at the Contractor site, Herndon, VA, or an alternate site specified by the government. The Contractor's PMRs shall be targeted for no more than one day in length. Attendance will generally be limited to 10-15 key government personnel and 5-10 Contractor personnel. PMRs shall include, at a minimum, a review of all pertinent technical, schedule and cost aspects of the contract, including an estimate of the work to be accomplished in the next month; current performance measurement information; and current and anticipated technical and implementation problems. The Contractor shall identify risks and assign a priority for developing a recommended course of action. The government reserves the right to replace a formal monthly review with a less formal update completed by teleconference, to change the location of the reviews at any time, and to increase or decrease the frequency of reviews as required. The results of the PMR will be documented and the minutes submitted for government review and approval. 3.4.2 Technical Interchange Meetings (CLIN 0004) The Contractor shall conduct and administratively support periodic Technical Interchange Meetings (TIMs) at the Contractor's facility. If requested, TIMs may also be conducted in Herndon, VA, or at another location approved by the government. During the TIMs, the Contractor and the government will discuss specific technical activities, including studies, design issues, technical decisions, test plans, test results, and implementation concerns to ensure continuing government visibility into the technical progress of the contract. 3.5 System Design 3.5.1 Hardware 3.5.1.1 Stand Alone (SA) EDS (CLIN 0001) The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of the Stand Alone (SA) EDS is provided as part of the supplies and services provided herein. The Contractor shall satisfy all the requirements for SA Explosives Detection System (EDS) in Specification SEIPT- C-11 EDS-0002. All equipment models are subject to government approval for each installation site configuration. 3.5.1.2 Integrated EDS 3.5.1.2.1 Integrated EDS - High Speed (CLIN 0002) The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of an Integrated EDS is provided as part of the supplies and services provided herein. The Contractor shall satisfy all the requirements for an Integrated (EDS) in Specification STDO-EDS-0001B. All equipment models are subject to government approval for each installation site configuration. 3.5.1.2.2 Integrated EDS - Medium Speed (CLIN 0003) The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of a Integrated EDS is provided as part of the supplies and services provided herein. The Contractor shall satisfy all the requirements for Partially Integrated (EDS) in Specification STDO-EDS-0001B. All equipment models are subject to government approval for each installation site configuration. 3.5.2 Software The Contractor shall acquire/develop, document, test, and manage all system software provided or developed under this contract. The Contractor shall employ best commercial practices as guidance for all software engineering requirements. The Contractor shall permit authorized government personnel or designees to inspect all software documentation with the exception of proprietary information. The Contractor shall make available to the government for review, the information, practices, procedures, or documentation developed or purchased by the Contractor or its subcontractors solely for the EDS software program. The Contractor shall allow the government to witness any test associated with the software development or integration of software developed solely for the EDS program. The Contractor shall establish an escrow account in accordance with section H.10 of the contract. 3.5.2.1 Software Metrics As a minimum, the Contractor shall track the following software metrics: (1) Program Trouble Reports (PTRs) open/closed items. All tracked software metrics that result in a software patch issued as a deviation or change shall C-12 be reported in the monthly PSR and discussed at each PMR. 3.5.2.2 Software Program Trouble Report The Contractor shall develop and implement internal procedures to identify, report, monitor, and resolve all software and/or software-related problems. All such software-related problems shall be documented in the PTR database. The Contractor shall include software-related problems identified by both the Contractor and the government, and those identified by other users that have an impact on the EDS functionality. The PTR database shall contain the master copy of all PTRs. 3.6 System Refresh, Upgrade, and Technology Infusion The Contractor may provide routine updates, upgrades, design modifications, and performance improvements for Product Baselined EDS systems. Additionally, the Contractor is encouraged to independently propose, engineering changes to Product Baselined EDS systems or other requirements of this contract due to available technology enhancements. These enhancements may be proposed to save money or energy, improve performance, satisfy increased data processing requirements, or for the replacement of equipment and software due to technological advancement. All such proposed modifications to Product Baselined EDS system shall be accomplished as Engineering Changes under the Configuration Management Program. The Contractor shall include a risk benefits analysis to include life cycle and transition planning for any proposed modification. 3.7 Test and Evaluation (T&E) 3.7.1 Test and Evaluation Program The Contractor shall: (1) Plan and conduct Contractor tests; (2) Support government conducted acceptance testing and continuous assessment; and (3) Provide maintenance support during operational and field testing. 3.7.1.1 General Test Program Requirements The Contractor's responsibilities for the EDS test program shall include the following activities: (1) Provide and maintain a single point of contact for the T&E program; (2) Conduct and/or support those T&E program activities described within this SOW and the Stand Alone Explosives Detection Systems (EDS) Specification SEIPT-EDS-0002 and Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B and; C-13 (3) Develop a Master Test Plan (MTP), for government approval, to describe the Contractor's EDS test program. The MTP shall describe the Contractor's tests (both internal and government required) include detailed schedules for conduct of each test. The MTP shall identify Stand Alone Explosives Detection Systems (EDS) Specification SEIPT-EDS-0002 and Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B requirements to be verified by each test, with general descriptions of methods to be used for verification. A Contractor Verification Requirements Traceability Matrix (VRTM) shall be included and list each requirement to be verified in each test with a reference to the appropriate requirement paragraph; (4) Develop Contractor test plans and procedures. The Contractor test procedures shall be provided for government approval 30 days prior to planned start of a formal test; (5) Conduct, or support the government in conducting, a Test Readiness Review (TRR) prior to performing any formal test; (6) Notify the government at least seven (7) days prior to commencement of all formal Contractor conducted T&E, and permit the government to witness the test; (7) Conduct tests according to Government approved test plans, test cases, and test procedures. Tests may be witnessed by an authorized Government representative; (8) Perform all data reduction associated with Contractor testing, and furnish analysis methods and results to support claims of T&E success; (9) If requested by the government, provide within fifteen days after the completion of a formal Contractor conducted test copies of all original data collected during the Contractor-conducted test; (10) Develop Factory Acceptance Test (FAT) plans and procedures for EDS. The FAT procedures shall be provided for government approval 30 days prior to submitting the first EDS for FAT; (11) Conduct FAT on each EDS prior to shipping to the sites for installation and report the results; and (12) Develop Site Acceptance Test (SAT) plans and procedures for EDS. The SAT procedures shall be provided for government approval at the same time the FAT procedures are submitted. CDRL A021 Master Test Plan (MTP) 3.7.1.2 General Test Requirements The Contractor shall, at a minimum, verify each of the Stand Alone Explosives Detection Systems (EDS) Specification SEIPT-EDS-0002 and Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B requirements in at least one test procedure as a system. Prior to commencing testing, the Contractor shall identify the configuration of the system to be tested. The configuration shall not be changed or modified during test and evaluation without concurrence from the government. During Contractor testing, the Contractor shall ensure that C-14 each test procedure is considered complete only when the test executes without aborts or errors, unless attributable to a procedure that has been acknowledged as faulty by the government. The Contractor shall conduct T&E using Contractor developed and government approved test plans and procedures. Any change to approved Contractor T&E procedures shall be approved by the government prior to implementation. The Contractor shall provide the necessary test equipment and shall ensure its availability, proper calibration, full operational status, and operation as documented by the test equipment manufacturer. The Contractor shall obtain prior written approval from the government before using unique or modified commercial test equipment not specified in the approved test plans and procedures. In the event of test equipment failure, test equipment damage, or faulty operation, the government may require the Contractor to verify calibration of any test equipment provided by the Contractor. The Contractor shall record all inputs, outputs, and test results as described in the approved test procedures. Anomalies, test deviations, test equipment substitutions, members of the test team, and any other significant events and the start and stop time for each test shall be documented in the Contractor's test logbook. The Contractor shall record in the Program Trouble Report (PTR) Database each failure or problem (system, hardware, or software) discovered and fully document the problem including corrective actions taken. 3.7.1.3 Test Readiness Review The Contractor shall support the government's Test Readiness Review (TRR) prior to conduct of all testing. The TRR shall include, but not be limited to the following: contract number/delivery order number/line item/serial number of the unit(s) to be tested, type of test to be conducted, open test anomalies observed to date, deviations/waivers requested and/or approved, open ECP(s), test procedure status (approved/disproved, version/date), configuration of the unit(s) (serial number(s)/revision level(s)) to be tested, software version. 3.7.1.4 Test and Evaluation Planning The Contractor shall prepare the following test plans/procedures for government approval in advance of initiating the test program. These plans and procedures shall be designed to ensure the tests are capable of being repeated with substantially similar results. Each plan shall include a detailed schedule for conduct of the test. The plan/procedure shall identify specification and lower-level derived requirements to be verified by the test, with general descriptions of methods to be used for verification. The Contractor VRTM shall be included in each test plan/procedure and list each specification and lower-level derived requirement to be verified in that test with a reference to the appropriate requirement paragraph. 3.7.1.4.1 First Article Test and Evaluation If directed by the government, a First Article Test and Evaluation (FAT&E) shall be performed on the Contractor's initial, pre-production model to verify compliance with all contract C-15 requirements. FAT&E shall include those test requirements that are best suited to an EDS operational environment (e.g., power, voltage, electromagnetic, stress, loading, live interfaces, alarm resolution). This test will be performed concurrent with the Functional Configuration Audit (FCA), and will verify each requirement in the Stand Alone Explosives Detection Systems (EDS) Specification SEIPT-EDS-0002, Integrated Explosive Detection System (EDS) Specification STDO-EDS-0001B and each requirement in DOT/government/AR-97/67, Functional Requirements for Threat Image Projection Systems on X-Ray Machines. 3.7.1.4.1.1 First Article Test and Evaluation Plan The Contractor shall prepare and submit a FAT&E Plan that describes methods for testing and evaluating the EDS system. The plan shall define the range of tests, system initialization requirements, input data, expected output, and the criteria for evaluating test results. The Contractor shall identify all test and evaluation resources required, including personnel, equipment, facility support, and schedules. CDRL A022 First Article Test and Evaluation (FAT&E) Plan 3.7.1.4.1.2 First Article Test and Evaluation Procedures and Report The Contractor shall prepare and submit FAT&E Procedures. The Contractor shall ensure that the test procedures indicate traceable paths to the approved Contractor VRTM. The Contractor shall prepare a First Article Test and Evaluation (FAT&E) Report at the conclusion of the evaluation. CDRL A023 First Article Test and Evaluation (FAT&E) Procedures CDRL A024 First Article Test and Evaluation (FAT&E) Report 3.7.1.4.2 Contractor Certification of Underwriter's Lab Conformance The Contractor shall provide an independent Certificate of Conformance to verify compliance to applicable safety standards for fire and shock hazard. The Contractor is solely responsible for obtaining certification from an independent audit/test agency. 3.7.1.4.3 Factory Acceptance Test The Contractor shall conduct Factory Acceptance Test (FAT) for each EDS in accordance with the FAT plan and procedure prepared by the Contractor, and approved by the government. The FAT will be witnessed by government-designated representative(s). 3.7.1.4.3.1 Factory Acceptance Test Plan The Contractor shall prepare and submit a FAT Plan that describes methods for testing, evaluating, and accepting EDS systems at the Contractor site for shipment to delivery sites. The FAT plan shall define the range of tests, system initialization requirements, input data, expected output, and the criteria for evaluating test results. The Contractor shall identify schedules and all test and evaluation resources required, including personnel, equipment, and facility. C-16 CDRL A025 Factory Acceptance Test (FAT) Plan 3.7.1.4.3.2 Factory Acceptance Test Procedures and Reports The Contractor shall prepare and submit Factory Acceptance Test (FAT) Procedures. The Contractor shall use the FAT Procedures for each FAT. The Contractor shall ensure that the test procedures indicate traceable paths to the approved Contractor VRTM. The Contractor shall prepare a Factory Acceptance Test (FAT) Report at the conclusion of each test. CDRL A026 Factory Acceptance Test (FAT) Procedures CDRL A027 Factory Acceptance Test (FAT) Report 3.7.1.4.4 Site Acceptance Test The Contractor shall setup and configure each EDS for Site Acceptance Test (SAT). The Contractor shall conduct a SAT at every delivery site location for each EDS installed in accordance with the government approved SAT plan and procedure. The SAT will confirm that the EDS is properly setup and operationally configured, has not been damaged during shipping, and remains in compliance with contractual requirements. The SAT will be witnessed by government-designated representative(s). 3.7.1.4.4.1 Site Acceptance Test Plan The Contractor shall prepare and submit a Site Acceptance Test (SAT) Plan that describes methods for testing, evaluating, and accepting the EDS at each site. The Contractor's SAT plan shall define the range of tests, system initialization requirements, input data, expected output, and the criteria for evaluating test results. The Contractor shall identify all test and evaluation resources required, including personnel, and equipment. CDRL A028 Site Acceptance Test (SAT) Plan 3.7.1.4.4.2 Site Acceptance Test Procedures and Reports The Contractor shall prepare and submit Site Acceptance Test (SAT) Procedures that detail the step-by-step test process to be conducted during each SAT. In an addendum to the SAT procedures, the Contractor shall provide procedure updates necessary to address site unique configurations and capabilities. The Contractor shall ensure the test procedures indicate traceable paths to the approved Contractor VRTM. The Contractor shall prepare a Site Acceptance Test (SAT) Report at the conclusion of each test. CDRL A029 Site Acceptance Test (SAT) Procedures CDRL A030 Site Acceptance Test (SAT) Report 3.8 Technical Manuals The Contractor shall develop and deliver EDS Technical Manuals to support the EDS. C-17 (1) An Operations Manual for all tasks to be performed by the operator/screener including state management, alarm resolution, training and limited diagnostics and maintenance shall be developed. The manual shall provide sufficient guidance for task performance. The manual will include instructions for daily operational use of the OTK. (2) A Maintenance Manual to support on site maintenance performed by maintenance technicians at the EDS sites shall be developed. The Maintenance Manual shall indicate the type of maintenance action and frequency. The manual shall contain instructions on how to perform the action. The manual and instructions shall be written at a level to allow on-site air carrier maintenance personnel to perform preventive/ scheduled maintenance and repair actions. (3) An Installation/Integration Manual to support the installation, setup, and configuration of EDS system shall be developed. Supplemental data to augment the COTS and Commercially Available Software data shall be developed as required and provided to make the technical manuals fully acceptable for use in the EDS environment. The supplemental data development shall use FAA-D-2494/B, Appendix I, Commercial Instruction Books, as a guide. Although the government will not be actively performing network management and remote monitoring and control, the Maintenance Manual shall include a section that describes operation and maintenance of the Contractor's network management and remote monitoring and control system functions and procedures. The Contractor shall ensure and certify that all technical manuals are current, accurate, and complete before submitting to the government for validation and acceptance. CDRL A031 Operations Manual CDRL A032 Maintenance Manual CDRL A033 Installation/Integration Manual CDRL A034 Site Installation Planning Guide 3.9 Site Installation for CLINs 0001, 0002 and 0003 3.9.1 Site Installation Support The Contractor shall perform all activities necessary to assemble, and perform final system checkout of the EDS in preparation for site acceptance test (SAT). The Contractor shall coordinate the installation activities with the government system integration Contractor. The Contractor shall prepare the EDS and associated equipment for shipping to an airport receiving dock or to other location. The Contractor shall utilize shipping crates of appropriate C-18 sizes to allow movement through airport terminal areas. The maximum size of any individual system crate, or package, will not exceed external dimensions that allow for ease of transportability through airport terminal areas from the equipment delivery point to its final location at the airport site. Unless otherwise provided for through additional tasking, the Contractor shall not be responsible for site installation engineering. 3.9.2 Site Installation Engineering (CLIN 3000) The Contractor shall install and integrate EDS when directed by the CO by individual delivery orders. The Contractor shall ensure proper operation when connected to existing baggage handling equipment and external interfaces. The Contractor shall obtain all necessary approvals, permits, and authorizations required for providing utilities (heating, ventilating, air-conditioning, power, and telecommunications) and space for the EDS installation. The Contractor shall take into account terminal main doorway openings, doorway clearances, floor ramps and other physical constraints. The Contractor shall resolve all installation-related issues. 3.9.2.1 Government Site Manager/Representative The government will designate a site manager for each equipment installation. The site manager will be the primary point of contact for each installation to assist in the facilitation of the installation and will receive copies of all plans, reports, and any additional documentation pertaining to that site. The site manager will be included in all communication and resolution of site installation issues. The site manager will coordinate with the Contracting Officer Technical Representative (COTR), and the CO as necessary, to resolve site installation matters. The site manager does not have the authority to make changes to scope, price, schedule, or terms and conditions of the contract. In addition, the site manager does not have the authority to sign contractual documents, order contract changes, modify contract terms, or create any commitment or liability on the part of the government different from that set forth in the contract. 3.9.2.2 Site Coordination The Contractor shall coordinate with Government Site Manager/representative, other government contractors, airport and air carrier representatives, and stakeholders for specific EDS installation sites. 3.9.2.3 Site Installation Engineering The Contractor shall integrate and install the EDS. The site installation engineering and design analysis will determine the placement of equipment to optimize baggage handling based on airline schedule, airline operational factors, and airport facility layout. The designs shall reflect the capability to handle peak load of baggage on the busiest days of the year. The Contractor shall ensure that equipment physical environmental guidelines are taken into account including any special structural foundation and mechanical requirements. All security equipment shall be physically positioned in accordance with the equipment installation guidelines and air carrier operational requirements. The equipment layout must, to the extent possible, provide clear and C-19 unrestricted access to any rack or equipment unit, including consoles, to permit equipment maintenance or removal. 3.9.2.4 Site Surveys and Site Survey Reports The Contractor shall prepare and submit a Site Survey Report (SSR) for each EDS installation site. The Contractor shall coordinate with the COTR concerning access to an EDS installation site at least thirty (30) days prior to performing the required site surveys. The surveys of the site will consider special service requirements for electrical power, climate control, communication services, floor loading, equipment handling, and access clearance requirements. The Contractor shall collect and analyze data, conduct necessary demand and baggage flow modeling, and consult with the appropriate airline and airport representatives to determine any special operational or facility considerations including existing or planned terminal modification or construction that will be accommodated. The site surveys will describe the site preparation requirements, site-specific deficiencies, and provide detailed estimates of cost, schedule and major milestone to complete integration, installation, acceptance testing and initial operational capability. The site survey report will include the advantages and disadvantages of each installation option presented in the site survey. The Contractor shall provide a complete, accurate, and validated set of installation drawings for each site where the equipment is installed. The Contractor shall also ensure that the SSR satisfies the following site implementation requirements: (1) Installation complies with NEC NFPA-70; (2) Equipment grounding, bonding, shielding, and transient protection shall comply with FAA-STD-020B Section 3.8.5; (3) Mounting of cabinets and installation of equipment complies with state and local building codes; and (4) Seismic requirements as specified in the Uniform Building Code, Section 2312 and Table 23-J. CDRL B001 Site Survey Report 3.9.2.5 Site Installation Plan After all issues resulting from the site survey have been resolved the government will notify the Contractor of the acceptance of the SSR. After SSR approval the Contractor shall prepare and submit a Site Installation Plan (SIP) detailing all steps to be conducted throughout the installation and integration process. The Contractor must ensure that equipment physical environmental guidelines are taken into account including any special structural foundation and mechanical requirements. After government approval of the SIP, the Contractor shall perform site preparations in accordance with the plan. The Contractor shall conduct pre-construction meeting with the sub-contractor (s) prior to equipment installation to ensure that the site preparation is done in accordance with the SIP. CDRL B002 Site Installation Plan (SIP) C-20 3.9.2.5.1 Multiple Site Surveys The Contractor shall not perform additional surveys at the same air carrier terminal site without specific written authorization from the government's COTR. 3.9.2.6 Equipment Installation Installation, integration and testing of EDS will not, to the extent possible, disrupt, or interfere with airline or airport operations. The Contractor shall work in conjunction with the government Site Manager/Representative. The Contractor shall ensure that the installation activities are coordinated, prior to installation, with the sites to minimize the impact on day-to-day operation of the sites and their related systems. Any disruptions or interference with airline or airport operations that cannot be avoided shall be closely coordinated with and approved in advance by the affected parties prior to commencement of such activities. The Contractor shall perform work at night, weekends, or other varied non-operational hours when required. If dismantling of existing airline or airport facilities or equipment or other measures is necessary to complete the installation, the Contractor shall be responsible for the full restoration to pre-installation conditions of these unrelated facilities or equipment. Site Installation will encompass the test and evaluation requirements listed in paragraph 3.7.1.4.4 of this SOW. The Contractor shall remove all debris from the site following site preparation and installation activities. 3.9.2.7 Equipment Relocation In the event an EDS needs to be relocated from or within an installed site, the Contractor shall inventory, pack, and perform all activities associated with the preparation for relocation of the hardware when directed by the CO. The Contractor shall remove all debris on the site resulting from relocation. 3.9.2.8 Equipment Removal In the event an EDS needs to be removed from an installed site, the Contractor, if directed by the CO, shall inventory, pack, and perform all activities associated with the preparation for shipping of the removed hardware. The Contractor shall remove all debris on the site resulting from removal. 3.9.3 First Article Units First Article units, if required, under CLIN 0001 and CLIN 0002 shall be housed at the Contractor's facility until such time the government requires delivery to a site. The government anticipates that the First Article units will be the last units shipped under this contract. These units shall be maintained under strict configuration management per Section 3.3 of this SOW, and will be considered as the product baseline for the entire inventory. The contractor shall not alter this unit in any way without the express approval of the government. If approved by the government the contractor may be allowed to install proposed ECPs for government evaluation. The First Article unit(s) shall be restored to the approved government C-21 configuration baseline as soon as testing or evaluation is completed, or when directed by the government. 3.10 Security The Contractor shall develop, apply and maintain effective security practices in accordance with the following requirements: 49 CFR Part 1520 Protection of Sensitive Security Information ACS Memorandum, Classification Guide for FAA Explosive Detection System Information and Data, November 21, 1990 Contract Security Classification Specification, DD Form 254 FAA Order 1600.2D, Safeguarding Controls and Procedures For Classified National Security Information and Sensitive Unclassified Information CDRL A038 Personnel List CDRL A039 Facility Security Certificate The Contractor must request written government approval prior to release of any information text, images or video associated with this contract. The Contractor shall document all incidents through the Physical and Communications Security Breach/Incident Report. The Contractor shall notify the COTR of such incidents, which include: (1) Actual or suspected unauthorized attempts to penetrate an EDS through the remote workstation or remote functions; (2) Actual or suspected unauthorized attempts to penetrate the EDS through the Contractors Remote Maintenance Monitoring Facility or Contractor's support facility; (3) Actual or suspected unauthorized penetration of the Contractor's EDS support facility or Remote Maintenance Monitoring facility(s); and (4) Actual or suspected attempt to subvert the EDS. CDRL A040 Physical and Communications Security Breach/Incident Report 3.11 Training (CLIN 0007) Upon tasking by the government, the Contractor shall conduct training courses for EDS operators and maintainers. The training courses shall be capable of being performed on an EDS or an EDS Standalone Training Simulator. C-22 3.11.1 Operator Training Course (CLIN 0007A) The Contractor shall develop a training course to train EDS operators. Qualification testing will be used at the conclusion of training to verify that required skill and knowledge levels have been attained. The operator training shall: (1) Adequately prepare operators to use the EDS, including all system functions and alarm resolution techniques, as evidenced by successful completion of operator qualification testing; (2) Be matched and attuned to the skill level, qualifications, and capabilities of operators who demonstrate the abilities needed to successfully complete EDS training and pass qualification testing; and (3) Adequately addresses the basics of Threat Image Projection (TIP) scoring, especially in the areas of detection success rate and false alarm rate. 3.11.1.1 Training Validation (CLIN 0007B) Upon tasking by the government, the Contractor shall train 10 operators to support a validation of the training program culminated by operator qualification testing. These operators should be selected from current screener population, if possible. The Contractor shall ensure that this training is targeted to match the skill level, qualifications, and capacity of current X-ray imaging operators and supervisors performing similar baggage inspection. The government will witness the initial training class. CDRL A041 Training Syllabus (Operator) CDRL A042 Training Materials (Operator) 3.11.1.2 Operator Training (Initial) (CLIN 0007C) Upon tasking by the government, the Contractor shall conduct one (1) class of operator training for 10 trainees in accordance with a government-approved training program for each EDS. The Contractor shall train to target EDS operator proficiency levels defined in the FAA Air Carrier Standard Security Program and amendments and policy directives. The Contractor shall evaluate operator proficiency based on these criteria. The Contractor shall supply all training materials as listed in the training syllabus. CDRL A041 Training Syllabus (Operator) CDRL A042 Training Materials (Operator) 3.11.1.3 Additional Operator Training (Initial) (CLIN 0007D) The Contractor shall provide additional site operator training classes as described in 3.11.1.2, if ordered by the government. C-23 3.11.1.4 Operator Training (Recurrent) (CLIN 0007E) The Contractor shall conduct recurrent training for five to ten individuals at each airport site as required. Upon request by the CO, the training will occur at the Contractor's facility. CDRL A043 Operator Training Syllabus (Recurrent) CDRL A044 Operator Training Materials (Recurrent) 3.11.2 Instructor Training Course (CLIN 0007F) Upon tasking by the government, the Contractor shall provide training for customer-selected instructors. The training will prepare the attendees to conduct both initial and recurrent operator training courses. Successful graduates of the course will be accredited by the Contractor to teach operators of the EDS. The Contractor shall conduct training at locations directed by the government. The Contractor shall provide course and instruction materials. The Contractor shall include a list of all required training materials to conduct both initial and recurrent operator-training courses. Class size will be for up to five students. CDRL A045 Training Syllabus (Instructor) CDRL A046 Training Materials (Instructor) 3.11.3 Maintainer Training Course (CLIN 0007G) The Contractor shall develop a training course to train EDS maintainers. The training program shall be matched and attuned to the skill level, qualifications, and capabilities of maintainers who demonstrate the abilities needed to be selected for EDS training. Qualification testing will be used at the conclusion of training to verify that required skill and knowledge levels have been attained. The maintainer training must adequately prepare technicians to perform preventive and corrective maintenance in accordance with the government approved maintenance plan for the EDS. CDRL A047 Training Syllabus (Maintainer) CDRL A048 Training Materials (Maintainer) 3.12 Equipment (CLIN 0005) 3.12.1 Powered Incline Conveyor (CLIN 0005A) The Contractor shall deliver and install a powered incline entrance conveyor for semi-automated luggage loading. 3.12.2 Powered Flat Conveyor (CLIN 0005B) The Contractor shall deliver and install a powered flat entrance conveyor for semi-automated luggage loading. C-24 3.12.3 Baggage Exit Slide (CLIN 0005C) The Contractor shall deliver and install a bag exit slide or conveyor. The exit slide or conveyor shall be sloped from the SA EDS Pass Through exit to ground level with a bag stop. 3.12.4 Luggage Positioning Adapter (CLIN 0005D) The Contractor shall deliver and install a luggage positioning adapter for the medium speed Integrated EDS. This adapter will position luggage to from the BHS conveyors into the medium speed EDS. 3.12.5 Standalone Training Simulator (CLIN 0005E) (Medium Speed EDS) An EDS Standalone Training Simulator shall be provided that includes the same screener/operator interface as the EDS. The training simulator shall be a Commercial Off-The-Shelf (COTS) platform that simulates real time operation of the EDS. The simulator shall include a printer. 3.12.6 Standalone Training Simulator (CLIN 0005F) (High Speed EDS) An EDS Standalone Training Simulator shall be provided that includes the same screener/operator interface as the EDS. The training simulator shall be a Commercial Off-The-Shelf (COTS) platform that simulates real time operation of the EDS. The simulator shall include a printer. 3.12.7 Programmable Logic Control (PLC) (CLIN 0005G) The contractor shall provide a programmable logic control (PLC) device to interface BHS with the medium speed Integrated EDS. 3.12.8 Remote Image Replay (CLIN 0005H) The contractor shall provide the hardware and software necessary to store images from the SA EDS and replay them at a remotely located passive threat resolution interface (PTRI). 3.12.9 BVS Remoting Kit (CLIN 0005I) The contractor shall provide the hardware and software to extend the usable range of a BVS to 300 feet (cable length). The Contractor shall maximize the use of COTS hardware and software to meet the contract requirements. The use of commercial item hardware does not exempt the Contractor from complying with the contract requirements. The Contractor shall ensure that all hardware, software, and documentation required for the operation and support of the printer is C-25 provided as part of the supplies and services provided herein. All equipment models are subject to government approval for each installation site configuration. 3.12.10 Multiplex Operation (CLIN 0006) The Contractor shall provide the necessary hardware, software, and documentation to allow multiple operators to review and resolve alarms from multiple Integrated EDS, in accordance with the requirements for multiplexing in the Integrated Explosives Detection System (EDS) Specification SEIPT-EDS-0001B. 3.12.10.1 Multiplex Network (CLIN 0006A). The hardware can include: (a) EDS scanners and Baggage Viewing Stations (BVS). (b) A server (to store common data required for network operation) with modified software configurations to enable data to be dynamically routed between EDS scanners and specific BVSs. The server maintains a database of all the information required for the multiplexing operation. (c) A network switch (for routing communications between network elements). (d) Racks, switches, cables and ancillary hardware, as required. 3.12.10.2 Additional TRI workstation (CLIN 0006B). The Contractor shall provide additional workstations for screener/operator on-screen threat resolution. 3.12.10.3 PTRI workstation (CLIN 0006C). The Contractor shall provide additional workstations for image retrieval for hand searching or other remote screening procedure. 3.12.10.4 Additional Control Interface Workstation (CLIN 0006D). The Contractor shall provide additional workstations for central network monitoring and control of EDS scanner machine operation. 3.12.10.5 Network Printer (CLIN 0006E). The Contractor shall provide a high speed network printer. C-26 3.13 EDS System Warranty For CLINs 0001, 0002, 0003 and Associated Equipment [***] Acceptance of the commercial warranty does not waive the government's rights with regard to other terms and conditions of this contract. The commercial warranty shall be in addition to and in no way limit the government's right that the system and its components will be delivered in conformity with all contract requirements and free from defects in workmanship and material. In the event of a conflict, the terms and conditions of the contract shall take precedence over the commercial warranty. 3.13.1 Scheduled/Preventive Maintenance The Contractor shall perform all scheduled/preventive maintenance for the EDS during the warranty period. For all scheduled/preventive maintenance actions, the Contractor shall coordinate in advance with the Federal Security Director (FSD) or his designee. The Contractor shall provide a logbook with each EDS. The logbook shall contain, at a minimum, a description of each action performed, date performed, and the individual that performed the action. The Contractor shall establish and maintain an electronic database containing the maintenance history and planned preventive maintenance actions of each EDS. 3.13.2 Unscheduled Maintenance For all unscheduled maintenance actions during the warranty period, the Contractor shall issue a Maintenance Coordination Electronic Message to the government's EDS systems integration contractor. A Maintenance after Action Report shall be prepared for each unscheduled (preventive and corrective) maintenance action and sent to the government's EDS system integration contractor upon completion of action. All maintenance actions shall be reported to the COTR on a monthly basis. CDRL A049 Maintenance Coordination Message CDRL A050 Maintenance after Action Report 3.14 Engineering Support Services (CLIN 3000) The Contractor shall provide the services of senior engineers and technicians to perform support tasks including, but not limited to, witnessing and assisting in operational and field tests, troubleshooting and correction of problems that may arise after successful completion of tests, assisting the government in installing of a network integrated EDS, equipment installation including performance of site surveys, site design, and project coordination. * Confidential treatment requested. C-27 4 ACRONYMS
Acronym Definition ------- ---------- CDRL Contract Data Requirements List CDROM Compact Disc Read Only Memory CFR Code of Federal Regulations CI Configuration Item CM Configuration Management CMP Configuration Management Plan CO Contracting Officer COTR Contracting Officer's Technical Representative COTS Commercial Off-the-Shelf CPR Cost Performance Report CSA Configuration Status Accounting CSAR Configuration Status Accounting Report CSCI Computer Software Configuration Item DLI Document Library Index DO Delivery Order DODSSP Department of Defense Single Stock Point DOT Department of Transportation ECP Engineering Change Proposal EDS Explosives Detection System FAA Federal Aviation Administration FAST FAA Acquisition System Toolset FAT Factory Acceptance Test FAT&E First Article Test and Evaluation FCA Functional Configuration Audit FDRS Field Data Reporting Subsystem FSD Federal Security Director HWCI Hardware Configuration Item ILS Integrated Logistics Support ISP Integrated Support Plan LRU Line Replaceable Unit
C-28
Acronym Definition ------- ---------- MCIL Master Configuration Item Listing NEC National Electrical Code OTK Operational Test Kit PCA Physical Configuration Audit PDL Program Document Library PMP Program Management Plan PMR Program Management Review PSR Program Status Report PTR Program Trouble Report QRO Quality Reliability Officer QSP Quality System Plan RFD Request for Deviation RFW Request for Waiver SAT Site Acceptance Test SEIPT Security Equipment Integrated Product Team SIP Site Installation Plan SOW Statement of Work SSR Site Survey Report T&E Test and Evaluation TIM Technical Interchange Meeting TIP Threat Image Projection TRR Test Readiness Review VRTM Verification Requirements Traceability Matrix
C-29 5 Table of Contract Data Requirements List
CDRL NUMBER DESCRIPTION ----------- ----------- A001 Program Management Plan (PMP) A002 Requirements Traceability Report A003 Program Status Report (PSR) A004 Equipment Database A005 Document Library Index (DLI) A006 Data Accession List A007 (reserved) A008 Integrated Support Plan (ISP) A009 Meeting Minutes A010 Quality System Plan (QSP) A011 Configuration Management Plan (CMP) A012 Master Configuration Item List (MCIL) A013 Engineering Change Proposal (ECP) A014 Request for Deviation (RFD) A015 Request for Waiver (RFW) A016 Configuration Status Accounting Report (CSAR) A017 Configuration Audit Plan A018 Configuration Audit Summary Plan A019 (reserved) A020 (reserved) A021 Master Test Plan (MTP) A022 First Article Test and Evaluation (FAT&E) Plan A023 First Article Test and Evaluation (FAT&E) Procedures A024 First Article Test and Evaluation (FAT&E) Report A025 Factory Acceptance Test (FAT) Plan A026 Factory Acceptance Test (FAT) Procedures A027 Factory Acceptance Test (FAT) Report A028 Site Acceptance Test (SAT) Plan A029 Site Acceptance Test (SAT) Procedures A030 Site Acceptance Test (SAT) Report A031 Operations Manual A032 Maintenance Manual A033 Installation/Integration Manual A034 Site Installation Planning Guide A035 (reserved) A036 (reserved) A037 (reserved) A038 (reserved) A039 (reserved) A040 (reserved) A041 Training Syllabus (Operator)
C-30 A042 Training Materials (Operator) A043 Operator Training Syllabus (Recurrent) A044 Operator Training Materials (Recurrent) A045 Training Syllabus (Instructor) A046 Training Materials (Instructor) A047 (reserved) A048 (reserved) A049 Maintenance Coordination Message A050 Maintenance After Action Report B001 Site Survey Report B002 Site Installation Plan (SIP)

C-31 PART I - SECTION D PACKAGING AND MARKING D.1 PACKING AND PACKAGING All deliverables under this contract shall be preserved and packaged in accordance with ASTM-D-3951, Standard Commercial Practice, to assure delivery at the destination and to prevent deterioration and damage due to shipping, handling, and storage hazards. The contractor shall identify any unique storage requirements for units and related equipment. D.2 MARKING OF DELIVERABLES In addition to information provided with shipping instructions, all deliverables shall be marked on the outside of the packaging with the following: a. TSA contract number b. Contractor's name and address c. List of contents d. Task/Delivery Order Number e. Date of submittal The Contractor may be required to install TSA furnished inventory bar codes upon completion of the EDS Site Acceptance Test as specified in delivery/task orders. D.3 MARKING OF REPORTS The Contractor shall mark all reports as follows: a. TSA contract number b. Contract Line Item Number (CLIN) c. Report Title d. Task/Delivery Order Number (if applicable) e. Date f. Distribution D-1 PART I - SECTION E INSPECTION AND ACCEPTANCE E.1 TSA ACQUISITION MANAGEMENT SYSTEM CLAUSES E.1.1 3.1-1 CLAUSES AND PROVISIONS INCORPORATED BY REFERENCE (JUNE 1999) This Screening Information Request (SIR) or contract, as applicable, incorporates by reference one or more provisions or clauses listed below with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make the full text available. (End of provision) 3.10.4-1 Contractor Inspection Requirements 3.10.4-16 Responsibility for Supplies E.1.2 TSA ACQUISITION MANAGEMENT SYSTEM CLAUSES, FULL TEXT E.1.2.A 3.10.4-13 HIGHER-LEVEL CONTRACT QUALITY REQUIREMENT (a) The Contractor shall comply with the standard(s) titled ANSI/ISO/ASQC Q9001-1994 AMERICAN NATIONAL STANDARD Quality Systems - Model for Quality Assurance in Production, Installation, and Servicing, and ANSI/ISO/ASQ Q9000-3-1997 Quality management and quality assurance standard - Part 3: Guidelines for the application of ANSI/ISO/ASQC Q9001-1994 to the development, supply, installation and maintenance of computer software. (b) The Contractor shall establish and maintain a Quality System in accordance with the above referenced standard(s) and the Contractor's Quality System Plan (QSP). This QSP is hereby incorporated into this contract when approved by the Contracting Officer. If the QSP is submitted as part of a response to a Screening Information Request (SIR) submission and approved before award, then the QSP is hereby incorporated into this contract at time of award. The QSP shall describe the Contractor's provisions for quality assurance, inspection and test of all supplies to be provided under this contract, in accordance with the terms of this contract, including but not limited to the contract specifications and the above referenced standard. (Note: formal third-party ISO 9000 registration is not required. formal third-party ISO 9000 registration does not relieve the Contractor from the requirements of submitting a QSP.) E-1 (c) In the event of conflict between the Quality System Plan (QSP) and the above referenced standard(s), the applicable ANSI/ISO/ASQC documents shall control. (d) Calibration systems and measuring and test equipment shall be controlled in accordance with MIL-STD-45662, ISO 10012, or equivalent. (e) Government Furnished Property shall be controlled to assure acceptability upon receipt, preclude degradation, damage or misuse during storage, use or test, and assure proper final disposition in accordance with the contract. (f) Site installation activities, maintenance, and support services shall be controlled in accordance with contract requirements. E.1.2.B 3.10.4-14 ASSIGNMENT OF TSA QUALITY REPRESENTATIVE The following provisions are a part of this contract. (a) The Government's TSA Quality Representative assigned to this contract, and designated as such by the Government, has the authority to verify that the Contractor's quality system complies with contract requirements, including the Contractor's Quality System Plan (QSP) (if applicable), to witness tests, and to inspect and accept or reject supplies provided under this contract. (b) Prior to shipment thereof, the Contractor shall submit to the TSA Quality Representative, for inspection and preliminary acceptance, all supplies which are subject to final Government inspection and acceptance at destination. Preliminary acceptance by the TSA Quality Representative constitutes verification by the Government that supplies comply with all contract requirements, which are to be completed prior to shipment, including satisfactory completion of factory tests. Any supplies determined by the TSA Quality Representative to be nonconforming shall be corrected prior to shipment. All other supplies, except those specified to be accepted by the Contracting Officer, shall be submitted to the TSA Quality Representative for final inspection and acceptance prior to shipment. for all supplies subject to preliminary acceptance, final acceptance and passage of title to the Government shall occur at destination. (c) Failure of the Contractor to maintain and operate a Quality System in accordance with the terms of the contract may, based upon a written determination of the TSA Quality Representative (and consistent with the quality system requirements of the contract), be grounds for rejection of affected supplies. (d) The Contractor shall provide appropriate office space for the TSA Quality Representative and his/her staff for the performance of Government evaluations and administrative functions. The office area shall be secure to accommodate meetings of a sensitive nature. File cabinets and suitable desks, both with locking capabilities; typewriters and chairs; and other miscellaneous office equipment; as required, all in E-2 good repair, shall be supplied by the Contractor. The Contractor shall provide secretarial help, as required by the TSA Quality Representative, for typing documents related to the contract. A telephone shall be provided to each desk, with no less than one line per two TSA Quality Representative staff members. The cost of long distance calls placed by the TSA Quality Representative staff will be borne by the Government. The Contractor shall provide parking space to the extent available. In the event a change in location of the TSA Quality Representative staff is required, Contractor/TSA Quality Representative coordination will take place in order to facilitate Government planning and implementation of a smooth transition. (e) Notification of Readiness for Inspection. Unless otherwise specified in the contract, the Contractor shall notify the designated resident TSA Quality Representative in writing within 2 workdays (7 workdays if there is not a resident TSA Quality Representative) of the time (1) when Contractor inspection or tests will be performed in accordance with the conditions of the contract and (2) when the supplies or services performed will be ready for government inspection. E.2 POINTS OF INSPECTION AND ACCEPTANCE E.2.1 Supplies and/or services specified for delivery in Part I - Section F, Deliveries or Performance, of this Contract shall be inspected and accepted at location specified in Section F. E.2.2 All deliverables under this Contract shall be subject to review and inspection by the Contracting Officer's TSA Quality Representative), specified in Section G. E.2.3 Inspection, review and approval of deliverables or associated services prior to final acceptance shall not be construed as assurance of acceptance of the finished product. E.2.4 Unless otherwise specifically provided in this contract, the Contracting Officer is the person authorized to make final Government acceptance of all deliverables called for in the CDRLs and all reviews specified in the SOW. Final acceptance of all deliverable items shall be made, in writing, by the TSA Contracting Officer or designee. E.3 INSPECTION AND ACCEPTANCE E.3.1 PRELIMINARY INSPECTION AND ACCEPTANCE Inspection and test associated with preliminary government acceptance of systems components and aggregates, including all hardware/equipment, along with all software, firmware and interface requirements shall be performed by the Contractor at the Contractor's facility and shall be witnessed by the TSA Quality Representative. Preliminary Government acceptance of systems components and aggregates, including all hardware/equipment, along with all software, firmware and interface requirements E-3 consists of satisfactory completion of all required factory inspections and tests. Preliminary acceptance shall be made by the Contracting Officer or designated representative on form FAA-256, Inspection Report of Material and/or Services. E.3.2 FINAL INSPECTION AND ACCEPTANCE The Government shall perform final inspection and acceptance on all systems components and aggregates, including all hardware/equipment, along with all software, firmware and interface requirements under Part I - Section F, Deliveries or Performance of this contract including installation services. Final acceptance consists of satisfactory completion of all inspections and test associated with the delivered items. Final acceptance shall be made by the Contracting Officer or designated representative on form FAA-256, Inspection Report of Material and/or Services. E.4 DEVIATIONS AND WAIVERS The Government reserves the right to waive any Government inspection. If Government inspection is waived for a Contract Item, the Contractor shall nevertheless perform all of the required tests utilizing the Government approved test procedures and provide to the Government certified test data recorded on forms as approved by the Government. The TSA Quality Representative has the authority to approve minor deviations and waivers affecting a Contract End Item if so designated by the Contracting Officer. A minor deviation or waiver is one, which does not adversely affect safety, durability, reliability, performance, interchangeability of parts or assemblies, or any technical or other requirement of the Contract and does not change price or quantity, or affect delivery under the Contract. E-4 PART I - SECTION F DELIVERIES OR PERFORMANCE F.1 3.1-1 CLAUSES AND PROVISIONS INCORPORATED BY REFERENCE This Screening Information Request (SIR) or contract, as applicable, incorporates by reference one or more provisions or clauses listed below with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make the full text available. (End of provision) 3.10.1-9 Stop Work Order 3.10.1-11 Government Delay of Work 3.10.4-16 Responsibility for Supplies F.2 3.11-29 F.O.B. ORIGIN (a) The term "f.o.b. origin," as used in this clause, means free of expense to the Government delivered -- (1) On board the indicated type of conveyance of the carrier (or of the Government, if specified) at a designated point in the city, county, and State from which the shipment will be made and from which line-haul transportation service (as distinguished from switching, local drayage, or other terminal service) will begin; (2) To, and placed on, the carrier's wharf (at shipside, within reach of the ship's loading tackle, when the shipping point is within a port area having water transportation service) or the carrier's freight station; (3) To a U.S. Postal Service facility; or (4) If stated in the SIR to any Government designated point located within the same city or commercial zone as the f.o.b. origin point specified in the contract (commercial zones are prescribed by the Interstate Commerce Commission at 49 CFR 1048). (b) The Contractor shall-- (1) (i) Pack and mark the shipment to comply with contract specifications; or F-1 (ii) In the absence of specifications, prepare the shipment in conformance with carrier requirements to protect the goods and to ensure assessment of the lowest applicable transportation charge; (2) (i) Order specified carrier equipment when requested by the Government; or (ii) If not specified, order appropriate carrier equipment not in excess of capacity to accommodate shipment; (b) (3) Deliver the shipment in good order and condition to the carrier, and load, stow, trim, block, and/or brace carload or truckload shipment (when loaded by the Contractor) on or in the carrier's conveyance as required by carrier rules and regulations; (4) Be responsible for any loss of and/or damage to the goods-- (i) Occurring before delivery to the carrier; (ii) Resulting from improper packing and marking; or (iii) Resulting from improper loading, stowing, trimming, blocking, and/or bracing of the shipment, if loaded by the Contractor on or in the carrier's conveyance; (5) Complete the Government bill of lading supplied by the (Transportation Security Administration) TSA or, when a Government bill of lading is not supplied, prepare a commercial bill of lading or other transportation receipt. The bill of lading shall show-- (i) A description of the shipment in terms of the governing freight classification or tariff (or Government rate tender) under which lowest freight rates are applicable; (ii) The seals affixed to the conveyance with their serial numbers or other identification; (iii) Lengths and capacities of cars or trucks ordered and furnished; (iv) Other pertinent information required to effect prompt delivery to the consignee, including name, delivery address, postal address and ZIP code of consignee, routing, etc.; (v) Special instructions or annotations requested by the ordering agency for commercial bills of lading; e.g., F-2 (A) "To be converted to a Government bill of lading," or (B) "This shipment is the property of, and the freight charges paid to the carrier(s) will be reimbursed by, the Government"; and (vi) The signature of the carrier's agent and the date the shipment is received by the carrier; and (6) Distribute the copies of the bill of lading, or other transportation receipts, as directed by the TSA. (c) These Contractor responsibilities are specified for performance at the plant or plants at which the supplies are to be finally inspected and accepted, unless the facilities for shipment by carrier's equipment are not available at the Contractor's plant, in which case the responsibilities shall be performed f.o.b. the point or points in the same or nearest city where the specified carrier's facilities are available; subject, however, to the following qualifications: (1) If the Contractor's shipping plant is located in the State of Alaska or Hawaii, the Contractor shall deliver the supplies listed for shipment outside Alaska or Hawaii to the port of loading in Alaska or Hawaii, respectively, as specified in the contract, at Contractor's expense, and to that extent the contract shall be "f.o.b. destination." (2) Notwithstanding subparagraph (c)(1) of this clause, if the Contractor's shipping plant is located in the State of Hawaii, and the contract requires delivery to be made by container service, the Contractor shall deliver the supplies, at the Contractor's expense, to the container yard in the same or nearest city where seavan container service is available. (End of clause) (c) The term "Ex Works" (Newark, CA) as used in this clause, means that the Contractor delivers the goods at the disposal of the Government at the Contractor's premises or another named place (i.e. works, factory, warehouse, etc.) not cleared for export and not loaded on any collecting vehicle. (d) The Contractor shall: (1) Pack and mark the shipment to comply with contract specifications; or (2) In the absence of specifications, prepare the shipment in conformance with carrier requirements. F-3 F.3 PERIOD OF PERFORMANCE The period of performance of this contract is from contract award through 36 months thereafter. The period of performance of individual Delivery Orders/Task Orders shall be specified therein. The period of performance of the firm fixed price CLINs in accordance with the QASP are as follows:
CLIN DESCRIPTION DATE ---- ----------- ---- 0008A [***] Mulltiplexing [***] 0008B [***] Mulltiplexing [***] 0008C [***] Mulltiplexing [***] 0008D [***] Passive Threat Resolution Workstations [***] 0008E [***] Mulltiplexing [***] 0008F [***] Selectee Bag [***] 0008G [***] High Speed Integrated EDS (CTX 9000) Integration [***] 0008H Image Archiver / Remote Image Replay [***] 0008I Refurbish three CTX 5500 and one CTX 2500, without warranty [***] 0008J UL Conformance [***] 0008K Automated Data Collection [***] 0008L Three try logon [***] 0008M Human Factors New GUI [***] 0008N Threat tracking [***] 0008O Radiation Survey Mode [***] 0008P Print format [***] 0008Q Feedback to Operator [***] 0008R High Speed Integrated EDS Multiplexing Capability [***]
F.4 TRANSPORTATION The Contractor shall make all arrangements for transportation, as required. F.5 PLACE OF DELIVERY/PERFORMANCE - NON-DATA ITEMS The place of delivery or performance shall be as specified in individual task/delivery orders. The Contractor is responsible for all shipping charges through final installation. The Factory Acceptance Test will be the basis for final acceptance by the government for each EDS, but such acceptance will not relieve the Contractor of its warranty obligations under this agreement. Payment shall be processed as specified in clause H.9 of this agreement. *Confidential treatment requested. F-4 F.6 TIME AND PLACE OF DELIVERY - DATA ITEMS Time and place of delivery of all contract data requirements shall be as detailed in the applicable Contract Data Requirements List (CDRL), Section J. F.7 NOTICE REGARDING LATE DELIVERY In the event the Contractor anticipates difficulty in complying with any delivery schedule, the Contractor shall immediately notify the Contracting Officer in writing, giving pertinent details, including the date by which it expects to make delivery; PROVIDED, however, that this data shall be informational only in character and that receipt thereof shall not be construed as a waiver by the Government of any contract delivery schedule, or any rights or remedies provided by law or under this contract. (End of clause) F.8 TIME OF DELIVERY - INDEFINITE DELIVERY/INDEFINITE QUANTITY ITEMS The time of delivery schedule for all contract line items (CLINs) shall be as specified in individual delivery orders and task orders. However, the Government will not order nor shall the Contractor be required to deliver indefinite delivery/indefinite quantity units in excess of the quantities indicated in Section B. The Government agrees to order the minimum quantity in accordance with Section B.4.1 in the initial delivery order, concurrent with contract award. F-5 PART I - SECTION G CONTRACT ADMINISTRATION DATA G.1 CONTRACT ADMINISTRATION (TSA) a. Contracting Officer: The TSA Administrative Contracting Officer (CO) for this contract shall be designated upon contract award. The Contracting Officer's address is as follows: Transportation Security Administration Jack Handrahan 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7125 Fax (703) 707-8997 Email: jack.handrahan@tsa.dot.gov b. Contracting Officer's Technical Representative (COTR). To be designated in writing by the Contracting Officer upon contract award. 590 Herndon Parkway, Suite 120 Ed Ocker, TSA STDO Herndon, VA 20170-5232 Telephone (703) 796-7104 Fax (703) 707-5675 Email: Keith.Goll@tsa.dot.gov c. TSA QUALITY REPRESENTATIVE. To be designated in writing by the Contracting Officer upon contract award. G.2 CONTRACT ADMINISTRATION (CONTRACTOR) a. Contract Manager: Dana Piper 7151 Gateway Blvd. Newark, CA 94560 Telephone: 510-739-2591 Fax: 510-608-0761 Email: dana_piper@invision.iip.com G-1 b. Program Manager: David Pillor 7151 Gateway Blvd Newark, CA 94560 Telephone: 510-739-2404 Fax: 510-739-0768 Email: david_pillor@invision.iip.com G.3 CONTRACTING OFFICER'S AUTHORITY a. The Contracting Officer has responsibility for ensuring the performance of all necessary actions for effective contracting; ensuring compliance with the terms of the contract and safeguarding the interests of the United States in its contractual relationships. Accordingly, the Contracting Officer is the only individual who has the authority to enter into, administer, or terminate this contract. In addition, the Contracting Officer is the only person authorized to approve changes to any of the requirements under this contract, and notwithstanding any provision contained elsewhere in this contract, the said authority remains solely with the Contracting Officer. b. The Contracting Officer may designate, in writing, representatives to perform functions required to administer this contract, however, any implied or expressed actions taken by these representatives must be within the limits cited within the Contracting Officer's written designations. The Contracting Officer shall provide the Contractor copies of all relevant written designations. If any individual alleges to be a representative of the Contracting Officer and the Contractor has not received a copy of the document designating that representative, the Contractor shall refrain from acting upon the representative's requirements and immediately contact the Contracting Officer to obtain a copy of the document designating that individual as a representative of the Contracting Officer. c. The Contractor shall immediately notify the Contracting Officer for clarification when a question arises regarding the authority of any person to act for the Contracting Officer under the contract. G.4 3.10.1-22 CONTRACTING OFFICER'S TECHNICAL REPRESENTATIVE (a) The Contracting Officer may designate other Government personnel (known as the Contracting Officer's Technical Representative) to act as his or her authorized representative for contract administration functions which do not involve changes to the scope, price, schedule, or terms and conditions of the contract. The designation will be in writing, signed by the Contracting Officer, and will set forth the authorities and limitations of the representative(s) under the contract. Such designation will not contain authority to sign contractual documents, order contract changes, modify contract terms, or create any G-2 commitment or liability on the part of the Government different from that set forth in the contract. (b) The Contractor shall immediately contact the Contracting Officer if there is any question regarding the authority of an individual to act on behalf of the Contracting Officer under this contract. (End of clause) G.5 INVOICES The Transportation Security Administration intends to make payment within 30 days of receipt of a properly prepared invoice submitted to the billing office below: See individual delivery orders: Transportation Security Administration DOT/FAA/TSA-AMZ-110 FAA Mailroom-Powership Attn: Terri King 6500 So. MacArthur Blvd, Room #370 Oklahoma City, OK 73169 The Contractor shall place the following statement on each invoice, signed by an authorized company representative: "THIS IS TO CERTIFY THAT THE SERVICES SET FORTH HEREIN WERE PERFORMED DURING THE PERIOD STATED, AND THAT INCURRED COSTS BILLED WERE ACTUALLY EXPENDED. - --------------------------------------------------- --------- SIGNATURE OF CONTRACTOR'S AUTHORIZED REPRESENTATIVE DATE" The Contractor shall submit an original and three copies of all invoices to the above designated billing office not more than once monthly. TSA approval of the invoices will be based on Contracting Officer/Contract Specialist and Contracting Officer's Technical Representative review. The Contracting Officer will authorize payment in amounts determined to be allowable, allocable, and reasonable in accordance with the following Transportation Security Administration Acquisition Management System (TSAAMS) clauses: Section G: G.5.1 3.3.1-27 Invoices for Equipment Delivered G.7 Travel Costs G.10 Accountability of Costs/Segregation of Task Orders Section H: H.9 Payment Terms

G-3 ~~Section I: 3.3.1-25 Mandatory Information for Electronic Funds Transfer Payment Method 3.3.2-1 TSA Cost Principles~~

The Contractor shall provide simultaneously with the original, a copy of each certified invoice to the Contracting Officer, and the Contracting Officer's Technical Representative as listed in Section G.1. Payment will be made pursuant to the "Mandatory Information for Electronic Funds Transfer Payment Methods" clause in Section I of this contract. G.5.1 3.3.1-27 INVOICES FOR EQUIPMENT DELIVERED (a) The Contractor shall submit a copy of FAA form 4500-1, Project Materiel Shipping and Receiving and a signed form FAA-256, Inspection Report of Material and/or Services, with invoices submitted to the TSA for payment of equipment delivered to the TSA. Further, the Contractor's invoice shall indicate the appropriate Contract Line Item number (CLIN) and, when applicable, the sub-CLIN under which each piece of equipment was ordered. (b) In addition, for each piece of equipment previously delivered, the Contractor shall list the price according to each CLIN or sub-CLIN, and indicate the corresponding form 4500-1 outgoing number. (c) If the Contractor fails to submit FAA form 4500-1, form FAA-256, or fails to submit the form in the format required by this clause, payment may be delayed. (End of Clause) G-4 G.6 CORRESPONDENCE PROCEDURES To promote timely and effective contract administration, correspondence submitted under this contract shall be subject to the following procedures (except for invoices and deliverable items): a. All correspondence relative to this contract shall be addressed to the Contracting Officer, listed in Section G.1. Correspondence of a technical nature shall include an information copy addressed to the Contracting Officer's Technical Representative (COTR), TSA, STDO Herndon, Va., listed in Section G.1. b. Mail: The Contractor shall use discretion in the use of "express" or "overnight" mail. These premium services should be used sparingly and in situations where the regular U.S. mail system would not be adequate for the timely transfer of technical or contract related documentation. Use of electronic mail or facsimile (FAX) service is encouraged where appropriate. G.7 TRAVEL COSTS a. Travel shall be reimbursed on a cost plus no fee basis, subject to Joint Federal Travel Regulations (JFTR) guidelines and any other limitations cited below. 1. The Government will reimburse the Contractor, up to amounts allowed by the JFTR, for reasonable travel expenditures, incurred in the performance of this contract. In maintaining a policy of keeping travel costs `reasonable' in the performance of this contract, the Contractor agrees to use a cost effective approach and continuously pursue opportunities to lower and contain travel costs using, where practical, group rate arrangements, off-peak travel itineraries and other similar travel cost containment methods. Further, the Contractor agrees to effect procedures to ensure Government reimbursable travel expenditures are only incurred when absolutely necessary. To assist it in determining reasonable travel cost objectives, as needed, the Contractor is encouraged to contact the TSA travel office for general guidance. Further, to mitigate the inherently higher rates associated with urgent emergent travel, the Contractor agrees to contact, reasonably in advance, the Contracting Officer for assistance prior to executing such travel, unless documented circumstances clearly indicate such advance contact was not possible. G-5 2. Incurred travel costs, listed below, will be disallowed for Government reimbursement and considered as being expenditures to be absorbed by the Contractor. Included are costs: (i) in excess of amounts allowed by the JFTR; (ii) within a Government installation, where Government transportation is available; (iii) for personal convenience, including daily travel to and from work; (iv) in the case of urgent emergent travel, in excess of amounts allowed by the JFTR, due to the Contractor not requesting Contracting Officer assistance reasonably in advance except for justifiable and documented circumstances which prevented such advance contact from being possible; and (v) in the replacement of personnel, when such replacement is accomplished for the Contractor's or employee's convenience In the case of urgent emergent travel, if the Contracting Officer's assistance has been reasonably requested in advance, or if requested as soon as practical after commencement of travel and properly justified and documented, the Contracting Officer may authorize, on a case-by-case basis, reimbursement for amounts in excess of JFTR rates. The Contractor shall implement procedures to minimize urgent emergent travel. Any Contracting Officer decision regarding reimbursement of travel costs in excess of amounts allowed by JFTR, for urgent emergent travel, shall be a unilateral decision, not subject to dispute or any right contained in the contracts disputes clause of this contract. 3. Relocation and travel costs incident to relocation will only be reimbursable by the Government if such costs are: (i) in conformance with existing company policy; (ii) represent the most cost effective approach among all other potential alternatives; and (iii) are specifically authorized by the Contracting Officer in advance of being incurred. If the Contractor anticipates relocation costs will be incurred, the Contractor must submit, to the Contracting Officer, reasonably in advance, a written request with detailed justification and a cost/benefit analysis of alternatives. The Contracting Officer shall make a unilateral decision, on the request, which will not be subject to dispute or any other recourse contained in this contract. G-6 G.8 3.8.2-17 KEY PERSONNEL AND FACILITIES a. The personnel and/or facilities as specified below are considered essential to the work being performed hereunder and may, with the consent of the contracting parties, be changed from time to time during the course of the contract. b. Prior to removing, replacing or diverting the personnel the Contractor shall notify in writing and receive consent from the Contracting Officer reasonably in advance of the action and shall submit justification (including proposed substitutions) in sufficient detail to permit the evaluation of the impact on this contract. c. No diversion shall be made by the Contractor without the written consent of the Contracting Officer. d. The key personnel and/or facilities under this contract are: Program Manager - David Pillor Production Manager - Waldemar Orlow Lead System Engineer - Lee Deal Lead Software Engineer - Lee Deal Quality Manager - John Peacock Configuration Control Manager - Michael Heintzman

InVision Technologies, Inc. 7151 Gateway Boulevard Newark (Alameda County) California 94560 G.9 LABOR CATEGORIES/SKILL LEVELS - MINIMUM QUALIFICATIONS a. The Contractor shall bill for each hour using professional labor category/skill level cited in the contract. Each labor category/skill level is derived by combining one of the labor categories with one of the skill levels cited below. Labor categories describe the type of experience or expertise and specific degree type needed. Skill levels describe the amount of experience required and level of education needed or preferred. b In determining if an employee's level of education qualifies for a specific labor category, the Contractor shall ensure that any degrees the employee has received were obtained from accredited colleges only. In determining the amount of employee direct or related work experience, the Contractor shall not count any time the employee spent acquiring education, in any form, including tine on-the-job in a cooperative program. G-7 c Professional labor categories and skill levels required on this contract, LABOR CATEGORIES Field Engineer Basic Qualifications: Successful completion of a full four (4) year course of study in an accredited college or university leading to a bachelor's or higher degree in computer science, computer engineering, electrical engineering, management information systems, or related field. Equivalent work experience is suitable as a substitute for the four year degree. Additional Qualifications: A minimum of ten (10) year experience assisting in the implementation, fielding, and maintenance of explosives detection systems (EDS) or cabinet x-ray systems, preferably in security applications. Field Services Technician Basic Qualifications: Successful completion of a two (2)-year course of study in an accredited college or trade school leading to an associate degree or equivalent, which included a major study or specific course requirements for an electronics, instrumentation and electromechanical systems leading to a professional occupation of a technician. Additional Qualifications: Must have at least five (5) years experience in implementation, fielding, and maintenance of explosives detection systems (EDS) or cabinet x-ray systems or, preferably in a security application. G.10 ACCOUNTABILITY OF COSTS/SEGREGATION OF TASK ORDERS All costs incurred, in performance of Task Orders issued under this contract, shall be accumulated in a separate job order cost account established specifically for that task order number. There shall be no commingling of costs between Task Orders. G.11 ACCOUNTING AND APPROPRIATION DATA All task and delivery orders issued under this contract will be accompanied by a proper TSA funding sheet which cites, at a minimum, the task/delivery order number, accounting data to charge for effort performed under the task/delivery order and the total amount of funding authorized to be expended for the task/delivery order. G-8 G.12 TSA INTERNAL REVIEWS OF CONTRACTOR PERFORMANCE Notwithstanding the requirement that price must always be assessed by the Contracting Officer as being reasonable, the TSA places a high value on the Contractor providing a high level of quality support in performing this contract. This TSA emphasis on the importance of quality performance initiated in awarding this contract, will be ongoing throughout the duration of this contract. Accordingly, the TSA will periodically, as subsequently scheduled by the Contracting Officer, conduct formal internal reviews focused on assessing the quality of the Contractor's performance. The Contracting Officer will share the summary results of these ongoing reviews with the Contractor as a means of providing ongoing feedback on the TSA's perception of Contractor performance. Should these reviews disclose a pattern of poor performance, lack of adherence to contractual requirements, negligence or other unfavorable trends, the TSA may terminate or, not exercise options in, this contract. Additionally, completed TSA internal review reports of Contractor performance will be maintained in the TSA's past performance database, which may be used by other Federal, State and local Government personnel in future procurements. G-9 PART I - SECTION H SPECIAL CONTRACT REQUIREMENTS H.1 SYSTEM INTEGRATION CONTRACTOR/OTHER CONTRACTOR RELATIONSHIPS a. The Contractor shall enter into a Liaison Agreement (the "Agreement") with the TSA's General Contractor and/or System Integration Contractor. All parties to the Agreement shall comply with the terms of the Agreement for the duration of this contract. The General Contractor and/or System Integration Contractor shall not, by execution of the Agreement, be considered as a subcontractor for the purposes of this contract b. The Agreements shall facilitate the exchange of data and information between the General Contractor and/or System Integration Contractor and the Contractor as reasonable and necessary for the successful integration and implementation of contract deliverables in Section B. c. As a minimum, the Agreements shall provide for the following: 1. As requested by the General Contractor and/or System Integration Contractor, the Contractor shall provide the General Contractor and/or System Integration Contractor all necessary interface data for the successful integration and implementation of the contract deliverables. 2. Concurrent with its submittal to the Government of each proposed engineering change, the Contractor shall provide to the General Contractor and/or System Integration Contractor any interface data that the Contractor believes is changed or impacted by the proposed engineering change. The Contractor will communicate to the General Contractor and/or System Integration Contractor in a reasonable and efficient manner the details of any known impact of the proposed engineering change on the TSA's Configuration Management Plan, and any information regarding the Contractor's projected and actual costs and schedule that is necessary for the General Contractor and/or System Integration Contractor to evaluate the proposed engineering change. 3. Concurrent with its submittal to the Government, the Contractor shall coordinate each proposed contract specification change, deviation and waiver that impacts the integration and implementation of the contract deliverables with the General Contractor and/or System Integration Contractor. The Contractor shall provide to the General Contractor and/or System Integration Contractor interface data that is necessary for the System Integration Contractor to evaluate the proposed specification change, deviation or waiver. H-1 4. The Contractor shall promptly disclose to the General Contractor and/or System Integration Contractor material interface problems known to the Contractor that, if unresolved, would prevent successful integration and implementation of the contract effort with other systems or subsystems. If an interface problem is proposed to be resolved by a change in the contract specifications, the Contractor shall do so as described in c.2 above. 5. Unless restricted by the Government, the General Contractor and/or System Integration Contractor shall be permitted to attend all meetings between the Contractor and the Government pertaining to equipment integration issues or matters, and the Contractor shall be permitted to attend all meetings between the General Contractor and/or System Integration Contractor and the Government pertaining to equipment integration issues. 6. As may be necessary to accomplish the purposes of the Agreement, representatives of the Contractor shall meet from time to time at the Contractor's facility with the General Contractor and/or System Integration Contractor. 7. If requested by the TSA, the General Contractor and/or System Integration Contractor shall be permitted to monitor all acceptance testing by the Contractor in connection with this contract which the Government has the right to witness and the Contractor shall be permitted to monitor all testing by the General Contractor and/or System Integration Contractor in connection with the General Contractor and/or Systems Integration Contract as it pertains to the equipment. 8. In accordance with paragraph (d) of this agreement, the General Contractor and/or System Integration Contractor and the Contractor shall agree on the procedures for the proper protection of proprietary information owned by the Contractor and disclosed to the General Contractor and/or System Integration Contractor, and of proprietary information owned by other Contractors and disclosed to the Contractor. The General Contractor and/or System Integration Contractor will agree to use the proprietary information owned by the Contractor, whether provided by the Government, the Contractor or any other Contractor or subcontractor solely for the performance of the General Contract and/or System Integration Contract and execute an appropriate non-disclosure agreement. 9. For as long as InVision offers to maintain the EDS machines sold or manufactured by InVision to the TSA or any Government entity (the InVision machines) to a reasonable standard and at a fair and reasonable price, InVision will have a perpetual right to be the maintenance provider for all InVision machines. d. The Contractor may receive proprietary information owned by other TSA Contractors from the General Contractor and/or System Integration Contractor or the Government. Except with the prior written permission of the owner of the proprietary information, the Contractor shall not release, use or disclose, in whole or part, proprietary information owned by another person. Neither this contract nor the Agreement shall affect the H-2 right of the Government, the Contractor, the Contractor's subcontractors, the General Contractor and/or System Integration Contractor, the General Contractor and/or System Integration Contractor's subcontractors, or any other TSA Contractor to use proprietary information if such information is lawfully obtained on an unrestricted basis from any source. At no time during the performance of this contract is the Contractor required to release proprietary information, or proprietary direct or indirect rate information to the General Contractor and/or System Integration Contractor, or other Contractors. Should any inadvertent release occur, neither this contract nor the Agreement shall be the basis for any liability on the part of the Government for the use, release or disclosure, by the General Contractor and/or System Integration Contractor, or other Contractors, of any proprietary information owned by the Contractor. The Contractor agrees that it shall use proprietary information owned by others, whether provided by the Government, the General Contractor and/or System Integration Contractor or any other Contractor or subcontractor, solely for the performance of this contract. This provision, however, shall not affect the right of the Contractor or any of its subcontractors to use such proprietary information for other purposes if the information is lawfully obtained on an unrestricted basis from any source. e. The Contractor shall provide the Contracting Officer with one copy of each Agreement entered into with the General Contractor and/or System Integration Contractor, and other Contractors, and any Amendments thereto. f. The Contractor shall include the requirements of this agreement in its subcontracts in excess of $100,000. g. Nothing in this contract or in the Agreement shall be deemed to be a basis for the alteration of, deviation from or failure to comply with, the terms and provisions of this contract. In the event of a conflict between any of the terms and provisions of this contract and the Agreement, the terms and provisions of this contract shall control with respect to the parties to this contract. H.2 TASK ORDER PROCEDURES (APPLICABLE TO CLIN 3000) a. General. Services to be performed under the referenced Contract Line Item Number shall be ordered by the issuance of Task Orders. b. Format. The Contracting Officer will issue all Task Orders, in writing, to the Contractor using TSA form titled "Award for Supplies or Services", or "Revision to Award for Supplies or Services" in the case of a modification to an order. Each Task Order shall be in accordance with and subject to all terms and conditions of the contract under which it is issued and shall contain, as a minimum, the following information: H-3 1. A Task Order number 2. Task Order Title 3. Task Order (or revision) Action Description 4. Appropriate TSA points-of-contact 5. A period-of-performance 6. Funding information: Not-to-exceeds, limitations, appropriation data, task order cost detail, and other appropriate information 7. A description of the work to be performed which is within the scope of the statement-of-work for this contract 8. A list of deliverables and the required delivery schedule; 9. A description of any authorized travel including to and from points as applicable; 10. A description of any Government-Furnished Information or Property to be provided with delivery locations and required delivery dates; c. Procedures. The Contracting Officer will submit to the Contractor a Task Order marked "Draft" for Contractor review and comment. The Contractor will consult with the COTR to estimate resources (time, material, travel and GFP/GFI support) needed to accomplish the Task Order requirements. The Contractor will prepare an estimate and forward it to the Contracting Officer by facsimile transmission or other rapid communication method. Upon receipt, the Contracting Officer shall check the Task Order for acceptability, accuracy and completeness; include additional information if necessary; and forward the Task Order to the Contractor at least 24 hours prior to commencement of performance. Upon receipt, the Contractor shall review and acknowledge acceptance of the Task Order by signing and dating the order and expeditiously returning the signed Task Order to the Contracting Officer by facsimile transmission or other rapid communication method. If the Contractor determines that the Task Order, as written, is unacceptable, the Contractor shall immediately notify the Contracting Officer and detail the reasons for its position. Upon receipt of this notification, the Contracting Officer will initiate action, as appropriate. Upon receipt of an acceptable signed Task Order from the Contractor, the Contracting Officer will countersign and date the Task Order. d. Immediate Need Procedures. In the event the SEIPT has an immediate need to start an activity in the field that cannot wait for the usual task order procedures, the Technical Officer will notify the Contracting Officer via electronic mail and phone. The Technical Officer will provide the Contracting Officer all pertinent information to base a decision to authorize work. Upon deciding that the SEIPT should start this effort, the Contracting Officer will send electronic mail and phone messages to the Contractor authorizing work to begin, and providing as much written direction as feasible to start work. The Technical Officer has five (5) working days to prepare the draft task order for submittal to the Contractor, as per the procedures in Section C above. H.3 DELIVERY ORDER PROCEDURES (APPLICABLE TO CLIN 0003,) a. General. Items to be delivered under the referenced Contract Line Item Numbers (CLINs) shall be ordered via the issuance of Delivery Orders. H-4 b. format. The Contracting Officer will issue Delivery Orders, in writing, to the Contractor, using TSA format (Order for Supplies or Services). Each Delivery order issued shall be in accordance with and subject to all terms and conditions of the contract under which it is issued and shall contain, as a minimum, the following information: 1. A Delivery Order number; 2. Appropriate TSA points-of-contact; 3. A period-of-performance; 4. A list of deliverables and the delivery schedule; 5. A description of authorized travel including to and from points; 6. A maximum allowable travel amount, as applicable; 7. A description of any Government-Furnished Information or Property to be provided with delivery locations and required delivery dates; 8. A delivery order maximum amount; 9. Applicable appropriation and accounting data; and c. Procedures. Each Delivery Order shall be prepared by the COTR and forwarded to the Contracting Officer for review and signature. Upon receipt, the Contracting Officer shall check the Delivery Order for acceptability, accuracy and completeness and shall forward the Order to the Contractor. Upon receipt, the Contractor shall review and acknowledge acceptance of the Delivery Order by signing and dating the order and expeditiously returning the signed Delivery Order to the Contracting Officer by facsimile transmission or other rapid communication method. If the Contractor determines that the Delivery Order, as written, is unacceptable, the Contractor shall immediately notify the Contracting Officer and detail the reasons for its position. Upon receipt of this notification, the Contracting Officer will initiate action, as appropriate. Upon receipt of an acceptable, signed Delivery Order from the Contractor, the Contracting Officer will countersign and date the Order. d. Minimum Lead Time - Order to Delivery. Via issuance of delivery orders, the Government shall afford the Contractor a minimum lead time from date of Contracting Officer signature to required date of item delivery, as stated in individual delivery orders. The minimum lead times shall be not less than the following: ~~CLIN Lead Time 0003 A minimum of six months from date of order to date of delivery T&M A minimum of three weeks from date of order to date of performance~~

H.4 3.2.4-16 ORDERING (a) Any supplies and services to be furnished under this contract shall be ordered by issuance of delivery orders or task orders by the individuals or activities designated in the Schedule. Such orders may be issued from date of contract award through 24 months thereafter. H-5 (b) All delivery orders or task orders are subject to the terms and conditions of this contract. In the event of conflict between a delivery order or task order and this contract, the contract shall control. (c) If mailed, a delivery order or task order is considered "issued" when the Government deposits the order in the mail. Orders may be issued orally, by facsimile, or by electronic commerce methods only if authorized in the Schedule. (End of clause) H.5 3.2.4-17 ORDER LIMITATIONS (OCTOBER 1996) (a) Minimum order. When the Government requires supplies or services covered by this contract in an amount of less than $1,000,000 the Government is not obligated to purchase, nor is the Contractor obligated to furnish, those supplies or services under the contract. (b) Maximum order. The Contractor is not obligated to honor- (1) Any order for a single item in excess of N/A units; (2) Any order for a combination of items in excess of N/A; or (3) A series of orders from the same ordering office within N/A days that together call for quantities exceeding the limitation in subparagraph (1) or (2) above. (c) If this is a requirements contract, the Government is not required to order a part of any one requirement from the Contractor if that requirement exceeds the maximum-order limitations in paragraph (b) above. (d) Notwithstanding paragraphs (b) and (c) above, the Contractor shall honor any order exceeding the maximum order limitations in paragraph (b), unless that order (or orders) is returned to the ordering office within 15 days after issuance, with written notice stating the Contractor's intent not to ship the item (or items) called for and the reasons. Upon receiving this notice, the Government may acquire the supplies or services from another source. (End of clause) H.6 DISSEMINATION OF CONTRACT INFORMATION The Contractor shall not publish, permit to be published, or distribute for public consumption any information, oral or written, concerning the results or conclusions made pursuant to the performance of this contract, without the prior written consent of the H-6 Contracting Officer. This statement includes seminars, professional society meeting/conferences and meetings with foreign dignitaries both government and from the private sector. Two copies of any material proposed to be published or distributed shall be submitted to the Contracting Officer. The following schedule is established as a guideline when requesting consent (calendar days): ~~Written information - 15 days Oral information - 15 days Congressional information - 10 days~~

Any Contractor proposals for perspective work, exclusive of this contract, for which the Contractor may employ information generated in the performance of this contract, the Contractor is required only to notify the Contracting Officer of its intent to submit a proposal. Such notification shall include a brief description of the requirement for which the Contractor is proposing and indicate the Government or business entity to which the proposal is being submitted. H.7 INCORPORATION OF REPRESENTATIONS AND CERTIFICATIONS BY REFERENCE All representations, certifications and other written statements made by the Contractor in response to Section K of the SOLICITATION, incident to award of this contract or modification of this contract, are hereby incorporated by reference into this contract with the same force and effect as if they were given in full text herein. H.8 ETHICAL BEHAVIOR Notwithstanding the Contractor's obligation to comply with all requirements, terms and conditions contained in this contract, the Contractor is encouraged to conduct an ongoing program to ensure its and subcontractor employees are aware of, understand and practice ethical behavior and conduct themselves in an unbiased and objective manner. Situations may arise where employees of the Contractor or subcontractor may review documentation, participate in discussions, help execute actions or otherwise exert influence on decisions, which could involve competitors. In such situations, involved Contractor or subcontractor employees shall refrain from making any statement or taking action, which could be construed as demonstrating bias against a competitor. H.9 PAYMENT TERMS The TSA shall pay the Contractor, upon the submission of proper invoices, the prices stipulated in this contract for supplies delivered and accepted or services rendered and accepted, less any deductions provided in this contract. Payment will be made upon receipt of a proper invoice that includes a form FAA-256, Inspection Report of Material and/or Services, signed by the TSA Quality Representative, upon successful completion of Factory Acceptance Test (FAT) and Site Acceptance Test (SAT). Payment shall be H-7 made in accordance with the following schedule. Offerors may propose alternate payment terms. Payment Terms: For CLIN, 00003, Production units: Up to 50% of the CLIN price at the time of order. 40% of the CLIN price at satisfactory completion of Factory Acceptance Test, Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. 10% of the CLIN price at satisfactory completion of Site Acceptance Test, but not later than 90 days after successful completion of the Factory Acceptance Test. Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. H.10 ESCROW ACCOUNT REQUIREMENT The TSA has a mandate to acquire and install airport security equipment throughout the country. It is essential that the TSA have the ability to acquire and maintain the systems in the event the Contractor goes out of business, or cannot supply and maintain the equipment acquired under this contract. Therefore, the Contractor shall establish an escrow account to include all necessary software (installation disks and documentation) source and object code and documentation, and related hardware drawings (level 3) for the equipment and its peripheral equipment ordered under this contract. The Contractor shall ensure that the escrow is updated and kept current to the product baseline and any engineering change proposals provided under this contract as modified. The Contractor shall coordinate this effort with the TSA and provide a copy of the account document for TSA review and concurrence. The escrow account shall be established within sixty (60) days from contract award, and the final agreement shall be completed no later than sixty (60) days after TSA concurrence of account. The account shall include the same information for subcontractors IAW Clause H.1.f, except for commercial off the shelf items from subcontractors or vendors, for which the escrow account shall include only installation disks and documentation, and not source and object code and documentation. H.11 SUBCONTRACTING PLAN SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS SUBCONTRACTING PLAN. H-8 The Contractor's Small Business and Small Disadvantaged Business Subcontracting Plan, will be approved by contract modification, and will be incorporated into and made a part of this contract. The Small Business and Small Disadvantaged Business Subcontracting Plan must be submitted and approved no later than July 31, 2003. H.12 RESERVED H.13 CONTRACTOR NON-COMPLIANCE WITH CONTRACT a. Contractor non-compliance with any requirement, term or condition contained in this contract may result in the TSA: 1. Terminating this contract, in whole or part, for convenience or default; 2. Withholding payments; 3. Initiating suspension or debarment action against the Contractor; and 4. Initiating other action, as appropriate. b. In addition to paragraph a., Contractor non-compliance with any statutory requirement included in this contract, may result in the Contractor and, its employees and subcontractors being fined and/or imprisoned, or incurring other sanctions. H.14 SUBCONTRACTS The Contractor shall ensure all subcontracts awarded under this contract incorporate all clauses and provisions required by this contract, including applicable Section K "Representations and Certifications". The Contractor shall only invoice for work completed by subcontractors and make payments to subcontractors in a manner consistent with or more expeditious than the Government's requirement for prompt payment. If the Contractor fails to comply with this procedure, it will be proceeding at its own risk and may result in this contract subsequently being terminated. H.15 RESERVED H.16 RELEASE OF INFORMATION Work performed under this contract may involve access to information, including specification, cost estimates and other sensitive data. Consequently, the Contractor and subcontractor(s) (including individual employees thereof) shall not release or communicate, except as required by law or regulations, such information, including any news release, public announcement, or advertising material concerned with this contract, whether orally or in writing, to any person except: H-9 a. TSA personnel with a "need to know" who have signed a non-disclosure form b. Employees of the Contractor with a "need to know", who have signed a non-disclosure form, or c. Such other person as may be designated in writing by the CO and who have signed a non-disclosure form. Further, no documents, reports, information, etc., related to work under this contract, may be released to the public or provided to any party other than the TSA and it's Contractors without Security Sensitive Information and Classification review in accordance with the form DD-254 and written approval of the TSA. H.17 DATA RIGHTS TRANSFER In the event that the Government transfers title to the supplies acquired under this contract to a third party, the license document titled InVision Technologies, Inc. Software License (Attached at the end of Section H) ("the InVision License") shall apply to the transferee. Government data rights under this contract are as detailed in the InVision License, Section I clauses 3.5-11, "Patent Rights - Retained by Contractor (Long Form)," 3.5-13, "Rights in Data - General" and 3.5-18 "Commercial Computer Software - Restricted Rights" for any customization or modification made to Contractor software. Additionally, the Government shall not be liable for any patent or copyright infringement resulting from a title transfer. H.18 FIXED RATES (CLIN 3000) - INDEFINITE QUANTITY CONTRACT The rate, or rates, set forth in the contract include salary, overhead, general and administrative expenses, and profit. The Contractor shall submit an invoice for only the time of the personnel whose services are applied directly to the work called for in each individual Delivery/Task Order and accepted by the Contracting Officer's Technical Representative. The Government shall pay the Contractor for a Delivery/Task Order at rates in effect in the contract for the contract period when the Delivery/Task Order was issued. The Contractor shall maintain time and labor distribution records for all employees who worked under the contract. These records must document time worked and work performed by each individual on all Delivery/Task Orders. H.19 MATERIALS AND TRAVEL Travel and incidental materials used during installation shall be reimbursed at cost plus G&A, if applicable and approved by DCAA. No profit shall be paid on travel and incidental materials used during installation. H-10 H.20 COMPLETION OF DELIVERY ORDERS All orders issued during the effective period of the contract and not completed within that period shall be completed by the Contractor within the time specified in the order, or any option exercised. The rate prevailing immediately prior to contract expiration shall apply to all such work. H.21 3.10.4-22 DIMINISHING MANUFACTURING SOURCES AND MATERIAL SHORTAGES (a) The Contractor shall perform an initial baseline analysis of the electronic parts / electronic micro-circuits including preferred and alternate parts and submit it to the TSA Contracting Officer for acceptance within (90*) days after contract award. The Contracting Officer will review the analysis and notify the Contractor of acceptance within 90* days after receipt. (b) The Contractor's analysis shall identify obsolete parts and diminishing manufacturing sources and material shortages (DMSMS). Criteria used in evaluating obsolete parts and DMSMS shall include the life cycle use of the product and available suppliers. The Contractor's analysis shall identify electronic parts / electronic micro-circuits in a high, medium and low risk category as follows: High risk indicates parts are obsolete and availability is minimal or nonexistent. Medium risk indicates the parts are a diminishing item and projected availability is for one or two years or only one supplier is available. Low risk indicates parts are projected to be available for 3 years or more and multiple suppliers are available. (c) The Contractor shall monitor the parts and material that have the potential to adversely affect production or life cycle supportability. (d) The Contractor shall also monitor the Government Industry Data Exchange Program (GIDEP) data base for all high risk parts identified as part of the analysis and during risk monitoring. The Contractor shall prepare a DMSMS notice in accordance with GIDEP for all parts not found in the data base. (e) The Contractor shall submit a recommendation to the Contracting Officer or designated representative stating how the DMSMS parts will be supported. The Contractor shall submit the recommendation quarterly after the initial baseline analysis is accepted by the TSA Contracting Officer. The Contractor shall also address part cost, where and how often parts are used in the product, and how many parts are affected in the recommendation. H-11 (f) Compliance with this clause shall not relieve the Contractor from complying with any other provisions of the contract. * Specify at time of award. (End of clause) H.23 RESERVED H.24 EQUIPMENT NONCONFORMANCE a. Definitions Nonconformance - The failure of a characteristic to conform to the requirements specified in the contract, drawings, specifications, or other approved product description. (1) Minor Nonconformance - A nonconformance that is not likely to materially reduce the usability of the supplies or services for their intended purpose, or is a departure from established standards having little bearing on the effective use or operation of the supplies or services. Multiple minor non-conformances, when considered collectively, may raise the category to a major/critical nonconformance. A minor nonconformance does not adversely affect any of the following: a) Health or Safety. b) Performance. c) Interchangeability, reliability, or maintainability. d) Effective use or operation. e) Weight or appearance (when a factor). (2) Major Nonconformance - A nonconformance, other than critical, that is likely to result in failure, or to materially reduce the usability of the supplies or services for their intended purpose; and that cannot be completely eliminated by rework or reduced to a minor nonconformance by repair and directly affects items in subparagraph (1) a through e above. This may also include a failure or refusal by the Contractor to repair the supplies or services under the warranty. (3) Critical Nonconformance - A nonconformance that is likely to result in hazardous or unsafe conditions for individuals using, maintaining, or depending upon the supplies or services, or is likely to prevent performance of a vital agency mission. b. If a piece of equipment purchased by the TSA is discovered to have any nonconformance, the Contractor must propose a fix to the TSA. At the discretion of the Contracting Officer, this fix can be, but is not limited to, a "swap out" with a new piece of equipment or extended warranty. The proposed fix must be at no additional cost to the TSA, it's Assignee, or agent. H-12 c. If a piece of equipment is found to have any major or critical nonconformance and the Contractor does not satisfactorily correct the nonconformance, the TSA must be compensated as follows: (1) If the nonconformance is discovered in year 1 - complete replacement d. If the major or critical nonconformance is so grievous as to affect the TSA's, Assignee's, or agent's ability to maintain security at the site where the subject equipment is located, the TSA, as determined by the Contracting Officer, may: (1) Suspend all subsequent orders at no cost to the TSA; (2) Cancel all subsequent orders at no cost to the TSA; (3) Seek an equitable adjustment for the value of the nonconforming equipment; (4) Seek any remaining common law damages; or (5) Terminate for default. (End of Clause) H.25 CONTRACTOR EMPLOYEES WITH LIMITED ACCESS TO DHS INFORMATION, FACILITIES, AND RESOURCES The Contracting Officer may require dismissal from work of those employees that he/she deems incompetent, careless, insubordinate, unsuitable or otherwise objectionable, or whose continued employment he/she deems contrary to the public interest or inconsistent with the best interests of security and the Department. The Contractor and Contractor's employees shall complete and submit to the Government such forms as may be necessary for security or other reasons. At a minimum, a fingerprint card will be submitted by each Contractor employee, prior to entrance on duty. H.26 3.2.2.3-33 ORDER OF PRECEDENCE Any inconsistency in this contract shall be resolved by giving precedence in the following order: (a) the Schedule (excluding the specifications); (b) representations and other instructions; (c) contract clauses; (d) other documents, exhibits, and attachments; (e) the specifications; and (f) the drawings. H.27 RESERVED H-13 H.28 RESERVED H.29 RECIPROCAL WAIVER OF CLAIMS (REGULATIONS IMPLEMENTING THE SUPPORT ANTI-TERRORISM BY FOSTERING EFFECTIVE TECHNOLOGIES ACT OF 2002 (THE SAFETY ACT) SEC. 25.4(E), 68 FED.REG. 133, 41429 (JULY 11, 2003)) The TSA and Contractor shall each be responsible for losses, including business interruption losses, that it sustains or for losses sustained by its own employees resulting from an activity resulting from an act of terrorism when qualified anti-terrorism technologies have been deployed in defense against, response to, or recovery from such act. H.30 DEFENSE PRIORITY AND ALLOCATION REQUIREMENT This is a DO-H8 rated order certified for national defense use. Contractor shall follow all the requirements of the Defense Priorities and Allocations System regulation (15 CFR 700). H.31 PRICE REDUCTION The Government requires significant cost reductions in the performance of this contract. The pricing for Standalone EDS incorporates significant reductions for varying volume increases. The Government also anticipates that the Contractor will realize Bill of Material (BOM) cost savings. In satisfaction of this price reduction requirement, the Contractor shall provide the following equipment and services to the Government: [***] *Confidential treatment requested. H-14 INVISION TECHNOLOGIES, INC. SOFTWARE LICENSE Where any Product includes software, whether embedded or on a disk or tape or other media, InVision grants to Purchaser a perpetual, non-exclusive, license to use the software portion of such Product, in object code and firmware form only, in connection with Purchaser's use of the Product. InVision retains all right, title and interest in the software portion of the Product, and all improvements, modifications and upgrades (if any) to the software portion of the Product. This license may not be transferred except in connection with the transfer of the Product itself. Purchaser shall not reproduce, decompile or disassemble all or any portion of the software portion of the Products or sub-license, distribute or disclose all or any portion of the software to any third party without InVision's express prior written consent. Purchaser agrees that it shall not exceed, nor permit others to exceed, the scope of the license granted herein. H-15 PART II - SECTION I CONTRACT CLAUSES I.1 3.1-1 CLAUSES AND PROVISIONS INCORPORATED BY REFERENCE) This Screening Information Request (SIR) or contract, as applicable, incorporates by reference one or more provisions or clauses listed below with the same force and effect as if they were given in full text. Upon request, the Contracting Officer will make the full text available. (End of provision) 3.1.8-2 Price or Fee Adjustment for Illegal or Improper Activity 3.2.2.3-1 False Statements in Offers 3.2.2.3-8 Audit and Records 3.2.2.3-25 Price Reduction for Defective Cost or Pricing Data 3.2.2.3-29 Integrity of Unit Prices (April 1996) 3.2.2.3-31 Facilities Capital Cost of Money 3.2.2.3-32 Waiver of Facilities Capital Cost of Money 3.2.2.3-37 Notification of Ownership Changes 3.2.2.3-67 Special Precautions for Work at Operating Airports 3.2.2.7-6 Protecting the Government's Interest when Subcontracting with Contractors Debarred, Suspended, or Proposed for Debarment 3.2.2.8-1 New Material 3.2.5-1 Officials Not to Benefit 3.2.5-3 Gratuities or Gifts 3.2.5-4 Contingent Fees 3.2.5-5 Anti-Kickback Procedures 3.2.5-8 Whistleblower Protection for Contractor Employees 3.2.5-11 Drug Free Workplace 3.3.1-12 Limitation of Cost 3.3.1-15 Assignment of Claims 3.3.1-25 Mandatory Information for Electronic Funds Transfer Payment 3.3.2-1 TSA Cost Principles 3.5-11 Patent Rights - Retention by Contractor (Long Form) 3.5-13/alt 1 Rights in Data - General 3.5-18 Commercial Computer Software - Restricted Rights* 3.6.2-4 Walsh-Healey Public Contracts Act 3.6.2-7 Pre-award On-Site Equal Opportunity Compliance Review 3.6.2-9 Equal Opportunity 3.6.2-12 Affirmative Action for Special Disabled and Vietnam Era Veterans 3.6.2-13 Affirmative Action for Workers with Disabilities 3.6.2-14 Employment Reports on Special Disabled Veterans and Veterans of Vietnam Era - ----------- * Applies for any customization or modification made to Contractor software I-1 3.6.3-1 Clean Air and Water 3.6.3-2 Clean Air and Clean Water Certification 3.6.3-10 Certification of Toxic Chemical Release Reporting 3.6.4-2 Buy American Act -- Supplies 3.10.1-1 Notice of Intent To Disallow Costs 3.10.1-2 Production Progress Reports 3.10.1-9 Stop-Work Order 3.10.1-11 Government Delay of Work 3.10.1-12 Changes--Fixed-Price 3.10.1-14 Changes--Time and Materials or Labor Hours 3.10.1-24 Notice of Delay 3.10.2-3. Subcontracts (Time-and-Materials and Labor-Hour Contracts) 3.10.2-6. Subcontracts for Commercial Items and Commercial Components 3.10.4-2 Inspection of Supplies--Fixed-Price 3.10.4-5 Inspection--Time-and-Material and Labor-Hour 3.10.4-23 Contractor and Subcontractor Compliance with Fastener Act 3.10.5-1 Product Improvement/Technology Enhancement 3.10.6-1 Termination for Convenience of the Government (Fixed Price) 3.10.6-3/alt4 Termination (Cost-Reimbursement) Alternate IV 3.10.6-4 Default (Fixed-Price Supply and Service) 3.10.6-7 Excusable Delays I.2 RESERVED I.3 3.1.8-1 CANCELLATION, RECISSION, AND RECOVERY OF FUNDS FOR ILLEGAL OR IMPROPER ACTIVITY (a) If the Government receives information that a Contractor or person has engaged in conduct constituting a violation of subsection (a), (b), (c), or (d) of section 27 of the Office of Federal Procurement Policy Act (41 U.S.C. 423) (the Act), as amended by section 4304 of the National Defense Authorization Act for Fiscal Year 1996 (Pub. L. 104-106), the Government may- (1) Cancel the Screening Information Request, if the contract has not been awarded or issued; or (2) Rescind the contract with respect to which- (i) The Contractor or someone acting for the Contractor has been convicted for an offense where the conduct constitutes a violation of subsection 27 (a) or (b) of the Act for the purpose of either- (A) Exchanging the information covered by such subsections for anything of value; or (B) Obtaining or giving anyone a competitive advantage in the award of an TSA procurement contract; or I-2 (ii) The head of the contracting activity has determined, based upon a preponderance of the evidence, that the Contractor, or someone acting for the Contractor has engaged in conduct constituting an offense punishable under subsection 27 (e)(1) of the Act. (b) If the Government rescinds the contract under paragraph (a) of this clause, the Government is entitled to recover, in addition to any penalty prescribed by law, the amount expended under the contract. (c) The rights and remedies of the Government specified herein are not exclusive, and are in addition to any other rights and remedies provided by law, regulation, or under this contract. (End of clause) I.4 3.2.5-12 NOTICE OF EMPLOYMENT OF FORMER UNITED STATES GOVERNMENT EMPLOYEES (SERVICE CONTRACTS) (a) This clause implements the Federal Workforce Restructuring Act of 1994 ("Buyout"), P.L. 103-226. The following requirements apply to any contract, task order, or other arrangement for service contracts entered into after March 30, 1994 and immediately upon knowledge of such arrangements. (b) The offeror shall provide, along with the submittal, the following notice and certification of employment of employee(s) who were previously employed by the United States Government and received the voluntary separation incentive payment ("buyout"). This notice is required immediately upon the Contractor's knowledge at any time during the contract period. The Contractor shall provide notice to employees that in accordance with the buyout legislation, the buyout employee performing on a personal service contract for the Untied States Government is required to repay the buyout incentive. NOTICE OF EMPLOYMENT OF FORMER UNITED STATES GOVERNMENT EMPLOYEES (SERVICE CONTRACTS) The following individuals are former United States Government employees who are presently employed by___________________________ [company name]. I-3
Employee's Name former Agency Description SubContractor Date of of Employment of Contract Separation Task from Agency - --------------- ------------- ----------- ------------- -----------
This company has not hired and does not intend to hire any former United States Government employees who took the buyout. Contractor's Certification On behalf of _________________ [company's name] I certify that the above information is accurate and complete to the best of my knowledge. - -------------------------- [Name of Company Representative] Contracting Officer's Certification I have reviewed the above information and have determined that: ____ The buyout legislation has not been violated. ____ The employment is in violation of the buyout legislation and the employee is required to repay the incentive payment. The Contractor shall remind the employee of his/her obligation to pay. - ---------------------------- [Contracting Officer's Name] - ---------------------------- Date (End of clause) I.5 RESERVED I.6 3.9.1-1 CONTRACT DISPUTES (a) All contract disputes arising under or related to this contract shall be resolved through the Federal Aviation Administration (FAA) dispute resolution system at the Office of Dispute Resolution for I-4 Acquisition (ODRA) and shall be governed by the procedures set forth in 14 C.F.R. Parts 14 and 17, which are hereby incorporated by reference. Judicial review, where available, will be in accordance with 49 U.S.C. 46110 and shall apply only to final agency decisions. A Contractor may seek review of a final TSA decision only after its administrative remedies have been exhausted. (b) The filing of a contract dispute with the ODRA may be accomplished by mail, overnight delivery, hand delivery, or by facsimile. A contract dispute is considered to be filed on the date it is received by the ODRA. (c) Contract disputes are to be in writing and shall contain: (1) The Contractor's name, address, telephone and fax numbers and the name, address, telephone and fax numbers of the Contractor's legal representative(s) (if any) for the contract dispute; (2) The contract number and the name of the Contracting Officer; (3) Contractor's positions regarding each element or count of the contract dispute (i.e., broken down by individual claim item), citing to relevant contract provisions and documents and attaching copies of those provisions and documents; (4) All information establishing that the contract dispute was timely filed; (5) A request for a specific remedy, and if a monetary remedy is requested, a sum certain must be specified and pertinent cost information and documentation (e.g., invoices and cancelled checks) attached, broken down by individual claim item and summarized; and (6) The signature of a duly authorized representative of the initiating party. (d) Contract disputes shall be filed at the following address: (1) Office of Dispute Resolution for Acquisition, AGC-70, Federal Aviation Administration, 400 7th Street, S.W., Room 8332, Washington, DC 20590, Telephone: (202) 366-6400, Facsimile: (202) 366-7400; or (2) other address as specified in 14 CFR Part 17. (e) A contract dispute against the TSA shall be filed with the ODRA within two (2) years of the accrual of the contract claim involved. A contract dispute by the TSA against a Contractor (excluding contract disputes alleging warranty issues, fraud or latent defects) likewise shall be filed within two (2) years after the accrual of the contract claim. If an underlying contract entered into prior to the effective date of this part provides for time limitations for filing of contract disputes with the ODRA I-5 which differ from the aforesaid two (2) year period, the limitation periods in the contract shall control over the limitation period of this section. In no event will either party be permitted to file with the ODRA a contract dispute seeking an equitable adjustment or other damages after the Contractor has accepted final contract payment, with the exception of TSA claims related to warranty issues, gross mistakes amounting to fraud or latent defects. TSA claims against the Contractor based on warranty issues must be filed within the time specified under applicable contract warranty provisions. Any TSA claims against the Contractor based on gross mistakes amounting to fraud or latent defects shall be filed with the ODRA within two (2) years of the date on which the TSA knew or should have known of the presence of the fraud or latent defect. (f) A party shall serve a copy of the contract dispute upon the other party, by means reasonably calculated to be received on the same day as the filing is to be received by the ODRA. (g) After filing the contract dispute, the Contractor should seek informal resolution with the Contracting Officer. (h) The TSA requires continued performance with respect to contract disputes arising under this contract, in accordance with the provisions of the contract, pending a final TSA decision. (i) The TSA will pay interest on the amount found due and unpaid from (1) the date the Contracting Officer receives the contract dispute, or (2) the date payment otherwise would be due, if that date is later, until the date of payment. Simple interest on contract disputes shall be paid at the rate fixed by the Secretary of the Treasury that is applicable on the date the Contracting Officer receives the contract dispute and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary until payment is made. (j) Additional information and guidance about the ODRA dispute resolution process for contract disputes can be found on the ODRA Website at http://www.faa.gov. (End of clause) I.7 3.9.1-2 PROTEST AFTER AWARD (a) Upon receipt of a notice that a protest has been filed with the FAA Office of Dispute Resolution, or a determination that a protest is likely, the Administrator or his designee may instruct the Contracting Officer) to direct the Contractor to stop performance of the work called for by this contract. The order to the Contractor shall be in writing, and shall be specifically identified as a stop-work order issued under this clause. Upon receipt of the order, the Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Upon receipt of the final decision or other resolution of the protest, the Contracting Officer shall either-- (1) Cancel the stop-work order; or I-6 (2) for other than cost-reimbursement contracts, terminate the work covered by the order as provided in the "Default" or the "Termination for Convenience of the Government" clause(s) of this contract; or (3) for cost-reimbursement contracts, terminate the work covered by the order as provided in the "Termination" clause of this contract. (b) If a stop-work order issued under this clause is canceled either before or after the final resolution of the protest, the Contractor shall resume work. The Contracting Officer shall make for other than cost-reimbursement contracts, an equitable adjustment in the delivery schedule or contract price, or both; and for cost-reimbursement contracts, an equitable adjustment in the delivery schedule, the estimated cost, the fee, or a combination thereof, and in any other terms of the contract that may be affected; and the contract shall be modified, in writing, accordingly, if-- (1) The stop-work order results in an increase in the time required for, or in the Contractor's cost properly allocable to, the performance of any part of this contract; and (2) The Contractor asserts its right to an adjustment within 30 days after the end of the period of work stoppage; provided, that if the Contracting Officer decides the facts justify the action, the Contracting Officer may receive and act upon a proposal submitted at any time before final payment under this contract. (c) If a stop-work order is not canceled and the work covered by the order is terminated for the convenience of the Government, the Contracting Officer shall allow reasonable costs resulting from the stop-work order in arriving at the termination settlement. (d) If a stop-work order is not canceled and the work covered by the order is terminated for default, the Contracting Officer shall allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop-work order. (e) The Government's rights to terminate this contract at any time are not affected by action taken under this clause. (End of clause) I.8 3.13-6 CONTRACTOR PERSONNEL SUITABILITY REQUIREMENTS (a) Definitions. (1) Access - In general the term "access' is defined as the ability to physically enter or pass through an TSA area or a facility; or having the physical ability or authority to obtain TSA sensitive information, materials or resources. In relation to classified information, the ability, authority or opportunity to obtain knowledge of such information or materials. (2) Classified information - means official information or material that requires protection in the interest of national security and is classified for such purpose by appropriate classification I-7 authority in accordance with the provisions of Executive Order 12958, Classified National Security Information, in accordance with the provisions of Executive Order 12968, Access to Classified. (3) Contractor employee as used for personnel security - any person employed as or by a Contractor, subcontractor or consultant in support of the TSA. (4) TSA Facility as it applies to personnel security - any manned or unmanned building, structure, warehouse, appendage, storage area, utilities, and components, which, when related by function and location form an operating entity owned, operated, or controlled by the TSA. (5) Operating Office - a TSA line of business, an office or service in TSA headquarters, or a TSA division level organization in a region or center. (6) Resources - TSA resources includes a physical plant, information databases including hardware and software, as well as manual records pertaining to agency mission or personnel. (7) Sensitive Information - any information which if subject to unauthorized access, modification, loss, or misuse could adversely affect the national interest, the conduct of Federal programs, or the privacy to which individuals are entitled under Section 552a of Title 5, United States Code (the Privacy Act), but which has not been specifically authorized under criteria established by an Executive Order or an Act of Congress to be kept secret in the interest of national defense or foreign policy. Sensitive data also includes proprietary data. (8) Servicing Security Element - the TSA headquarters, region, or center organizational element, which is responsible for providing security services to a particular activity. (b) This clause applies to the extent that this contract requires Contractor employees, subcontractors, or consultants to have access to: (1) TSA facilities, (2) sensitive information, and/or (3) resources regardless of the location where such access occurs, and none of the requirements and exceptions listed in Appendix 9, paragraph 8 of FAA Order 1600.1D pertain. (c) Consistent with Appendices 3 and 9 of FAA Order 1600.1D, the TSA Servicing Security Element (SSE) has approved designated risk levels for the following positions under the contract:
Position Risk Level -------- ---------- Program Manager 5 Production Manager 1 Lead System Engineer 1 Lead Software Engineer 1 Quality Manager 1 Configuration Control Manager 1
(d) Not later than 30 days after contract award (or date of modification, if this provision is included by modification to an existing contract), for each employee in a listed position, provided, no previous I-8 background investigations can be supported as described below, the Contractor shall submit the following documentation to the SSE for an employment suitability determination. - - Standard form (SF) 85P, Questionnaire for Public Trust Positions, revised September 1995. The SF 85P shall be completed (all questions answered) in accordance with the instruction sheet. - - One single sheet fingerprint chart (FD-258). Fingerprinting facilities are available through the SSE and local police department. All fingerprint charts shall be written in ink or typewritten with all answerable question blocks completed, and shall be signed and dated within the 60 day period preceding the submission. The type of investigation conducted will be determined by the position risk level designation for all duties, functions, and/or tasks performed and shall serve as the basis for granting a favorable employment suitability authorization as described in Appendix 9 of FAA Order 1600.1D. If an employee has had a previous background investigation completed by a federal Government entity, which meets the requirements of Chapter 7 of FAA Order 1600.1D, it will be accepted by the TSA, however, the TSA reserves the right to conduct further investigations, if necessary. for each employee for whom a previous background investigation was completed the Contractor shall provide, in writing to the SSE, the name, date of birth, place of birth, and social security number of the employee, the name of the investigating entity and approximate date the previous background investigation was completed. The Contractor shall submit the required information with a transmittal letter referencing the contract number and this request to: Headquarters Contracts: Manager, Investigations Division, TSA Regional and Center Contracts: NONE The transmittal letter shall also include a list of the names of employees and their positions for which completed forms were submitted to the SSE pursuant to this Clause. A copy of the transmittal letter shall also be provided to the Contracting Officer. (e) The Contractor shall submit the information required by Section (d) of this Clause for any new employee not listed in the Contractor's initial thirty (30) day submission who is hired into any position identified in Section (c) of this Clause. (f) No Contractor employee shall work in a high, moderate, or low risk position unless the SSE has received all forms necessary to conduct any required investigation and has granted its approval of the forms. However, if this provision is added by modification to an existing contract, Contractor employees performing in the positions listed above may continue work on the contract pending: I-9 (1) the submittal of all necessary forms within [CO to insert information] days, but not to exceed a maximum of 30 days, and (2) completion of a suitability investigation by the SSE, subject to the following conditions: (State any SSE conditions such as restricted access to sensitive information or facilities. Specify information or facilities. If the SSE imposes no conditions, state "None"). If the necessary forms are not submitted by the Contractor to the SSE within 30 days of the effective date of the modification, the Contractor employee shall be denied access to TSA facilities, sensitive information and/or resources until such time as the forms are submitted. (g) As applicable, the Contractor shall submit quarterly reports providing the following information to the Contracting Officer with a copy to the SSE and the Operating Office on or before the fifth day following each report period: A complete listing by full name in alphabetical order with the social security number, of all Contractor personnel who had access to an TSA facility, sensitive information and/or resources anytime during the report period (date of birth and social security number shall be omitted from CO and Operating Office copies of report(s)). (h) The Contractor shall notify the CO within one (1) day after any employee identified pursuant to Section (c) of this Clause is terminated from performance on the contract. (i) The Contracting Officer may also, after coordination with the SSE and other security specialists, require Contractor employees to submit any other security information (including additional fingerprinting) deemed reasonably necessary to protect the interests of the TSA. In this event, the Contractor shall provide, or cause each of its employees to provide such security information to the SSE, and the same transmittal letter requirements of Section (d) of this Clause shall apply. (j) Failure to submit information required by this clause within the time required may be determined by the Contracting Officer a material breach of the contract. (k) If subsequent to the effective date of this contract, the security classification or security requirements under this contract are changed by the Government and if the changes cause an increase or decrease in security costs or otherwise affect any other term or condition of this contract, the contract shall be subject to an equitable adjustment as if the changes were directed under the Changes clause of this contract. (l) The Contractor agrees to insert terms that conform substantially to the language of this clause, including this paragraph (l) but excluding any reference to the Changes clause of this contract, in all subcontracts under this contract that involve access and where the Appendix 9, paragraph 8 requirements and exceptions do not apply. (End of clause) I-10 I.9 QUALIFICATIONS OF EMPLOYEES The Contracting Officer will provide notice to the Contractor when any Contractor employee is found to unsuitable or otherwise objectionable, or whose conduct appears contrary to the public interest, or inconsistent with the best interest of national security. The Contractor shall take appropriate action, including the removal of such employees from working on this TSA contract, at their own expense. The Contractor agrees to insert terms that conform substantially to the language of this clause in all subcontracts under this contract. (End of clause) I.10 3.13-8 FOREIGN NATIONALS AS CONTRACTOR EMPLOYEES Each employee of the Contractor who have access to EDS data, shall be a citizen of the United States of America, or an alien who has been lawfully admitted for permanent residence as evidenced by Alien Registration Receipt Card form I-151, or who presents other evidence from the Immigration and Naturalization Service that employment will not affect his/her immigration status. (End of clause) I-11 PART III - SECTION J LIST OF ATTACHMENTS J.1 Standalone Explosive Detection System Procurement Specification, SEIPT-EDS-002 11/19/2001 J.2 Integrated Explosive Detection System Procurement Specification, STDO-EDS-002 J.3 Program Management Plan (PMP) - CDRL A001 J.4 Integrated Support Plan (ISP) - CDRL A008 J.5 Quality System Plan (QSP) - CDRL A010 J.6 Configuration Management Plan (CMP) -CDRL A011 J.7 Master Test Plan (MTP) - CDRL A021 J.8 Subcontracting Plan J-9 Manuals and Training Materials J.10 Description of CDRL and DID forms (Requirements/Instructions) J.11 CDRL Data Items and DIDs J.12 Contractor's Warranty (To be included at contract award) J.13 Scheduled Preventive Maintenance J.14 Quality Assurance Surveillance Plan (QASP) J-1 J.12 Contractor's Warranty INVISION TECHNOLOGIES, INC LIMITED WARRANTY. A) DEFECTS WARRANTY. InVision warrants that for a period of [***] ("the Warranty Period") the Products: 1) will be free from defects in materials and workmanship; and 2) will substantially conform to the product specifications published by InVision at the time of Delivery. B) INFRINGEMENT WARRANTY. InVision warrants that the Purchaser's use of the Products in accordance with InVision's instructions (absent any modifications by the Purchaser) and not in combination with any other product will not: (1) infringe any United States patent, trademark or copyright; or (2) constitute misappropriation of any trade secret. C) PURCHASER OPERATION. InVision's warranty obligations are conditioned upon Purchaser operating the Products in accordance with InVision's instructions, and performing Operator Maintenance including daily inspections and software tool resets. D) NOTICE. InVision's warranty obligations are conditioned upon Purchaser's notice of claims, as set forth herein. Purchaser shall notify InVision of any alleged defect, non-conformance or infringement or misappropriation claim within ten (10) days of discovery. Purchaser shall provide InVision a reasonable opportunity to inspect the Products. Purchaser shall allow InVision to reasonably assist in the defense of any infringement or misappropriation claim. E) EXCLUSIONS. This warranty is conditioned upon the proper use of the Products, and will not apply to Products that have been: 1) improperly stored, installed, operated, serviced, maintained or repaired; 2) modified without InVision's prior written consent; or 3) damaged by negligence, accident, fire, power failure, power surge, or other hazard. F) EXCLUSIVE REMEDY. Any Product which InVision finds to be defective or non-conforming during the Warranty Period will be repaired or replaced at Purchaser's facility or InVision's facility, as InVision shall determine in its sole discretion. Repair or replacement does not extend the warranty period beyond the stated Warranty Period. If Purchaser's use of any Product is enjoined or restricted as a result an Infringement Claim, InVision will at a commercially reasonable cost secure for Purchaser the right to use the Product in accordance with the terms of this Agreement. If InVision cannot secure the right to use at a commercially reasonable cost, then InVision may, at its option, replace the Product or remove the Product and refund the Purchase Price less depreciation calculated using a five-year straight line depreciation schedule. THE ABOVE REMEDY IS PURCHASER'S SOLE AND EXCLUSIVE REMEDY FOR ANY BREACH OF THE FOREGOING WARRANTIES. G) DISCLAIMER. THERE ARE NO OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING TITLE, NON-INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, WHICH EXTEND BEYOND THE EXPRESS WARRANTIES STATED IN THIS AGREEMENT. SC-2 SUPPORT AND MAINTENANCE. During the Warranty Period, InVision will provide the following support and maintenance: [***] * Confidential treatment requested. J-2 J.14 Quality Assurance Surveillance Plan (QASP) The items of equipment to be provided under this agreement are commercial items that will be modified by the Contractor to meet the particular technical requirements described in the Quality Assurance Surveillance Plan (QASP) below. The modifications are anticipated to be minor. The QASP will be used to monitor the Contractor's performance and schedule. J-3 J-4 EX-10.4 10 f94131orexv10w4.txt EXHIBIT 10.4 Exhibit 10.4 ORDER FOR SUPPLIES OR SERVICES PAGE OF PAGES 1 4 IMPORTANT: Mark all packages and papers with contract and/or order numbers 1. DATE OF ORDER 8/12/03 2. CONTRACT NO. IF ANY DTFA01-02-C-00023 3. DATE REQUESTED 8/11/03 4. REQUISITION/REFERENCE NO. 5. ISSUING OFFICE Address Correspondence to TSA/HDO 6. SHIP TO: a. NAME OF CONSIGNEE ED OCKER b. STREET ADDRESS 590 HERNDON PKWY c. CITY HERNDON d. STATE VA e. ZIP CODE 20170 f. SHIP VIA FOB ORIGIN 7. TO: a. NAME OF CONTRACTOR INVISION TECHNOLOGIES b. COMPANY NAME INVISION TECHNOLOGIES c. STREET ADDRESS 7157 GATEWAY BLVD d. CITY NEWARK e. STATE CA f. ZIP CODE 94560 8. TYPE OF ORDER [ ] a. PURCHASE REFERENCE YOUR: _______________________ Please furnish the following on the terms and conditions specified both sides of the sheet, if any, including delivery as indicated. [X] b. DELIVERY Except for billing instructions on the reverse this delivery order is subject to instructions contained on this side only of this form and is issued subject to the terms and conditions of the above numbered contract. 9. ACCOUNTING AND APPROPRIATION DATA N/A 10. REQUISITION OFFICE TRANSPORTATION SECURITY ADMINISTRATION 11. BUSINESS CLASSIFICATION (Check appropriate boxes)) [ ] a. SMALL [ ] b. OTHER THAN SMALL [ ] c. DISADVANTAGED [ ] d. WOMEN-OWNED 12. F.O.B. POINT ORIGIN 13. PLACE OF a. INSPECTION CA b. ACCEPTANCE CA 14. GOVERNMENT B/L NO. 15. DELIVER TO F.O.B. POINT ON OR BEFORE (Date) 12/31/2003 16. DISCOUNT TERMS NET 30 17. SCHEDULE (See reverse for Rejections)
UNIT PRICE QUANTITY (IN AMOUNT QUANTITY ITEM NO. SUPPLIES OR SERVICES ORDERED UNIT DOLLARS) (IN DOLLARS) ACCEPTED (a) (b) (c) (d) (e) (f) D - -------- -------------------- ------- --- --------- ------------ -------- ~~SEE ATTACHED DELIVERY ORDER DTFA01-02-F-23008~~
SEE BILLING INSTRUCTIONS ON REVERSE 18. SHIPPING POINT 19. GROSS SHIPPING WEIGHT 20. INVOICE NO. 21. MAIL INVOICE TO: a. NAME Terri King, Accounts Payable, AMZ-110 b. STREET ADDRESS (or PO Box) 6500 S. MacArthur Blvd #370 c. CITY Oklahoma City d. STATE OK e. ZIP CODE 73169 [***] 17(H) Total (Cont. pages) [***] 17(I) GRAND TOTAL 22. UNITED STATES OF AMERICA BY (Signature) /s/ Patricia A. Newton 23. NAME (Typed) PATRICIA A. NEWTON TITLE CONTRACTING/ORDERING OFFICER OMB Control No. 2120-0595 (OF-347) FAA Template No. 4 (8/97) * Confidential treatment requested. Delivery Order DTFA01-02-F-23008 Contract DTFA01-02-C-00023 DTFA01-02-C-00023 INVISION DELIVERY ORDER DTFA01-02-F-23008 The purpose of this Delivery Order is to receive additional Explosives Detection Systems (EDS), in accordance with Contract number DTFA01-02-C-00023. Items authorized under this Delivery Order are prescribed herein. 1. Section B The Contractor shall provide the following supplies and services in accordance with the terms and conditions of this letter contract. The following line item(s) will be ordered in accordance with the contract amounts set forth below.
CLIN TITLE QUANTITY UNIT PRICE TOTAL - ---- ----- -------- ---------- ----- [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] [***] TOTAL ORDERED $7,175,836.00
2. Funding: Funding in the amount of $7,175,836 is NOT added under this Delivery Order, under the provisions set forth below: 3.2.4-22 Limitation of Government Liability (April 1996) (a) In performing this contract, the Contractor is not authorized to make expenditures or incur obligations exceeding [***]. (b) The maximum amount for which the Government shall be liable if this contract is terminated is [***] (End of clause) Expenditures above that amount are not authorized, and are at InVision's own risk. PAYMENT TERMS: THESE PRODUCTS AND SERVICES ARE BEING PROVIDED AT [***] TO THE GOVERNMENT PURSUANT TO CLAUSE H.31 (COST SAVINGS). GOVERNMENT ACCEPTANCE WILL BE THROUGH A SIGNED DD-256. 3. Section C The Contractor shall deliver the supplies and services associated with the above CLINs in accordance with the Statement of Work in Contract DTFA01-02-C-00023. 4. Section F The CLINS are to be delivered to the following locations (TBD locations will be supplied upon completion * Confidential treatment requested. Delivery Order DTFA01-02-F-23008 Contract DTFA01-02-C-00023 of TSA site surveys).
ITEM SUPPLY/SERVICE QTY DATE OF PLACE OF PLACE OF NO. DELIVERY DELIVERY ACCEPTANCE - --- -------------- ----- -------- -------- ---------- [***] [***] [***] [***] [***] FOB ORIGIN [***] [***] [***] [***] [***] FOB ORIGIN [***] [***] [***] [***] [***] FOB ORIGIN
b. Period of Delivery The period of delivery for this order is from the date of award through December 31, 2003. 5. Section G a) The following administration data applies to this order: Contracting Officer Transportation Security Administration Jack Handrahan, HDO/STDO 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7125 Fax (703) 707-5675 Contracting Officer's Technical Representative (COTR) Transportation Security Administration Ed Ocker, HDO/STDO 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7104 Fax (703) 707-5675 b. This Delivery Order is funded in the amount of [***]. This amount is considered the contract ceiling. Unless modified by the Contracting Officer in writing, the Contractor may not exceed this ceiling except at its own risk (see clause in Contracting Officer's letter dated February 19, 2002 - Limitation of Government Liability (Apr 1996) c. The Contractor shall submit to the FAA Contracting Officer the serial numbers/ID numbers for each system delivered under this Delivery Order, at least one week prior to, but no later than, delivery of the system. * Confidential treatment requested. Delivery Order DTFA01-02-F-23008 Contract DTFA01-02-C-00023 6. Section H - Special Terms and Conditions The following terms apply to this Delivery Order DTFA01-02-23008 only. (1) In the event the Contractor fails to meet the delivery schedule as provided herein, such failure will be considered in accordance with the Termination for Default clause (AMS 3.10.6-4(1996)). (2) The Contractor shall execute and perform all terms and conditions of the License Agreement contained in the Letter Contract under which this Delivery Order is executed. Failure to adhere to the licensing agreement may result in the Government terminating the contract for default pursuant to the Termination for Default clause (AMS 3.10.6-4(1996)). (3) PAYMENT TERMS: THESE PRODUCTS AND SERVICES ARE BEING PROVIDED AT [***] TO THE GOVERNMENT PURSUANT TO CLAUSE H.31 (COST SAVINGS). GOVERNMENT ACCEPTANCE WILL BE THROUGH A SIGNED DD-256. 7. Defense Priority and Allocation Requirement DO-H8 priority rating hereby applies to this delivery order. The contractor shall follow all requirements of the DPAS regulation (15 C.F.R. section 700, et seq.) during the conduct of this delivery order. END OF DELIVERY ORDER * Confidential treatment requested. EX-10.5 11 f94131orexv10w5.txt EXHIBIT 10.5 Exhibit 10.5 ORDER FOR SUPPLIES OR SERVICES PAGE OF PAGES 1 5 IMPORTANT: Mark all packages and papers with contract and/or order numbers 1. DATE OF ORDER 12/06/02 2. CONTRACT NO. IF ANY 02-C-00023 3. DATE REQUESTED 12/06/02 4. REQUISITION/REFERENCE NO. N/A 5. ISSUING OFFICE Address Correspondence to TSA/STDO 6. SHIP TO: a. NAME OF CONSIGNEE KEITH GOLL b. STREET ADDRESS 590 HERNDON PKWY c. CITY HERNDON d. STATE VA e. ZIP CODE 20136 f. SHIP VIA FOB ORIGIN 7. TO: a. NAME OF CONTRACTOR INVISION TECHNOLOGIES b. COMPANY NAME DAN ROSEN c. STREET ADDRESS 7151 GATEWAY BLVD d. CITY NEWARK e. STATE CA f. ZIP CODE 94560 8. TYPE OF ORDER [ ] a. PURCHASE REFERENCE YOUR: ------------------------ Please furnish the following on the terms and conditions Specified both sides of the sheet, if any, including delivery as indicated. [ ] b. DELIVERY Except for billing instructions on the reverse, this delivery order is subject to instructions contained on this side only of this form and is issued subject to the terms and conditions of the above numbered contract. 9. ACCOUNTING AND APPROPRIATION DATA 10. REQUISITION OFFICE Transportation Security Administration 11. BUSINESS CLASSIFICATION (Check appropriate boxes)) [ ] a. SMALL [X] b. OTHER THAN SMALL [ ] c. DISADVANTAGED [ ] d. WOMEN-OWNED 12. F.O.B. POINT DESTINATION 13. PLACE OF a. INSPECTION CA b. ACCEPTANCE CA 14. GOVERNMENT B/L NO. 15. DELIVER TO F.O.B. POINT ON OR BEFORE (Date) 3/31/03 16. DISCOUNT TERMS NET 30 17. SCHEDULE (See reverse for Rejections)
UNIT PRICE QUANTITY (IN AMOUNT ITEM NO. SUPPLIES OR SERVICES ORDERED UNIT DOLLARS) (IN DOLLARS) QUANTITY (a) (b) (c) (d) (e) (f) ACCEPTED -------- -------------------- ------- ----- -------- ------------ ------- CONTRACT DTFA01-02-C-00023 DELIVERY ORDER #5 REVISION #1 IN THE ATTACHED PAGES THIS /s/ Don Mattson REFLECTS REPRICING 1/13/03 OF LINE ITEMS AND ORDERS FOR BOTH ITEMS AND SERVICE FOR INTEGRAGED CTX5500 INSTALLS AGREED TO BETWEEN THE PARTIES [***] 17(H) Total (Cont. pages) [***] 17(I) GRAND TOTAL
SEE BILLING INSTRUCTIONS ON REVERSE 18. SHIPPING POINT 19. GROSS SHIPPING WEIGHT 20. INVOICE NO. 21. MAIL INVOICE TO: a. NAME Steve Aube, AMZ-120 b. STREET ADDRESS (or PO Box) Mike Monroney Aeronautical Center, P.O. Box 25082 c. CITY Oklahoma City d. STATE OK e. ZIP CODE 73125 22. UNITED STATES OF AMERICA BY (Signature) /s/ John J. Handrahan 23. NAME (Typed) JOHN J. HANDRAHAN TITLE CONTRACTING/ORDERING OFFICER * Confidential treatment requested. Delivery Order DTFA01-02-23005 Revision 1 Contract DTFA01-02-C-00023 DELIVERY ORDER DO#5 Under Contract No. DTFA01-02-C-00023 Revision 1 The purpose of this revised delivery order is to correct the pricing of CLIN 0006A, order peripheral equipment under additional CLINs to support integrated CTX 5500's, and to attach a task order to cover engineering support services. Items authorized under this Delivery Order are prescribed herein. 1. Section B The Contractor shall provide the following supplies and services in accordance with the terms and conditions of this letter contract. The following line item(s) will be ordered in accordance with the contract amounts set forth below.
CLIN TITLE QUANTITY UNIT PRICE TOTAL - ---- ----- -------- ---------- ----- 0005A Powered Flat Entrance Conveyor for [***] [***] [***] CTX5500 0005E Programmable Logic Control for CTX [***] [***] [***] 5500 0005F Luggage Positioning Adapter for CTX [***] [***] [***] 55000 0006A Pass Through SA EDS Unit (CTX-5500) [***] [***] [***] w/powered incline conveyor and baggage exit slide/conveyor (units [***]) 0007 Integrated EDS Unit, CTX-9000 [***] [***] [***] (units [***]) TOTAL SUPPLIES ORDERED $ $50,182,000.00

CLIN LABOR CATEGORY HOURS COST/HOUR TOTAL ---- -------------- ----- --------- ----- (NTE) 3000 Field Service Engineer [***] [***] [***] Project Manager [***] [***] [***] System Engineer [***] [***] [***] (Test) Technician [***] [***] [***] Travel/Per Diem [***] [***] Shipping [***] [***] Estimated Materials [***] [***] Other Direct Costs [***] [***] TOTAL TIME AND MATERIALS $1,346,000.00 ORDERED
2. Funding: Funding in the amount of $51,528,000 is hereby authorized under this Delivery Order, under the provisions set forth below: 3.2.4-22 Limitation of Government Liability (April 1996) (a) In performing this contract, the Contractor is not authorized to make expenditures or incur obligations exceeding $51,528,000 dollars. * Confidential treatment requested. Delivery Order DTFA01-02-23005 Revision 1 Contract DTFA01-02-C-00023 (b) The maximum amount for which the Government shall be liable if this contract is terminated is $51,528,000 dollars (End of clause) Expenditures above that amount are not authorized, and are at InVision's own risk. 3. Section C The Contractor shall deliver the supplies and services associated with the above CLINs in accordance with the Statement of Work in Contract DTFA01-02-C-00023 as described in this delivery order. .. Services: The Contractor shall supply the manpower and materials necessary to provide engineering and technical support on an as-needed basis. Descriptions of this support include, but are not limited to, the following: 1) Site-specific engineering services to support the integration of the CTS 5500 and 9000. This support will allow the contactor to respond to site-specific, non-standard deployment requirements beyond what is covered with typical installation. An example of this support would include the manpower and hardware associated with the installation of remote console locations for the CTX 5500s. 2) Engineering support for the implementation of multiplexing of the CTX 9000 units. 3) Support for redeployment of EDS equipment, where not covered by the system integrator. This may include both the disassembly and reassembly of redeployed units. 4) Technical support for TSA training to include upon request review of TSA training curriculum pertaining to CTX equipment, and auditing of TSA-provided training classes. 5) Refurbishment of out-of-warranty CTX units. 6) Modeling support. 7) Maintenance of out-of-warranty CTX simulators 4. Section F The supply CLINS are to be delivered to the following locations (TBD locations will be supplied upon completion of TSA site surveys. The TSA system integrator will provide contractor with delivery and schedule information.
ITEM DATE OF PLACE OF PLACE OF NO. SUPPLY/SERVICE QTY DELIVERY DELIVERY ACCEPTANCE - --- -------------- --- -------- -------- ---------- 0005A Powered Flat Entrance [***] [***] [***] FOB ORIGIN Conveyor 0005E Programmable Logic [***] [***] [***] FOB ORIGIN Control Interface 0005E Programmable Logic [***] [***] [***] FOB ORIGIN Control Interface 0005F Luggage Positioning [***] [***] [***] FOB ORIGIN Adapter 0006A Pass Through SA EDS [***] [***] [***]
* Confidential treatment requested. Delivery Order DTFA01-02-23005 Revision 1 Contract DTFA01-02-C-00023 Unit (CTX-5500) FOB ORIGIN w/powered incline conveyor and baggage exit slide/conveyor [***] [***] [***] 0006A Pass Through SA EDS FOB ORIGIN Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor [***] [***] [***] 0007 Integrated EDS Unit FOB ORIGIN CTX-9000 [***] [***] [***] 0007 Integrated EDS Unit FOB ORIGIN CTX-9000 0007 Integrated EDS Unit [***] [***] [***] FOB ORIGIN CTX-9000 3000 Engineering and [***] [***] N/A Technical Services Travel/Per Diem [***] [***] N/A Shipping [***] [***] N/A Estimated Materials [***] [***] N/A Other Direct Costs [***] [***] N/A

b. Period of Delivery The period of delivery for this order is from the date of award through December 31, 2003. 5. Section G a) The following administration data applies to this order: Contracting Officer Transportation Security Administration Jack Handrahan, HDO/STDO 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7125 Fax (703) 707-8997 Contracting Officer's Technical Representative (COTR) Transportation Security Administration Keith Goll, HDO/STDO 590 Herndon Parkway, Suite 120 Herndon, VA 20170-5232 Telephone (703) 796-7104 Fax (703) 707-5675 Quality Reliability Officer (QRO) Contracted Support * Confidential treatment requested. Delivery Order DTFA01-02-23005 Revision 1 Contract DTFA01-02-C-00023 b. This Delivery Order is funded in the amount of $51,528,000. This amount is considered the contract ceiling. Unless modified by the Contracting Officer in writing, the Contractor may not exceed this ceiling except at its own risk (see clause in Contracting Officer's letter dated February 19, 2002 - Limitation of Government Liability (Apr 1996) c. The Contractor shall submit to the FAA Contracting Officer the serial numbers/ID numbers for each system delivered under this Delivery Order, at least one week prior to, but no later than, delivery of the system. 6. Section H - Special Terms and Conditions The following terms apply to this Delivery Order DTFA01-02-23005 only. (1) In the event the Contractor fails to meet the delivery schedule as provided herein, such failure will be considered in accordance with the Termination for Default clause (AMS 3.10.6-4(1996)). (2) The Contractor shall execute and perform all terms and conditions of the License Agreement contained in the Letter Contract under which this Delivery Order is executed. Failure to adhere to the licensing agreement may result in the Government terminating the contract for default pursuant to the Termination for Default clause (AMS 3.10.6-4(1996)). (7) Payment Terms: For CLIN 0006A and CLIN 0007 Production Units. For units [***] (CLIN0006A) and units [***] (CLIN0007): 70% of the CLIN price at satisfactory completion of Factory Acceptance Test (minus any previously paid long-lead items). Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. 30% of the CLIN price at satisfactory completion of Site Acceptance Test, but not later than 90 days after successful completion of the Factory Acceptance Test. Satisfactory completion includes a signed form FAA-256, Inspection Report of Material and/or Services. (8) Defense Priority and Allocation Requirement DO-H8 priority rating hereby applies to this delivery order. The contractor shall follow all requirements of the DPAS regulation (15C.F.R. section 700, et seq.) during the conduct of this delivery order. END OF DELIVERY ORDER * Confidential treatment requested. EX-10.6 12 f94131orexv10w6.txt EXHIBIT 10.6 EXHIBIT 10.6 1. CONTRACT ID CODE PAGE OF PAGES 1 5 AMENDMENT OF SOLICITATION/MODIFICATION OF CONTRACT 2. AMENDMENT/MODIFICATION NO. 004 3. EFFECTIVE DATE 9/17/03 4. REQUISITION/PURCHASE NO. 5. PROJECT NO. (If applicable) 6. ISSUED BY CODE TSA/STDO 590 Herndon Parkway, Suite 120 Herndon, VA 20170 7. ADMINISTERED BY (If other than Item 6) CODE TSA/STDO 590 Herndon Parkway, Suite 120 Herndon, VA 20170 8. NAME AND ADDRESS OF CONTRACTOR (No., street, county, State, and Zip Code) INVISION TECHNOLOGIES 8151 Gateway Blvd Newark, NJ 94560 (X) 9A. AMENDMENT OF SOLICITATION NO. 9B. DATED (SEE ITEM 11) 10A. MODIFICATION OF CONTRACT/ORDER NO. X DTFA01-02-C-00023/DTFA01-02-F-23003 10b. DATED (SEE ITEM 13) 4/01/02 CODE FACILITY CODE 11. THIS ITEM ONLY APPLIES TO AMENDMENTS OF SOLICITATIONS [ ] The above numbered solicitation is amended as set forth in Item 14. The hour and date specified for receipt of Offers [ ] is extended, [ ] is not extended. Offers must acknowledge receipt of this amendment prior to the hour and date specified in the solicitation or as amended, by one of the following methods: (a) By completing Items 8 and 15, and returning ____ copies of the amendment; (b) By acknowledging receipt of this amendment on each copy of the offer submitted; or (c) By separate letter or telegram which includes a reference to the solicitation and amendment numbers. FAILURE OF YOUR ACKNOWLEDGEMENT TO BE RECEIVED AT THE PLACE DESIGNATED FOR THE RECEIPT OF OFFERS PRIOR TO THE HOUR AND DATE SPECIFIED MAY RESULT IN REJECTION OF YOUR OFFER. If by virtue of this amendment you desire to change an offer already submitted, such change may be made by telegram or letter, provided each telegram or letter makes reference to the solicitation and this amendment, and is received prior to the opening hour and date specified. 12. ACCOUNTING AND APPROPRIATION DATA (If required) N/A 13. THIS ITEM APPLIES ONLY TO MODIFICATIONS OF CONTRACTS/ORDERS, IT MODIFIES THE CONTRACT/ORDER NO. AS DESCRIBED IN ITEM 14. A THIS CHANGE ORDER IS ISSUED PURSUANT TO: (Specify authority) THE CHANGES SET FORTH IN ITEM 14 ARE MADE IN THE CONTRACT ORDER NO. IN ITEM 10A. X B THE ABOVE NUMBERED CONTRACT/ORDER IS MODIFIED TO REFLECT THE ADMINISTRATIVE CHANGES (such as changes in paying office, appropriation date, etc.) SET FORTH IN ITEM 14, PURSUANT TO THE AUTHORITY OF FAR 43.103(b). C THIS SUPPLEMENTAL AGREEMENT IS ENTERED INTO PURSUANT TO AUTHORITY OF: D OTHER (Specify type of modification and authority) E. IMPORTANT: Contractor [X] is not, [ ] is required to sign this document and return ____ copies to the issuing office. 14. DESCRIPTION OF AMENDMENT/MODIFICATION (Organized by UCF section headings, including solicitation/contract subject matter where feasible.) The purpose of this modification is to amend quantities for Delivery Order # 3 in accordance with the attached. All other terms and conditions remain unchanged. Total Value DO #3: $157,550,000.00; TSA Funds - $157,550,000.00 15A. NAME AND TITLE OF SIGNER (Type or print) 15B. CONTRACTOR/OFFEROR - ---------------------------------------------------- (Signature of person authorized to sign) 15C. DATE SIGNED 16A. NAME AND TITLE OF CONTRACTING OFFICER (Type or print) Patricia A. Newton 16B. UNITED STATES OF AMERICA BY /s/ PATRICIA A. NEWTON - ---------------------------------------------------- (Signature of Contracting Officer) 16C. DATE SIGNED 9-17-03 NSN 7540-01-152-8070 30-105 STANDARD FORM 30 (Rev. 10-83) PREVIOUS EDITION UNUSABLE Prescribed by GSA FAR (48 CFR) 53.243 Delivery Order DTFA01-02-23003 (rev.4) Contract DTFA01-02-C-00023 DELIVERY ORDER DO#3 (rev.4) Under Contract No. DTFA01-02-C-00023 The purpose of this revised Delivery Order is to amend quantities as part of the definitization of the contract. This is a no cost change delivery order. Changes authorized under this Delivery Order are prescribed herein. 1. Section B The Contractor shall provide the following supplies and services in accordance with the terms and conditions of the definitized contract. The following line item(s) will be ordered in accordance with the contract amounts set forth below.
CLIN TITLE QUANTITY UNIT PRICE TOTAL - ---- ----- -------- ---------- ----- RU-01 Manufacture Ramp-Up [***] [***] [***] 0001A Pass Through SA EDS Unit (CTX-2500) w/powered incline conveyor and baggage [***] [***] [***] exit slide/conveyor (units [***]) 0001A Pass Through SA EDS Unit (CTX-2500) w/powered incline conveyor and baggage [***] [***] [***] exit slide/conveyor (units [***]) 0001A Pass Through SA EDS Unit (CTX-2500) w/powered incline conveyor and baggage [***] [***] [***] exit slide/conveyor (units [***]) 0006A Pass Through SA EDS Unit (CTX-5500) w/powered incline conveyor and baggage [***] [***] [***] exit slide/conveyor (units [***]) 0006A Pass Through SA EDS Unit (CTX-5500) w/powered incline conveyor and baggage [***] [***] [***] exit slide/conveyor (units [***]) 0006A Parts Kits for SA EDS Unit (CTX-5500) w/powered incline conveyor and baggage [***] [***] [***] exit slide/conveyor 008 QASP ITEMS 0008A [***] Multiplexing [***] [***] [***] 0008B [***] Multiplexing [***] [***] [***] 0008C [***] Multiplexing [***] [***] [***] 0008D [***] PTRI Workstations [***] [***] [***] 0008E [***] Multiplexing [***] [***] [***] 0008F [***] Selectee Bag [***] [***] [***] 0008G [***] High Speed Integrated EDS (CTX 9000) [***] [***] [***] Integration 0008H Remote Image Replay/Archiver [***] [***] [***] 0008I Refurbishments w/o wty [***] [***] [***] 0008J UL Conformance [***] [***] [***] 0008K Automated Data Collection [***] [***] [***] 0008L Three try logon [***] [***] [***] 0008M Human Factors New GUI [***] [***] [***] 0008N Threat tracking [***] [***] [***] 0008O Radiation Survey Mode [***] [***] [***]
* Confidential treatment requested. Delivery Order DTFA01-02-23003 (rev.4) Contract DTFA01-02-C-00023 ~~0008P Print format [***] [***] [***]~~

CLIN TITLE QUANTITY UNIT PRICE TOTAL - ---- ----- -------- ---------- ----- 0008Q Feedback to Operator [***] [***] [***] 0008R MuX Development [***] [***] [***] ----- TOTAL QASP ITEMS [***]

CLIN LABOR CATEGORY HOURS (NTE) COST/HR TOTAL - ---- -------------- ----------- ------- ----- 3000 Time and Materials Field Service Engineer [***] [***] [***] Proj Mgr [***] [***] [***] Software Engineer [***] [***] [***] Sr. Software Engineer [***] [***] [***] Design Engineer [***] [***] [***] Sr. Design Engineer [***] [***] [***] Sr. System Engineer [***] [***] [***] Estimated Materials [***] [***] ------------ TOTAL TIME AND MATERIALS ORDERED [***] TOTAL ORDERED $157,550,000
2. Funding: Funding in the amount of $157,550,000 is hereby authorized under this Delivery Order, under the provisions set forth below: 3.2.4-22 Limitation of Government Liability (April 1996) (a) In performing this contract, the Contractor is not authorized to make expenditures or incur obligations exceeding $157,550,000 dollars. (b) The maximum amount for which the Government shall be liable if this contract is terminated is $157,550,000 dollars. (End of clause) Expenditures above that amount are not authorized, and are at InVision's own risk. 3. Section C The Contractor shall deliver the supplies and services associated with the above CLINs in accordance with the Statement of Work in Contract DTFAOI-02-C-00023. * Confidential treatment requested. Delivery Order DTFA01-02-23003 (rev.4) Contract DTFA01-02-C-00023 4. Section F The CLINS are to be delivered to the following locations:
ITEM DATE OF PLACE OF PLACE OF NO. SUPPLY/SERVICE QTY DELIVERY DELIVERY ACCEPTANCE --- -------------- --- -------- -------- ---------- 0001A Pass Through SA EDS [***] [***] [***] FOB ORIGIN Unit (CTX-2500) w/powered incline conveyor and baggage exit slide/conveyor 0001A Pass Through SA EDS [***] [***] [***] FOB ORIGIN Unit (CTX-2500) w/powered incline conveyor and baggage exit slide/conveyor 0001A Pass Through SA EDS [***] [***] [***] FOB ORIGIN Unit (CTX-2500) w/powered incline conveyor and baggage exit slide/conveyor 0001A Total Production Units [***] 0006A Pass Through SA EDS [***] [***] [***] FOB ORIGIN Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor 0006A Pass Through SA EDS [***] [***] [***] FOB ORIGIN Unit (CTX-5500) w/powered incline conveyor and baggage exit slide/conveyor 0006A Total Production Units [***] 0008 QASP ITEMS 0008A [***] Multiplexing [***] [***] 0008B [***] Multiplexing [***] [***] 0008C [***] Multiplexing [***] [***] 0008D [***] PTRI [***] [***] Workstations 0008E [***] Multiplexing [***] [***] 0008F [***] Selectee Bag [***] [***] 0008G [***] High Speed Integrated EDS (CTX [***] [***] 9000) Integration 0008H Remote Image [***] [***] Replay/Archiver FOB Origin 0008I Refurbishments w/o wty [***] [***] FOB Origin
* Confidential treatment requested. Delivery Order DTFA01-02-23003 (rev.4) Contract DTFA01-02-C-00023
ITEM DATE OF PLACE OF PLACE OF NO. SUPPLY/SERVICE QTY DELIVERY DELIVERY ACCEPTANCE --- -------------- --- -------- -------- ---------- 0008J UL Conformance [***] 0008K Automated Data [***] [***] Collection FOB Origin 0008L Three try logon [***] [***] FOB Origin 0008M Human Factors New [***] [***] GUI FOB Origin 0008N Threat tracking [***] [***] FOB Origin 0008O Radiation Survey Mode [***] [***] FOB Origin 0008P Print format [***] [***] FOB Origin 0008Q Feedback to Operator [***] [***] FOB Origin 0008R MuX Development [***] [***] FOB Origin
b. Period of Delivery The period of delivery for this order is from the date of award through December 31, 2004. 5. Section G - NO CHANGE 6. Section H - Special Terms and Conditions - NO CHANGE END OF DELIVERY ORDER * Confidential treatment requested. EX-12.1 13 f94131orexv12w1.txt EXHIBIT 12.1 EXHIBIT 12.1 Computation of Ratio of Earnings to Fixed Charges (Unaudited) InVision Technologies, Inc. For the years ended December 31, 1998, 1999, 2000, 2001 and 2002 and the six month periods ended June 30, 2002 and June 29, 2003
YEAR ENDED DECEMBER 31, SIX MONTHS ENDED -------------------------------------------------------------- ----------------------- JUNE 30, JUNE 29, 1998 1999 2000 2001 2002 2002 2003 ---------- ---------- ---------- ---------- ---------- ---------- ---------- (in thousands, other than ratios) Income (loss) before income taxes $ 9,137 $ 450 $ (1,806) $ 2,952 $ 132,168 $ 21,022 $ 71,644 Fixed charges 1,097 908 821 863 963 460 619 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Earnings as adjusted for fixed charges $ 10,234 $ 1,358 $ (985) $ 3,815 $ 133,131 $ 21,482 $ 72,263 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Fixed charges: Interest expense $ 390 $ 227 $ 195 $ 289 $ 399 $ 210 $ 145 Interest within rental expense 707 681 626 574 564 250 474 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Total fixed charges $ 1,097 $ 908 $ 821 $ 863 $ 963 $ 460 $ 619 ---------- ---------- ---------- ---------- ---------- ---------- ---------- Ratio of earnings to fixed charges 9.33 1.50 --* 4.42 138.25 46.70 116.74 ========== ========== ========== ========== ========== ========== ==========
* Earnings were not sufficient to cover fixed charges by $1.8 million for the year ended December 31, 2000. EX-23.3 14 f94131orexv23w3.txt EXHIBIT 23.3 EXHIBIT 23.3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement of InVision Technologies, Inc. on Form S-3 of our report dated February 11, 2003 (February 21, 2003 as to Note 16) which expresses an unqualified opinion and includes an explanatory paragraph relating to the adoption of Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets," appearing in the Annual Report on Form 10-K of InVision Technologies, Inc. for the year ended December 31, 2002 and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ DELOITTE & TOUCHE LLP San Jose, California November 3, 2003 EX-25.1 15 f94131orexv25w1.txt EXHIBIT 25.1 EXHIBIT 25.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------- FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE Check if an Application to Determine Eligibility of a Trustee Pursuant to Section 305(b)(2) x ------------------------------------------------------- U.S. BANK NATIONAL ASSOCIATION (Exact name of Trustee as specified in its charter) 31-0841368 I.R.S. Employer Identification No. - -------------------------------------------------------------------------------- 180 East Fifth Street St. Paul, Minnesota 55101 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) - --------------------------------------------------------------------------------
Paula Oswald U.S. Bank National Association 633 W. 5TH Street, 24th Floor Los Angeles, CA 90071 (213) 615-6043 (Name, address and telephone number of agent for service) INVISION TECHNOLOGIES, INC. (Issuer with respect to the Securities) - ------------------------------------------------------------------------------------------------------------- DELAWARE 94-3123544 - ------------------------------------------------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) - ------------------------------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------------------------------- 7151 Gateway Blvd. Newark, CA 94560 - ------------------------------------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) - -------------------------------------------------------------------------------------------------------------
3% CONVERTIBLE SENIOR NOTES DUE 2023 (Title of the Indenture Securities) ================================================================================ FORM T-1 ITEM 1. GENERAL INFORMATION. Furnish the following information as to the Trustee. a) Name and address of each examining or supervising authority to which it is subject. Comptroller of the Currency Washington, D.C. b) Whether it is authorized to exercise corporate trust powers. Trustee is authorized to exercise corporate trust powers. ITEM 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation. None In answering this item, the trustee has relied, in part, upon information furnished by the obligor and the underwriters, and the trustee disclaims responsibility for the accuracy or completeness of such information. The trustee has also examined its own books and records for the purpose of answering this item. ITEMS 3-15 Items 3-15 are not applicable because to the best of the Trustee's knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee. ITEM 16. LIST OF EXHIBITS: List below all exhibits filed as a part of this statement of eligibility and qualification. 1. A copy of the Articles of Association of the Trustee.* 2. A copy of the certificate of authority of the Trustee to commence business.* 3. A copy of the certificate of authority of the Trustee to exercise corporate trust powers.* 4. A copy of the existing bylaws of the Trustee.* 5. A copy of each Indenture referred to in Item 4. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6. 7. A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority, attached as Exhibit 7. * Incorporated by reference to Registration Number 333-67188. A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as an Exhibit with corresponding exhibit number to the Form T-1 of Structured Obligations Corporation, filed pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, as amended (the "Act"), on November 16, 2001 (Registration No. 333-67188), and is incorporated herein by reference. NOTE The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors. While the Trustee has no reason to doubt the accuracy of any such information, it cannot accept any responsibility therefor. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Los Angeles, State of California on the 29th day of September, 2003. U.S. BANK NATIONAL ASSOCIATION By: /s/Paula Oswald ----------------------------- Paula Oswald Vice President 2 EXHIBIT 6 CONSENT In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor. Dated: September 29, 2003 U.S. BANK NATIONAL ASSOCIATION By: /s/ Paula Oswald ------------------------------ Paula Oswald Vice President 3 EXHIBIT 7 U.S. BANK NATIONAL ASSOCIATION STATEMENT OF FINANCIAL CONDITION AS OF 6/30/2003 ($000's)
6/30/2003 --------- ASSETS Cash and Due From Depository Institutions $ 11,987,100 Federal Reserve Stock 0 Securities 35,336,411 Federal Funds 4,955,134 Loans & Lease Financing Receivables 118,648,100 Fixed Assets 1,864,465 Intangible Assets 9,999,520 Other Assets 8,735,830 ------------ TOTAL ASSETS $191,526,560 LIABILITIES Deposits $132,461,590 Fed Funds 5,061,915 Treasury Demand Notes 0 Trading Liabilities 303,140 Other Borrowed Money 20,320,775 Acceptances 150,586 Subordinated Notes and Debentures 6,326,523 Other Liabilities 5,864,946 ------------ TOTAL LIABILITIES $170,489,475 EQUITY Minority Interest in Subsidiaries $ 999,216 Common and Preferred Stock 18,200 Surplus 11,015,123 Undivided Profits 9,004,546 ------------ TOTAL EQUITY CAPITAL $ 21,037,085 TOTAL LIABILITIES AND EQUITY CAPITAL $191,526,560
To the best of the undersigned's determination, as of the date hereof, the above financial information is true and correct. U.S. BANK NATIONAL ASSOCIATION By: /s/ Paula Oswald ------------------------------ Vice President Date: September 29, 2003 4 GRAPHIC 16 f94131orf9413100.gif GRAPHIC begin 644 f94131orf9413100.gif M1TE&.#EAH`%/`/<``````(````"``("`````@(``@`"`@,#`P,#/CX^KJZO'Q\?CX^/_[\*"@I("`@/\```#_ M`/__````__\`_P#______RP`````H`%/```(_@#_"1Q(L*#!@P@3*ES(L*'# MAQ`C2IQ(L:+%BQ@S:MS(L:/'CR!#BAQ)LJ3)DRA3JES)LJ7+ES!CRIQ)LZ;- MFSASZMS)LZ?/GT!UPAM*+ZC1HTB3*G4';]V0"A4B*)C*@`)4"D.5:MW*M2M) M7OBD3AU+MNS4(1+<>5W+MJU;@^P>F%5008+=NW;G-G@7[ZW?OX!YLC/;1EV] M>0GGU6NGSJP$Q($C2YY\\EU9=?Q@'DRTJNK7K MU_]XF4:]4?74-K!SZP8,@2S(>*6GKMM-O/A6L0J&B[2MH)[QY]!Y!E?@>:&] M>>K:K"OL'**[U='#_HN/66%L=X3U),@URQHBO/)3VX^?3W\D_.8)WZV?B]_@ MN_,(!5=!?006R-$]8\E'T`'[\:>`@O^01H$D"SD@G($89AC1`6-!9I`$#I8% MH$#K3%#!`0MQ.!6%&K;HHD$-7&B0/!2$*&)!]U!``3X-J:B`AR\&B2&("E!P MT'P1!H*-\8U*@G$&R3:7FGL_1,]9!T[TY%8#VM(.F0&,VJ4Y"41[* MYZ.O$=E70>L(6M:3`QTP@:(*Q?,GI*"*5L]4`Q:4IZ7F)=1.!4WBME"4_BR& M*JMD1+)C$'*H/IC0/150X.I"\DPU@4*5E@4/1*>.%0%"C9'5EUD16>8;2O?9 M.$1'GZZ$8'(BC77G9'(Y@&>N72HD"8H.97L0/F8="Y%9"SS9(`0"E=5`M&6E M-,&;1G*D;DK2VAJ2A0H(/)F?=-U*;H(2S=-F0:HY6A"[QD;$W%1J%61/61+4 M2Q8#&^:+D@0+-&!R`PQ0=7(#"PSKKYXL2FM*#[Q M/#G8U`A=K`#A"-G]C]-CX?P/PF-5QW.9$?&"J4+R3.K0MI<3M*J..MI.$#SL M]$K!$+Y[K,#N;?1:01L*\L*+N_?H70$^(PY$(_-8C1BP0?#\K.,0M`M$H_03 MJ$8!!'W!X_U![^C]?OP10E\%)&&\G`A+3*.KASVLLTS;0@.]1Q2.04D[Q_OB)%98C40V1'- M>E$SB^VF\@!X$(PLG!/(OLPRN8&L;TES<1Q!QFB6ZOV+%U\$HT$"198,UF0J MZ!I($P7U#]0H4"`.=."F(B@FYR$$879D8;L$LBUO->@V@#3+>/D`^S"1J;]PS81<.!8F#86Q.5E+,8[ M"WPH0*2IT$8@TQGD6$(GD#.*<9820,X"SL/&K_72E00C2+(".1;.32>07TQD M3-J!1QR-[A_=:>`@-[4HBW3S(+(#WYL0X\ESII`Z!+$7,*TE$%%>3R"<_@E1 MVD+YIH:@LB!2O*=`;`.U44VEG!$:"[K((D*!P*-FUN/@0,3RJT8:[![K89HQ MG88T3BHG6)O3X^`&$LV)0M*,"A5(GAP`)&X.ZB9*6X=\VIFD/H)S@?\()"L) M29&I5!(NB_P'3?DS,[-4TJ5/BR=9[@72Q.%.`>6T9SVYY("BV--!ND/(/T6J M@'L5Q*4N*U89!4*Q"%:MF%.A95(',C>S@5&:6105DE9-%&>,*_]'$ M&);T=@PCB+0FEZ=?65(=`'2)I\A"UW_DDX_@)(@@-_6UBW"Q:$&E*6[,(K!> M?JHL8ZWK5.[EV3MQJ`)(D^H_2'DF@>!J=OPL_HNM`GI2@!K$ M915A(*MK\IIJ26Z)#F9#\VI!UM.F,^;SITJ%)WS*=!:2P@R3,CJNKO($2L%0 M,KJ0190X65G9@_`*?7;ZFP)"J\',EL55R2H8(\U2PRU[LJB=AM7J;1V:N7\T"QZ\.XBABGN0]10WJW452)1X.I!F.>Z, MQ3(E62\$GPSZU+H"76M!2OR/+0U!$F'$R<6@FZL^UL,YJ)GL(!$2/@$FV&/L M'7'%A%H6=-E38+R;9;.FLL_BXC=*_)%`K*3*R8."5TH&%L@[?VR0K?YCL4F2 MAX\8DKF_7HFZ,-.K_GE)]=^9B<5O!J&8N%03VGS2U5?FH`9=%?F M4F01E=-!!A(A\"";HM^11Z424VU#;F=UMA322(;HQ_)\YUQ<5>7K+7DJ/&V7 M/=O4U-J>7.MVQ.=$6._?644NR16FQ73T6KPZUE+']$[)# M7995EX74[V6(E\',$&D]&B%EOBZ@N6WIORK`BPD\[G$/!7W;083^HX[+6Y&Y5CO2]FUQM@?"VKFHM]M<=="`_CH= M;E!?67&CEE^Z%^+EA\8G19FK!SU8D[E89W'@&?['A@_BX?\*+)]<5@V/YL'L ML3A@UWA6P*X?<@\VXEPG_Q8T3KNCTT-/>^D#M7;OL"W'#CM(Q*+M:D'<\8YU M-."1#U)M65!GSP*?6^5DX7)!O+S:J11P(.LX@&+^\=>!**TH-9>W`MZ-Q7Q? M4;(K\KE`>FX0@GFF6!(8FZ(/DG2LMX,>\G#./.;QI#S%T"=)%K1-(QM(RG)8 MI=QCR+82F<[Y7EOC78?[7+`N3]@7\-/TDJI!R0*UIU(HY?\HM0+D3A#D(?[P M`@%S7RAZ-Y/G?+F"Q_FGE$8XI4WJC*?B]U1]_OD/^`QOV/B\++SXR,/[=`@;C M\B!%,S,=K#,40Z%]?'==&+A7RC)/"C`$0&(/4=)=/?%4-H)#/C@$$``/Q5,\ M\7!W)-(K33(^\"9V]3=2][=UL%=-!?%89-%G$25V^N4@GJ%:#I8D1O9V#1AW MZH9JEJ8`"Q`!\1`!OX9P'#<6%<`.T_%3@9=B"B!]UZ4T9P@]SJ)M!O-G;1`/ M4#9@(;)*4--W1A,!_FU`(U)41CYRAMZCABD5%%>%*N6#$/.P#F`S`4/@@A[C M2I!F?U$W:1LW$!AX5O<%,YZU:<[V:@='%GD$?,)'?%SU1%3(4+N&=A*E@00A M19849.H27XG3:",8AF;19),()VLXA?P16L!(%ACF$[@H*)6H$&5G;WPU%=KT M#L[$2E"C*7020H0>6PUCF-'1Q&@#O+! M"^-8'43WC59X-YMB1SYC&HET#U]4`:;T0`=ACDS#2USF3&*21,.$4`/A#ILB M,>UC&HZ",`MP>9SG3.I@2XX%-@;A#IXE`AR1_R$0^L(I'R@Q!;TIJX21FR*8V44IH-T50)EYO"V199Z"`C\AX3 M0)M08FK#V9QO\0YQQ!_ELPX4@(:O`IC.F9U=P"$)Q0D>!=$^-8E;/Z*=Y.D7 M]*`>[FF>\B`!;4`PZWD0]Q&<[YF?7`$?]4D0@!A8^AF@;.%] M#_&7^"F@"&H4P=&?\G`?$W"@"1JA/L&?P%(MRBFA&!H4"YH0-'(I&?JA2!$< MOX0H\U"+N06B**J@1ED/[R`!ZF@6#*!L*3JC.>&.9.$`$X"7-+JC-M%Q3!85 JY\*C0MH3^N,]WN,.33FD2KJD3-JD3OJD4!JE4CJE5%JE5GJE61D0```[ ` end -----END PRIVACY-ENHANCED MESSAGE-----


				Proposed Maximum			Proposed Maximum
Title of Each Class of	Amount to be			Offering Price per			Aggregate Offering			Amount of
Securities to be Registered	Registered			Unit (1)			Price			Registration Fee

3% Convertible Senior Notes due 2023	$	125,000,000			100	%	$	125,000,000		$	10,113

Common Stock, $0.001 par value		3,906,250	(2)		—	(2)		—	(2)	$	—	(3)


	Year Ended December 31,										Six Months Ended June 29,

	1998		1999		2000		2001		2002		2002		2003

Ratio of earnings to fixed charges (1)		9.33		1.50		—		4.42		138.25		46.70		116.74


Delaware (State or other jurisdiction of incorporation or organization)		94-3123544 (I.R.S. Employer Identification Number)


SUMMARY
The Offering
RISK FACTORS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
RATIO OF EARNINGS TO FIXED CHARGES
USE OF PROCEEDS
SELLING SECURITYHOLDERS
PLAN OF DISTRIBUTION
DESCRIPTION OF NOTES
U.S. FEDERAL INCOME TAX CONSIDERATIONS
DESCRIPTION OF CAPITAL STOCK
LEGAL MATTERS
EXPERTS
WHERE YOU CAN FIND MORE INFORMATION
EXHIBIT 4.4
EXHIBIT 4.5
EXHIBIT 4.6
EXHIBIT 5.1
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 10.6
EXHIBIT 12.1
EXHIBIT 23.3
EXHIBIT 25.1


	Page

Summary		3
The Offering		4
Risk Factors		6
Special Note Regarding Forward-Looking Statements		20
Ratio of Earnings to Fixed Charges		21
Use of Proceeds		21
Selling Securityholders		22
Plan of Distribution		25
Description of Notes		27
U.S. Federal Income Tax Considerations		40
Description of Capital Stock		46
Legal Matters		47
Experts		47
Where You Can Find More Information		47


Securities and Exchange Commission registration fee		$	10,113
NASDAQ National Market filing fee			—
Accounting fees and expenses			40,000
Legal fees and expenses			50,000
Miscellaneous			9,887

	Total	$	110,000


		INVISION TECHNOLOGIES, INC

		By: /s/ Sergio Magistri Sergio Magistri, Ph.D. President and Chief Executive Officer