Patent And Technology License Agreement - JMAR TECHNOLOGIES INC - 3-31-2005

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					                                               EXHIBIT 10.12

                       PATENT AND TECHNOLOGY LICENSE AGREEMENT

                                              By and Between:

                                POINTSOURCE TECHNOLOGIES, LLC
                                             AND
                                   JMAR TECHNOLOGIES, INC.

                                               January 25, 2005



                                              Table of Contents

      1.     Definitions...............................................................                 2
      2.     License Grants............................................................                 5
      3.     Royalties to be Paid to PointSource.......................................                 6
      4.     Payments and Recordkeeping................................................                 8
      5.     Additional Obligations of JMAR............................................                 9
      6.     Additional Obligations of PointSource.....................................                 9
      7.     Mutual Release............................................................                10
      8.     Intellectual Property.....................................................                12
      9.     Representations and Warranties............................................                13
      10.    Indemnification...........................................................                14
      11.    Confidential Information..................................................                15
      12.    Publicity.................................................................                18
      13.    Term and Termination......................................................                18
      14.    Disclaimers...............................................................                21
      15.    Disclaimer of Warranty....................................................                21
      16.    Dispute Resolution........................................................                22
      17.    Limitations on Liability..................................................                23
      18.    Insurance.................................................................                24
      19.    Governing Law; Venue and Jurisdiction.....................................                24
      20.    Relationship of the Parties...............................................                25
      21.    Assignability.............................................................                25
      22.    Notices...................................................................                26
      23.    Waiver....................................................................                26
      24.    Entire Agreement..........................................................                26
      25.    Compliance with Law.......................................................                27
      26.    Severability..............................................................                27
      27.    Counterparts and Facsimile................................................                27
      28.    Force Majeure.............................................................                27
      29.    Rules of Construction.....................................................                28




                                                        i


                       PATENT AND TECHNOLOGY LICENSE AGREEMENT
                               POINTSOURCE TECHNOLOGY

This License Agreement made and entered into and effective as of this 25th day of January, 2005 (the "Effective
Date") by and between PointSource Technologies, LLC., a Delaware limited liability company, having its
principal place of business at 514 Via de la Valle, Solana Beach, CA 92075 (hereinafter, "PointSource"), and
JMAR Technologies, Inc., a Delaware corporation having its principal place of business at 5800 Armada Drive,
Carlsbad, CA 92008 (hereinafter "JMAR"). PointSource and JMAR are referred to herein individually as a
"Party" and collectively as the "Parties."

                                               WITNESSETH:
WHEREAS, PointSource has designed and developed proprietary systems and methods referred to by the
Parties as the "PointSource Technology," which is defined below, and which will facilitate the detection and
classification of microorganisms; and

WHEREAS, PointSource holds patent and other Intellectual Property rights relating to the PointSource
Technology; and

WHEREAS, subject to the terms and conditions contained herein, JMAR desires to obtain a license from
PointSource that would allow JMAR to utilize PointSource's Intellectual Property rights to manufacture, market
and sell the PointSource Technology and components thereof; and

WHEREAS, the parties have previously entered into a Letter Agreement, dated January 7, 2005 (the "Letter
Agreement") setting forth key terms and conditions under which such a license shall be granted.

NOW THEREFORE, in consideration of the premises and of the respective agreements and covenants
contained in this License Agreement, the Parties hereby agree as follows:

                                                           -1-


1. DEFINITIONS

1.1 As used in this License Agreement, the following terms when capitalized shall have the following meanings
(such meanings to be equally applicable to both the singular and the plural forms of the defined term):

1.1.1 "AFFILIATE" shall mean with respect to any specified Person, any other Person that it owns or is owned
by, or controls or is controlled by, directly or indirectly through one or more intermediaries, or is under common
control with, such specified Person. For purposes of the immediately preceding sentence, the term
"control" (including, with correlative meanings, the terms "controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through ownership of voting securities, by
contract or otherwise. Ownership, direct or indirect, of at least fifty percent of the voting stock ordinarily entitled
to vote in the election of directors of a business entity or, if no such stock is issued, of at least fifty percent of the
ownership interest in the business entity, shall constitute ownership thereof. An Affiliate shall not be considered to
be a third party under this License Agreement.

1.1.2 "CHANGE OF CONTROL" shall mean a transaction or a series of related transactions in which (i) one or
more Persons who did not previously own at least a fifty percent (50%) interest in a Party to this License
Agreement obtain at least a fifty percent (50%) interest in such Party, including, without limitation, a transfer of all
or substantially all of such Party's assets, whether by sale, merger, or otherwise, or (ii) a Party acquires, by
merger, acquisition of assets or otherwise, all or any portion of another Person such that the market value of such
Party immediately after the close of such transaction is, as a result of such transaction, greater than two times the
market value of such Party immediately prior to such transaction.

1.2 "CONFIDENTIAL INFORMATION" shall mean any and all information and material disclosed by
PointSource (the "Disclosing Party") to JMAR (the "Receiving Party") or obtained by Receiving Party through
inspection or observation of Disclosing Party's property or facilities whether in writing, or in oral, graphic,
electronic or any other form, that is marked or described as, identified in writing as, or provided under
circumstances indicating it is, confidential or proprietary. Confidential Information includes, but is not limited to,
(a) trade secret, know-how, idea, invention, process, technique, algorithm, program (whether in source code or
object code form), hardware, device, design, schematic, drawing, formula, data, plan, strategy and forecast of,
and (b) technical, engineering, manufacturing, product, marketing, servicing, financial, personnel and other
information and materials of, Disclosing Party and its employees, consultants, investors, affiliates, licensors,
suppliers, vendors, customers, clients and other persons and entities.

1.3 "EFFECTIVE DATE" shall mean January 25, 2005.

1.4 "INTELLECTUAL PROPERTY" shall mean all worldwide (a) patent and patent applications, (b) copyrights
and registrations and applications for registration thereof, (c) mask works and registrations and applications for
registration thereof, (d) computer software, data and

                                                          -2-


documentation, (e) trade secrets and confidential business information, whether patentable or nonpatentable and
whether or not reduced to practice, know-how, research and development information, copyrightable works,
financial, marketing and business data, pricing and cost information, and (f) other statutory and non-statutory
proprietary rights, including moral rights and industrial rights, and all registrations, filings, applications and
recordings for any of the foregoing (including remedies against infringements thereof and rights of protection of
interest therein under the laws of all jurisdictions). Notwithstanding the foregoing, the term "Intellectual Property"
specifically excludes the goodwill of any business, and all common-law rights relating thereto.

1.5 "LICENSED PRODUCT" shall mean any scattered-radiation-based product used to detect or classify
microorganisms in water (including, without limitation, JMAR's BioSentry product and successors and
replacements thereof) or any product that falls within the scope of, or utilizes any method or process which falls
within the scope of, any of the claims of the licensed patents, or that incorporates, or is itself, the subject invention
of any of the licensed patents, now or hereafter made or used, imported, leased, sold or otherwise disposed of,
by or on behalf of JMAR (including any finished product and any finished product used in the manufacture of
another product).

1.6 "NET SALES" shall mean the amounts billed or charged for Licensed Products by JMAR by reason of the
sale, lease or other disposition of the Licensed Products. Provided that:

1.6.1 Licensed Products shall be considered sold, leased or otherwise disposed of when shipped, billed out, or
paid for, whichever occurs first.

1.6.2 Net Sales shall be calculated after deducting from gross revenues OF the Licensed Products: (i) normal and
customary cash and trade discounts and credits for returns and allowances actually given in an arms-length
transaction; (ii) actual and reasonable outbound transportation charges actually paid by JMAR or reasonable
allowances made therefore; (iii) insurance costs for the Licensed Products sold (specific to the Licensed Products
themselves); (iv) product packaging costs; and (v) governmental sales taxes, excise taxes or import/export duties
imposed upon and actually paid by JMAR with respect to raw materials used by JMAR in producing Licensed
Products.

1.6.3 Net Sales shall also exclude any "extras" that: (i) have a quantifiable market value; (ii) are not necessary for
the operation of the Licensed Products for their intended purpose; (iii) are not covered by or included in any of
the PointSource Intellectual Property Rights; and (iv) are associated with functions that do not involve the use of
any scattered-radiation-based technology used to detect or classify microorganisms in water.

1.7 "NOTICE" shall mean any notice permitted or required under this License Agreement. All notices shall be
sufficiently given when given in accordance with Section 22 of this License Agreement.

                                                          -3-


1.8 "PERSON" shall mean any natural person, partnership, joint venture, corporation, limited liability entity, trust,
unincorporated organization government, agency or other entity (including a governmental entity or instrumentality
of a government).

1.9 "POINTSOURCE INTELLECTUAL PROPERTY RIGHTS" shall collectively refer to the PointSource
Patent Rights and the PointSource Technology Rights.

1.10 "POINTSOURCE PATENT RIGHTS" shall mean the patent or patent applications listed in Schedule A
hereto and any continuation or divisional thereof.

1.11 "POINTSOURCE TECHNOLOGY RIGHTS" shall mean PointSource' legal rights in and to the
PointSource Technology, including copyright rights, database rights, trade secret rights, the name "Vigilant," and
any other intellectual property right (other than patent rights), but expressly does not include: (i) any rights in and
to any data, algorithms, software, or other information contained on or in the hard drives, memories or other
storage devices of any computers except for Scientific Data; and (ii) any Intellectual Property licensed to
PointSource by William Fitzgerald ("Fitzgerald") or Wyatt Technology Corporation ("Wyatt").

1.12 "POINTSOURCE TECHNOLOGY" shall mean all of the following assets owned by PointSource: know-
how concerning methods, processes and materials, technical information, algorithms, formulae, designs, drawings,
specifications, records, documentation and all other information that is useful in manufacturing, assembling or
selling Licensed Products currently contained in the storage space in San Marcos and Solana Beach, California
rented by PointSource. PointSource Technology shall specifically exclude: (i) any assets of the type listed above
in this Section 1.12 that may be contained on or in the hard drives, memories or other storage devices of any
computers except for Scientific Data and (ii) any technology that PointSource cannot license or otherwise transfer
to JMAR without the permission of or payment of royalties to Fitzgerald or Wyatt.

1.13 "SCIENTIFIC DATA" shall mean any and all data and algorithms used in the operation of a scattered-
radiation-based product for detecting or classifying microorganisms in water, or used to analyze data received
from such a scattered-radiation-based products, that is in existence as of the Effective Date and is stored on a
hard drive, memory or other storage device of any of the computers located in the San Marcos or Solana Beach
storage spaces. For clarity, Scientific Data shall not include any algorithm, data or other information that
(i) is financial in nature or that relates to the business or operation of PointSource; (ii) is of a personal or
administrative nature (including any personal information of Quist or Drake); or (iv) includes or embodies any
intellectual property of Wyatt or Fitzgerald.

1.14 "SCIENTIFIC COMPUTERS" shall mean those computers that contain Scientific Data.

1.15 "SUBLICENSE" shall mean a license under any or all of the PointSource Intellectual Property Rights
granted by JMAR to an authorized third party in accordance with the terms and conditions of this License
Agreement, and shall include any amendment, modification or extension thereof.

                                                         -4-


1.16 "SUBLICENSEE" shall mean any third party to whom JMAR has properly granted a Sublicense in
accordance with the terms and conditions set forth herein.

1.17 "TANGIBLE PROPERTY" shall mean all equipment, Scientific Computers, furniture, laboratory
instruments, research results, assignable application software licenses for software resident on said Scientific
Computers, inventory, work in process and finished goods owned by PointSource and located in the storage
space in San Marcos, California rented by PointSource, as well as the Scientific Computers located in the Solana
Beach storage location. For clarity, Tangible Property shall include the most recent version of the Vigilant product
and its associated computer, but shall not include prior versions of the Vigilant Product or their associated
computers that are located in the Solana Beach storage location.

1.18 "TRANSACTION DOCUMENTS" shall mean the Letter Agreement, and a Warrant, a Registration Rights
Agreement, and a Securities Purchase Agreement entered into concurrently herewith.

2. LICENSE GRANTS

2.1 GRANT. Subject to the terms and conditions contained herein, PointSource hereby grants to JMAR an
exclusive, non-transferable, world-wide, royalty-bearing license under the PointSource Intellectual Property
Rights, for the Term:

2.1.1 to make, have made use, import, sell, offer for sale, lease and otherwise dispose of Licensed Products; and

2.1.2 to grant Sublicenses of such license rights to a third party, but only for so long as the license granted herein
remains exclusive, and in accordance with the terms and conditions set forth in Section 2.3.

2.2 ROYALTY REQUIREMENT. No license is granted pursuant to Section 2.1 with respect to any particular
Licensed Product, unless all royalties attributable to said Licensed Product are paid as required by Sections 3
and 4 of this License Agreement.
2.3 SUBLICENSES. During the Term of this License Agreement and subject to the terms and conditions
contained herein, JMAR may grant Sublicenses to a sublicensee, provided that:

2.3.1 Sublicenses granted hereunder shall only be effective when that third party enters into a sublicense
agreement in writing, which sublicense agreement shall at a minimum contain all of the terms and conditions of this
License Agreement that inure to the benefit and protection of PointSource, shall preserve the right of PointSource
to receive royalties for the acts carried out thereunder as if such acts were being carried out by JMAR under this
License Agreement, and shall expressly provide that PointSource shall be a third-party beneficiary of such
sublicense agreement with the right to enforce PointSource's rights and remedies directly against such
Sublicensee;

                                                          -5-


2.3.2 JMAR shall remain responsible for the payment of royalties due to PointSource as a result of any
Sublicensee activities under the Sublicense;

2.3.3 no Sublicense may be made during any time that JMAR is in default with respect to any of its obligations to
PointSource under this License Agreement;

2.3.4 such Sublicense agreement shall be made using such forms as may be provided by or approved in writing
by PointSource, which approval shall not be unreasonably withheld;

2.3.5 such Sublicense agreement shall refer to and incorporate by reference this License Agreement;

2.3.6 no Sublicense shall be approved by PointSource unless JMAR provides PointSource with the identity of
the proposed Sublicensee; and

2.3.7 JMAR shall promptly furnish to PointSource a true, exact and complete copy of the executed Sublicense
agreement to any such Sublicensee.

2.4 EFFECT OF TERMINATION. Termination of the license granted under this License Agreement shall
automatically terminate all Sublicenses which may have been granted by JMAR under this License Agreement
unless: (i) PointSource in its sole discretion agrees to allow the Sublicense to continue with respect to a particular
Sublicensee; and (ii) that Sublicensee shall agree to the substitution of PointSource for JMAR as the grantor of
such Sublicense and shall pay directly to PointSource the greater of such royalty payments that would be due to
JMAR under the Sublicense or such royalty payments as are required by JMAR under this License Agreement
for the licensed activities conducted by Sublicensee.

3. ROYALTIES TO BE PAID TO POINTSOURCE.

3.1 UP-FRONT PAYMENT. As partial consideration for the grant of this exclusive license, JMAR shall provide
to PointSource:

3.1.1 520,000 shares of JMAR fully paid, non-assessable common stock pursuant to the terms of the
Registration Rights Agreement; and

3.1.2 Warrants to purchase 333,333 shares of JMAR common stock, with an exercise price of $1.38 per share,
and a term of five (5) years, pursuant to the terms of the Warrant.

3.2 ROYALTIES. As further consideration for the license granted herein, JMAR shall pay to PointSource an
ongoing royalty, which shall be calculated at the rate of Two And One-Half Percent (2.5%) of the Net Sales of
all Licensed Products throughout the Term of this License Agreement and any extensions thereof (including any
extensions set forth in Section 13.1).

                                                          -6-


3.2.1 It is the intention of the parties that the ongoing royalties in this Section 3.2 will be based on the bona fide
prices at which JMAR sells Licensed Products to third parties in arms length transactions. In the event JMAR
sells, transfers, or otherwise provides a Licensed Product to its Affiliates (or to any third party in other than an
arms-length transaction), the royalties for such a transaction shall be calculated on the basis of such bona fide
prices irrespective of the actual transaction price or of JMAR's accounting treatment of such transaction. JMAR
shall identify all sales to Affiliates (and all transactions other than arms-length transactions) separately in the
reports provided to Licensor pursuant to Section 4 hereof.

3.3 If JMAR in good faith determines that it is no longer using or required to use the PointSource Intellectual
Property Rights, it shall give written Notice to PointSource of this determination and PointSource shall have sixty
(60) days to confirm JMAR's determination from such date of Notice, at JMAR's sole expense. At the end of
that sixty (60) day period, unless PointSource disagrees that JMAR is no longer using or required to use the
PointSource Intellectual Property Rights, then the applicable royalty shall be reduced to one and one-fourth
percent (1.25%) for the fifth (5th) and sixth
(6th) year of the Term and the license granted hereunder shall become non-exclusive.

3.3.1 Should JMAR make such a determination, JMAR shall, immediately after providing Notice to PointSource
under this Section 3.3, cooperate fully with PointSource and provide PointSource with access upon reasonable
notice and during normal business hours to any of JMAR's facilities; personnel (including its employees
consultants and advisors); test set-ups and equipment; and any documents, data, test results, and any other
information, items and materials related to the product(s) in question as may be requested by PointSource to
allow PointSource to effectively evaluate JMAR's determination. Should JMAR fail to cooperate fully with
PointSource in accordance with this Section 3.3, then the license granted hereunder shall remain exclusive for the
Term and any extensions thereof.

3.3.2 Any disagreement between JMAR and PointSource regarding whether JMAR is using the PointSource
Intellectual Property Rights under this
Section 3.3 shall be resolved in accordance with the Dispute resolution procedures set forth in Section 16 of this
License Agreement. While the Dispute under this Section 3.3 is unresolved, JMAR shall pay a reduced royalty of
1.25% to PointSource, and shall pay the remaining 1.25% royalty into escrow until final resolution of such
Dispute. Upon final resolution of such Dispute, escrowed funds shall be released to PointSource should it be
determined that JMAR is using or is required to use the PointSource Intellectual Property Rights, or returned to
JMAR should it be determined that JMAR is no longer using or is not required to use the PointSource Intellectual
Property Rights.

3.4 NO SET-OFF. The obligation of JMAR to pay royalties and payments hereunder shall be absolute
regardless of any claim that JMAR may have or assert against PointSource now or in the future. JMAR shall not
have the right to set-off, compensate or make any deduction from such royalty payments for any reason
whatsoever.

3.5 TAXES. JMAR will bear all taxes, duties and other governmental charges relating to or arising under this
License Agreement, including without limitation, any income taxes, any stamp or documentary taxes or duties,
turnover, sales or use taxes, value added taxes, excise

                                                         -7-


taxes, customs or exchange control duties or any other charges relating to or on, any royalty payable hereunder.
JMAR shall obtain, at its own cost and expense, all licenses, Reserve Bank, Commercial Bank or other bank
approvals, and any other documentation necessary for the transmission of royalties and all other payments
relevant to JMAR's performance under this Agreement. All royalties payable under this License Agreement shall
be payable to PointSource in gross amounts without any tax withholding therefrom unless, by operation of an
applicable law, JMAR is required to withhold tax thereon and, by opinion of JMAR's tax counsel in writing so
stating, advises PointSource of such requirement. In regard to any withholding tax so deducted, JMAR shall
furnish PointSource with proper evidence of the taxes paid. In the event that JMAR realizes a reduction in its tax
liability by reason of a foreign tax credit with respect to withholding taxes so deducted from royalties payable to
PointSource hereunder, JMAR shall pay to PointSource the amount of such reduction in its tax liability.

4. PAYMENTS AND RECORDKEEPING.
4.1 WRITTEN STATEMENT. Not later than forty-five (45) days after the end of each calendar quarter, JMAR
shall provide PointSource with a written statement specifying for the previous calendar quarter: (1) the total
quantity of Licensed Products produced; (2) the total quantity of Licensed Products sold, leased or otherwise
disposed of; (3) JMAR's model name or type designation Licensed Products sold, leased or otherwise disposed
of; (4) the territory in which such Licensed Products sold, leased or otherwise disposed of; (5) JMAR's Net
Sales; and (6) the amount of royalties payable thereon. The statement shall also include a statement under oath by
one of JMAR's officers that the data presented in the written statement is accurate and complete and that all
conditions of this License Agreement have been complied with. Each report shall be accompanied by payment in
full of the royalties shown thereby to be due to PointSource.

4.2 FUNDS. All payments to be made hereunder shall be payable in United States dollars. The payments to
PointSource shall be made to PointSource at the address indicated in the Notice provisions hereof, or to such
other place of business as may be designated by PointSource in writing.

4.3 INTEREST. In addition to any other remedy available to Licensor, if any payment due under this License
Agreement is delayed for any reason, interest shall accrue and be payable, to the extent legally enforceable, on
such unpaid principal amounts from and after the date on which the same became due, at a per annum rate equal
to the lower of four (4) percentage points above the prime rate of interest in effect at the time the late payment
was due, as reported by Chase Manhattan Bank in New York, New York, U.S.A., and the highest rate
permitted by law in the state of California.

4.4 BOOKS AND RECORDS. JMAR agrees to keep full, clear and accurate accounts and records reflecting
and recording all transactions relating to Licensed Products in sufficient detail to enable the royalties due
hereunder to be determined and generally to allow such investigation of all its operations hereunder as may be
necessary to determine JMAR's compliance with this License Agreement and the accuracy of the reports and the
statements to be furnished hereunder. JMAR agrees, upon reasonable notice and during normal business hours,
to make those records

                                                       -8-


available for inspection and audit by authorized representatives of PointSource at such place or places where
those records are customarily kept, and to allow PointSource to inspect JMAR's manufacturing facilities and
products, including parts, work-in-process and finished goods, to confirm whether the PointSource Technology
has been incorporated into JMAR's products. If the audit of JMAR's records pursuant to this Section determines
that there is any underpayment of royalties due, the payment due shall be made within five (5) days of notice of
such underpayment. If the underpayment is greater than ten percent (10%) of the payment due for the audited
period, then JMAR shall pay the cost of the audit plus a penalty equal to ten percent (10%) of the cost of that
audit.

5. ADDITIONAL OBLIGATIONS OF JMAR.

5.1 COMMERCIALIZE TECHNOLOGY. JMAR will use commercially reasonable efforts to produce, market
and sell the Licensed Products under its license throughout the world. As used in this Section 5.1, "commercially
reasonable efforts" shall mean that JMAR is performing its obligations in a sustained manner consistent with the
efforts other similarly situated companies devote to significant products of similar market potential derived from
internal research programs. Should JMAR for any reason fail to use commercially reasonable efforts to produce,
market and sell any class of the Licensed Products in any of the three (3) major territories of North and South
America, Europe and Africa, and Asia within four (4) years of the Effective Date, then the license granted under
the License Agreement for each such class of Licensed Product in each such territory shall at PointSource's sole
discretion become non-exclusive thereafter.

5.2 WRITTEN REPORT. Upon the request of PointSource but not more often than once per calendar year,
JMAR shall deliver to PointSource a written report as to JMAR's efforts and accomplishments during the
preceding year in marketing and selling Licensed Products in various parts of the Licensed Territory and its
commercialization plans for the upcoming year.

6. ADDITIONAL OBLIGATIONS OF POINTSOURCE.
6.1 TANGIBLE PROPERTY. On the Effective Date, in consideration for the payment of $1.00, PointSource
shall sell and transfer (or cause to be sold and transferred) to JMAR all right, title and interest of PointSource in
and to Tangible Property. The Tangible Property will be transferred to JMAR, free and clear of all liabilities,
obligations, security interests, liens, encumbrances and other claims. Notwithstanding the foregoing, in no event
shall PointSource be required to effectuate the transfer of any technology or know-how to JMAR.

6.1.1 The Parties agree to cooperate fully to ensure that the computers transferred in this Section 6.1 contain only
assignable third party application software and Scientific Data, and to further ensure that all data, algorithms or
other information that is not Scientific Data or assignable third party application software is removed from these
computers and remains with PointSource (i.e., the computers are "Scrubbed"). JMAR shall cooperate fully with
Roland Hassanein (or other PointSource designee) and provide full access to the computers and any reasonably
requested assistance to such designee to ensure that these computers are scrubbed within two weeks of the
Effective Date. Until such time as the computers are Scrubbed

                                                          -9-


to the mutual satisfaction of the Parties, the only access JMAR shall make to those computers is in the presence
of and upon the approval of the PointSource designee. Nothing contained in this Section 6.1 shall limit or
otherwise affect the right to have Fitzgerald conduct any inspections as provided for in Section 9.3.

6.2 As set forth in Section 1.17, the Tangible Property does not include prior versions of the Vigilant product and
their associated computers. PointSource agrees that it shall not, for so long as this License Agreement remains
exclusive, sell, transfer or otherwise provide these prior versions of the Vigilant product to any competitor of
JMAR in the field of the Licensed Products.

6.3 NO OBLIGATION. The parties understand and agree that there is no obligation on the part of PointSource
to further develop or commercialize the PointSource Technology.

7. MUTUAL RELEASE

7.1 POINTSOURCE RELEASE OF JMAR. Effective as of the Effective Date, and for valuable consideration,
the receipt and adequacy of which is hereby acknowledged, PointSource further hereby releases and forever
discharges JMAR and its representatives, officers, directors, employees, shareholders, attorneys, accountants
and other agents other than Gregory Quist, David Drake, the LXT Group and each of their affiliates (with the
sole exception of Quist's and Drake's rendering of consulting services on behalf of JMAR), (collectively, the
"JMAR Releasees"), of and from any and all manner of action or actions, cause or causes of action, in law or in
equity for indemnity or otherwise, suits, debts, liens, liabilities, claims, demands, damages, losses, costs, or
expenses, of any nature whatsoever, known or unknown, fixed or contingent, arising up to and including the
Effective Date, of any nature whatsoever (hereinafter called "PointSource Released Claims"), and including but
not limited to all claims which PointSource has made or could have made against the JMAR Releasees, or which
arise out of or relate in any way to the PointSource Intellectual Property Rights. The foregoing releases shall inure
to the benefit of the JMAR Releasees, their successors, heirs and assigns.

7.1.1 Notwithstanding any of the above, PointSource reserves all rights and remedies against JMAR and its
Affiliates in the event of their failure to perform their obligations or breach of their representations and warranties
under this License Agreement or any of the Transaction Documents.

7.1.2 PointSource acknowledges that it has been advised by its legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."

                                                         -10-
Being aware of said code section, PointSource hereby expressly waives any rights it may have under California
Civil Code Section 1542, as well as any other statutes or common law principles of similar effect.

7.1.3 PointSource represents and warrants that there has been, and there will be, no assignment or other transfer
of any interest in any of the PointSource Released Claims released hereunder which they may have against
JMAR's Releasees, or any of them. PointSource agrees to indemnify and hold JMAR's Releasees, and each of
them, harmless from any PointSource Released Claims, liability, demands, damages, costs, expenses and
attorneys' fees incurred by JMAR's Releasees, or any of them, as a result of PointSource's breach of the
foregoing warranty, provided that any JMAR Releasee seeking such indemnity notifies PointSource within twenty
(20) days after receiving any such PointSource Released Claim and provides PointSource with control over the
defense and settlement of such PointSource Released Claim.

7.2 JMAR'S RELEASE OF POINTSOURCE. Effective as of the Effective Date, and for valuable
consideration, the receipt and adequacy of which is hereby acknowledged, JMAR further hereby releases and
forever discharges PointSource and any of its representatives, officers, directors, employees, shareholders,
attorneys, accountants and other agents, (collectively, the "PointSource Releasees"), of and from any and all
manner of action or actions, cause or causes of action, in law or in equity for indemnity or otherwise, suits, debts,
liens, liabilities, claims, demands, damages, losses, costs, or expenses, of any nature whatsoever, known or
unknown, fixed or contingent, arising up to and including the Effective Date, of any nature whatsoever (hereinafter
called "JMAR Released Claims"), and including but not limited to all claims which JMAR has made or could have
made against the PointSource Releasees, or which arise out of or relate in any way to the PointSource Intellectual
Property Rights. The foregoing releases shall inure to the benefit of the PointSource Releasees, their successors,
heirs and assigns.

7.2.1 Notwithstanding any of the above, JMAR reserves all rights and remedies against the PointSource and its
Affiliates in the event of their failure to perform their obligations or breach of their representations and warranties
under this License Agreement or any of the Transaction Documents.

7.2.2 JMAR acknowledges that it has been advised by its legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as follows:

"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH
THE DEBTOR."

Being aware of said code section, JMAR hereby expressly waives any rights it may have under California Civil
Code Section 1542, as well as any other statutes or common law principles of similar effect.

                                                         -11-


7.2.3 JMAR represents and warrants that there has been, and there will be, no assignment or other transfer of
any interest in any of the JMAR Released Claims released hereunder which they may have against PointSource's
Releasees, or any of them. JMAR agrees to indemnify and hold PointSource's Releasees, and each of them,
harmless from any JMAR Released Claims, liability, demands, damages, costs, expenses and attorneys' fees
incurred by PointSource's Releasees, or any of them, as a result of JMAR's breach of the foregoing warranty,
provided that any PointSource Releasee seeking such indemnity notifies JMAR within twenty (20) days after
receiving any such JMAR Released Claim and provides JMAR with control over the defense and settlement of
such JMAR Released Claim.

8. INTELLECTUAL PROPERTY

8.1 OWNERSHIP. JMAR acknowledges that PointSource shall remain the owner of and retains all rights, title
and interest (including ownership rights) in and to the PointSource Intellectual Property Rights and PointSource's
Confidential Information, and that JMAR has no rights therein other than under the licenses as expressly set forth
in this License Agreement. Nothing in this License Agreement shall be construed, by estoppel, implication or
otherwise, to transfer to JMAR title to, or any ownership interest in, the PointSource Intellectual Property Rights
or any other Intellectual Property of PointSource, or its Affiliates.
8.2 PREPARATION, COST. PointSource shall be solely responsible for the ongoing preparation and
prosecution of patent applications and for the registration or other activities necessary to perfect the PointSource
Intellectual Property Rights.

8.2.1 In order to retain its rights to the patents included in the PointSource Intellectual Property Rights, JMAR
shall reimburse PointSource for all costs related to these activities and for any and all maintenance fees, taxes or
annuities associated therewith.

8.2.2 From time to time, JMAR and PointSource will review and discuss which maintenance fees and costs to
pay, whether to continue to prosecute specific pending patent applications, and whether to file new patent
applications (including PCT and foreign counterpart applications). In the event that JMAR decides not to
continue to pay a maintenance fee or to take other action to maintain a particular patent, or decides that it is not in
its interests to continue to prosecute a pending application or to file a new application, it will give sufficient prior
notice to PointSource of this fact to enable PointSource to pay such cost or fee or to take such action and,
effective upon the giving of such notice, JMAR shall thereupon relinquish all of its license rights to such patent;
provided, however, nothing contained herein shall affect JMAR's obligation to pay the royalty under Section 3
above.

8.3 PATENT MARKING. JMAR shall observe all requirements of any applicable laws in each country with
respect to the marking of any product sold, leased or otherwise disposed of by JMAR, where such product is
covered by a claim of a licensed patent or manufactured using a method claimed by a licensed patent. In the
event that such marking of such a product is not feasible, JMAR shall communicate such infeasibility in writing to
PointSource and all requirements of any applicable laws with respect to the marking of any packaging and

                                                         -12-


advertising, sales or technical literature pertaining thereto, including without limitation with words and numbers
identifying the patents applicable thereto.

8.4 INFRINGEMENT. JMAR shall promptly provide Notice to PointSource in writing of any infringement or
misuse of the PointSource Intellectual Property Rights JMAR suspects or of which JMAR is aware.

8.4.1 The Parties agree to discuss whether and what action may be warranted against such violation and if the
Parties agree that action is warranted, JMAR may, so long as exclusivity remains in effect under the License
Agreement, in its discretion take the agreed upon action to enforce the PST Intellectual Property Rights against
such violation.

8.4.2 If JMAR elects to take any such action, JMAR will do so at JMAR's sole expense, and fully indemnify
PointSource for any claims arising against PointSource as a result thereof. Any amounts recovered by JMAR,
whether by way of judgment, settlement or compromise, shall be applied in the following order: (i) to cover
JMAR's actual and reasonable costs and fees for the enforcement of any such action; (ii) to pay PointSource in
an amount equal to a two and one-half percent (2.5%) royalty for any accused products covered by the action,
and (iii) to pay the remainder, if any, to JMAR.

8.4.3 If JMAR does not, within ninety (90) days after knowledge of the actual or suspected infringement,
commence action directed toward restraining or enjoining such infringement, and diligently pursue such action
thereafter, PointSource may take any permissible legal actions it deems necessary or appropriate to enforce
PointSource's intellectual property rights and restrain such infringement at PointSource's sole expense, in which
case PointSource shall be entitled to all amounts recovered whether by way of judgment, settlement or
compromise, and PointSource shall be permitted to grant a license to the accused infringer under the PST
Intellectual Property rights without any accounting to JMAR and notwithstanding any exclusivity provisions that
may be in effect under this License Agreement.

9. REPRESENTATIONS AND WARRANTIES.

9.1 MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party hereby represents and warrants to
other Party that:
9.1.1 it is a company validly existing under the laws of its principal place of business;

9.1.2 it has full power, authority and legal right to execute, deliver, perform under and observe the terms and
provisions of this License Agreement, including that this (i) is within its corporate powers; (ii) has been duly
authorized by all necessary or proper corporate action; (iii) is not in violation of any of its articles or certificates of
incorporation or by-laws;
(iv) does not violate any provisions of any law, rule, regulation, order, writ, judgment, injunction, decree,
determination or award having applicability to it; and (v) does not require the consent or approval of any other
party in order to make this License Agreement a binding and enforceable obligation of the respective party
hereto; and

                                                           -13-


9.1.3 this License Agreement is a legal, valid and binding obligation of it, enforceable in accordance with its
terms.

9.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF POINTSOURCE. Except as noted on
Schedule B, as of the Effective Date, PointSource represents and warrants to JMAR that:

9.2.1 PointSource owns the PointSource Technology and the Tangible Property, free and clear of all material
liabilities, obligations, security interests, liens, encumbrances and other claims.

9.2.2 To the actual knowledge of PointSource, PointSource has not licensed or otherwise granted any rights to
the PointSource Technology to any other person.

9.2.3 PointSource has no actual knowledge of any infringement by others of the PointSource Technology.

9.2.4 Neither PointSource nor any of its Affiliates have actual knowledge of any claim that the PointSource
Technology is owned by any other person.

9.2.5 To the actual knowledge of PointSource, there are no other material agreements requiring PointSource to
make payments for or restricting PointSource's right to use, any intellectual property included in the PointSource
Technology.

9.3 ADDITIONAL REPRESENTATIONS AND WARRANTIES OF JMAR. As of the Effective Date,
JMAR represents and warrants to PointSource that JMAR (i) has not used any algorithms developed by
Fitzgerald, other than what was already in the public domain prior to such use through no fault of Gregory Quist,
David Drake or the LXT Group, and (ii) has not used any information covered by any claims in any unexpired
patents issued to Wyatt. In connection with PointSource's due diligence review of JMAR, JMAR shall permit
Fitzgerald to inspect its products and technology to the extent necessary in order to verify the representation in
(i) above either before or after the Effective Date (but in any event prior to March 31, 2005) and upon execution
of a customary non-disclosure agreement.

10. INDEMNIFICATION

10.1.1 INDEMNIFICATION BY JMAR. JMAR, at its sole expense, shall indemnify, defend and hold harmless
PointSource and its Affiliates, including their respective directors, officers, employees, agents, contractors, and
consultants from and against any and all demands, claims, losses, liability, damages, settlement amounts, costs
and expenses (including reasonable attorneys' fees and expenses) arising out of any action, claim or proceeding
made or brought against them or any of them or any of them, for or by reason of any acts or alleged acts,
whether of omission or commission, by JMAR or any of their servants, agents, Affiliates, Sublicensees,
employees, consultants or contractors as a result of the breach of any of JMAR's representations and warranties
in Section 9 of this License Agreement or JMAR's manufacture or sale of Licensed Products or other activities
undertaken in connection with this License Agreement, including but not limited to:

                                                           -14-
10.1.2 any alleged or actual defect in any Licensed Product, regardless of whether the action is based upon
negligence or strict liability;

10.1.3 the manufacture, labeling, sale, distribution or advertisement of any Licensed Product by JMAR;

10.1.4 any alleged or actual violation of any warranty, representation or agreement made by JMAR pertaining to
a Licensed Product;

10.1.5 any alleged or actual claim of any broker, finder or agent in connection with the making of this License
Agreement or any transactions contemplated by this License Agreement; and

10.1.6 alleged or actual patent, copyright infringement or trade secret misappropriation, or any other intellectual
property infringement or misappropriation arising out of the Licensed Products and any part thereof.

10.2 INDEMNIFICATION BY POINTSOURCE. PointSource, at its sole expense, shall indemnify, defend
and hold harmless JMAR and its Affiliates, including their respective directors, officers, employees, agents,
contractors, and consultants from and against any and all demands, claims, losses, liability, damages, settlement
amounts, costs and expenses (including reasonable attorneys' fees and expenses) arising out of any action, claim
or proceeding made or brought against them or any of them, for or by reason of any acts or alleged acts, whether
of omission or commission, by PointSource or any of their servants, agents, Affiliates, Sublicensees, employees,
consultants or contractors in connection with PointSource's performance of this License Agreement, as a result of
the breach of any of PointSource's representations and warranties in Section 9 of this License Agreement.

10.3 JMAR shall promptly inform PointSource by written Notice of any suit or claim against JMAR relating to
JMAR's performance under this License Agreement, whether such suit or claim is for personal injury, involves
alleged defects in the Licensed Products manufactured, sold or distributed hereunder, or otherwise.

11. CONFIDENTIAL INFORMATION.

11.1 JMAR shall use Confidential Information solely to exercise its rights or perform its obligations under this
License Agreement (the "Purpose") and for no other purpose. JMAR shall hold the Confidential Information in
strict confidence and shall not disclose, provide or otherwise make available any Confidential Information to any
Person without the express written consent of PointSource, except that JMAR may disclose Confidential
Information to its employees, contractors, consultants, customers, and suppliers, but only in accordance with the
terms and conditions set forth in Section 11.3.

11.2 JMAR shall take reasonable measures to protect the secrecy of and avoid disclosure and unauthorized use
of the Confidential Information. Without limiting the foregoing, JMAR shall take at least those measures that it
takes to protect its own most highly confidential

                                                        -15-


information (but in no event less than reasonable care), to protect the confidentiality and avoid the unauthorized
use, disclosure, publication or dissemination of the Confidential Information. JMAR shall limit copying and
reproduction of Confidential Information to the minimum required to carry out the Purpose. JMAR shall include
appropriate proprietary rights notices on any such copies, in the same manner in which such notices were set
forth in or on the original, or add such notices if none were included on the original. JMAR shall immediately
notify PointSource in the event of any unauthorized use or disclosure of the Confidential Information.

11.3 JMAR, may disclose the Confidential Information to its employees, contractors, consultants, customers, and
suppliers, but only to those individuals who have a need to access such Confidential Information (and only such
Confidential Information as they may need) in order for JMAR to exercise its rights or perform its obligations
under this License Agreement, and further provided that JMAR shall use its best efforts to ensure that such
recipients who shall have access to the Confidential Information shall hold it confidential, and not disclose the
same and not use the Confidential Information except for the Purpose. Without limiting the generality of the
foregoing, JMAR shall inform each of its contractors, consultants, and employees having access to such
Confidential Information ("Designated Recipients") of such party's limitations, duties, and obligations regarding
disclosure, use and copying of the Confidential Information, and cause its Designated Recipients to enter into a
secrecy agreement, whether by means of a new or existing agreement, providing the same or greater protection
as provided herein. JMAR shall be and shall remain liable for any breach of the confidentiality provisions
contained herein by any of its employees, contractors, consultants and suppliers.

11.4 The obligations of this Section, including the restrictions on disclosure and use shall not apply with respect to
any Confidential Information to the extent that such Confidential Information: (i) is now publicly available or
becomes available to the public in the future through no act or failure to act on the part of the Receiving Party and
without breach of this License Agreement (or of any other confidentiality agreement between the Parties); (ii) the
Receiving Party can demonstrate came into its possession in good faith from a third party who is legally entitled to
make such information available without restriction, and who is not bound by a duty of confidentiality toward the
Disclosing Party; (iii) is at any time developed by the Receiving Party independently of any such disclosure from
the Disclosing Party, and such independent development can be demonstrated by the Receiving Party; and (iv)
information that the Receiving Party can establish within 30 days of disclosure by appropriate documentation or
other evidence, was already in its possession prior to the disclosure by the Disclosing Party without breach of any
obligation or other misappropriation. In addition, Receiving Party may use or disclose Confidential Information
for other than the Purpose to the extent (ii) such use or disclosure is explicitly approved for release by written
authorization of the Disclosing Party, which release shall be in the sole discretion of the Disclosing Party; or (ii)
Receiving Party is legally compelled to disclose such Proprietary Information, provided, however, that prior to
any such compelled disclosure, Receiving Party shall give Disclosing Party reasonable advance Notice of any
such disclosure and shall cooperate with Disclosing Party in protecting against any such disclosure and/or
obtaining a protective order narrowing the scope of such disclosure and/or use of the Proprietary Information.

                                                         -16-


11.5 The Parties expressly confirm and agree that no public disclosure with respect to any item of Confidential
Information is now required by reasons of the Securities Exchange Act of 1934, as amended, or the rules and
regulations promulgated thereunder, or similar requirements related to general disclosure. In the event Receiving
Party determines in the future that such disclosure is required, no such disclosure shall be made unless and until
Receiving Party consults with Disclosing Party regarding the necessity and form of any such disclosure, and
provides Disclosing Party a reasonable opportunity to review the proposed disclosure and comment thereon, and
that such disclosure shall be redacted to the reasonable satisfaction of both Parties.

11.6 All documents and information relating to Confidential Information delivered to JMAR are and shall remain
the property of PointSource. Within sixty
(60) days after the termination of this License Agreement for any reason, JMAR shall deliver to PointSource or
its designee all documents and other information in tangible form furnished to JMAR by PointSource or created
by JMAR as a result of information furnished to JMAR by PointSource including all copies thereof, which
incorporate or reflect the PointSource Intellectual Property Rights or any other Confidential Information; or (at
the option of JMAR with the prior written approval of PointSource) in the case of any such documents or other
items created by JMAR as a result of information furnished to JMAR by PointSource, a certificate from JMAR's
Chief Executive Officer certifying that all such documents or items, and all copies thereof, have been destroyed.
Upon termination, Receiving Party shall not use the Proprietary Information in any way for any purpose.

11.7 JMAR acknowledges and agrees that PointSource would suffer irreparable harm for which monetary
damages alone would be an inadequate remedy if there were a breach of obligations under this Section 11.
JMAR further acknowledges and agrees that PointSource would be entitled to equitable relief, including
injunctive relief, in addition to any other remedies available, to protect PointSource's rights and interests if such a
breach were to arise, were threatened, or were asserted.

11.8 On all copies of the PointSource Intellectual Property Rights made by JMAR pursuant to this License
Agreement, JMAR agrees that it shall (i) not remove any copyright notices, trademarks, or other proprietary
legends contained therein or thereon, as provided by PointSource, and (ii) include any copyright notices,
trademarks, or other proprietary legends contained within the PointSource Technology, as provided by
PointSource.

11.9 Each Party will provide notice to the other Party immediately after learning of, or having reason to suspect, a
breach of any of the confidential restrictions set forth in this Section or elsewhere in this License Agreement.
11.10 The parties have previously entered into a confidentiality agreement dated January 12, 2005 (the
"Confidentiality Agreement"). The Parties agree that the confidentiality provisions of this License Agreement shall
supersede that prior Confidentiality Agreement.

11.11 The provisions of this Section 11 shall survive the termination of this License Agreement for any reason
whatsoever.

                                                        -17-


12. PUBLICITY

12.1 Within ten (10) days of the Effective Date, the Parties shall agree in good faith on a form of press release
which JMAR may release any time thereafter.

12.2 The Parties agree to keep the terms and conditions of this License Agreement confidential, except either
Party may:

12.2.1 acknowledge the existence of this License Agreement;

12.2.2 disclose the Agreement in confidence to existing or prospective investors or acquirers and investment
bankers and related financial service providers; and

12.2.3 make disclosure of the terms and conditions of this License Agreement if considered a "material"
agreement under federal laws or SEC rules or regulations. Any copy of this License Agreement to be filed with
the Securities and Exchange Commission under this Section shall be redacted to the reasonable satisfaction of
both Parties; provided, however, in the event that the Securities and Exchange Commission objects to the
redaction of any portion of the Agreement after the initial submission, JMAR shall inform PointSource of the
objections and shall in good faith respond to the objections and use commercially reasonable efforts to limit the
disclosure required by the Securities and Exchange Commission.

12.2.4 make disclosure of the terms and conditions of this License Agreement if such disclosure is in response to
a court order or regulation of a governmental body provided, however, that either Party prior to such disclosure
pursuant to such law, order or regulation shall first have promptly informed the other Party of such law, order or
regulation and made reasonable efforts to obtain a protective order and/or appropriate confidentiality provisions
requiring that such information to be disclosed be used only for the purpose for which such law, order or
regulation was issued.

12.3 Nothing in this License Agreement shall be construed as conferring upon either Party any right to include or
use in advertising, packaging or other commercial activities related to a Licensed Product, any reference to the
other Party or its Affiliates, their trade names (other than the name Vigilant), trademarks or service marks in a
manner that would be likely to cause confusion or to indicate that such Licensed Product is in any way certified
by the other Party hereto or its Affiliates.

13. TERM AND TERMINATION.

13.1 INITIAL TERM. The License shall remain in effect for a period of six
(6) years following the Effective Date (the "Term"). The parties may extend the term of the License Agreement
beyond this six (6) year period, provided that:
(i) JMAR provides PointSource with Notice of a request for such extension at least six (6) months prior to the
expiration of the Term; (ii) such extension shall be under the same terms and conditions as set forth herein (other
than the initial stock and warrant payment as set forth in Section 3.1); and (iii) the parties shall have negotiated
and agreed in writing upon a mutually acceptable amendment to the License providing

                                                        -18-


for minimum royalties and appropriate remedies with respect thereto prior to the fourth anniversary of the
Effective Date.
13.2 TERMINATION BY POINTSOURCE. At the sole option of PointSource, this License Agreement shall
be and become terminated immediately upon written Notice of termination from PointSource to JMAR for any of
the following events:

13.2.1 JMAR fails to pay the royalties to be paid pursuant to
Section 3 or any other amounts due to PointSource hereunder when those payments are due and does not make
that payment within thirty (30) days after Notice of default is given to JMAR;

13.2.2 JMAR makes any purported assignment of this License Agreement or grants any purported sublicense
under this License Agreement in violation of the provisions of Sections 2.3 or 21 and of this License Agreement;

13.2.3 JMAR materially breaches any other provision of this License Agreement and shall not cure that violation
within sixty (60) calendar days after Notice thereof by PointSource;

13.2.4 if JMAR shall be adjudged bankrupt or insolvent by a court of competent jurisdiction or an order shall be
made by a court of competent jurisdiction for the appointment of a receiver, liquidator or trustee of JMAR or of
all or substantially all of its property by reason of the foregoing, or approving any petition filed against JMAR for
its reorganization under the bankruptcy laws, and such adjudication or order shall remain in force for a period of
thirty (30) days;

13.2.5 if JMAR shall institute proceedings for voluntary bankruptcy or shall file a petition seeking reorganization
under the federal bankruptcy laws, or for relief under any law for the relief of debtors, or shall consent to the
appointment of a receiver for itself or of all or substantially all of its property, or shall make a general assignment
for the benefit of its creditors, or shall admit in writing its inability to pay its debts generally, as they become due;

13.2.6 In the event that JMAR or any of its Affiliates initiates any judicial proceeding or administrative action or
proceeding (including arbitration, International Trade Commission, and similar proceedings, in the form of
interferences in the Patent and Trademark Office or an action under 35 U.S.C. Section 146 or 256 (or any
foreign equivalent thereof)) to challenge the validity and/or enforceability of any PointSource Patent Right,
PointSource may, at its option, (i) terminate JMAR's license to such challenged patents, or (ii) terminate this
License Agreement, in each case on written notice to JMAR, it being expressly agreed that neither JMAR nor its
Affiliates may enjoy a license to such patent(s) while at the same time seeking to invalidate or render such patent
unenforceable. The parties agree, however, that no right of termination under this section shall arise if the
challenge is (a) in response to or defense of an action initiated by PointSource, or (b) required by virtue of a
contractual obligation to indemnify a third party in a patent infringement action initiated by PointSource.

                                                           -19-


13.3 NOTICE TO POINTSOURCE. JMAR agrees that if any of the events specified in Section 13.2 of this
Section shall occur, it shall give written Notice thereof to PointSource within seven (7) days after the occurrence
of that event.

13.4 TERMINATION BY JMAR. At the sole option of JMAR, this License Agreement shall be and become
terminated immediately upon written Notice of termination from JMAR to PointSource in the following events:

13.4.1 if PointSource shall violate any material provision of this License Agreement and shall not cure that
violation within thirty (30) days after Notice thereof by JMAR;

13.4.2 if PointSource shall be adjudged bankrupt or insolvent by a court of competent jurisdiction or an order
shall be made by a court of competent jurisdiction for the appointment of a receiver, liquidator or trustee of
PointSource or of all or substantially all of its property by reason of the foregoing, or approving any petition filed
against PointSource for its reorganization under the bankruptcy laws, and such adjudication or order shall remain
in force for a period of thirty (30) days; or

13.4.3 if PointSource shall institute proceedings for voluntary bankruptcy or shall file a petition seeking
reorganization under the federal bankruptcy laws, or for relief under any law for the relief of debtors, or shall
consent to the appointment of a receiver for itself or of all or substantially all of its property, or shall make a
general assignment for the benefit of its creditors, or shall admit in writing its inability to pay its debts generally, as
they become due;

13.5 NOTICE TO JMAR. PointSource agrees that if any of the events specified Section 13.4.2 or 13.4.3 shall
occur, it shall give written Notice thereof to JMAR within seven (7) days after the occurrence of that event.

13.6 EFFECT OF TERMINATION. The rights and obligations under Sections 1, 3.1, 3.4, 3.5, 4, 10, 11, 12,
13, 14, 15, 16, 17, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, and 29 survive termination or expiration of this
License Agreement for any reason.

13.7 TERMINATION OBLIGATIONS. Upon the termination or expiration of this License Agreement, JMAR
shall immediately cease using the PointSource Intellectual Property Rights for any purpose and will, within five (5)
business days thereof, return or, at its option, destroy all whole or partial copies of the Confidential Information
that is in its possession, custody or control, and certify in writing within five (5) business days thereafter that it has
complied with the foregoing obligation. The Parties shall remain liable for the reporting and payment of all
payments due or which may become due under this License Agreement after its termination or expiration.

13.8 TERMINATION WITHOUT PREJUDICE. The termination of this License Agreement for any reason
shall:

13.8.1 be without prejudice to PointSource' right to receive all payments due under the terms of this License
Agreement to the date of its termination;

                                                          -20-


13.8.2 not affect the obligations of either Party under any other agreement that may be in effect between the
Parties including the Registration Rights Agreement and the Warrant Agreement; and

13.8.3 be without prejudice to either party's rights to recover damages for breach of contract or otherwise or for
appropriate equitable relief.

14. DISCLAIMERS.

14.1 EACH PARTY ACKNOWLEDGES AND AGREES THAT ALL INTELLECTUAL PROPERTY AND
ANY OTHER INFORMATION OR MATERIALS LICENSED OR PROVIDED HEREUNDER
(INCLUDING THE POINT SOURCE INTELLECTUAL PROPERTY, POINTSOURCE TECHNOLOGY
AND TANGIBLE PROPERTY) ARE LICENSED OR PROVIDED ON AN "AS IS" "WHERE IS" BASIS
AND THAT POINTSOURCE DOES NOT MAKE ANY REPRESENTATIONS OR EXTEND ANY
WARRANTIES WHATSOEVER, EXPRESS, IMPLIED OR STATUTORY, WITH RESPECT THERETO
INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTIES OF MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE, TITLE, ENFORCEABILITY OR NON-INFRINGEMENT.

14.2 TO THE MAXIMUM ALLOWED BY APPLICABLE LAW, IN NO EVENT SHALL
POINTSOURCE BE LIABLE FOR ANY LOSS, INABILITY TO USE, INTERRUPTION OF BUSINESS,
OR ANY INDIRECT, SPECIAL, INCIDENTAL, OR CONSEQUENTIAL DAMAGES OF ANY KIND
(INCLUDING LOST PROFITS) ARISING OUT OF THE LICENSED TECHNOLOGY, THE LICENSED
PRODUCTS, THE TANGIBLE PROPERTY, OR OTHERWISE UNDER THIS AGREEMENT,
REGARDLESS OF THE FORM OF ACTION, WHETHER IN CONTRACT, TORT (INCLUDING
NEGLIGENCE), STRICT PRODUCT LIABILITY, OR OTHERWISE, EVEN IF POINTSOURCE HAS
BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.

14.3 TO THE MAXIMUM EXTENT ALLOWED UNDER APPLICABLE LAW, IN NO EVENT SHALL
POINTSOURCE'S AGGREGATE LIABILITY TO JMAR, OR ANY THIRD PARTY FOR ANY AND
ALL CLAIMS ARISING FROM OR RELATING TO THIS LICENSE AGREEMENT, WHETHER IN
CONTRACT, TORT OR ANY OTHER THEORY OF LIABILITY, EXCEED THE AMOUNTS PAID BY
JMAR TO POINTSOURCE HEREUNDER PRIOR TO THE DATE OF THE EVENT GIVING RISE TO
SUCH LIABILITY. THIS LIMITATION SHALL APPLY NOTWITHSTANDING ANY FAILURE OF
ESSENTIAL PURPOSE OF ANY LIMITED REMEDY PROVIDED HEREIN.
15. DISCLAIMER OF WARRANTY

15.1 EXCEPT AS EXPRESSLY PROVIDED IN SECTION 9, NEITHER PARTY MAKES ANY
WARRANTY, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTY OF MERCHANTABILITY,
OR FITNESS FOR A PARTICULAR PURPOSE, OR ARISING FROM A COURSE OF DEALING,
USAGE, OR TRADE PRACTICE.

                                                         -21-


15.2 Nothing in this License Agreement shall be construed as:

15.2.1 a warranty or representation by PointSource as to the scope, coverage, validity or enforceability, of any
Intellectual Property licensed hereunder; or

15.2.2 a warranty or representation by PointSource that any manufacture, sale, lease, import, use or other
disposition of any Licensed Products hereunder will be free from infringement or claims of infringement of any
Intellectual Property right of third parties; or

15.2.3 a requirement that PointSource shall file any Patent application, secure any Patent, or maintain any Patent
in force other than as set forth in Section 8.2; or

15.2.4 an agreement or any authorization by PointSource to bring or prosecute actions or suits against third
parties for patent infringement or conferring any right to bring or prosecute actions or suits against third parties for
patent infringement; or

15.2.5 conferring any right to JMAR to use in advertising, publicity, or otherwise, any trademark, service mark,
trade name or names, or any contraction, abbreviation, or simulation thereof, except for the name Vigilant.

16. DISPUTE RESOLUTION.

16.1 DISPUTES. The handling and resolution of any and all disputes, claims and causes of action of any nature
whatsoever arising from or in connection with this License Agreement (the "Dispute") shall be governed
exclusively by and settled in accordance with the provisions of this Section 16.

16.2 NEGOTIATION. The Parties shall make a good faith attempt to resolve any Dispute arising out of or
relating to this License Agreement through informal negotiation between appropriate representatives from each
party. Within thirty (30) days after Notice of a Dispute is given by either Party to the other Party, representatives
of each Party with the authority to resolve the Dispute shall meet and make a good faith attempt to resolve such
dispute and shall continue to negotiate in good faith in an effort to resolve the Dispute or renegotiate the
applicable section or provision without the necessity of any formal proceedings. If after sixty (60) days from the
first Notice of a Dispute either Party feels that such negotiations are not leading to a resolution of the Dispute,
such Party may send a Notice to the other Party describing the Dispute and requesting a meeting of the senior
executives from each Party. Within ten
(10) business days after this second Notice of a Dispute is given, appropriate senior executives (V.P. level or
higher) of each Party who shall have the authority to resolve the Dispute shall meet to attempt in good faith to
negotiate a resolution of the Dispute prior to pursuing other available remedies.

16.3 INFORMATION REQUESTS. During the course of negotiations under Section 16.2, any and all
reasonable requests made by one Party to the other for information, including requests for copies of relevant
documents, shall be honored by the other Party. The specific format for such information will be left to the
reasonable discretion of the designated negotiating senior

                                                         -22-


executives of the Parties, and may include, for example, the preparation of agreed upon statements of fact or
written statements of position furnished to the other party.
16.4 MEDIATION. In the event that any Dispute is not settled by the Parties within thirty (30) days after the first
meeting of the negotiating senior executives, the Parties will attempt in good faith to resolve such Dispute by
nonbinding mediation using a mediator employed by JAMS, with the specific mediator agreed to by the parties.
The mediation shall be held at a mutually agreeable location in San Diego, and be held within thirty (30) days of
the end of such thirty (30) day negotiation period. Except as provided below in
Section 16.6, no litigation for the resolution of such dispute may be commenced until the Parties try in good faith
to settle the Dispute by such mediation in accordance with this Section and either Party has concluded in good
faith that amicable resolution through continued mediation of the matter does not appear likely. The costs of
mediation shall be shared equally by the Parties to the mediation. Any settlement reached by mediation shall be
recorded in writing, signed by the Parties, and shall be binding on them.

16.5 LEGAL PROCEEDINGS. In the event that any Dispute is not settled by the Parties through mediation as
outlined in Section 16.4, either Party may institute legal proceedings for that Dispute in a court of competent
jurisdiction.

16.6 RELIEF. Notwithstanding anything else to the contrary contained in this Section 16, a Party is not required
to follow these dispute resolution mechanisms prior to seeking relief from a court of competent jurisdiction where
the subject Dispute involves: (i) nonpayment of royalties or other payments due to PointSource hereunder; (ii)
breach of any obligation of confidentiality;
(iii) an infringement, misappropriation, or misuse of any intellectual property right; or (iv) any other claim where
interim relief from the court is sought to prevent serious and irreparable injury to a party. Provided, however, that
the Parties shall make a good faith effort to negotiate such Dispute while such court action is pending.

16.7 ATTORNEYS FEES. The prevailing Party in any litigation arising out of the License Agreement shall be
entitled to reasonable attorneys' fees, with the amount thereof to be determined by the court.

16.8 CONTINUED OBLIGATION. Unless otherwise agreed in writing, both Parties shall continue to provide
service and honor all other commitments and obligations as set forth in this License Agreement, and any
amendments hereto, during the course of Dispute resolution with respect to all matters not subject to such
Dispute.

17. LIMITATIONS ON LIABILITY

17.1 EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS LICENSE AGREEMENT, IN NO
EVENT WILL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR LOST PROFITS OR FOR
ANY INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, OR EXEMPLARY DAMAGES
ARISING FROM THE SUBJECT MATTER OF THIS LICENSE AGREEMENT, REGARDLESS OF THE
TYPE OF CLAIM AND EVEN IF THAT PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF

                                                        -23-


SUCH DAMAGES. EACH PARTY ACKNOWLEDGES THAT THE MUTUAL LIMITATIONS OF
LIABILITY CONTAINED IN THIS SECTION REFLECT THE ALLOCATION OF RISK SET FORTH IN
THIS LICENSE AGREEMENT AND THAT EACH PARTY WOULD NOT ENTER INTO THIS
LICENSE AGREEMENT WITHOUT THESE LIMITATIONS ON LIABILITY.

18. INSURANCE.

18.1 Without limiting JMAR's liability pursuant to the indemnity provisions of this License Agreement, prior to the
date on which JMAR shall first install a beta or other version of the Licensed Products in a customer's facility or
otherwise sell, license or dispose of a Licensed Product, JMAR shall obtain and thereafter maintain commercial
products liability insurance in the amount of at least $1,000,000 per occurrence. Said insurance coverage shall be
written on a "claims made" or "occurrence" basis.

18.2 The insurance described in this Section 18 shall include: (1) an endorsement stating that PointSource shall
receive at least thirty (30) days written notice prior to cancellation or non-renewal of coverage, with exception of
a 10 day notice of cancellation for non-payment; and (2) an endorsement naming PointSource as an additional
insured.
18.3 All insurance shall be obtained from an insurance company of recognized financial responsibility. JMAR
shall give at least thirty (30) days prior written notice to PointSource of the cancellation of, or any modification in,
such insurance policy that would affect PointSource's status or benefits thereunder, with exception of a 10 day
notice of cancellation for non-payment. This insurance may be obtained for PointSource by JMAR in conjunction
with a policy which covers products other than the Licensed Products.

18.4 No later than thirty (30) days from the effective date hereof, JMAR shall furnish to PointSource evidence, in
form and substance satisfactory to PointSource, of the maintenance and renewal of the required insurance
including, but not limited to, copies of policies with applicable riders and endorsements, and certificates of
insurance.

18.5 The insurance set forth in this Section must cover all countries in which JMAR sells, transports,
manufactures or maintains inventory of Licensed Products.

19. GOVERNING LAW; VENUE AND JURISDICTION.

This License Agreement will be governed by, subject to, and construed in accordance with the internal laws of
the State of California, without reference to its conflicts of laws provision, as such laws apply to contracts
between California residents performed entirely within California. Venue for any dispute however arising under
this License Agreement shall be in San Diego California and both Parties hereby consent to the jurisdiction of the
State and Federal Courts in San Diego, California. The Parties agree that the United Nations Convention on
Contracts for the International Sale of Goods will not apply to this License Agreement.

                                                          -24-


20. RELATIONSHIP OF THE PARTIES.

20.1 Under this License Agreement (i) each Party will be deemed to be an independent contractor and not an
agent, joint venturer, or representative of the other Party; (ii) neither Party may create any obligations or
responsibilities on behalf of or in the name of the other Party; and (iii) neither Party will hold itself out to be a
partner, employee, franchisee, representative, servant, or agent of the other Party. Nothing contained in this
License Agreement shall be deemed to create any partnership, joint venture, association or syndicate among or
between the Parties, and nothing herein contained shall give, or is intended to give, any rights of any kind to any
third persons.

20.2 In addition, without limiting the generality of Section 20.1, JMAR agrees not to in any way misrepresent, or
to mislead any third party (especially with respect to prospective customers, journalists, or market analysts, etc.)
about JMAR's relationship with PointSource or regarding the features of the PointSource Technology, including
any technical specifications or expected benefits of use. In particular, JMAR shall not represent itself as an
exclusive distributor of PointSource' products, and shall not represent itself as the developer or manufacturer of
PointSource' products, or as PointSource itself.

21. ASSIGNABILITY.

21.1 ASSIGNABILITY IN GENERAL. Neither Party shall assign or transfer this License Agreement or all or
any part of its rights or obligations hereunder, by operation of law or otherwise, without the prior written consent
of the other Party, except that PointSource may assign its rights and obligations under this License Agreement to
a Permissible Transferee as that term is defined in the Securities Purchase Agreement. Notwithstanding the
foregoing and provided such entity is not a competitor of the other Party, either Party may assign this License
Agreement in whole or in part (i) to any Subsidiary; or (ii) to a successor of such Party in the event of a merger or
acquisition of all or substantially all of the assets of such Party; (iii) to a successor of any portion of the business of
such Party resulting from a divestiture of such business; or (iv) to a successor of such Party as a result of a
foreclosure action instituted against that Party. Any unauthorized assignment or transfer shall be null and void.
This License Agreement shall be binding upon and inure solely to the benefit of each Party and its successors and
permitted assigns.

21.2 ASSIGNABILITY BY POINTSOURCE. Notwithstanding the foregoing, PointSource may, without the
consent of JMAR, assign this License Agreement to any person, firm or corporation which shall acquire all or
substantially all of the PointSource Patent Rights and PointSource Technology relating to this License Agreement.

21.3 ASSUMPTION BY ASSIGNEE. No assignment of this License Agreement shall be valid until and unless
this License Agreement shall have been assumed by the assignee in writing. When assigned in accordance with
the foregoing, this License Agreement shall be binding upon and shall inure to the benefit of the assignee,
however, the assignor shall not be released from any duties, obligations or liabilities under this License Agreement
unless such release is expressly made in writing by the releasing Party.

                                                        -25-


22. NOTICES.

Any notice, consent, approval, or other communication intended to have legal effect to be given under this
License Agreement must be in writing and will be delivered (as elected by the Party giving such notice): (i)
personally;
(ii) by postage prepaid registered mail, return receipt requested; (iii) by express courier service providing proof of
delivery; or (iv) by facsimile with a confirmation copy deposited prepaid with an express courier service. Unless
otherwise provided herein, all notices will be deemed to have been duly given on: (y) the date of receipt (or if
delivery is refused, the date of such refusal) if delivered personally, by mail, or by express courier; or (z) one (1)
business day after receipt by telecopy if the telecopy was accompanied by the mailing of the notice via courier
service. Each Party may change its address for purposes hereof on not less than three (3) days' prior notice to the
other Party. Notice hereunder will be sent to the following addresses (with a copy to the legal department):

               If to PointSource, to:                                If to JMAR, to:

               PointSource Technologies, LLC                         JMAR Technologies, Inc.
               514 Via de la Valle, Ste. 207                         5800 Armada Drive
               Solana Beach, CA 92075                                Carlsbad, CA 92008
               Attention: Salah M. Hassanein                         Attention: General Counsel
               Telephone: (858) 509-7979                             Telephone: 760-602-3292
               Telecopy: (858) 509-0708                              Telecopy: 760-602-3299

               With a copy to:

               Steven G. Rowles, Esq.
               Morrison & Foerster LLP
               3811 Valley Centre Dr., Ste. 500
               San Diego, California 92130
               Telephone: (858) 720-5100
               Telecopy: (858) 720-5125




23. WAIVER.

No waiver, amendment or modification of this License Agreement shall be effective unless made in writing and
signed by both parties. Failure or delay of a Party to demand performance of any of the terms and conditions, or
to exercise any of its rights, powers, remedies or privileges under this License Agreement, will not constitute a
waiver of such terms, conditions, rights, or privileges.

24. ENTIRE AGREEMENT.

This License Agreement, the Exhibits hereto, and the Transaction Documents, each as amended from time to
time, constitute the entire understanding and agreement between the parties in relation to the subject matter hereof
and, unless otherwise expressly provided in this License Agreement, supersede all prior discussions, negotiations,
agreements and representations related to this subject matter, whether oral or written and whether or not
executed by a Party. No

                                                        -26-


modification, amendment or other change may be made to this Agreement or any part thereof unless reduced to
writing and executed by authorized representatives of all Parties.
25. COMPLIANCE WITH LAW

The Parties will at all times comply with all applicable foreign, U.S., state, and local laws, rules and regulations
relating to the execution, delivery and performance of this License Agreement. Each Party agrees that it will not
export or reexport, resell, ship, provide, or divert or cause to be exported or reexported, resold, shipped,
provided, or diverted directly or indirectly any PointSource Technology, in whole or in part, whether or not it is
Confidential Information, nor provide or furnish any material or service to any country or to any person or entity,
where such activity is prohibited or otherwise restricted by any applicable U.S. regulation or statute, or by any
foreign sovereign government with competent jurisdiction, or for which an export license or other governmental
approval is required, without prior written consent (or export license), as required, of the Bureau of Export
Administration of the U.S. Department of Commerce, or other such governmental entity as may have jurisdiction
over such export or transmission.

26. SEVERABILITY.

In the event any provision of this License Agreement or the application of such provision to any particular facts or
circumstances is held to be invalid, unenforceable or contrary to law by any court of competent jurisdiction, then:
(i) the validity and enforceability of such provision or provisions as applied to any other particular facts or
circumstances shall not in any way be affected or impaired thereby; (ii) the remaining provisions of this License
Agreement shall remain in full force and effect as if the invalid portion was never a part of this License Agreement
when it was executed; and (iii) such provision or provisions will be reformed without further action by the Parties
and only to the extent necessary to make such provision or provisions valid and enforceable when applied to such
particular facts and circumstances. Should the severance of any such part of this License Agreement materially
affect any other rights and obligations of the parties hereunder, the parties shall negotiate in good faith to amend
this License Agreement to effectuate the original intent of both Parties in a manner satisfactory to the Parties.

27. COUNTERPARTS AND FACSIMILE.

This License Agreement may be executed in any number of counterparts, each of which when so executed and
delivered will be deemed an original, and such counterparts together will constitute one and the same instrument.
The Parties intend that each Party will receive a duplicate original of the counterpart copy or copies executed by
it. This License Agreement may be executed and delivered by telecopier with the same force and effect as if it
were a manually executed and delivered counterpart.

28. FORCE MAJEURE

Neither Party shall be liable for failure or delay in performance of its obligations under this License Agreement,
nor will it be deemed in default or breach of any provision of this

                                                        -27-


License Agreement by reason thereof, to the extent such failure or delay is caused by an act of God, act of a
public enemy, war or national emergency, rebellion, insurrection, riot, epidemic, quarantine restriction, fire, flood,
explosion, storm, earthquake, or other catastrophe. If a Party's performance under this License Agreement is
affected by a force majeure event, such Party shall give prompt written notice of such event to the other Party
and shall at all times use its reasonable commercial efforts to mitigate the impact of the force majeure event on its
performance under this License Agreement.

29. RULES OF CONSTRUCTION

Any reference to any Federal, state, local, provincial or foreign law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. For the purposes of this License
Agreement, (i) words in the singular shall be held to include the plural and vice versa and words of one gender
shall be held to include the other gender as the context requires, (ii) the terms "hereof", "herein", "hereunder" and
"herewith" and words of similar import shall, unless otherwise stated, be construed to refer to this License
Agreement as a whole and not to any particular provision or Section of this License Agreement, (iii) when used in
this License Agreement, unless otherwise expressly stated, the word "including" shall mean "including, without
limitation" and "discretion" means sole discretion. Unless otherwise expressly stated, when a Party's approval or
consent is required under this License Agreement, such Party may grant or withhold its approval or consent in its
discretion. References to "Section" or "Schedule" will be to the applicable section or schedule of this License
Agreement. Descriptive headings are inserted for convenience only and shall not be utilized in interpreting the
Agreement. This License Agreement has been negotiated by the Parties and reviewed by their respective counsel
and shall be fairly interpreted in accordance with its terms and without any strict construction in favor of or against
either Party.

                      [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                                         -28-


IN WITNESS WHEREOF, the parties hereto have executed this License Agreement by person thereunto duly
authorized as of the date first above written.

                                        PointSource Technologies , LLC

                                      /s/ SALAH HASSANEIN
                                          By: Salah Hassanein
                                          Its: Chief Executive Officer




                                            JMAR Technologies, Inc.

                                /s/ RONALD A. WALROD
                                    By: Ronald A. Walrod
                                    Its: Chief Executive Officer & President




                                                         -29-


                                                 SCHEDULE A
                                               PointSource Patents

                                      SERIAL/
          TITLE                      PATENT NO.           FILED         TYPE            STATUS        INVENTORS
  -----------------------         ---------------       --------     -----------       --------     -------------
  "Identification of              U.S. Patent No.                      Utility          Issued      Quist & Ix
  Particles in Fluid"             6,774,995                                            08/10/04

  "Identification of              U.S. Patent No.                       Utility         Issued      Quist & Ix
  Particles in Fluid"             6,519,033                                            02/11/03

                                  Europe                02/25/02        Utility        Pending
                                  02251286.7
                                  Published as:
                                  EP1281951A1

                                  Japan                                 Utility         Issued
                                  JP Patent No.                                        04/30/04
                                  3,550,131

  "Particle Detection             U.S. Patent No.                       Utility         Issued      Davis, Mead &
  Beam"                           6,628,386                                            09/30/03     Quist

  "Plano Convex Fluid             U.S. Patent No.                       Utility         Issued      Drake
  Carrier For Scattering          6,573,992                                            06/03/03
  Correction" (Fluid
  Carrier For Scatter
  Detection)

  "Flow Through Light             U.S. Patent No.                       Utility         Issued      Quist &
  Scattering Device"              6,590,652                                            07/08/03     Tisserat
  "High Detection Rate           10/412,100           04/11/03        Utility       Pending      Ix, Quist &
  Particle Identifier"                                                                           Mead

  "Unsupervised Learning:        U.S. Patent No.                      Utility        Issued      Mead & Davis
  Detect New Class In            6,819,421                                          11/16/04
  Field"

  "Optical Sensor Module         10/394,986           03/21/03        Utility       Pending      Davis &
  Tester"                                                                                        Aguirre




                                                       A-1

                                     SERIAL/
          TITLE                     PATENT NO.          FILED         TYPE           STATUS        INVENTORS
  -----------------------        ---------------      --------     -----------      --------     -------------
  "Particulate Info To           10/393,459           03/20/03       Utility        Pending      Mead & Quist
  Field Units"

  "Holographic Spherical         10/272,869                           Utility        Issued      Drake, Mead &
  Lenses"                        U.S. Patent No.                                    07/06/04     Quist
                                 6,760,107
                                 US02/22368           07/09/02          PCT         Pending

  "Solubilizer/Dispersant        60/572,937           05/20/04     Provisional      Pending      Felkner &
  For Insoluble Organics                                                                         Hunsberger
  That Is Harmless For
  Bacteria"

  "Automatic Adaption Of         60/602,612           08/19/04     Provisional      Pending      Mead
  Background Signature"

  "Particle ID With              10/834,516           04/29/04       Utility        Pending      Quist & Ix
  Narrow Angle Detectors"                                          Divisional




                                                       A-2


                                                 SCHEDULE B
                                                  Exceptions

1. RSM Ventures, LLC has a first priority security interest in the PointSource Intellectual Property Rights
pursuant to the terms of the Patent Security Agreement dated January 8, 2003.

                                                       B-1


                                                EXHIBIT 10.19

         TECHNOLOGY TESTING AND CONTINGENT PURCHASE AGREEMENT FOR
                                 BIOSENTRY

This Agreement is entered into by and between the Olivenhain Municipal Water District, a Municipal Water
District organized and operating pursuant to Water Code Sections 71000 et seq. (hereinafter the District) and
JMAR Technologies, Inc., a Delaware corporation operating in the State of California (hereinafter "JMAR").

                                                R-E-C-I-T-A-L-S

1. The District is a public agency organized and operating pursuant to Water Code Sections 71000 et seq.,
which provides water and sewer service within certain areas of Northern San Diego County.

2. JMAR is a leading innovator in the development of laser-based equipment for imaging, analysis and fabrication
and, in conjunction with The LXT Group, has developed the BioSentry(TM) system, a laser-based, early-
warning system for detecting and classifying potentially harmful microorganisms in water supplies;
3. JMAR has successfully completed a proof of concept and alpha versions of its BioSentry(TM) units, and has
offered to install three beta BioSentry units in the District's water treatment facilities for the purposes of testing the
operation of these beta units in a water facility environment;

4. The District's goal with regard to testing and ultimate purchase of the BioSentry(TM) units is to receive a
waiver from the California Department of Health Services ("CDHS") of the requirement for a 0.5 log reduction in
Giardia now required for the District's treatment system.

5. JMAR and the District desire to engage in a joint effort to test the operation and effectiveness of the BioSentry
units in order to allow the District to obtain the approval and waiver from the CDHS. If successful, the District
has agreed to purchase 3 BioSentry(TM) units on the terms set forth herein.

                                                            1


                                                C-O-V-E-N-A-N-T-S

1. Services to Be Performed. JMAR agrees to install BioSentry beta units at the District's facility and to operate
and perform testing of such units in accordance with the BioSentry Test Program Proposal and Test Plan
attached hereto as Exhibit A and Exhibit A-1 and incorporated herein by reference. All work performed by
JMAR shall be subject to review and approval by the District. The District shall have no obligation to approve
any work found defective by the District, in its sole discretion.

2. Installation and Testing of Beta Units. JMAR agrees to a) supply and install three BioSentry(TM) Beta units at
the District's treatment facility and
b) operate and test the Beta units in accordance with Exhibit A at no cost to the District. JMAR agrees to bear
the cost of the three Beta units and its own costs for installing, operating and testing the units. The District agrees
to make available its facility to JMAR at no additional cost to JMAR for the purpose of the installation and testing
of the three BioSentry(TM) Beta units. The District also agrees to make its personnel available to JMAR at the
District's cost to support the installation and testing of the Beta units in accordance with Exhibit A.

3. Contingent Purchase Order. The parties must obtain approval by the CDHS for installation and operation of
the BioSentry(TM) units at the District's treatment plant. The parties also intend to seek a waiver by the CDHS
of the requirement for a 0.5 log reduction in Giardia currently required by the CDHS for the District's water
treatment plant. The obligation of the District to purchase any BioSentry(TM) units is expressly conditional upon
CDHS approval of both installation of the BioSentry(TM) units at the Districts's treatment plant and CDHS
approval of a waiver of the requirement for 0.5 log reduction in Giardia at the District's water treatment plant.
Upon receipt by the District of written approval from the CDHS for the installation and operation of the
BioSentry(TM) units and CDHS approval of a waiver of the 0.5 log reduction in Giardia, the District will issue a
binding Purchase Order obligating the District to purchase at least three production units of the BioSentry(TM)
system. The Purchase Order will contain the terms and conditions set forth in the Quotation attached hereto as
Exhibit B and incorporated herein by reference. Following the purchase of the production units by the District, the
parties agree to

                                                            2


continue to work together to obtain the desired CDHS waiver. If CDHS does not approve installation of the
BioSentry(TM) system in the District's treatment plant or the DDHS does not approve a waiver of 0.5 log
reduction in Giardia at the District's water treatment plant, the District shall have the unilateral right to terminate
this agreement by written notice to JMAR. JMAR shall remove all BioSentry(TM) units in the plant at is sole cost
and expense without causing any damage to the District's water treatment plant and JMAR will not receive any
compensation from the District.

4. Work Performance Standards. JMAR agrees to perform all work and services required by this Agreement in
a manner which complies with all federal and state health and safety standards, in a manner that complies with all
permit requirements for the District's water treatment plant, in a manner that complies with all CDHS
requirements, and in a manner which avoids damage or injury to any real or personal property of any person or
entity, including any real or personal property of the District. JMAR agrees to perform the work at all times in a
manner which avoids the creation of any trespass or private or public nuisance during conduct of the work.

5. Liability for Work of Agents, Independent Contractors, and Subcontractors. JMAR shall be solely liable and
responsible for all labor and materials provided by any director, officer, agent, employee, subcontractor, supplier,
or independent contractor hired or retained by JMAR to perform any work or to provide any materials or
supplies. The District shall have no liability whatsoever for any work or services performed or any materials or
supplies provided by JMAR or its directors, officers, agents, employees, subcontractors, suppliers, or
independent contractors.

6. Time for Completion of Services. As a material term of this Agreement, JMAR agrees to complete all work
and services required by this Agreement by no later than December 31, 2005.

7. Termination Right. Either party shall have the express right to terminate this Agreement at any time by giving
thirty (30) consecutive days advance written notice to the other party upon the occurrence of any of the following
events: a) the failure of the BioSentry Beta units to perform in accordance with the Test Plan set forth in Exhibit
A-1 for a period of 120

                                                          3


days after installation; or b) the receipt of an unconditional refusal by CDHS to grant the requested approval or
waiver. Upon receipt of such a termination notice, JMAR shall promptly cease its testing and operation of the
BioSentry units, shall remove the BioSentry units from the District's treatment plant within 30 days at its sole cost
and expense and shall avoid any injury or damage to any part of the District's treatment plant in removing the
units. The District shall be responsible for restoring the premises to its previous condition.

8. Hazardous and Toxic Waste. For purposes of this section, the term "hazardous or toxic waste" means any
solid, liquid, or gaseous product classified as a hazardous or toxic waste under any federal, state, or local laws,
rules, regulations, or ordinances, and all gas and oil products and by-products of every kind or nature. JMAR
shall be solely liable and responsible for the proper clean-up and removal of all hazardous or toxic waste used,
handled, stored, or spilled by JMAR or any director, officer, agent, employee, subcontractor, independent
contractor or representative of JMAR. JMAR shall pay all fees, costs, expenses and fines necessary to clean-up
or remediate any hazardous or toxic waste for which JMAR is liable under this paragraph in strict accordance
with all federal, state and local laws, rules and regulations at JMAR's sole cost and expense. JMAR shall not be
liable for any hazardous or toxic waste used, handled, stored or spilled by the District or its directors, officers,
employees or contractors.

In the event any third party, including any regulatory agency, brings any claim or cause of action against the
District to clean-up or remediate any hazardous or toxic waste for which JMAR is liable under this section,
JMAR shall also indemnify and hold harmless the District and its directors, officers, agents, and employees from
all claims, actions, losses, costs, fees, expenses, fines, and penalties, of whatever type or nature, including all
costs of defense and attorneys fees, upon written demand for indemnity from the District.

In the event any third party, including any regulatory agency, brings any claim or cause of action against JMAR to
clean-up or remediate any hazardous or toxic waste for which District is liable under this section, District shall
also indemnify and hold harmless JMAR and its directors, officers, agents, and employees from all claims,
actions, losses, costs, fees, expenses, fines, and penalties, of whatever type or nature, including all costs of
defense and attorneys fees, upon written demand for indemnity from JMAR.

                                                          4


9. Independent Contractor. As a material term of this Agreement, it is expressly agreed between the parties that
JMAR is performing all work and services for the District pursuant to this Agreement as an independent
contractor and not as an agent or employee of the District. The parties further agree and acknowledge that the
District expects JMAR to make its own independent determination of the means and methods to perform all
work required by this Agreement, and will not be directed as to any of these means or methods by the District.

10. Conflicts of Interest Prohibited. As a material term of this Agreement, JMAR shall not in any way attempt to
use its position to influence any decision of the District in which it knows, or has reason to know, it has a financial
interest other than the compensation provided in this agreement. As a material term of this Agreement, JMAR
warrants and represents that it does not, to the best of its knowledge, have any economic interests which would
conflict with any of its duties under this Agreement. JMAR agrees not to secure any economic interest during the
performance of this Agreement which conflicts with its duties to the District under this Agreement.

11. Insurance. At all times during the term of this Agreement, JMAR shall maintain workers compensation
insurance and a commercial general liability insurance policy in strict accordance with all terms of this paragraph.
The insurance required by this paragraph shall be provided as follows:

11.1 Workers Compensation Insurance. Immediately following execution of this Agreement and prior to
commencement of any work by JMAR, JMAR shall provide the District with certificates of insurance showing
that JMAR has obtained, for the full period of this Agreement, workers compensation insurance coverage for no
less than the statutory limits covering all persons whom JMAR employs or may employ in carrying out any work
under this Agreement. This workers compensation insurance shall remain in full force and effect at all times during
performance of any work required by this Agreement; and

11.2 Liability Insurance. Promptly following execution of this Agreement, and prior to commencement of any
work, JMAR shall provide the District with certificates of insurance and such endorsements as may be required
by the District, demonstrating that JMAR has in full force and effect a broad form commercial general liability
insurance policy or policies

                                                           5


covering bodily injury, property damage, products-completed operations, and personal injury in an amount of not
less than $2,000,000.00 per occurrence with a deductible not to exceed $50,000. This liability insurance policy
or policies shall be with an insurance company licensed to do business in the State of California and acceptable to
the District. All liability insurance shall include an occurrence coverage (except for products liability insurance
which shall be "claims made" coverage) and shall include a "cross-liability" or "severability of interest" clause. The
insurance certificate and any endorsements shall be non-cancelable without thirty (30) days prior written notice to
the District.

The District shall be named as additional named insureds on all policies required by this paragraph. The insurance
afforded to the District shall be primary insurance. If the District has other insurance which might be applicable to
any loss, the amount of the insurance provided under this section shall not be reduced or prorated by the
existence of such other insurance.

12. Job Site Safety. JMAR shall be solely liable and responsible for the job site safety and complying with all
federal, state and local laws, rules and regulations pertaining to job safety for all agents, employees,
subcontractors, suppliers, and independent contractors retained by JMAR to perform any work or services or to
provide any materials required by this Agreement. However, JMAR shall not be liable or responsible for job site
safety for any workers or agents employed by the District in connection with the installation and operation of the
BioSentry units.

13. Indemnity. As a material term of this Agreement, JMAR agrees to hold harmless, indemnify, and defend the
District and its directors, officers, employees, agents, and representatives from and against any and all liability,
claims, causes of action, suits, actions, damages, losses, costs, fees, expenses, fines, and penalties, of whatever
type or nature, including all costs of defense and attorney fees, caused in whole or in part, or claimed to be
caused in whole or in part by the action, inaction, passive or active negligence, or intentional misconduct of
JMAR or its directors, officers, employees, agents, subcontractors, sub-consultants, suppliers, or independent
contractors, except claims and causes of action caused by the sole active negligence or intentional misconduct of
the District or its directors, officers, employees or agents. The District agrees to hold harmless, indemnify, and
defend JMAR and its directors, officers, employees, agents, and representatives from and against any and all
claims, causes of action, suits, actions, damages, losses, costs, fees, expenses, fines, and penalties, of whatever
type or

                                                           6
nature, including all costs of defense and attorney fees, caused by the sole active negligence or intentional
misconduct of the District or its directors, officers, employees, agents, subcontractors, sub-consultants, suppliers,
or independent contractors. In the event that any administrative proceeding, litigation or arbitration is instituted
naming an indemnified party as a defendant, the indemnified party shall be entitled to appoint its own independent
counsel to represent it, and the indemnifying party agrees to pay all reasonable attorneys fees, expert fees and
costs, and litigation costs associated with this defense within thirty (30) days of any billing.

14. Miscellaneous Provisions.

14.1 California Law Governs. This Agreement shall by governed by California law.

14.2 Jurisdiction and Venue. In the event of any legal or equitable proceeding to enforce or interpret the terms
and conditions of this Agreement, the parties agree that jurisdiction and venue shall lie only in the state courts
located in the North County Judicial District, County of San Diego, State of California.

14.3 Modification. This Agreement may not be altered in whole or in part except by a written modification
approved by the Board of Directors of the District and executed by all the parties to this Agreement.

14.4 Attorneys' Fees. In the event any arbitration, action or proceeding is initiated to challenge, invalidate,
enforce or interpret any of the terms of this Agreement, the prevailing party shall be entitled to all attorneys' fees,
all expert fees and costs, and all litigation fees, costs, and expenses in addition to any other relief granted by law.
This provision shall apply to the entire Agreement.

14.5 Entire Agreement. This Agreement, together with all exhibits attached hereto, contains all representations
and the entire understanding between the parties with respect to the subject matter of this Agreement. Any prior
correspondence, memoranda, or agreements, whether or not such correspondence, memoranda or agreements
are in conflict with this Agreement, are intended to be replaced in total by this Agreement and its exhibits. JMAR
warrants and represents that no District representative has made any oral representations or oral

                                                           7


agreements not contained in this Agreement. JMAR further warrants and represents that JMAR has not relied
upon any oral statements or promises made by any District representative or agent in executing this Agreement.
The parties mutually declare that this Agreement and its exhibits constitute a final, complete and integrated
agreement between the parties.

14.6 Prohibition on Assignment. JMAR shall not be entitled to assign or transfer all or any portion of its rights or
obligations in this Agreement without obtaining the express prior written consent of the District. The District shall
have no obligation to give its consent to any assignment and may deny any requested assignment, in its sole
discretion.

14.7 Binding Effect. This Agreement shall inure to the benefit of and be binding upon the parties and on their
respective purchasers, successors, heirs and assigns.

14.8 Unenforceable Provisions. The terms, conditions, and covenants of this Agreement shall be construed
whenever possible as consistent with all applicable laws and regulations. To the extent that any provision of this
Agreement, as so interpreted, is held to violate any applicable law or regulation, the remaining provisions shall
nevertheless be carried into full force and effect and remain enforceable.

14.9 Representation of Capacity to Contract. Each party to this Agreement represents and warrants that he or
she has the authority to execute this Agreement on behalf of the entity represented by that individual. This
representation is a material term of this Agreement.

14.10 Opportunity to be Represented by Independent Counsel. Each of the parties to this Agreement warrants
and represents that it has been advised to consult independent counsel of its own choosing and has had a
reasonable opportunity to do so prior to executing this Agreement.

14.11 No Waiver. The failure of either party to enforce any term, covenant or condition of this Agreement on the
date it is to be performed shall not be construed as a waiver of that party's right to enforce this, or any other,
term, covenant, or condition of this Agreement at any later date or as a waiver of any term, covenant, or
condition of this Agreement. No waiver shall occur unless the waiver is expressly stated in writing and signed by
the person for the party

                                                          8


having the authority to expressly waive the benefit or provision, in writing. No oral waivers shall be effective
against either party.

14.12 No Joint Venture and No Third Party Beneficiaries. Nothing in this Agreement is intended to create a joint
venture, partnership or common enterprise relationship of any kind between the District and JMAR. No third
parties shall be construed as beneficiaries of any term, covenant or provision of this Agreement.

14.13 Time of Essence. The parties agree that time is of the essence as to all matters specified in this Agreement.
The parties mutually declare that this is a material term of this Agreement.

14.14 Notices. All letters, statements, or notices required pursuant to this Agreement shall be deemed effective
upon receipt when personally served, transmitted by facsimile machine, or sent certified mail, return receipt
requested, to the following addresses or facsimile numbers:

To: "JMAR"

JMAR Technologies, Inc.
Attention: General Counsel
5800 Armada Drive
Carlsbad, California 92008
Facsimile No. (760) 602-3299

To: "District"

Olivenhain Municipal Water District
Attn: David C. McCollom, General Manager 1966 Olivenhain Road
Encinitas, California 92024
Facsimile No. (760) 753-5640

14.15 Effective Date. The effective date of this Agreement executed in counterparts in Olivenhain, California,
within the North County Judicial District, County of San Diego, State of California, is March 4, 2005.

                                                          9

            Dated:   March 4, 2005                       OLIVENHAIN MUNICIPAL WATER DISTRICT,
                                                         a public agency

                                                         By: /s/ DAVID C. McCOLLOM
                                                             David C. McCollom
                                                             General Manager

            Dated:   March 4, 2005                       JMAR TECHNOLOGIES, INC.

                                                         By: /s/ JOHN RICARDI
                                                         Title: Vice President of Sensor Products




                                                         10


Exhibit 10.20 March 18, 2003

Dr. Jack L. Herz
Dr. Ara Chutjian
Dr. Murray Darrach
FemtoTrace, Inc.

Gentlemen:

This letter sets forth the agreement ("Agreement") of JMAR Technologies, Inc. ("JMAR") and FemtoTrace, Inc.
("FemtoTrace") regarding the design, manufacture and delivery by JMAR of certain prototype versions of the
READ Analytical Instrument for the Trace Analysis and Detection of Organic Pollutants, Explosives, Nerve and
Blister Agents, Illicit Drugs and Other Contraband ("READ Analytical Instrument").

This Agreement shall be performed in phases as provided below.

1. Alpha and Beta Units

a) In order to expedite commencement of the work provided for under this Agreement, upon execution of this
Agreement JMAR shall commence work on the initial design tasks for the two Alpha units, up to the point of
incurring a total of $50,000 in burdened labor. Unless and until FemtoTrace shall have delivered written
authorization to JMAR to proceed with the balance of the work specified under the Agreement, JMAR shall not
incur costs in excess of $50,000 and FemtoTrace shall not be obligated to pay any costs in excess of $50,000.

b) The first phase of this Agreement shall involve the design, manufacture and delivery of two (2) Alpha versions
of the READ Analytical Instrument. The specifications of the Alpha units are attached hereto as Exhibit A.

c) The second phase of this Agreement shall involve the design, manufacture and delivery of two (2) Beta
versions of the READ Analytical Instrument. Following completion of acceptance testing for the Alpha units as
provided in Section 5 below, there shall be a period of 60 days during which the parties will discuss and agree
upon the final specifications of the Beta units, the timeline and tasks related to the assembly and delivery of the
Beta units and the designs and other modifications required to be made to the Beta units. Unless FemtoTrace has
exercised its right under Section 9(b) to terminate this Agreement, after the parties have reached agreement on
the final specifications, timeline, tasks, designs and other modifications for the Beta units and related matters,
JMAR shall be obligated to design, manufacture and deliver the two (2) Beta units in accordance with those final
specifications and other agreed upon terms and FemtoTrace shall be obligated to



purchase those units on the terms set forth herein. If the parties are unable to reach agreement on the final
specifications, timeline, tasks, designs and other modifications required for the Beta units, then JMAR shall have
no obligation to design, manufacture or deliver the Beta units. Each of the parties shall bear its own costs in
negotiating and preparing this Agreement, as well as in discussing and agreeing upon the final specifications of the
Beta units, the timeline and tasks related to the assembly and delivery of the Beta units.

d) Prior to the delivery of the two Alpha units, JMAR shall also provide FemtoTrace with a recommended
schedule of spare parts and options to purchase such spare parts and an optional service contract.

2. Price

a) This Agreement will be a fixed price, best efforts level of performance contract. The total contract price will be
$1,016,780 subject to adjustment for good cause as provided in this Agreement.

b) The contract price for the delivery of two (2) Alpha units of the READ Analytical Instrument shall be
$598,047 subject to change only under Section 8(b) below. The methodology for calculating the contract price
for the Alpha units is set forth on Exhibit B-1 hereto.

c) The contract price for the delivery of two (2) Beta units of the READ Analytical Instrument shall be $418,733
subject to adjustment during the 60 day period after acceptance of the Alpha units by taking into account all
agreed upon changes to the design, scope of work and changes in materials. The contract price for the two Beta
units shall include the time budgeted by JMAR for evaluation of the performance of the Alpha units after delivery
and the final design of the Beta units. The methodology for calculating the contract price for the Beta units is set
forth on Exhibit B-1 hereto.

d) JMAR will permit representatives designated by FemtoTrace, upon reasonable notice and during normal
business hours, at FemtoTrace's expense to (a) visit JMAR's Systems Division and inspect the activities being
performed in connection with the design and manufacture of the Alpha and Beta units, and (b) examine the
financial and other business records of JMAR's Systems Division to confirm the costs and prices for the Alpha
and Beta units, as well any adjustments to the pricing required by the Agreement (unless such examination is not
permitted by federal, state or local law or by contract) and make copies thereof or extracts therefrom.

                                                         2


3. Payment Schedule

FemtoTrace shall pay the contract price for the Alpha and Beta units in accordance with the schedule set forth on
Exhibit C hereto.

4. Schedule of Work

a) The tasks to be performed by JMAR related to the design, manufacturing and assembly of the Alpha units, are
listed on Exhibit D-1 hereto.

b) A recommended timeline with specific tasks related to the design and assembly of the Alpha units is attached
hereto as Exhibit D-2. The JMAR Program Manager may modify this timeline and list of tasks from time to time
as necessary after consultation with FemtoTrace, provided, however, that such modifications must be reasonable
and necessary and cannot change the agreed delivery dates.

c) The parties shall agree upon the tasks and timelines for the two Beta units within the 60 day period after
acceptance of the Alpha units.

d) A series of program reviews will be scheduled, including an Initial Program Review (IPR), Preliminary Design
Review (PDR), Critical Design Review (CDR) and a Manufacturing Release Review (MRR) for the Alpha units
and a CDR and a MRR for the Beta units. Written weekly reports will be provided by JMAR to FemoTrace
describing the progress versus schedule, problems and actions to resolve problems. The parties will hold weekly
meetings on the status of the program by telephone conference at a regular time and to be agreed by the parties
upon execution of this Agreement. The parties will meet in person as reasonably necessary to effectively complete
the work.

5. Acceptance Testing

Final acceptance of the Alpha and Beta units by FemtoTrace will consist of the satisfactory completion of a
mutually agreed upon final test procedure and the delivery by JMAR of a report that describes the variance of the
unit's performance from the product performance specification set forth on Exhibit A hereto.

FemtoTrace shall, within 45 days of execution of this Agreement, provide to JMAR its acceptance test
requirements for Alpha Units. JMAR shall, at least 45 days prior to the scheduled delivery of the initial Alpha
Units, provide FemtoTrace with its proposed written acceptance test procedures, subject to FemtoTrace's
review and modification prior to delivery. With respect to Beta Units, FemtoTrace will provide test requirements
within 30 days after the parties have reached agreement (under Section 6b, below) on Beta specifications, with
JMAR to provide its proposed test procedure at least 30 days before delivery of the initial Beta Units.

                                                         3


6. Delivery Schedule

a) The two Alpha units will be delivered to FemtoTrace by JMAR not later than seven (7) months following the
date of execution of this Agreement by the parties.
b) Provided the parties have reached agreement on the final specifications, timeline, tasks, designs and other
modifications required for the Beta units by the end of the 60 day period described in Section 1(b) above and
provided FemtoTrace shall not have terminated this Agreement pursuant to Section 9(b), the design and
manufacture of the two Beta units will commence not later than 30 days after the parties have reached agreement
on said matters, with delivery of the Beta units four months after design and manufacture has commenced.

c) Upon delivery of the Alpha units, JMAR shall also deliver to FemtoTrace all software, including source code,
together with all blueprints, specifications, drawings and instructions, sufficient to replicate a fully functioning
Alpha unit in all aspects. Upon delivery of the Beta Units, JMAR shall also deliver to FemtoTrace all software,
including source code, together with all blueprints, specifications, drawings and instructions, sufficient to replicate
a fully functioning Beta unit in all aspects.

7. Delivery of Additional Alpha or Beta Units

a) Within the 60-day period after acceptance of the initial Alpha units, the parties will agree on the configuration
of any additional Alpha units that FemtoTrace may order in the future. At any time after acceptance of the Alpha
Units and up to twenty-four (24) months after execution of this Agreement, upon 45 days advance written notice
by FemtoTrace, and after delivery of the first Alpha units, FemtoTrace may order additional Alpha units in the
agreed upon configuration at a price based upon the pricing methodology set forth on Exhibit B-2 hereto applied
to that configuration. Any changes to that configuration will result in changes in the pricing based on re-application
of the pricing methodology. The delivery of such additional Alpha units shall be no longer than 120 days following
the order.

b) Within the 60-day period after acceptance of the initial Beta units, the parties will agree on the configuration of
any additional Beta units that FemtoTrace may order in the future. At any time up to twenty-four (24) months
after execution of this Agreement, upon 45 days advance written notice by FemtoTrace, and after the delivery of
the first Beta units, FemtoTrace may order additional Beta units in the agreed upon configuration at a price based
upon the pricing methodology set forth on Exhibit B-2 hereto applied to that configuration. Any changes to that
configuration will result in changes in the pricing based on re-application of the pricing methodology. The delivery
of such additional Beta units shall be no longer than 120 days following the order.

                                                           4


c) From time to time, FemtoTrace may request that JMAR perform other services, such as non-recurring
engineering services, or provide other goods not covered by this Agreement. In such event, the price of such
goods or services shall be based upon the pricing methodology set forth on Exhibit B-2 hereto.

8. List of Components; Cost

a) The pricing of this contract is based upon the specification by FemtoTrace of various commercially available
components and subsystems. The components to be used in the READ Analytical Instrument, together with the
cost thereof, are listed in Exhibit E hereto. Also listed on Exhibit E are those components that will be supplied to
JMAR by FemtoTrace.

b) In the event that components other than those listed on Exhibit E are used in the Alpha or Beta units, or in the
event that the cost of those components have changed, resulting in a change in the cost of the units, the contract
price for the Alpha or Beta units shall be increased or decreased, as the case may be, to reflect the change in the
cost of the components. JMAR shall provide written confirmation of any increased or decreased component
costs to FemtoTrace prior to incurring such changed costs. Labor costs associated with any component changes
will not be charged unless the aggregate of all component changes under this Agreement results in substantial and
material increased labor. It is agreed that the contract prices for the Alpha and Beta units already include
sufficient labor allocations to cover customary minor adjustments to design and components

9. Termination Provisions

(a) FemtoTrace shall have the right to terminate this Agreement upon the material breach by JMAR in the
performance of its obligations under this Agreement. In order to terminate this Agreement on account of such a
breach by JMAR, FemtoTrace shall deliver written notice of termination of this Agreement to JMAR and JMAR
shall have failed to cure said breach within 30 days after delivery of said notice.

(b) FemtoTrace shall have the right to terminate this Agreement within 60 days after its acceptance of the Alpha
units if it has not secured sufficient financing to enable it to fund the second phase of this Agreement, by delivering
a written notice of termination to JMAR certifying its failure to obtain said financing. If FemtoTrace terminates this
Agreement pursuant to this Section 9(b), then it shall be responsible to pay JMAR for its reasonable costs in
evaluating the performance of the Alpha units after delivery and in designing the final Beta units. However, JMAR
will not incur such costs prior to funding without prior written approval of FemtoTrace and no components or
materials for the Beta units will be ordered until FemtoTrace confirms to JMAR that the funding contingency has
been met.

                                                          5


(c) In the event that the parties have not reached an agreement on the matters set forth in Section 1(b) before the
expiration of 60 days after acceptance by FemtoTrace of the two Alpha units, either party may terminate this
Agreement by delivery of a notice of termination to the other party with the termination being effective 10 days
after delivery of said notice.

10. Right to Exclusive Negotiation

Conditioned upon timely and complete performance by JMAR of this Agreement, FemtoTrace agrees to
negotiate exclusively with JMAR, for a period of up to 60 days beginning not later than the delivery by JMAR of
the Beta units under this Agreement, for the purpose of entering into a further agreement for the development and
manufacture of the production version of the READ Analytical Instrument. If the parties have reached an
agreement in principle within this period, the period shall be extended an additional 30 days for the purpose of
drafting and negotiating definitive agreements. The parties understand that these negotiations will be guided, in
part, by the need for FemtoTrace to be able to achieve certain price points and margins for this business. In
arriving at the terms and conditions of a production supply agreement, JMAR shall be treated as a contract
manufacturer and, as such, the pricing of its manufacturing services under the production supply agreement shall
be based upon the pricing methodology set forth on Exhibit B-3 hereto. During this exclusive negotiating period,
FemtoTrace will not negotiate for such an agreement with any other supplier.

11. Intellectual Property Rights

The intellectual property owned by JMAR and FemtoTrace, respectively, prior to the execution of this
Agreement shall not be affected by this Agreement. All intellectual property of any kind, whether patents,
trademarks, copyrights, trade secrets or other proprietary materials or information, that is developed in
connection with the design and manufacturing activities performed by JMAR under this Agreement will be owned
by FemtoTrace. All of the work performed by JMAR under this Agreement will be performed as "work for hire"
for FemtoTrace. JMAR will execute such documents (including assignments, licenses, patent applications,
registrations, etc.) and take any actions required to fully effectuate FemtoTrace's intellectual property rights under
this Agreement; provided, however, that the costs of preparing and prosecuting patent applications and other
similar actions to protect FemtoTrace's intellectual property rights shall be borne by FemtoTrace.

JMAR shall retain rights in any intellectual property developed by JMAR under this Agreement that may be used
in the field of semiconductor equipment applications that are not competitive with FemtoTrace's products.
FemtoTrace will execute an appropriate form of "grant-back" license to JMAR to enable JMAR to retain such
rights.

                                                          6


Upon delivery of the first Alpha unit under this Agreement and again upon delivery of the first Beta unit, JMAR
and FemtoTrace will conduct intellectual property reviews to identify all intellectual property of any kind that has
been developed in connection with JMAR's performance of the Agreement, so that FemtoTrace may take
appropriate action to secure its intellectual property rights.

12. Confidentiality
JMAR agrees to maintain in confidence and not to disclose to any third party any information or other
documentation created in connection with its performance under this Agreement, including without limitation any
specifications, plans, drawings, trade secrets, software, source code, manufacturing processes, or inventions.
JMAR may disclose confidential information only to employees or agents who have a need to know the
confidential information for the purpose of performing JMAR's obligations under this Agreement, and who are
bound by an obligation of secrecy, whether written or oral with respect to such information. JMAR will instruct its
employees, in written form, of their obligations under this Agreement.

FemtoTrace may, in its sole discretion, seek positive publicity on certain aspects of the project and JMAR agrees
to cooperate reasonably in these efforts upon the request of FemtoTrace.

JMAR may make such public disclosures regarding the execution of this Agreement as it deems necessary or
appropriate to satisfy its obligations as an SEC reporting company, provided that no proprietary information shall
be disclosed and, unless a shorter timeframe is required by law, FemtoTrace shall have been given at least five
(5) business days to review and comment on such proposed disclosures.

13. Other Terms and Conditions

a) Taxes. FemtoTrace shall pay for all sales, use, excise, custom duties, export fees and/or similar taxes caused
by or associated with the sale of the products contemplated by this Agreement.

b) Shipment. Shipments shall be F.O.B. South Burlington, Vermont. FemtoTrace shall be responsible for the
payment of all shipping and related expenses unless otherwise agreed to in writing. JMAR shall not be liable for
delay or default in performance when such delay or default directly or indirectly results from or is contributed to
by circumstances beyond JMAR's control, including, but not limited to, acts of God; war or national emergency;
fire; flood; riot; explosion; any labor dispute, difficulty or practice, however caused; or the unavailability of
necessary materials despite diligent and timely efforts. The period of any such delays will extend the time of
shipment accordingly.

c) Limited Warranty. JMAR MAKES NO WARRANTIES, EXPRESS OR IMPLIED, OF
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR

                                                         7


PURPOSE OR OTHERWISE, AND JMAR HAS NOT AUTHORIZED ANY OTHER PERSON TO
MAKE ANY OTHER REPRESENTATIONS OR WARRANTIES OR OTHERWISE SUBJECT JMAR TO
ANY OTHER LIABILITY IN CONNECTION WITH THE SALE OF THE READ ANALYTICAL
INSTRUMENTS. JMAR'S SOLE AND LIMITED WARRANTY TO FEMTOTRACE IS THAT THE
READ UNITS PROVIDED UNDER THIS CONTRACT WILL BE FREE OF MANUFACTURING OR
WORKMANSHIP DEFECTS ARISING DIRECTLY FROM THE WORK PERFORMED BY JMAR. THE
SOLE REMEDY FOR ANY SUCH DEFECT, FOR A PERIOD OF 180 DAYS FOLLOWING DELIVERY
TO FEMTOTRACE ONLY, WILL BE FOR JMAR, IN ITS DISCRETION, TO EITHER REPAIR OR
REPLACE ANY DEFECTIVE PART OR COMPONENT OF THE READ UNIT.

Components not of JMAR's manufacture are subject to component manufacturer's standard new product
warranties that will be made available to FemtoTrace to the full extent available to JMAR.

d) Limitation of Liability. JMAR and FemtoTrace shall have no liability to each other for payment of incidental or
consequential damages, including, but not limited to, damages due to loss of use, loss of production, or loss of
profit or other economic loss as a result of the performance of this Agreement or use and operation of the
product, including, but not limited to, defective workmanship or materials or any delay, act, error or omission of
JMAR.

e) Insurance and Indemnity. JMAR and FemtoTrace will each maintain insurance sufficient to cover their own
acts and omissions in the performance of this Agreement. JMAR and FemtoTrace shall each hold harmless and
indemnify the other against any loss, damage, claim, settlement or judgment arising solely from their own
negligence or misconduct.
                                          Miscellaneous Provisions

a) This Agreement shall be governed by and construed in accordance with the laws of the State of California.

b) This Agreement constitutes the entire agreement between the parties hereto relating to the subject matter
hereof and supersedes all prior or contemporaneous negotiations, representations, agreements and
understandings of the parties relating thereto. This Agreement may be amended or supplemented at any time, but
only by written agreement of the parties.

c) This Agreement may be signed in counterparts and signatures may be exchanged by facsimile. When both
parties have signed and exchanged facsimile signatures, the Agreement shall be deemed fully executed.

                                                       8


JMAR TECHNOLOGIES, INC.

                            By:    /s/ RONALD A. WALROD
                                   Ronald A. Walrod, Chief Executive Officer

                            FEMTOTRACE, INC.


                            By:    /S/ JACK L. HERZ
                                   Dr. Jack L. Herz, Chief Executive Officer




                                                       9
  




     E x h i b i t   1 0 . 2 1   P u r c h a s e   O r d e r  G E N E R A L          D Y N A M I C S A d v a n c e d       I n f o r m a t i o n     S y s t e m s   8 8 0 0   Q U E E N     A V E N U E     S O U T H     B L O O M I N G T O N ,      M N     5 5 4 3 1- 1 9 9 6   S U P P L I E R   N O T E :   W h e n   u s e d ,   t h e   I t e m   N o . ,   P a r t   N u m b e r   a n d   Q u a n t i t y   m u s t   a p p e a r   o n   a l l   P a c k i n g   L i s t s   a n d   I n v o i c e s .   I n v o i c e s   a r e   n o t   p a y a b l e   p r i o r   t o   r e q u e s t e d   D e l i v e r y   d a t e .   T h e   f o l l o w i n g   o r d e r   i s   s u b j e c t   t o   t h e   t e r m s ,   c o n d i t i o n s   a n d   w a r r a n t i e s   a t t a c h e d   t o   t h e   P u r c h a s e   O r d e r .   S U P P L I E R   N O :   1 9 2 8 1- 0 0 1   J S I   M I C R O E L E C T R O N I C S ,   I N C .   4 2 3 5   F o r c u m   A v e n u e   S u i t e   5 0 0   M C C L E L L A N                         C A   9 5 6 5 2  P U R C H A S E                                    O R D E R     N U M B E R —        P O    N U M B E R      1 0 1 2 7 0 2 2     T h i s    n u m b e r    m u s t   a p p e a r   o n   a l l
     I n v o i c e s ,   S h i p p i n g   N o t i c e s ,   C a s e s ,   P a c k a g e s   o r   C o r r e s p o n d e n c e   P e r t a i n i n g   t o   t h i s   O r d e r .   D A T E   P R E P A R E D                         P A G E   O F   P A G E S                         C H A N G E   N O .   0 3- 0             2- 0 4   1   2   0 0 0     S H I P   T O     A D D R E S S   G E N E R A L     D Y N A M I C S      A d v a n c e d   I n f o r m a t i o n    S y s t e m s   4 2 3 5   F O R C U M    A V E N U E     S U I T E   2 0 0   M C C L E L L A N ,      C A   9 5 6 5 2- 2 3 0 1   M A I L   I N V O I C E   T O   A D D R E S S   G E N E R A L   D Y N A M I C S   A d v a n c e d   I n f o r m a t i o n   S y s t e m s   A T T N :   B A R B A R A   B Y L S M A                         C A S F A C   4 2 3 5   F O R C U M   A V E N U E   S U I T E   2 0 0   M C C L E L L A N ,   C A   9 5 6 5 2- 2 3 0 1   T A X   I N S T R U C T I O N S                         T R A N S P O R A T I O N   M O D E :   S h i p   v i a   U n i f o r m   B i l l   o f   T h i s   o r d e r   i s   e x e m p t   f o r   S a l e s / U s e   T a x   i n  

     t h e                         F O B                         T E R M S                         L a d i n g ;   d o   n o t   d e c l a r e   e x c e s s   v a l u e .   s t a t e   o f   C A .   S R   O H   1 0 0- 1 7 1 9 6 8   O r i g i n                         N E T   3 0   D A Y S                         U N I T E D   P A R C E L   S E R V I C E   S U R F A C E   I T E M                         P A R T- N U M B E R                         R E V                         B U D G E T   C E N T E R                         S T A R T   D A T E                         E N D   D A T E  0 0 0 1                          B L A N K E T- 7 0      0 0   4 4 0 5     0 2- 2   3- 0 4   1 2- 3    1- 0 5   D E S C R I P T I O N B L A N K E T        O R D E R P R I O R I T Y- R A T I N G                         C O N T R A C T- I N V O L V E D             D O- A 7    D M E A 9 0- 9      9- D - 0 0 0 4   Y o u   a r e   r e q u i r e d   t o   f o l l o w   t h e   p r o v i s i o n s   o f   I S   C F R   7 0 0 ,   t h e   D e f e n s e   P r i o r i t i e s   a n d   A l l o c a t i o n s   S y s t e m   ( D P A S )   r e g u l a t i o n ,   a n d   a l l   o t h e r   a p p l i c a b l e   d i r e c t i o n s   o f   t h e  
     O f f i c e   o f   I n d u s t r i a l   R e s o u r c e   A d m i n i s t r a t i o n   i n   o b t a i n i n g   m a t e r i a l   a n d   p r o d u c t s   n e e d e d   t o   f i l l   t h i s   o r d e r .   T h i s   C o s t   P l u s   F i x e d   F e e   S u b c o n t r a c t / P u r c h a s e   O r d e r   i s   b e i n g   i s s u e d   i n   t h e                         n o t   t o   e x c e e d   a m o u n t   o f   $ 1 , 2 1 6 , 5 6 1 . 0 0   a n d   i s   i n   s u p p o r t   o f   C o n t r a c t u a l   E n g i n e e r i n g   T a s k   D M E A   0 4- 4 0 2                          d a t e d   1 1 / 0 4 / 2 0 0 3 ,   C o n t r a c t    N u m b e r      D M E A 9 0- 9      9- D - 0 0 0 4- 0 0 2 9 .    A t t a c h m e n t s     A     a n d   B   ( i d e n t i f i e d   b e l o w )   a r e   h e r e b y      i n c o r p o r a t e d   i n t o   t h i s   S u b c o n t r a c t / P u r c h a s e    O r d e r .   O r d e r   o f   P r e c e d e n c e :   1 .   S u b c o n t r a c t / P u r c h a s e   O r d e r   1 0 1 2 7 0 2 2   2 .   A t t a c h m e n t    A –    S u b c o n t r a c t   S t a t e m e n t    o f   W o r k ,    R e v i s i o n    1 ,   f o r   C O T S
     M i c r o e l e c t r o n i c s   a n d   H a r d / S o f t   C o r e   I n t e l l e c t u a l   P r o p e r t y   S u p p o r t   D a t e d   F e b r u a r y   2 3 ,   2 0 0 4 .   3 .   A t t a c h m e n t   B  –                G D A I S    S t a n d a r d    S u b c o n t r a c t    T e r m s      a n d   C o n d i t i o n s     w i t h    J S I    M i c r o e l e c t r o n i c s ,   I n c .   T h i s   P u r c h a s e   O r d e r    i s   a l s o     i s s u e d   c o n t i n g e n t   u p o n   a c c e p t a n c e   o f   J S I’ s   F o r w a r d   P r i c i n g   R a t e   A g r e e m e n t   b y   D C A A .   T h e   f o l l o w i n g   F A R      c l a u s e s    a r e    i n c o r p o r a t e d   b y   r e f e r e n c e   i n t o   t h i s   S u b c o n t r a c t / P u r c h a s e    O r d e r :    5 2 . 2 2 3- 5     –   P o l l u t i o n   P r e v e n t i o n    a n d   R i g h t- T o- K n o w        I n f o r m a t i o n   5 2 . 2 3 7 . 2 –   P r o t e c t i o n   o f   G o v e r n m e n t   B u i l d i n g s ,   e q u i p m e n t ,   a n d   V e g e t a t i o n                         T h e   p a r t i e s   u n d e r s t a n d   a n d   a g r e e   t h a t   t h e   c o s t   f o r   a l l   J S I  
     M i c r o e l e c t r o n i c s ,   I n c .   e f f o r t s   r e q u i r e d     t o   a c c o m p l i s h   t h e   i t e m s    a n d      a c t i v i t i e s   c o n t a i n e d   i n   A t t a c h m e n t s   A   a n d   B    s h a l l   n o t   e x c e e d   t h e   v a l u e    o f   t h i s   S u b c o n t r a c t / P u r c h a s e       O r d e r .    C O N T I N U E D      O N    N E X T     P A G E     V e n d o r   C o p y




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
  




     P u r c h a s e   O r d e r P U R C H A S E         O R D E R    N U M B E R —          G E N E R A L     D Y N A M I C S P O   N U M B E R   1 0 1 2 7 0 2 2   A d v a n c e d   I n f o r m a t i o n   S y s t e m s                         T h i s   n u m b e r   m u s t   a p p e a r   o n   a l l   I n v o i c e s ,   S h i p p i n g   N o t i c e s ,   C a s e s ,   P a c k a g e s   o r   C o r r e s p o n d e n c e   P e r t a i n i n g   t o   t h i s   O r d e r .   8 8 0 0   Q U E E N   A V E N U E   S O U T H   B L O O M I N G T O N ,   M N   5 5 4 3 1- 1 9 9 6   D A T E   P R E P A R E D                         P A G E   O F   P A G E S                         C H A N G E   N O .   0 3- 0                     2- 0 4   2   2   0 0 0   S U P P L I E R   N O T E :   W h e n   u s e d ,   t h e   I t e m   N o . ,   P a r t   N u m b e r   a n d   Q u a n t i t y   m u s t   a p p e a r   o n   a l l   P a c k i n g   L i s t s   a n d   I n v o i c e s .   I n v o i c e s   a r e   n o t   p a y a b l e   p r i o r   t o   r e q u e s t e d   D e l i v e r y   d a t e .   T h e   f o l l o w i n g   o r d e r   i s   s u b j e c t   t o   t h e   t e r m s ,  
     c o n d i t i o n s   a n d   w a r r a n t i e s   a t t a c h e d   t o   t h e   P u r c h a s e   O r d e r .   ( C o n t i n u e d   f r o m   p r e v i o u s   p a g e )   M A T E R I A L S / S E R V I C E S    N O T    T O    E X C E E D     T O T A L    O R D E R     P R I C E :   $ 1 , 2 1 6 , 5 6 1 . 0 0   S U P P L I E R    P L E A S E    N O T E :    B y   a c c e p t a n c e   o f   t h i s   o r d e r ,   s u p p l i e r   h e r e b y   c e r t i f i e s   t h a t   a l l   p r o d u c t s   a n d   s e r v i c e s   t o   b e   f u r n i s h e d     u n d e r   t h i s   P u r c h a s e   O r d e r   a r e   i n   c o m p l i a n c e   w i t h   W i l l i a m s- S t e i g e r   O c c u p a t i o n a l   S a f e t y   a n d   H e a l t h   A c t   o f   1 9 7 0 ,   P u b l i c   L a w   9 1- 5 9 8 ,   a n d                         B U Y E R S   A U T H O R I Z A T I O N   a l l   a m e n d m e n t s   t h e r e t o   a s   o f   t h e   d a t e   o f   t h i s   P u r c h a s e   O r d e r .   E d w a r d   R a a s h o f   3 / 2 / 0 4   M a i l   A c k n o w l e d g e m e n t ,   C o r r e s p o n d e n c e ,   G E N E R A L  
     D Y N A M I C S                         S U P P L I E R   A U T H O R I Z E D / A C C E P T E D   B Y   S I G N A T U R E   I n q u i r i e s   e t c .   t o   t h e   f o l l o w i n g   b u y e r :   A d v a n c e d   I n f o r m a t i o n   S y s t e m s                         L a r r y   R .   J o h n s o n   3 / 2 / 0 4   A T T N :   L O W E L L   B A R I E   8 8 0 0   Q U E E N   A V E N U E   S O U T H   S U I T E   2 0 0   B L O O M I N G T O N ,   M N   5 5 4 3 1- 1 9 9 6             P H O N E :    9 5 2 9 2 1 5 5 0 4    F A X :     9 5 2 9 2 1 6 8 6 9    V e n d o r   C o p y




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
  




     P u r c h a s e   O r d e r G E N E R A L         D Y N A M I C S A d v a n c e d       I n f o r m a t i o n   S y s t e m s   8 8 0 0   Q U E E N       A V E N U E     S O U T H     B L O O M I N G T O N ,           M N   5 5 4 3 1- 1 9 9 6   S U P P L I E R   N O T E :   W h e n   u s e d ,   t h e   I t e m   N o . ,   P a r t   N u m b e r   a n d   Q u a n t i t y   m u s t   a p p e a r   o n   a l l   P a c k i n g   L i s t s   a n d   I n v o i c e s .   I n v o i c e s   a r e   n o t   p a y a b l e   p r i o r   t o   r e q u e s t e d   D e l i v e r y   d a t e .   T h e   f o l l o w i n g   o r d e r   i s   s u b j e c t   t o   t h e   t e r m s ,   c o n d i t i o n s   a n d   w a r r a n t i e s   a t t a c h e d   t o   t h e   P u r c h a s e   O r d e r .   S U P P L I E R   N O :   1 9 2 8 1- 0 0 1   J S I   M I C R O E L E C T R O N I C S ,   I N C .   4 2 3 5   F o r c u m   A v e n u e   S u i t e   5 0 0   M C C L E L L A N                         C A   9 5 6 5 2  P U R C H A S E                                       O R D E R    N U M B E R —             P O    N U M B E R        1 0 1 2 7 0 2 3     T h i s   n u m b e r       m u s t   a p p e a r   o n    a l l   I n v o i c e s ,
     S h i p p i n g   N o t i c e s ,   C a s e s ,   P a c k a g e s   o r   C o r r e s p o n d e n c e   P e r t a i n i n g   t o   t h i s   O r d e r .   D A T E   P R E P A R E D                         P A G E   O F   P A G E S                         C H A N G E   N O .   0 3- 0             2- 0 4   1   2   0 0 0   S H I P   T O   A D D R E S S     G E N E R A L     D Y N A M I C S     A d v a n c e d     I n f o r m a t i o n   S y s t e m s   4 2 3 5    F O R C U M     A V E N U E     S U I T E   2 0 0   M C C L E L L A N ,     C A   9 5 6 5 2- 2 3 0 1   M A I L   I N V O I C E   T O   A D D R E S S   G E N E R A L   D Y N A M I C S   A d v a n c e d   I n f o r m a t i o n   S y s t e m s   A T T N :   B A R B A R A   B Y L S M A                         C A S F A C   4 2 3 5   F O R C U M   A V E N U E   S U I T E   2 0 0   M C C L E L L A N ,   C A   9 5 6 5 2- 2 3 0 1   T A X   I N S T R U C T I O N S                         T R A N S P O R A T I O N   M O D E :   S h i p   v i a   U n i f o r m   B i l l   o f   T h i s   o r d e r   i s   e x e m p t   f o r   S a l e s / U s e   T a x   i n   t h e   s t a t e   o f   C A .  

     F O B                         T E R M S                         L a d i n g ;   d o   n o t   d e c l a r e   e x c e s s   v a l u e .   S R   O H   1 0 0- 1 7 1 9 6 8   O r i g i n                         N E T   3 0   D A Y S                         U N I T E D   P A R C E L   S E R V I C E   S U R F A C E   I T E M                         P A R T- N U M B E R                         R E V                         B U D G E T   C E N T E R                         S T A R T   D A T E                         E N D   D A T E  0 0 0 1                             B L A N K E T- 7 0     0 0   4 4 0 5     0 2- 2   3- 0 4     1 2- 3   1- 0 5   D E S C R I P T I O N B L A N K E T       O R D E R P R I O R I T Y- R A T I N G                         C O N T R A C T- I N V O L V E D        D O- A 7    D M E A 9 0- 9       9- D - 0 0 0 4   Y o u   a r e   r e q u i r e d    t o   f o l l o w    t h e   p r o v i s i o n s    o f   I S   C F R   7 0 0 ,   t h e   D e f e n s e    P r i o r i t i e s     a n d   A l l o c a t i o n s   S y s t e m   ( D P A S )    r e g u l a t i o n ,     a n d     a l l   o t h e r     a p p l i c a b l e   d i r e c t i o n s   o f     t h e   O f f i c e   o f   I n d u s t r i a l    R e s o u r c e
     A d m i n i s t r a t i o n   i n   o b t a i n i n g   m a t e r i a l   a n d   p r o d u c t s   n e e d e d   t o   f i l l   t h i s   o r d e r .   T h i s   C o s t   P l u s   F i x e d   F e e   S u b c o n t r a c t / P u r c h a s e   O r d e r   i s   b e i n g   i s s u e d   i n   t h e                         n o t   t o   e x c e e d   a m o u n t   o f   $ 2 , 3 0 0 , 5 1 4 . 0 0   a n d   i s   i n   s u p p o r t   o f   C o n t r a c t u a l   E n g i n e e r i n g   T a s k   D M E A   0 4- 4 0 1                           d a t e d   1 1 / 2 1 / 2 0 0 3 ,    C o n t r a c t     N u m b e r    D M E A 9 0- 9       9- D - 0 0 0 4- 0 0 3 0 .    A t t a c h m e n t s    A   a n d   B    ( i d e n t i f i e d   b e l o w )   a r e   h e r e b y   i n c o r p o r a t e d   i n t o    t h i s   S u b c o n t r a c t / P u r c h a s e   O r d e r .   O r d e r   o f     P r e c e d e n c e :   1 .    S u b c o n t r a c t / P u r c h a s e   O r d e r    1 0 1 2 7 0 2 3    2 .     A t t a c h m e n t   A –     S u b c o n t r a c t   S t a t e m e n t   o f      W o r k ,       R e v i s i o n     1 ,   f o r   a r m s   F o u n d r y     U p g r a d e s      a n d    E n h a n c e m e n t       p e r   S Q W
     C E T   0 4- 4 - 1   d a t e d   F e b r u a r y   2 3 ,   2 0 0 4 .   3 .   A t t a c h m e n t   B  –         G D A I S       S t a n d a r d   S u b c o n t r a c t    T e r m s     a n d      C o n d i t i o n s    w i t h   J S I   M i c r o e l e c t r o n i c s ,     I n c .   T h i s   P u r c h a s e    O r d e r   i s   a l s o   i s s u e d   c o n t i n g e n t   u p o n   a c c e p t a n c e     o f   J S I’ s   F o r w a r d    P r i c i n g     R a t e   A g r e e m e n t    b y   D C A A .   T h e   f o l l o w i n g   F A R     c l a u s e s    a r e   i n c o r p o r a t e d   b y   r e f e r e n c e     i n t o   t h i s   S u b c o n t r a c t / P u r c h a s e   O r d e r :   5 2 . 2 2 3- 5   –   P o l l u t i o n   P r e v e n t i o n   a n d    R i g h t- T o- K n o w        I n f o r m a t i o n   5 2 . 2 3 7 . 2 –    P r o t e c t i o n   o f   G o v e r n m e n t   B u i l d i n g s ,   e q u i p m e n t ,   a n d   V e g e t a t i o n                         T h e   p a r t i e s   u n d e r s t a n d   a n d   a g r e e   t h a t   t h e   c o s t   f o r   a l l   J S I   M i c r o   e l e c t r o n i c s ,   I n c .   e f f o r t s   r e q u i r e d   t o  
     a c c o m p l i s h   t h e   i t e m s   a n d    a c t i v i t i e s   c o n t a i n e d   i n   A t t a c h m e n t s    A    a n d    B   s h a l l   n o t   e x c e e d   t h e   v a l u e     o f   t h i s   S u b c o n t r a c t / P u r c h a s e   O r d e r .      C O N T I N U E D      O N    N E X T     P A G E     A c k n o w l e d g e m e n t      C o p y




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
  




     P u r c h a s e   O r d e r G E N E R A L      D Y N A M I C S A d v a n c e d      I n f o r m a t i o n   S y s t e m s   8 8 0 0   Q U E E N     A V E N U E   S O U T H   B L O O M I N G T O N ,     M N   5 5 4 3 1- 1 9 9 6   S U P P L I E R   N O T E :   W h e n   u s e d ,   t h e   I t e m   N o . ,   P a r t   N u m b e r   a n d   Q u a n t i t y   m u s t   a p p e a r   o n   a l l   P a c k i n g   L i s t s   a n d   I n v o i c e s .   I n v o i c e s   a r e   n o t   p a y a b l e   p r i o r   t o   r e q u e s t e d   D e l i v e r y   d a t e .   T h e   f o l l o w i n g   o r d e r   i s   s u b j e c t   t o   t h e   t e r m s ,   c o n d i t i o n s   a n d   w a r r a n t i e s   a t t a c h e d   t o   t h e   P u r c h a s e   O r d e r .   ( C o n t i n u e d   f r o m   p r e v i o u s   p a g e )  P U R C H A S E                       O R D E R    N U M B E R —        P O    N U M B E R      1 0 1 2 7 0 2 3   T h i s   n u m b e r    m u s t   a p p e a r   o n   a l l   I n v o i c e s ,   S h i p p i n g   N o t i c e s ,   C a s e s ,   P a c k a g e s   o r   C o r r e s p o n d e n c e   P e r t a i n i n g   t o   t h i s   O r d e r .   D A T E
     P R E P A R E D                         P A G E   O F   P A G E S                         C H A N G E   N O .   0 3- 0 2- 0 4    2    2   0 0 0   M A T E R I A L S / S E R V I C E S   N O T    T O   E X C E E D     T O T A L    O R D E R     P R I C E :    $ 2 , 3 0 0 , 5 1 4 . 0 0   S U P P L I E R   P L E A S E     N O T E :    B y   a c c e p t a n c e   o f   t h i s   o r d e r ,   s u p p l i e r   h e r e b y   c e r t i f i e s   t h a t   a l l   p r o d u c t s   a n d   s e r v i c e s   t o   b e   f u r n i s h e d   u n d e r   t h i s   P u r c h a s e   O r d e r   a r e   i n   c o m p l i a n c e   w i t h   W i l l i a m s- S t e i g e r   O c c u p a t i o n a l   S a f e t y   a n d   H e a l t h   A c t   o f   1 9 7 0 ,   P u b l i c   L a w   9 1- 5 9 8 ,   a n d   a l l   a m e n d m e n t s   t h e r e t o   a s   o f                         B U Y E R S   A U T H O R I Z A T I O N   t h e   d a t e   o f   t h i s   P u r c h a s e   O r d e r .   E d w a r d   R a a s h o f   3 / 2 / 0 4   M a i l   A c k n o w l e d g e m e n t ,   C o r r e s p o n d e n c e ,   I n q u i r i e s   e t c .   t o   t h e  

     f o l l o w i n g                         G E N E R A L   D Y N A M I C S                         S U P P L I E R   A U T H O R I Z E D / A C C E P T E D   B Y   S I G N A T U R E   b u y e r :   A d v a n c e d   I n f o r m a t i o n   S y s t e m s                         L a r r y   R .   J o h n s o n   3 / 2 / 0 4   A T T N :   L O W E L L   B A R I E   8 8 0 0   Q U E E N   A V E N U E   S O U T H   S U I T E   2 0 0   B L O O M I N G T O N ,   M N   5 5 4 3 1- 1 9 9 6             P H O N E :      9 5 2 9 2 1 5 5 0 4   F A X :   9 5 2 9 2 1 6 8 6 9     A c k n o w l e d g e m e n t C o p y




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
  




     P u r c h a s e   O r d e r G E N E R A L       D Y N A M I C S A d v a n c e d        I n f o r m a t i o n   S y s t e m s   8 8 0 0   Q U E E N     A V E N U E    S O U T H      B L O O M I N G T O N ,       M N    5 5 4 3 1- 1 9 9 6   S U P P L I E R   N O T E :   W h e n   u s e d ,   t h e   I t e m   N o . ,   P a r t   N u m b e r   a n d   Q u a n t i t y   m u s t   a p p e a r   o n   a l l   P a c k i n g   L i s t s   a n d   I n v o i c e s .   I n v o i c e s   a r e   n o t   p a y a b l e   p r i o r   t o   r e q u e s t e d   D e l i v e r y   d a t e .   T h e   f o l l o w i n g   o r d e r   i s   s u b j e c t   t o   t h e   t e r m s ,   c o n d i t i o n s   a n d   w a r r a n t i e s   a t t a c h e d   t o   t h e   P u r c h a s e   O r d e r .   S U P P L I E R   N O :   1 9 2 8 1- 0 0 1   J S I   M I C R O E L E C T R O N I C S ,   I N C .   4 2 3 5   F o r c u m   A v e n u e   S u i t e   5 0 0   M C C L E L L A N                         C A   9 5 6 5 2  




     P U R C H A S E       O R D E R    N U M B E R —        P O   N U M B E R   1 0 1 3 4 2 4 1   T h i s   n u m b e r   m u s t   a p p e a r   o n   a l l   I n v o i c e s ,   S h i p p i n g   N o t i c e s ,   C a s e s ,   P a c k a g e s   o r   C o r r e s p o n d e n c e   P e r t a i n i n g   t o   t h i s   O r d e r .   D A T E   P R E P A R E D                         P A G E   O F   P A G E S                         C H A N G E   N O .   0 1- 1            1- 0 5     1    2   0 0 0   S H I P   T O   A D D R E S S      G E N E R A L    D Y N A M I C S         A d v a n c e d    I n f o r m a t i o n   S y s t e m s   4 2 3 5   F O R C U M   A V E N U E   S U I T E   2 0 0   M C C L E L L A N ,   C A   9 5 6 5 2- 2 3 0 1   M A I L   I N V O I C E   T O   A D D R E S S   G E N E R A L   D Y N A M I C S   A d v a n c e d   I n f o r m a t i o n   S y s t e m s   A T T N :   B A R B A R A   B Y L S M A                         C A S F A C   4 2 3 5   F O R C U M   A V E N U E   S U I T E   2 0 0   M C C L E L L A N ,   C A   9 5 6 5 2- 2 3 0 1




     T A X   I N S T R U C T I O N S                         T R A N S P O R A T I O N   M O D E :   S h i p   v i a   U n i f o r m   B i l l   o f   L a d i n g ;   d o   n o t   d e c l a r e   T h i s   o r d e r   i s   e x e m p t   f o r   S a l e s / U s e   T a x   i n   t h e   s t a t e   o f                         F O B                         T E R M S                         e x c e s s   v a l u e .   C A .   S R   O H   1 0 0- 1 7 1 9 6 8   O r i g i n                         N E T   3 0   D A Y S                         U N I T E D   P A R C E L   S E R V I C E   G R N D   ( # 5 5 X 9 0 2 )   I T E M                         P A R T- N U M B E R                         R E V                         B U D G E T   C E N T E R                         S T A R T   D A T E                         E N D   D A T E  0 0 0 1                   B L A N K E T- 7 0     0 0   4 4 3 7   0 1- 0   1- 0 5   1 2- 3   1- 0 5   D E S C R I P T I O N B L A N K E T     O R D E R P R I O R I T Y- R A T I N G                         C O N T R A C T- I N V O L V E D    D O- A 7    D M E A 9 0- 9    9- D - 0 0 0 4   Y o u   a r e   r e q u i r e d   t o   f o l l o w   t h e   p r o v i s i o n s

     o f   I S   C F R   7 0 0 ,   t h e   D e f e n s e   P r i o r i t i e s   a n d   A l l o c a t i o n s   S y s t e m   ( D P A S )   r e g u l a t i o n ,   a n d   a l l   o t h e r   a p p l i c a b l e   d i r e c t i o n s   o f   t h e   O f f i c e   o f   I n d u s t r i a l   R e s o u r c e   A d m i n i s t r a t i o n   i n   o b t a i n i n g   m a t e r i a l   a n d   p r o d u c t s   n e e d e d   t o   f i l l   t h i s   o r d e r .   T h i s   P u r c h a s e   O r d e r   i s   i s s u e d   t o   p r o v i d e   J S I   f u n d i n g   i n   t h e   a m o u n t   o f   $ 1 4 1 , 8 4 6 . 5 0   f o r   J S I   u p g r a d e   o f   t h e   S V G 8 8   t o o l   i n   D M E A   f o u n d r y   i n   a c c o r d a n c e   w i t h   J S I   q u o t e   f o r   S V G 8 8   d a t e d   1 1 / 0 1 / 0 4   a n d   s u p p o r t i n g   R i t e   T r a c k   Q u o t e   d a t e d   0 7 / 1 9 / 0 4 .   B y   a c c e p t a n c e   o f   t h i s   P u r c h a s e   O r d e r   J S I   a c k n o w l e d g e s   t h e   e x t e n s i o n   a n d   v a l i d i t y   o f   J S I   Q u o t e   S V G 8 8   d a t e d   1 1 / 0 1 / 0 4 .   M A T E R I A L S /   S E R V I C E S  
     N O T   T O   E X C E E D    T O T A L    O R D E R     P R I C E   $ 1 4 1 , 8 4 6 . 5 0 —    S U P P L I E R      P L E A S E     N O T E :    B y     a c c e p t a n c e   o f    t h i s   o r d e r ,   s u p p l i e r   h e r e b y   c e r t i f i e s   t h a t   a l l   p r o d u c t s   a n d   s e r v i c e s   t o   b e   f u r n i s h e d   u n d e r   t h i s   P u r c h a s e   O r d e r   a r e   i n   c o m p l i a n c e   w i t h   W i l l i a m s- S t e i g e r       O c c u p a t i o n a l   S a f e t y   a n d    H e a l t h   A c t   o f   1 9 7 0 ,     P u b l i c     L a w   9 1- 5 9 8 ,   a n d   a l l   a m e n d m e n t s   t h e r e t o   a s   o f   t h e   d a t e   o f   t h i s   P u r c h a s e   O r d e r .   M a i l   A c k n o w l e d g e m e n t ,   C o r r e s p o n d e n c e ,   I n q u i r i e s   e t c .   t o   t h e                         G E N E R A L   D Y N A M I C S   f o l l o w i n g   b u y e r :   A d v a n c e d   I n f o r m a t i o n   S y s t e m s   A T T N :   L O W E L L   B A R I E   8 8 0 0   Q U E E N   A V E N U E   S O U T H   S U I T E   2 0 0   B L O O M I N G T O N ,   M N   5 5 4 3 1- 1 9 9 6   P H O N E :
     9 5 2 9 2 1 6 5 0 4    F A X :    9 5 2 9 2 1 6 8 6 9   P u r c h a s e   O r d e r   V e n d o r   C o p y




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
  




     G E N E R A L     D Y N A M I C S A d v a n c e d          I n f o r m a t i o n    S y s t e m s   8 8 0 0   Q U E E N     A V E N U E    S O U T H       B L O O M I N G T O N ,       M N     5 5 4 3 1- 1 9 9 6   S U P P L I E R   N O T E :   W h e n   u s e d ,   t h e   I t e m   N o . ,   P a r t   N u m b e r   a n d   Q u a n t i t y   m u s t   a p p e a r   o n   a l l   P a c k i n g   L i s t s   a n d   I n v o i c e s .   I n v o i c e s   a r e   n o t   p a y a b l e   p r i o r   t o   r e q u e s t e d   D e l i v e r y   d a t e .   T h e   f o l l o w i n g   o r d e r   i s   s u b j e c t   t o   t h e   t e r m s ,   c o n d i t i o n s   a n d   w a r r a n t i e s   a t t a c h e d   t o   t h e   P u r c h a s e   O r d e r .   S U P P L I E R   N O :   1 9 2 8 1- 0 0 1   J S I   M I C R O E L E C T R O N I C S ,   I N C .   4 2 3 5   F o r c u m   A v e n u e   S u i t e   5 0 0   M C C L E L L A N                         C A   9 5 6 5 2   B U Y E R S   A U T H O R I Z A T I O N   L .   B a i n   1 / 1 1 / 0 5   S U P P L I E R   A U T H O R I Z E D / A C C E P T E D   B Y   S I G N A T U R E   L a r r y   R .   J o h n s o n   1 / 1 2 / 0 5   V e n d o r  

     C o p y P U R C H A S E       O R D E R    N U M B E R —             P O   N U M B E R   1 0 1 3 4 2 3 9   T h i s   n u m b e r   m u s t   a p p e a r   o n   a l l   I n v o i c e s ,   S h i p p i n g   N o t i c e s ,   C a s e s ,   P a c k a g e s   o r   C o r r e s p o n d e n c e   P e r t a i n i n g   t o   t h i s   O r d e r .   D A T E   P R E P A R E D                         P A G E   O F   P A G E S                         C H A N G E   N O .   0 3- 1                       4- 0 5     1   2   0 0 2   S H I P   T O     A D D R E S S    G E N E R A L       D Y N A M I C S     A d v a n c e d   I n f o r m a t i o n   S y s t e m s     4 2 3 5   F O R C U M     A V E N U E     S U I T E    2 0 0   M C C L E L L A N ,     C A    9 5 6 5 2- 2 3 0 1   M A I L   I N V O I C E   T O   A D D R E S S   G E N E R A L   D Y N A M I C S   A d v a n c e d   I n f o r m a t i o n   S y s t e m s   A T T N :   B A R B A R A   B Y L S M A                         C A S F A C   4 2 3 5   F O R C U M   A V E N U E   S U I T E   2 0 0   M C C L E L L A N ,   C A   9 5 6 5 2- 2 3 0 1                    T A X      I N S T R U C T I O N S          T h i s   o r d e r   i s     e x e m p t   f o r    S a l e s / U s e   T a x
     i n                         F O B                         T E R M S                         T R A N S P O R A T I O N   M O D E :   S h i p   v i a   U n i f o r m   B i l l   o f   L a d i n g ;   d o   n o t   d e c l a r e   e x c e s s   v a l u e .   t h e   s t a t e   o f   C A .   S R   O H   1 0 0- 1 7 1 9 6 8   O r i g i n                         N E T   3 0   D A Y S                         U N I T E D   P A R C E L   S E R V I C E   S U R F A C E   I T E M                         P A R T- N U M B E R                         R E V                         B U D G E T   C E N T E R                         S T A R T   D A T E                         E N D   D A T E  0 0 0 1                                            B L A N K E T- 7 0     0 0    4 4 3 7     1 2- 0     1- 0 4   0 4- 3     0- 0 5   D E S C R I P T I O N B L A N K E T    O R D E R P R I O R I T Y- R A T I N G                         C O N T R A C T- I N V O L V E D    D O- A 7   D M E A 9 0- 9   9- D - 0 0 0 4    T h i s   P u r c h a s e    O r d e r   i s   i s s u e d    t o   p r o v i d e     J S I     f u n d i n g     i n     t h e   a m o u n t     o f     $ 8 1 , 4 4 9 . 1 7    f o r      J S I    r e p l a c e m e n t     o f   t h e   s i l a n e
     l i n e   a t   D M E A’ s     f o u n d r y      t o     b e   p e r f o r m e d     i n   a c c o r d a n c e   w i t h     J S I’ s   q u o t e   f o r   D 0 0 2 4     d a t e d   1 0 / 2 2 / 0 4 .       B y   a c c e p t a n c e   o f   t h i s   P u r c h a s e   O r d e r     J S I    a c k n o w l e d g e s   t h e   e x t e n s i o n   a n d   v a l i d i t y   o f   J S I   Q u o t e   D 0 0 2 4   d a t e d   1 0 / 2 2 / 0 4 .   C h a n g e   O r d e r   0 0 1   i s   i s s u e d   t o      e x t e n d   t h e   p e r i o d    o f   p e r f o r m a n c e   t o   0 4 / 3 0 / 0 5 .   C h a n g e   O r d e r    0 0 2    i s   i s s u e d     t o   r e d u c e   t h e   v a l u e   f r o m   $ 8 1 , 4 4 9 . 1 7   t o   $ 8 1 , 1 1 8 . 4 0   a n d   c l o s e    t h i s     P u r c h a s e     O r d e r   c o m p l e t e .   M A T E R I A L S /   S E R V I C E S   N O T    T O   E X C E E D    T O T A L     O R D E R    P R I C E      $ 8 1 , 1 1 8 . 4 0 —   S U P P L I E R       P L E A S E   N O T E :      B y   a c c e p t a n c e   o f   t h i s   o r d e r ,   s u p p l i e r       h e r e b y     c e r t i f i e s   t h a t    a l l   p r o d u c t s   a n d     s e r v i c e s     t o   b e   f u r n i s h e d   u n d e r

     t h i s   P u r c h a s e    O r d e r    a r e     i n     c o m p l i a n c e      w i t h    W i l l i a m s- S t e i g e r   O c c u p a t i o n a l     S a f e t y   a n d   H e a l t h   A c t   o f     1 9 7 0 ,   B U Y E R S    A U T H O R I Z A T I O N        P u b l i c    L a w     9 1- 5 9 8 ,   a n d   a l l   a m e n d m e n t s   t h e r e t o   a s   o f   t h e   d a t e   o f   t h i s   P u r c h a s e   O r d e r .   L .   B a r i e   3 / 1 4 / 0 5   M a i l   A c k n o w l e d g e m e n t ,   C o r r e s p o n d e n c e ,   I n q u i r i e s   e t c .   G E N E R A L   D Y N A M I C S                         S U P P L I E R   A U T H O R I Z E D / A C C E P T E D   B Y   S I G N A T U R E   t o   t h e   f o l l o w i n g   b u y e r :   A d v a n c e d   I n f o r m a t i o n   S y s t e m s                         L a r r y   R .   J o h n s o n   3 / 2 3 / 0 5   A T T N :   L O W E L L   B A R I E   8 8 0 0   Q U E E N   A V E N U E   S O U T H   S U I T E   2 0 0   B L O O M I N G T O N ,   M N   5 5 4   3 1- 1 9 9 6                                     P H O N E :     9 5 2 9 2 1 6 6 0 4     F A X :    9 5 2 9 2 1 6 8 6 9      V e n d o r      C o p y




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
  

                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Exhibit 10.22 




     O R D E R     F O R    S U P P L I E S     O R     S E R V I C E S P A G E   1   O F     1 5   1 .   C O N T R A C T / P U R C H .   O R D E R /   A G R E E M E N T     N O .   2 .   D E L I V E R Y   O R D E R / C A L L    N O .      3 .     D A T E    O F   O R D E R / C A L L     4 .   R E Q . / P U R C H .   R E Q U E S T     N O .   N 0 0 4 2 1- 0   2- D - 3 1 8 9   0 0 0 3   2 0 0 4   S e p   2 3   S E E   S C H E D U L E   5 .   P r i o r i t y   6 .   I S S U E D   B Y                         C O D E                         N 0 0 4 2 1   7 .   A D M I N I S T E R E D   B Y   (  I F   O T H E R   T H A N   6 ) C O D E                         S 0 7 0 1 A   N A V A L   A I R   W A R F A R E   C E N T E R   A D   ( P A X )   C O D E   2 . 5 . 1 . 4 . 5   B L D G .   4 4 1   D C M   H A R T F O R D   2 1 9 8 3   B U N D Y   R O A D   1 3 0   D A R L I N   S T R E E T   P A T U X E N T   R I V E R ,   M D   2 0 6 7 0   E A S T   H A R T F O R D ,   C T   0 6 1 0 8- 3 2 3 4   8 .   D E L I V E R Y   F O B   X                         D E S T I N A T I O N   O T H E R   ( S e e   S c h e d u l e   i f   o t h e r . )   9 .   C O N T R A C T O R                         C O D E   1 X P H 2  
     F A C I L I T Y   1 0 .   D E L I V E R   T O   F O B   P O I N T   B Y   ( D A T E )   1 1 .   M A R K   I F   B U S I N E S S   I S  ( Y Y Y Y M M D D ) S E E   S C H E D U L E   J M A R / S A L   N A N O L I T H O G R A P H Y   I N C                         X                         S M A L L  N A M E R O B E R T   S E L Z E R   1 2 .   D I S C O U N T   T E R M S                         S M A L L  A N D 2 1   G R E G O R Y   D R I V E                         N E T   3 0   D A Y S                         D I S A D V A N T A G E D  A D D R E S S S O U T H                                        B U R L I N G T O N ,   V T    0 5 4 0 3   W O M E N- O W N E D   1 3 .   M A I L   I N V O I C E S   T O   T H E   A D D R E S S   I N   B L O C K   S E E   I T E M   1 5   1 5 .   P A Y M E N T   W I L L   B E   M A D E   B Y                         C O D E   D F A S   C O L U M B U S   C E N T E R                         M A R K   A L L   D F A S- C O / N O R T H   E N T I T L E M E N T   O P E R A T I O N S                         P A C K A G E S   A N D   1 4 .   S H I P   T O                         C O D E                         P O   B O X   1 8 2 2 6 6   P A P E R S   W I T H  
     I D E N T I F I C A T I O N   N U M B E R S   I N   S E E   S C H E D U L E                         C O L U M B U S ,   O H   4 3 2 1 8- 2 2 6 6   H Q 0 3 3 7   B L O C K S   1   A N D   2 .   1 6 .   T Y P E   O F                         D E L I V E R Y /   O R D E R                         C A L L                         X                         T h i s   d e l i v e r y   o r d e r / c a l l   i s   i s s u e d   o n   a n o t h e r   G o v e r n m e n t   a g e n c y   o r   i n   a c c o r d a n c e   w i t h   a n d   s u b j e c t   t o   t e r m s   a n d   c o n d i t i o n s   o f   a b o v e   n u m b e r e d   c o n t r a c t .   P U R C H A S E                         R e f e r e n c e   y o u r   q u o t e   d a t e d   F u r n i s h   t h e   f o l l o w i n g   o n   t e r m s   s p e c i f i e d   h e r e i n .   R E F   :   A C C E P T A N C E .   T H E   C O N T R A C T O R   H E R E B Y   A C C E P T S   T H E   O F F E R   R E P R E S E N T E D   B Y   T H E   N U M B E R E D   P U R C H A S E   O R D E R   A S   I T   M A Y   P R E V I O U S L Y   H A V E   B E E N   O R   I S   N O W   M O D I F I E D ,   S U B J E C T   T O   A L L   O F   T H E  

     T E R M S   A N D   C O N D I T I O N S   S E T   F O R T H ,   A N D   A G R E E S   T O   P E R F O R M   T H E   S A M E .   J M A R / S A L   N A N O L I T H O G R A P H Y ,   I N C .   R O B E R T   S E L Z E R                         R O B E R T   S E L Z E R ,   V P   O F   T E C H N O L O G Y   2 0 0 4- 0                     9- 2 3   N A M E   O F   C O N T R A C T O R                         S I G N A T U R E                         T Y P E D   N A M E   A N D   T I T L E                         D A T E   S I G N E D   X                         I f   t h i s   b o x   i s   m a r k e d ,   s u p p l i e r   m u s t   s i g n   A c c e p t a n c e   a n d   r e t u r n   t h e   f o l l o w i n g   n u m b e r   o f   c o p i e s :   2  ( Y Y Y Y M M D D ) 1 7 .             A C C O U N T I N G    A N D    A P P R O P R I A T I O N   D A T A / L O C A L    U S E   S e e   S c h e d u l e   2 0   Q U A N T I T Y   O R D E R E D / 1 8 .   I T E M   N O .   1 9 .   S C H E D U L E   O F   S U P P L I E S / S E R V I C E S                         A C C E P T E D *   2 1   .   U N I T   2 2 .   U N I T   P R I C E   2 3 .   A M O U N T   S E E   S C H E D U L E   2 4 .   U N I T E D  
     S T A T E S    O F    A M E R I C A      T E L :   E M A I L : * I f   q u a n t i t y    a c c e p t e d     b y   t h e   G o v e r n m e n t    i s   s a m e   a s   q u a n t i t y   o r d e r e d ,   i n d i c a t e   b y   X .         I f   d i f f e r e n t ,   e n t e r   a c t u a l   q u a n t i t y    a c c e p t e d    b e l o w   q u a n t i t y    o r d e r e d    a n d   e n c i r c l e . B Y :   C O N T R A C T I N G / O R D E R I N G   O F F I C E R   2 5 . T O T A L   $ 2 , 1 0 0 , 0 0 0 . 0 0   2 6 .   D I F F E R E N C E S   2 7 A .   Q U A N T I T Y   I N   C O L U M N   2 0   H A S   B E E N   I N S P E C T E D                         R E C E I V E D                         A C C E P T E D ,   A N D   C O N F O R M S   T O   T H E   C O N T R A C T   E X C E P T   A S   N O T E D   c .   D A T E   b .   S I G N A T U R E   O F   A U T H O R I Z E D   G O V E R N M E N T   R E P R E S E N T A T I V E  ( Y Y Y Y M M D D ) d .        P R I N T E D    N A M E    A N D    T I T L E   O F   A U T H O R I Z E D    G O V E R N M E N T      R E P R E S E N T A T I V E     S U E   R .   W A I N W R I G H T    2 0 0 4 / 0 9 / 2 3   S U E   R .   W A I N W R I G H T   e .

     M A I L I N G   A D D R E S S   O F   A U T H O R I Z E D   G O V E R N M E N T   R E P R E S E N T A T I V E   2 8 .   S H I P   N O .   2 9 .   D O   V O U C H E R   N O .   3 0 .   I N I T I A L S   P A R T I A L   3 3 .   A M O U N T   V E R I F I E D   f .   T E L E P H O N E   N U M B E R                         g .   E- M A I L   A D D R E S S                         F I N A L   3 2 .   P A I D   B Y                         C O R R E C T   F O R   3 1 .   P A Y M E N T   3 6 .   I   c e r t i f y   t h i s   a c c o u n t   i s   c o r r e c t   a n d   p r o p e r   f o r   p a y m e n t .   C O M P L E T E   3 4 .   C H E C K   N U M B E R   a .   D A T E  ( Y Y Y Y M M D D ) b .   S I G N A T U R E   A N D   T I T L E   O F   C E R T I F Y I N G   O F F I C E R                         P A R T I A L   F I N A L   3 5 .   B I L L   O F   L A D I N G   N O .   4 0 .   T O T A L   4 2 .   S / R   V O U C H E R   N O .   3 7 . R E C E I V E D   A T   3 8 .   R E C E I V E D   B Y   3 9 .   D A T E   R E C E I V E D   4 1   S / R   A C C O U N T   N O .   D D   F o r m   1 1 5 5 ,   D E C   2 0 0 1   P R E V I O U S   E D I T I O N   I S   O B S O L E T E  




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
  

     Section B — Supplies or Services and Prices
                                                                                                                                                                                    
ITEM NO  SUPPLIES/SERVICES                                     QUANTITY  UNIT   UNIT PRICE                                                                         AMOUNT           
0001                                                                 1      Lot  $2,100,000.00  $2,100,000.00 
         SUPPLIES OR SERVICES                                                                                  
         FFP                                                                                                   
          Develop, design, and provide semiconductor chips and related Point X-Ray Lithography Technology,
          material and services in accordance with the Attachment (1) Statement of Work (SOW), Attachment 
          (2) Milestone Payment Schedule and Attachment (3) Performance Questionnaire. 
         FOB: Destination                                                                                      
  
     
         PURCHASE REQUEST NUMBER: 0031890003
             
                     
                                                                  
                                                                                  
                                                                                  
                                                                                              
                                                                                                   
                                                                                                  
                                                                                                               
                                                                                                                  
                                                                                                                          
                                                                                                                                                                    
                                                                                                                                                                                
                                                                                                                                                                                        




                                                                                      NET AMT $2,100,000.00 
                                                                                                               
ITEM NO   SUPPLIES/SERVICES                                             QUANTITY   UNIT    UNIT PRICE    AMOUNT                                                                     
000101                                                                                                  Lot                          
        FUNDING IN SUPPORT OF LINE ITEM 0001                                                                                         
        FFP                                                                                                                          
        FOB: Destination                                                                                                             
  
     
        PURCHASE REQUEST NUMBER: 0010111063
             
                             
                                                                          
                                                                                          
                                                                                                               
                                                                                                          
                                                                                                                              
                                                                                                                                      
                                                                                                                                                  
                                                                                                                                                                    
                                                                                                                                                                                
                                                                                                                                                                                        




                                                                                                             NET AMT $         0.00 
        ACRN AA                                                                                                       $2,100,000.00 
        CIN: 001011106300001                                                                                                         

                                                         
  

                                                                                                                                             
ITEM NO   SUPPLIES/SERVICES                                          QUANTITY   UNIT                 UNIT PRICE     AMOUNT 
0002                                                                            Lot                                       NSP
           SUPPLIES OR SERVICES                                                                                               
           FFP                                                                                                                
           Scientific and Technical data for Item 0001 in accordance with Exhibit “A”                                         
           Contract Data Requirements List DD-Form 1423                                                             
  
     
           FOB: Destination
             
                     
                                                                   
                                                                       
                                                                               
                                                                               
                                                                                   
                                                                                       
                                                                                       
                                                                                               
                                                                                                    
                                                                                                       
                                                                                                            
                                                                                                               
                                                                                                                       
                                                                                                                          
                                                                                                                              
                                                                                                                                         
                                                                                                                                                 




                                                                                                          NET AMT             
                                                                                                                              
ITEM NO   SUPPLIES/SERVICES                                          QUANTITY   UNIT                 UNIT PRICE     AMOUNT 
0003                                                                           Lot                                                   NSP
           SUPPLIES OR SERVICES                                                                                                          
           FFP                                                                                                                           
           Administrative and Financial Data for Item 0001 in accordance with Exhibit                                                    
           “B” Contract Data Requirements List DD-Form 1423                                                    
  
     
           FOB: Destination
             
                     
                                                                    
                                                                       
                                                                              
                                                                               
                                                                                   
                                                                                       
                                                                                               
                                                                                                       
                                                                                                       
                                                                                                           
                                                                                                                  
                                                                                                                          
                                                                                                                                  
                                                                                                                                         
                                                                                                                                         
                                                                                                                                                 




                                                                                                     NET AMT                             

                                                          
  

Section E — Inspection and Acceptance

INSPECTION AND ACCEPTANCE TERMS

     Supplies/services will be inspected/accepted at: 
                                                                                     
CLIN                     INSPECT AT               INSPECT BY        ACCEPT AT        ACCEPT BY
0001                     N/A                      N/A               N/A              N/A
000101                   N/A                      N/A               N/A              N/A
0002                     N/A                      N/A               N/A              Government
0003                     N/A                      N/A               N/A              Government

                                                            
  

Section F — Deliveries or Performance

DELIVERY INFORMATION
                                                                                               
CLIN        DELIVERY DATE                    QUANTITY      SHIP TO ADDRESS                     UIC
  
0001        POP 23-SEP-2004 TO               N/A           NAVAL AIR WARFARE CENTER            N00421
                                                           (PAX)                            
            30-JUL-2005                                    SUPPLY DEPARTMENT BLDG.665            
                                                           47179 VAUGHN RD. (NASSU)              
                                                           PATUXENT RIVER MD 20670-1614          
                                                           FOB: Destination                      
  
000101      N/A                            N/A           N/A                                 N/A
  
0002        POP 23-SEP-2004 TO               N/A           NAVAL AIR WARFARE CENTER            N00421
                                                           (PAX)                            
            30-JUL-2005                                    SUPPLY DEPARTMENT BLDG.665            
                                                           47179 VAUGHN RD. (NASSU)              
                                                           PATUXENT RIVER MD 20670-1614          
                                                           FOB: Destination                      
  
0003        POP 23-SEP-2004 TO             N/A           (SAME AS PREVIOUS LOCATION)         N00421
            30-JUL-2005                                  FOB: Destination                      

                                                             
  

Section G — Contract Administration Data

ACCOUNTING AND APPROPRIATION DATA

AA: 9740400 1304 252 00019 0 050119 2D 000000
COST CODE: AIR406541110
AMOUNT: $2,100,000.00
CIN 001011106300001: $2,100,000.00

                                                  
  

Section J — List of Documents, Exhibits and Other Attachments

STATEMENT OF WORK
ATTACHMENT (1)

     ADVANCED MANUFACTURING OF X-RAY PROXIMITY MASKS FOR SUB-100nm DEVICES

                                              SEPTEMBER 3, 2004

1    INTRODUCTION/BACKGROUND

       1.1       The effectiveness of our 21 st Century Warfighting capability is predicated on a combination sensor
            and communications networks that enable the timely flow of the “right” information to all echelons of
            Warfighters engaged in military operations. Such technology is necessary to provide warfighters the
            Single Integrated Picture (SIP)/Common Operational Picture (COP) required to engage an enemy. 
            These technologies can also be used for humanitarian applications as well as for evaluation of the real
            and/or synthetic systems. At the heart of these military and homeland defense systems are advanced
            technology components (e.g., processors, RF sub-systems, photonics, MEM’s, system-on-a-chip
            (SOC), etc.), which provide the US substantial advantage over any adversary. The performance of
            these enabling technologies has continued to advance at an amazing rate — this rate is referred to as
            Moore’s Law. One of the major factors contributing to this growth in computational performance,
            efficiency, spectrum of performance, bandwidth, etc. is the ability to manufacture these products with
            ever decreasing geometries using advanced lithographic tools, including X-ray lithography. Both the
            Government and industry have invested in X-ray lithography technology development and
            demonstration since the 1980’s at a level approaching a billion dollars. Such tools now exist in small
            numbers and are being used for defense products on a limited basis. X-ray lithography is not yet an
            accepted technology for commercial device manufacturing. Because of the importance of the X-ray
            Program and technology to the U.S. Defense community, this effort to advance the mask technology
            and bridge the gap between limited defense applications and self-sustaining commercial responsibility is
            established with this contract. Hence, work under this contract shall give preference to defense
            applications but will also seek commercial business in order to eventually establish a self-sustaining
            business capability.
  
       1.2       The focus of this Program is the development of the U.S. X-ray mask source and the JMAR/BAES
            ability to expose these masks for DOD and commercially related programs. To help accomplish these
            goals, JMAR will award a subcontract to BAESystems, Nashua, NH to demonstrate the fabrication of
            an Air Force Research Laboratory (AFRL) device to be used in space and other applications. BAE 
            Systems Nashua and Manassas together with JMAR propose to demonstrate fabrication of CRAM
            with 35-50 nm contact holes enabling 4 Mb and higher densities. The demonstration involves
            fabrication of CRAM wafers utilizing chalcogenide at the Mansassas Foundry

                                                            
  



          up to the chalcogenide via hole level. Via hole lithography will be performed utilizing current X-ray
          lithography tools such as DPF system at Nashua and CP system at Burlington. The wafers will then be
          completed and evaluated at Manassas. The proposed program includes two reduction printing
          approaches. This demonstration will enable future production of high density CRAM using X-ray
          lithography for high-priority, military and space applications. Chalcogenide-based memories, when
          combined with a Rad Hard CMOS base technology, provide an attractive solution meeting the needs
          of space-based applications for non-volatile memory.
  
     1.3       The Contractor is developing the technology for limited manufacturing of X-ray Proximity Masks
          for sub-100 nanometer (nm) devices. The initial work will build on efforts either previously or currently 
          sponsored by the Government — largely DARPA — as well as the private sector. The Army
          Research Lab has expressed great interest in an X-ray Microscope (XRM) and X-ray NanoProbe
          (XNP). Order to demonstrate these tools a type of X-ray mask called a “Zone Plate” or ZP mask is
          needed. JMAR will use technology developed under the mask program to produce ZP masks and
          usable ZP optics for these important developments. As the program progresses work may include the
          appropriate infrastructure technologies (e.g., materials/films for masks, mask blanks, cleaning
          technology, resists, patterning tools, metrology, inspection technology, handling technology, etc.). In
          doing so, the Contractor may form sub-contracting and/or teaming arrangements with necessary
          partners to sustain a mask making capability for defense and commercial applications. Masks
          fabricated during this effort may be for internal use of the Contractor, his teammates, for outside
          defense/commercial customers, or for delivery to the Government.

2     SCOPE

     2.1       The Contractor and CNTech, working under a task already funded in BAA 01-08, will obtain and
          provide for evaluation XRL/CPL/ZP masks using the services of this proposal. The purpose of this
          effort is to characterize masks and membrane films for Next Generation X-ray (NGX), X-Ray
          Microscope (XRM) and X-ray NanoProbe (XNP), in particular X-ray mask substrates and optics.
          This work will be accomplished in cooperation with vendors of thin films. An additional goal of this
          effort will be to establish a commercial U.S.-based supplier or suppliers of thin-fil or other substrates
          for X-ray masks. The scope of the study includes evaluation of thin films for membranes from various
          vendors. The surface roughness, stress and thickness uniformity, and composition will be evaluated by
          conventional surface analysis techniques. Also, the capability of using the thin films to form membranes
          will be evaluated through the production of actual NGL mask substrates and masks. Further, these
          masks will be evaluated for use in wafer printing X-ray optics (contract and optical alignment
          capability) and for radiation damage at BAE Systems, Nashua NH.
  
     2.2  As the program progresses, it may be necessary for the contractor to lease or purchase appropriate
          tools or technology to enable the operation of a

                                                           
  



                mask prototype manufacturing facility. This is considered to be within the scope of the overall
                effort, but not deemed necessary under this delivery order. Recommendations for future
                leases/purchases will be described in CDRL Item A004, the detailed program plan. 
  
           2.3       Assumptions 

          2.3.1  Right-to-use licenses for any Contractor-proprietary designs or software shall be provided for
                 the duration of the initial funded contract period of performance.

     2.4       Constraints 

          2.4.1  Right-to-use licenses do not imply transfer of ownership or rights to proprietary development.

3.0  REQUIREMENTS
  
3.1  The contractor shall continue the development of XRL-CPL-ZP mask technology and shall deliver 16
     advanced masks.
  
3.2  The contractor shall demonstrate the exposure capability of these masks to make devices using facilities with
     the necessary requisite equipment and expertise, i.e. BAES XRL Dense Plasma Source in Nashua, NH and
     the facilities of JMAR Systems CPL source in Burlington, VT.
  
3.3  The contractor, shall support the build of 4MB CRAM devices (i.e. utilizing a subcontract with BAE
     Systems) in conjunction with a joint AFRL-BAES Manassas program and help design 16MB CRAM
     devices.
  
3.4  The contractor shall support BAE Systems’ build of advanced F-22 MMIC devices by procuring XRL-
     CPL masks for the next generation devices.
  
3.5  The contractor shall support work initiated by CNTech under previous DARPA programs. JMAR, under a
     subcontract to CNTech will develop a “Mesa Mask” or “Butte Mask” form factor. JMAR will verify the
     capability of this form factor to do close gap- high resolution XRL-CPL-ZP.
  
3.6  The contractor shall facilitate the manufacture of XRL-CPL-ZP masks using a new U.S. supplier. This will
     be accomplished under a subcontract with CNTech who will act as the contractor’s “Expert” for mask
     process in teaching the techniques needed for XRL-CPL-ZP mask manufacture to XRADIA of Concord,
     CA.
  
3.7  The contractor shall manage a subcontract with UVM who will model the Aeroelastic performance of XRL-
     CPL-ZP masks to ensure the ability to design future masks with smaller gapping capabilities. They will also
     validate the mechanical designs provided under the other CNTech and XRADIA subcontracts, looking at
     the performance of the MESA or Butte Mask and thicker substrates.

                                                           
  



3.8      The contractor shall continue to develop a supply of U.S. sources mask membranes from FLXmicro in
         Solon, OH. U.S. and Canadian manufacturers of masks under this contract will obtain their mask blanks
         from FLXmicro.
  
3.9      The contractor shall, using mask making tools obtained from IBM, inspect all produced masks for
         compliance with design and specification parameters and report on the results.
  
3.10    The contractor shall manage the manufacture and delivery of the cited XRL-CPL-ZP mask (sets) during
        the contract timeframe. A total of 16 masks shall be delivered under the contract. The mix and quantities
        listed below may be periodically reviewed with team members and the government and may be adjusted
        to meet program needs. JMAR systems shall give preference to the U.S. suppliers according to
        demonstrated quality, cost and delivery. JMAR systems shall notify NAVAIR contracts, in writing,
        before any changes are made to the type or quantity of masks to be delivered.
  
3.11    Prior to shipment, CNTech, XRADIA, Quantiscript and NTT-AT will measure all products to determine
        conformance with the Product Performance Specifications. JMAR will in turn receive, verify
        specifications and inspect each mask prior to actual exposure testing at JMAR, BAES or both sites
        following delivery and acceptance by JMAR Systems. The quality of the masks and exposures will be
        reported on in the Monthly Program Status Report (MPSR).
  
3.12    JMAR Systems shall provide Program Management of all tasks in the SOW.
  
3.13    Performance Measurement
  
3.13.1  The Contractor shall participate in an evaluation of no less than every six months using the survey found in
        Attachment (2) entitled “Performance Measurement Survey.” The TPOC is responsible for facilitating the
        collection process and ensuring that performance metrics are obtained in accordance with said schedule.
  
3.13.2  Results of this survey will be used to determine future Task Order awards and/or continuation of current
        Task Order awards under this IDIQ Contract. Less than favorable responses may adversely impact
        continuation of performance on respective Delivery/Task Orders.
  
3.13.3  The PCO and the TPOC will review the assessed metrics within two weeks of submission by the
        contractor. Performance metrics will be shared with the contractor at the end of each collection and
        assessment period.

                                                           
  

4     DELIVERABLES

       2.5       The contractor, in collaboration with CNTech, XRADIA, Quantiscript and NTT-AT shall
            provide the following masks as deliverables:

4.1.1  Five (5) CRAM masks from XRADIA via the CNTech subcontracts 
  
4.1.2  Four (4) CRAM masks from Quantiscript Purchase Orders 
  
4.1.3  Four (4) ZP masks for XRM/XNP from CNTech Purchase Orders 
  
4.1.4  Three (3) 80nm LED array and test masks from NTT-AT Purchase Orders

       2.6       The contractor shall submit a monthly progress/status/milestone report in accordance with CDRL
            Item A002 contained in the basic contract award. 

     4.1.  The contractor shall submit a monthly funds expenditure report in accordance with CDRL Item B001 
           contained in the basic contract award for the Period of Performance.
  
     4.2.  The contractor shall submit agenda, presentation material and minutes at all planning or technical
           interchange meetings in accordance with CDRL Items A003, A007 and A008. Contractor shall
           distribute minutes of all reviews and TIMS within ten (10) working days of completion of the 
           review/meeting.
  
     4.3.  The contractor shall submit a detailed program plan in accordance with CDRL Item A004 contained in
           the basic contract award.
  
     4.4.  The contractor shall submit a Delivery Order Summary Report in accordance with CDRL Item A005 
           contained in the basic contract award.
  
     4.5.  The contractor shall submit an Acceptance Test Plan in accordance with CDRL Item A006 contained 
           in the basic contract award.
  
     4.6.  The contractor shall submit a Final Report in accordance with CDRL Item A009 contained in the 
           basic contract award.
  
     4.7.  The contractor shall submit a Data Accession List/Internal Data in accordance with CDRL Item A010 
           contained in the basic contract award.

                                                           
  



     PAYMENT MILESTONE SCHEDULE 
     ATTACHMENT (2) 
   
 
            
         
                  
                     
                                                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                               




                                                                                                                                                                                 Percent-                                    
                                             Event Type                                                                             Accomplishment       Verification            age of                                      
      CLIN                      Event No.    (See Note 1)     Description                                                              expected             Method               Payment        Event Value      Target Date 
                                                                                                                                                                                                                                                               




                        0001                        1                           S      Continued Place subcontracts Copies of                                                                        20% $ 419,518  30-Sep-
                                                                                       development with CNTech, BAE executed                                                                                          04
                                                                                       of XRL-           and Brian Grennon; subcontract
                                                                                       CPL-ZP            provide engineering agreements
                                                                                       mask              development and        with CNTech,
                                                                                       technology mgmt oversight.               BAE & B.
                                                                                       and design                               Grennon.
                                                                                       of 16
                                                                                       advanced
     
                     
                              
                                                 
                                                          
                                                                             
                                                                                      masks.
                                                                                                     
                                                                                                                             
                                                                                                                                 
                                                                                                                                                                                                  
                                                                                                                                                                                                                   
                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                               




                        0001                        2                           C      Demonstrate Conduct                      Certification                                                        13% $ 265,951  30-Oct-
                                                                                       the exposure demonstrations              by the                                                                                04
                                                                                       capability of (Sow 3.2) using            Contractor;
                                                                                       these masks BAE XRL Dense                and,
                                                                                       to make           Plasma Source and assessment by
                                                                                       devices           JMAR Systems           TPOC that
                                                                                       using             CPL Source; and,       monthly status
                                                                                       facilities with submit monthly           reports
                                                                                       the               status reports which demonstrate
                                                                                       necessary         demonstrates           commensurate
                                                                                       requisite         commensurate/timely progress on
                                                                                       equipment progress on mask               mask
                                                                                       and               technology.            technology
                                                                                       expertise.                               includes report
                                                                                                                                on validation
                                                                                                                                of mechanical
     
                     
                              
                                                 
                                                          
                                                                             
                                                                                      
                                                                                                     
                                                                                                                             
                                                                                                                               designs.
                                                                                                                                 
                                                                                                                                                                                                  
                                                                                                                                                                                                                   
                                                                                                                                                                                                                           
                                                                                                                                                                                                                                                               




                                                    3                           C      Continued Place subcontract              Copy of                                                               9%    184,153  30-Nov-
                                                                                       development with UVM for                 executed                                                                                04
                                                                                       of XRL-           modeling; payments subcontract
                                                                                       CPL-ZP            to subcontractor's     agreement
                                                                                       mask              current; provide       with UVM;
                                                                                       technology; required engineering payments to
                                                                                       support the development and              subcontractors
                                                                                       build of          mgmt over site to      current; and,
                                                                                       4MB               ensure progress is     assessment by
                                                                                       CRAM              made IAW contract TPOC that
                                                                                       devices           objectives; and,       monthly status
                                                                                       (BAE) and submit monthly                 reports
                                                                                       contribute to status reports which demonstrate
                                                                                       the design of demonstrates               commensurate
                                                                                       XRL-CPL- commensurate/timely progress on
                                                                                       ZP masks in progress on mask             mask
                                                                                       conjunction technology. Validate technology
                                                                                       with a joint mechanical designs includes report
                                                                                       AFRL-             provided under the on validation
                                                                                       BAES              CNTech and             of mechanical
                                                                                       Manassas          XRADIA                 designs).
                                                                                       program and subcontracts.                Certification
                                                                                       help design                              by the
                                                                                       of 16 MB                                 Contractor.
                                                                                      CRAM
                                                                                      devices;
                                                                                      and, provide
                                                                                      for the
                                                                                      modeling of
                                                                                      the
                                                                                      Aeroelastic
                                                                                      performance
                                                                                      of
                                                                                      XRL/CPL
                                                                                      masks to
                                                                                      ensure the
                                                                                      ability to
                                                                                      design future
                                                                                      masks with
                                                                                      smaller
                                                                                      gapping
     
                     
                              
                                                 
                                                          
                                                                             
                                                                                      capabilities.   
                                                                                                                         
                                                                                                                                          
                                                                                                                                              
                                                                                                                                                                                      
                                                                                                                                                                                              
                                                                                                                                                                                                      
                                                                                                                                                                                                          
                                                                                                                                                                                                              
                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                  




                        0001                        4                           C     Continued Interim payments to Delivered in                                                         14%    288,276  30-Dec-
                                                                                      development and coordination           place 5 masks                                                                 04
                                                                                      of XRL-          with BAE, CNTech and Progress;
                                                                                      CPL-ZP           (2 POs) & UVM for and,
                                                                                      mask             work on evaluation assessment by
                                                                                      technology; of masks. Majority TPOC that
                                                                                      facilitate the of materials            monthly status
                                                                                      manufacture purchased. Required reports
                                                                                      of               Monthly Status        demonstrate
                                                                                      XRL/CPL reports submitted.             commensurate
                                                                                      masks using                            progress on
                                                                                      a new US                               mask
                                                                                      supplier.                              technology.
                                                                                      Demonstrate                           Certification                                                                                                     
                                                                                      the exposure                           by the
                                                                                      capability of                          Contractor.
                                                                                      these masks
                                                                                      to make
                                                                                      devices
                                                                                      using
                                                                                      facilities with
                                                                                      the
                                                                                      necessary
                                                                                      requisite
                                                                                      equipment
                                                                                      and
                                                                                     
                                                                                      expertise.
                                                                                                                                                                                                                                                  




                                                                                                                                      
  

   
                     
                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                




                                                                                                                                                                                  Percent-                                     
                                                Event Type                       Accomplishment     Verification                                                                  age of                                       
      CLIN                         Event No.    (See Note 1)     Description        expected           Method                                                                     Payment        Event Value       Target Date 
                                                                                                                                                                                                                                                                




                        0001                           5                           C                   Continued             Certification by  
                                                                                                                                 Three (3) masks                                                      22% $ 456,105  30-Mar-
                                                                                                       development           Contractor.
                                                                                                                                 developed, final                                                                       05
                                                                                                       of XRL-               Three (3)
                                                                                                                                 payments
                                                                                                       CPL-ZP                masks
                                                                                                                                 (excluding fee) to
                                                                                                       mask                  delivered in
                                                                                                                                 subcontractors,
                                                                                                       technology.           place. Copy of
                                                                                                                                 payment to BAE
                                                                                                                             order to BAE
                                                                                                                                 for 3 additional
                                                                                                                             for additional
                                                                                                                                 masks, trips to
                                                                                                                             (3) masks. An
                                                                                                                                 BAE Manassas
                                                                                                                             assessment by
                                                                                                                                 for engineering
                                                                                                                             TPOC that
                                                                                                                                 development and
                                                                                                                             monthly status
                                                                                                                                 coordination.
                                                                                                                             reports
                                                                                                                             demonstrate
                                                                                                                             commensurate
                                                                                                                             progress on
                                                                                                                             mask
     
                     
                                 
                                                    
                                                             
                                                                                
                                                                                         
                                                                                                    
                                                                                                        
                                                                                                                          
                                                                                                                             technology.   
                                                                                                                                                                                                   
                                                                                                                                                                                                             
                                                                                                                                                                                                                                
                                                                                                                                                                                                                                     
                                                                                                                                                                                                                                                        
                                                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                




                        0001                           6                           C      Continued Eight (8) masks Certification by                                                                  13% $ 275,997  30-Jun-
                                                                                          development delivered. Final Contractor.                                                                                     05
                                                                                          of XRL-        fee payment to      Eight (8)
                                                                                          CPL-ZP         BAES for            masks
                                                                                          mask           CRAM Effort - delivered in
                                                                                          technology. fee. On-site           place. Copy of
                                                                                                         overview/support order to BAE
                                                                                                         to BAE              for additional
                                                                                                         Manassas.JMAR masks. Copy
                                                                                                         to inspect          of receipt of
                                                                                                         materials at        masks
                                                                                                         BAE.                delivered by
                                                                                                                             CNTech. A
                                                                                                                             written
                                                                                                                             assessment by
                                                                                                                             TPOC that
                                                                                                                             monthly status
                                                                                                                             reports
                                                                                                                             demonstrate
                                                                                                                             commensurate
                                                                                                                             progress on
                                                                                                                             mask
     
                     
                                 
                                                    
                                                             
                                                                                
                                                                                         
                                                                                                    
                                                                                                        
                                                                                                                          
                                                                                                                             technology.   
                                                                                                                                                                                                   
                                                                                                                                                                                                             
                                                                                                                                                                                                                    
                                                                                                                                                                                                                            
                                                                                                                                                                                                                                
                                                                                                                                                                                                                                                                




                        0001                           7                           C      Final          Final Acceptance Copies of                                                                   10% $ 210,000  30-Jul-05
                                                                                          Payment for of all products        verification
                                                                                          Year 3         produced during documentation.
                                                                                          Mask           YR3 Mask            DD-250
                                                                                          Contract       Contract.           signed-off by
                                                                                          with JMAR Verification of          the
                                                                                          Systems        specifications for Government's
                                                                                          Final          conformance         TPOC.
                                                                                          Inspection with the Product
                                                                                          and            Performance
                                                                                          Acceptance Specifications.
                                                                                          of Products. Delivery of all
                                                                                                         products (16).
                                                                                                            Final Report
     
     
                                             
                                                       
                                                                          
                                                                                    
                                                                                                       
                                                                                                            submitted.
                                                                                                                               
                                                                                                                                         
                                                                                                                                                            
                                                                                                                                                                 
                                                                                                                                                                                    
                                                                                                                                                                                             
                                                                                                                                                                                                     
                                                                                                                                                                                                          
                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                      




 
     TOTAL  
                                             
                                                       
                                                                          
                                                                                      
                                                                                                       
                                                                                                              
                                                                                                                               
                                                                                                                                           
                                                                                                                                                            
                                                                                                                                                                  
                                                                                                                                                                                    
                                                                                                                                                                                       100%  $2,100,000   
                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                  
                                                                                                                                                                                                                                                      




Note 1: Event type: Severable (S) or Cumulative (C) 

                                                                                                                                    
  

PERFORMANCE QUESTIONNAIRE
ATTACHMENT (3)

                                          PERFORMANCE MEASUREMENT SURVEY

1.    Understanding of The Technology
    
     
                                                                                                                                        
      Poor                                                                                                                                 Excellent     

 
     1
     
                     2           3           4           5           6           7           8           9                                      10    

Rating Based Upon:
o Peer/Colleague Recognition (Do you and/or others consider them subject matter experts)
þ Published and/or Presented Material (Papers, Articles, Lectures/Presentations, etc.)
þ Past Contracts and Subcontracts Experience
o Other:
     




     




     




     




2.    Ability to Incorporate Technology Into Relevant Priority Programs/Systems
    
     
                                                                                                                                        
      Poor                                                                                                                                 Excellent     

 
     1
     
                     2           3           4           5           6           7           8           9                                      10    

Rating Based Upon:
þ Technology Advancing Towards Desired Goal
þ Relevance To Current/Projected Fleet Needs
o Will It Be Delivered To Customers In A Timely Manner
þ Demonstrated Ability to Incorporate Technology into Applicable Platforms/Systems
þ Demonstrated Knowledge of Related Systems/Network
o Other:
     




     




     




     




3.    Ability To Plan, Coordinate and Manage a Development Effort
    
     
                                                                                                                                        
      Poor                                                                                                                                 Excellent     

 
     1
     
                     2           3           4           5           6           7           8           9                                      10    

Rating Based Upon:
þ Appropriate Personnel/Resources
þ Cost Accountability
þ Ability To Adapt to Evolving Developmental Environment
o Early Identification of Problems/Issues/Risks and Develop Mitigations Plans
o Utilized Disciplined Program Planning and Tracking Methodology
o Other:
     




     




     




     




4. Understanding of Applicable Procedures
    
     
                                                                                                                                             
      Poor                                                                                                                                 Excellent     

 
     1
     
                     2           3           4           5           6           7           8           9                                      10    

                                                                                
  

Rating Based Upon:
o Patents (Filing Procedures, Timeliness of Filing)
o Test and Evaluation Plans/Approvals (to include flight testing if applicable)
o Security/OPSEC
þ Information Technology (IT)
o Commercial Software Development Standards
þ IEEE Standards
þ System Engineering and Development Standards
o NAVAIR Standards
o Other:
     




     




     




     




Exhibit/Attachment Table of Contents
                                                                                       
DOCUMENT TYPE                 DESCRIPTION                 PAGES                        DATE
Attachment 1                Statement of Work           3                              
Attachment 2                Payment Milestone           2                              
                            Schedule                                                
Attachment 3                Performance                 2                              
                            Questionnaire                                           
Attachment 4                TEST                        5                              

                                                            
  

          Exhibit 10.23 




       
  

SECTION SF 30 BLOCK 14 CONTINUATION PAGE

SUMMARY OF CHANGES

SECTION B — SUPPLIES OR SERVICES AND PRICES

     SUBCLIN 000205 is added as follows: 
                                                                                                                                                                    
ITEM NO                 SUPPLIES/SERVICES           QUANTITY  UNIT                                               UNIT PRICE                          AMOUNT         
000205                                                                Lot                                                                                           
        INCREMENTAL                                                         
        FUNDING                                                                                                                                                     
        CPFF                                                                                                                                                        
        INCREMENTAL                                                         
        FUNDING FOR CLIN
        0002                                                                                                                                                        
        PURCHASE REQUEST                                                                 
        NUMBER: W71B7J-5031-
        H342                                                                                                                                                        
        ROBERT REAMS, 301-                                                               
        394-3135                                                                                                                           
                                                                                                      ESTIMATED COST   $             0.00  
  
     
          
             
                     
                                                     
                                                       
                                                               
                                                                       
                                                                         
                                                                                 
                                                                                         
                                                                                             
                                                                                                  
                                                                                                              
                                                                                                               FIXED FEE   $
                                                                                                                                   
                                                                                                                                     0.00  
                                                                                                                                                                       




                                                                                                  TOTAL EST COST + FEE   $           0.00  
        ACRN AN Funded Amount                                                                                              $ 3,508,000.00  

FOB: Destination

SECTION E — INSPECTION AND ACCEPTANCE

The following Acceptance/Inspection Schedule was added for SUBCLIN 000205:
                                                                                
INSPECT AT                INSPECT BY                  ACCEPT AT               ACCEPT BY
Destination               Government                  Destination             Government

The following Technical Office was added for SUBCLIN 000205:
US ARMY RESEARCH LABORATORY
ROBERT REAMS
2800 POWDER MILL ROAD
ADELPHI MD 20783-1197

SECTION F — DELIVERIES OR PERFORMANCE

The following Delivery Schedule item for CLIN 0002 has been changed from:
                                                                                                                                                           
DELIVERY DATE                                  QUANTITY    SHIP TO ADDRESS                                                                               UIC
                                                                                                                                                             
POP 20-SEP-2002 TO                               N/A                                US ARMY RESEARCH LABORATORY                                            W71B7J
30-OCT-2004                                                                         ROBERT REAMS                                                             
                                                                                    2800 POWDER MILL ROAD                                                    
                                                                                    ADELPHI MD 20783-1197                                                    
                                                                                    301-394-3135                                                             
                                                                                    FOB: Destination                                                         

To:

                                                                                              
  

                                                                                                         
DELIVERY DATE                         QUANTITY    SHIP TO ADDRESS                                      UIC
                                                                                                           
POP 30-OCT-2004 TO                      N/A           US ARMY RESEARCH LABORATORY                        W71B7J
01-OCT-2006                                           ROBERT REAMS                                         
                                                      2800 POWDER MILL ROAD                                
                                                      ADELPHI MD 20783-1197                                
                                                      301-394-3135                                         
                                                      FOB: Destination                                     

The following Delivery Schedule item has been added to SUBCLIN 000205:
                                                                                                         
DELIVERY DATE                         QUANTITY    SHIP TO ADDRESS                                      UIC
                                                                                                           
01-OCT-2006                                           US ARMY RESEARCH LABORATORY                        W71B7J
                                                      ROBERT REAMS                                         
                                                      2800 POWDER MILL ROAD                                
                                                      ADELPHI MD 20783-1197                                
                                                      301-394-3135                                         
                                                      FOB: Destination                                     

SECTION G — CONTRACT ADMINISTRATION DATA

Accounting and Appropriation

Summary for the Payment Office

     As a result of this modification, the total funded amount for this document was increased by $3,508,000.00 
from $20,258,620.74 to $23,766,620.74.

SUBCLIN 000205:
Funding on SUBCLIN 000205 is initiated as follows:

     ACRN: AN 

     Acctng Data: 
974040013010RPARGO4H20D281000255YANRE00W71B7J5031H3424N9EKKS18129

     Increase: $3,508,000.00 

     Total: $3,508,000.00 

(End of Summary of Changes)

                                                           

                                                EXHIBIT 23.1

        CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTING FIRM

We have issued our report dated March 18, 2005, accompanying the consolidated financial statements and
schedule included in the Annual Report of JMAR Technologies, Inc. on Form 10-K for the year ended
December 31, 2004. We hereby consent to the incorporation by reference of said report in the Registration
Statements of JMAR Technologies, Inc. on Form S-3 (File Nos. 33-47390, effective July 2, 1993, 33-96848
effective August 14, 1996, 333-46392 effective October 5, 2000, 333-67056 effective October 11, 2001, 333-
72860 effective June 13, 2002, 333-104640 effective May 23, 2003, 333-110258 effective December 18,
2003, 333-111993 effective January 29, 2004, and 333-112639 effective February 17, 2004) and on Form S-
8 (File Nos. 333-33902 effective April 3, 2000, 333-33904 effective April 3, 2000, 333-111994 effective
January 16, 2004, 333-112059 effective January 21, 2004, 333-112060 effective January 21, 2004 and 333-
118189 effective August 13, 2004).

                                              /s/ GRANT THORNTON LLP

                                              Irvine, California
                                              March 18, 2005




                                                   EXHIBIT 31.1

                                                 CERTIFICATION

              PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Ronald A. Walrod, certify that:

1) I have reviewed this annual report on Form 10-K of JMAR Technologies, Inc.;

2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;

3) Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this annual report;

4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this annual report (based on such evaluation); and

c) disclosed in this annual report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and

5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant's internal control over financial reporting.

                                                                        By: /s/ Ronald A. Walrod
                                                                            --------------------------
                                                                            Ronald A. Walrod
                                                                             Chief Executive Officer

          March 30, 2005




                                                   EXHIBIT 31.2

                                                 CERTIFICATION

              PURSUANT TO SECTION 302 OF THE SARBANES OXLEY ACT OF 2002

I, Dennis E. Valentine, certify that:

1) I have reviewed this annual report on Form 10-K of JMAR Technologies, Inc.;

2) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by this annual report;

3) Based on my knowledge, the financial statements, and other financial information included in this annual report,
fairly present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this annual report;

4) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this annual
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this annual report (based on such evaluation); and

c) disclosed in this annual report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an
annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and

5) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of
directors:

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and
report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in
the registrant's internal control over financial reporting.

                                                                      By: /s/ Dennis E. Valentine
                                                                          ----------------------------
                                                                          Dennis E. Valentine
                                                                          Chief Financial Officer

          March 30, 2005
                                                  EXHIBIT 32.1

                                      CERTIFICATION PURSUANT TO

                                            18 U.S.C. SECTION 1350

                                        AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of JMAR Technologies, Inc. (the "Company") on Form 10-K for the year
ended December 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the
"Report"), Ronald A. Walrod, Chief Executive Officer of the Company and Dennis E. Valentine, Chief Financial
Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to the best of our knowledge:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of
1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the Company.

                                                                  By: /s/ Ronald A. Walrod
                                                                      ------------------------------
                                                                      Ronald A. Walrod
                                                                      Chief Executive Officer

                                                                  By: /s/ Dennis E. Valentine
                                                                      ------------------------------
                                                                      Dennis E. Valentine
                                                                      Chief Financial Officer

          March 30, 2005