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                              JOINT VENTURE AGREEMENT

     THIS JOINT VENTURE AGREEMENT (the "Agreement") is dated as of June 10, 
1997 (the "Effective Date") among Quantum Magnetics, Inc., a California 
corporation ("QM"), Biomagnetic Technologies, Inc., a California corporation 
("BTI"), and Mark S. DiIorio, Ph.D. ("DiIorio").

     WHEREAS QM and BTI have entered into that certain non-binding letter of
     intent dated March 27, 1997, a copy of which is attached hereto as Exhibit
     1 (the "Letter of Intent"); and

     WHEREAS the Letter of Intent contemplates the formation of a new
     corporation, referred to herein as Magnesensors, Inc. ("MSI"), and that
     DiIorio will serve as President and Chief Executive Officer of MSI pursuant
     to an employment contract generally outlined in the Letter of Intent; and

     WHEREAS the Letter of Intent contemplates that its terms will be
     implemented by various agreements; and

     WHEREAS this Agreement is intended by QM, BTI, DiIorio and MSI to serve 
     as the coordinating agreement for the implementation of the Letter of 
     Intent, it being understood that after this Agreement is signed, the 
     terms of this Agreement shall supersede the Letter of Intent in each and 
     every particular;

NOW THEREFORE the parties signing below agree as follows:

1.   ENTIRE AGREEMENT. This Agreement and the Exhibits attached hereto shall
     constitute the entire agreement among the parties hereto with respect to
     the subject matter hereof and supersede all prior agreements,
     understandings, offers and negotiations, including the Letter of Intent.

2.   FORMATION OF MAGNESENSORS, INC. The Articles of Incorporation, attached
     hereto as Exhibit 2, were executed by Mark S. DiIorio as the sole
     incorporator of MSI who caused them to be filed with the California
     Secretary of State on June 5, 1997.

3.   WRITTEN CONSENT ACTION OF SOLE INCORPORATOR. Immediately upon execution of
     this Agreement, DiIorio shall execute the form of Action by Written Consent
     of Sole Incorporator attached hereto as Exhibit 3 electing the following
     persons to the Board of Directors of MSI: D. Scott Buchanan and Herman
     Bergman (designated by BTI), Dale Sheets and Lowell Burnett (designated by
     QM), and Mark S. DiIorio.

4.   UNANIMOUS WRITTEN CONSENT ACTION OF DIRECTORS. Each of QM, BTI and DiIorio
     shall use its or his best efforts to cause the five directors of MSI's
     Board of Directors to execute the form of Written Consent Action of
     Directors attached hereto as Exhibit 4.

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5.   UNANIMOUS WRITTEN CONSENT ACTION OF SHAREHOLDERS. Each of QM, BTI and
     DiIorio shall execute the Unanimous Written Consent Action of Shareholders
     attached hereto as Exhibit 5.

6.   AGREEMENT TO ELECT DIRECTORS DESIGNATED BY QM AND BTI. So long as the
     parties to this Agreement own stock of MSI, they shall each use their
     respective best efforts to assure the election to the Board of MSI: (a) two
     individuals designated by BTI, (b) two individuals designated by QM, and,
     (c) so long as he remains the CEO of MSI, pursuant to the Employment
     Agreement attached hereto as Exhibit 8, DiIorio.

7.   LOAN GUARANTY. Each of QM and BTI hereby agrees to guarantee for three
     years one-half of a $200,000 working capital line of credit from Silicon
     Valley Bank, or a comparable financial institution acceptable to the Board
     of Directors of MSI. The liability of QM and BTI is to be several as to
     one-half of the aggregate amount of the line of credit, and not joint and
     several. If MSI has not pursued such line of credit and caused to be
     presented to each of QM and BTI the requisite documents to guarantee such
     line of credit by December 31, 1997, then neither of QM nor BTI shall have
     an obligation to guarantee any such line of credit. Each of QM and BTI
     hereby agrees to provide such financial statements and other information as
     is reasonably required by the financial institution to facilitate the
     issuance of such a line of credit to MSI.

8.   BYLAWS OF MSI. The bylaws attached hereto as Exhibit 6 shall be the bylaws
     of MSI.

9.   BUY-SELL AGREEMENT. QM, BTI, DiIorio and MSI shall execute the Buy-Sell
     Agreement attached hereto as Exhibit 7.

In addition to the foregoing, immediately following execution of this Agreement,
the parties agree to execute the following documents by personal execution, or
by causing the appropriate corporate officers to execute, as appropriate, each
of the following documents which contains a signature line for such party to
this Agreement:

10.  EMPLOYMENT CONTRACT FOR MARK S. DIIORIO. DiIorio and the officers of MSI
     shall execute the employment agreement for Mark S. DiIorio, attached hereto
     as Exhibit 8.

11.  EMPLOYMENT CONTRACTS FOR OTHER EMPLOYEES. Other employees of MSI may 
     include ***, ***, ***, and ***. QM agrees that if *** is employed by MSI 
     in 1997, QM will pay for reasonable moving costs of relocating *** to 
     San Diego County.

12.  1997 INCENTIVE STOCK OPTION PLAN. The Board of Directors and officers MSI
     shall adopt and ratify the 1997 Incentive Stock Option Plan in
     substantially the form attached as Exhibit 9, together with the form of
     Grant of Incentive Stock Option, form of Grant of Nonstatutory Stock
     Option, and form of Notice of Exercise attached thereto.

13.  STOCK ISSUANCE DOCUMENTATION. Each of QM, BTI, DiIorio and MSI shall
     execute applicable stock issuance-related documents attached hereto as
     Exhibit 10, Exhibit 11,

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     Exhibit 12, Exhibit 13 and Exhibit 14 to effect the purchase and sale of
     shares of common stock of MSI to: QM (40,000 shares), BTI (40,000 shares)
     and DiIorio (25,000 shares).

     Each of QM, BTI and DiIorio shall pay to MSI the cash consideration set
     forth in its or his respective stock subscription agreement on the
     Effective Date.

14.  SALE OF EQUIPMENT BY QM. QM shall execute the Bill of Sale to MSI attached
     hereto as Exhibit 15 for the equipment QM is selling, delivering and
     installing to or at MSI. Consideration for such sale shall be the
     promissory note which, along with the applicable UCC-1, both found at
     Exhibit 16, shall be executed by MSI.

15.  SALE OF EQUIPMENT BY BTI. BTI shall execute the Bill of Sale to MSI
     attached hereto as Exhibit 17 for the equipment BTI is selling to or at 
     MSI.  Consideration for such sale shall be the promissory note which, along
     with the applicable UCC-1, both found at Exhibit 18, shall be executed by 
     MSI.

16.  GRANT OF PATENT ASSIGNMENTS AND LICENSES, AND TRANSFER OF KNOW HOW. Each of
     QM, BTI and MSI shall execute the respective Patent and Patent Application
     Assignments, Licenses, Sublicenses, and Know How Transfer Agreements in the
     forms set forth in Exhibit 19 (relating to BTI agreements) and Exhibit 20
     (relating to QM agreement), respectively.

17.  LICENSE OF CERTAIN INTELLECTUAL PROPERTY RIGHTS UPON ACQUISITION BY QM. If
     QM should ever exercise its rights under the Buy Sell Agreement (Exhibit
     7), MSI will transfer to BTI non-exclusive licenses allowing BTI to use and
     exploit some of the intellectual property previously transferred to MSI by
     BTI. The form of such conditional nonexclusive license to use and exploit
     such property is set forth in Exhibit 21, and shall be executed
     immediately after this Agreement is executed, by MSI and BTI.

18.  MSI COVENANT NOT TO COMPETE AGAINST QM. MSI shall execute in favor of QM an
     agreement in the form attached as Exhibit 22 which obligates MSI to refrain
     from competing in a specified line of business.

19.  MSI COVENANT NOT TO COMPETE AGAINST BTI. MSI shall execute in favor of BTI
     an agreement in the form attached as Exhibit 23 which obligates MSI to
     refrain from competing in a specified line of business.

20.  QM REQUIREMENTS CONTRACT FOR HIGH-T(c) SUPERCONDUCTING RESEARCH AND 
     DEVICES. QM and MSI shall execute a three-year agreement titled 
     "Requirements Contract for High-T(c) Superconducting Research and 
     Devices" in the form set forth as Exhibit 24.

21.  BTI REQUIREMENTS CONTRACT FOR HIGH-T(c) SUPERCONDUCTING DEVICES DESIGN, 
     FABRICATION AND TESTING. BTI and MSI shall execute an 18-month agreement 
     titled "Requirements Contract for High-T(c) Superconducting Devices 
     Design, Fabrication and Testing" in the form set forth as Exhibit 25.

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22.  REPRESENTATIONS AND WARRANTIES OF THE PARTIES. Each party represents and
     warrants to the other parties with respect to itself as follows:

     a.   AUTHORIZATION. The execution, delivery and performance of this
     Agreement and all of the other documents contemplated by this Agreement,
     referenced herein or to be executed in connection herewith (the "Related
     Agreements") to which such party is a party, by such party, and the
     consummation by it of the transactions contemplated hereby and thereby have
     been duly and validly authorized by all necessary action of such party, and
     this Agreement when executed and delivered, shall constitute the legal,
     valid and binding obligations of such party, enforceable against such party
     in accordance with its terms, and each of the Related Agreements to which
     such party is a party, and upon execution and delivery by such party, will
     be legal, valid and binding obligation of such party, enforceable against
     such party in accordance with its terms.

     b.   NO CONFLICT WITH OTHER INSTRUMENTS OR AGREEMENTS. Neither the
     execution, delivery and performance of this Agreement, the Related
     Agreements to which such party is a party, nor the consummation of the
     transactions contemplated hereby or thereby, will result in a breach or
     violation of, or constitute a default under, such party's charter documents
     or any material agreement to which such party is a party, or by which it is
     bound or to which any of its property is subject.

23.  SEVERABILITY. The provisions of this Agreement are severable and in the
     event that any of the provisions of this Agreement are determined to be
     invalid or unenforceable under any controlling body of law, such invalidity
     or unenforceability shall not in any way affect the validity or
     enforceability of the remaining provisions hereof.

24.  APPLICABLE LAW. This Agreement shall be governed by and construed in
     accordance with the laws of the State of California, without regard to its
     choice of law provisions, and any applicable laws of the United States. As
     respects the interpretation of this Agreement and each of the implementing
     agreements referenced in this document, this Agreement shall be interpreted
     in strict accordance with its terms. Each party hereto was either
     represented by an attorney or voluntarily waived his, her or its right to
     be so represented. No inference or rule of construction shall be applied to
     the interpretation of this Agreement relating to the party which prepared
     the draft Agreement, nor to the degree of any party's participation in the
     negotiation hereof.

25.  WAIVER. The waiver by any party hereto of any right hereunder, or of a
     breach by any other party hereto, shall not be deemed a waiver of any other
     right hereunder or of any breach or failure by said or any other party,
     whether of a similar nature or otherwise.

26.  COUNTERPARTS. This Agreement may be executed in two or more counterparts,
     each of which shall be deemed an original, but all of which together
     constitute one and the same instrument.

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27.  DISPUTE RESOLUTION. In the event of any dispute regarding this Agreement or
     any implementing agreement, the parties agree to resolve the dispute
     pursuant to the rules of the American Arbitration Association in San Diego
     County pursuant to California law.


Quantum Magnetics, Inc.

By /s/ Dale Sheets                                     Dated June 10, 1997
  ----------------------------------------                         
Biomagnetic Technologies, Inc.

By /s/ D. Scott Buchanan                               Dated June 10, 1997
   ---------------------------------------                        


   /s/ Mark S. DiIorio                                 Dated June 10, 1997
   ---------------------------------------                        
Mark DiIorio


Agreed and Accepted:

Magnesensors, Inc.

      By  /s/ Mark S. DiIorio                          Dated June 10, 1997
       -----------------------------------              

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