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U.S. SETTLES LAWSUIT FILED AGAINST MILITARY CONTRACTORS WASHINGTON, D.C. -- Varo Inc., a subsidiary of Imo Industries Inc., will pay the United States $2 million to settle allegations that Varo, its Ni-Tec division, and Optic Electronic Corporation violated the False Claims Act by delivering to the Army components for night vision equipment that did not meet the reliability and testing requirements of military contracts, the Department of Justice and the Dallas, Texas, U.S. Attorney's office announced today. Assistant Attorney General Frank W. Hunger of the Civil Division and Dallas U.S. Attorney Paul E. Coggins said the settlement resolves a qui tam false claims lawsuit brought against Varo, Imo Industries Inc., Ni-Tec, Optic-Electronic Corporation and six former or current Ni-Tec employees in U.S. District Court in Dallas, Texas. The suit was filed by a former employee of Ni-Tec, which Optic-Electronic founded in 1961 and Varo later acquired. Varo, Optic-Electronic and Ni-Tec are located in Garland, Texas. Varo will pay the United States $2 million to resolve the matter, while Imo, its parent, guaranteed the payment. The Department said the firms manufactured image intensifier tubes used in the Army's night vision goggles and aviator's night vision imaging systems. A government investigation found that over several years the firms submitted false quality control reports to the Army, including false failure analysis reports and false product assurance and test reports alleging that the components met all reliability requirements when in fact they did not. Hunger said the firms worked with the Army to recall and retest more than 1,000 image intensifier tubes from the Army's inventory and replaced non-conforming tubes with those that met military specifications. Night vision goggles are a light-weight night vision system worn on the head that provides enhanced imagery so the wearer can perform such tasks as walking, driving, weapon firing, short range surveillance, map reading, vehicle maintenance and administering medical aid with light from the moon and stars. The aviator's night vision imaging system is an image intensifier system used by military helicopter pilots to aid their vision during low level flights at night. The qui tam provisions of the False Claims Act permit a private citizen to file a suit on behalf of the federal government and collect a portion of the money if the government's action is successful. The suit was filed in March 1995. The government intervened and took over the lawsuit on May 31, 1996. The case was jointly investigated by the Federal Bureau of

Investigation's Dallas, Texas, office and the Defense Criminal Investigative Service's Southwest Field Office at Fort Worth, Texas. ##### 96-346