ROBOTIC VISION SYSTEMS INC, POS AM, 1995-07-25

ROBOTIC VISION SYSTEMS INC
POS AM, 1995-07-25
INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 1995

File No. 33-76320
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------

POST EFFECTIVE AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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

ROBOTIC VISION SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)

DELAWARE 3827 11-2400145
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification
Number)

425 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
(516) 273-9700

(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)

PAT V. COSTA, PRESIDENT
425 RABRO DRIVE EAST
HAUPPAUGE, NEW YORK 11788
(516) 273-9700

(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-----------------

COPY TO:
IRA ROXLAND, ESQ.
PARKER DURYEE ROSOFF & HAFT
529 FIFTH AVENUE
NEW YORK, NEW YORK 10017
(212) 599-0500
-----------------

APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after
the effective date of this Amendment to the Registration Statement

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, please check the following box. /x/
-----------------

PURSUANT TO RULE 429, PROMULGATED UNDER THE SECURITIES ACT OF 1933, THE
PROSPECTUS FORMING A PART OF THIS REGISTRATION STATEMENT ALSO RELATES TO
AN AGGREGATE OF 4,731,671 SHARES OF COMMON STOCK OF ROBOTIC VISION SYSTEMS, INC.
("RVSI"), INITIALLY INCLUDED IN RVSI'S REGISTRATION STATEMENT ON FORM S-1
(FILE NO. 33-61396), DECLARED EFFECTIVE ON OCTOBER 12, 1993, FOR WHICH
AGGREGATE FILING FEES OF $4,457.93 WERE PREVIOUSLY PAID.

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

<PAGE>
ROBOTIC VISION SYSTEMS, INC.

(Cross Reference Sheet Pursuant to Item 501(b) of Regulation S-K)

<TABLE>
<CAPTION>
ITEM NUMBER AND CAPTION HEADING IN PROSPECTUS
----------------------- ---------------------
<S> <C> <C>

Item 1. Forepart of the Registration
Statement and Outside Front Cover Page
Cover Page of Prospectus . . .

Item 2. Inside Front and Outside Back Cover Page
Cover Pages of Inside Front
Prospectus . . . . . . . . . .

Item 3. Summary Information, Risk Summary; The Company;
Factors and Ratio of Earnings to Risk Factors;
Fixed Charges . . . . . . . . . Management's
Discussion and
Analysis of Financial
Condition and Results
of Operations;
Financial Statements;
Notes to Financial
Statements

Item 4. Use of Proceeds . . . . . . . . *

Item 5. Determination of Offering Price Cover Page

Item 6. Dilution . . . . . . . . . . . *

Item 7. Selling Security Holders . . . Selling Stockholders

Item 8. Plan of Distribution . . . . . Cover Page; Selling
Stockholders

Item 9. Description of Securities to be Description of
Registered . . . . . . . . . . Securities

Item 10. Interests of Named Experts and Experts; Legal Matters
Counsel . . . . . . . . . . . .

Item 11. Information with Respect to the
Registrant
The Company; Business;
Subparagraph (a) . . . . . . . Management - Transactions
with Management and Other
Related Persons

Subparagraph (b) . . . . . . . Business - Facilities

Subparagraph (c) . . . . . . . Legal Proceedings

Subparagraph (d) . . . . . . . Dividend Policy; Price
Range of Common Stock;
Description of Securities

<PAGE>
Subparagraph (e) . . . . . . . Financial Statements;
Notes to Financial
Statements

Subparagraph (f) . . . . . . . Summary; Selected
Financial Data

Subparagraph (g) . . . . . . . *

Subparagraph (h) . . . . . . . Selected Financial
Data; Management's
Discussion and
Analysis of Financial
Condition and Results
of Operations

Subparagraph (i) . . . . . . . *

Subparagraph (j) . . . . . . . Management - Executive
Officers and Directors

Subparagraph (k) . . . . . . . Management - Compensation;
Management - Transactions
with Management and Other
Related Persons

Subparagraph (l) . . . . . . . Principal Stockholders

Subparagraph (m) . . . . . . . Management - Transactions
with Management and Other
Related Persons

Item 12. Disclosure of Commission
Position on Indemnification for
Securities Act *
Liabilities . . . . . . . . . .

<FN>
* Omitted because response is negative or inapplicable.

</TABLE>

<PAGE>

SUBJECT TO COMPLETION - PRELIMINARY PROSPECTUS DATED JULY 25, 1995

6,156,791 SHARES

ROBOTIC VISION SYSTEMS, INC.

COMMON STOCK
-----------------

This Prospectus relates to 6,156,796 shares of Common Stock comprising,
respectively, 4,824,725 shares which are currently issued and outstanding and
1,332,071 shares which may be issued subsequent hereto upon the exercise of
certain of the Company's currently outstanding common stock purchase warrants,
all of which are being offered for sale by the Selling Stockholders. The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders. See "Selling Stockholders."

The Company has been advised by each of the Selling Stockholders that there
are no underwriting arrangements with respect to the sale of their respective
shares, that such shares will be sold from time to time in public sales in the
over-the-counter market at then prevailing prices or in private transactions at
negotiated prices, and that no greater than usual and customary brokerage fees
will be paid by the Selling Stockholders in connection therewith. See "Selling
Stockholders."
-----------------

AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES ELEMENTS
OF RISK. SEE "RISK FACTORS."

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-----------------

The Company's Common Stock is traded under the symbol ROBV on the Nasdaq
National Market. The closing price for such Common Stock was $ per share on
July , 1995. See "Risk Factors" and "Price Range of Common Stock."

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

The date of this Prospectus is , 1995

<PAGE>

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the Regional Offices of the Commission at 7 World
Trade Center, New York, New York 10048 and Suite 1400, Northwestern Atrium
Center, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material can also be obtained from the Public Reference Section of the
Commission at prescribed rates by writing to the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549.

The Company has filed with the Commission a Registration Statement on
Form S-1 under the Securities Act of 1933, as amended (the "Securities Act"),
with respect to the Common Stock being offered hereby. This Prospectus does not
contain all the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which can be obtained from the Public Reference Section of
the Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549,
upon payment of the fees prescribed by the Commission.

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

TABLE OF CONTENTS

Page Page
----- -----
<S> <C> <C> <C>
Summary . . . . . . . . . . . . (i) Principal Stockholders . . . . . 23
Risk Factors . . . . . . . . . . 1 Selling Stockholders . . . . . 25
Price Range of Common Stock . . 2 Description of Securities . . . 27
Dividend Policy . . . . . . . . 2 Legal Proceeding . . . . . . . 27
Capitalization . . . . . . . . 3 Legal Matters . . . . . . . . . 28
Selected Financial Data . . . . . 4 Experts . . . . . . . . . . . . 28
Management's Discussion and Financial Statements . . . . . F- 1
Analysis of Financial Condition Notes to Financial Statements . F- 6
and Results of Operations . . 6 Unaudited Financial Statements F-17
Business . . . . . . . . . . . 11 Notes to Unaudited Financial
Management . . . . . . . . . . 19 Statements . . . . . . . . . F-20

</TABLE>

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

NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THESE SECURITIES TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL AT ANY TIME CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.

<PAGE>

SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.

THE COMPANY

Robotic Vision Systems, Inc. (the "Company") designs, manufactures, markets
and installs machine vision-based products for productivity improvement and
quality control applications in the manufacturing workplace. These products
have as their primary component the Company's proprietary 3-dimensional machine
vision technology. This technology uses sophisticated structured laser light
and optical triangulation techniques to acquire precise 3-dimensional
measurement information about the surface of a viewed object.

The Company's LS Lead Scanning Systems offer automated high-speed
3-dimensional ("3-D") semiconductor package lead inspection with the added
feature of non-contact scanning of the packages in their shipping trays
("in-tray scanning"). The system uses a laser-based, non-contact, 3-D
measurement technique to inspect and sort quad flat packs, thin quad
flat packs, plastic leaded chip carriers, ball grid arrays and thin
small outline packs from their carrying trays. The system measurements include
coplanarity, total package height, true position spread and span, as well as
lead angle, width, pitch and gap.

The Company was incorporated in New York in 1976 and reincorporated in
Delaware in 1977. Its executive offices are located at 425 Rabro Drive East,
Hauppauge, New York 11788; telephone (516) 273-9700.

PROPOSED ACQUISITION

The Company has entered into a definitive merger agreement, dated as of
April 27, 1995, as amended and restated as of July 11, 1995 (the "Merger
Agreement"), with Acuity Imaging Inc., a publicly owned company located in
Nashua, New Hampshire ("Acuity"), pursuant to which Acuity is to become a wholly
owned subsidiary of the Company (the "Merger"). Acuity designs, develops,
manufactures and supplies 2-D machine vision systems to a diversity of markets.
Consummation of the Merger, which is intended to be completed as a tax-free
reorganization and to be accounted for as a pooling of interests, is subject to
conditions which are customary for transactions of this nature, including
approval by the stockholders of each of the Company (the "Company's Special
Meeting") and Acuity. Consequently, consummation of this transaction cannot
be assured.

The Merger Agreement provides that each then outstanding share of
Acuity's common stock will be converted into the right to receive, and become
exchangeable for (the "Exchange Offer"), 0.766 of a share of the Company's
Common Stock; provided, however, that if the average of the closing prices of
the Company's Common Stock on The Nasdaq National Market for the 20 trading
days ending on (and including) the third trading day immediately prior to the
Company's Special Meeting (the "Average Closing Price") is greater than
$14.50, then the Exchange Ratio shall be equal to the quotient of $11.107
divided by the Average Closing Price (provided that in no event shall the
Exchange Ratio be less than 0.555375) (the "Minimum Collar"); and if the
Average Closing Price is less than $10.00, then the Exchange Ratio shall be
equal to the quotient of $7.66 divided by the Average Closing Price (provided
that in no event shall the Exchange Ratio be more than 0.925626) (the
"Maximum Collar" and collectively with the Minimum Collar, the "Collars").

The Merger Agreement also provides that (i) options to purchase up to 205,646
shares of Acuity's common stock at various exercise prices will be converted
into options to purchase shares of the Company's Common Stock and (ii) rights
under Acuity's 1994 Employee Qualified Stock Purchase Plan to purchase shares of
Acuity's common stock will be converted into rights to purchase shares of the
Company's Common Stock.

Assuming the satisfaction of all conditions set forth in the Merger
Agreement, the Company will issue up to a maximum of 2,524,000 shares of its
Common Stock as a consequence of the Merger.

THE OFFERING

This offering consists of 6,156,796 shares of Common Stock comprising,
respectively, 4,824,725 shares which are currently issued and outstanding and
1,332,071 shares which may be issued subsequent hereto upon the exercise of
certain of the Company's currently outstanding common stock purchase warrants
("Warrants"), all of which are being offered for sale by the several persons
whose respective names are set forth under "Selling Stockholders". The Company
will not receive any of the proceeds from the sale of shares of Common Stock
by the Selling Stockholders. The proceeds, if any, from the exercise of Warrants
will be added to the Company's working capital. The Company is not aware of any
underwriting arrangements with respect to the sale of any of such shares.
See "Selling Stockholders".

<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves elements
of risk. Such risks include, among others, the Company's dependence upon limited
number of customers, competition and pending litigation. See "Risk Factors."

(ii)

<PAGE>

SUMMARY OF FINANCIAL INFORMATION
(In thousands, except per share data):

The financial data set forth below is qualified in its entirety by and should
be read in conjunction with the more detailed information and financial
statements and notes to financial statements appearing elsewhere in
this Prospectus.

STATEMENT OF OPERATIONS DATA (IN THOUSANDS):

SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
-------------------- -----------------------------------------------------------
1995(e) 1994(e) 1994 1993 1992 1991 1990
-------- ------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $16,600 $11,790 $24,613 $19,943 $13,335 $ 8,519 $11,256
Income (Loss) before Benefit
(Provision) from Income Taxes
and Extraordinary Items $ 3,222 $ 1,006 $ 2,710 $ 1,104 $ (983) $(2,428) $(5,523)
)(a)

Benefit from Income Taxes $ 2,060 $ 1,093 $ 401 $ 495 - - -
Income (Loss) before Extraordinary
Items $ 5,282 $ 2,099 $ 3,111 $ 1,599 $ (983) $(2,428) $(5,523)(a)
Extraordinary Items - - - - $ 1,210(b)(c) - -

Net Income (Loss) $ 5,282 $ 2,099 $ 3,111 $ 1,599 $ 227(b)(c) $(2,428) $(5,523)(a)
Income (Loss) Per Share before
Extraordinary Items $ .38 $ .16 $ .24 $ .14 $ (.13) $ (.38) $ (.87)

Net Income (Loss) Per Share $ .38 $ .16 $ .24 $ .14 $ .03 $ (.38) $ (.87)

Weighted Average Number of
Common Shares and Equivalents 13,765(d) 12,830(d) 13,057(d) 12,534(d) 7,783 6,354 6,337

<FN>
- ----------------------------
(a) Includes restructuring charges of $2,526,000.

(b) Includes an extraordinary credit of $1,138,000 (net of income tax provision
of $97,000) relating to an agreement with General Motors Corporation. See
Note 12 of Notes to Financial Statements.

(d) Weighted average number of common shares and common share equivalents
calculated using the modified treasury stock method. See Note 1i of
Notes to Financial Statements.

(e) Derived from unaudited financial statements.

</TABLE>

(iii)

<PAGE>

BALANCE SHEET DATA (in thousands):

SEPTEMBER 30,
-----------------------------------------------------------------
MARCH 31, 1995(a) 1994 1993 1992 1991 1990
---------------- ------- ------ ------- ------- ------
<S> <C> <C> <C> <C> <C> <C>
Total Assets $21,710 $14,988 $7,889 $ 4,515 $ 4,296 $5,963
Current Liabilities $ 6,936 $ 5,742 $6,215 $ 4,463 $ 5,899 $5,140
Total Liabilities $ 7,149 $ 5,952 $6,460 $ 4,798 $ 6,297 $5,564
Stockholders' Equity (Deficiency) $14,561 $ 9,036 $1,429 $ (283) $(2,001) $ 399
Working Capital (Deficiency) $ 8,311 $ 4,664 $ (766) $(1,326) $(2,476) $ (530)

<FN>
- ---------------------------------
(a) Derived from unaudited financial statements.

</TABLE>

Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Notes to Financial Statements.

(iv)

<PAGE>

RISK FACTORS

This offering entails elements of risk. The following factors should be
carefully considered before any decision is made to purchase any of the shares
of Common Stock offered hereby.

- CONCENTRATION OF REVENUES. The Company's sales have
been historically concentrated in a small number of customers at any time,
although the specific customers change over time. Sales to Advanced
Semiconductor Engineering Inc. ("ASE") and Anam Industrial Co., Ltd. ("Anam")
accounted for approximately 11% and 10%, respectively, of the Company's revenues
during the six months ended March 31, 1995. Sales to Intel Corporation and
Motorola Inc. accounted for approximately 15% and 10%, respectively, of the
Company's revenues during the fiscal year ended September 30, 1994. Sales to
Samsung Corporation, Anam Corporation and Intel Corporation accounted for
approximately 15%, 13% and 13%, respectively, of the Company's revenues during
its year ended September 30, 1993. No other customers accounted for more than
10% of sales during such fiscal periods and fiscal years. The loss of any one or
more of these customers or any significant reduction in their orders for the
Company's products may be expected to materially adversely affect the Company's
operations and prospects. A majority of the Company's sales in recent years
has been export sales to the Far East. For the six months ended March 31, 1995
and for the fiscal years ended September 30, 1994 and 1993, export sales
accounted for approximately 79%, 62% and 74%, respectively, of the Company's
revenues. See "Business - Customers."

- COMPETITION. The Company believes that the machine vision industry is
currently highly fragmented and intensely competitive. The Company is aware that
a large number of concerns, which it estimates to be upward of 100, entered the
industry in the years 1980 through 1986 and that most of these were relatively
young, private concerns. Over the past several years, however, the Company
estimates that the number of its competitors has narrowed to less than 25, which
the Company believes is attributable in substantial part to a consolidation
within the industry. The Company is aware of several competitors which
promote substitute technologies. In addition, the Company believes that there
are other concerns, some of which may be substantially larger and have
substantially greater assets and resources than the Company, engaged in the
development of technology and products which would be competitive with those of
the Company should such concerns choose to enter the machine vision marketplace.
See "Business - Competition."

- PENDING LITIGATION. The Company has been the subject of a counterclaim
in excess of $3.0 million asserted by the defendant in a proceeding previously
instituted by the Company in which the Company had alleged that such defendant
had breached certain agreements between the Company and the defendant relating
to the defendant's purchase of all of the assets of the Company's former welding
and cutting systems business. In view of the magnitude of the counterclaim
against the Company when compared to the Company's total assets of approximately
$21.7 million at March 31, 1995, and given the inherent uncertainties of
litigation, an adverse outcome to the Company in the counterclaim could
materially adversely affect the Company's financial viability. See
"Business - Legal Proceedings."

- UNCERTAIN PATENT PROTECTION. At March 31, 1995, the Company owned 76
issued U.S. patents relating to its 3-D vision technology. The Company also
owns the rights to several U.S. patent applications relating to such technology.
The Company does not believe that its present operations are materially
dependent upon the proprietary protection that may be available to the Company
by reason of any one or more of such patents. Moreover, there can be no
assurance given as to the effectiveness of the protection afforded by its
patent rights. See "Business - Proprietary Protection."

- MAJOR SUPPLIER IN BANKRUPTCY. During fiscal 1994, one of the
Company's major suppliers voluntarily filed for protection under Chapter 11
of the Federal Bankruptcy Act. This supplier has presented a plan of
reorganization to its creditors, which plan is currently before the
bankruptcy court for approval. However, to ensure a stable supply of this
product, the Company has acquired a three month inventory and has negotiated
an escrow arrangement with this supplier that would afford the Company access
to the documentation required to reproduce or manufacture this product in the
event the vendor is no longer able to furnish such product to the Company.
The Company anticipates that it may experience a short term interruption in
rebuilding its inventory of this product should this supplier not emerge from
bankruptcy successfully. See "Business - Sources of Supply."

- EXPORT SALES. Foreign export sales accounted for 62%, 74% and 54%
of the Company's revenues in fiscal 1994, 1993 and 1992, respectively. The
Company's foreign export sales are denominated in U.S. dollars and, therefore,
the Company's receivables are not exposed to the risk of foreign currency
fluctuations. However, to the extent foreign currencies weaken relative to the
U.S. dollar, the Company's products could become more expensive in these
countries. This could adversely affect both the Company's sales volumes and
gross profitability.

- NO DIVIDENDS. The Company does not anticipate paying cash dividends
on its Common Stock in the foreseeable future. The Company intends to reinvest
any funds that might otherwise be available for the payment of dividends in
further development of its business following the Merger. See "Dividend Policy."

<PAGE>

- POSSIBLE VOLATILITY OF STOCK PRICE. Stock prices for many
technology companies fluctuate widely for reasons which may be unrelated to
operating performance or new product or service announcements. Broad market
fluctuations, earnings and other announcements of other companies, general
economic conditions or other matters unrelated to the Company and outside its
control also could affect the market price of the Common Stock.

- POSSIBLE FUTURE PUBLIC SALES OF COMMON STOCK. Sales of
substantial amounts of shares of the Company's Common Stock in the public
market following the date of this Prospectus could adversely affect the market
price of the Company's Common Stock. As of the date of this Prospectus,
10,730,465 shares of the Company's Common Stock are unrestricted and freely
tradable. There are also 2,388,668 restricted shares of the Company's
Common Stock, as such term is defined under Rule 144 of the Securities Act, of
which 1,110,000 shares will be registered under the Securities Act prior to
January 1996, and thereby be freely tradable.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, an additional 1,904,993 shares (excluding
shares issuable upon exercise of options) of the Company's Common Stock (the
"Merger Shares") will be outstanding. Merger Shares owned by nonaffiliates
of Acuity (approximately 1,844,590 shares) will be eligible for sale
immediately upon consummation of the Merger. Merger Shares owned by affiliates
of Acuity (approximately 60,403 shares) may not be sold until after the results
covering 30 days of post-Merger combined operations of the Company and Acuity
have been filed with the Commission, sent to stockholders of the Company or
otherwise publicly disclosed. After such public disclosures, affiliates of
Acuity will be able to sell such shares without restriction.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, there will also be outstanding options,
warrants and rights to purchase up to 2,904,453 shares of the Company's Common
Stock. The sale of a substantial amount of these shares could have an adverse
effect on the future market price of the Company's Common Stock. See "Price
Range of Common Stock" and "Selling Stockholders."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock commenced trading on the Nasdaq National Market
on January 5, 1994, under the symbol ROBV. Prior thereto and from December 4,
1991, such Common Stock was traded under the same symbol on the OTC Bulletin
Board. The following table sets forth the high and low bid prices for the
Company's Common Stock for the periods indicated:

FISCAL QUARTER ENDED BID
-------------------- ---------------------
HIGH LOW
------- ------

June 30, 1995 $15-1/4 $6-5/8
March 31, 1995 7-5/8 5-1/2
December 31, 1994 8-1/8 5-1/2

September 30, 1994 6-1/4 4-3/8
June 30, 1994 6-3/4 4-3/4
March 31, 1994 7-1/8 4-5/8
December 31, 1993 5-5/8 3-1/2

September 30, 1993 4-5/8 2
June 30, 1993 2-7/8 1-7/8
March 31, 1993 3-1/32 1-1/4
December 31, 1992 1-7/16 3/4

Bid quotations represent prices between dealers, do not include retail
markups, markdowns or commissions and may not represent actual transactions.

See the cover page of this Prospectus for a more current price quotation
for the Company's Common Stock.

DIVIDEND POLICY

The Company has not paid any cash dividends since its inception and does
not contemplate doing so in the near future. Any decisions as to the future
payment of the dividends will depend on the earnings and financial

<PAGE>

condition of the Company and such other factors as the Board of Directors deems
relevant at that time.

CAPITALIZATION

The following table sets forth the Company's capitalization as of March 31,
1995. No effect has been given to the potential exercise of then outstanding
stock options and common stock purchase warrants.

<TABLE>

<S> <C>
Stockholders' equity:
Common Stock, $.01 par value, 20,000,000 shares
authorized, 11,671,615 shares issued (1). . . . . . . . . . . $ 117,000

Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . 33,047,000

Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . ( 18,603,000)
-----------

Total Stockholders' equity . . . . . . . . . . . . . . . . . . . . .$14,561,000
-----------
-----------

<FN>
- -------------
(1) Does not include 3,006,147 shares at March 31, 1995 issuable upon the
exercise of outstanding stock options and common stock purchase warrants or
32,625 shares reserved for future issuance under the Company's stock option
plans. See "Management - Compensation" and "-Transactions with Management
and Other Related Persons."

</TABLE>

<PAGE>

SELECTED FINANCIAL DATA

The selected financial data set forth below is qualified in its entirety by
and should be read in conjunction with the more detailed information and
financial statements and notes to financial statements appearing elsewhere in
this Prospectus.

STATEMENT OF OPERATIONS DATA (IN THOUSANDS):

SIX MONTHS ENDED
MARCH 31, YEAR ENDED SEPTEMBER 30,
-------------------- ----------------------------------------------------------------
1995(e) 1994(e) 1994 1993 1992 1991 1990
------- ------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>

Revenues $16,600 $11,790 $24,613 $19,943 $13,335 $ 8,519 $11,256
Income (Loss) before Benefit
(Provision) from Income Taxes
and Extraordinary Items $ 3,222 $ 1,006 $ 2,710 $ 1,104 $( 983) $(2,428) $(5,523)(a)
Benefit from Income Taxes $ 2,060 $ 1,093 $ 401 $ 495 -- -- --
Income (Loss) before Extraordinary
Items $ 5,282 $ 2,099 $ 3,111 $ 1,599 $( 983) $(2,428) $(5,523)(a)
Extraordinary Items -- -- -- -- $1,210 (b)(c) -- --
Net Income (Loss) $ 5,282 $ 2,099 $ 3,111 $ 1,599 $ 227 (b)(c) $(2,428) $(5,523)(a)
Income (Loss) Per Share before
Extraordinary Items $ .38 $ .16 $ .24 $ .14 $( .13) $( .38) $( .87)

Net Income (Loss) Per Share $ .38 $ .16 $ .24 $ .14 $ .03 $( .38) $( .87)

Weighted Average Number of Common
Shares and Equivalents 13,765 (d) 12,830 (d) 13,057 (d) 12,534 (d) 7,783 6,354 6,337

<FN>
- ---------------
(a) Includes restructuring charges of $2,526,000.
(b) Includes an extraordinary credit of $1,138,000 (net of income tax provision
of $97,000) relating to an agreement with General Motors Corporation. See
Note 12 of Notes to Financial Statements.
(c) Includes extraordinary credits of $72,000 resulting from utilization of net
operating loss carryforwards.
(d) Weighted average number of common shares and common share equivalents
calculated using the modified treasury stock method. See Note 1i of Notes
to Financial Statements.
(e) Derived from unaudited financial statements.

</TABLE>

<PAGE>

SELECTED BALANCE SHEET DATA (IN THOUSANDS):

SEPTEMBER 30,
-------------------------------------------------------------------
MARCH 31, 1995(a) 1994 1993 1992 1991 1990
----------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>

Total Assets $21,710 $14,988 $ 7,889 $ 4,515 $ 4,296 $ 5,963

Current Liabilities $ 6,936 $ 5,742 $ 6,215 $ 4,463 $ 5,899 $ 5,140

Total Liabilities $ 7,149 $ 5,952 $ 6,460 $ 4,798 $ 6,297 $ 5,564

Stockholders' Equity
(Deficiency) $14,561 $ 9,036 $ 1,429 $( 283) $(2,001) $ 399

Working Capital
(Deficiency) $ 8,311 $ 4,664 $( 766) $(1,326) $(2,474) $( 530)

<FN>
- -----------
(a) Derived from unaudited financial statements.

</TABLE>

Reference is made to "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Notes to Financial Statements.

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

SIX MONTHS ENDED MARCH 31, 1995 AND 1994

Revenues of $16,600,000 for the six months ended March 31, 1995 represent
an increase of $4,810,000, or 41%, in comparison to revenues of $11,790,000 for
the six months ended March 31, 1994. The increase in revenues was a result of
substantially increased shipments of the Company's LS-2000 and LS-3000 Series
semiconductor lead inspection systems. Revenues relating to the LS-3000 Series,
which was introduced in July 1994, were $14,944,000 for the six-month period
ended March 31, 1995.

Gross profit margins for the six months ended March 31, 1995 and March 31,
1994 were 54% and 45%, respectively. The increase in gross profit margins was
primarily due to the improved profitability of the LS-2000 and LS-3000 Series
product lines.

Company-funded research and development expenditures for the six months
ended March 31, 1995 increased by $591,000 over the comparable 1994 level. The
increase is attributable to continued development of the Company's lead scanning
systems and, in addition, research and development associated with the Company's
aircraft wing ice detection product. Certain software development costs are
capitalized in accordance with the provisions of Statement of Financial
Accounting Standards No. 86. For the six months ended March 31, 1995, $173,000
of these costs were capitalized as compared to $246,000 for the comparable 1994
period.

The Company's selling, general and administrative costs increased by
$920,000, or 36% for the six months ended March 31, 1995 as compared to the six
months ended March 31, 1994. The increase is primarily as a result of increased
marketing and distribution costs associated with the lead scanning systems
product line.

Net income for the six months ended March 31, 1995 was $5,282,000, or $.38
per share as compared to net income of $2,099,000, or $.16 for the six months
ended March 31, 1994. During the six months ended March 31, 1995 and 1994, the
Company recorded benefits from income taxes in the amounts of $2,060,000 and
$1,093,000, respectively. Such benefits were primarily the result of decreases
to the valuation allowances against deferred tax assets, totaling $3,302,000 and
$1,143,000 during the six month periods ended March 31, 1995 and 1994,
respectively. These decreases in the valuation allowances emanated from the
Company's profitable operations and the extent to which the Company can
substantiate projected future earnings. Had these valuation allowances not
been decreased, net income for the six month periods ended March 31, 1995 and
1994 would have been approximately $1,980,000 and $956,000, respectively.

The deferred tax assets (net of valuation allowances) at March 31, 1995 and
September 30, 1994 of $3,429,000 and $1,163,000, respectively, are equivalent to
the benefit to be derived from net operating loss carryforwards that were
expected to be utilized to offset future taxable income projected as of the
respective balance sheet dates. The deferred tax assets at March 31, 1995 and
1994 have been limited to the benefit to be derived from projected future
income, due to the Company's limited history of earnings and its projected
future profitability currently being primarily dependent on one existing
product line. The valuation allowance as of March 31, 1995 was approximately
$4,860,000. The Company is not able to predict whether this valuation allowance
will be changed in the foreseeable future.

YEARS ENDED SEPTEMBER 30, 1994 AND 1993

Revenues of $24,613,000 for the year ended September 30, 1994 represent an
increase of $4,670,000, or 23%, in comparison to revenues of
$19,943,000 for the year ended September 30, 1993. The increase in revenues was
a result of substantially increased shipments of the Company's LS-2000 and LS-
3000 Series semiconductor lead inspection systems. The LS-3000 Series system, a
more advanced, high performance machine, was introduced in July 1994, and
represents the next generation lead scanning system designed to replace the
LS-2000 Series system. Sales of the LS-2000 and LS-3000 Series accounted for
revenues of $23,411,000 for the year ended September 30, 1994, representing an
increase of $5,095,000 or 28%, as contrasted with LS-2000 sales of
$18,316,000 for the year ended September 30, 1993. Sales of the LS-3000 Series
were $4,783,000 for the year ended September 30, 1994. Revenues related to U.S.
Government business during the fiscal year ended September 30, 1994 decreased
by 32% from the prior fiscal year, from $1,595,000 to $1,080,000.

<PAGE>

Gross profit margins for the fiscal years ended September 30, 1994 and 1993
were 48% and 43%, respectively. The increase in gross profit margins during
fiscal 1994 was primarily due to the improved profitability of the LS-2000 and
LS-3000 Series product lines.

Continued development of the LS-2000 Series and the new LS-3000 Series of
lead scanning systems and the Company's ID-1 aircraft wing ice detection systems
primarily accounted for $3,718,000 in the Company funded research and
development expense, net of capitalized software development costs, during the
year ended September 30, 1994, as contrasted with $2,526,000 during fiscal 1993.
In its fiscal year ended September 30, 1994, the Company capitalized $433,000 of
its software development costs as compared to $476,000 over the comparable 1993
period in accordance with the provisions of Statement of Financial Accounting
Standards No. 86. The Company also contracts to perform certain customer-funded
research and development efforts. Revenues and cost of revenues related to such
contracts were $468,000 and $155,000, respectively, during fiscal 1994 as
compared to $342,000 and $271,000, respectively, for fiscal 1993.

The Company's selling, general and administrative costs increased by
$687,000, or 14% for the year ended September 30, 1994 as compared to the prior
fiscal year, primarily as a result of increased marketing and distribution costs
associated with the LS-2000 and LS-3000 Series products. For the year ended
September 30, 1994 net interest income was $58,000 compared to net interest
expense of $25,000 in the comparable 1993 period.

Net income for the year ended September 30, 1994 was $3,111,000, or $.24
per share, as compared to net income of $1,599,000, or $.14 for the year ended
September 30, 1993.

During the fiscal years ended September 30, 1994 and 1993, the Company
recorded benefits from income taxes in the amounts of $401,000 and $495,000,
respectively. Such benefits were primarily the result of decreases in the
valuation allowances which emanated from the Company's profitable operations in
fiscal 1994 and 1993, respectively, and the extent to which the Company can
substantiate projected future earnings.

The deferred tax assets at September 30, 1994 and 1993 of $1,163,000 and
$584,000, respectively, are equivalent to the benefit to be derived from net
operating loss carryforwards that were expected to be utilized to offset future
taxable income projected as of the respective balance sheet dates. The deferred
tax assets at September 30, 1994 and 1993 have been limited to the benefit to be
derived from projected future income, due to the Company's limited history of
earnings and its projected future profitability currently being primarily
dependent on one existing product line.

YEARS ENDED SEPTEMBER 30, 1993 AND 1992

Revenues of $19,943,000 for the year ended September 30, 1993 represented
an increase of $6,608,000, or 50%, in comparison to revenues of $13,335,000 for
the year ended September 30, 1992. The increase in revenues was a result of
substantially increased shipments of the Company's LS-2000 Series semiconductor
lead inspection systems. Sales of the LS-2000 Series accounted for revenues of
$18,316,000 for the year ended September 30, 1993, representing an increase of
$7,745,000 or 73%, as contrasted with LS-2000 sales of $10,571,000 for the year
ended September 30, 1992. Revenues related to U.S. Government business during
the fiscal year ended September 30, 1993 decreased by 47% from the prior fiscal
year, from $3,021,000 to $1,595,000.

Gross profit margins for the fiscal years ended September 30, 1993 and 1992
were 43% and 26%, respectively. The increase in gross profit margins during
fiscal 1993 was primarily due to the improved profitability of the LS-2000
Series product line.

The Company recorded an extraordinary item in the year ended September 30,
1992 in the amount of $1,138,000 (net of income tax provision of $97,000)
associated with the satisfaction of approximately $1.3 million of indebtedness
owed to General Motors Corporation ("GM") at no significant cost to the Company
via the sale to GM of certain inventory and spare parts previously utilized by
the Company in its automotive robotic systems integration business which was
discontinued by the Company during its fiscal year ended September 30, 1990. The

<PAGE>

Company also executed a four year service agreement with GM under which the
Company, upon request by GM, will provide maintenance and repair services at the
Company's standard rates for certain automotive systems previously sold to GM.

Continued development of the LS-2000 Series of lead scanning systems and
the Company's ID-1 aircraft wing ice detection systems primarily accounted for
$2,526,000 in the Company funded research and development expense, net of
capitalized software development costs, during the year ended September 30, 1993
as contrasted with $1,731,000 during the comparable 1992 period. In its fiscal
year ended September 30, 1993, the Company capitalized $476,000 of its software
development costs as compared to $568,000 over the comparable 1992 period in
accordance with the provisions of Statement of Financial Accounting Standards
No. 86. the Company also contracts to perform certain customer-funded research
and development efforts. Revenues and cost of revenues related to such contracts
were $342,000 and $271,000, respectively, during fiscal 1993 as compared to
$107,000 and $133,000, respectively, for fiscal 1992.

Selling, general and administrative expenses were $4,834,000 and
$2,766,000 for fiscal 1993 and 1992, respectively, or 24.2% and 20.7% of total
revenues, respectively. The increase was primarily due to the expansion of sales
efforts in various international markets, increased consulting expenses
relating to new products and markets, and increased employees, salaries and
related expenses to support the growing market for the Company's products. For
the year ended September 30, 1993 interest expense net of interest income
increased by $6,000 over the comparable 1992 period.

Net income for the year ended September 30, 1993 was $1,599,000, or $.14
per share, as compared to net income of $227,000, or $.03 for the year ended
September 30, 1992. Fiscal 1992 net income reflects the effects of extraordinary
items of $1,210,000 attributable to an agreement with GM and utilization of net
operating loss carryforwards.

During the fiscal year ended 1993, the Company adopted the provision of
Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes", ("SFAS 109") which requires recognition of deferred tax assets and
liabilities for the expected future tax consequences of events that have been
included in the Company's financial statements or tax returns. Under this
method, deferred tax assets and liabilities are determined based on the
differences between the financial accounting and tax bases of assets and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.

The adoption of SFAS 109 was made as of the beginning of the fiscal year on
a prospective basis. This accounting change had no effect on the Company's
financial statements as of the date of adoption. However, the adoption of SFAS
109 resulted in an increase in the income tax benefit recognized in fiscal 1993
and, therefore, an increase in income before extraordinary items of $584,000.

The deferred tax benefit recognized during the fiscal year ended September
30, 1993 represents a decrease in the valuation allowance from the date of
adoption. This adjustment in the valuation allowance emanates from the Company's
profitable operations in fiscal 1993 and the extent to which it could
substantiate projected future earnings. The adjustment in the valuation
allowance as of September 30, 1993 is equivalent to the benefit to be derived
from net operating loss carryforwards that are expected to be utilized to offset
projected future taxable income.

The deferred tax asset at September 30, 1993 has been limited to the
benefit to be derived from projected future income, due to the Company's limited
history of earnings and its projected future profitability currently being
primarily dependent on one existing product line.

Prior to fiscal 1993, the provision for income taxes was based on revenue
and expenses included in the Company's statement of operations. Where
appropriate the Company provided deferred income taxes for the tax effects of
transactions which were recorded for different periods for financial accounting
purposes than for income tax purposes. At September 30, 1992, no deferred taxes
were recorded because of the existence of net operating loss carryforwards.

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

SIX MONTHS ENDED MARCH 31, 1995

The Company's operating, investing, and financing activities for the six
months ended March 31, 1995 utilized net cash and cash equivalents of $1,222,000
as follows:

- Operating activities provided $216,000;

- $551,000 was used to purchase property and equipment, primarily
computer and demonstration equipment;

- $993,000 was invested primarily in U.S. Treasury Notes; and

- Financing activities provided $106,000 primarily through the issuance
of Common Stock upon the exercise of stock options and warrants.

The Company's inventories at March 31, 1995 of $4,533,000 increased by
$1,899,000 from $2,634,000 as of September 30, 1994 primarily to support
higher production volumes. Accounts receivable at March 31, 1995 of $5,691,000
increased by $2,279,000 from $3,412,000 as of September 30, 1994 primarily due
to higher operating levels and increased sales to larger customers with
longer payment terms.

YEAR ENDED SEPTEMBER 30, 1994

The Company's operating, investing and financing activities for the year
ended September 30, 1994 generated net cash and cash equivalents of $1,103,000
as follows:

- Operating activities provided $566,000;

- $1,002,000 was used to purchase property and equipment, primarily
computer and demonstration equipment;

- $2,984,000 was invested primarily in U.S. Treasury Notes and U.S.
Treasury Bills; and

- Financing activities provided $4,523,000 primarily through the
issuance of common stock and warrants in a private equity placement
and the issuance of common stock upon the exercise of stock options
and warrants.

The Company anticipates that its working capital needs for fiscal 1995 will
be satisfied by operating revenues and, if necessary, through borrowings under
an existing line of credit. The Company, however, will consider the possibility
of additional debt and/or equity financing, if such financing can be arranged on
terms favorable to the Company.

EXPORT SALES

Foreign export sales accounted for 62%, 74% and 54% of the Company's revenues
in fiscal 1994, 1993 and 1992, respectively. The Company's foreign export
sales are denominated in U.S. dollars and, therefore, the Company's receivables
are not exposed to the risk of foreign currency fluctuations. However, to the
extent foreign currencies weaken relative to the U.S. dollar, the Company's
products could become more expensive in these countries. This could affect
both the Company's sales volumes and gross profitability.

EFFECT OF INFLATION

Management believes that the effect of inflation has not been material
during each of the years ended September 30, 1994, 1993 and 1992, respectively,
and the six months ended March 31, 1995.

PROPOSED ACQUISITION

On April 27, 1995, the Company announced that it had entered into a
definitive merger agreement (the "Merger Agreement") with Acuity Imaging Inc., a
publicly owned company located in Nashua, New Hampshire ("Acuity"), pursuant to
which Acuity is to become a wholly owned subsidiary of the Company. Acuity
designs, develops, manufactures and supplies 2-D machine vision systems to a
diversity of markets.

<PAGE>

The Merger Agreement calls for the Company to issue 0.766 of a share
of its Common Stock for each Acuity share (subject to possible adjustments to
the Exchange Ratio as a result of implementation of the Collars), or
approximately 1,904,993 shares, in exchange for all of Acuity's outstanding
common stock assuming that the Exchange Ratio equals 0.766. If the price of
shares of the Company's Common Stock averages more than $14.50 or less than
$10.00 per share during the 20 trading days ending on (and including) the
third trading day immediately prior to the Company's Special Meeting, the
number of shares of the Company's Common Stock issuable to the Acuity's
stockholders would be proportionately adjusted. In no event, however, will
the Exchange Ratio be more than 0.925626 or less than 0.555375. In addition,
Acuity's outstanding stock options are to be exchanged for options upon the
Company's Common Stock in the same 0.766 to one ratio.

Consummation of the proposed merger, which is intended to be completed as a
tax-free reorganization and to be accounted for as a pooling of interests, is
subject to conditions which are customary for transactions of this nature,
including approval by the stockholders of each of the Company and Acuity.
Consequently, consummation of this transaction cannot be assured and it is
therefore not "probable" within the meaning ascribed to such term under the
Securities Act and the rules and regulations promulgated by the Commission
thereunder.

PRIVATE EQUITY PLACEMENT

On June 28, 1995, the Company consummated a private sale of an aggregate of
1,110,000 shares of its Common Stock, at a price of $9.00 from which the Company
derived net proceeds of approximately $9,500,000. The Company has agreed to
file a registration statement under the Securities Act covering these shares
for the respective accounts of the purchasers thereof no later than December
28, 1995. Arnhold and S. Bleichroeder, Inc. acted as the Company's agent in
connection with the Company's sale of these shares.

<PAGE>

BUSINESS

HISTORY

The history of the Company dates back to June 1960 with the founding of
Dynell Electronics Corporation, a manufacturer of large complex radar sets,
special purpose data processing equipment, underwater acoustic detection
equipment and target tracking equipment ("Dynell"). In December 1977, United
Technologies Corp. acquired Dynell for $22 million.

As part of the acquisition, United Technologies agreed to spin-off the
Company, then a division of Dynell, as an independent publicly-held company to
develop a novel technology dealing with optical three-dimensional measurement
and replication techniques. The Company operated as a developmental stage
company for the first four years of its existence.

Initially, the Company applied its vision technology in a project for the
U.S. Navy. The Company developed a turn-key system to aid the Navy in inspecting
propellers for the Navy's nuclear submarines. This project, along with several
other smaller government projects, provided revenues of approximately $9.5
million over a period of time from 1980 to the end of 1984. To reflect its
concentrated focus on vision-based systems, the Company changed its name to
Robotic Vision Systems, Inc. in July 1981.

Having built up a significant base of technology, the Company began to look
to other industrial markets where it could commercially manufacture and market
vision-based systems. In late 1983, GM sought out the Company to undertake
several major projects aimed at automating certain automobile manufacturing
processes, a strategic action which GM undertook in an attempt to achieve
worldwide competitiveness. Seeking to avoid the typical vendor-manufacturer
relationship of the automobile industry, the Company agreed to pursue this
direction only if GM would acquire a significant equity interest in the Company.
In August 1984, GM purchased an approximately 18% equity interest in the Company
for $8.9 million, provided the Company with $3.9 million for research and
development and contracted with the Company to perform a specific $1.0 million
vision related project.

Following the establishment of its relationship with GM, the Company grew
from 60 employees to 225 employees in 1986. The Company's first project for GM
was the design, manufacturing and implementation of a vision guided robotic
sealant turn-key system. The first equipment purchase order from GM for two of
these systems aggregated $6.0 million. In the first year of its relationship
with the Company, GM placed orders for projects worth approximately $15.0
million.

Over the course of the next three years, GM dramatically reduced its level
of capital spending, particularly for high tech automation systems. In view of
this development, the Company sought alternative markets to compensate for
declining revenues in the automotive industry. On an interim basis, the Company
pursued contract business in the robotic welding systems market. The Company
viewed this step as an interim means of generating cash flow to offset further
declines in the automotive sector. Between 1987 and 1990, the Company produced
nine welding systems generating approximately $6.9 million in revenues.

Concurrent with developing its welding systems operations and deciding not
to wait for GM to resume project spending, the Company sought to apply its core
technology to new applications outside the turn-key robotic systems industry. In
particular, the Company considered relevant markets to the machine vision
industry in light of its expertise and the advanced state of its technology. The
Company focused on the electronics industry as having a significant number of
applications where its technology could be applied with identifiable advantages
over current equipment.

The Company's first area of focus in the electronics industry addressed the
difficulties of manual and 2-dimensional ("2-D") inspection methods for printed
circuit boards. As a source of low-cost research, the Company initially
undertook a U.S. Navy project, funded through IBM, to study the feasibility of
fully automating the highly labor intensive and error-prone circuit board
inspection process. This study ultimately resulted in the Company's receipt of
approximately $3.0 million in development funding from IBM and the U.S. Navy to
develop automated

<PAGE>

solder joint inspection applications for vision technology. Building on this
research, the Company successfully completed the engineering and development of
the HR-2000, a fully automated 3-dimensional ("3-D") solder joint inspection and
process control system, by the spring of 1989. Over the next two years, the
Company installed HR-2000 units at several defense electronics manufacturing
houses.

Subsequently, the Company began to explore other applications in the
electronics industry for vision technology based inspection and quality control
equipment. Identifying both the competitive advantages of 3-D inspection over
traditional equipment while also recognizing the size of the market, the Company
decided to pursue the development of a semiconductor lead-inspection system in
August 1990. Two months later, the LS-2000, an automated high-speed 3-D
semiconductor lead inspection system, was introduced. In July 1994, the Company
introduced its advanced LS-3000 Series lead inspection system. Since the
initial introduction of the LS-2000 and through March 31, 1995, the Company has
shipped a total of 238 LS-2000 and LS-3000 Series units. It had an order backlog
for an additional 40 units at March 31, 1995, valued at approximately $11.6
million.

During the fiscal year ended September 30, 1990, the Company withdrew from
its automotive robotic systems integration business because of extremely
aggressive price competition from a large Japanese robot manufacturer, resulting
in reduced margins and a diminishing backlog of orders. The sale of its robotic
welding systems integration business in fiscal 1990 marked the culmination of
the Company's transition from being a supplier of turnkey systems to being a
developer and supplier of standard products having a wide array of commercial
and military applications in the area of electronics inspection.

VISION TECHNOLOGY

An important class of digital imaging systems is "machine vision",
intelligent machines that "see" in order to perform tasks such as automated
inspection in factory environments. These systems operate at a sufficiently high
speed to work within a system's existing production rate and with sufficient
visual discrimination to adaptively react to the factory environment.

On a simple level, machine vision can be categorized into three segments.
In ascending order of sophistication, these systems are 2-D binary imaging,
stereovision and 3-D vision.

2-D imaging has been satisfactory for many applications of machine vision
to date. 2-D vision technology employs a technique known as gray-scaling in
which workpieces are illuminated, viewed and converted into an image composed of
many light points in varying shades of gray, much like a black and white
television picture. The image captures qualitative information about the width
and height of the object but provides no data as to its depth characteristics.
Consequently, 2-D vision is unable to distinguish a three-inch sheetmetal hole
positioned two feet away from a six-inch hole placed four feet away.

Stereovision is an intermediate technology that, while more sophisticated
than 2-D vision, is less sophisticated and reliable than true 3-D vision. This
technology is based on viewing an illuminated workpiece from cameras poised at
two different angles. Theoretically, the relative positions of the two images
seen by the cameras can be reconciled to determine the object's location in
three-dimensional space. While more powerful than 2-D vision, stereovision
requires copious surface detail on the object and unambiguous and consistent
recognition by both cameras. A further constraint is that ambient lighting
conditions found on the typical factory floor may confuse a stereovision system
by shadowing one camera's view more than the other's view.

The highest level of machine vision sophistication is contained in true 3-D
vision. This technology, based on sophisticated structured light and optical
triangulation techniques, is at the heart of all of the Company's systems. With
true 3-D vision technology, workpieces are first illuminated with a known
pattern of laser light. After illumination, a single camera views light patterns
reflected by the workpiece, thus eliminating the problem of sensitivity to
ambient lighting conditions inherent in two-camera systems. Images are then
digitized into a grid of precise data points. In the final stage, exact three-
dimensional coordinates of each of these data points are calculated, and the
position and orientation of the object in three-dimensional space and its
feature characteristics are known.

<PAGE>

Three-dimensional vision is the only technique that can recognize depth
characteristics of almost any arbitrary workpiece.

On a broad level, machine vision applications in automated manufacturing
fall into two categories --inspection and process guidance.

INSPECTION TASKS PROCESS GUIDANCE TASKS
---------------- ----------------------

Verification Positioning
Counting Control
Character Recognition Sorting
Identification Adaptive Control
Flaw Detection Seam Tracking

Inspection functions are ideally suited to machine vision technology.
Because inspection is largely performed on a random sampling basis, human
inspection results in information delays and requires continual sampling to
determine the extent and cause of any defects. Machine vision eliminates
information delay through real-time inspection. Machine-based inspection also
eliminates subjectivity and human errors that result from fatigue and loss of
concentration.

Process guidance, in most cases, represents the more sophisticated
application of machine vision. In these applications, robots, using optical
imaging, must first "find" the location, orientation and geometric features of a
part under manufacture, and then, once a work environment has become "known" to
the computer, guide a robot or other mechanical device to the workpiece and
adaptively control the operation of a specific process.

MARKETS AND PRODUCTS

Revenues derived by the Company during the six months ended March 31, 1995
and its fiscal years ended September 30, 1994, 1993 and 1992 are described
below:

<TABLE>
<CAPTION>
% OF REVENUES
-------------------------------------------------
FISCAL YEAR ENDED
SEPTEMBER 30,
SIX MONTHS ENDED ------------------------
MARCH 31, 1995 1994 1993 1992
---------------- ---- ---- ----
<S> <C> <C> <C> <C>

Semiconductor Lead 99% 95% 92% 79%
Inspection Systems
(LS-2000 and
LS-3000 Series)

Contracts from U.S. 1% 4% 8% 23%
Government (1)

Other (2) --% 1% --% ( 2%)
--- --- --- ---
100% 100% 100% 100%
--- --- --- ---
--- --- --- ---

<FN>
- ---------------
(1) Includes, but is not limited to, programs relating to the advanced
inspection and machining of ship's propellers, and continued research and
development of the Company's ID-1 Ice Detection Technology.
(2) The Company provided for certain adjustments with respect to revenues
associated with two automotive contracts which were canceled in fiscal
1992.

</TABLE>

<PAGE>

The Company's domestic and foreign export sales during the Company's six
months ended March 31, 1995 and its fiscal years ended September 30, 1994, 1993
and 1992 are described below:

FISCAL YEAR ENDED
SEPTEMBER 30,
SIX MONTHS ENDED ---------------------------
MARCH 31, 1995 1994 1993 1992
---------------- ---- ---- ----
<S> <C> <C> <C> <C>

North America $ 3,500 $ 9,258 $ 5,166 $ 6,074
Asia/Pacific Rim 10,800 14,103 12,608 5,838
Europe 2,300 1,252 2,169 1,423
------- ------- ------- -------
$16,600 $24,613 $19,943 $13,335
------- ------- ------- -------
------- ------- ------- -------

</TABLE>

SEMICONDUCTOR LEAD INSPECTION SYSTEMS

The semiconductor manufacturing process begins with the fabrication of the
semiconductor chip and ends with the final assembly, test/inspection and marking
of the ultimate product. The typical industry descriptions for these areas are
"front end" and "back end."

The front end is a "planar" process where devices are made in "wafer"
format (i.e., large flat surface where the main process concerns are x-y
alignment for various process tools). The trend toward very high density chips
has demanded more inspection and process control in the front end and,
consequently, has created the need for vision guided processes. This technology
advancement generated several large and profitable optical based companies all
of which used 2-D optical and vision technology. While the front end developed
rapidly to utilize the new technology, the back end of the manufacturing process
did not yet involve such tiny part dimensions. The back end had line
separations of 0.1 inches and above, and pin counts were seldom in excess of 40
leads. In addition, there was very little competitive pressure to improve
quality dramatically. Accordingly, automated inspections was not yet required.

Today, the back end of the production process must deal with pin counts as
high as 500 leads and line spacings down to 0.004 inches. In addition,
manufacturers are seeing demands for quality levels as high as 3 or 4 failures
per million. Unlike the front end, the height dimension is also critical in
assuring proper lead contact when mounted. Therefore, at this end of the
process, vision solutions must be "three-dimensional." This advancing
technology has created a significant market opportunity for the Company's series
lead inspection products.

The Company's LS-3000 Series Lead Scanning Systems are an outgrowth of its
prior LS-2000 Series. The Company believes that the LS-2000, first introduced in
October 1990, is the only high-speed automated semiconductor lead inspection
system capable of inspecting devices while they remain in their protective
trays. The LS-2000 is an extension of the Company's HR-2000 product, which was
originally introduced in 1989 for printed circuit board solder joint inspection.
In June 1992, the Company introduced the LS-2000A which is a higher accuracy
version of the LS-2000. At the same time, the Company also introduced the LS-
2700, a significantly faster version of the LS-2000, which also affords a
greater level of accuracy. The Company formally introduced the LS-3000 Series at
the Semicon West trade show in July 1994. All of the models in the LS-3000
Series line are lighter and smaller than the LS-2000A and the LS-2700. The
flagship of the LS-3000 series, the LS-3700, is also significantly faster than
the LS-2700. The Company received purchase orders for 55 and 36 LS-3000 Series
machines during the six months ended March 31, 1995 and the fiscal year ended
September 31, 1994, respectively.

AIRCRAFT ICE DETECTION SYSTEM

In January 1993, the Company announced the completion of the initial
development phase of its new ID-1 aircraft ice detection system. The ID-1 is
designed to make a major improvement in winter flight safety and to fulfill the
intent of strict new FAA regulations concerning the inspection of wing surfaces
in adverse weather conditions. The device is also anticipated to reduce winter
flying delays and their associated costs and to diminish the

<PAGE>

environmental hazard posed by de-icing fluids.

The ID-1 is a full-wing electro-optical ice detection system that is
designed to provide a quick, clear, and reliable indication of the presence or
absence of ice, snow or frost. The Company has filed patent applications for
this technology. The system can be mounted on the bucket of a de-icing truck or
other vehicle and is designed to operate under conditions where visual
inspection can be ineffective or tactile inspection difficult. Its compact size
and high degree of mobility are also designed to allow the ID-1 to detect ice on
aircraft surfaces at any point between the gate and runway.

Extensive field testing of the ID-1 was conducted at several locations
during the 1994-1995 winter ice season. The commercial viability of the ID-1 has
not as yet been proven nor can it be assured. Consequently, there can be no
assurance that the ID-1 can be commercially marketed at a profit at any time in
the proximate future, if ever.

MANUFACTURING

The Company's production facilities are capable of fabricating and
assembling total electronic and electromechanical systems and subsystems.
Facilities include an assembly and wiring department that has the capability of
producing complex wiring harnesses, as well as intricate electronic
subassemblies. The Company maintains a comprehensive test and inspection program
to ensure that all systems meet exacting customer requirements for performance
and quality workmanship to delivery. In addition, an in-house sheetmetal and
machine shop allows for the manufacture of both prototype and production
hardware. To support its internal operations and to extend its overall capacity,
the Company purchases a wide variety of components, assemblies and services from
proven outside manufacturers, distributors and service organizations.

MARKETING

The Company's marketing strategy focuses on cultivating long-term
relationships with the leading manufacturers of electronic and semiconductor
inspection and quality control equipment. As a result of its limited and focused
target market, the Company's marketing efforts rely heavily on direct sales
methods. The selling cycle for the LS-2000 and LS-3000 Series products has
proven to be generally between six to nine months from initial customer contact.
A lengthy purchase process is often the case in the purchase of the initial unit
of a particular product sold by the Company. Subsequent purchases require less
time and often result in multiple orders. Typically, potential purchasers visit
the Company's headquarters to receive a full demonstration of the product and
discuss the merits of the product with the Company's engineers before making a
purchase decision.

Sales activities in the domestic market are handled by a combination of
direct sales personnel and independent sales representatives. Due to the depth
of analysis involved in the customer's purchase decision, management emphasizes
active interaction between the direct sales staff, its independent sales
representatives and the buyer throughout the selling process.

The Company has also established distribution capabilities in both Europe
and the Far East, providing access to virtually all major markets for electronic
and semiconductor test equipment. Leveraging off management's experience and
contacts in the international markets, the Company has negotiated agreements
with four independent representatives in the Far East and three independent
representatives in Europe to sell and service the Company's products.

The Company presently employs 6 persons primarily engaged in personal
selling. In addition, corporate management is committed to frequent
communications with customers, particularly those in higher, policy-making
positions. Lending further support to the sales effort is the Company's 78
person engineering and technical staff, which provides assistance in areas
requiring in-depth technical analysis.

<PAGE>

Supporting the personal selling effort is a range of marketing
communications materials including brochures, video tapes and slide and overhead
presentations. Additionally, news coverage and trade articles are used to
enhance the Company's reputation and image. The Company also exhibits at
selected trade shows.

CUSTOMERS

The Company's sales have been historically concentrated in a small number
of customers at any time, although the specific customers change over time.
Sales to ASE and Anam accounted for approximately 11% and 10%, respectively,
of the Company's revenues during the six months ended March 31, 1995. Sales to
Intel Corporation and Motorola Inc. accounted for approximately 15% and 10%,
respectively, of the Company's revenues during the fiscal year ended September
30, 1994. Sales to Samsung Corporation, Anam Corporation and Intel Corporation
accounted for approximately 15%, 13% and 13%, respectively, of the Company's
revenues during its year ended September 30, 1993. Sales to the U.S. Government
accounted for 4%, 8% and 23% of the Company's total revenues for the fiscal
years ended September 30, 1994, as contrasted with 8% and 23% for the fiscal
years ended September 30, 1993 and 1992, respectively. No other customers
accounted for more than 10% of sales during such fiscal years and fiscal
periods.

RESEARCH AND DEVELOPMENT

The Company-sponsored research and development efforts over recent years
have been largely devoted to continued development of advanced three-dimensional
vision technology and applications software for use in various inspection and
process control automation systems. The Company's primary research and
development efforts are focused on development of new electronic and
semiconductor inspection and quality control products and improvements of
existing products, along with development of the Company's ID-1 aircraft wing
ice detection technology. Research and development expenditures, net of
capitalized software development costs, aggregated approximately $3,718,000,
$2,526,000, and $1,731,000 for the Company's fiscal years ended September 30,
1994, 1993 and 1992, respectively, and approximately $2,389,000 for its six
month fiscal period ended March 31, 1995. In its fiscal years ended September
30, 1994, 1993 and 1992 and its six month fiscal period ended March 31, 1995,
the Company capitalized $433,000, $476,000, $568,000 and $273,000, respectively,
of its software development costs in accordance with the provisions of Statement
of Financial Accounting Standards No. 86. The Company also contracts to perform
certain customer-funded research and development efforts. Revenues and cost of
revenues related to such contracts were $468,000 and $155,000, respectively, for
fiscal 1994, compared to $342,000 and $271,000, respectively, for fiscal 1993
and were $106,000 and $42,000, respectively, for its six month fiscal period
ended March 31, 1995.

SOURCES OF SUPPLY

The raw materials and components used in the development and manufacture of
the Company's products are generally available from domestic suppliers at
competitive prices; fabrication of certain major components has been
subcontracted for on an as-needed basis. The Company has not experienced any
significant difficulty in obtaining adequate supplies to perform under its
contracts.

During fiscal 1994, one of the Company's major suppliers voluntarily filed
for protection under Chapter 11 of the bankruptcy code. This supplier has
advised the Company that it expects to emerge successfully from bankruptcy.
However, as a protective measure to ensure a stable supply of this vendor's
product, the Company has acquired a three month inventory and has negotiated an
escrow arrangement with this vendor that would afford the Company access to the
documentation required to reprocure or manufacture this product in the event the
vendor is no longer able to furnish such product to the Company.

BACKLOG

At March 31, 1995 the Company's backlog was approximately $11.6 million as
contrasted with approximately $7.0 million, $7.3 million and $6.0 million at
September 30, 1994, 1993 and 1992, respectively. The Company believes that most
of its backlog at March 31, 1995 will be completed prior to the close of
calendar year

<PAGE>

1995. The Company does not believe that its backlog at any particular time is
necessarily indicative of its future business.

CUSTOMER SERVICE AND SUPPORT

Given the high cost of downtime, it is imperative that any malfunction in
one of the Company's systems, regardless of cause, be addressed in the shortest
possible time. The Company therefore makes available a 24-hour a day "hot line"
which can be used to request service support. The Company's service organization
consists of technicians, mechanics and engineers reporting to customer service
managers who not only are intimately familiar with its own vision sensors and
processors, but also with the other system components. Additionally, the Company
has made arrangements with many of its component suppliers whereby they have
agreed to provide service specialists within 24 hours should the need arise.
Such calls are coordinated through the Company's service manager who is assisted
by a full-time service administrator.

The Company's service personnel have their formal training augmented by
direct participation in testing of systems at the Company's facility and also in
the installation and acceptance tests at the customer's plant.

GOVERNMENT REGULATION

Approximately 1%, 4%, 8% and 23% of the Company's sales during the six
months ended March 31, 1995 and the fiscal years ended September 30, 1994, 1993
and 1992 were related directly or indirectly to U.S. Government programs. Any
substantial overall reduction in government expenditures may adversely affect
the Company's business. Orders under government prime contracts or subcontracts
are customarily subject to termination at the convenience of the government. In
this event, the contractor is normally entitled to reimbursement for allowable
costs and a reasonable allowance for profits, unless the termination was due to
a default on the part of the contractor. Government contracts are also subject
to audit by applicable government agencies prior to finalization.

PROPRIETARY PROTECTION

At March 31, 1995 the Company owned 76 issued U.S. patents, with expiration
dates ranging from 1995 to 2011, relating to its three-dimensional vision
technology. The Company also owns the rights to several U.S. patent applications
relating to such technology.

The Company does not believe that its present operations are materially
dependent upon the proprietary protection that may be available to the Company
by reason of any one or more of such patents. Moreover, as its patent position
has not been tested, no assurance can be given as to the effectiveness of the
protection afforded by its patent rights.

COMPETITION

The Company believes that machine vision has evolved into a new industry
over the past ten years in which a number of machine vision-based firms have
developed successful industrial applications for the technology. The Company is
aware that a large number of companies, estimated to be upward of 100 firms,
entered the industry in the years 1980 through 1986 and that most of these were
small private concerns. Over the last several years the number of competitors
has narrowed to less than 25. The Company believes this is attributable, to a
large extent, to a consolidation within the industry.

The Company is not aware of any other entity having a three-dimensional
vision system capability as comprehensive and highly automated as that achieved
by the Company. However, the Company is aware of several competitors which might
promote substitute technologies. The Company believes that there are other
concerns, some of which may be substantially larger and have substantially
greater assets and resources than the Company, engaged in the development of
technology and products which would be competitive with those of the Company
should they choose to enter the machine vision marketplace.

<PAGE>

EMPLOYEES

At March 31, 1995 the Company employed 149 persons, of whom 78 were
engineering and other technical personnel.

FACILITIES

The Company leases approximately 50,000 square feet of office and factory
space at 425 Rabro Drive East, Hauppauge, New York under a lease which extends
to March 31, 2001. The lease requires the Company to pay property taxes and
certain operating expenses and contains escalation clauses relating to property
taxes.

<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages and the positions and offices held by
each of the directors and executive officers of the Company.

DIRECTOR
NAME AGE SINCE POSITIONS AND OFFICES
---- --- -------- ---------------------

Pat V. Costa 51 1984 Chairman of the Board, President and
Chief Executive Officer

Frank A. DiPietro 68 1992 Director

Donald F. Domnick 73 1988 Director

Jay M. Haft 59 1977 Director

Mark J. Lerner 42 1994 Director

Howard Stern 57 1981 Senior Vice President and Director

Robert H. Walker 59 1990 Executive Vice President,
Secretary/Treasurer and Director

Steven J. Bilodeau 36 -- Executive Vice President

Earl H. Rideout 48 -- Vice President

William E. Yonescu 52 -- Vice President

PAT V. COSTA has served as President, Chief Executive Officer and Chairman
of the Board of Directors of the Company since July 1984. Prior thereto and from
1977, Mr. Costa was employed by GCA Corporation, most recently in the capacity
of Executive Vice President. GCA is engaged in the manufacture of various
electronic instrumentation equipment and systems.

FRANK A. DIPIETRO began his career with GM in 1944. During his forty-five
year career with GM, he was actively involved in automobile assembly and
manufacturing engineering systems. He retired in 1990 and continues as a
consultant in laser systems in several industries. At the time of his
retirement, Mr. DiPietro held the position of Director of Manufacturing
Engineering, Chevrolet-Pontiac-Canada Car Group, for GM.

DONALD F. DOMNICK served as Vice President of Caterpillar, Inc. from 1977
through 1985. Mr. Domnick, who has been retired since 1985, is also a fellow of
the Society of Manufacturing Engineers, is a Director of Midstate College in
Peoria, Illinois and is on the Board of Advisors of St. Francis Medical Center.

JAY M. HAFT is Of Counsel to Parker Duryee Rosoff & Haft, the Company's
counsel, and a practicing lawyer since 1959. Mr. Haft is also acting chief
executive officer and a director of Noise Cancellation Technologies, Inc. and a
director of, respectively, Extech Corporation, CAS Medical Systems, Inc., Nova
Technologies Inc. and

<PAGE>

Compucom Systems, Inc., all of which are publicly-owned concerns.

MARK J. LERNER has been President of Morgen, Evan & Company, Inc., an
investment banking firm which focuses on Japanese-U.S. transactions, since 1992.
Prior thereto and from 1990, he was a managing director at Chase Manhattan Bank
where he headed the Japan corporate finance group. From 1982 to 1990 Mr. Lerner
worked in the Investment Banking Division of Merrill Lynch as head of its Japan
Group, coordinating its New York-based Japanese activities with professionals in
Tokyo and London.

HOWARD STERN has been Senior Vice President and Technical Director of the
Company since December 1984. Prior thereto and from 1981, he was Vice President
of the Company.

ROBERT H. WALKER is and has been Executive Vice President and
Secretary/Treasurer of the Company since December 1986. Prior thereto and from
December 1984 he was Senior Vice President of the Company. From 1983 to 1985 he
also served as Treasurer. Mr. Walker is also a Director of Tel Instrument
Electronics Corporation, a publicly-owned company.

STEVEN J. BILODEAU is and since December 1986 has been Executive Vice
president of the Company. Prior thereto and from April 1985 he served the
Company in various capacities, most recently as Vice President of Operations.

EARL H. RIDEOUT is and since February 1989 has been Vice President of the
Electronics Group for the Company. Prior thereto and from 1986 he was Executive
Vice President of Vitronics Corporation, a firm engaged in the manufacture and
distribution of solder reflow ovens for the electronics industry. From 1984 to
1986 he was President and Chief Operating Officer of Testamatic Corporation, a
manufacturer of bare board test equipment.

WILLIAM E. YONESCU is and since June 1991 has been Vice President for New
Product Development of the Company. Prior thereto and from March 1984, he was
Research and Development Manager of the Company.

EXECUTIVE COMPENSATION

Set forth below is the aggregate compensation for services rendered in all
capacities to the Company during its fiscal years ended September 30, 1994, 1993
and 1992 by its chief executive officer and each of its four most highly
compensated executive officers whose compensation exceeded $100,000 during its
fiscal year ended September 30, 1994:

SUMMARY COMPENSATION TABLE

LONG TERM COMPENSATION
----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------- -------------------- ---------
OTHER RESTRIC- LONG ALL
NAME AND ANNUAL TED TERM IN- OTHER
PRINCIPAL FISCAL COMPEN- STOCK NUMBER OF CENTIVE COMPEN-
POSITION YEAR SALARY BONUS SATION AWARDS OPTIONS PAYOUTS SATION
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>

Pat V. Costa 1994 $176,702 $36,000 -- -- -- -- $52,310(1)(2)
Chief Executive 1993 $169,218 -- -- -- 100,000 -- $52,262(1)(2)
Officer 1992 $148,866 -- -- -- 340,000 -- --

Steven J. Bilodeau 1994 $139,260 $31,000 -- -- -- -- $ 2,686(2)
Executive Vice 1993 $133,426 $ 6,000 -- -- 50,000 -- $ 2,096(2)
President 1992 $117,374 $ 1,800 -- -- 141,900 -- --

Earl H. Rideout 1994 $112,127 $13,500 -- -- -- -- --
Vice President 1993 $112,550 -- -- -- 25,000 -- --
1992 $ 99,008 $ 2,700 $3,808(3) -- 70,000 -- --

Howard Stern 1994 $117,787 $26,000 -- -- -- -- $ 2,347(2)
Senior Vice 1993 $112,805 -- -- -- 45,000 -- $ 1,699(2)
President 1992 $ 99,237 -- -- -- 129,330 -- $ 1,541(2)

Robert H. Walker 1994 $111,715 $26,000 -- -- -- -- $ 1,785
Executive Vice 1993 $102,082 $ 4,000 -- -- 41,113 -- $ 1,598(2)
President 1992 $ 89,794 -- -- -- 94,580 -- $ 1,394(2)

<PAGE>

<FN>
- ---------------
(1) During fiscal 1992, the Company entered into a Stock Appreciation Rights
Agreement with Mr. Costa.
Under the terms of this agreement, Mr. Costa will receive a cash payment
based on the appreciation in the market value of the Company's Common
Stock. The maximum cash payments which may be made under this agreement
are $50,000 for the fiscal years ended September 30, 1993 and 1994, $75,000
for fiscal year ending September 30, 1995 and $100,000 for fiscal year
ending September 30, 1996. However, the timing of these payments may be
accelerated by the Board of Directors. Payments of $50,000 have been made
to Mr. Costa for each of the years ended September 30, 1993 and 1994.
(2) Represents accrued and vested payments under the Company's Stock Ownership
Plan. For Mr. Costa, this amount equaled $2,310 and $2,262 for the fiscal
years ended September 30, 1993 and 1994, respectively.
(3) Vacation pay in lieu of time.

</TABLE>

Set forth below is further information with respect to unexercised options
to purchase the Company's Common Stock under the Company's 1982, 1987 and 1991
stock option plans:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

NUMBER OF VALUE OF UNEXERCISED
SHARES NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
ACQUIRED OPTIONS AT SEPTEMBER 30, 1994 AT SEPTEMBER 30, 1994
ON VALUE ----------------------------- ----------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

Pat V. Costa 60,073 $253,295 219,927 160,000 $1,054,602 $ 670,475

Steven J. Bilodeau 44,900 $187,400 76,000 71,000 $ 358,992 $ 291,985

Earl H. Rideout 27,006 $115,826 24,244 43,750 $ 111,346 $ 190,025

Howard Stern 23,500 $104,160 86,580 64,250 $ 413,364 $ 265,930

Robert H. Walker 25,500 $110,654 56,858 53,335 $ 268,070 $ 216,997

</TABLE>

EMPLOYEE AGREEMENTS

Mr. Pat V. Costa is employed as Chief Executive Officer and President of
the Company under an indefinite term agreement which currently provides for
annual base salary of $180,627. Pursuant to the terms of his employment
agreement, Mr. Costa has been granted certain rights in the event of the
termination of his employment or a change in control of the Company.
Specifically, in the event of termination for any reason other than for cause
and other than voluntarily, Mr. Costa will be entitled to the continuance of
salary and certain fringe benefits for a period of twelve months and may
exercise all outstanding stock options which are exercisable during the twelve
month period succeeding termination at any time within such twelve month period.
In the event of the occurrence of a change in control of the Company (as defined
in his employment agreement) and, further, in the event that Mr. Costa is not
serving in the positions of Chief Executive Officer, President and Chairman of
the Company (other than for cause) within one year thereafter, Mr. Costa will be
entitled to exercise all outstanding stock options, regardless of when otherwise
exercisable, during the six month period following the termination date of his
employment.

The Company has also granted certain rights in the event of termination of
employment to Messrs. Bilodeau, Rideout, Stern, Walker and Yonescu. Specifically
in the event of involuntary termination other than for cause, each officer will
be given a termination package which provides for three months severance pay and
continued benefits, with the exception of Mr. Rideout whose employment agreement
allows for six months severance. In addition, the Company has agreed to provide
a maximum of one hundred days' advance written notice to each of Messrs.
Bilodeau, Stern, and Walker in the event the Company should desire to terminate
their employment other than for cause. In such event, each such officer shall be
entitled to exercise all outstanding stock options, regardless of when

<PAGE>

otherwise exercisable, during a specified period following such termination.

DIRECTORS' COMPENSATION

During the fiscal year ended September 30, 1994, directors who were not
otherwise employees of the Company were compensated at the rate of $1,000 for
attendance at each meeting of the Board of Directors or any committee thereof,
$250 for attendance at any second meeting held during the same day, and $100 for
participation at a telephonic meeting or execution of a consent in lieu of a
meeting.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

As of March 31, 1995, GM owned approximately 10.5% of the Company's
outstanding Common Stock. Sales to GM accounted for less than 1% of the
Company's total sales for the Company's fiscal year ended September 30, 1994.

Mr. Jay M. Haft, a Director of the Company, is Of Counsel to Parker Duryee
Rosoff & Haft, the Company's general counsel.

<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of July 18, 1995, the number and
percentage of shares of the Company Common Stock held by (a) all persons who,
to the knowledge of the Company, are the beneficial owners of, or who otherwise
exercise voting or dispositive control over, more than 5% of outstanding the
Company Common Stock within the meaning of Rule 13d-3 of the Exchange Act, (b)
all directors of the Company and (c) all executive officers and directors of the
Company as a group:

NAME AND ADDRESS AMOUNT OF
OF BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) PERCENT OF CLASS
- ------------------- ----------------------- ----------------

Pat V. Costa 326,647(2) 2.4%

Frank A. DiPietro 45,000(3) (13)

Donald F. Domnick 25,500(4) (13)

Jay M. Haft 516,546(5) 3.8%

Mark J. Lerner 100,411(6) (13)

Howard Stern 109,222(7) (13)

Robert H. Walker 69,983(8) (13)

General Motors Corporation 1,225,775 9.3%
767 Fifth Avenue
New York, New York 10153

Marie Cioti 1,100,000(9) 8.2%
408 Mamaroneck Road
Scarsdale, New York 10583

Robotic Vision Systems 897,865(10) 6.9%
Shareholder's Committee
and Robotic Vision Shareholder's
Group
c/o BEG Enterprises,Inc.
33493 14 Mile Road, #100
Farmington Hills, MI 48831

All current executive 1,321,018(11)(2) 9.3%
officers and directors as a
group (10 persons)

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

(1) Includes shares issuable pursuant to currently exercisable options and
warrants as well as those options and warrants which will become
exercisable within 60 days of July 18, 1995. Except as otherwise
indicated, the persons named herein have sole voting and dispositive power
with respect to the shares beneficially owned.

(2) Includes (i) 295,326 shares issuable to Mr. Costa upon exercise of
outstanding options and (ii) 1,321 vested shares held under the Stock
Ownership Plan over which shares Mr. Costa has voting power, but does not

<PAGE>

have dispositive control.

(3) Includes (i) 12,000 shares issuable to Mr. DiPietro upon exercise of
outstanding options and (ii) 28,000 shares owned of record by his spouse.

(4) Includes 12,000 shares issuable to Mr. Domnick upon exercise of outstanding
options.

(5) Includes (i) 52,000 shares issuable to Mr. Haft upon exercise of
outstanding options, (ii) 305,600 shares issuable upon exercise of
outstanding warrants, of which 286,100 are held by his spouse, (iii)
142,000 shares owned of record by his spouse and (iv) 7,666 shares held
indirectly in a retirement trust.

(6) Includes (i) 5,000 shares issuable to Mr. Lerner upon exercise of
outstanding options and (ii) 95,411 shares issuable to Morgen Evan &
Company, Inc. of which Mr. Lerner is the principal owner, upon exercise
of outstanding warrants.

(7) Includes (i) 103,330 shares issuable to Mt. Stern upon exercise of
outstanding options and (ii) 5,892 vested shares held under the Stock
Ownership Plan over which shares Mr. Stern has voting power, but does not
have dispositive control.

(8) Includes (i) 64,636 shares issuable to Mr. Walker upon exercise of
outstanding options and (ii) 5,347 vested shares held under the Stock
Ownership Plan over which shares Mr. Walker has voting power, but does not
have dispositive control.

(9) Includes 400,000 shares issuable upon exercise of certain outstanding
warrants.
(10) Information obtained from amended Schedule 13D filed with the Commission on
November 18, 1994.

(11) Includes (i) 235,446 shares owned of record and beneficially and (ii)
1,063,642 shares issuable upon exercise of certain outstanding stock
options and warrants.

(12) Includes 21,930 vested shares held in the Company's Stock Ownership Plan
for certain officers of the Company over which shares such officers have
voting power, but do not have dispositive control.
(13) Less than one percent.

<PAGE>

SELLING STOCKHOLDERS

GENERAL

The table sets forth certain information with respect to the Selling
Stockholders. The shares set forth therein are being included in the
Registration Statement of which this Prospectus forms a part pursuant to
registration commitments afforded to the Selling Stockholders by contractual
obligations. The Company will not receive any proceeds from the sale of the
shares by the Selling Stockholders. Net proceeds, if any, from the exercise of
Warrants to permit the sale of the underlying shares which are covered by this
Prospectus will be added to the Company's working capital:

BENEFICIAL
OWNERSHIP OF
BENEFICIAL SHARES OF
OWNERSHIP OF COMMON STOCK
NAME OF RELATION- SHARES OF NUMBER OF SHARES AFTER GIVING
SELLING SHIP WITH COMMON STOCK AT OF COMMON STOCK EFFECT TO
STOCKHOLDER THE COMPANY JUNE 30, 1995(1) OFFERED FOR SALE(1) PROPOSED SALE(1)
- ----------- ----------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C>

Aetrium Incorporated 25,000 25,000 --
AIM Overseas N.V. 200,000 200,000 --
Anorad Corporation 20,000 20,000 --
Arnhold and S. Bleichroeder, Inc. 29,800 29,800 --
Ronald Berman(2) 897,865 64,000 --
Ruth Bourne 5,700 5,700 --
William G. Bourne 6,400 6,400 --
F. Hardy Brown 16,000 16,000 --
Pat Capone 16,000 16,000 --
Marie Cioti 1,600,000 1,600,000 --
Robert S. Cline 6,400 6,400 --
Alfred L. Cohen 283,620 184,000 99,620
Robert P. Colin 8,000 8,000 --
Terry D. Diamond 208,000 208,000 --
Terry D. Diamond as 40,000 40,000 --
Trustee of Terry D.
Diamond Trust
dated 5/7/86
Paul DiMatteo 2,000 2,000 --
The Donaldson Trust 1,600 1,600
dated 1/28/93 Account
B. Revocable Kenneth
and Elizabeth Donaldson,
Trustees
Marc Eller(2) 897,865 96,000 801,865
Harold Freund 32,000 32,000 --
Thomas Giandoreggio 6,000 6,000 --
Steven Gluckstein 22,400 22,400 --
Jay Gottlieb 400,000 400,000 --
William R. Griffith 59,250 59,250 --
Clayre Hulsh--Haft 528,100 528,100 --
James Haft 64,000 64,000 --
Jay M. Haft Director 79,166 28,780 50,386
Jonathan Howe 35,004 35,004 --
Harris S. Jaffe 6,667 6,667 --
Edward K. Korff 9,600 9,600 --
Herbert Kozlov 50,750 50,750 --
Max Kurowski 25,000 25,000 --
Laidlaw Holdings, Inc. 20,000 20,000 --
Anita Lapidus &
Leon Lapidus 154,640 154,640 --

<PAGE>

Anita Lapidus & Leon
Lapidus, as custodians
for Jonathan Lapidus 77,346 77,346 --
Anita Lapidus &
Leon Lapidus, as
custodians for
Samuel Lapidus 77,347 77,347 --
Kristina McCormack 12,100 12,100 --
Wayne E. Meyer Former Director 10,000 10,000 --
Morgen, Evan & Company Inc. (3) 131,411 90,000 41,411
The Laurick Trust 400,000 400,000 --
Morgan Stanley F/A/C 131,250 131,250 --
Common Fund Equity Fund
Morgan Stanley F/A/C 309,750 309,750 --
Weiss Global Hedged
Investment Ltd. Partnership
Morgan Stanley F/A/C 84,000 84,000 --
Weiss Offshore Global
Hedged Fund
National Assurance Indemnity Company 32,000 32,000 --
NOM & Co. 138,000 138,000 --
Karen G. Olah 14,400 14,400 --
John C. Onufer, Jr. 234,500 184,000 50,500
Michael J. Parrella 136,000 136,000 --
George Pavlides 16,000 16,000 --
Ronald W. Place 25,000 25,000 --
Riede Systems Asia
Pte. Ltd. 5,000 5,000 --
Rock Financial(2) 897,865 32,000 865,865
Burnett Roth and 32,000 32,000 --
Helen Roth as
Joint Tenants
N.M. Rothschild & Sons 16,000 16,000 --
(C.I.) Limited
Ira Roxland 46,375 46,375 --
Barry Shaw 128,000 128,000 --
Martin Stein 59,250 59,250 --
Marvin Weinstein &
Sherry Weinstein 26,667 26,667 --
Carl Yackel 64,000 64,000 --

<FN>
- -----------
(1) Includes shares issuable upon the exercise of currently outstanding options
and warrants as well as those options and warrants which will become
exercisable within 60 days of June 30, 1995. To the Company's knowledge,
except as otherwise indicated, the persons named herein have sole voting
and dispositive power with respect to the shares beneficially owned.
(2) Denotes a member of a "group" within the meaning of Section 13(d) of the
Exchange Act. See Note 10 to the tabular presentation under "Principal
Stockholders."
(3) Mark J. Lerner, a director of the Company, is the principal stockholder of
this concern.

</TABLE>

PLAN OF DISTRIBUTION

The Company has been advised by the Selling Stockholders that there are no
underwriting agreements with respect to the sale of the shares, that such Shares
will be sold from time to time in the over-the-counter market at then prevailing
prices or in private transactions at negotiated prices, and that usual and
customary brokerage fees will be paid by the Selling Stockholders in connection
therewith.

<PAGE>

DESCRIPTION OF SECURITIES

COMMON STOCK

The Company is currently authorized to issue up to 20,000,000 shares of its
Common Stock, $.01 par value. As of March 31, 1995, there were 11,671,615 shares
of its Common Stock issued and outstanding, held of record by approximately
2,700 persons.

Holders of shares of the Company Common Stock are entitled to such
dividends as may be declared from time to time by the Board of Directors in its
discretion, on a ratable basis, out of funds legally available therefor, and to
a pro rata share of all assets available for distribution upon liquidation,
dissolution or the winding up of the affairs of the Company. All of the
outstanding shares of the Company Common Stock are fully paid and non-
assessable.

WARRANTS

As of March 31, 1995, there were 1,382,762 warrants issued and outstanding,
held of record by 36 persons, each allowing the holder thereof to acquire one
share of the Company Common Stock at various dates through February 1999 at
exercise prices ranging from $1.00 to $6.56 per share. See "Management -
Transactions with Management and Other Related Persons".

The Company Common Stock issuable upon exercise of all such warrants, when
paid for in accordance with their respective terms, will be fully paid and non-
assessable. All such shares are included in the Registration Statement of which
this Prospectus is a part. See "Management - Transactions with Management and
Other Related Persons" and "Selling Stockholders". The Warrants provide for
adjustment of the exercise price to protect the holders against dilution upon
the occurrence of such events as stock dividends an distributions, splits,
recapitalizations, mergers and the like.

TRANSFER AGENT

The transfer agent for the Company Common Stock is American Stock Transfer
& Trust Company, 40 Wall Street, New York, New York 10005. The Company acts as
its own warrant agent.

REPORTS TO STOCKHOLDERS

The Company furnishes to its Stockholders, after the close of each fiscal
year, an Annual Report which contains audited financial statements.

SHARES ELIGIBLE FOR FUTURE SALE

As of July 18, 1995, 10,730,465 shares of the Company's Common Stock
were unrestricted and freely tradable. As of such date, there were also
2,388,668 restricted shares of the Company's Common Stock, as such term is
defined under Rule 144 of the Securities Act, of which 1,110,000 shares will
be registered under the Securities Act prior to January 1996, and thereby be
freely tradable.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, an additional 1,904,993 shares
(excluding shares issuable upon exercise of options) of the Company's Common
Stock (the "Merger Shares") will be outstanding. Merger Shares owned by
nonaffiliates of Acuity (approximately 1,844,590 shares) will be eligible for
sale immediately upon consummation of the Merger. Merger Shares owned by
affiliates of Acuity (approximately 60,403 shares) may not be sold until
after the results covering 30 days of post-Merger combined operations of the
Company and Acuity have been filed with the Commission, sent to stockholders
of the Company or otherwise publicly disclosed. After such public disclosure,
affiliates of Acuity will be able to sell such shares without restriction.

Upon consummation of the Merger and assuming that the Exchange Ratio is
equal to 0.766, there will also be outstanding options,
warrants and rights to purchase up to 2,904,453 shares of the Company's
Common Stock. The sale of a substantial amount of these shares could have an
adverse effect on the future market price of the Company's Common Stock.

LEGAL PROCEEDING

On or about October 22, 1992, the Company instituted an action in the
United States District Court for the

<PAGE>

Eastern District of New York against defendant Cybo Systems, Inc. ("Cybo"),
entitled ROBOTIC VISION SYSTEMS, INC. V. CYBO SYSTEMS, INC. A/K/A CYBOT SYSTEMS,
INC., alleging that the defendant breached certain agreements between the
parties with respect to the sale by the Company to the defendant of all of the
assets of its welding and cutting systems business.

On or about December 4, 1992, Cybo filed and served an answer denying the
substantive allegations of the Company's complaint. In addition, Cybo asserted
counterclaims against the Company alleging, among other things, breach of
contract and warranties, fraud, bad faith, trespass and conversion and is
seeking aggregate damages in excess of $3.3 million. Shortly thereafter, the
Company moved to dismiss certain of Cybo's counterclaims on the ground that Cybo
failed to plead fraud with the requisite particularity. By Order dated March 20,
1993, the Court (i) granted the Company's motion to dismiss without prejudice,
and (ii) granted Cybo leave to serve an amended answer with amended
counterclaims by April 19, 1993. Cybo has since served an amended answer and
counterclaims which purport to plead fraud with the requisite particularity.
Subsequent thereto, the Company moved to dismiss Cybo's claims for trespass and
conversion, which motion is presently pending. The Company, upon the advice of
its general counsel, believes Cybo's counterclaims are without merit and that
the ultimate outcome of this matter will not have a material adverse effect on
the Company's financial position or results of operations. The Company plans to
defend against such counterclaims vigorously. Except for certain matters
relating to the issue of damages, the parties have completed discovery.

In addition, on October 21, 1993, the Company instituted an action against
Cybo and Robert Rongo, a Cybo employee who had previously been employed by the
Company, in the Supreme Court of the State of New York, County of Suffolk. The
action, entitled ROBOTIC VISION SYSTEMS, INC. V. ROBERT RONGO AND CYBO SYSTEMS,
INC. A/K/A CYBOT SYSTEMS, INC., alleges that Rongo, induced by Cybo, breached a
confidentiality agreement which he had entered into while in the Company's
employ. Defendants have asserted an answer to the Company's complaint, which
answer incorporates the counterclaims asserted by Cybo in the action previously
filed by the Company against Cybo, discussed above. Mr. Rongo made a motion to
dismiss the action for lack of jurisdiction, but that motion was denied.

The Company is a defendant in a recently filed proceeding instituted by
one of its competitors seeking (i) a declaration of the invalidity of one
of the Company's patents ("Pertinent RVSI Patent"), (ii) a declaration
that the plaintiff is not infringing the Pertinent RVSI Patent and (iii) a
restraining order or other relief preventing the Company from contacting
customers of the plaintiff regarding the Pertinent RVSI Patent. Such
proceeding does not seek or assert damages. Based upon the advice of its
patent counsel, the Morrison Law Firm, the Company believes this suit is
without merit. The Company has filed an answer and counterclaim seeking (i) a
declaration that the Pertinent RVSI Patent is valid, (ii) a declaration that
the plaintiff has infringed a number of the Company's patents, including the
Pertinent RVSI Patent, (iii) the prohibition of further infringement by
plaintiff of certain patents of the Company, including the Pertinent RVSI
Patent, (iv) a denial of the plaintiff's request for injunctive relief, (v)
monetary damages for the plaintiff's infringement of the Company's patents,
and (vi) a trebling of monetary damages because of willful infringement by
plaintiff of the Company's patents.

LEGAL MATTERS

Matters relating to the legality of the shares of the securities offered by
this Prospectus are being passed upon by Parker Duryee Rosoff & Haft A
Professional Corporation, 529 Fifth Avenue, New York, New York 10017. Jay M.
Haft, of counsel to such Firm and a director of the Company beneficially owns
158,946 shares of Common Stock of the Company, as well as options and warrants
to acquire an additional 357,600 shares of such Common Stock. Members of Parker
Duryee Rosoff & Haft, other than Mr. Haft, beneficially own 149,625 shares of
Common Stock of the Company and warrants to acquire an additional 72,667 shares
of Common Stock of the Company.

Matters relating to the patent litigation are being passed upon by the
Morrison Law Firm, 145 North Fifth Avenue, Mt. Vernon, N.Y. 10550-1201.

EXPERTS

The financial statements of the Company at September 30, 1994 and 1993 and
for the years ended September 30, 1994, 1993 and 1992 appearing in this
Prospectus have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, included herein, and are included in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.

<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders of Robotic Vision Systems, Inc.:

We have audited the accompanying balance sheets of Robotic Vision Systems,
Inc. as of September 30, 1994 and 1993, and the related statements of
operations, stockholders' equity (deficiency), and cash flows for each of the
three years in the period ended September 30, 1994. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company at September 30, 1994 and 1993,
and the results of its operations and its cash flows for each of the three years
in the period ended September 30, 1994 in conformity with generally accepted
accounting principles.

Deloitte & Touche LLP
Jericho, New York
December 14, 1994

F-1
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
BALANCE SHEETS
SEPTEMBER 30, 1994 AND 1993
<TABLE>
<CAPTION>
ASSETS (NOTE 8) NOTES 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents................................ 13 $ 1,568,000 $ 465,000
Investments.............................................. 13 1,495,000 --
Receivables -- net....................................... 2,13 3,412,000 2,157,000
Inventories.............................................. 3 2,634,000 2,136,000
Deferred income taxes.................................... 4 1,163,000 584,000
Prepaid expenses and other............................... 134,000 107,000
----------- -----------
Total current assets................................... 10,406,000 5,449,000
PLANT AND EQUIPMENT -- NET............................... 5 1,923,000 1,317,000
OTHER ASSETS............................................. 6 1,159,000 1,123,000
INVESTMENTS.............................................. 13 1,500,000 --
----------- -----------
TOTAL.................................................. $14,988,000 $ 7,889,000
----------- -----------
----------- -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C> <C>

CURRENT LIABILITIES:
Notes payable............................................ 8 $ 63,000 $ --
Accounts payable......................................... 2,717,000 2,579,000
Accrued expenses......................................... 7,9 2,243,000 2,742,000
Advance contract payments received....................... 719,000 894,000
----------- -----------
Total current liabilities.............................. 5,742,000 6,215,000
OTHER LIABILITIES........................................ 9 210,000 245,000
----------- -----------
TOTAL LIABILITIES...................................... 5,952,000 6,460,000
----------- -----------
COMMITMENTS AND CONTINGENCIES............................ 10

STOCKHOLDERS' EQUITY: 11
Common stock, $.01 par value; shares authorized,
20,000,000; shares issued and outstanding, 1994 --
11,583,602 and 1993 -- 9,651,285........................ 116,000 97,000
Additional paid-in capital............................... 32,805,000 28,328,000
Accumulated deficit...................................... (23,885,000) (26,996,000)
----------- -----------
Stockholders' equity..................................... 9,036,000 1,429,000
----------- -----------
TOTAL.................................................. $14,988,000 $ 7,889,000
----------- -----------
----------- -----------
</TABLE>

See Notes to Financial Statements.

F-2
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
NOTES 1994 1993 1992
----------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
REVENUES............................................... 14 $ 24,613,000 $ 19,943,000 $ 13,335,000
COST OF REVENUES....................................... 12,722,000 11,454,000 9,802,000
-------------- -------------- --------------
GROSS PROFIT........................................... 11,891,000 8,489,000 3,533,000
-------------- -------------- --------------
OPERATING COSTS AND EXPENSES:
Research and development costs......................... 3,718,000 2,526,000 1,731,000
Selling, general and administrative expenses........... 5,521,000 4,834,000 2,766,000
Interest income........................................ (104,000) (2,000) (11,000)
Interest expense....................................... 46,000 27,000 30,000
-------------- -------------- --------------
9,181,000 7,385,000 4,516,000
-------------- -------------- --------------
INCOME (LOSS) BEFORE BENEFIT FROM INCOME TAXES AND
EXTRAORDINARY ITEMS................................... 2,710,000 1,104,000 (983,000)
BENEFIT FROM INCOME TAXES.............................. 4 401,000 495,000 --
-------------- -------------- --------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS............... 3,111,000 1,599,000 (983,000)
EXTRAORDINARY ITEMS:
Gain relating to agreement with General Motors
Corporation (net of income tax provision of
$97,000).............................................. 4,12 -- -- 1,138,000
Utilization of net operating loss carryforward......... 4 -- -- 72,000
-------------- -------------- --------------
NET INCOME............................................. $ 3,111,000 $ 1,599,000 $ 227,000
-------------- -------------- --------------
INCOME (LOSS) PER SHARE:
Income (loss) before extraordinary items............... $ .24 $ .14 $ (.13)
Extraordinary items.................................... -- -- .16
-------------- -------------- --------------
Net income............................................. $ .24 $ .14 $ .03
-------------- -------------- --------------
</TABLE>

See Notes to Financial Statements.

F-3
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
COMMON STOCK
--------------------- ADDITIONAL STOCKHOLDERS'
NUMBER PAID-IN ACCUMULATED EQUITY
NOTES OF SHARES AMOUNT CAPITAL DEFICIT (DEFICIENCY)
----- ---------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 1, 1991............... 6,357,480 $ 64,000 $26,757,000 $(28,822,000) $(2,001,000)
Shares issued to the Defined
Contribution Stock Ownership and
Deferred Compensation Plan............ 9 26,027 -- 22,000 -- 22,000
Shares and warrants issued in
connection with private equity
placement, net of offering costs...... 11 3,000,000 30,000 1,309,000 -- 1,339,000
Shares and warrant issued for
professional services rendered........ 11 230,000 2,000 128,000 -- 130,000
Net income............................. -- -- -- 227,000 227,000
---------- --------- ----------- ------------ ------------
Balance, September 30, 1992............ 9,613,507 96,000 28,216,000 (28,595,000) (283,000 )
Shares issued to the Defined
Contribution Stock Ownership and
Deferred Compensation Plan............ 9 16,250 -- 22,000 -- 22,000
Offering costs incurred in connection
with registration of shares and
warrants.............................. -- -- (80,000) -- (80,000 )
Shares issued in connection with the
exercise of stock options............. 21,528 1,000 20,000 -- 21,000
Warrants issued for professional
services rendered..................... 11 -- -- 125,000 -- 125,000
Warrants issued in connection with the
settlement of litigation.............. 11 -- -- 25,000 -- 25,000
Net income............................. -- -- -- 1,599,000 1,599,000
---------- --------- ----------- ------------ ------------
Balance, September 30, 1993............ 9,651,285 97,000 28,328,000 (26,996,000) 1,429,000
Shares issued to the Defined
Contribution Stock Ownership and
Deferred Compensation Plan............ 9 8,610 -- 36,000 -- 36,000
Shares and warrants issued in
connection with private equity
placement, net of offering costs...... 11 1,360,000 14,000 3,790,000 -- 3,804,000
Warrants issued for professional
services.............................. 11 -- -- 38,000 -- 38,000
Shares issued in connection with the
exercise of stock options............. 11 321,107 3,000 345,000 -- 348,000
Shares issued in connection with the
exercise of warrants.................. 11 242,600 2,000 268,000 -- 270,000
Net income............................. -- -- -- 3,111,000 3,111,000
---------- --------- ----------- ------------ ------------
Balance, September 30, 1994............ 11,583,602 $ 116,000 $32,805,000 $(23,885,000) $9,036,000
---------- --------- ----------- ------------ ------------
---------- --------- ----------- ------------ ------------
</TABLE>

See Notes to Financial Statements.

F-4
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

<TABLE>
<CAPTION>
1994 1993 1992
-------------- -------------- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Income (loss) before extraordinary items.......................... $ 3,111,000 $ 1,599,000 $ (983,000)
Adjustments to reconcile income (loss) before extraordinary items
to net cash provided by (used in) operating activities:
Deferred income taxes........................................... (579,000) (584,000) --
Depreciation and amortization................................... 620,000 425,000 322,000
Provision for doubtful accounts receivable...................... -- 82,000 20,000
Issuance of common stock and warrant for professional services
rendered....................................................... -- 125,000 130,000
Issuance of common stock -- Defined Contribution Stock
Ownership and Deferred Compensation Plan...................... 36,000 22,000 22,000
Warrants issued as settlement of litigation..................... -- 25,000 --
Other........................................................... 4,000 -- 3,000
Changes in assets and liabilities:
Receivables................................................... (1,255,000) (437,000) (123,000)
Inventories................................................... (498,000) (1,108,000) 392,000
Prepaid expenses and other current assets..................... (27,000) 25,000 (2,000)
Other assets.................................................. (275,000) (650,000) (483,000)
Accounts payable.............................................. 138,000 1,490,000 (122,000)
Accrued expenses.............................................. (499,000) 18,000 282,000
Advance contract payments received............................ (175,000) 244,000 (310,000)
Other liabilities............................................. (35,000) (90,000) (139,000)
-------------- -------------- --------------
Net cash provided by (used in) operating activities............... 566,000 1,186,000 (991,000)
-------------- -------------- --------------
INVESTING ACTIVITIES:
Additions to plant and equipment.................................. (1,002,000) (837,000) (347,000)
Purchase of Investments........................................... (2,984,000) -- --
-------------- -------------- --------------
Net cash used in investing activities............................. (3,986,000) (837,000) (347,000)
-------------- -------------- --------------
FINANCING ACTIVITIES:
Issuance of common stock and warrants -- private equity placement
(less offering costs)............................................ 3,842,000 (80,000) 1,339,000
Issuance of common stock in connection with the exercise of stock
options and warrants............................................. 618,000 21,000 --
Notes payable..................................................... 63,000 -- --
-------------- -------------- --------------
Net cash provided by (used in) financing activities............... 4,523,000 (59,000) 1,339,000
-------------- -------------- --------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.............. 1,103,000 290,000 1,000
CASH AND CASH EQUIVALENTS:
BEGINNING OF YEAR................................................ 465,000 175,000 174,000
-------------- -------------- --------------
END OF YEAR...................................................... $ 1,568,000 $ 465,000 $ 175,000
-------------- -------------- --------------
SUPPLEMENTAL INFORMATION -- Interest paid......................... $ 46,000 $ 25,000 $ 137,000
-------------- -------------- --------------
-- Taxes paid................... $ 269,000 $ 11,000 $ --
-------------- -------------- --------------
</TABLE>

See Notes to Financial Statements.

F-5
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

1. SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES

a. DESCRIPTION OF BUSINESS -- Robotic Vision Systems, Inc. (the "Company")
is principally engaged in the development, manufacture and marketing of
standard inspection and measurement products which have a variety of
commercial and military applications.

b. REVENUES AND COST OF REVENUES -- The Company recognizes revenue on its
standard electronic inspection and measurement products upon shipment.
The Company recognizes revenues and related cost of revenues associated
with the long-term contracts using the percentage-of-completion method of
accounting, measured by the percentage of total costs incurred in
relation to total estimated costs at completion. Contract costs include
material, direct labor, manufacturing overhead and other direct costs.
The degree of accuracy with which the Company is able to estimate the
profit to be realized on fixed-price long-term contracts is greater as
the contract approaches completion; accordingly, the Company reviews its
estimates periodically and records adjustments thereto as required. On
firm fixed-price contracts which are in the early stages of completion,
and for which estimates of profit cannot be reasonably determined, the
Company utilizes the percentage-of-completion method recognizing revenue
in amounts equal to costs incurred until such time that profit margins
can be reasonably estimated. If a loss is anticipated on a contract, the
entire amount of the estimated loss is accrued in the period in which the
loss becomes known.

Revenues are billed in accordance with the terms of each contract. The
Company estimates that all of its unbilled receivables at September 30,
1994 will become billable during the ensuing twelve months.

c. CASH AND CASH EQUIVALENTS -- Cash and cash equivalents includes money
market accounts with an original maturity of less than three months.

d. PLANT AND EQUIPMENT -- Plant and equipment is recorded at cost less
accumulated depreciation and amortization and includes the costs
associated with demonstration equipment and other equipment internally
developed by the Company. The cost of internally developed assets
includes direct material and labor costs and applicable factory overhead.
Depreciation is computed by the straight-line method over estimated lives
ranging from two to eight years. Leasehold improvements are amortized
over the lesser of their respective estimated useful lives or lease
terms.

e. INVENTORIES -- Inventories are stated at the lower of cost (using the
first-in, first-out cost flow assumption) or market.

f. SOFTWARE DEVELOPMENT COSTS -- Software development costs are capitalized
in accordance with Statement of Financial Accounting Standards No. 86.
Capitalized software development costs are amortized primarily over a
five-year period, which is the estimated useful life of the software.
Amortization begins in the period in which the related product is
available for general release to customers.

g. RESEARCH AND DEVELOPMENT COSTS -- The Company charges research and
development costs for Company-funded projects to operations as incurred.
Research and development costs which are reimbursable under
customer-funded contracts are treated as contract costs.

F-6
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

1. SUMMARY OF SIGNIFICANT ACCOUNTING AND FINANCIAL REPORTING POLICIES
(CONTINUED)

h. INCOME TAXES -- In fiscal 1993, the Company adopted the provision of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"), which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events
that have been included in the Company's financial statements or tax
returns. Under this method, deferred tax assets and liabilities are
determined based on the differences between the financial accounting and
tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.

Prior to fiscal 1993, the provision for income taxes was based on revenue
and expenses included in the Company's statement of operations. Where
appropriate, the Company provided deferred income taxes for the tax
effects of transactions which were recorded for different periods for
financial accounting purposes than for income tax purposes. At September
30, 1992, no deferred taxes were recorded because of the existence of net
operating loss carryforwards.

i. INCOME (LOSS) PER SHARE -- Income (loss) before extraordinary items per
common share, extraordinary items per common share, and net income per
common share are computed by dividing each year's income (loss) before
extraordinary items, extraordinary items and net income by the respective
weighted average number of shares of common stock outstanding during the
period, after giving effect to dilutive options and warrants. For the
year ended September 30, 1994 and 1993, the effect of options and
warrants was calculated using the modified treasury stock method. The
average number of shares used in the computation of per common share
amounts for the year ended September 30, 1992 does not include shares
issuable pursuant to options and warrants since their effect was not
material. The weighted average number of common and common equivalent
shares outstanding for 1994, 1993 and 1992 was 13,057,000, 12,534,000 and
7,783,000, respectively.

j. RECLASSIFICATION -- Certain amounts in the 1992 and 1993 financial
statements have been reclassified to conform with the 1994 presentation.

2. RECEIVABLES

Receivables at September 30, 1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Accounts billed and receivable from the United States
Government and its agencies............................. $ 351,000 $ 593,000
Accounts receivable from other customers................. 2,463,000 1,378,000
Unbilled receivables (including retainages on
contracts-in-progress).................................. 702,000 290,000
------------- -------------
Total.................................................. 3,516,000 2,261,000
Less allowance for doubtful accounts receivable.......... 104,000 104,000
------------- -------------
Receivables -- net....................................... $ 3,412,000 $ 2,157,000
------------- -------------
------------- -------------
</TABLE>

F-7
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

3. INVENTORIES

Inventories at September 30, 1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Raw materials.......................................... $ 356,000 $ 348,000
Work-in-process........................................ 2,278,000 1,788,000
------------- -------------
Total................................................ $ 2,634,000 $ 2,136,000
------------- -------------
------------- -------------
</TABLE>

4. INCOME TAXES

The benefit from income taxes for the fiscal years ended September 30,
1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
-------------- --------------
<S> <C> <C>
Current:
Federal....................................................... $ 905,000 $ 653,000
State......................................................... 173,000 126,000
Utilization of net operating loss carryforwards............... (900,000) (690,000)
-------------- --------------
178,000 89,000
Deferred:
Federal....................................................... 891,000 --
State......................................................... 108,000 --
Adjustment of valuation allowance............................. (1,578,000) (584,000)
-------------- --------------
Total....................................................... $ (401,000) $ (495,000)
-------------- --------------
-------------- --------------
</TABLE>

The income tax provision relating to the extraordinary credit relating
to the agreement with General Motors Corporation for the fiscal year ended
September 30, 1992, consists of the following:

<TABLE>
<S> <C> <C>
Federal -- charge equivalent..................... $ 72,000
State -- current................................. 25,000
-----------
$ 97,000
-----------
-----------
</TABLE>

As described in Note 1, the Company adopted SFAS 109 during fiscal 1993.
The adoption of SFAS 109 was made as of the beginning of the fiscal year on
a prospective basis. This accounting change had no effect on the Company's
financial statements as of the date of adoption. However, the adoption of
SFAS 109 resulted in an increase in the income tax benefit recognized in
fiscal 1993 and, therefore, an increase in income before extraordinary items
of $584,000 ($.05 per common share).

The adjustments of the valuation allowance during fiscal 1994 and fiscal
1993 emanate from the Company's profitable operations during those years and
the extent to which the Company can substantiate projected future earnings.
The deferred tax assets as of September 30, 1994 and 1993 are equivalent to
the benefit to be derived from net operating loss carryforwards that were
expected to be utilized to offset future taxable income projected as of the
respective balance sheet dates. The deferred tax assets at September 30,
1994 and 1993 have been limited to the benefit to

F-8
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

4. INCOME TAXES (CONTINUED)
be derived from projected future income, primarily due to the Company's
limited history of earnings and its projected future profitability currently
being primarily dependent on one existing product line.

A reconciliation between the statutory U.S. Federal income tax rate and
the Company's effective tax rate for the years ended September 30, 1994 and
1993 is as follows:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
U.S. Federal statutory rate.................................................. 34.0% 34.0%
Increases (reductions) due to:
State taxes -- net of Federal tax benefit.................................. 4.2 7.5
Utilization of net operating loss carryforwards............................ (31.9) (34.1)
Anticipated future utilization of net operating loss carryforwards......... (21.4) (52.9)
Other -- net............................................................... .3 .7
----- -----
Total.................................................................... (14.8)% (44.8)%
----- -----
----- -----
</TABLE>

The deferred tax assets at September 30, 1994 and 1993 are comprised of the
following:

<TABLE>
<CAPTION>
DEFERRED TAX ASSETS 1994 1993
- ------------------------------------------------------------------ -------------- --------------
<S> <C> <C>
Net operating loss carryforwards.................................. $ 7,743,000 $ 8,763,000
Tax credit carryforwards.......................................... 767,000 460,000
Accrued liabilities............................................... 462,000 451,000
Inventory......................................................... 269,000 196,000
Fixed assets...................................................... 47,000 122,000
Receivables....................................................... 40,000 40,000
-------------- --------------
9,328,000 10,032,000
Less valuation allowance.......................................... (8,165,000) (9,448,000)
-------------- --------------
Total........................................................... $ 1,163,000 $ 584,000
-------------- --------------
-------------- --------------
</TABLE>

As of September 30, 1994, the Company had Federal net operating loss
carryforwards of approximately $20,300,000. Such loss carryforwards expire
in the fiscal years 1995 through 2007 as follows:

Fiscal Year Ending September 30,

<TABLE>
<S> <C>
1995 $ 33,000
1996.......................................................... 1,136,000
1997.......................................................... 797,000
1998.......................................................... 518,000
1999.......................................................... 1,030,000
2000-2004..................................................... 9,678,000
2005-2007..................................................... 7,108,000
-----------
Total....................................................... $20,300,000
-----------
-----------
</TABLE>

F-9
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

4. INCOME TAXES (CONTINUED)
Additionally, the Company had Federal income tax credits of
approximately $518,000 and state income tax credits of approximately
$377,000. The utilization of the carryforwards to offset future tax
liabilities is dependent upon the Company's ability to generate sufficient
taxable income during the carryforward periods.

5. PLANT AND EQUIPMENT
Plant and equipment at September 30, 1994 and 1993 consisted of the
following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Machinery and equipment......................................... $ 1,581,000 $ 1,602,000
Furniture, fixtures and other equipment......................... 1,064,000 1,126,000
Demonstration equipment......................................... 469,000 418,000
Leasehold improvements.......................................... 112,000 45,000
------------- -------------
Total......................................................... 3,226,000 3,191,000
Less accumulated depreciation and amortization.................. 1,303,000 1,874,000
------------- -------------
Plant and equipment -- net...................................... $ 1,923,000 $ 1,317,000
------------- -------------
------------- -------------
</TABLE>

6. OTHER ASSETS
Other assets at September 30, 1994 and 1993 consisted of the following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Software development costs, net of accumulated amortization of
$413,000 and $174,000, respectively............................ $ 1,064,000 $ 870,000
Other........................................................... 95,000 253,000
------------- -------------
Total......................................................... $ 1,159,000 $ 1,123,000
------------- -------------
------------- -------------
</TABLE>

Certain software development costs totaling $433,000 and $476,000 have
been capitalized during the fiscal years ended September 30, 1994 and 1993,
respectively. Amortization expense relating to software development costs
for 1994, 1993 and 1992 was $239,000, $137,000 and $37,000, respectively.

7. ACCRUED EXPENSES
Accrued expenses at September 30, 1994 and 1993 consisted of the
following:

<TABLE>
<CAPTION>
1994 1993
------------- -------------
<S> <C> <C>
Accrued wages and related employee benefits..................... $ 857,000 $ 472,000
Accrued warranty and other product related costs................ 385,000 526,000
Accrued sales commissions....................................... 348,000 596,000
Accrued pension costs (Note 9).................................. 175,000 112,000
Other........................................................... 478,000 1,036,000
------------- -------------
Total......................................................... $ 2,243,000 $ 2,742,000
------------- -------------
------------- -------------
</TABLE>

8. NOTES PAYABLE TO BANK
The Company maintains a line of credit agreement with a bank under which
the Company may borrow up to $1,500,000 against certain customer accounts
receivable and inventory. Borrowings under this agreement bear interest at
the higher of the banks prime lending rate or the Federal funds rate plus
one-half of one percent. The interest rate for borrowings under this
agreement at September 30, 1994 was 8.75 percent. This agreement expires in
June 1995.

F-10
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

9. EMPLOYEE BENEFIT PLANS
DEFINED BENEFIT PLAN

The Company has a noncontributory pension plan for employees who meet
certain minimum eligibility requirements. The level of retirement benefit is
based on a formula which considers both employee compensation and length of
credited service.

Plan assets are invested in pooled bank investment accounts, and the
fair value of such assets is based on the quoted market prices of underlying
securities in such accounts. The Company funds pension plan costs based on
minimum and maximum funding criteria as determined by independent actuarial
consultants.

The components of net pension cost for the fiscal years ended September
30, 1994, 1993 and 1992 are summarized as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------------ ---------- ----------
<S> <C> <C> <C>
Service cost -- benefits earned during the period...... $ 143,000 $ 91,000 $ 93,000
Interest on projected benefit obligations.............. 62,000 49,000 58,000
Estimated return on plan assets........................ (52,000) (43,000) (55,000)
Other -- amortization of actuarial gains and net
transition asset...................................... (30,000) (32,000) (35,000)
------------ ---------- ----------
Net pension cost....................................... $ 123,000 $ 65,000 $ 61,000
------------ ---------- ----------
------------ ---------- ----------
</TABLE>

The funded status of the plan compared with the accrued expense included
in the Company's balance sheet at September 30, 1994 and 1993 is as follows:

<TABLE>
<CAPTION>
1994 1993
------------- ------------
<S> <C> <C>
Fair value of plan assets........................................ $ 724,000 $ 621,000
------------- ------------
Actuarial present value of benefit obligation:
Accumulated benefit obligation, including vested benefits of
$636,000 and $491,000 in 1994 and 1993, respectively.......... 790,000 587,000
Effect of projected compensation increases..................... 226,000 137,000
------------- ------------
Projected benefit obligation for services rendered to date....... 1,016,000 724,000
------------- ------------
Projected benefit obligation in excess of plan assets............ (292,000) (103,000)
Unrecognized net loss (gain)..................................... 67,000 (85,000)
Remaining unrecognized net transition asset being amortized over
11 years........................................................ (122,000) (157,000)
Unrecognized prior service costs................................. 40,000 48,000
------------- ------------
Accrued pension cost............................................. $ (307,000) $ (297,000)
------------- ------------
------------- ------------
</TABLE>

F-11
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

9. EMPLOYEE BENEFIT PLANS (CONTINUED)
Accrued pension costs are included in the accompanying September 30,
1994 and 1993 balance sheets as follows:

<TABLE>
<CAPTION>
1994 1993
----------- -----------
<S> <C> <C>
Accrued expenses.................................................... $ 175,000 $ 112,000
Other liabilities................................................... 132,000 185,000
----------- -----------
$ 307,000 $ 297,000
----------- -----------
----------- -----------
</TABLE>

Significant assumptions used in determining net periodic pension cost
and related pension obligations are as follows:

<TABLE>
<CAPTION>
1994 1993
--------- ---------
<S> <C> <C>
Discount rate............................................................... 7.50% 8.25%
Rate of compensation increase............................................... 4.00% 4.00%
Expected long-term rate of return on assets................................. 8.25% 8.25%
</TABLE>

DEFINED CONTRIBUTION STOCK OWNERSHIP AND DEFERRED COMPENSATION PLAN

The Company has a defined contribution plan for all eligible employees,
as defined by the Plan. The Plan provides for employee cash contributions
ranging from two to ten percent of compensation and matching employer
contributions of Company stock at a rate of 25 percent of an employee's
contribution, limited to a maximum of six percent of a participant's
compensation. The Plan also provides for additional employer contributions
of Company stock at the discretion of the Company's Board of Directors. The
Company incurred $61,000, $36,000 and $22,000 for employer contributions to
the Plan in 1994, 1993 and 1992, respectively. In 1994, 1993 and 1992, the
Company issued 8,610, 16,250 and 26,027, respectively, shares of its common
stock to the Plan related to its prior year contribution.

STOCK APPRECIATION RIGHTS

During fiscal 1992, the Company entered into a stock appreciation rights
agreement with its President. Under the terms of the agreement, the
President will receive a cash payment equal to the appreciation in the
market value of a fixed number of shares of the Company's common stock if
certain conditions are met.

The Company records the compensation expense related to this agreement
at the date that the amount of payment to be made can be reasonably
estimated. The Company recorded compensation expense of $85,000 and $100,000
related to this agreement during fiscal 1994 and 1993, respectively. No
compensation expense was recorded relating to this agreement during fiscal
1992. The maximum future compensation which may be earned under this
agreement is $90,000.

F-12
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

10. COMMITMENTS AND CONTINGENCIES

a. OPERATING LEASES

The Company has entered into operating lease agreements for
equipment, manufacturing and office facilities. The minimum noncancelable
scheduled rentals under these agreements are as follows:

<TABLE>
<CAPTION>
YEAR ENDING SEPTEMBER 30: AMOUNT
- ------------------------------------------------------------------- -------------
<S> <C>
1995............................................................... $ 408,000
1996............................................................... 396,000
1997............................................................... 385,000
1998............................................................... 257,000
-------------
Total............................................................ $ 1,446,000
</TABLE>

Rent expense for 1994, 1993 and 1992 was $363,000, $347,000 and
$347,000, respectively.

b. LITIGATION

During fiscal 1992, the Company instituted an action against Cybo
Systems, Inc. ("Cybo"), alleging that Cybo breached certain agreements
between the parties with respect to the sale by the Company to Cybo of
all of the assets of its welding and cutting systems business.

In response to the action brought by the Company, Cybo asserted
claims against the Company alleging, among other things, breach of
contract and warranties, fraud, bad faith, and conversion. Cybo is
seeking aggregate damages in excess of $3.3 million. The Company believes
that Cybo's claims are without merit and plans to defend against them
vigorously. The Company's management, after discussion with legal
counsel, believes that the ultimate outcome of this matter will not have
a material adverse impact on the Company's financial position or results
of operations.

c. UNITED STATES GOVERNMENT CONTRACTS

Certain of the Company's contracts are subject to audit by applicable
United States governmental agencies. Until such audits are completed, the
ultimate profit on these contracts cannot be finally determined; however,
in the opinion of management, the final contract settlements will not
have a material adverse effect on the Company's financial position or
results of operations.

11. STOCKHOLDERS' EQUITY

PRIVATE EQUITY PLACEMENTS -- During fiscal 1994, the Company entered
into an agreement with a group of investors. Under the agreement the Company
received approximately $3,800,000, after expenses, in exchange for the
issuance of 1,360,000 shares of the Company's common stock. The Company also
issued warrants exerciseable through December 1999 to purchase 51,000 shares
of the Company's common stock at an exercise price of $3.75 per share.

During fiscal 1992, the Company entered into an agreement with a group
of investors which included a director of the Company. Under the agreement
the Company received approximately $1,300,000, after expenses, in exchange
for the issuance of 3,000,000 shares of the Company's common stock and
warrants exercisable through July 1996 to purchase an additional 1,000,000

F-13
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

11. STOCKHOLDERS' EQUITY (CONTINUED)
shares of the Company's common stock at an exercise price of $1.00 per
share. Additionally, the director included in the group of investors
received warrants exercisable through July 1997 to purchase 240,000 shares
of the Company's common stock at an exercise price of $1.00 per share.

SHARES AND WARRANTS ISSUED FOR SERVICES RENDERED -- During fiscal 1994,
the Company issued warrants for the purchase of 30,000 shares of the
Company's common stock at an exercise price of $4.69 per share as
compensation for professional services rendered. The Company recorded an
expense of approximately $38,000 related to the issuance of such warrants.

During fiscal 1993, the Company issued warrants under certain agreements
granting the holders thereof the right through June 1998 to purchase up to
227,004 shares of the Company's common stock at exercise prices ranging from
$0.88 to $3.00 per share as compensation for professional services rendered.
The Company recorded an expense of approximately $125,000 related to the
issuance of such warrants.

During fiscal 1992, the Company issued 230,000 shares of common stock
and a warrant expiring April 1996 to purchase 66,667 shares of the Company's
common stock at an exercise price of $1.00 per share to a law firm in
satisfaction of unpaid legal fees of $130,000. A director of the Company is
a partner in the law firm. The market value of the shares and the warrant on
the dates of issuance was $130,000.

WARRANT ISSUED IN SETTLEMENT OF LITIGATION -- During fiscal 1993, the
Company issued warrants in connection with the settlement of a lawsuit to
purchase up to 25,000 shares of the Company's common stock at an exercise
price of $4.37 per share. The expiration date of such warrants is November
1, 1996. The Company recorded an expense of approximately $25,000 related to
the issuance of such warrants.

WARRANTS EXERCISED -- During fiscal 1994, the Company received
approximately $270,000 in connection with the issuance of 242,600 shares of
its common stock upon the exercise of warrants to purchase such shares at
prices between $0.88 and $4.38 per share.

WARRANTS OUTSTANDING -- As of September 30, 1994, there were warrants
outstanding to purchase approximately 1,372,000 shares of the Company's
common stock with exercise prices of between $1.00 and $4.69 per share.

STOCK OPTION PLANS -- The Company has four stock option plans (the 1977,
1982, 1987 and 1991 plans) which provide for the granting of options to
employees or directors at prices and terms as determined by the Board of
Directors' Stock Option Committee (the "Committee"). With respect to the
1977 and 1987 plans, option prices may not be less than the fair market
value at date of grant. Any excess of the fair market value of shares under
option at the date of grant over the exercise price is charged to operations
over the period in which the stock options vest. All options issued by the
Company to date have exercise prices which were equal to market value of the
Company's common stock at the date of grant. No new options may be granted
under the 1977 and 1982 plans.

F-14
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

11. STOCKHOLDERS' EQUITY (CONTINUED)
The following table sets forth summarized information concerning the
Company's stock options:

<TABLE>
<CAPTION>
NUMBER OF EXERCISE
SHARES PRICE RANGE
----------- -----------------
<S> <C> <C>
Options outstanding for shares of common stock at October 1,
1991......................................................... 834,088 $ .75 - $7.06
Granted....................................................... 1,130,721 .53 - 1.63
Canceled or expired........................................... (649,323) .53 - 7.06
----------- -----------------
Options outstanding for shares of common stock at September
30, 1992..................................................... 1,315,486 .53 - 5.69
Granted....................................................... 470,963 .88 - 4.04
Canceled or expired........................................... (99,852) .53 - 5.69
Exercised..................................................... (21,528) .53 - 1.44
----------- -----------------
Options outstanding for shares of common stock at September
30, 1993..................................................... 1,665,069 .53 - 4.25
Granted....................................................... 257,416 3.63 - 6.81
Canceled or expired........................................... (23,478) .53 - 5.32
Exercised..................................................... (321,107) .53 - 4.19
----------- -----------------
Options outstanding for shares of common stock at September
30, 1994..................................................... 1,577,900 $ .53 - $6.81
----------- -----------------
----------- -----------------
Options exercisable at September 30, 1994..................... 725,845
-----------
-----------
Shares reserved for issuance at September 30, 1994............ 1,692,525
-----------
-----------
</TABLE>

12. GAIN RELATING TO AGREEMENT WITH GENERAL MOTORS CORPORATION

In September 1989, General Motors Corporation ("GM") and the Company
entered into an agreement whereby GM would lend the Company up to
$1,100,000. Loans under this agreement bore interest at two percentage
points above the prime rate and were collateralized by substantially all of
the Company's assets.

The Company recorded interest expense of approximately $22,000 for the
year ended September 30, 1992 relating to this note payable.

In fiscal 1992, the Company and GM entered into an agreement whereby GM
exchanged this debt and the related accrued interest thereon and released
the security interest held by GM in the Company's assets as full payment for
(i) certain automotive spare parts inventories held by the Company, (ii) the
execution of a service agreement under which the Company will provide
maintenance and repair services for a four-year period and (iii) execution
of an agreement by the Company and its officers and directors not to bring a
suit against GM.

During fiscal 1992, the Company recorded an extraordinary item relating
to the agreement from the sale of the inventory to GM. The inventory which
was sold to GM had been written off during fiscal 1990 as part of the
Company's restructuring decision. The Company is recognizing the revenue
related to the service agreement on a straight-line basis over the life of
the agreement, with $18,000, $18,000 and $14,000 recognized in fiscal 1994,
1993 and 1992, respectively. Costs related to the fulfillment of the service
agreement are expensed as incurred.

F-15
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE YEARS ENDED SEPTEMBER 30, 1994, 1993 AND 1992

13. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following methods and assumptions were used to estimate the fair
value of each class of financial instruments:

a. Cash and Cash Equivalents -- The carrying amounts approximate fair value
because of the short maturity of these instruments.

b. Investments -- Fair value equals quoted market value.

c. Receivables -- The carrying amount approximates fair value because of
the short maturity of these instruments.

As of September 30, 1994, investments consisted of certain debt
securities issued by the United States government with maturities through
November 1996. The Company's intention is to hold such investments until
their maturity, therefore, such investments are recorded at their amortized
cost. As of September 30, 1994, the aggregate fair value of investments
maturing within one year was approximately $1,478,000 and the fair value of
investments with maturities of longer than one year was approximately
$1,447,000. The aggregate unrealized losses as of September 30,1994 were
approximately $70,000.

14. SEGMENT AND PRINCIPAL CUSTOMER INFORMATION

For the purposes of segment reporting, management considers the Company
to operate in one industry, the machine vision industry.

During the years ended September 30, 1994, 1993 and 1992 the Company
recognized revenues on sales to major customers as set forth below:

PERCENT OF TOTAL REVENUES

<TABLE>
<CAPTION>
1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
United States Government and its agencies............................ 4 8 23
Major customers:
Customer A......................................................... 15 13 21
Customer B......................................................... 10 3 --
Customer C......................................................... 9 15 3
Customer D......................................................... 5 13 --
Customer E......................................................... -- -- 17
All other customers.................................................. 57 48 36
--- --- ---
Total.............................................................. 100 100 100
--- --- ---
--- --- ---
</TABLE>

Foreign export sales accounted for 62 percent, 74 percent and 54 percent
of the Company's revenues in fiscal 1994, 1993 and 1992, respectively.

The Company's domestic and foreign export sales during the years
ended September 30, 1994, 1993 and 1992 are set forth below:

<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
<S> <C> <C> <C>
North America $ 9,258,000 $ 5,166,000 $ 6,074,000
Asia/Pacific Rim 14,103,000 12,608,000 5,838,000
Europe 1,252,000 2,169,000 1,423,000
----------- ----------- -----------
Total $24,613,000 $19,943,000 $13,335,000
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

* * * * * * *

F-16
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1995 1994
-------------- --------------
(UNAUDITED) (NOTE 1)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents...................................................... $ 346,000 $ 1,568,000
Investments (Note 2)........................................................... 1,500,000 1,495,000
Receivables -- net (including unbilled receivables of $678,000 at March 31,
1995 and $702,000 at September 30, 1994)...................................... 5,691,000 3,412,000
Inventories (Note 3)........................................................... 4,533,000 2,634,000
Deferred income taxes.......................................................... 2,923,000 1,163,000
Prepaid expenses and other current assets...................................... 254,000 134,000
-------------- --------------
Total Current Assets......................................................... 15,247,000 10,406,000
Machinery and equipment (at cost, less accumulated depreciation and
amortization)................................................................... 2,210,000 1,923,000
Deferred income taxes............................................................ 506,000 --
Other assets..................................................................... 1,260,000 1,159,000
Investments (Note 2)............................................................. 2,487,000 1,500,000
-------------- --------------
TOTAL........................................................................ $ 21,710,000 $ 14,988,000
-------------- --------------
-------------- --------------

<CAPTION>
LIABILITIES
<S> <C> <C>
Current Liabilities:
Accounts payable............................................................... $ 4,503,000 $ 2,717,000
Accrued expenses............................................................... 2,330,000 2,243,000
Advance contract payments received............................................. 103,000 719,000
Notes payable (Note 4)......................................................... -- 63,000
-------------- --------------
Total Current Liabilities.................................................... 6,936,000 5,742,000
Other liabilities................................................................ 213,000 210,000
-------------- --------------
Total Liabilities............................................................ 7,149,000 5,952,000
-------------- --------------
<CAPTION>
STOCKHOLDER'S EQUITY
<S> <C> <C>

Capital stock -- common -- authorized 20,000,000 shares, $.01 par value; issued
and outstanding 11,671,615 shares at March 31, 1995 and 11,583,602 shares at
September 30, 1994.............................................................. 117,000 116,000
Additional paid-in capital....................................................... 33,047,000 32,805,000
Accumulated deficit.............................................................. (18,603,000) (23,885,000)
-------------- --------------
Total Stockholder's Equity................................................... 14,561,000 9,036,000
-------------- --------------
TOTAL........................................................................ $ 21,710,000 $ 14,988,000
-------------- --------------
-------------- --------------
</TABLE>

F-17
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
STATEMENTS OF INCOME
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
MARCH 31, MARCH 31,
------------------------------ ----------------------------
1995 1994 1995 1994
-------------- -------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues........................................... $ 16,600,000 $ 11,790,000 $ 9,071,000 $ 5,901,000
Cost of revenues................................... 7,616,000 6,439,000 4,054,000 3,101,000
-------------- -------------- ------------- -------------
Gross profit....................................... 8,984,000 5,351,000 5,017,000 2,800,000
Research and development costs..................... 2,389,000 1,798,000 1,270,000 968,000
Selling, general and administrative expenses....... 3,469,000 2,549,000 1,955,000 1,321,000
Interest (income) net.............................. (96,000) (2,000) (65,000) (9,000)
-------------- -------------- ------------- -------------
Income before income tax benefit................... 3,222,000 1,006,000 1,857,000 520,000
Income tax benefit................................. 2,060,000 1,093,000 2,606,000 1,123,000
-------------- -------------- ------------- -------------
Net income......................................... $ 5,282,000 $ 2,099,000 $ 4,463,000 $ 1,643,000
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
Net income per common share........................ $ .38 $ .16 $ .32 $ .13
-------------- -------------- ------------- -------------
-------------- -------------- ------------- -------------
</TABLE>

F-18
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
------------------------------
1995 1994
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income........................................................................ $ 5,284,000 $ 2,099,000
Adjustments to reconcile net income to net cash from operating activities:
Deferred income taxes........................................................... (2,266,000) (1,143,000)
Depreciation and amortization................................................... 410,000 320,000
Issuance of common stock -- defined contribution stock ownership and deferred
compensation plan.............................................................. 60,000 36,000
Provision for doubtful receivable............................................... 20,000 --
Issuance of warrants for professional services rendered......................... 14,000 --
Asset and liability management:
Receivables................................................................... (2,299,000) (1,293,000)
Inventories................................................................... (1,899,000) (266,000)
Prepaid expenses and other current assets..................................... (121,000) (73,000)
Other assets.................................................................. (247,000) (166,000)
Accounts payable.............................................................. 1,786,000 95,000
Accrued expenses.............................................................. 87,000 281,000
Advanced contract payment received............................................ (616,000) (774,000)
Other liabilities............................................................. 3,000 (40,000)
-------------- --------------
Net cash provided by (used in) operating activities............................... 216,000 (924,000)
-------------- --------------
CASH FLOWS (USED IN) INVESTING ACTIVITIES:
Additions to property and equipment........................................... (551,000) (715,000)
Investments................................................................... (993,000) (3,000,000)
-------------- --------------
Net cash used in investing activities............................................. (1,544,000) (3,715,000)
-------------- --------------
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Issuance of common stock in connection with the exercise of stock option and
warrants..................................................................... 169,000 32,000
Notes payable................................................................. (63,000) 187,000
Proceeds/net of expenses related to issuance of common stock.................. -- 4,078,000
-------------- --------------
Net cash provided by financing activities......................................... 106,000 4,297,000
-------------- --------------
DECREASE IN CASH AND CASH EQUIVALENTS............................................. $ (1,222,000) $ (342,000)
-------------- --------------
-------------- --------------
</TABLE>

F-19
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

1. CONDENSED FINANCIAL STATEMENTS

The condensed balance sheet as of March 31, 1995, the condensed statements
of operations for the three and six month periods ended March 31, 1995 and 1994
and the condensed statements of cash flows for the six month periods ended March
31, 1995 and 1994 have been prepared by the Company, without audit. The balance
sheet as of September 30, 1994 was derived from the audited balance sheet
included in the Company's September 30, 1994 Annual Report on Form 10-K. In the
opinion of management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial condition, results of
operations and cash flows at March 31, 1995 and for all periods presented have
been made.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these condensed financial
statements be read in conjunction with the financial statements and notes
thereto included in the Company's September 30, 1994 Form 10-K. The results of
operations for the period ended March 31, 1995 are not necessarily indicative of
the operating results for the full year.

2. INVESTMENTS

At March 31, 1995 and September 30, 1994, investments consist primarily of
U.S. Treasury Notes and U.S. Treasury Bills.

3. INVENTORIES

As of March 31, 1995 and September 30, 1994 inventories consisted of the
following:

<TABLE>
<CAPTION>
MARCH 31, 1995 SEPTEMBER 30, 1994
-------------- ------------------
<S> <C> <C>
Raw Materials................................................................. $ 461,000 $ 356,000
Work-in-Process............................................................... 4,072,000 2,278,000
-------------- ------------------
Total....................................................................... $ 4,533,000 $ 2,634,000
-------------- ------------------
-------------- ------------------
</TABLE>

4. NOTES PAYABLE

The Company has an agreement with a bank under which the Company may borrow
up to $1,500,000. Loans under this agreement bear interest at a rate of prime
plus one percent per annum and are secured by all the assets of the Company. The
amount outstanding under this credit facility was $-0- at March 31, 1995 and
$63,000 at September 30, 1994. The agreement expires on June 7, 1995.

5. INCOME TAXES

The income tax benefit for the six months ended March 31, 1995 and 1994
consisted of the following:

<TABLE>
<CAPTION>
1995 1994
-------------- -------------
<S> <C> <C>
Current provision.................................................................. $ (206,000) $ (50,000)
Deferred provision................................................................. (1,036,000) --
Adjustment of valuation allowance.................................................. 3,302,000 1,143,000
-------------- -------------
Total............................................................................ $ 2,060,000 $ 1,093,000
-------------- -------------
-------------- -------------
</TABLE>

F-20
<PAGE>
ROBOTIC VISION SYSTEMS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS -- CONTINUED
(UNAUDITED)

5. INCOME TAXES (CONTINUED)
The adjustments to the valuation allowance during the quarters ended March
31, 1995 and 1994 emanate from the Company's profitable operations and the
extent to which the Company can substantiate projected future earnings. The
deferred tax assets as of March 31, 1995 and September 30, 1994 are equivalent
to the benefit to be derived from net operating loss carryforwards and other tax
credits which are expected to be utilized to offset future taxable income
projected as of those dates. The deferred tax assets as of March 31, 1995 and
September 30, 1994 have been limited to the benefit to be derived from projected
future income, primarily due to the Company's limited history of earnings and
its projected future profitability currently being primarily dependent on one
existing product line.

6. SUBSEQUENT EVENTS

a) PROPOSED MERGER AGREEMENT

On April 27, 1995, the Company and Acuity Imaging, Inc. ("Acuity") signed a
definitive merger agreement. Upon consummation of the merger, Acuity Imaging
will become a wholly-owned subsidiary of RVSI.

The merger terms, as amended on July 11, 1995, contemplate that RVSI
is to issue 0.766 of a share of its common stock for each Acuity share (the
"Exchange Ratio"), or approximately 1,883,000 shares of RVSI common stock in
exchange for all of Acuity's outstanding shares as of March 31, 1995. In
addition, Acuity's outstanding stock options are to be exchanged for options
upon RVSI's common stock in the same 0.766 to one ratio. If the price of the
RVSI Common Stock averages more than $14.50 or less than $10.00 per share
during the 20 business days preceding the consummation of the Merger, the
number of shares of the RVSI Common Stock issuable to the Acuity Stockholders
would be proportionately adjusted. In no event, however, will the Exchange
Ratio be more than .925626 or less than .555375.

Consummation of the merger, which is intended to be completed as a tax-free
reorganization and to be accounted for as a pooling of interests, is subject to
conditions customary for transactions of this nature, including approval by the
stockholders of each of RVSI and Acuity.

b) PRIVATE EQUITY PLACEMENT

On June 28, 1995, the Company entered into an agreement with a group of
investors. Under the agreement the Company received approximately $9.5
million, after expenses, in exchange for the issuance of 1,110,000 shares of
the Company's common stock. The Company also issued warrants exercisable
through June 2000 to purchase 33,300 shares of the Company's common stock at
an exercise price of $9.00 per share.

F-21
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth various expenses which will be incurred
in connection with the offering contemplated by Post-Effective Amendment No. 1
to this Registration Statement. All amounts set forth below are estimated:

<TABLE>

<S> <C>

Printing expenses. . . . . . . . . . . . . . . . . . . . . . $ 3,500
Legal fees and expenses. . . . . . . . . . . . . . . . . . . 15,000
Accounting fees and expenses . . . . . . . . . . . . . . . . 5,000
Miscellaneous expenses . . . . . . . . . . . . . . . . . . . 1,500
---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $ 25,000
---------
---------
</TABLE>

Item 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article SEVENTH of the Certificate of Incorporation of Robotic Vision
Systems, Inc. (the "Registrant") provides with respect to the indemnification of
directors and officers that the Registrant shall indemnify to the fullest extent
permitted by Section 145 of the Delaware General Corporation Law, as amended
from time to time, each person that such Section grants the Registrant power to
indemnify. Article Sixth of the Certificate of Incorporation of the Registrant
also provides that no director shall be liable to the corporation or any of its
stockholders for monetary damages for breach of fiduciary duty as a director,
except with respect to (1) a breach of the director's duty of loyalty to the
corporation or its stockholders, (2), acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (3)
liability under Section 174 of the Delaware General Corporation Law or (4) a
transactions from which the director derived an improper personal benefit, it
being the intention of the foregoing provision to eliminate the ability of the
corporation's directors to the corporation or its stockholders to the fullest
extent permitted by Section 102(b)(7) of Delaware General Corporation Law, as
amended from time to time.

Section 145 of Delaware Corporation Law provides, INTER ALIA, that to the
extent a director, officer, employee or agent of a corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding, whether civil, criminal, administrative or investigative or in
defense of any claim, issue, or matter therein (hereinafter, a "Proceeding"), by
reason of the

II-1

<PAGE>

fact that he is or was a director, officer, employee or agent of a corporation
or is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or of a partnership, joint venture,
trust or other enterprise (collectively an "Agent" of the corporation), he shall
be indemnified against expenses (including attorney's fees) actually and
reasonably incurred by him in connection therewith.

Section 145 also provides that a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any threatened
Proceeding by reason of the fact that he is or was an Agent of the corporation,
against expenses (including attorney's fees) judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in, or not opposed to, the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful; provided, however, that in
an action by or in the right of the corporation, the corporation may not
indemnify such person in respect of any claim, issue, or matter as to which he
is adjudged to be liable to the corporation unless, and only to the extent that,
the Court of Chancery or the court in which such proceeding was brought
determines that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is reasonably entitled to indemnity.

Item 15. RECENT SALES OF UNREGISTERED SECURITIES

The following sets forth information relating to all securities of the
Registrant which were sold by it during the past three years and which were not
registered under the Securities Act of 1933, as amended (the "Act").

(a) In January 1992, Registrant sold 1,500,000 shares of its Common Stock
and common stock purchase warrants to acquire an additional 500,000
shares of its Common Stock to 11 persons, all of whom were "accredited
investors' within the meaning of Rule 501, promulgated under the Act,
from which it derived gross proceeds of $750,000.00 Jay M. Haft, a
director of Registrant, received common stock purchase warrants to
acquire 120,000 shares of Registrant's Common Sock for his services in
facilitating the consummation of such placement.

(b) In January 1992, Registrant issued 200,000 shares of its Common Stock
and common stock purchase warrants to acquire an additional 66,667
shares of its Common Stock to Parker Duryee Rosoff & Haft, its
counsel("PD"), in satisfaction of $100,000 in legal fees and
disbursements

II-2

<PAGE>

owed to such Firm.

(c) In February 1992 Registrant issued to Anorad Corporation, in
consideration for favorable credit terms on outstanding monies due,
warrants exercisable at $1.00 per share through February 1996, to
acquire up to 20,000 shares of Registrant's Common Stock.

(d) In July 1992, Registrant sold 1,500,000 shares of its Common Stock and
common stock purchase warrants to acquire an additional 500,000 shares
of its Common Stock to the same persons referred to in subparagraph
(a) above, from which it derived gross proceeds of $750,000. Mr. Haft
again received common stock purchase warrants to acquire 120,000
shares of Registrant's Common Stock for his services in facilitating
the consummation of such placement.

(e) In July 1992, Registrant issued 30,000 shares of its Common Stock to
PD in satisfaction of $30,000 in legal fees and disbursements owed to
such Firm.

(f) In September 1992, Registrant issued to Wayne E. Meyer, a former
director, in consideration for consulting services, warrants,
exercisable at $1.06 per share through September 1995 to acquire up to
10,000 shares of Registrant's Common Stock.

(g) In December 1992, Registrant issued to Paul DiMatteo, a former
employee in consideration for delayed payment of compensation due,
warrants, exercisable at $1.00 per share through December 1996, to
acquire up to 2,000 shares of Registrant's Common Stock.

(h) In the period from December 1992 to January 1995, Registrant issued to
Morgen, Evan & Company, Inc., in consideration for consulting services
and in partial payment of sales commissions, warrants to acquire up to
131,411 shares of Registrant's Common Stock, exercisable at prices
ranging from $.0875 per share to $6.56 per share and expiring between
December 1996 and January 1999. Mark J. Lerner, a director of
Registrant, is President of Morgen, Evan & Company, Inc.

(i) In the period from December 1992 to March 1995, the Registrant issued
to 6 persons/firms, in consideration for consulting services, warrants
to acquire an aggregate of up to 74,284 shares of Registrant's Common
Stock, exercisable at $1.00 per share to $6.125 per share and expiring
between December 1996 and February 1999.

II-3

<PAGE>

(j) In April 1993, Registrant issued to Riede Systems, Inc., in partial
consideration for services as a sales representative, warrants,
exercisable at $2.19 per share through April 1997, to acquire up to
5,000 shares of Registrant's Common Stock.

(k) In November 1993, Registrant issued to Ronald Place, a former
employee, as part of a legal settlement, warrants, exercisable at
$4.375 per share through September 1996, to acquire up to 25,000
shares of Registrant's Common Stock.

(l) In the period from December 1993 to January 1994, Registrant sold
1,360,000 shares of its Common Stock to 29 persons, all of whom were
"accredited investors", from which it derived gross proceeds of
$4,250,000. Arnhold and S. Bleichroeder acted as Registrant's
placement agent in connection therewith and received warrants,
exercisable at $3.75 per share through January 1999, to acquire up to
51,000 shares of Registrant's Common Stock.

(m) In February 1994, Registrant retroactively issued to Laidlaw
Holdings, Inc. as of July 1993 warrants, exercisable at $3.00
per share through July 1999, to acquire up to 20,000 shares of
Registrant's Common Stock in settlement of fee dispute attendant
to an unconsummated private placement.

(n) On June 28, 1995, Registrant consummated a private sale of an
aggregate of 1,110,000 shares of its Common Stock to 30 accredited
persons, at a price of $9.00 from which the Company derived net
proceeds of approximately $9,500,000. Arnhold and S. Bleichroeder,
Inc. acted as Registrant's agent in connection with Registrant's sale
of these shares and received, in addition to $499,500, warrants to
purchase 33,300 shares of Registrant's Common Stock.

Exemption from registration under the Act is claimed for each sale of
securities referred to above in reliance upon the exemption afforded by Section
4(2) of the Act. The certificates evidencing each of such securities bear
appropriate restrictive legends thereon and "stop transfer" orders are
maintained on Registrant's stock transfer records thereagainst. None of these
sales involved the payment of underwriting commissions.

Item 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following is a list of Exhibits filed herewith as part of the
Registration Statement:

EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------

2 Agreement and Plan of Merger and Reorganization, dated as of April 27,
1995, as amended and restated as of July 11, 1995, by and among
Registrant, RVSI Acquisition Corp. and Acuity Imaging, Inc.*

3(a) Registrant's Certificate of Incorporation, as amended to date(1)

3(b) Registrant's By-Laws, as amended(2)

4(a) Stock and Warrant Purchase Agreement by and between Registrant and
General Motors Corporation dated as of December 12, 1984(3)

II-4

<PAGE>

4(b) Stock Purchase Warrant expiring December 12,1989 issued to General
Motors Corporation(3)

4(c) Form of warrant expiring December 14, 1988 (Exhibit 4(f))(4)

4(d) Amendment to Warrant issued to General Motors (Exhibit 4(d))(5)

5.1 Opinion of Parker Duryee Rosoff & Haft

10(a) Research and Development Master Agreement by and between Registrant
and General Motors Corporation dated as of December 12, 1984(3)

10(b) Patent License and Technology Agreement by and between Registrant and
General Motors Corporation dated as of December 12, 1984(3)

10(c) License Agreement by and between Registrant and Med-Bed Technologies,
Inc. dated as of January 24, 1984(3)

10(d) Employment Agreement, dated December 11, 1984 between Registrant and
Pat V. Costa(3)

10(e) Letter of Agreement dated December 21, 1984 between Registrant and
Howard Stern (Exhibit 10(f))(6)

10(f) Letter of Agreement dated July 14, 1983 between Registrant and Robert
H. Walker (Exhibit 10(g))(3)

10(g) Lease agreement dated May 2, 1990 between Registrant and NM&J
Investors covering the premises located at 425 Rabro Drive east,
Hauppauge, New York(7)

10(h) Mortgage between Registrant as Mortgagee and Earl H. Rideout and
Catherine Rideout as Mortgagors(5)

10(i) Loan Agreement dated September 13, 1989 between Registrant and General
Motors Corporation(5)

10(j) Asset Purchase Agreement dated as of September 30, 1990 between
Registrant and Cybo Systems, Inc.(8)

11 Statement regarding computation of per share earnings (included in
Note 1i of the Notes to Financial Statements)

22 Subsidiaries of Registrant(3)

23.1 Consent of Deloitte & Touche LLP*

II-5

<PAGE>

23.2 Consent of Parker Duryee Rosoff & Haft (included in Exhibit 5.1)

23.3 Consent of Morrison Law Firm

24.1 Power of Attorney (included on the signature page of Part II of this
Registration Statement)

- ---------------
* Denotes document filed with Post-Effective Amendment No. 1 to this
Registration Statement.
(1) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1987 and incorporated herein by
reference.
(2) Denotes document filed as Exhibit to Registrant's Registration Statement on
Form S-1 (File No. 2-75483) and incorporated herein by reference.
(3) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1984 and incorporated herein by
reference.
(4) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1985 and incorporated herein by
reference.
(5) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1989 and incorporated herein by
reference.
(6) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1986 and incorporated herein by
reference.
(7) Denotes document filed as Exhibit to Registrant's Annual Report on Form 10-
K for its fiscal year ended September 30, 1990 and incorporated herein by
reference.
(8) Denotes document filed as Exhibit to Registrant's Current Report on Form 8-
K for an event which occurred on October 1, 1990 and incorporated herein by
reference.

(b) FINANCIAL STATEMENT SCHEDULES

All financial statement schedules are omitted because the conditions
requiring their filing do not exist or the information required thereby is
included in the financial statements filed, including the notes thereto.

Item 17. UNDERTAKINGS

The Registrant hereby undertakes:

(1) That for purposes of determining any liability under the Act, the
information omitted from the form of Prospectus filed

II-6

<PAGE>

as part of this Registration Statement in reliance upon Rule 430A and contained
in a form of Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.

(2) That for the purpose of determining any liability under the Act,
each post-effective amendment that contains a form of prospectus 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.

(3) 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;

(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;

(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.

(4) That, for the purpose of determining any liability under the
Securities Act, 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.

(5) 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.

(6) Insofar as indemnification for liabilities arising under the Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 14 of this Part II to
the Registration Statement, 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

II-7

<PAGE>

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 the public policy as expressed in the Act
and will be governed by the final adjudication of such issue.

II-8

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Post-Effective Amendment to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
Village of Hauppauge, State of New York, on the 25th day of July, 1995.

ROBOTIC VISION SYSTEMS, INC.

By: *
-----------------------------------
Pat V. Costa, President

Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated:

SIGNATURE TITLE DATE
--------- ----- ----

Chairman of the Board
President and
Director, (Principal
* Executive Officer) July 25, 1995
- -------------------
Pat V. Costa

Executive Vice President,
Secretary/Treasurer and
Director (Principal
Financial Officer and
Principal Accounting
/s/Robert H. Walker Officer) July 25, 1995
- -------------------
Robert H. Walker

Senior Vice President
* and Director July 25, 1995
- -------------------
Howard Stern

Director
- -------------------
Donald F. Domnick

* Director July 25, 1995
- -------------------
Jay M. Haft

<PAGE>

Director
- -------------------
Frank A. DiPietro

Director
- -------------------
Mark J. Lerner

- -----------------------
* Robert H. Walker, pursuant to the Powers of Attorney, (executed by each of
the officers and directors listed above and indicated as signing above, and
filed with the Securities and Exchange Commission), by signing his name
hereto does hereby sign and execute this Post-Effective Amendment to the
Registration Statement on behalf of each of the persons referenced above.

Dated: July 25, 1995 /s/Robert H. Walker
----------------------------
Robert H. Walker

<PAGE>

EXHIBIT 2

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

AGREEMENT AND PLAN OF MERGER AND REORGANIZATION

dated as of

April 27, 1995, as amended and restated as of July 11, 1995

by and among

ROBOTIC VISION SYSTEMS, INC.,

RVSI ACQUISITION CORP.

and

ACUITY IMAGING, INC.

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

<PAGE>

TABLE OF CONTENTS

ARTICLE I

THE MERGER

SECTION 1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.2 Effective Time of the Merger. . . . . . . . . . . . . . . . .

ARTICLE II

SURVIVING AND PARENT CORPORATIONS

SECTION 2.1 Certificate of Incorporation. . . . . . . . . . . . . . . . .
SECTION 2.2 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.4 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.5 Additional Director of Parent . . . . . . . . . . . . . . . .
SECTION 2.6 Further Action. . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE III

CONVERSION OF SHARES

SECTION 3.1 Conversion of Company Shares in the Merger. . . . . . . . . .
SECTION 3.2 Conversion of Subsidiary Shares . . . . . . . . . . . . . . .
SECTION 3.3 Exchange of Certificates. . . . . . . . . . . . . . . . . . .
SECTION 3.4 No Fractional Shares. . . . . . . . . . . . . . . . . . . . .
SECTION 3.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

SECTION 4.1 Organization and Qualification. . . . . . . . . . . . . . . .
SECTION 4.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.3 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.4 Authority; Non-Contravention; Approvals . . . . . . . . . . .
SECTION 4.5 Reports and Financial Statements. . . . . . . . . . . . . . .
SECTION 4.6 Absence of Undisclosed Liabilities. . . . . . . . . . . . . .
SECTION 4.7 Absence of Certain Changes or Events. . . . . . . . . . . . .
SECTION 4.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.9 Registration Statement and Proxy Statement. . . . . . . . . .
SECTION 4.10 No Violation of Law . . . . . . . . . . . . . . . . . . . . .
SECTION 4.11 Compliance with Instruments . . . . . . . . . . . . . . . . .
SECTION 4.12 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.13 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . .
SECTION 4.14 Certain Agreements. . . . . . . . . . . . . . . . . . . . . .
SECTION 4.15 Labor Controversies . . . . . . . . . . . . . . . . . . . . .
SECTION 4.16 Environmental Matters . . . . . . . . . . . . . . . . . . . .

<PAGE>

SECTION 4.17 Intentionally Left Blank. . . . . . . . . . . . . . . . . . .
SECTION 4.18 NASDAQ; No Appraisal Rights . . . . . . . . . . . . . . . . .
SECTION 4.19 Contracts, Etc. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.20 Intellectual Property . . . . . . . . . . . . . . . . . . . .
SECTION 4.21 Customers . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.23 Books, Records and Accounts . . . . . . . . . . . . . . . . .
SECTION 4.24 Accounting Matters. . . . . . . . . . . . . . . . . . . . . .
SECTION 4.25 Brokers and Finders . . . . . . . . . . . . . . . . . . . . .
SECTION 4.26 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE V

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PARENT

SECTION 5.1 Organization and Qualification. . . . . . . . . . . . . . . .
SECTION 5.2 Ownership of Subsidiary; No Prior Activities; Assets of
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.3 Authority; Non-Contravention; Approvals . . . . . . . . . . .

ARTICLE VI

CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 6.1 Conduct of Business Prior to Effective Time . . . . . . . . .
SECTION 6.2 Additional Covenants of the Company . . . . . . . . . . . . .
SECTION 6.3 Acquisition Transactions; Break-up Fees . . . . . . . . . . .

ARTICLE VII

ADDITIONAL AGREEMENTS

SECTION 7.1 Access to Information . . . . . . . . . . . . . . . . . . . .
SECTION 7.2 Registration Statement and Proxy Statement/Prospectus . . . .
SECTION 7.3 Stockholders' Approval. . . . . . . . . . . . . . . . . . . .
SECTION 7.4 Managed Offering of Affiliates' Shares. . . . . . . . . . . .
SECTION 7.5 NASDAQ National Market. . . . . . . . . . . . . . . . . . . .
SECTION 7.6 Agreement to Cooperate. . . . . . . . . . . . . . . . . . . .
SECTION 7.7 Public Statements . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.8 Corrections to the Proxy Statement/
Prospectus and Registration Statement . . . . . . . . . . . .
SECTION 7.9 Agreements of Affiliates. . . . . . . . . . . . . . . . . . .
SECTION 7.10 Assurances Relating to Tax Matters Certificate. . . . . . . .
SECTION 7.11 Disclosure Supplements. . . . . . . . . . . . . . . . . . . .
SECTION 7.12 Satisfaction of Conditions Precedent. . . . . . . . . . . . .

<PAGE>

ARTICLE VIII

CONDITIONS

SECTION 8.1 Conditions to Each Party's Obligations to Effect
the Merger. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.2 Conditions to Obligations of the Company to Effect
the Merger. . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.3 Conditions to Obligations of Parent and Subsidiary
to Effect the Merger. . . . . . . . . . . . . . . . . . . . .

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

SECTION 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . .
SECTION 9.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.4 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . .

ARTICLE X

GENERAL PROVISIONS

SECTION 10.1 Non-Survival of Representations and Warranties. . . . . . . .
SECTION 10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10.3 Interpretation. . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10.4 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10.6 Parties In Interest . . . . . . . . . . . . . . . . . . . . .
SECTION 10.7 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 10.8 Additional Defined Terms. . . . . . . . . . . . . . . . . . .

<PAGE>
EXHIBIT A

AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION, dated as of April 27, 1995,
as amended and restated as of July 11, 1995
(this "Agreement"), by and among ROBOTIC
VISION SYSTEMS, INC., a Delaware
corporation ("Parent"), RVSI ACQUISITION
CORP., a Delaware corporation and a wholly
owned subsidiary of Parent ("Subsidiary"),
and ACUITY IMAGING, INC., a Delaware
corporation (the "Company").

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

The Boards of Directors of Parent, Subsidiary and the Company have
approved the merger of Subsidiary with and into the Company pursuant to this
Agreement (the "Merger") and the transactions contemplated hereby upon the
terms and subject to the conditions set forth herein.

It is intended that the Merger shall qualify for federal income tax
purposes as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended.

It is intended that the Merger shall be recorded for accounting purposes
as a pooling of interests.

Parent, Subsidiary and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger.

NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto, intending to be legally bound hereby, agree as follows:

ARTICLE I

THE MERGER

SECTION 1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, at the Effective Time (as defined in Section 1.2 below),
Subsidiary shall be merged with and into the Company in accordance with the
provisions of Section 251 of the Delaware General Corporation Law (the "DGCL")
and with the effect provided in Sections 259 - 261 of the DGCL, and the
separate existence of Subsidiary shall thereupon cease. The Company shall be
the surviving corporation in the Merger (hereinafter sometimes referred to as
"Surviving Corporation") and shall continue to be governed by the laws of the
State of Delaware. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time of the Merger, (a) Surviving

<PAGE>

Corporation shall possess all assets and property of every description, and
every interest therein, wherever located, and the rights, privileges,
immunities, powers, franchises and authority, of a public as well as of a
private nature, of each of Subsidiary and the Company, (b) all obligations
belonging to or due each of Subsidiary and the Company shall be vested in, and
become the obligations of, Surviving Corporation without further act or deed,
(c) title to any real estate or any interest therein vested in either of
Subsidiary and the Company shall not revert or in any way be impaired by
reason of the Merger, (d) all rights of creditors and all liens upon any
property of any of Subsidiary and the Company shall be preserved unimpaired,
and (e) Surviving Corporation shall be liable for all of the obligations of
each of Subsidiary and the Company and any claim existing, or action or
proceeding pending, by or against either of Subsidiary and the Company may be
prosecuted to judgment with right of appeal, as if the Merger had not taken
place.

SECTION 1.2 EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective at such time (the "Effective Time") as a Certificate of Merger, in
the form set forth as Exhibit I hereto, is filed with the Secretary of State
of the State of Delaware (the "Merger Filing"), such filing shall be made
simultaneously with or as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 3.5.

ARTICLE II

SURVIVING AND PARENT CORPORATIONS

SECTION 2.1 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of Subsidiary as in effect immediately prior to the Effective
Time shall be in the form of the attached Exhibit II and shall be the
Certificate of Incorporation of Surviving Corporation, until duly amended in
accordance with the terms thereof and of the DGCL.

SECTION 2.2 BY-LAWS. The By-laws of Subsidiary as in effect immediately
prior to the Effective Time shall be in the form of the attached Exhibit III
and shall be the By-laws of Surviving Corporation after the Effective Time,
and thereafter may be amended in accordance with their terms and as provided
by the Certificate of Incorporation of Surviving Corporation and the DGCL.

SECTION 2.3 DIRECTORS. The sole director of Subsidiary at the Effective
Time shall, from and after the Effective Time, be the sole director of
Surviving Corporation until his successor has been duly elected or appointed
and qualified or until his earlier death, resignation or removal in accordance
with Surviving Corporation's Certificate of Incorporation and By-laws.

SECTION 2.4 OFFICERS. The officers of the Company at the Effective Time
shall, from and after the Effective Time, be the officers of Surviving
Corporation until their

<PAGE>

successors have been duly elected or appointed and qualified or until their
earlier death, resignation or removal in accordance with Surviving Corporation's
Certificate of Incorporation and By-Laws.

SECTION 2.5 ADDITIONAL DIRECTOR OF PARENT. At the Effective Time, one
designee of the current directors of the Company, reasonably acceptable to
Parent (the "Company Designee"), shall be appointed a director of Parent, as an
addition to Parent's seven-member Board of Directors, to serve until Parent's
first annual meeting of stockholders next following the Effective Time (the
"1996 Annual Meeting") and until his successor has been duly elected or
appointed and qualified or until his earlier death, resignation or removal in
accordance with Parent's Certificate of Incorporation and By-Laws. At the sole
discretion of the Parent, an additional Company Designee may be appointed a
director of Parent to serve until the 1996 Annual Meeting and until his
successor has been duly elected or appointed and qualified or until his earlier
death, resignation or removal.

SECTION 2.6 FURTHER ACTION. If at any time after the Effective Time,
Parent shall consider that any further deeds, assignments, conveyances,
agreements, documents, instruments or assurances in law or any other things
are necessary or desirable to vest, perfect, confirm or record in Surviving
Corporation the title to any property, rights, privileges, powers and
franchises of the Company by reason of, or as a result of, the Merger, or
otherwise to carry out the provisions of this Agreement, the officers of the
Company shall execute and deliver, upon Parent's reasonable request, any
instruments or assurances, and do all other things necessary or proper to
vest, perfect, confirm or record title to such property, rights, privileges,
powers and franchises in Surviving Corporation, and otherwise to carry out the
provisions of this Agreement.

ARTICLE III

CONVERSION OF SHARES

SECTION 3.1 CONVERSION OF COMPANY SHARES IN THE MERGER. At the
Effective Time, by virtue of the Merger and without any action on the part of
any holder of any capital stock of the Company:

(a) each share of Common Stock, $.01 par value, of the Company ("Company
Common Stock"), issued and outstanding at the Effective Time, subject to the
terms and conditions of this Agreement, shall be converted (except as provided
in Section 3.1(b)), without any further action, into the right to receive, and
become exchangeable for, 0.766 of a share (as adjusted as provided below, the
"Exchange Ratio") of Common Stock, $.01 par value, of Parent ("Parent Common
Stock"), subject to the payment of cash adjustments in lieu of the issuance of
fractional shares as provided in Section 3.4 of this Agreement; PROVIDED,
HOWEVER, that if the average of the closing prices of Parent Common Stock on the
Nasdaq National Market for the 20 trading days ending on (and including) the
third trading day immediately prior to the date of the special meeting of the
Company's shareholders called to approve the Merger (the "Average Closing
Price") is greater than $14.50, then the Exchange Ratio shall be equal to an
amount determined as follows:

11.107/Average Closing Price = Exchange Ratio (PROVIDED that
in no event shall the Exchange Ratio be less than .555375)

<PAGE>

and if the Average Closing Price is less than $10.00 then the Exchange
Ratio shall be equal to an amount determined as follows:

7.66/Average Closing Price = Exchange Ratio (PROVIDED that
in no event shall the Exchange Ratio exceed .925626)

and PROVIDED, FURTHER, that if, prior to the Effective Time, Parent
should split, reclassify or combine Parent Common Stock, or pay or
grant to all stockholders of Parent a stock dividend or other stock
distribution in Parent Common Stock or rights to acquire Parent Common
Stock, or otherwise change Parent Common Stock into any other
securities, then the Exchange Ratio will be appropriately adjusted to
reflect such split, reclassification, combination, stock dividend or
other distribution or change;

(b) each share of Company Common Stock, if any, owned by Parent or
any subsidiary of Parent or the Company immediately prior to the
Effective Time shall be cancelled and shall cease to exist from and
after the Effective Time; and

(c) As of the Effective Time, Parent shall assume and thereafter
be solely responsible for satisfying, in accordance with their
respective terms (except as modified herein), the Company's obligations
with respect to each option to purchase shares of Company Common Stock
(a "Company Option") referred to in Section 4.2(b) of the Company's
Disclosure Schedule (including but not limited to the options there
referred to and granted under the Company's Employee Stock Purchase Plan
(the "ESPP")) and outstanding immediately prior to the Effective Time.
From and after the Effective Time, this Agreement shall be the sole
required evidence of such assumption, regardless of whether a new
instrument is issued by Parent in exchange for the instrument
representing any Company Option.

From and after the Effective Date, each Company Option shall entitle the
holder thereof to purchase from the Parent up to that number of shares of
Parent Common Stock determined by multiplying the number of shares of Company
Common Stock subject to such Company Option by the Exchange Ratio, at a price
per share of Parent Common Stock:

(i) determined, in the case of any Company Option other than one
granted under the ESPP, by dividing the exercise price per share of
Company Common Stock provided for in such Company Option by the Exchange
Ratio, and

(ii) equal to, in the case of any Company Option granted under
the ESPP, eighty-five percent of the lesser of (A) the "fair market
value" (as defined in the ESPP) of a share of Company Common Stock as of
the date of the grant of such Option, divided by the Exchange Ratio, and
(B) the fair market value of a share of Parent Common Stock on the date
of the exercise of such Option;

PROVIDED, HOWEVER, that no scrip or fractional shares shall be issued in
connection with the exercise of any Company Option. In lieu of any such
fractional share interests, each holder of a Company Option who would
otherwise be entitled to receive a fraction of a share of Parent Common Stock
upon exercise of such Company Option pursuant to this Section 3.1(c) shall be
paid an amount in cash therefor (without interest) equal to the fractional
interest of such holder in a share of Parent Common Stock multiplied by (i) in
the case of any such Company Option granted under the ESPP, the last reported
sale

<PAGE>

price of Parent Common Stock on the NASDAQ National Market on the date
such Company Option is exercised, or (ii) in the case of all other Company
Options, the average of the last reported sale prices of Parent Common Stock
on the NASDAQ National Market for the 20 consecutive trading days ending with
the third trading day prior to the Closing Date.

Except as otherwise specifically provided in this Section 3.1(c), each
Company Option shall remain subject after the Effective Time to the same terms
and conditions (including without limitation those with respect to the dates
on which, and with respect to each such date, the proportionate extent to
which, such Company Option may be exercised) as were applicable to such
Company Option immediately prior to the Effective Time.

As soon as is practicable following the Effective Time, Parent shall
prepare and file with the Securities and Exchange Commission ("SEC") a
registration statement on Form S-8 covering the issuance and sale by Parent of
the shares of Parent Common Stock subject to all Company Options, and shall
use its best efforts to cause such registration statement to remain effective
for so long as any Company Options remain outstanding.

SECTION 3.2 CONVERSION OF SUBSIDIARY SHARES. At the Effective Time, by
virtue of the Merger and without any action on the part of any holder of any
capital stock of Subsidiary, each issued and outstanding share of Common
Stock, $.01 par value, of Subsidiary ("Subsidiary Common Stock") shall be
converted into one share of Common Stock, $.01 par value, of Surviving
Corporation ("Surviving Corporation Common Stock").

SECTION 3.3 EXCHANGE OF CERTIFICATES.

(a) From and after the Effective Time, each holder of an
outstanding certificate which immediately prior to the Effective Time
represented shares of Company Common Stock (the "Company Certificates")
shall cease to have any right as a stockholder of the Company and such
holder's sole rights shall be to receive in exchange for such holder's
Company Certificates, upon surrender thereof to an exchange agent
selected by Parent (the "Exchange Agent"), a certificate or certificates
representing the number of whole shares of Parent Common Stock which
such holder is entitled to receive pursuant to Section 3.1 plus cash in
lieu of fractional shares, as provided in Section 3.4 hereof.
Notwithstanding any other provision of this Agreement, (i) until holders
of Company Certificates theretofore representing shares of Company
Common Stock have surrendered such certificates for exchange as provided
herein, (A) no dividends shall be paid by the Company with respect to
any shares represented by such Company Certificates and (B) no payment
for fractional shares shall be made, PROVIDED, in each case, that upon
surrender of such Company Certificates, the surrendering holder shall
receive all such dividends and payments for fractional shares and (ii)
without regard to when such Company Certificates are

<PAGE>

surrendered for exchange as provided herein, no interest shall be paid on
any such dividend or payment for fractional shares. If any certificate for
shares of Parent Common Stock is to be issued in a name other than that in
which the certificate for shares of Company Common Stock surrendered in
exchange therefor is registered, it shall be a condition of such
exchange that the person requesting such exchange shall pay any transfer
or other taxes required by reason of the issuance of certificates for
such shares of Parent Common Stock in a name other than that of the
registered holder of the certificate surrendered, or shall establish to
the satisfaction of Parent that such tax has been paid or is not
applicable. No transfers of Company Common Stock shall be made on the
stock transfer books of the Company after the close of business on the
day prior to the date of the Effective Time.

(b) At or before the Effective Time, Parent shall make available
to the Exchange Agent a sufficient number of certificates representing
shares of Parent Common Stock required to effect the exchange referred
to in Section 3.3(a).

(c) Promptly after the Effective Time, Parent shall cause the
Exchange Agent to mail to each holder of record of the Company
Certificates (i) a form letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Company
Certificates shall pass, only upon actual delivery of the Company
Certificates to the Exchange Agent) and (ii) instructions for use in
effecting the surrender of the Company Certificates in exchange for
certificates representing shares of Parent Common Stock. Upon surrender
of the Company Certificates for cancellation to the Exchange Agent,
together with a duly executed letter of transmittal and such other
documents as the Exchange Agent shall reasonably require, the holder of
such Company Certificates shall be entitled to receive in exchange
therefor one or more certificates representing that number of whole
shares of Parent Common Stock into which the shares of Company Common
Stock theretofore represented by the Company Certificates so surrendered
shall have been converted pursuant to the provisions of Section 3.1, in
addition to payment for any fractional share of Parent Common Stock, and
the Company Certificates so surrendered shall forthwith be cancelled.
Until so surrendered, the Company Certificates shall represent solely
the right to receive the number of whole shares of Parent Common Stock
that shall be issued in exchange for Company Common Stock and any cash
in lieu of the fractional Parent Common Stock as contemplated by Section
3.4. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of shares of Company Common
Stock for any shares of Parent Common Stock delivered to a public
official as required by applicable abandoned property, escheat or
similar laws. The Exchange Agent shall not be entitled to vote or
exercise any rights of ownership with respect to Parent Common Stock
held by it from time to time hereunder.

<PAGE>

(d) From and after the Effective Time, Parent shall be entitled to
treat outstanding certificates which immediately prior to the Effective
Time represented shares of Subsidiary Common Stock as evidencing the
ownership of the number of full shares of Surviving Corporation Common
Stock, which the holder of the shares of Subsidiary Common Stock
represented by such certificates is entitled to receive pursuant to
Section 3.2, and the holder of such certificates shall not be required
to surrender such certificates for exchange. Shares of Surviving
Corporation Common Stock which the holder of shares of Subsidiary Common
Stock is entitled to receive in the Merger shall be deemed to have been
issued at the Effective Time.

SECTION 3.4 NO FRACTIONAL SHARES. Notwithstanding any other provision
of this Agreement, no certificates or scrip for fractional shares of Parent
Common Stock shall be issued in the Merger and no Parent Common Stock
dividend, reclassification, stock split or interest shall be paid or have
effect with respect to any fractional interest in a share of Parent Common
Stock, and such fractional interests shall not entitle the owner thereof to
vote or to any other rights of a security holder. In lieu of any such
fractional shares, each holder of Company Common Stock who would otherwise
have been entitled to receive a fraction of a share of Parent Common Stock
upon surrender of the Company Certificates for exchange pursuant to this
Article III will be paid an amount in cash therefor (without interest) equal
to the average of the last reported sale prices of Parent Common Stock on the
National Association of Securities Dealers, Inc. Automated Quotation
System-National Market (the "NASDAQ National Market") for each of the twenty
consecutive trading days ending with the third trading day prior to the
Closing Date (as defined in Section 3.5) multiplied by the fractional interest
of such stockholder in a share of Parent Common Stock. For purposes of
determining whether and to what extent a particular stockholder is entitled to
receive cash adjustments pursuant to this Section 3.4, shares of record held
by such holder and represented by two or more Company Certificates shall be
aggregated.

SECTION 3.5 CLOSING. The closing (the "Closing") of the transactions
contemplated by this Agreement shall take place at the offices of Parker
Duryee Rosoff & Haft, 529 Fifth Avenue, New York, New York 10017, on the third
business day following the date on which the last of the conditions set forth
in Article VIII hereof is fulfilled or waived, or at such other time and place
as Parent and the Company shall agree (the date on which the closing occurs
being the "Closing Date").

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

Each of Parent and the Company hereby represents and warrants to the
other as follows (subject in each case to such exceptions as are set forth or
cross-referenced in the representing party's attached Disclosure Schedule in
the labeled section

<PAGE>

corresponding to the caption of the representation or warranty to which such
exceptions relate):

SECTION 4.1 ORGANIZATION AND QUALIFICATION.

(a) It is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now being
conducted.

(b) It is qualified to do business and is in good standing as a
foreign corporation in all jurisdictions set forth in Section 4.1(b) of
its Disclosure Schedule, and to its knowledge, such jurisdictions are
the only ones in which the properties owned, leased or operated by it or
the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified and in good
standing will not have a Material Adverse Effect on it.

(c) True, accurate and complete copies of its Certificate of
Incorporation and By-laws, in each case as in effect on the date hereof,
including all amendments thereto, have heretofore been delivered to the
other.

SECTION 4.2 CAPITALIZATION.

(a) Its authorized and outstanding capital stock are as set forth
in Section 4.2(a) of its Disclosure Schedule. All of its issued and
outstanding shares of capital stock are validly issued and are fully
paid, nonassessable and free of preemptive rights. All outstanding
shares of its capital stock and other securities were issued in
compliance with all applicable laws and regulations.

(b) Attached as Section 4.2(b) of its Disclosure Schedule is a
list of outstanding subscriptions, options, calls, contracts,
commitments, understandings, restrictions, arrangements, rights or
warrants, including any right of conversion or exchange under any
outstanding security, instrument or other agreement, obligating it to
issue, deliver or sell or cause to be issued, delivered or sold,
additional shares of its capital stock or obligating it to grant, extend
or enter into any such agreement or commitment. There are no voting
trusts, proxies or other agreements or understandings to which it is a
party or by which it is bound with respect to the voting of any shares
of its capital stock. Subsequent to January 28, 1995, it has not (i)
issued any shares of its capital stock except upon exercise or
conversion of the above-described stock equivalents or (ii) issued any
additional stock equivalents.

SECTION 4.3 SUBSIDIARIES. Attached as Section 4.3 of its Disclosure
Schedule is a list of its subsidiaries. As used in this Agreement, the term
"subsidiary" shall mean

<PAGE>

any corporation or other entity of which the relevant party, directly or
indirectly, controls or which the relevant party owns, directly or indirectly,
50% or more of the stock or other voting interests, the holders of which are,
ordinarily or generally, in the absence of contingencies (which contingencies
have not occurred) or understandings (which understandings have not yet been
required to be performed) entitled to vote for the election of a majority of the
board of directors or any similar governing body. It is not a partner in any
partnership or joint venture and will not become one prior to the Effective
Time.

SECTION 4.4 AUTHORITY; NON-CONTRAVENTION; APPROVALS.

(a) It has full corporate power and authority to enter into this
Agreement and, subject to the Company Stockholders' Approval or the
Parent Stockholders' Approval, as the case may be, (each as defined in
Section 7.3 below) and the Required Statutory Approvals (as defined in
Section 4.4(c) below), to consummate the transactions contemplated
hereby. Its execution and delivery of this Agreement, and its
consummation of the transactions contemplated hereby, have been duly
authorized by its Board of Directors and no other corporate proceedings
on its part are necessary to authorize its execution and delivery of
this Agreement and its consummation of the transactions contemplated
hereby, except for the Company Stockholders' Approval or the Parent
Stockholders' Approval, as the case may be, and the obtaining of the
Required Statutory Approvals. This Agreement has been duly and validly
executed and delivered by it, and constitutes its valid and binding
agreement, enforceable against it in accordance with its terms, except
that such enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or relating
to enforcement of creditors' rights generally and (ii) general equitable
principles.

(b) Its execution and delivery of this Agreement do not, and its
consummation of the transactions contemplated hereby will not, violate,
conflict with or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any
lien, security interest, charge or encumbrance upon any of its
properties or assets under any of the terms, conditions or provisions of
(i) its Certificate of Incorporation or By-Laws, (ii) subject to
obtaining the Required Statutory Approvals and the receipt of the
Company Stockholders' Approval or the Parent Stockholders' Approval, as
the case may be, any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any
court or governmental authority applicable to it or any of its
properties or assets, or (iii) any note, bond, mortgage, indenture, deed
of trust, license, franchise, permit, concession, contract, lease or
other instrument, obligation or agreement of any kind to which it is now
a party or by which it or any of its properties or assets may be bound,
excluding from the foregoing clauses (ii) and (iii), such violations,

<PAGE>

conflicts, breaches, defaults, terminations, accelerations or creations
of liens, security interests, charges or encumbrances that would not, in
the aggregate, have a Material Adverse Effect on it.

(c) Except for (i) the filing of the Proxy Statement/Prospectus
(as defined in Section 4.9 below) with the SEC pursuant to the
Securities Act of 1933, as amended (the Securities Act"), and the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii)
the declaration of the effectiveness thereof by the SEC and filings with
various state blue sky authorities, and (iii) the making of the Merger
Filing with the Secretary of State of the State of Delaware and the
Recorder of the County of New Castle, Delaware in connection with the
Merger (the filings and approvals referred to in clauses (i) through
(iii) are collectively referred to as the "Required Statutory
Approvals"), no declaration, filing or registration with, or notice to,
or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for its execution and delivery of this
Agreement or its consummation of the transactions contemplated hereby,
other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as
the case may be, would not, in the aggregate, have a Material Adverse
Effect on it.

SECTION 4.5 REPORTS AND FINANCIAL STATEMENTS.

(a) It has filed with the SEC all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto)
required to be filed by it under each of the Securities Act and the
Exchange Act and the respective rules and regulations thereunder, all of
which complied in all material respects with all applicable requirements
of the appropriate act and the rules and regulations thereunder, other
than such filings which if not made or not made in compliance with all
applicable requirements, would not, in the aggregate, have a Material
Adverse Effect on it. It has delivered to the other copies of its SEC
Reports. As of their respective dates, its SEC Reports did not contain
any 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, in light of the circumstances under which they were made, not
misleading. Its audited consolidated financial statements and unaudited
interim consolidated financial statements included in its SEC Reports
(its "Financial Statements") have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
and fairly present its financial condition as of the dates thereof and
the results of its operations, cash flows and changes in financial
condition for the periods then ended, subject, in the case of the
unaudited interim financial statements, to the absence of notes thereto
and normal year-end audit adjustments. Upon filing thereof with the
SEC, (i) the Company shall deliver to Parent any Quarterly Report on
Form 10-QSB so filed by it, in each case together with a certificate
containing the representations and warranties contained in this Section
4.5(a) with respect to such Annual or Quarterly Report, and (ii) Parent
shall deliver to the Company

<PAGE>

a copy of any Quarterly Report on Form 10-Q so filed by it, in each case
together with a certificate containing the representations and warranties
contained in this Section 4.5(a) with respect to such Quarterly Report.

(b) All of its accounts receivable included in its Financial
Statements reflect actual transactions, have arisen in the ordinary
course of business, will not, to its knowledge, be subject to offset or
deduction and will, to its knowledge, be collectible at the aggregate
recorded amounts thereof net of any reserves established in a manner
consistent with its past practices, all as reflected in its Financial
Statements.

SECTION 4.6 ABSENCE OF UNDISCLOSED LIABILITIES. It did not have at
December 31, 1994 and has not incurred since that date any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any
nature, (a) except liabilities, obligations or contingencies (i) which are
accrued or reserved against in its Financial Statements as of such date or
reflected in the notes thereto or (ii) which were incurred after such date and
were incurred in the ordinary course of business and consistent with past
practices or in connection with the transactions hereby contemplated and (b)
except for any liabilities, obligations or contingencies which (i) would not,
in the aggregate, have, or be reasonably expected to have, a Material Adverse
Effect on it or (ii) have been discharged or paid in full prior to the date
hereof.

SECTION 4.7 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1994 there has not been any Material Adverse Effect, or any event which would
reasonably be expected to have a Material Adverse Effect, individually or in
the aggregate, with respect to it.

SECTION 4.8 LITIGATION. Except as disclosed in its SEC Reports, there
are no claims, suits, actions or proceedings pending or, to its knowledge,
threatened against, it before or by any court, governmental department,
commission, agency, instrumentality or authority, or any arbitrator, except
for such claims, suits, actions or proceedings which, alone or in the
aggregate, would reasonably be expected not to have, a Material Adverse Effect
on it. It is not subject to any judgment, decree, injunction, rule or order
specifically naming it of any court, governmental department, commission,
agency, instrumentality, authority, or arbitrator.

SECTION 4.9 REGISTRATION STATEMENT AND PROXY STATEMENT. None of the
information to be supplied by it for inclusion in (a) the Registration
Statement on Form S-4 to be filed under the Securities Act with the SEC by
Parent in connection with the Merger for the purpose of registering the shares
of Parent Common Stock to be issued in the Merger (the "Registration
Statement") or (b) the proxy or information statement to be distributed in
connection with (i) the Company's meeting of stockholders or (ii) Parent's
meeting of stockholders, in either case to vote upon this Agreement and the
transactions contemplated hereby (collectively, the "Proxy Statement" and,
together with the prospectus included in the Registration Statement, the
"Proxy Statement/Prospec-

<PAGE>

tus") will, in the case of the Proxy Statement/Prospectus or any amendments
thereof or supplements thereto, at the time of the mailing of the Proxy
Statement/Prospectus and any amendments or supplements thereto, and at the time
of the meetings of each of the stockholders of the Company and of Parent to be
held in connection with the transactions contemplated by this Agreement, or, in
the case of the Registration Statement, as amended or supplemented, at the time
it becomes effective and at the time of such meetings, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.

SECTION 4.10 NO VIOLATION OF LAW. It is not in violation of and has
not been given notice or been charged with any violation of, any law, statute,
order, rule, regulation, ordinance or judgment (including, without limitation,
any applicable environmental law, ordinance or regulation) of any governmental
or regulatory body or authority, except for violations which, in the
aggregate, do not have, and would not reasonably be expected to have, a
Material Adverse Effect on it. It has not received any written notice that
any investigation or review with respect to it by any governmental or
regulatory body or authority is pending or threatened, other than, in each
case, those the outcome of which, as far as reasonably can be foreseen, would
not reasonably be expected to have, a Material Adverse Effect on it. It has
all permits, licenses, franchises, variances, exemptions, orders and other
governmental authorizations, consents and approvals necessary to conduct its
business as presently conducted (collectively its "Permits"), except for
permits, licenses, franchises, variances, exemptions, orders, authorizations,
consents and approvals the absence of which, alone or in the aggregate, would
not have a Material Adverse Effect on it. It (a) has duly and timely filed
all reports and other information required to be filed with any governmental
or regulatory authority in connection with its Permits, and (b) is not in
violation of the terms of any of its Permits, except for omissions or delays
in filings, reports or violations which, alone or in the aggregate, would not
have a Material Adverse Effect on it.

SECTION 4.11 COMPLIANCE WITH INSTRUMENTS. It is not in breach or
violation of or in default in the performance or observance of any term or
provision of, and no event has occurred which, with lapse of time or action by
a third party, could result in a default under its Certificate of
Incorporation or By-Laws.

SECTION 4.12 TAXES.

(a) It has (i) duly and timely filed with the appropriate
governmental authorities all Tax Returns (as defined in subsection (c)
below) required to be filed by it, and has not filed for an extension to
file any Tax Returns and such Tax Returns are true, correct and complete
in all material respects, and (ii) duly paid in full or made adequate
provision for the payment of all Taxes (as defined in subsection (b)
below) shown to be due on such Tax Returns. Its Tax Returns referred to
in clause (i) hereinabove have been examined by the United States

<PAGE>

Internal Revenue Service (the "IRS") or the appropriate governmental
authority or the period of assessment of the Taxes in respect of which
such Tax Returns were required to be filed has expired, all deficiencies
asserted or assessments made as a result of such examinations have been
paid in full and no proceeding or examination by or in front of the
relevant governmental authority in connection with the examination of
any of the Tax Returns referred to in clause (i) hereinabove is
currently pending. No claim has been made in writing to it by any
authority in a jurisdiction where it does not file a Tax Return that it
is or may be subject to Tax in such jurisdiction. No waiver of statutes
of limitation have been given by or requested in writing to it with
respect to any Taxes. It has not agreed to any extension of time with
respect to any Tax deficiency. The liabilities and reserves for Taxes
reflected in its balance sheet as of December 31, 1994 will be adequate
to cover all Taxes for all periods ending on or prior to such respective
dates, except for the payment of such taxes which, alone or in the
aggregate, would not have a Material Adverse Effect on it, and there are
no liens for Taxes upon any property or asset of it, except for liens
for Taxes not yet due. There are no unresolved issues of law or fact
arising out of a notice of deficiency, proposed deficiency or assessment
from the IRS or any other governmental taxing authority with respect to
its Taxes which, if decided adversely, singly or in the aggregate, would
have a Material Adverse Effect on it. It is not a party to any
agreement providing for the allocation or sharing of Taxes with any
entity. It has not, with regard to any assets or property held, acquired
or to be acquired by it, filed a consent to the application of Section
341(f) of the Internal Revenue Code of 1986, as amended (the "Code"). It
has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, except for such
taxes which, alone or in the aggregate, would not have a Material
Adverse Effect on it. No Tax is required to be withheld by it pursuant
to Section 1445 of the Code as a result of the transfer contemplated by
this Agreement. As a result of the Merger, it will not be obligated to
make a payment to an individual that would be a "parachute payment" to a
"disqualified individual" as those terms are defined in Section 28OG of
the Code without regard to whether such payment is reasonable
compensation for personal services performed or to be performed in the
future.

(b) For purposes of this Agreement, the term "Taxes" shall mean
all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, property, sales,
withholdings, social security, occupation, use, service, service use,
license, payroll, franchise, transfer and recording taxes, fees and
charges, imposed by the United States, or any state, local or foreign
government or subdivision or agency thereof whether computed on a
separate, consolidated, unitary, combined or any other basis; and such
term shall include any interest, fines, penalties or additional amounts
attributable or imposed or with respect to any such taxes, charges,
fees, levies or other assessments.

<PAGE>

(c) For purposes of this Agreement, the term "Tax Return" shall
mean any return, report or other document or information required to be
supplied to a taxing authority in connection with Taxes.

SECTION 4.13 EMPLOYEE BENEFIT PLANS; ERISA.

(a) At the date hereof, it does not maintain or contribute to any
employee benefit plans, programs, arrangements and practices (such
plans, programs, arrangements and practices being referred to as its
"Plans"), including employee benefit plans within the meaning set forth
in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and all regulations promulgated thereunder, as in effect
from time to time ("ERISA"), or any written employment contracts
providing for an annual base salary in excess of $100,000 and having a
term in excess of one year, which contracts are not immediately
terminable without penalty or further liability, or other similar
arrangements for the provision of benefits (excluding any "Multiemployer
Plan" within the meaning of Section 3(37) of ERISA or a "Multiple
Employer Plan" within the meaning of Section 413(c) of the Code, and all
regulations promulgated thereunder, as in effect from time to time).
Section 4.13(a) of its Disclosure Schedule lists all Multiemployer Plans
and Multiple Employer Plans which it maintains or to which it makes
contributions. It does not have any obligation to create any additional
such plan or to amend any such plan so as to increase benefits
thereunder, except as required under the terms of its Plans, under
existing collective bargaining agreements or to comply with applicable
law.

(b) (i) There have been no prohibited transactions within the
meaning of Section 406 or 407 of ERISA or Section 4975 of the Code with
respect to any of its Plans that could result in penalties, taxes or
liabilities which, singly or in the aggregate, could have a Material
Adverse Effect on it, (ii) except for premiums due, there is no
outstanding liability in excess of $25,000, whether measured alone or in
the aggregate, under Title IV of ERISA with respect to any of its Plans,
(iii) neither the Pension Benefit Guaranty Corporation nor any plan
administrator has instituted proceedings to terminate any of its Plans
subject to Title IV of ERISA other than in a "standard termination"
described in Section 4041 (b) of ERISA, (iv) none of its Plans has
incurred any "accumulated funding deficiency" (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, as of the
last day of the most recent fiscal year of each of its Plans ended prior
to the date of this Agreement, (v) the current present value of all
projected benefit obligations under each of its Plans which is subject
to Title IV of ERISA did not, as of its latest valuation date, exceed
the then current value of the assets of such plan allocable to such
benefit liabilities by more than the amount, if any, disclosed in its
latest SEC Report (based upon reasonable actuarial assumptions currently
utilized for such Plan), (vi) each of its Plans has been operated and
administered in all material respects in accordance with applicable laws
during the period of time covered by the applicable statute of
limitations, (vii) each of its

<PAGE>

Plans which is intended to be "qualified" within the meaning of Section
401(a) of the Code has been determined by the IRS to be so qualified and
such determination has not been modified, revoked or limited by failure to
satisfy any condition thereof or by a subsequent amendment thereto or a
failure to amend, except that it may be necessary to make additional
amendments retroactively to maintain the "qualified" status of such Plan,
and the period for making any such necessary retroactive amendments has not
expired, (viii) with respect to Multiemployer Plans, it has not, since
December 31, 1982, made or suffered a "complete withdrawal" or a "partial
withdrawal," as such terms are respectively defined in Sections 4203, 4204
and 4205 of ERISA and, to its knowledge, no event has occurred or is
expected to occur which presents a material risk of a complete or partial
withdrawal under said Sections 4203, 4204 and 4205, (ix) there are no
pending or, to its knowledge, threatened or anticipated claims involving
any of its Plans other than claims for benefits in the ordinary course,
(x) it has no current liability in excess of $50,000, whether measured
alone or in the aggregate, for plan termination or withdrawal (complete or
partial) under Title IV of ERISA based on any plan to which any entity that
would be deemed one employer with it under Section 4001 of ERISA or Section
414 of the Code contributed during the period of time covered by the
applicable statute of limitations (its "Controlled Group Plans"), and it
does not reasonably anticipate that any such liability will be asserted
against it, none of its Controlled Group Plans has an "accumulated funding
deficiency" (as defined in Section 302 of ERISA and 412 of the Code), and
none of its Controlled Group Plans has an outstanding funding waiver which
could result in the imposition of liens, excise taxes or liability on it in
excess of $25,000 whether measured alone or in the aggregate, and (xi) none
of its Plans provide welfare benefits to employees and/or their dependents
subsequent to termination of employment except as required by Title I, Part
6 of ERISA or applicable state insurance laws.

SECTION 4.14 CERTAIN AGREEMENTS.

(a) As of the date hereof, it is not a party to any oral or
written (i) consulting or similar agreement with any present or former
director, officer or employee or any entity controlled by any such
person not terminable on thirty days' or less notice involving the
payment of not more than $100,000 per annum, (ii) agreement with any
executive officer or other key employee, the benefits of which are
contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving it of the nature contemplated by
this Agreement, (iii) agreement with respect to any executive officer or
other key employee of it providing any term of employment or
compensation guarantee extending for a period longer than one year and
for the payment in excess of $100,000 per annum, or (iv) agreement or
plan, including any stock option plan, stock appreciation right plan,
restricted stock plan or stock purchase plan, any of the benefits of
which will be increased, or the vesting of the benefits of which will be
accelerated, by the occurrence of any of the transactions contemplated
by this

<PAGE>

Agreement or the value of any of the benefits of which will be
calculated on the basis of the transactions contemplated by this
Agreement.

(b) It is not indebted for money borrowed, either directly or
indirectly, from any of its officers, directors, or any Affiliate (as
defined below), in any amount whatsoever, nor are any of its officers,
directors, or Affiliates indebted for money borrowed from it; nor are
there any transactions of a continuing nature between it and any of its
officers, directors, or Affiliates (other than by or through the regular
employment thereof by it) not subject to cancellation which will
continue beyond the Effective Time, including, without limitation, use
of its assets for personal benefit with or without adequate
compensation. For purposes of this Agreement, the term "Affiliate" shall
mean any person that, directly or indirectly, through one or more
intermediaries, controls or is controlled by, or is under common control
with, the person specified. As used in the foregoing definition, the
term (i) "control" shall mean the power through the ownership of voting
securities, contract or otherwise to direct the affairs of another
person and (ii) "person" shall mean an individual, firm, trust,
association, corporation, partnership, government (whether federal,
state, local or other political subdivision, or any agency, or bureau of
any of them) or other entity.

SECTION 4.15 LABOR CONTROVERSIES. It is not a party to any collective
bargaining agreements. There are no controversies pending or, to its
knowledge, threatened between it and any representatives of any of its
employees. To its knowledge, there are no organizational efforts presently
being made involving any of the presently unorganized employees of it. It has
complied in all material respects with all laws relating to the employment of
labor, including, without limitation, any provisions thereof relating to
wages, hours, collective bargaining, and the payment of social security and
similar taxes. No person has, to its knowledge, asserted that it is liable for
any arrears of wages or any taxes or penalties for failure to comply with any
of the foregoing.

SECTION 4.16 ENVIRONMENTAL MATTERS. It is and at all times has been in
compliance with all applicable requirements of Environmental Laws (as defined
below) in connection with the ownership, operation and conditions of its
business, except such instances of non-compliance that, both individually and
in the aggregate, would not have a Material Adverse Effect on it. To its
knowledge, there are no PCB's, underground storage tanks (as defined by
Environmental Laws), asbestos materials or asbestos containing materials in
any property leased, owned or operated by it. It has not released, transported
or arranged for the disposal of any hazardous substance at any facility,
location or site, except in material compliance with all applicable laws. To
its knowledge, no conditions exist or have occurred as a result of which or in
connection with which it could be held liable for damages, response or
remedial costs, fines, penalties, sanctions or equitable relief under any
Environmental Laws, except for such damages, costs, fines, penalties,
sanctions or relief which, alone or in the aggregate, would not have a
Material Adverse Effect on it. As used in this Section 4.16, "Environmental
Laws" means any federal, state or local statute, regulation, ordinance,
permit, order, judgment, decree or

<PAGE>

decision relating to health, safety or the environment. "Release" means any
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping, active disposal or passive disposal (including the
abandonment or discarding of barrels, containers or other closed receptacles
containing any hazardous substances). "Hazardous substance" means (a) any
"hazardous substance" as defined in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, ("CERCLA") and any
implementing regulations, (b) any hazardous or toxic substance, waste or
material within the meaning of any other federal, state or local statute,
regulation, ordinance or decision, (c) any pollutant, contaminant or special
waste regulated by any Environmental Laws, or (d) petroleum, crude oil or any
fraction thereof.

SECTION 4.17 [Intentionally Left Blank]

SECTION 4.18 NASDAQ; NO APPRAISAL RIGHTS. Its Common Stock is, and at
the Effective Time will be, designated as a national market security on the
NASDAQ National Market, in the case of Parent, or designated for listing in
the NASDAQ Small-Cap Market System, in the case of the Company. None of its
(and in the case of Parent, none of Subsidiary's) stockholders will be
entitled to appraisal rights under Delaware law in connection with the Merger.

SECTION 4.19 CONTRACTS, ETC.

(a) Section 4.19(a) of its Disclosure Schedule hereto consists of
a true and complete list of all contracts, agreements, commitments and
other instruments (whether oral or written) to which it is a party that
(i) involve an expenditure by it or require the performance of services
or delivery of goods to, by, through, on behalf of or for the benefit of
it, which in each case, relates to a contract, agreement, commitment or
instrument that requires payments in excess of $100,000 per year and
(ii) involve an obligation for the performance of services or delivery
of goods by it that cannot, or in reasonable probability will not, be
performed within thirty days from the dates as of which these
representations are made.

(b) All of the contracts, agreements, commitments and other
instruments described in Section 4.19 of its Disclosure Schedule are
valid and binding upon it and, to its knowledge, the other parties
thereto and are in full force and effect and, to the knowledge of the
Company, enforceable in accordance with their terms, and neither it nor,
to its knowledge, any other party to any such contract, agreement,
commitment or other instrument has breached any provision of, and, to
its knowledge, no event has occurred,in each case, which, with the lapse
of time or action by a third party, could result in a default under the
terms thereof which, alone or in the aggregate, would provide the basis
for a claim against it in

<PAGE>

excess of $100,000, and, to its knowledge, there are no existing facts or
circumstances which would prevent its contracts and agreements for the sale
of goods by it from maturing in due course into fully collectible accounts
receivable. Neither it nor to its knowledge, any of its stockholders, has
received any payment from any contracting party in connection with or as an
inducement for entering into any contract, agreement, commitment or
instrument except for payment for actual services rendered or to be
rendered, or goods sold or to be sold, by it or such stockholder, as the
case may be.

SECTION 4.20 INTELLECTUAL PROPERTY

(a) Section 4.20(a) of its Disclosure Schedule hereto sets forth
a complete and correct list of all patents, material unpatented
inventions set forth or described in writing, trademarks, servicemarks,
service names, brand names and copyrights, registrations thereof and
applications therefor, material to its business, together with a
complete list of all licenses granted by or to it with respect to any of
the above. All such patents, material unpatented inventions,
trademarks, tradenames, servicemarks, service names, brand names and
copyrights are owned by, or licensed to, it, and in the case of such as
are owned by it, are free and clear of all liens, claims, security
interests and encumbrances of any nature whatsoever. It is not
currently in receipt of any written notice of any violation or
infringements by it of, and it is not knowingly violating or infringing,
the rights of others in any patent, unpatented invention, trademark,
tradename, servicemark, copyright, trade secret, know-how, design,
process or other intangible asset.

(b) (i) Section 4.20(b)(i) of its Disclosure Schedule contains a
complete and accurate list of all computer software owned by it (other
than "off-the-shelf" software that has not been customized for its use)
(its "Owned Software"). It has exclusive title to its Owned Software,
free and clear of all claims, including claims or rights of employees,
agents, consultants, customers, licensees or other parties involved in
the development, creation, documentation, marketing, maintenance,
enhancement or licensing of such computer software. Its Owned Software
is not dependent on any Licensed Software (as defined in subsection (ii)
below) in order to operate fully in the manner in which it is intended.
None of its Owned Software has been published or disclosed to any other
parties, except pursuant to contracts requiring such other parties to
keep such Owned Software confidential. To its knowledge, no such other
party has breached any such obligation of confidentiality.

(ii) Section 4.20(b)(ii) of its Disclosure Schedule contains
a complete and accurate list of all software under which it is a
licensee, lessee or otherwise has obtained the right to use software and
it pays a royalty for the use of such software (its "Licensed
Software"). Section 4.20(b)(ii) of its Disclosure Schedule also sets
forth a list of all license fees, rents, royalties or other charges that
it is

<PAGE>

required or obligated to pay with respect to Licensed Software.
It has the right and license to use its Licensed Software, free and
clear of any limitations or encumbrances, except as may be set forth in
its license agreement with respect thereto. It is in material
compliance with all provisions of any license, lease or other similar
agreement pursuant to which it has rights to use its Licensed Software.
None of its Licensed Software has been incorporated into or made a part
of its Owned Software or any other of its Licensed Software. It has not
published or disclosed any of its Licensed Software to any other party
except, in the case of its Licensed Software which it leases or markets
to others, in accordance with and as permitted by any license, lease or
similar agreement relating to such Licensed Software and except pursuant
to contracts requiring such other parties to keep such Licensed Software
confidential. To its knowledge, no party to whom it has disclosed
Licensed Software has breached such obligation of confidentiality.

(iii) The Owned Software and Licensed Software, together
with any "off-the-shelf" software that has not been customized for its
use, constitute all software material to its business (its "Software").
The transactions contemplated herein will not cause a breach of default
under any licenses, leases or similar agreements relating to its
Software or impair its ability to use its Software subsequent to the
Effective Time in the same manner as its Software is currently used. It
is not knowingly infringing any intellectual property rights of any
other person or entity with respect to its Software, and, to its
knowledge, no other person or entity is infringing any of its
intellectual property rights with respect to its Software.

SECTION 4.21 CUSTOMERS. Section 4.21 of its Disclosure Schedule
attached hereto sets forth a true and correct list of each of its customers
that, within the preceding twelve months, accounted for an aggregate amount of
its gross revenue equal to 5% or more of its revenues. It has not received any
written notice that any such customer has taken or contemplates taking any
steps which could disrupt the business relationship of it with such customer
and would result in the material diminution in the value of its business as a
going concern.

SECTION 4.22 INSURANCE. Section 4.22 of its Disclosure Schedule sets
forth a true and correct list of all insurance policies held by it (indicating
the insurer, type, amount and term of coverage, deductible, and additional
named insureds with respect to each such policy and identifies all claims
currently pending under any of such insurance policies. All of these policies
are in full force and effect and all premiums due thereon have been paid or
accrued and there are no retroactive experience-based premium adjustment
features in any policy.

SECTION 4.23 BOOKS, RECORDS AND ACCOUNTS. Its books, records and
accounts fairly and accurately in all material respects reflect its
transactions and dispositions of assets, and its system of internal accounting
controls is sufficient to

<PAGE>

assure that: (a) transactions are executed in accordance with management's
authorization; (b) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles, and to maintain accountability for assets; (c) access to assets is
permitted only in accordance with management's authorization; and (d) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

SECTION 4.24 ACCOUNTING MATTERS. Neither it nor, to its knowledge, any
of its Affiliates has, through the date of this Agreement, or will have as of
the Effective Time, taken or agreed to take any action that would prevent
Parent from accounting for the business combination to be effected by the
Merger as a pooling of interests.

SECTION 4.25 BROKERS AND FINDERS. Except for the fees and expenses
payable to its Financial Advisor, neither it nor, to its knowledge, any of its
Affiliates, has employed any investment banker, broker, finder, consultant or
intermediary in connection with the transactions contemplated by this
Agreement which would be entitled to any investment banking, brokerage,
finder's or similar fee or commission in connection with this Agreement or the
transactions contemplated hereby.

SECTION 4.26 DISCLOSURE. No statement contained herein or in any
certificate, schedule, list, exhibit or other instrument furnished to the
other pursuant to the provisions hereof contains or will contain any untrue
statement of any material fact or omits or will omit to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.

ARTICLE V

ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PARENT

Parent hereby represents and warrants to the Company as follows (subject
in each case to such exceptions as are set forth or cross-referenced in
Parent's attached Disclosure Schedule in the labeled section corresponding to
the caption of the representation or warranty to which such exceptions
relate):

<PAGE>

SECTION 5.1 ORGANIZATION AND QUALIFICATION

(a) Subsidiary is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has the
requisite corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now being
conducted.

(b) Subsidiary is qualified to do business and is in good standing
in each jurisdiction in which the properties owned, leased or operated
by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified and
in good standing will not have a material adverse effect on the
business, operations, properties, assets, condition (financial or
other), results of operations or prospects of Parent on a consolidated
basis.

(c) True, accurate and complete copies of Subsidiary's Certificate
of Incorporation and By-laws, in each case as in effect on the date
hereof, including all amendments thereto, have heretofore been delivered
to the Company.

SECTION 5.2 OWNERSHIP OF SUBSIDIARY; NO PRIOR ACTIVITIES; ASSETS OF
SUBSIDIARY.

(a) Subsidiary was formed by Parent solely for the purpose of
engaging in the transactions contemplated hereby. The authorized
capital stock of Subsidiary consists of 1,000 shares of Subsidiary
Common Stock, of which 1,000 shares are issued and outstanding, all of
which are owned beneficially and of record by Parent.

(b) As of the date hereof and the Effective Time, 100% of the
capital stock of Subsidiary is and will be owned directly by Parent.
Further, there are not as of the date hereof and there will not be at
the Effective Time any outstanding or authorized options, warrants,
calls, rights, commitments or any other agreements of any character to
which Subsidiary is a party, or by which Subsidiary may be bound,
requiring it to issue, transfer, sell, purchase, redeem or acquire any
shares of capital stock or any securities or rights convertible into,
exchangeable for, or evidencing the right to subscribe for or acquire,
any shares of capital stock of Subsidiary.

(c) As of the date hereof and the Effective Time, except for
obligations or liabilities incurred in connection with its incorporation
or organization and the transactions contemplated thereby and hereby,
Subsidiary has not and will not have incurred, directly or indirectly
through any subsidiary or affiliate, any obligations or liabilities or
engaged in any business or activities of any type or kind whatsoever or
entered into any agreements, instruments, commitments, or other
arrangements with any person or entity.

<PAGE>

(d) Parent will take all action necessary to ensure that
Subsidiary at no time prior to the Effective Time owns any asset other
than an amount of cash necessary to incorporate Subsidiary and to pay
the expenses of the Merger attributable to Subsidiary if the Merger is
consummated.

SECTION 5.3 AUTHORITY; NON-CONTRAVENTION; APPROVALS.

(a) Subsidiary has full corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated
hereby. Subsidiary's execution and delivery of this Agreement, and the
consummation by Subsidiary of the transactions contemplated hereby, have
been duly authorized by Subsidiary's Board of Directors and sole
stockholder, respectively, and no other corporate proceedings on the
part of Subsidiary are necessary to authorize Subsidiary's execution and
delivery of this Agreement and consummation by Subsidiary of the
transactions contemplated hereby. This Agreement has been duly and
validly executed and delivered by Subsidiary, and constitutes a valid
and binding agreement of Subsidiary enforceable against Subsidiary in
accordance with its terms, except that such enforcement may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles.

(b) The execution and delivery of this Agreement by Subsidiary
does not, and the consummation by Subsidiary of the transactions
contemplated hereby will not, violate, conflict with or result in a
breach of any provision of, or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required
by, or result in a right of termination or acceleration under, or result
in the creation of any lien, security interest, charge or encumbrance
upon any of the properties or assets of Subsidiary under any of the
terms, conditions or provisions of (i) Subsidiary's Certificate of
Incorporation or By-Laws, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or license
of any court or governmental authority applicable to Subsidiary or any
of its properties or assets, or (iii) any note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any kind
to which Subsidiary is now a party or by which Subsidiary or any of its
properties or assets may be bound, excluding from the foregoing clauses
(ii) and (iii), such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests,
charges or encumbrances that would not, in the aggregate, have a
Material Adverse Effect on Parent.

(c) No declaration, filing or registration with, or notice to,
or authorization, consent or approval of, any governmental or regulatory
body or authority is necessary for the execution and delivery of this
Agreement by Subsidiary or the consummation by Subsidiary of the
transactions contemplated

<PAGE>

hereby, other than such declarations, filings, registrations, notices,
authorizations, consents or approvals which, if not made or obtained, as
the case may be, would not, in the aggregate, have a Material Adverse
Effect on Parent.

ARTICLE VI

CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 6.1 CONDUCT OF BUSINESS PRIOR TO EFFECTIVE TIME. Each of Parent
(for itself and the Subsidiary) and the Company hereby covenants and agrees as
follows, from and after the date of this Agreement and until the Effective
Time, except as otherwise specifically consented to in writing by the other
party:

(a) It shall conduct its business in the ordinary and usual course
of business and consistent with past practice;

(b) It shall not (i) split, combine or reclassify its outstanding
capital stock or declare, set aside or pay any dividend or distribution
payable in cash, stock, property or otherwise, (ii) spin-off any assets
or businesses, (iii) engage in any transaction for the purpose of
effecting a recapitalization, or (iv) engage in any transaction or
series of related transactions which has a similar effect to any of the
foregoing;

(c) It shall not issue, sell, pledge or dispose of, or agree to
issue, sell pledge or dispose of, any additional shares of, or any
options, warrants or rights of any kind to acquire any shares of its
capital stock of any class or any debt or equity securities convertible
into or exchangeable for such capital stock or amend or modify the terms
and conditions of any of the foregoing, except that it (i) may issue
shares upon exercise of outstanding options, warrants or stock purchase
rights and (ii) grant options, warrants and stock purchase rights, and
issue shares upon exercises thereof, in accordance with past practices
in numbers and exercise prices consistent therewith;

(d) It shall not (i) redeem, purchase, acquire or offer to
purchase or acquire any shares of its capital stock, other than as
required by the governing terms of such securities, (ii) take any action
(either before or after the Effective Time) which would jeopardize the
treatment of the Merger as a "reorganization" within the meaning of
Section 368(a) of the Code or as a "pooling of interests" for accounting
purposes, (iii) take or fail to take any action which action or failure
to take action would cause the Company or its stockholders (except to
the extent that any stockholders receive cash in lieu of fractional
shares) to recognize gain or loss for federal income tax purposes as a
result of the consummation of the Merger, (iv) make any acquisition of
any material assets (except in the ordinary course of business) or
businesses, (v) sell any material assets (except in the

<PAGE>

ordinary course of business) or businesses, or (vi) enter into any
contract, agreement, commitment or arrangement to do any of the foregoing;

(e) It shall use reasonable efforts to preserve intact its
business organization and goodwill, keep available the services of its
present officers and key employees, and preserve the goodwill and
business relationships with suppliers, distributors, customers, and
others having business relationships with it, and not engage in any
action, directly or indirectly, with the intent to impact adversely the
transactions contemplated by this Agreement;

(f) It shall confer on a regular basis with one or more
representatives of the other to report on material operational matters
and the general status of ongoing operations; and

(g) it shall file with the SEC all forms, statements, reports and
documents (including all exhibits, amendments and supplements thereto)
required to be filed by it pursuant to the Exchange Act.

SECTION 6.2 ADDITIONAL COVENANTS OF THE COMPANY. The Company hereby
covenants and agrees, from and after the date of this Agreement and until the
Effective Time, except as otherwise specifically consented to in writing by
Parent, the Company shall:

(a) not amend or propose to amend its Certificate of Incorporation
or By-Laws;

(b) not incur of become contingently liable with respect to any
indebtedness for borrowed money, except in the ordinary course of
business or pursuant to the revolving credit arrangements referred to in
Section 4.14(b) of its Disclosure Schedule or any successor arrangements
thereto;

(c) not enter into or amend in any material respect any material
employment, severance, or special pay arrangement with respect to
termination of employment or other similar material arrangements or
agreements with any directors, officers or key employees;

(d) not increase the rate of remuneration payable to any of its
directors or key officers, or, except in the ordinary course of business
consistent with past practices, to any other employees or other
representatives, or agree to do so;

(e) not adopt, enter into or amend in any material respect any
bonus, profit sharing, compensation, stock option, pension, retirement,
deferred compensation, health care, employment or other employee benefit
plan, agreement, trust, fund or arrangement for the benefit or welfare
of any employee or retiree, except as required to comply with changes in
applicable law; and

<PAGE>

(f) use its best efforts to maintain in force the insurance
coverage described in Section 4.22 of its Disclosure Schedule.

SECTION 6.3 ACQUISITION TRANSACTIONS; BREAK-UP FEES.

(a) After the date hereof and prior to the earlier of (i) the
Effective Time, (ii) termination of this Agreement as provided in
Article IX hereof or (iii) September 30, 1995, unless Parent shall other-
wise agree in writing, the Company shall not initiate, solicit, negotiate,
encourage, or provide confidential information to facilitate, and the
Company shall (A) use its best efforts to cause any officer, director or
employee of, or any attorney, accountant or other agent retained by, the
Company and (B) use its best efforts to cause any investment banker
retained by the Company, not to initiate, solicit, negotiate, encourage,
or provide confidential information to facilitate, any proposal or offer
to acquire all or substantially all of the business and properties of
the Company, or capital stock of the Company, whether by merger,
purchase of assets, tender offer or otherwise, whether for cash,
securities or any other consideration or combination thereof (such
transactions being referred to herein as "Acquisition Transactions");
provided, however, that the Company may furnish (on terms including
confidentiality terms, substantially similar to those set forth in that
certain Confidentiality Agreement between Parent and the Company (the
"Confidentiality Agreement")) information concerning its business,
properties or assets to a corporation, partnership, person or other
entity or group (a "Potential Acquirer") if (1) the Company's Board of
Directors is advised by its financial advisor that such Potential
Acquirer has the financial wherewithal to consummate an Acquisition
Transaction that would yield a higher value to the Company's
stockholders than will the Merger, (2) the Company's Board of Directors
determines that such Potential Acquirer is reasonably likely to submit a
bona fide offer to consummate an Acquisition Transaction on terms that
would yield such a higher value to the Company's stockholders if
provided with confidential information about the Company, and (3) after
consultation with counsel, the Company's Board of Directors determines
that the failure to provide such confidential information would
constitute a breach of its fiduciary duty to stockholders of the
Company. Following receipt of a bona fide offer from a Potential
Acquirer proposing an Acquisition Transaction which offer the Board of
Directors of the Company determines would likely yield a higher value to
the Company's stockholders than will the Merger, the Company may, with
respect to such Potential Acquirer, negotiate and take any of the
actions otherwise prohibited by this Section 6.3 if, in the opinion of
the Board of Directors of the Company after consultation with counsel,
the failure to negotiate with such Potential Acquirer would constitute a
breach by the Board of Directors of its fiduciary duty to the
stockholders of the Company. In the event the Company shall determine to
provide any information as described above, or shall receive any offer
relating to an Acquisition Transaction, it shall promptly notify Parent
(a "Notice of Proposal") as to the fact that information is to be
provided or that an offer relating

<PAGE>

to an Acquisition Transaction has been received and shall furnish to Parent
the identity of the recipient of such information or the proponent of such
offer or proposal, if applicable, and, if an offer or proposal has been
received, a description of the material terms thereof. The Company may
enter into a definitive agreement for an Acquisition Transaction with a
Potential Acquirer with which it is permitted to negotiate pursuant to this
Section 6.3; provided, however that, at least one business day prior to
the Company's execution thereof the Company shall have notified Parent
in writing (a "Notice of Agreement") indicating the Company's intent to
enter into such agreement and describing all of the material terms of
such agreement. Following the execution of such a definitive agreement,
Parent or the Company may terminate this Agreement in accordance with
Article IX hereof, subject to the following fee and expense
reimbursement provisions of this Section 6.3.

(b) If (1) the Company fails to effect a Merger within 156 days of
the date of this Agreement, other than as a result of a Parent
Notification, a Parent Adverse Change or a Parent Breach (each as
defined in Section 9.1 hereof), or any other condition set forth in
this Agreement required to be satisfied by Parent to effect the Merger
set forth in Article VIII of this Agreement, and (2) a proposal for an
Acquisition Transaction from other than Parent is accepted by the Board
of Directors of the Company or, if applicable, by the holders of 51% or
more of the outstanding Company Common Stock (irrespective of whether
or not such acceptance is then binding upon the initiator of the
Acquisition Transaction so long as it is ultimately so binding), in
each case prior to or within 90 days of the termination of this
Agreement, or if earlier, 246 days after the date of this Agreement, or
if such a proposal is so accepted after the expiration of such 90 or
246-day period, but resulted from the Company commencing to seek offers
for an Acquisition Transaction within 20 calendar days after the date
of termination of this Agreement, then the Company shall promptly (i)
issue to Parent a six-month option, which shall be immediately
exercisable, to acquire such number of shares of Company Common Stock
as shall equal 10% of the outstanding Company Common Stock as of the
date of such acceptance, after giving effect to the exercise of such
option, at an exercise price of $11.107 per share (subject to
proportionate adjustment in the event of any stock dividend, stock
split, reverse stock split, or other recapitalization or similar change
with respect to Company Common Stock) (the "Topping Option"), and (ii)
giving credit to the Company for any other payments to Parent made
pursuant to Section 9.1 hereof and/or this Section 6.3, pay Parent the
sum of $500,000 (the "Parent Breakup Fee"), together with up to
$450,000 of the reasonable outside legal, accounting and investment
banking fees and disbursements and printing expenses incurred in
connection with the preparation, execution and delivery of this
Agreement and the transactions contemplated hereby (subject to such
$450,000 maximum, "Transaction Expenses") by Parent; provided, however,
that if the aggregate value of the accepted Acquisition Transaction
proposal does not

<PAGE>

exceed $30,000,000, then, in such event, the Parent Breakup
Fee shall be $750,000 rather than $500,000. In the event a proposal
for an Acquisition Transaction is so accepted within such time periods
by the holders of 30% or more but less than 51% of the shares of
Company Common Stock (the "Tender Acceptance"), then, should Parent
elect not to proceed with the Merger, giving credit for any other
payments to Parent made pursuant to Section 9.1 and/or this Section
6.3, the Company shall promptly pay Parent the Parent Breakup Fee (but
in no event more than $500,000) and Parent's Transaction Expenses;
provided, however, that if within 12 months of the Tender Acceptance,
the person which initiated such Acquisition Transaction shall acquire
such additional number of shares of Company Common Stock as shall
increase such person's equity interest in the Company to at least 51%
or shall effectuate a transaction which, directly or indirectly, will
afford such person ownership or control of all or substantially all of
the assets or business of the Company, then the Company shall promptly
(i) issue to Parent the Topping Option (the number of shares covered by
which shall be computed as of the date of the Tender Acceptance), and
(ii) if the aggregate value of all consideration paid by such person
for all assets and interests of and in the Company acquired by it does
not exceed $30,000,000, pay to Parent an additional $250,000 of Parent
Breakup Fee.

(c) Notwithstanding the foregoing provisions of this Section 6.3
or any other provision hereof, in no event shall either party be
required to pay Transaction Expenses of the other party in excess of
$450,000.

ARTICLE VII

ADDITIONAL AGREEMENTS

SECTION 7.1 ACCESS TO INFORMATION. Each of Parent and the Company
shall afford to the other and the other's accountants, counsel, financial
advisors and other representatives full access during normal business hours
throughout the period prior to the Effective Time to all properties, books,
contracts, commitments and records (including, but not limited to, Tax
Returns) of it and, during such period, shall furnish promptly (a) a copy of
each report, schedule and other document filed or received by it during such
period pursuant to the requirements of federal or state securities laws or
filed by it during such period with the SEC in connection with the
transactions contemplated by this Agreement or which may have a material
effect on its business, properties or personnel and (b) such other information
concerning its business, properties and personnel as the other shall
reasonably request; provided, however, that, no investigation pursuant to this
Section 7.1 shall affect any representation or warranty made herein or the
conditions to the obligations of the respective parties to consummate the
Merger. All non-public documents and information furnished to Parent or to the
Company, as the case may be, in connection with the transactions contemplated
by this Agreement shall be deemed to have been received pursuant to and shall
be subject to the provisions of the Confidentiality Agreement, except that
Parent and the Company

<PAGE>

may disclose such information as may be necessary in connection with seeking
the Parent Required Statutory Approvals, the Parent Stockholders' Approval,
the Company Required Statutory Approvals and the Company Stockholders' Approval.
The Company shall promptly advise Parent, and Parent shall promptly advise the
Company, in writing, of any change or the occurrence of any event after the date
of this Agreement having, or which, insofar as can reasonably be foreseen, in
the future may have, any Material Adverse Effect on the Company or Parent, as
the case may be.

SECTION 7.2 REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS.
Parent and the Company shall prepare and file with the SEC as soon as is
reasonably practicable after the date hereof the Proxy Statement/Prospectus
and shall use all reasonable efforts to have the Registration Statement
declared effective by the SEC as promptly as practicable. Parent shall also
take any action required to be taken under applicable state blue sky or
securities laws in connection with the issuance of Parent Common Stock.
Parent and the Company shall promptly furnish to each other all information,
and take such other actions, as may reasonably be requested in connection
with any action by any of them in connection with the preceding sentence and
shall cooperate with one another and use their respective best efforts to
facilitate the expeditious consummation of the transaction contemplated by
this Agreement. The Registration Statement shall contain a resale prospectus
covering all shares of Parent Common Stock to be acquired by Affiliates of
the Company. It shall be a condition to the obligation of either Parent or
the Company to mail the Proxy Statement/Prospectus to its stockholders that
Parent or the Company, as the case may be, have received the opinion of its
respective Financial Advisor to the effect that, as of the date of such
opinion (which shall be in no event earlier than July 11, 1995), the Exchange
Ratio is fair, from a financial point of view, to its stockholders. A copy
of such opinion shall be delivered to the other prior to the mailing of the
Proxy Statement/Prospectus.

SECTION 7.3 STOCKHOLDERS' APPROVAL. The Company shall use its best
efforts to obtain stockholder approval and adoption (the "Company
Stockholders' Approval") of this Agreement and the transactions contemplated
hereby as soon as practicable following the date upon which the Registration
Statement is declared effective by the SEC. Subject to the fiduciary duties of
the Board of Directors of the Company under applicable law, the Company shall,
through its Board of Directors, recommend to the holders of Company Common
Stock approval of this Agreement and the transactions contemplated by this
Agreement. Parent, in its capacity as the sole stockholder of Subsidiary, has
approved and adopted this Agreement and the transactions contemplated by this
Agreement upon its execution hereof. Parent shall use its best efforts to
obtain stockholder approval and adoption (the "Parent Stockholders' Approval")
of this Agreement and the transactions contemplated hereby as soon as
practicable following the date upon which the Registration Statement is
declared effective by the SEC. Subject to the fiduciary duties of the Board of
Directors of Parent under applicable law, Parent shall, through its Board of
Directors, recommend to the holders of Parent Common Stock approval of this
Agreement and the transactions contemplated by this Agreement.

SECTION 7.4 MANAGED OFFERING OF AFFILIATES' SHARES. Parent will exert
its best efforts, as soon as practicable subsequent to the Effective Time,
subject to then prevailing market conditions, to arrange for a managed
offering of all shares of Parent Common Stock received by Affiliates of the
Company as a result of the Merger through

<PAGE>

an underwriter to be selected by Parent and reasonably satisfactory to a
majority in interest of the Company's Affiliates so receiving Parent Common
Stock.

SECTION 7.5 NASDAQ NATIONAL MARKET. Parent use its best efforts to
effect, at or before the Effective Time, authorization for quotation on the
NASDAQ National Market, upon official notice of issuance, of the shares of
Parent Common Stock to be issued pursuant to the Merger.

SECTION 7.6 AGREEMENT TO COOPERATE. Subject to the terms and
conditions herein provided, each of the parties hereto shall cooperate and use
their respective best efforts to take, or cause to be taken, all action and to
do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable
efforts to obtain all necessary or appropriate waivers, consents and approvals
and SEC "no-action" letters, to effect all necessary registrations, filings
and submissions and to lift any injunction or other legal bar to the Merger
(and, in such case, to proceed with the Merger as expeditiously as possible),
subject, however, to obtaining the Required Statutory Approvals and the
Company Stockholders' Approval and the Parent Stockholders' Approval; and
PROVIDED, that nothing in this Section 7.6 shall affect any responsibility or
obligation specifically allocated to any party in this Agreement.

SECTION 7.7 PUBLIC STATEMENTS. The parties shall consult with each
other prior to issuing any press release or any written public statement with
respect to this Agreement or the transactions contemplated hereby and shall
not issue any such press release or written public statement prior to such
consultation, except that prior review and approval shall not be required if,
in the reasonable judgment of the party seeking to issue such release or
public statement, prior review and approval would prevent the timely
dissemination of such release or statement in violation of applicable law,
rule, regulation or policy of the NASDAQ National Market.

SECTION 7.8 CORRECTIONS TO THE PROXY STATEMENT/PROSPECTUS AND
REGISTRATION STATEMENT. Prior to the date of approval of the Merger by
stockholders of the Company and by the stockholders of Parent, each of the
Company, Parent and Subsidiary shall correct promptly any information provided
by it to be used specifically in the Proxy Statement/Prospectus and
Registration Statement that shall have become false or misleading in any
material respect and shall take all steps necessary to file with the SEC and
have declared effective or cleared by the SEC any amendment or supplement to
the Proxy Statement/Prospectus or the Registration Statement so as to correct
the same and to cause the Proxy Statement/Prospectus as so corrected to be
disseminated to the stockholders of the Company and/or stockholders of Parent,
in each case to the extent required by applicable law.

SECTION 7.9 AGREEMENTS OF AFFILIATES. By July 22, 1995, each of the
Company and Parent shall identify in a letter to the other, after
consultation with outside counsel, all Persons who it believes may be deemed
to be

<PAGE>

"affiliates" of it (and/or, in the case of Parent, of Subsidiary), as that
term, in the case of the Company, is (i) defined for purposes of paragraphs
(c) and (d) of Rule 145 under the Securities Act or (ii) used in and for
purposes of Accounting Series, Releases 130 and 135, as amended, of the SEC,
and in the case of Parent and Subsidiary, is used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the SEC. Each of the
Company and Parent shall use its best commercially reasonable efforts to cause
each Person who is so identified by it as a possible Affiliate, to deliver to
it, at least 30 days prior to the Closing Date, an executed copy of an
Affiliate's Agreement substantially in the form of the attached Exhibit IV-1 or
IV-2, as applicable (each an "Affiliate's Agreement"), and shall promptly
provide a copy of each such Affiliate's Agreement to the other. Prior to the
Closing Date, each of the Company and Parent shall amend and supplement its
letter referred to above and shall use all reasonable efforts to cause each
additional person who is identified therein as a possible affiliate to execute
and deliver a copy of the applicable Affiliate's Agreement in accordance with
the foregoing.

SECTION 7.10 ASSURANCES RELATING TO TAX MATTERS CERTIFICATE. Each of
Parent and the Company shall use all reasonable efforts to obtain, as promptly
as is practicable following the date hereof and in any event prior to the
Effective Time, such oral or written assurances as it reasonably deems
sufficient to enable it to execute and deliver to the other a certificate
substantially in the form of that attached as an exhibit to the tax matters
opinion of the other party's tax counsel referred to in Sections 8.2(i) and
8.3(g) hereof.

SECTION 7.11 DISCLOSURE SUPPLEMENTS. From time to time prior to the
Effective Time, and in any event immediately prior to the Effective Time, each
of Parent and the Company shall promptly supplement or amend its Disclosure
Schedule with respect to any matter hereafter arising that, if existing,
occurring, or known at the date of this Agreement, would have been required to
be set forth or described in such Disclosure Schedule or that is necessary to
correct any information in such Disclosure Schedule that is or has become
inaccurate. Notwithstanding the foregoing, if any such supplement or
amendment discloses a Material Adverse Effect, the conditions to the other
party's obligations to consummate the Merger set forth in Article VIII hereof
shall be deemed not to have been satisfied.

SECTION 7.12 SATISFACTION OF CONDITIONS PRECEDENT. Each of the parties
shall use its best efforts to cause the satisfaction on or before September 30,
1995, of the conditions precedent contained in Article VIII of this Agreement
that impose obligations on it or require action on its part or on the part of
any of its stockholders or Affiliates.

<PAGE>

ARTICLE VIII

CONDITIONS

SECTION 8.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS TO EFFECT THE MERGER.
The respective obligation of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Closing Date of the following
conditions:

(a) The Company shall have obtained the Company Stockholders'
Approval;

(b) Parent shall have obtained the Parent Stockholders'
Approval;

(c) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act, and no stop order
suspending such effectiveness shall have been issued and remain in
effect;

(d) No preliminary or permanent injunction or other order or
decree by any federal or state court which prevents the consummation of
the Merger shall have been issued and remain in effect (each party
agreeing to use its reasonable efforts to have any such injunction,
order or decree lifted);

(e) No action shall have been taken, and no statute, rule or
regulation shall have been enacted, by any state or federal government
or governmental agency in the United States which would prevent the
consummation of the Merger, and

(f) All governmental and third party consents, orders and
approvals legally required for the consummation of the Merger and the
transactions contemplated hereby (including without limitation all
Required Statutory Approvals) shall have been obtained and be in effect
at the Effective Time without any material limitations or conditions.

(g) As of the Closing Date, all blue sky filings as may be
required in order for the offer, issuance and sale of all of the shares
of Parent Common Stock to be issued pursuant to Section 3.1(a) hereof,
all of the options and stock purchase rights to purchase Parent Common
Stock to be issued pursuant to Section 3.1(c) hereof, and all of the
shares of Parent Common Stock issuable upon exercise of such options and
stock purchase rights, respectively, to be in full compliance with all
applicable state securities laws and regulations shall have been made
and shall be in effect and not subject to any suspension, revocation, or
stop order, as may be required in order for the offer, issuance and sale
of all such securities to be legally permitted under all such laws and
regulations.

<PAGE>

SECTION 8.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY TO EFFECT THE
MERGER. Unless waived by the Company, the obligation of the Company to effect
the Merger shall be subject to the fulfillment at or prior to the Closing Date
of the following additional conditions:

(a) Parent and Subsidiary shall have performed in all material
respects their agreements contained in this Agreement required to be
performed on or prior to the Closing Date and the representations and
warranties of Parent and Subsidiary contained in this Agreement shall be
true and correct in all material respects on and as of (i) the date made
and (ii) the Closing Date (except in the case of representations and
warranties expressly made solely with reference to a particular date);
and the Company shall have received a certificate of the Chairman of the
Board and Chief Executive Officer, the President or a Vice President of
Parent and of the President and Chief Executive Officer or a Vice
President of Subsidiary to that effect;

(b) The Company shall have received an opinion from Parker Duryee
Rosoff & Haft, counsel to Parent and Subsidiary, dated the Closing Date,
substantially in the form set forth in Exhibit V hereto;

(c) The Company shall have received "comfort" letters from
Deloitte & Touche LLP, independent public accountants for Parent and
Subsidiary, dated the date of the Proxy Statement/Prospectus, the
effective date of the Registration Statement and the Closing Date (or
such other date reasonably acceptable to the Company) with respect to
certain financial statements and other financial information included in
the Registration Statement in customary form;

(d) The Company shall have received an opinion from each of
Deloitte & Touche LLP, independent public accountants for Parent, and
Arthur Andersen LLP, independent certified public accountants for the
Company, dated the Closing Date, addressed to the Company, each in form
and substance reasonably satisfactory to the Company, stating that the
Merger will qualify as a "pooling of interests" transaction under
generally accepted accounting principles;

(e) The Company shall have received all of the Affiliate's
Agreements contemplated by Section 7.9 to have been received by it.

(f) Parent shall have furnished to the Company such additional
certificates, opinions and other documents as the Company may have
reasonably requested as to any of the conditions set forth in this
Section 8.2.

(g) The Company shall have received an opinion of Fechtor
Detwiler & Co., Inc., or another nationally recognized investment
banking firm, dated as of the Closing Date, that the Exchange Ratio is
fair, from a financial point of view, to the Company's public stockholders;

<PAGE>

(h) All of the shares of Parent Common Stock to be issued or
issuable in connection with the Merger (including shares subject to
Company Options and Company Stock Purchase Rights pursuant to Section
3.1(c) hereof) shall have been authorized for listing on the NASDAQ
National Market upon official notice of issuance;

(i) The Company shall have received an opinion of Bingham Dana &
Gould, dated the Effective Time, to the effect that (i) the Merger will
be treated for federal income tax purposes as a reorganization within
the meaning of Section 368(a) of the Code; (ii) each of Parent,
Subsidiary and the Company will be a party to the reorganization within
the meaning of Section 368(b) of the Code, (iii) no gain or loss will be
recognized by the Company as a result of the Merger, and (iv) no gain or
loss will be recognized by a stockholder of the Company as a result of
the Merger with respect to Company Common Stock converted solely into
Parent Common Stock. In rendering such opinion, Bingham Dana & Gould may
receive and rely upon representations contained in certificates of
Parent, Subsidiary, the Company and certain stockholders of the Company;
and

(j) Since the date of this Agreement there shall not have been
any Material Adverse Effect with respect to Parent, the likelihood of
which was not previously disclosed to the Company by the Parent.

(k) The Company shall have received from Parent an executed
original of a certificate substantially in the form of the attached
Exhibit VI.

(l) All proceedings in connection with the Merger and the other
transactions contemplated by this Agreement and all agreements,
instruments, certificates, and other documents delivered to the Company
by or on behalf of Parent or Subsidiary pursuant to this Agreement shall
be reasonably satisfactory to the Company and its counsel.

SECTION 8.3 CONDITIONS TO OBLIGATIONS OF PARENT AND SUBSIDIARY TO
EFFECT THE MERGER. Unless waived by Parent, the obligations of Parent and
Subsidiary to effect the Merger shall be subject to the fulfillment at or
prior to the Closing Date of the additional following conditions:

(a) The Company shall have performed in all material respects
its agreements contained in this Agreement required to be performed on
or prior to the Closing Date and the representations and warranties of
the Company contained in this Agreement shall be true and correct in all
material respects on and as of (i) the date made and (ii) the Closing
Date (except in the case of representations and warranties expressly
made solely with reference to a particular date); and Parent shall have
received a Certificate of the President and Chief Executive Officer or
of a Vice President of the Company to that effect;

<PAGE>

(b) Parent shall have received an opinion from Bingham Dana &
Gould, counsel to the Company, dated the Closing Date, substantially in
the form set forth in Exhibit VII hereto;

(c) Parent shall have received "comfort" letters from Arthur
Andersen & Co., LLP, independent certified public accountants for the
Company, dated the date of the Proxy Statement/Prospectus, the effective
date of the Registration Statement and the Closing Date (or such other
date reasonably acceptable to Parent) with respect to certain financial
statements and other financial information included in the Registration
Statement in customary form;

(d) Parent shall have received an opinion from each of Deloitte
& Touche LLP, independent public accountants for Parent, and Arthur
Andersen LLP, independent certified public accountants for the Company,
dated the Closing Date, addressed to Parent, each in form and substance
reasonably satisfactory to Parent, stating that the Merger will qualify
as a "pooling of interests" transaction under generally accepted
accounting principles;

(e) Parent shall have received all of the Affiliate's Agreements
contemplated by Section 7.9 to have been received by it.

(f) Parent shall have received an opinion of Janney Montgomery
Scott Inc., or another nationally recognized investment banking firm,
dated as of the Closing Date, that the Exchange Ratio is fair, from a
financial point of view, to Parent's public stockholders.

(g) Parent shall have received an opinion of Parker Duryee
Rosoff & Haft, dated the Effective Time, to the effect that (i) the
Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code; (ii)
each of Parent, Subsidiary and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code; (iii)
no gain or loss will be recognized by the Company, Parent or Subsidiary
as a result of the Merger, and (iv) no gain or loss will be recognized
by a stockholder of the Company as a result of the Merger with respect
to Company Common Stock converted solely into Parent Common Stock. In
rendering such opinion, Parker Duryee Rosoff & Haft may receive and rely
upon representations contained in certificates of Parent, Subsidiary,
the Company, and certain stockholders of the Company, respectively;

(h) The Company shall have furnished to Parent such additional
certificates, opinions and other documents as Parent may have reasonably
requested as to any of the conditions set forth in this Section 8.3.

<PAGE>

(i) Since the date of this Agreement there shall not have been
any Material Adverse Effect with respect to the Company, the likelihood
of which was not previously disclosed to the Parent by the Company.

(j) Parent shall have received from the Company an executed
original of a certificate substantially in the form of the attached
Exhibit VIII.

(k) All proceedings in connection with the Merger and the other
transactions contemplated by this Agreement and all agreements,
instruments, certificates, and other documents delivered to Parent by or
on behalf of the Company pursuant to this Agreement shall be reasonably
satisfactory to Parent and its counsel.

ARTICLE IX

TERMINATION, AMENDMENT AND WAIVER

SECTION 9.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date, whether before or after approval by the
stockholders of the Company and/or Parent:

(a) by mutual consent of Parent and the Company;

(b) unilaterally by Parent upon the occurrence of a Material
Adverse Effect with respect to the Company, the likelihood of which was
not previously disclosed to Parent by the Company prior to the date of
this Agreement, (a "Company Adverse Change"), whereupon absent the
Company's fraud or gross negligence in failing to disclose such to
Parent neither party shall have any obligation to the other for
Transaction Expenses;

(c) unilaterally by the Company upon the occurrence of a Material
Adverse Effect with respect to Parent, the likelihood of which was not
previously disclosed to the Company by Parent prior to the date of this
Agreement, (a "Parent Adverse Change"), whereupon absent Parent's fraud
or gross negligence in failing to disclose such to the Company neither
party shall have any obligation to the other for Transaction Expenses;

(d) unilaterally by Parent in the event of the Company's material
breach when made of any material representation or warranty of the
Company contained in this Agreement, or the Company's willful failure to
comply with or satisfy any material covenant or condition of Company
contained in this Agreement (each a "Company Breach"), or if the Company
fails to obtain the Company Stockholders' Approval;

<PAGE>

(e) unilaterally by the Company in the event of Parent's material
breach when made of any material representation or warranty contained in
this Agreement, or Parent's willful failure to comply with or satisfy
any material covenant or condition of Parent contained in this Agreement
(each a "Parent Breach"), or if Parent fails to obtain the Parent
Stockholders' Approval (the "Adverse Stockholders' Vote");

(f) unilaterally by the Company if at any time when the provisions
of this Agreement are in effect, the Company shall notify Parent (a
"Company Notification") that the Company elects not to proceed with the
Merger (other than as a result of a Parent Adverse Change or a Parent
Breach or the Company's failure to obtain the Company Stockholders'
Approval), in which event, subject to the provisions of Section 6.3(b),
the Company shall promptly pay Parent $500,000, together with Parent's
Transaction Expenses;

(g) unilaterally by Parent if at any time when the provisions of
this Agreement are in effect, the Parent shall notify the Company in
writing (a "Parent Notification") that Parent elects not to proceed with
the Merger Transaction (other than as a result of a Company Adverse
Change or a Company Breach or Parent's failure to obtain Parent
Stockholders' Approval), in which event Parent shall promptly pay the
Company $500,000, together with the Company's Transaction Expenses;

(h) unilaterally by either Parent or the Company if the Merger
Transaction is not consummated for any reason not specified or referred
to in the preceding provisions of this Section 9.1 by the close of
business on September 30, 1995 whereupon, subject to Section 6.3(b),
neither party shall have any obligation to the other for Transaction
Expenses.

Notwithstanding the provisions of Section 6.3 hereof or any other
provision hereof, in no event shall either party be required to pay
Transaction Expenses of the other in excess of $450,000.

SECTION 9.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either Parent or the Company, as provided in Section 9.1, this
Agreement shall forthwith become void and there shall be no further obligation
on the part of either the Company, Parent, Subsidiary (except as set forth in
this Section 9.2 and in Section 6.3 (with respect to certain fees, expense
reimbursement, options and rights due to Parent thereunder), the penultimate
sentence of Section 7.1 (with respect to confidential and non-public
information), and Sections 9.1 and 9.5, which shall survive such termination).
Nothing in this Section 9.2 shall relieve any party from liability for any
breach of this Agreement.

<PAGE>

SECTION 9.3 AMENDMENT. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto and in
compliance with applicable law.

SECTION 9.4 WAIVER. At any time prior to the Effective Time, the
parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto and (iii) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid if set forth in an
instrument in writing signed on behalf of such party.

SECTION 9.5 EXPENSES. Except as otherwise provided in Section 9.1 and
Section 6.3, whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such costs and expenses.

ARTICLE X

GENERAL PROVISIONS

SECTION 10.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
respective representations, warranties, obligations, agreements, and promises
of the parties contained in this Agreement and in any schedule, certificate,
or other document delivered pursuant to this Agreement, other than those that
by their terms are to be performed or otherwise are to apply after the
Effective Time, shall terminate as of, and shall not survive, the Effective
Time.

SECTION 10.2 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally
(effective upon delivery), mailed by registered or certified mail (return
receipt requested) (effective three business days after mailing), sent by a
reputable overnight courier service for next business day delivery (effective
the next business day) or sent via facsimile (effective upon receipt of the
telecopy in complete, readable form) to the parties at the following addresses
(or at such other address for a party as shall be specified by like notice):

(a) If to Parent or Subsidiary to:

Robotic Vision Systems, Inc.
425 Rabro Drive East
Hauppauge, New York 11788
Attention: Pat V. Costa, Chairman, President and CEO
FAX: (516) 273-1167

<PAGE>

with a copy to:

Parker, Duryee, Rosoff & Haft
529 Fifth Avenue
New York, New York 10017
Attention: Ira I. Roxland, Esq.
FAX: (212) 972-9487

(b) If to the Company, to:

Acuity Imaging, Inc.
9 Townsend West
Nashua, New Hampshire 03063
Attention: Ofer Gneezy, President
FAX: (603) 598-4684

with a copy to:

Bingham Dana & Gould
150 Federal Street
Boston, Massachusetts
Attention: David L. Engel, Esq.
FAX: (617) 951-8736

SECTION 10.3 INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

SECTION 10.4 MISCELLANEOUS. This Agreement (including the documents and
instruments referred to herein) (i) constitutes the entire agreement and
supersedes all other prior agreements and understandings, both written and
oral, among the parties, or any of them, with respect to the subject matter
hereof (including without limitation a letter agreement dated as of January
31, 1995, as amended on March 30 and April 24, 1995, between Parent and the
Company, but excluding the Confidentiality Agreement); (ii) shall not be
assigned by operation of law or otherwise, and any attempt to do so shall be
void; and (iii) shall be governed in all respects, including validity,
interpretation and effect, by the laws of the State of Delaware (without
giving effect to the provisions thereof relating to conflicts of law).

SECTION 10.5 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement. In pleading or proving
this Agreement, it shall not be necessary to produce or account for more than
one fully executed original.

<PAGE>

SECTION 10.6 PARTIES IN INTEREST. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.

SECTION 10.7 CAPTIONS. The captions of sections and subsections of
this Agreement are for reference only, and shall not affect the interpretation
or construction of this Agreement.

SECTION 10.8 ADDITIONAL DEFINED TERMS. As used in this Agreement, the
following defined terms have the respective meanings ascribed to them below.

"Financial Advisor" when used with respect to Parent or the Company,
means Janney Montgomery Scott Inc., in the case of Parent, and Fechtor,
Detwiler & Co., Inc., in the case of the Company.

"Material Adverse Effect" means, with respect to a party, a material
adverse effect on the business, operations, properties, assets, condition
(financial or otherwise), results of operations, or prospects of it and its
Subsidiaries, on a consolidated basis, or on its ability to consummate the
transactions contemplated hereby; PROVIDED that, as to the Company, a Material
Adverse Effect shall not be deemed to have occurred as a result of any facts or
circumstances disclosed on the Disclosure Schedule of the Company attached
hereto as Annex A or if (i) as to its first and second fiscal quarters of 1995,
its results of operations reflect an aggregate operating loss (without giving
effect to expenses of the Merger) of no more than $700,000 in both such quarters
and (ii) its results of operations or projected results of operations (as
projected in good faith by the Company) for its third fiscal quarter of 1995,
reflect or project (as applicable) an operating loss (without giving effect to
expenses of the Merger) of no more than $500,000 for such fiscal quarter; and a
Material Adverse Effect shall be deemed to have occurred (the likelihood of
which had not been previously disclosed to Parent by the Company prior to the
date of the Merger Agreement), if the Company's results of operations or
projected results of operations (as projected in good faith by the Company) for
its third fiscal quarter of 1995 reflect or project (as applicable) an operating
loss (without giving effect to expenses of the Merger) in excess of $500,000 for
such fiscal quarter.

"Person" means a natural person, corporation, an association, a
partnership, an organization, a business, a government or political
subdivision thereof, a governmental agency or any other entity.

"SEC Reports", when used with respect to Parent or the Company, means:

(i) in the case of Parent, (A) its Annual Reports on Form 10-K
for its fiscal years ended September 30, 1994, 1993 and 1992,
respectively, each as filed with the SEC, (B) its annual reports to
stockholders for the two most recent years, each as provided to its
stockholders, (C) all proxy and information statements relating to (1)
all meetings of its stockholders (whether annual or special) and (2) all
actions by written consent in lieu of a meeting of its stockholders, in
each case from December 31, 1991 until the date of this Agreement, (D)
its Quarterly Report on Form 10-Q for the quarter ended December 31,
1994, (E) all other reports or registration statements filed by Parent
with the SEC since December 31, 1991 (other than registration statements
on Form S-8), and (F) any Quarterly Report on Form 10-Q delivered to the
Company pursuant to the final sentence of Section 4.5(a) hereof, but in
each case only from and after the time of such delivery; and

(ii) in the case of the Company, (A) its Annual Reports on Form
10-K or KSB for its fiscal years ended December 31, 1994, 1993, 1992 and
1991, respectively, each as filed with the SEC, (B) its annual reports
to stockholders for the two most recent years, each as provided to its
stockholders, (C) all proxy and

<PAGE>

information statements relating to (1) all meetings of its stockholders
(whether annual or special) and (2) all actions by written consent in lieu
of a meeting of its stockholders, in each case from December 31, 1991 until
the date of this Agreement, (D) its Quarterly Reports on Form 10-QSB for
the quarters ended April 2, July 2 and October 1, 1994, respectively, (E)
all other reports or registration statements filed by the Company with the
SEC since December 31, 1991 (other than registration statements on Form
S-8), and (F) any Annual Report on Form 10-KSB and any Quarterly Report on
Form 10-QSB, in each case as delivered to Parent pursuant to the final
sentence of Section 4.5(a) hereof, but in each case only from and after the
time of such delivery.

<PAGE>

IN WITNESS WHEREOF, Parent, Subsidiary and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized
as of the date first written above.

ATTEST: ROBOTIC VISION SYSTEMS, INC.

/s/Robert H. Walker By: /s/Pat V. Costa
- --------------------------- ---------------------------
Name: Robert H. Walker Name: Pat V. Costa
Title: Secretary Title: Chairman,

ATTEST: RVSI ACQUISITION CORP.

/s/Robert H. Walker By: /s/Pat V. Costa
- --------------------------- ---------------------------
Name: Robert H. Walker Name: Pat V. Costa
Title: Secretary Title: President

ATTEST: ACUITY IMAGING INC.

/s/John A. Rogers By: /s/Ofer Gneezy
- --------------------------- ---------------------------
Name: John A. Rogers Name: Ofer Gneezy
Title: VP - Finance Title: President

<PAGE>

Exhibit 23.1

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Post Effective Amendment No. 2 to Registration
Statement No. 33-76320 of Robotic Vision Systems, Inc. of our report dated
December 14, 1994 appearing in the Prospectus, which is part of such
Registration Statement, and to the reference to us under the heading "Experts"
in such Prospectus.

Deloitte & Touche LLP

Jericho, New York
July 20, 1995

<PAGE> Exhibit 23.3

CONSENT

We hereby consent to the reference to our Firm under the caption
"Business of RVSI - Litigation" in the preliminary Prospectus comprising a
portion of that certain Registration Statement on Form S-1 (File No.
33-76320), as amended, of Robotic Vision Systems, Inc.

MORRISON LAW FIRM

by: /s/
---------------------------------
A Member of the Firm

Mt. Vernon, New York
July 21, 1995